EXHIBIT 99.3
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
______________________, 2000 by and among Grand Court Lifestyles, Inc. and its
affiliates, a Delaware corporation and the Official Committee of Unsecured
Creditors of Grand Court Lifestyles, Inc. (collectively "Grand Court"), Triad
Senior Corporation, a Delaware corporation ("Triad "), and Capital Senior
Living-GC, Inc., a Delaware corporation ("Capital").
RECITALS:
A. Grand Court owns directly or indirectly 100% of the economic interest of the
sole general partner or sole managing partner or managing member, (the "General
Partner Rights") of the partnerships or other owning entities set forth on
Exhibit "A" (the "Partnerships" or "Partnership" when referencing a particular
partnership).
B. The Partnerships are comprised of syndicated limited partnerships (the
"Investing Partnerships") in which limited partnership interests were offered to
investors in private placements and general partnerships (the "Owning
Partnerships") that currently own senior living Facilities (hereinafter
defined). Grand Court has various Purchase Notes, Loans and Exchanges, and Other
Receivables (herein so called) associated with the Investing Partnerships and
Owning Partnerships as set forth on Exhibit "B" attached hereto.
C. Grand Court also has management contracts (the "Management Contracts") to
manage the senior living facilities (the "Facilities") for the Owning
Partnerships all as set forth on Exhibit "C" attached hereto.
D. Triad desires to purchase from Grand Court the General Partner Rights of
Partnerships that directly or indirectly own Facilities on the First Closing
Date (hereinafter defined) (and become the new general partner of the Investing
Partnerships and the new managing partner or managing member of the Owning
Partnerships), and the Purchase Notes, the Loans and Exchanges, and the Other
Receivables (collectively the "GP Interests").
E. Capital desires to purchase the Management Rights (hereinafter defined).
F. Grand Court is prepared to withdraw as general partner of the Investing
Partnerships and as managing partner of the Owning Partnerships and cancel the
current Management Contracts they have concerning the Facilities, in exchange
for the consideration set forth in this Agreement, and will endeavor to have any
other general partners of Investing Partnerships resign.
G. Grand Court is currently the subject of Chapter 11 proceedings in the United
States Bankruptcy Court, District of New Jersey, Novalyn L. Winfield, United
States Bankruptcy Court Judge ("Bankruptcy Court"), Case No. 00-32578(NLW).
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AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, and covenants hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Assets to be Acquired.
(a) Upon the terms and subject to the conditions set forth herein, at the First
Closing (hereinafter defined) Grand Court shall sell, assign, transfer, and
deliver to Triad, and Triad shall purchase and acquire from Grand Court, the GP
Interests, free and clear of all liens, claims, and encumbrances.
(b) Upon the terms and subject to the conditions set forth herein, at the First
Closing, Grand Court shall reject the Management Rights so that they may be
transferred to Capital and shall sell, assign, transfer and deliver to Capital,
and Capital shall purchase and acquire from Grand Court, the Management Rights,
free and clear of all liens, claims, and encumbrances.
(c) Upon the terms and subject to the conditions set forth herein, at the Second
Closing (hereinafter defined), Triad agrees to establish the LP Offset and LP
Recovery Fund (hereinafter defined).
"GP Interests" shall include all books and records of the Partnerships in the
possession of Grand Court, all collateral, assets, investor notes, purchase and
other agreements (including Deferred Sales Proceeds), documents and rights (but
not obligations) related to the Purchase Notes and any and all assets of Grand
Court related to the Partnerships and set forth on Schedule 1.1 attached hereto.
" Management Rights" shall include all rights (but not obligations) to manage
the Facilities under new management agreements, to hire the operational
personnel of Grand Court, and shall include all of the tangible assets of Grand
Court used by Grand Court in the performance of the Management Contracts as set
forth on Schedule 1.1 attached hereto. Further, Grand Court agrees to transfer,
or cause to be transferred, to Capital at the First Closing possession and
control of any and all bank accounts containing Partnership funds held by Grand
Court in accordance with the terms of the Management Contracts together with
possession and control of any and all bank accounts held by Grand Court or the
Partnerships and used in the Partnerships' business.
1.2 Excluded Assets. Grand Court shall not sell, assign, transfer, or convey to
Triad or Capital hereunder any of the assets or property of Grand Court except
for the GP Interests and Management Rights.
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1.3 Assumption of Certain Liabilities. Upon the terms and subject to the
conditions set forth herein, at the First Closing, Triad shall agree to
guaranty, on terms reasonably acceptable to Triad, the bank debt of
approximately $12.9 million as set forth on Schedule 1.3 attached hereto ("Bank
Debt") consisting of nine lenders holding as collateral, limited partner
investor notes in the approximate amount of $17.7 million as set forth on
Schedule 1.3 attached hereto ("Investor Notes"). The Triad guaranty will be on
terms reasonably acceptable to Triad, which shall include a requirement that the
holders of the Bank Debt, at their cost, continue to use their best efforts on
collection of the Investor Notes, which shall include litigation if necessary,
that Triad or Grand Court, if requested, will send out the standard notices of
collection, and the best efforts of Grand Court, if requested, to assist in the
collection process and that Triad shall only be called upon to pay under its
guaranty if such collection efforts fail. Except as expressly set forth in this
Agreement, Triad and Capital do not hereby assume or agree to pay any other
liabilities or obligations of Grand Court, the limited partners of the
Partnerships, the Partnership, or any other entity.
It is expressly understood that Triad and Capital shall not be liable for and do
not assume any of Grand Court's, the limited partners' of the Partnerships, the
Partnerships', or any other entity's obligations or liabilities (whether known
or unknown, matured or unmatured, or fixed or contingent) other than the
guaranty of the Bank Debt as expressly provided in this Section 1.3 and those
obligations and liabilities expressly set forth on Schedule 1.3 attached hereto
Without limiting the foregoing, the GP Interests and Management Rights shall not
include (a) any claims for workmen's compensation, (b) any federal, state, or
local taxes on income or any federal, state, or local taxes arising by reason of
the sale of the rights as herein provided or otherwise or any other Taxes (as
hereinafter defined), (c) any liability for any violation by Grand Court or the
Partnerships of any applicable statutes, laws, regulations, or ordinances of any
federal, state, or local government, (d) any liability for any breach of
contract, negligence, or misconduct by Grand Court or the Partnerships or any of
its or their respective agents, servants, or employees, (e) any liability of
Grand Court or the Partnerships arising out of or pursuant to this Agreement,
(f) any liability of Grand Court or the Partnerships relating to any litigation
arising from any event, action, or omission, (g) any liability for any employee
or other compensation, including, without limitation, any salaries, bonuses,
incentive compensation, or accrued vacation time, relating to services provided
to Grand Court or the Partnerships, before the First Closing, as to the
Partnerships, (h) any liability of Grand Court or the Partnerships relating to
employee benefit plans maintained by Grand Court or the Partnerships, before the
First Closing, as to the Partnerships, (i) any liability arising out of or
incurred in respect of any transaction of Grand Court occurring before or after
the First Closing, (j) any liability for any accrued and unpaid federal, state,
or local taxes of Grand Court based on income of its employees, (k) any trade or
other accounts payable of Grand Court or the Partnerships, or (l) any other
liability or obligation of Grand Court or the Partnerships other than the Bank
Debt, unless specifically assumed in writing by Triad or Capital as set forth on
Schedule 1.3 attached hereto.
