PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT
(this
“Agreement”)
is
made and entered into this ____ day of October, 2006 by and between PITA
GENERAL CORPORATION,
an
Illinois corporation ( “PITA”)
and
AHC
TENANT, INC
a
Delaware Corporation (“Tenant”)
(PITA
and Tenant referred to collectively as “Seller”),
each
of the entities listed in Exhibit
A
attached
hereto (“Licensees”)
and
BREA
EMERITUS LLC,
a
Delaware limited liability company (the “Buyer”).
RECITALS
WHEREAS,
PITA is
the owner of fee title to the twenty five (25) healthcare facilities identified
on Exhibit
B
attached
hereto and made a part hereof as the “Facilities”
(each
being referred to herein individually as a “Facility”);
and
WHEREAS,
PITA leased
the Facilities to Tenant pursuant to a Master Lease dated July 16, 1999 (the
“Master
Lease”);
and
WHEREAS,
Tenant
has entered into Sublease Agreements (“Regulatory
Subleases”)
for
each of the Facilities with the Licensees listed on Exhibit
C attached
hereto and made part hereof, which entities have secured and maintained the
required licenses to operate the Facilities; and
WHEREAS,
the
Regulatory Subleases provide that, for income tax purposes, Tenant is the owner
of all assets of the Facilities; and
WHEREAS,
the
Regulatory Subleases terminate upon the termination of the Master Lease;
and
WHEREAS,
the
Licensees have entered into Consulting and Services Agreements (the
“C&S
Agreements”)
with
management companies (“Managers”)
listed
on Exhibit
D for
the
provision of designated services necessary for the operation of the Facilities;
and
WHEREAS,
Seller
desires to sell, transfer, convey and assign (and Licensees, by quitclaim
instrument, desire to sell, transfer, convey and assign) to Buyer, and Buyer
desires to acquire, assume and accept from Seller and Licensees (to the extent
of any interest Licensees may have therein), certain land, personal property
and
other assets associated with the Facilities (the “Sale
Assets,”
as
further defined herein) and assume the “Assumed
Obligations,”
as
further defined herein, to the extent of their respective interests in the
Sale
Assets and Assumed Obligations, on and subject to the terms and conditions
contained in this Agreement; and
WHEREAS,
simultaneous with the closing of the transactions contemplated by this
Agreement, Tenant, the Licensees and the Managers shall enter into and execute
one or more Operations Transfer Agreements (each a “Transfer
Agreement”)
with
Buyer, in the form of Exhibit
E
(subject
to any third party manager’s review and comment), pursuant to which Tenant, the
Licensees, and Managers shall transfer the operations of the Facilities, and
all
of their respective rights, titles and interests therein and thereto, to Buyer
or Buyer’s designee, and Buyer
shall
accept transfer of the operations of the Facilities
pursuant
to the terms of the Transfer Agreements; and
WHEREAS,
simultaneous with the closing of the transactions contemplated by this
Agreement, Seller and Licensees shall enter into and execute an Assignment
and
Assumption Agreement (the “Assignment
and Assumption Agreement”),
in
the form of Exhibit
F,
pursuant to which Seller and Licensees shall sell, transfer, convey, and assign
to Buyer and Buyer shall purchase, acquire, assume, and accept from Seller
and
Licensees, all of their respective right, title and interest in and to any
assets (to the extent transferable) associated with the Facilities that are
not
otherwise sold, transferred, conveyed, assumed, or assigned to Buyer and Buyer
shall assume and agree to pay the Assumed Obligations pursuant to the terms
hereof.
NOW,
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which are
acknowledged hereby, the parties hereto agree to incorporate the above recitals
into this Agreement as if fully rewritten herein and further agree as
follows:
1. Sale.
Seller
agrees to sell, convey, and assign (and Licensees, by quitclaim instrument,
agree to sell, convey and assign) to Buyer, and Buyer agrees to purchase from
Seller and Licensees, for the Purchase Price (as hereinafter defined), and
on
the terms and conditions set forth in this Agreement, the Sale Assets (and,
with
respect to the Licensees, any interest they may have therein). The Licensees
are
conveying their interest in all of the Sale Assets, to the extent that the
Licensees have any interest in the Sale Assets, as an accommodation to Buyer
to
eliminate any claim or allegation that Buyer is not obtaining title to the
Sale
Assets as provided for herein.
1.1. For
purposes of this Agreement, the term “Sale
Assets”
shall
be deemed to mean on a collective basis:
(a) The
Land.
The
parcels of land legally described on Exhibit
G
attached
hereto and made a part hereof, together with all rights, easements and interests
appurtenant thereto of Seller that run with the land including, but not limited
to, any streets or other public ways adjacent to the Land and any water or
mineral rights owned by Seller or Licensees (collectively, the “Land”)
subject to the Permitted Encumbrances set forth in Schedule
1.
(b) The
Improvements.
All
improvements located on the Land,
including, but not limited to, the Facilities, and all other structures,
systems, fixtures and utilities associated with, and utilized in, the ownership
and operation of the Facilities (all such improvements being collectively
referred to as the “Improvements”
and,
together with the Land, collectively referred to herein as the “Real
Property”).
(c) Personal
Property.
All
tangible personal property of
Seller
and Licensees (i) located
on or in the Real
Property or
(ii)
used in connection with the ownership, operation and
maintenance of the Facilities (the “Personal
Property”),
including, but not limited, to, all, if any, building materials, supplies,
hardware, and carpeting owned by Seller or Licensees and Seller’s and Licensees’
right, title and interest in and to any “Consumables”,
which
are hereby defined to be the inventory of
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food,
dietary supplies, medical supplies, floor stock, maintenance supplies, paper
goods, linens, laundry supplies and all other consumables, disposable items
used
in the operation of the Facilities as of the Closing (as defined herein), and
other inventory maintained in connection with Seller’s and Licensees’ ownership
and operation of the Facilities as of the Closing (the “Inventory”).
(d) Intangible
Personal Property.
Each
and all of the following items of intangible property owned by Seller or
Licensees and utilized in
connection with the ownership and operation of the Facilities (collectively,
the
“Intangibles”):
(i)
to the extent assignable or transferable, all
right, title and
interest
of
Seller and Licensees in
and to
each and every guaranty and warranty concerning the Improvements and the
Personal Property, including, without limitation, any roofing, air conditioning,
heating, elevator or other guaranty or warranty relating to the construction,
maintenance or replacement of the Improvements or any portion thereof;
(ii) all
right, title and
interest in
and to
all guaranties and warranties given to Seller or Licensees that have not expired
(either on a “claims made” or occurrence basis) in connection with the
operation, construction, improvement, alteration or repair of the Improvements;
(iii) to the extent assignable or transferable,
all
right, title and
the
interest of
Seller
or Licensees in, to and under all governmental permits, licenses,
authorizations, operating rights and approvals associated with the physical
construction of the Improvements (not including any permits, licenses,
authorizations or approvals associated with the operation of the Facilities
as
health care facilities or otherwise); (iv) to the extent assignable, the
telephone numbers of each of the Facilities; and
(v)
to
the extent assignable or transferable, all
right, title and
interest
of
Seller and Licensees in,
to
and under any certificate of need, operating rights from a governmental
authority related to the construction and/or operation of any Facility for
the
use of a specified number of beds in a skilled nursing facility and/or assisted
living facility, and any other activities carried on by Seller or Licensees
in
the Facilities, or alteration of any such Facility or modification of services
provided at such Facility.
Provided, however, the trade names and logos under which the Facilities have
been operated or used by Seller and Licensees in connection with the operation
of the Facilities are not part of the Sale Assets and all uses of them at the
Facilities shall cease upon the Closing.
(e) Business
Records.
To the
extent that Seller and Licensees have ownership, control or the right to obtain
copies thereof, all of the following maintained by, issued to or held by Seller
or Licensees or used in connection with the operation, maintenance and use
of
the Facilities: books and records relating to the Facilities or the operation
thereof, including, without limitation, files, invoices, forms, accounts,
correspondence, patient records, technical, accounting and procedural manuals,
employment records, actuarial studies, studies, reports or summaries relating
to
any environmental matters, and other books and records relating to the
ownership, maintenance or operation of any of the Facilities or any of the
Sale
Assets, surveys, engineering or environmental reports and other studies,
investigations or depictions of the Facilities or the Sale Assets (collectively,
the “Business
Records”)
to the
extent Seller or Licensees have the right under applicable law to convey or
transfer them.