1.4 Sales Price. The aggregate sales price payable by Triad and Capital in
consideration for the sale of the GP Interests and Management Rights shall be
$7,000,000 (the " Sales Price") which shall be payable upon the First Closing.
1.5 Closings.
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(a) First Closing. Subject to the terms and conditions set forth herein, at the
First Closing:
(i) Grand Court shall sell, assign, transfer and deliver or cause to be
delivered to Triad or Capital, as applicable, (A) the Assignment of GP Interests
in the form attached hereto as Exhibit "D", assigning all of Grand Court 's
right, title, interest and privilege in, to, and under the GP Interests to
Triad, (B) the Assignment of Management Rights in the form attached hereto as
Exhibit "E", assigning all of Grand Court's right, title, interest, and
privilege in the Management Rights and in, to, and under the Management
Contracts to Capital, (C) the Bill of Sale, Assignment and Transfer regarding
the transferred assets set forth on Schedule 1.1 attached hereto as Exhibit "F",
(D) the Certificate of Representations and Warranties in the form attached
hereto as Exhibit "G", (E) the certified minutes of the special meeting of
directors of Grand Court ratifying the execution of this Agreement and approving
and authorizing the transactions contemplated by this Agreement and related
Bankruptcy Court Order (hereinafter defined), and (F) all files in Grand Court's
possession relating to the Partnerships or the Facilities and all appropriate
books and records, accounting information, and operating information and data,
current and historical, reasonably related to the Management Contracts and the
Management Rights.
(ii) Triad and Capital shall deliver or cause to be delivered to Grand Court the
Sales Price.
(b) Second Closing. Subject to the terms and conditions set forth herein, at the
Second Closing:
Triad shall establish a LP Recovery Fund (hereinafter defined).
(ii) Triad shall assign one-half (1/2) of the Deferred Sales Proceeds, as
defined in the Purchase Agreement payable by the Investing Partnerships or each
managing partner's back-end interest, over the required one percent (1%) for tax
purposes, in each Owning Partnership to the LP Recovery Fund ("Back-End
Assignment").
(iii) Triad shall establish the LP Offset (as hereinafter defined).
The First Closing shall take place at the offices of Grand Court no later
than five business days after satisfaction of the conditions to the First
Closing as set forth in Section 7.1(a) and 7.2(a) hereof, or at such other time
and place or on such other date as the parties hereto may agree (the "First
Closing"). The Second Closing shall take place no later than five business days
after satisfaction of the conditions to the Second Closing as set forth in
Section 7.1(b) hereof (the "Second Closing" and together with the First Closing
the "Closings"). The date on which the First Closing actually occurs is referred
to herein as the "First Closing Date," and the date on which the Second Closing
actually occurs is referred to herein as the "Second Closing Date."
1.6 New Entities. Triad will form one or more wholly owned subsidiaries to be
admitted as the new general partners of the Investing Partnerships and the new
managing partners of the Owning Partnerships. Capital will form one or more
wholly owned subsidiaries to manage the Facilities.
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1.7 Purchase Price. The "Purchase Price" shall mean an amount equal to
$7,000,000. The allocation of the Purchase Price to each Partnership is set
forth on Exhibit " I" attached hereto. The Purchase Price will be increased by
an amount equal to any amounts paid by Triad on the Bank Debt guarantee,
provided, however, the Purchase Price increase shall not exceed $3,000,000
reduced by sixty-four cents ($.64) for every dollar collected under the Investor
Notes and applied to the Bank Debt and the Purchase price allocated to each
Partnership will be decreased (i) by $150,000.00 per Partnership in the event
the Bank Debt holders do not reduce and compromise the Bank Debt to the benefit
of the limited partnes, or (ii) an amount equal to the benefit received by Triad
(to be reasonably determined and allocated by Triad and the Equity Committee)
from payments by limited partners on their investor notes after final payment
and full settlement of the Bank Debt (the increase or decrease referred herein
as the "Purchase Price Adjustment".
1.8 Allowed Claim. At the First Closing, the Bankruptcy Court shall order a
$5,000,000 allowed, unsecured claim of the Partnership's and Limited Partners
against the estate of Grand Court (the "Allowed Claim"). The independent
directors appointed by the Equity Committee to the Board of Triad and Triad
shall be the administrator of this claim. Any proceeds received from the
$5,000,000 unsecured claim shall be allocated to Purchase Notes of the
Facilities, subject to final approval of the Equity Committee, ratification of
the respective Partnerships, and Triad.
ARTICLE 2
PARTNER APPROVALS
2.1 The Consent. Except as modified by Section 2.2 below, Grand Court and Triad
agree that the First Closing is conditioned upon Triad's receipt of the written
consent of limited partners of each of the Investing Partnerships ("Limited
Partners") owning more than 50% of the outstanding limited partnership interests
that have been issued by each of the Investing Partnership (the "Consent") to
(i) the removal, or the approval of the withdrawal or resignation, of Grand
Court as general partner of the Investing Partnerships and managing partner or
managing member of the respective Owning Partnership, (ii) the admission of
Triad as the sole general partner of the Investing Partnerships and the managing
partner or managing member of the Owning Partnerships, (iii) the amendment of
the voting requirements whereby two-thirds of the limited partners in an
Investing Partnership can cause a sale of the Property by its Owning
Partnership, (iv) ratification of the Purchase Price (hereinafter defined)
allocation, (v) such other amendments as may be agreed to by the Equity
Committee (hereinafter defined) and Triad (the "Partnership Amendment" as set
forth on Exhibit "H" attached hereto, and (vi) authorization of the Owning
Partnerships and Investing Partnerships to agree to limit all claims against the
Grand Court Bankruptcy Estate to a $5,000,000 unsecured claim and release all
other claims against said Estate.
2.2 Solicitation. The Official Committee of the Unsecured Equity Investors of
Grand Court (the "Equity Committee") in coroperation with Triad and Capital,
shall have the right to solicit the Consent of the Limited Partners at such
times as they deem appropriate. Such parties may
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solicit the Consent at any time but in no event more than three times (not
including amendments to a specific solicitation). The right to solicit the
Consent granted by this Section 2.2 shall expire on the third instance in which
Limited Partners owning more than 50% of the outstanding limited partnership
interests of any Investing Partnership do not vote in favor of the matters set
forth in Section 2.1. As to each such solicitation that such parties decide
should be made, Grand Court, if requested by the Equity Committee, and the
Equity Committee shall endorse Triad and Capital to the Limited Partners by a
cover letter prepared by each party. The cover letter for the solicitations
shall be in form and substance reasonably satisfactory to Triad. Grand Court
agrees that it will endorse, recommend, cooperate with and assist the Limited
Partners in all aspects of such solicitations and shall use its best efforts,
subject to any applicable fiduciary duties, to have the Limited Partners approve
the Consent. The cost of any and all such solicitations of Limited Partners
shall be borne by Grand Court.