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(f) Provider
Agreements.
All
Provider Agreements and for purposes of this Agreement, the term “Provider
Agreements”
shall
mean, to the extent they are assignable, any provider agreements held by or
issued to Seller or Licensees or any Facility under which the Facilities are
eligible to receive payment under (i) Title XVIII (“Medicare”),
Title
XIX (“Medicaid”)
or any
other governmental or quasi-governmental third party payor programs, (ii) any
private or quasi-private healthcare reimbursement or private payor programs
(including so-called “HMO” and “PPO” programs) (herein, “Third
Party Payor Programs”),
and
(iii) any other agreement, arrangement, program or understanding with any
federal, state or local governmental agency or organization or private
organization pursuant to which the Facilities qualify for payment or
reimbursement for medical or therapeutic care or other goods or services
rendered or supplied to any resident. Notwithstanding the above, the parties
hereby acknowledge that Buyer intends to apply for its own Medicare and Medicaid
provider numbers and, unless it notifies Seller and Licensees at least thirty
(30) days prior to the Closing Date, the Buyer will not assume any of the
Seller’s and Licensees’ Medicare and Medicaid Provider Agreements.
(g) Facility
and Admission Agreements.
All
rights of Seller or Licensees in, to and under all contracts, leases,
agreements, vehicle leases, commitments and other arrangements, and any
amendments or modifications, used or useful in the operation of the Facilities
as of the date hereof or made or entered into by Seller or Licensees between
the
date hereof and the Closing Date in compliance with this Agreement (the
“Facility
Agreements”),
including but not limited to occupancy, residency, lease, tenancy and similar
written agreements entered into in the ordinary course of the Business with
residents of the Facilities (“Admission
Agreements”).
1.2. Excluded
Sale Assets.
Notwithstanding
any provision of this Agreement to the contrary, the Sale Assets shall not
include the following (collectively, the “Excluded
Assets”),
and
any such Excluded Assets or proceeds therefrom that Buyer may have or obtain
post-Closing shall be delivered promptly to Seller and Licensees:
(a) Any
and
all rights in and to claims or causes of action of Seller and Licensees against
third parties (including, without limitation, for indemnification) with respect
to, or which are made under or pursuant to, other Excluded Assets;
(b) Any
and
all accounts receivable arising or accruing in connection with the operation
of
the Facilities on or prior to the Closing Date and to the extent related to
the
period prior to the Closing Date (the “Retained
Receivables”);
(c) Subject
to Article 11,
any and
all rights of Seller or Licensees to coverage or benefits under any insurance
policies in force as of the Closing Date with respect to any liabilities that
may have arisen or accrued through the Closing Date;
(d) Any
Inventory disposed of or consumed between the date hereof and the Closing Date
in accordance with the terms and provisions of this Agreement;
4
(e) Any
records relating to Excluded Assets and to liabilities
other
than the Assumed Obligations;
(f) Any
and
all cash, bank deposits and other cash equivalents, certificates of deposit,
marketable securities and cash deposits made by Seller or Licensees to secure
contract obligations accrued through the Closing Date;
(g) Personal
property of Seller’s, the Licensees’ or the Managers’ officers or employees
located in their respective personal offices at the Facilities;
(h) Originals
of all financial and other records of Seller and Licensees (except records
related to operation of the Facilities or to residents of the
Facilities);
(i) All
other
assets of Seller and Licensees not located on or used in connection with the
operation of the Facilities;
(j) All
trade
names, assumed names and logos under which any of the Facilities has been
operated or used by Seller or Licensees in connection with the operation of
any
of the Facilities;
and
(k) All
operating procedure manuals, training manuals and proprietary business forms
of
Seller and Licensees.
1.3. Assumption
of Obligations.