2.3 Materials. For each such solicitation the Equity Committee shall prepare
such solicitation materials, subject to reimbursement by Grand Court, for review
and approval by Grand Court and the Equity Committee, which approval shall not
be unreasonably withheld or delayed. On or before the First Closing Date, Triad
shall provide written evidence satisfactory to Grand Court and the Equity
Committee of the receipt of the Consent. In the event the Consent has been
obtained, Triad shall be obligated to proceed with the First Closing, subject to
any other conditions contained in Section 7.1(a). The Equity Committee shall
engage, at the expense of Grand Court, an independent third party ballot agent
approved by Triad, Grand Court and the Equity Committee to receive and tally the
ballots of the Limited Partners and to report to all applicable parties the
results of the solicitation of the Consent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TRIAD AND CAPITAL
Each of Triad or Capital, respectively as to itself, hereby represents and
warrants severally, but not jointly, to Grand Court as follows:
3.1 Due Organization. Triad is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware. Capital is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Each of Triad and Capital have full corporate
power and authority to enter into and perform its obligations under this
Agreement and each agreement, instrument, and document required to be executed
by Triad or Capital in accordance herewith.
3.2 Due Authorization. The execution, delivery, and performance by each of Triad
or Capital of this Agreement and the other agreements, documents, and
instruments required to be executed and delivered by Triad or Capital
respectively, in accordance herewith have been duly authorized by all necessary
corporate action. This Agreement and the other agreements, documents, and
instruments required to be executed and delivered by either of Triad or Capital
in accordance herewith have been (or at the time required for delivery
hereunder, will have been) duly and validly executed and delivered by Triad or
Capital respectively and constitute (or at the
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time of delivery will constitute) valid and binding obligations of Triad or
Capital respectively enforceable in accordance with their respective terms.
3.3 Brokers and Finders. Neither Triad nor Capital has incurred any liability to
any finder, broker, or sales agent in connection with the execution, delivery,
or performance of this Agreement or the transactions contemplated hereby for
which Grand Court would be liable.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF GRAND COURT
4.1 Representations and Warranties of Grand Court. Grand Court hereby represents
and warrants to Triad and Capital as follows:
(a) Due Organization. Grand Court is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. Subject
to the Bankruptcy Order, (hereinafter defined) Grand Court has full corporate
power and authority to enter into and perform its obligations under this
Agreement and each agreement, instrument, and document required to be executed
by Grand Court in accordance herewith.
(b) Due Authorization. The execution, delivery, and performance of this
Agreement and any agreements, instruments, and documents required to be executed
by Grand Court in accordance herewith have been duly authorized by all necessary
corporate and Bankruptcy Court action. This Agreement and the agreements,
documents, and instruments required to be executed and delivered by Grand Court
in accordance herewith have been (or at the time required for delivery
hereunder, will have been) duly and validly executed and delivered by Grand
Court and constitute (or at the time of delivery will constitute) valid and
binding obligations of Grand Court enforceable in accordance with their
respective terms. Except as set forth on Schedule 4.1(b), the execution,
delivery, and performance of this Agreement or any other agreement, instrument,
or document to be executed by Grand Court in connection herewith does not or
will not (i) violate any federal, state, county, or local law, rule, regulation,
or order (a "Legal Requirement") applicable to Grand Court, or its respective
properties, (ii) violate, conflict with, or interfere with, or permit the
cancellation of, any agreement to which Grand Court, or by which it or any of
its respective properties are bound, or result in the creation of any lien,
security interest, charge, or encumbrance upon any of such properties, (iii)
result in the acceleration of the maturity of any indebtedness of, or
indebtedness secured by any property or other assets of the Partnerships or
Grand Court, or (iv) violate or conflict with any provision of the Charter or
by-laws of Grand Court.
(c) Consents. Except for the approval of the Bankruptcy Court and the Consents,
no actions, consents, or approvals of, or filings with, any governmental
authorities or third parties are required in connection with Grand Court's
execution, delivery, or performance of this Agreement or any agreement or other
document executed in connection herewith.
(d) Financial Statements. Grand Court has delivered to Triad the unaudited
balance sheet of each Partnership as of ____________, 2000, and income statement
for each Paratneship for the
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seven (7) month period ending July 31, 2000 (the "Financial Statements"). To the
knowledge of Grand Court, the Financial Statements have been prepared in
accordance with sound accounting principles applied on a consistent basis
throughout the periods indicated and fairly present the financial position of
each Partnership as of the indicated dates. To the knowledge of Grand Court,
except as set forth on Schedule 4.1(d), there are no current or pending
developments or circumstances, which would have a material adverse effect on the
GP Interests or Management Rights, or the transactions to be entered into by
Grand Court pursuant to this Agreement.
(e) Title. Upon completion of the transactions contemplated by the First
Closing, Triad or Capital, as applicable shall acquire title to the GP Interests
and Management Rights, respectively, free and clear of all liens, security
interests, claims, rights of another, and encumbrances.
(f) Compliance with Laws. To Grand Court's knowledge, Grand Court has complied
in all material respects, and is in compliance in all material respects, with
all Legal Requirements that are applicable to the GP Interests or Management
Rights and has filed with the proper authorities all statements and reports
applicable to the GP Interests or Management Rights and required by any Legal
Requirements to which Grand Court, the Partnerships, their property or
operations are subject. To the knowledge of Grand Court, no claim has been made
by any governmental authority (and, to the knowledge of Grand Court, no such
claim is anticipated) to the effect that the Grand Court has failed to comply,
in any respect, with any Legal Requirement applicable to the GP Interests or
Management Rights. To the knowledge of Grand Court, none of the Facilities are
in violation of any applicable environmental laws and have not received any
notices of any violation of, noncompliance with or remedial obligation under any
applicable environmental laws.
(g) Contracts and Agreements. The contracts and agreements provided to Triad and
Capital at Grand Court's due diligence room constitute all of the written or
oral contracts, commitments, leases, and other agreements (including, without
limitation, promissory notes, loan agreements, and other evidences of
indebtedness) that relate to the Facilities, GP Interests or Management Rights
and involve liabilities of more than $25,000 ("Material Contracts"). Grand Court
has afforded or will afford to Triad and Capital and their respective officers,
attorneys, and other representatives the opportunity to review complete and
correct copies of all such Material Contracts. Except as set forth on Schedule
4.1 (g), Grand Court and, to the knowledge of Grand Court, the Partnerships are
not in default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default) under any such Material
Contract and Grand Court has not waived any right under any such Material
Contract. Except as set forth on Schedule 4.1 (g), Grand Court has not received
any notice of default or termination under any such Material Contract and,
except as contemplated by this Agreement, Grand Court has not assigned or
otherwise transferred any rights under any such Material Contract.
(h) Claims and Proceedings. Except as set forth on Schedule 4.1 (h), to the
knowledge of Grand Court there are no claims, actions, suits, or proceedings
that relate to the GP Interests or Management Rights pending or threatened
against or affecting Grand Court, the Partnerships, or any of their respective
properties or assets, at law or in equity, or before or by any court, municipal
or other governmental department, commission, board, agency, or instrumentality
that
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will result in any liability or loss which, in the aggregate, is material to the
GP Interests or Management Rights, and would impair the rights acquired by Triad
and Capital under this Agreement notwithstanding the entry of the Bankruptcy
Order, and, to the knowledge of Grand Court, Grand Court has not been, is not
now, subject to any order, judgment, decree, stipulation, or consent of any
court, governmental body, or agency relating to the GP Interests or Management
Rights other than those claims that are the subject of the Grand Court
bankruptcy proceeding ("Bankruptcy Claims"). To the knowledge of Grand Court no
inquiry, action, or proceeding has been asserted, instituted, or threatened to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof
or seeking damages on account thereof other than the Bankruptcy Claims. Except
as set forth on Schedule 4.1(h) to the knowledge of Grand Court, there is no
basis for any such valid claim or action or any other claims or actions which
would, or could reasonably be expected to (individually or in the aggregate),
restrain or prohibit the transactions contemplated by this Agreement or have a
material adverse effect on the GP Interests or Management Rights and would
impair the rights acquired by Triad and Capital under this Agreement
notwithstanding the entry of the Bankruptcy Order.
(i) Brokers. Grand Court has not caused any liability to be incurred to any
finder, broker, or sales agent for which Triad, Capital, or the Partnerships
would be liable in connection with the execution, delivery, or performance of
this Agreement or the transactions contemplated hereby.
(j) Information Furnished. Grand Court has made available to Triad and Capital
and their respective officers, attorneys, accountants, and representatives true
and correct copies of all agreements, documents, and other items in Grand
Court's possession and all books and records relating to the GP Interests or
Management Rights, and to Grand Court's knowledge, neither this Agreement, the
schedules hereto, nor any information, agreements, or documents delivered to or
made available to Triad, Capital or their respective officers, attorneys,
accountants, and representatives pursuant to this Agreement contain any untrue
statement of a material fact or omit any material fact necessary to make the
statements herein or therein, as the case may be, not misleading.
ARTICLE 5
COVENANTS OF GRAND COURT
5.1 Inspection. Upon 25 hours notice, Grand Court shall provide Triad and
Capital, and their officers, attorneys, accountants, and representatives, free,
full, and complete access during reasonable business hours to all books,
records, tax returns, files, correspondence, personnel, facilities, and
properties of Grand Court relating to the Partnerships, the Management Rights
and the Facilities. Any investigation by Triad orCapital or their officers,
attorneys, accountants, or representatives shall not in any manner affect the
representations and warranties of Grand Court contained herein.
5.2 Compliance. From the date hereof to each Closing, Grand Court shall not take
or fail to take any action which action or failure to take such action shall
cause the representations and warranties made by Grand Court herein (including
the Certificate of Representations and
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Warranties attached hereto as Exhibit "G") to be untrue or incorrect as of such
Closing. Grand Court shall deliver to Traid and Capital a supplement to any
Schedules to this Agreement promptly after Grand Court becomes aware of any
event which changes any representation or warranty made by Grand Court in this
Agreement including any Schedule hereto.
5.3 Operation of the Partnerships. From the date hereof to the First Closing,
Grand Court will administer the day-to-day operations of the Partnerships
pursuant to the terms of the Management Contracts consistent with reasonable and
customary practices. During that period, Grand Court agrees that it will not,
without mutual written consent of Triad and Capital, such consent not to be
unreasonably withheld, or Order of the Bankruptcy Court on notice to Traid and
Capital:
(a) no Partnership shall incur any additional borrowed money obligations to
parties other than Grand Court and trade payables in the ordinary course of
business not to exceed $25,000 per Partnership;
(b) except as required for the Sections 363 Sale pursuant to Section 5.5 hereof,
enter into negotiations for or cause the Partnerships to sell, assign or convey
any right, title, or interest whatever in any health care facility or other real
property held by the Partnerships (a "Property ") to any third party other than
resident leases entered into in the normal course of business; or
(c) negotiate or enter into any Material Contract, or modify or renew any
existing Material Contract, including any Material Contract relating to the
management, financing, leasing, or maintenance of any Property.
5.4 Satisfaction of All Conditions Precedent. From the date hereof to each
Closing, Grand Court shall use its best efforts to cause all conditions
precedent to the obligations of Grand Court, Triad and Capital hereunder with
respect to such Closing to be satisfied by that Closing.
5.5 Section 363 Sale. From the date hereof to the First Closing, Grand Court
shall use its best efforts to market and sell the GP Interests and the
Management Rights pursuant to Section 363 of the Bankruptcy Code. Until Grand
Court has exhausted all possibilities pursuant to the Section 363 Sale, Grand
Court shall not offer or transfer any portion of the GP Interests or Management
Rights or hold discussions with any other party (other than Triad and Capital)
looking toward such an offer, solicitation, or transfer. Pursuant to its
fiduciary duties, Grand Court will provide the information reasonably requested
by bidders pursuant to the Section 363 sale and shall notify Triad and Capital
by telephone within 24 hours after providing such information and shall provide
copies of such information to Triad and Capital within 48 hours.
5.6 Non-Hostility. Subject to its fiduciary duties, from the date hereof to the
earlier of the Second Closing or the termination of this Agreement, Grand Court
agrees not to make, or sponsor or endorse an offer or solicitation to replace
the general partners of the Partnerships except pursuant to the Section 363 Sale
procedures approved by the Bankruptcy Court.
5.7 Notice of Developments. From the date hereof to the Second Closing, Grand
Court shall, immediately upon becoming aware thereof, notify Triad and Capital
of any material
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problems or developments with respect to the business, operations, assets, or
prospects of the Partnerships, the Management Rights and the Facilities.
5.8 Notice of Breach. From the date hereof to the Second Closing, Grand Court
shall, immediately upon becoming aware thereof, give detailed written notice to
Triad and Capital of the occurrence of, or the impending or threatened
occurrence of, any event which would cause or constitute a breach, or would have
caused or constituted a breach had such event occurred or been known to Grand
Court prior to the date of this Agreement, of any of its respective covenants,
agreements, representations, or warranties contained or referred to herein or in
any document delivered in accordance with the terms hereof.
5. 9 Limited Partner Approval. Grand Court shall use its best efforts, subject
to any applicable fiduciary duties, to obtain the Consent of the limited
partners.