Buyer
shall,
at
Closing, assume any
and
all responsibilities, liabilities and obligations of Seller and Licensees to
pay, discharge and perform when due all liabilities and obligations of Seller
or
Licensees or Managers arising under the Facility Agreements that accrue or
arise
after Closing (collectively, the “Assumed
Obligations”).
The
Assumed Obligations shall be prorated as of the Closing Date in accordance
with
Article 10.
The
parties hereby acknowledge that Buyer is not assuming any obligations or
liabilities of Seller, Licensees or Managers that arose or accrued prior to
the
Closing Date except as specifically set forth herein.
2. Purchase
Price.
2.1. Payment
of Purchase Price.
(a) The
total
purchase price for the Sale Assets (the “Purchase
Price”)
to be
paid to Seller by Buyer shall be equal to the sum of One Hundred Ninety Million
and no/100 Dollars ($190,000,000). It is expressly agreed and acknowledged
that
no portion of the Purchase Price shall be paid or payable to the Licensees
or
Managers.
(b) Buyer
will pay the Purchase Price by (a) depositing, within one (1) business day
of
Buyer’s receipt of a fully executed copy of this Agreement, Fifteen Million and
no/100 Dollars ($15,000,000) (together with any accrued interest thereon, the
“Deposit”)
with
Chicago Title Insurance Company (the
“Escrow
Agent”)
pursuant to the terms of the escrow agreement dated the date hereof between
the
Escrow Agent, Buyer and Seller and Licensees (the “Escrow
Agreement”)
and
(b) paying the balance of the
5
Purchase
Price at Closing by electronic wire transfer of immediately available funds
to
the Escrow Agent for disbursement to Seller in accordance with this Agreement.
(c) Subject
to Article 7,
the
entire Deposit is non-refundable and will be released from escrow and disbursed
by the Escrow Agent to Seller either (i) at Closing as payment of a portion
of
the Purchase Price or (ii) upon termination of this Agreement.
2.2. Allocation
of the Purchase Price.
The
Purchase Price shall be allocated among each of the Facilities in accordance
with Schedule 2.
Seller
and Buyer agree that the form of the transactions and the consideration provided
for in this Agreement were arrived at on the basis of arm’s length negotiation
between Seller and Licensees and Buyer, and shall be respected by each of them
for federal, state, local and other tax reporting purposes, including filings
on
Internal Revenue Service Form 8594, and that neither of them will assert or
maintain a position inconsistent with the forgoing. The Buyer and Seller and
Licensees hereby agree and acknowledge that no portion of the Purchase Price
is
allocable to the Licensees or the Manager.
3. Closing.
The
consummation of the purchase and sale of the Sale Assets contemplated herein
(“Closing”)
shall
occur at 3:00 p.m. Central time on December 1, 2006 (or December 15, 2006,
if
Buyer elects to change the Closing Date in accordance with Section 3.3),
at the
offices of the Escrow Agent, or at such other time or place or on such other
date as is mutually agreed to by the parties (the “Closing
Date”).
3.1. BUYER
ACKNOWLEDGEMENT. BUYER
ACKNOWLEDGES AND AGREES THAT BUYER IS ACQUIRING THE SALE ASSETS ON AN “AS-IS
WHERE-IS” BASIS AND ASSUMING THE ASSUMED OBLIGATIONS, WITHOUT REPRESENTATION,
WARRANTY OR COVENANT (EXPRESS OR IMPLIED OTHER THAN THE EXPRESS REPRESENTATIONS
CONTAINED IN THIS AGREEMENT) BY SELLER OR LICENSEE AND IN EACH CASE SUBJECT
ONLY
TO PERMITTED ENCUMBRANCES. SELLER AND LICENSEE HAVE NOT MADE NOR SHALL BE DEEMED
TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED OTHER
THAN THE EXPRESS REPRESENTATIONS CONTAINED IN THIS AGREEMENT) OR SHALL BE DEEMED
TO HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, HABITABILITY, USE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE SALE ASSETS (OR
ANY
PART THEREOF), THE ASSUMED OBLIGATIONS, OR ANY OTHER REPRESENTATION, WARRANTY
OR
COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SALE ASSETS (OR
ANY
PART THEREOF), OTHER THAN THE EXPRESS REPRESENTATIONS CONTAINED IN THIS
AGREEMENT, ANY USE OF THE SALE ASSETS, ANY BUSINESS OR BUSINESSES CONDUCTED
THEREIN, THE VALUE OR FINANCIAL STATUS OF THE SALE ASSETS OR THE FACILITIES,
AND
SELLER AND LICENSEE SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREON OR THE FAILURE OF THE SALE ASSETS, OR ANY PART THEREOF, TO COMPLY WITH
ANY LEGAL REQUIREMENT FROM AND AFTER THE CLOSING DATE. BUYER HAS OR PRIOR TO
THE
DATE HEREOF WILL HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT THE SALE ASSETS,
ASSUMED OBLIGATIONS, AND ANY AND ALL BUSINESSES OR OPERATIONS CONDUCTED THEREIN.