5.10 Bank Debt. All negotiations by Grand Court with the Bank Debt lenders shall
include a representative of Triad. The Bank Debt and related collateral shall
not be amended, modified or altered, in any way, without prior written notice to
Triad.
5.11 Escrow. At the First Closing, Grand Court agrees to establish a $1,700,000
escrow (the "Escrow") from the sales proceeds for the benefit of Triad. The
Escrow will be deposited at a bank or financial institution reasonably
acceptable to Triad (the "Bank"). The escrow instructions to the Bank shall
provide: (i) payment to Grand Court of thirty-six cents ($.36) for every dollar
collected from Investor Notes and applied to the Bank Debt; and (ii) if any
funds remain in the escrow, payment to Triad upon proof that Triad has paid
funds under its guaranty of the Bank Debt as more specifically provided in the
Escrow Agreement.
ARTICLE 6
COVENANTS OF TRIAD AND CAPITAL
6.1 Compliance. From the date hereof to each Closing, neither Triad nor Capital
shall take or fail to take any action which action or failure to take such
action shall cause the representations and warranties made by Triad or Capital
respectively herein to be untrue or incorrect as of such Closing.
6.2 Notice of Developments. From the date hereof to the Second Closing, either
of Triad or Capital shall, immediately upon becoming aware thereof, notify Grand
Court of any material problems or developments with respect to the business,
operations, assets, or prospects of the Partnerships.
6.3 Notice of Breach. From the date hereof to the Second Closing, either of
Triad or Capital shall, immediately upon becoming aware thereof, give detailed
written notice to Grand Court of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a breach, or
would have caused or constituted a breach had such event occurred or been known
to Grand Court prior to the date of this Agreement, of any of its covenants,
<PAGE>
agreements, representations, or warranties contained or referred to herein or in
any document delivered in accordance with the terms hereof.
6.4 Bankrupt Remote Entities. The new general partners, managing partners and
property managers will be bankrupt remote entities, with one independent
director appointed by the Equity Committee and approved, such approval not to be
unreasonably withheld, by Triad and Capital, respectively. The independent
director will not have any veto or super voting rights, except for bankruptcy
filings of the bankrupt remote entities, and receive compensation of $200.00 per
board meeting plus reasonable out-of-pocket expenses.
6.5 LP Recovery Fund. At the Second Closing, Triad shall establish a LP Recovery
Fund which shall be funded from the following sources: remaining amount of the
Investor Note balance paid on the Investor Notes that secure the Bank Debt,
remaining amount of the Purchase Note balance (after payment of the LP Offset
(hereinafter defined)), remaining amount of the Loans and Exchanges, and Other
Receivables, and the assigned one-half (1/2) of Deferred Sales Proceeds and the
managing partner's back-end interest. The sources of funds are subject to
deductions for distributions to Triad of a fifteen percent (15%) annual return
on the Purchase Price, and the balance of the Purchase Price. Limited Partners
that sign a LP Release (hereinafter defined) shall participate on a pro-rated
basis determined by their cash investment in the Investing Partnerships over the
total cash investment of all Limited Partners that sign a LP Release, not to
exceed the balance of their original investment (excluding interest) in their
respective Partnership.
6.6 Back-End Assignment. At the Second Closing, Triad would convey the Back-End
Assignment to the LP Recovery Fund.
6.7 LP Offset. At the Second Closing, limited partners whose Investor Note
balances are prepaid at the date of a Capital Transaction (as defined in their
respective Partnership agreement) would receive an offset against the Purchase
Note purchased by Triad regarding that particular Partnership, less any
recoveries by said limited partners from other sources (the "LP Offset"). The LP
Offset would be paid after return to Triad equal to fifteen percent (15%) per
annum of the allocated Purchase Price balance, and then the Purchase Price
balance. Any balance of the Purchase Notes after the LP Offset would be
allocated to the LP Recovery Fund after the Second Closing.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Triad and Capital .
(a) Conditions to the First Closing. The obligations of Triad and Capital to
complete the transactions contemplated to be completed at the First Closing are
subject to the fulfillment of each of the following conditions:
<PAGE>
(i) The representations and warranties of Grand Court contained in this
Agreement shall be true and correct at and as of the First Closing with the same
effect as through such representations and warranties had been made on and as of
the First Closing; Grand Court shall have performed and complied with all
agreements required by this Agreement to be performed or complied with by them
at or prior to the First Closing; and Triad and Capital shall have received
certificates, dated as of the First Closing Date, signed by the President or
Chief Executive Officer of Grand Court to the foregoing effect.
(ii) No action or proceeding shall have been instituted or threatened for the
purpose or with the possible effect of enjoining or preventing the completion of
this Agreement or seeking damages on account thereof.
(iii) Prior to the First Closing, except as disclosed in Schedule 4.1(d) there
shall have been no material adverse change in excess of $25,000 in the financial
condition, business, properties, or operations of Partnerships since July 31,
2000.
(iv) All consents and approvals required to be obtained by Grand Court in
connection with the execution, delivery, and performance of this Agreement shall
have been obtained or waived and all such consents and approvals shall be in
form and content reasonably satisfactory to Triad and Capital.
(v) Triad and Capital shall have received from Grand Court evidence of the Bank
Debt claims filed in the Grand Court bankruptcy proceeding having been
withdrawn, with prejudice, the Consent has been duly obtained and evidence of
the withdrawal or removal of Grand Court as general partner of the Investing
Partnerships and managing partner of the Owning Partnerships, and all such other
instruments as shall be necessary or desirable in the reasonable opinion of
Triad to vest in or confirm in Triad good and marketable title to the GP
Interests and in the reasonable opinion of Capital to vest in or confirm in
Capital good and marketable title to the Management Rights.
(vi) Grand Court shall have delivered such good standing certificates, officer's
certificates, and similar documents and certificates as either Triad or Capital
shall have reasonably requested prior to the Closing Date.
(vii) Triad, as managing partner on behalf of the Owning Partnerships, and
Capital shall have entered into a new management contract for the management of
the Facilities, substantially in the form of Exhibit "J" hereto.
(viii) The Bankruptcy Court shall have entered a final, non-appealable Order
(the "Bankruptcy Order") in form and substance reasonably acceptable to Traid
and Capital:
(1) Authorizing and approving this Agreement in its entirety;
(2) Authorizing and directing Grand Court and its affiliates to take all
necessary actions and execute all necessary documents to effectuate the
transactions contemplated by this Agreement;
<PAGE>
(3) Authorizing, pursuant to Section 363 to the Bankruptcy Code, the sale of all
assets described in this Agreement free and clear of all Claims (whether pre or
post petition and as defined in the Bankruptcy Code), liens and encumbrances of
any Entity (as defined in the Bankruptcy Code);
(4) Rejecting, pursuant to Section 363 of the Bankruptcy Code, all existing
management contracts between Grand Court and the Partnerships;
(5) Authorizing the substitution of Triad, or its designee, as managing partner
or general partner for each of the Owning Partnerships and Investing
Partnerships;
(6) Approving the Amendments to the Partnership Agreements;
(7) Authorizing each of the Owning Partnerships to enter into a new Management
Agreement with Capital or its designee;
(8) Approving the form of the new Management Agreements;
(9) Determining pursuant to Section 363(m) of the Bankruptcy Code that the
seller and purchasers acted in good faith;
(10) Directing all public officers and officers to accept for filing or
recording all requisite documents or instruments without payment of any tax as
provided in Section 1146 of the Bankruptcy Code;
(11) Denying and rejecting all objections to the transactions contemplated by
this Agreement and rejecting any other bids or offers;
(12) Containing such other findings and provisions as are usual and customary in
Orders authorizing the transactions anticipated by this Agreement.
Triad and Capital may waive the requirement that the Bankruptcy Order be final
and non-appealable.
(ix) Grand Court shall have executed and delivered to Triad and Capital a
Certificate of Representations and Warranties in the form attached as Exhibit
"G", and such representations and warranties shall be true and correct.
(b) Conditions to the Second Closing. The obligations of Triad to complete the
transactions contemplated to be completed at the Second Closing are subject to
the fulfillment of each of the following conditions:
(i) The First Closing shall have occurred.
(ii) A Plan of Reorganization consistant with the transactions contemplated
herein shall have been confirmed by a final, non-appealable order.
<PAGE>
(iii) A release from Grand Court, its directors, officers, employees,
consultants and representatives and its successors, Creditors Committee and
Trustee, if applicable, shall be delivered to Triad (the "Grand Court Release"),
releasing any and all claims against the limited partners, the Partnerships and
their respective facilities.
(iv) A release from the limited partners and the Partnerships is delivered (the
"LP Release") releasing the Partnerships, Grand Court, its officers, directors,
employees, consultants and representatives from any and all claims arising from
the limited partners' transactions with Grand Court in connection only with the
Partnerships. The LP Release would not cover securities claims or otherwise by
virtue of the relief requested, any rights, claims and defenses under applicable
law against any third parties other than Grand Court, its subsidiaries, Triad
and its subsidiaries, and Capital and its subsidiaries, including any holders of
Bank Debt obligations. Similarly, the limited partners will reserve any claims
against any current or former directors' and officers' insurance policies as
maintained by Grand Court.
(v) All claims of the Partnerships and limited partners associated with the
syndicated senior living facilities, including administrative, constructive
trusts, priority and unsecured claims of any kind or nature, with the sole
exception of the Allowed Claim (hereinafter defined) shall be extinguished,
expunged and released.
(vi) The Purchase Note and related documents shall be amended at the Second
Closing so that a single investor note default will only permit the holder of
the Purchase Note to foreclose on that limited partner's partnership interest or
pursue other legal remedies against that investor rather than proceeds against
the respective Investor Partnership and foreclose on the interest in the Owning
Partnership.
(vii) No action or proceeding shall have been instituted or threatened for the
purpose or with the possible effect of enjoining or preventing the completion of
the transactions contemplated by the Second Closing or seeking damages on
account thereof.
The decision of Triad or Capital to complete the transactions contemplated by
the First Closing or the Second Closing without the satisfaction of any of the
preceding conditions shall not constitute a waiver of any representation,
warranty, covenant or indemnity of Grand Court contained herein.
7.2 Conditions to Obligations of Grand Court.
(a) Conditions to the First Closing. The obligations of Grand Court to complete
the transactions contemplated by the First Closing are subject to the
fulfillment of the following conditions:
(i) The representations and warranties of Triad and Capital contained in this
Agreement shall be true and correct at and as of the First Closing with the same
effect as though such representations and warranties had been made as of the
First Closing; all agreements to be performed hereunder by Triad and Capital at
or prior to the First Closing shall have been
<PAGE>
performed; and Grand Court shall have received a certificate, dated as of the
First Closing Date, signed by the President or Chief Executive Officer of each
of Triad and Capital to the foregoing effect.
(ii) No action or proceeding shall have been instituted or threatened by third
parties for the purpose or with the possible effect of enjoining or preventing
the completion of this Agreement or seeking damages on account thereof.
(iii) Each of Triad and Capital shall have delivered such good standing
certificates, officer's certificates, and similar documents and certificates as
Grand Court shall have reasonably requested prior to the Closing Date.
(iv) Triad and Capital shall have tendered the Sale Price subject to
establishment of the Escrow.
(v) The Bank Debt claims have been withdrawn.
(vi) The Bankruptcy Court shall have entered an Order limiting claims of the
Partnerships and the Limited Partners to $5,000,000.
(vii) The Consent shall have been obtained from a majority in interest of the
Limited partners of each Investing Partnership.
(vii) Entry of the Bankruptcy Order.
The decision of Grand Court to complete the transactions contemplated by the
First Closing without the satisfaction of any of the preceding conditions shall
not constitute a waiver of any representation, warranty, covenant or indemnity
of Triad or Capital contained herein.
ARTICLE 8
TERMINATION
8.1 Termination Before First Closing. This Agreement may be terminated prior to
the First Closing by (a) the mutual written consent of Grand Court and Triad and
Capital; (b) Triad and Capital, upon the failure of Grand Court to perform or
comply with any of its covenants contained herein prior to the First Closing or
if any representation or warranty of Grand Court hereunder shall not have been
true and correct in a material respect as of the time at which such was made or
becomes untrue thereafter; or (c) Grand Court, upon the failure of Triad or
Capital to perform or comply with any of its covenants contained herein prior to
the First Closing or if any representation or warranty of Triad or Capital shall
not have been true and correct in a material respect as of the time at which
such was made; or (d) either party, if the First Closing does not occur on or
prior to June 30, 2001, provided, that no party may terminate this Agreement
pursuant to (b), (c) or (d) of this paragraph if such party is, at the time of
any such attempted termination, in breach of any term hereof; or (e) Grand
Court, upon the Bankruptcy Court order that another offer is a higher and better
offer and the closing of that offer.
<PAGE>
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification of Triad and Capital. Grand Court agrees to indemnify and
hold harmless Triad and Capital, and each officer, director, employee, and
consultant of Triad and Capital (collectively, the "Indemnified Parties"), from
and against any and all damages, losses, claims, liabilities, demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for and
participating in any litigation or proceeding) (collectively, "Indemnified
Costs") which any of the Indemnified Parties may sustain, or to which any of the
Indemnified Parties may be subjected, arising directly and solely as a result of
a breach of a representation, warranty, covenant of this Agreement that causes
an Indemnified Cost in excess of $25,000. Capital and Triad acknowledge and
understand that Grand Court will be filing a Plan of Reorganization on or about
November 27, 2000 (the "Plan") and that the Plan will provide for the
distribution of all available funds to creditors. The Plan will also provide for
a discharge under 11 U.S.C. 1141 of all preconfirmation claims. Capital and
Triad covenant and agree not to the existence of the indemnification set forth
herein as cause to delay or deny confirmation of the Plan, nor distribution to
creditors. Capital and Triad further covenant and agree not to seek disgorgement
or any recovery for such a breach from creditors, employees, officers, directors
or professionals employed in the Grand Court Bankruptcy case to fund any
recovery on the indemnification. Any claim for indemnification pursuant to this
Section 9.1 shall expire the earlier of: (a) twelve (12) months after the First
Closing, or (b) confirmation of a plan or reorganization/liquidation in the
Grand Court bankruptcy case. Grand Court's indemnification obligations pursuant
to this Section 9.1 shall not exceed $2,000,000.