IT IS UNDERSTOOD AND AGREED THAT BUYER IS PURCHASING THE SALE ASSETS AND
ASSUMING THE
6
ASSUMED
OBLIGATIONS AS SPECIFICALLY SET FORTH IN THIS AGREEMENT. SELLER AND LICENSEES
HAVE MADE NO REPRESENTATIONS AND WARRANTIES AND SHALL MAKE NO REPRESENTATIONS
AND WARRANTIES WITH RESPECT TO ANY OF THE BUSINESSES OR OPERATIONS CONDUCTED
IN
THE SALE ASSETS, OTHER THAN THE EXPRESS REPRESENTATIONS CONTAINED IN THIS
AGREEMENT. BUYER REPRESENTS AND WARRANTS TO SELLER AND LICENSEES, WITHOUT ANY
LIMITATION WHATSOEVER, THAT IT IS ENTERING INTO THIS AGREEMENT SOLELY ON THE
BASIS OF THE RESULTS OF BUYER’S OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE
MATTERS DESCRIBED IN THIS SECTION 3.1,
AS
BETWEEN SELLER AND LICENSEES ON THE ONE HAND, AND BUYER, ON THE OTHER HAND,
ARE
TO BE BORNE BY BUYER.
3.2. Consent
Condition.
Seller
and Licensees acknowledge and agree that Buyer’s obligation to purchase the Sale
Assets in accordance with the terms specified in this Agreement is subject
to
obtaining the consent of ZC Specialty Insurance Company (the “Surety”),
which
has issued a financial surety bond with respect to certain secured indebtedness
that encumbers the Sale Assets (the “Secured
Debt”),
which
consent Seller and Licensees represent and warrant, has been obtained on or
before the date of this Agreement.
3.3. Licensure.
Buyer
shall be responsible for filing and obtaining all requisite Operator Licenses
(as hereinafter defined) attributable to the change of ownership and operation
of the Facilities and Buyer shall file, on or before October 16, 2006, all
applications that Buyer reasonably believes are required to obtain the Operator
Licenses. Obtaining all Operator Licenses necessary in Buyer’s reasonable
opinion to operate the Facilities as of the Closing Date shall not be a
condition precedent to the sale and assumption as set out herein.
Buyer
hereby agrees to use commercially reasonable efforts to obtain such Operator
Licenses in an expeditious manner. However, if Buyer is unable, despite
commercially reasonable efforts to comply with applicable agency requirements
that may be completed pre-Closing, so as to assure Buyer that its license will
be issued promptly after Closing, then the applicable Licensee and Buyer shall
enter into a (i) Sale and Leaseback Agreement or (ii) Transition Services
Agreement, as appropriate to facilitate any necessary regulatory approvals,
for
each Facility located in a state where licensing may not occur promptly after
Closing. Subject to such minor and non-material economic changes as may be
appropriate for each particular circumstance and as may be required by
applicable regulatory authorities, the (i) Transition Services Agreement and
(ii) Sale and Leaseback Agreement shall be substantially in the forms attached
hereto as Exhibit
U
(“Sale
and Leaseback Agreement”)
and
Exhibit
V
(“Transition
Services Agreement”) respectively.