9.2 Indemnification of Grand Court. Triad and Capital separately (but not
jointly) agree to indemnify and hold harmless Grand Court and each officer,
director, employee, agent, and consultant of Grand Court (collectively, the
"Seller Indemnified Parties"), from and against any and all damages, losses,
claims, liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) which any of the
Seller Indemnified Parties may sustain, or to which any of the Seller
Indemnified Parties may be subjected, arising directly as a result of a breach
of the representations, warranties, covenants and agreements of this Agreement
by Triad or Capital that causes an Indemnified Cost in excess of $25,000. Any
claims for indemnification pursuant to this Section 9.2 must be made in writing
within twelve (12) months of the First Closing. Triad's and Capital's aggregate
indemnification obligations pursuant to this Section 9.2 shall not exceed
$2,000,000.
9.3 Defense of Third-Party Claims. An Indemnified Party or a Seller Indemnified
Party, as appropriate, shall give prompt written notice to any person who is
obligated to provide indemnification hereunder (an "Indemnifying Party") of the
commencement or assertion of any action, proceeding, demand, or claim by a third
party (collectively, a "third-party action") in respect of which such
Indemnified Party or Seller Indemnified Party shall seek indemnification
hereunder. Any failure so to notify an Indemnifying Party shall not relieve such
Indemnifying
<PAGE>
Party from any liability that it may have to such Indemnified Party or Seller
Indemnified Party under this Article 9 unless the failure to give such notice
materially and adversely prejudices such Indemnifying Party. The Indemnifying
Parties shall have the right to assume control of the defense of, settle, or
otherwise dispose of such third-party action on such terms as they deem
appropriate; provided, however, that:
(a) The Indemnified Party or Seller Indemnified Party shall be entitled, at his,
her, or its own expense, to participate in the defense of such third-party
action (provided, however, that the Indemnifying Parties shall pay the
attorneys' fees of the Indemnified Party if (i) the employment of separate
counsel shall have been authorized in writing by any such Indemnifying Party in
connection with the defense of such third-party action, (ii) the Indemnifying
Parties shall not have employed counsel reasonably satisfactory to the
Indemnified Party or Seller Indemnified Party to have charge of such third-party
action after 30 days notice, or (iii) the Indemnified Party's or Seller
Indemnified Party's counsel shall have advised the Indemnified Party or Seller
Indemnified Party in writing, with a copy to the Indemnifying Parties, that
there is a conflict of interest that could make it inappropriate under
applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Parties shall obtain the prior written approval, not to be
unreasonably withheld, of the Indemnified Party or Seller Indemnified Party
before entering into or making any settlement, compromise, admission, or
acknowledgement of the validity of such third-party action or any liability in
respect thereof if, pursuant to or as a result of such settlement, compromise,
admission, or acknowledgement, injunctive or other equitable relief would be
imposed against the Indemnified Party or Seller Indemnified Party or if, in the
opinion of the Indemnified Party, such settlement, compromise, admission, or
acknowledgement could have a material adverse effect on its business or, in the
case of an Indemnified Party who is a natural person, on his or her assets or
interests;
(c) No Indemnifying Party shall consent to the entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each Indemnified Party or Seller
Indemnified Party of a release from all liability in respect of such third-party
action; and
(d) The Indemnifying Parties shall not be entitled to control (but shall be
entitled to participate at their own expense in the defense of), and the
Indemnified Party or Seller Indemnified Party shall be entitled to have sole
control over, the defense or settlement, compromise, admission, or
acknowledgement of any third-party action (i) as to which the Indemnifying
Parties fail to assume the defense within a reasonable length of time, (ii) to
the extent the third-party action seeks an order, injunction, or other equitable
relief against the Indemnified Party or Seller Indemnified Party which, if
successful, would materially adversely affect the business, operations, assets,
or financial condition of the Indemnified Party; provided, however , that the
Indemnified Party or Seller Indemnified Party shall make no settlement,
compromise, admission, or acknowledgement which would give rise to liability on
the part of any Indemnifying Party without the prior written consent of the
Indemnifying Party (which consent will not be unreasonably withheld), or (iii)
to the extent that the Indemnified Party or Seller Indemnified Party reasonably
believes that the Indemnifying Party does not have adequate
<PAGE>
financial resources to provide or maintain the defense of any third-party
action, or satisfy any award or judgment that may result from any third-party
action.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 9 and, in connection
therewith, shall furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may be
reasonably requested.
9.4 Direct Claims. In any case in which an Indemnified Party or a Seller
Indemnified Party seeks indemnification hereunder which is not subject to
Section 9.3 hereof because no third-party action is involved, the Indemnified
Party or a Seller Indemnified Party shall notify the Indemnifying Parties in
writing of any Indemnified Costs which he, she, or it claims are subject to
indemnification under the terms hereof. The failure of the Indemnified Party or
a Seller Indemnified Party to exercise promptness in such notification shall not
amount to a waiver of such claim unless the resulting delay materially
prejudices the position of the Indemnifying Parties with respect to such claim.
9.5 Right of Offset. Without in any way limiting the remedies of any party
hereunder, the parties hereto expressly agree that Triad may offset against
amounts otherwise payable to Triad pursuant to the Escrow set forth in Section
5.11 hereof the amount of any indemnification obligation owed by Grand Court to
Triad pursuant to this Article 9. Prior to or contemporaneously with exercising
any right of offset hereunder, Triad shall notify Grand Court of such exercise
and of the specific grounds for such exercise.
ARTICLE 10
MISCELLANEOUS
10.1 Allocation of Sales Price. The parties hereto acknowledge that the
transactions contemplated hereby must be reported in accordance with Section
1060 of the Internal Revenue Code. Accordingly, the parties shall report the
transactions contemplated hereunder for all purposes in accordance with the
Purchase Price allocation set forth on Exhibit "K" hereto. The allocation of the
Sales Price set forth on Exhibit "K" shal not constitute any admission or
consent by Grand Court as to the value of the interests conveyed.
10.2 Survival of Representations. Warranties, and Covenants. Regardless of any
investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, all covenants, agreements,
indemnities, representations, and warranties made hereunder or pursuant hereto
or in connection with the transactions contemplated hereby shall survive the
Closing with respect to which such covenant, indemnity, representation or
warranty was made for a period of 12 months after that Closing.
10.3 No Third-Party Beneficiaries. Except for the Indemnified Parties not a
party to this Agreement, no person or entity not a party to this Agreement
(except permitted assigns) shall be deemed to be a third-party beneficiary
hereunder or entitled to any rights hereunder.
<PAGE>
10.4 Specific Performance. The parties hereto acknowledge and agree that,
without limiting any other remedy available to the parties hereto at law or in
equity, the parties hereto shall be able to specifically enforce the terms of
this Agreement.
10.5 Sales Taxes. The parties hereto expressly agree that Grand Court shall be
responsible for and shall pay all federal, state, or local taxes, if any,
arising by reason of or resulting from the sale of the GP Interests or
Management Rights contemplated hereby.
10.6 Expenses Each of the parties hereto shall pay its or his own respective
costs and expenses incurred in connection with this Agreement. However, Triad
and Capital shall be reimbursed up to $250,000 for third party costs by the
bankruptcy estate of Grand Court pursuant to the sale procedures approved under
the Section 363 Sale in the event Triad and Capital do not acquire the GP
Interests and Management Rights, other than due to their breach of this
Agreement.
10.7 Collateral Agreements, Amendments. and Waivers. This Agreement (together
with the documents delivered in connection herewith) supersedes all prior
documents, understandings, and agreements, oral or written, relating to this
transaction (including, without limitation, that certain Term Sheet dated
October 18, 2000, as amended), and constitutes the entire understanding among
the parties with respect to the subject matter hereof. Any modification or
amendment to, or waiver of, any provision of this Agreement (or any document
delivered in connection herewith unless otherwise expressly provided therein)
may be made only by an instrument in writing executed by the party against whom
enforcement thereof is sought.
10.8 Successors and Assigns. No rights or obligations of any party hereto under
this Agreement may be assigned except that either Triad or Capital may assign
its rights and obligations to any affiliate (as that term is defined in Rule 144
under the Securities Act of 1933, as amended) thereof. Any assignment in
violation of the foregoing shall be null and void. Subject to the preceding
sentences of this Section 10.8, the provisions of this Agreement (and, unless
otherwise expressly provided therein, of any document delivered pursuant to this
Agreement) shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors, and assigns.
10.9 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of such illegal, invalid, or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
10.10 Waiver. No failure or delay on the part of any party in exercising any
right, power, or privilege hereunder or under any of the documents delivered in
connection with this Agreement shall operate as a waiver of such right, power,
or privilege; nor shall any single or partial
<PAGE>
exercise of any such right, power, or privilege preclude any other or future
exercise thereof or the exercise of any other right, power, or privilege.
10.11 Notices. Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein, under any document
delivered in connection with this Agreement) shall be given in writing and shall
be deemed received (a) when personally delivered to the relevant party at such
party's address as set forth below, (b) upon receipt, if delivered by overnight
courier service or telefacsimile or similar device, or (c) if sent by mail, on
the third day following the date when deposited in the United States mail,
certified or registered mail, postage prepaid, to the relevant party at its or
his address indicated below:
If toTriad: Triad Senior Living Corporation
4312 Mockingbird Lane
Dallas, Texas 75205
Attn: Blake N. Fail, President
Phone (214) 697-2988
Fax (214) 520-2988
If to Capital: Capital Senior Living
14160 Dallas Parkway, Suite 300
Dallas, Texas 75240
Attn: Lawrence A. Cohen, CEO
Copy to: David R. Brickman, Esq.
Phone (972) 770-5600
Fax (972) 770-5666
If to Grand Court: Grand Court Lifestyles, Inc.
One Executive Drive, Suite 15
Fort Lee, New Jersey 07024
Attn: John Luciani, CEO and Keith G. Marlowe, Esq.
Phone (800) 331-1268
Fax (201) 947-6623
With a copy to: Sills, Cummis, Radin, Tischman, Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Andrew Sherman, Esq.
Phone (973) 643-7000
Fax (972) 643-6500
And a copy to: Wasserman, Jurista & Stolz
225 Millburn Avenue, Suite 207
P.O. Box 1029
Millburn, New Jersey 07041
Attn: Daniel M. Stolz, Esq.
Phone (973) 467-2700
<PAGE>
Fax (973) 467-8136
Each party may change its or her address for purposes of this Section 10.11 by
proper notice to the other parties, actually received by such parties.
10.12 Further Assurances. From time to time hereafter, (a) at the request of
Triad or Capital, but without further consideration, Grand Court shall execute
and deliver such other instruments of conveyance, assignment, transfer, and
delivery and take such other action as Triad or Capital may reasonably request
in order more effectively to complete the transactions contemplated hereby, and
(b) at the request of Grand Court, but without further consideration, Triad or
Capital shall execute and deliver such other certificates, statements, and
documents, and take such other action as Grand Court may reasonably request in
order to more effectively complete the transactions contemplated hereby.
10.13 Access to Records. Following the First Closing, Triad and Capital shall
give Grand Court access (and the right to make copies at the expense of Grand
Court) of the books and records that were acquired by Triad and Capital
hereunder and relate to the business of Grand Court prior to the First Closing.
Such access shall be given on reasonable prior written notice and conducrted in
a manner as not to unreasonably interfere with the operations of Triad and
Capital.
10.14 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
10.15 Headings. The headings, captions, and arrangements used in this Agreement
are, unless specified otherwise, for convenience only and shall not be deemed to
limit, amplify, or modify the terms of this Agreement or affect the meaning
hereof.
10.16 Sections: Exhibits. All references to "Articles," "Sections,"
"Subsections," "Schedules," "Annexes," and "Exhibits" herein are, unless
specifically indicated otherwise, references to articles, sections, subsections,
schedules, annexes, and exhibits of and to this Agreement. All schedules and
exhibits attached hereto are made a part hereof for all purposes, the same as
set forth herein verbatim, it being understood that if any exhibit attached
hereto which is to be executed and delivered contains blanks, the same shall be
completed correctly and in accordance with the terms and provisions contained
and as contemplated herein prior to or at the time of the execution and delivery
thereof.
10.17 Number and Reference of Words. Whenever herein the singular number is
used, the same shall include the plural where appropriate, and references to
persons of one sex shall be deemed to include references to persons of the other
sex where appropriate.
10.18 Multiple Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall constitute one agreement binding on all the.
parties notwithstanding that all the parties are not signatories to the original
or the same counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
Triad Senior Living, Inc.
By: ____________________________________
Blake N. Fail, President
Grand Court Lifestyles, Inc.
By: ____________________________________
John Luciani, CEO
Capital Senior Living - GC, Inc.
By: ____________________________________
Lawrence A. Cohen, CEO
The Official Committee of Unsecured
Creditors
Grand Court Lifestyles, Inc.
By: ____________________________________
Daniel M. Stolz