Notwithstanding anything contained herein to the contrary, in the event that
Buyer, despite using commercially reasonable efforts, has not, on or before
November 27, 2006, obtained Operator Licenses or satisfied all conditions
necessary to obtain reasonable assurances from the applicable regulatory
authorities that it will obtain Operator Licenses promptly after Closing and
satisfaction or completion of customary post closing matters associated with
obtaining such Operator Licenses as reasonably determined by Buyer, for at
least
sixteen (16) of the Facilities, then Buyer, in its sole discretion, may elect
to
change the Closing Date to December 15, 2006. For the avoidance of doubt,
delivering a copy of the executed deed to the appropriate regulatory authority
and/or a survey of a Facility by the requisite regulatory authority are examples
of customary post closing matters. Buyer shall provide Seller and Licensees
with
notice that it is exercising its option to change the Closing Date on or before
11:59 p.m. Central time, November 27, 2006.
The
immediately preceding sentence
7
and
the
making of such election does not relieve Buyer of its obligation to close or
give rise to any right to terminate this Agreement.
3.4. Westlake
Facility Closing.
The
parties hereby acknowledge that the real property upon which the Cypress Gardens
at Westlake in Westlake, Ohio (“Westlake
Facility”)
is
located (“Westlake
Property”)
is
subject to that certain (i) Commissioner’s Deed dated February 28, 1995, and
(ii) Foreclosure Sale Use Agreement dated February 28, 1995, as amended by
that
certain Amendment to Commissioner’s Deed and Foreclosure Sale Use Agreement
dated June 30, 1999 (collectively, “HUD
Agreement”).
The
HUD Agreement provides, among other things, that the Westlake Property may
not
be transferred without the prior written approval of the Department of Housing
and Urban Development (“HUD”).
In
order to obtain HUD’s approval, the Buyer must obtain a “2530 Clearance” from
HUD and submit (i) a written request to HUD to approve the sale, (ii) a copy
of
the HUD Agreement, and (iii) a copy of the Operator License in the name of
the
Buyer or, if the application for the Operator License is pending, then a copy
of
the applicable application, together with a statement from the State of Ohio
licensing agency that the Buyer is authorized to operate the Westlake Facility
under the existing Operator License pending issuance to Buyer of its Operator
License (collectively, “HUD
Conditions”).
Buyer
hereby agrees to diligently pursue in good faith the satisfaction of the HUD
Conditions and Seller and Licensee hereby agree to cooperate and work with
Buyer
in good faith to satisfy the HUD Conditions until Buyer obtains HUD approval
or
provides Seller with a Westlake Termination Notice, as defined hereinafter
below. However, in the event that Buyer, despite good faith efforts, has not
satisfied the HUD Conditions and obtained HUD approval on or before the Closing
Date, then, notwithstanding anything contained in this Agreement to the
contrary, the Sale Assets and Assumed Obligations associated with or related
to
the Westlake Facility (collectively, “Westlake
Facility Assets”)
shall
be excluded from the Closing.
In
such
event, (i) the Purchase Price shall be reduced by the amount of the Purchase
Price allocated to the Westlake Facility Assets (“Westlake
Facility Price”)
in
Schedule 2, (ii) the amount of the Deposit that may be applied against the
reduced Purchase Price at Closing shall be an amount equal to the Deposit less
a
proportionate share of the Deposit allocable to the Westlake Facility Assets
(“Westlake
Facility Deposit”)
and
(iii) the Westlake Facility Deposit shall be held in escrow as more particularly
described in the Escrow Agreement. In addition, at Closing, Buyer, or its
designee, and Westlake Senior Care, LLC shall enter into a management agreement
on such reasonable terms and conditions as are to be agreed by the parties
pursuant to which Buyer or its designee shall operate and manage the Westlake
Facility on an interim basis (the “Westlake
Management Agreement”).
Further, at the Westlake Facility Closing (as hereinafter defined), the parties
shall make the prorations and adjustments provided in Article 10
with
respect to the Westlake Facility Assets.
The
closing with respect to the Westlake Facility Assets (“Westlake
Facility Closing”)
shall
be extended until the fifth business day after the date that Buyer obtains
HUD
approval (“Westlake
Facility Closing Date”).
The
purchase price for the Westlake Facility Assets shall be equal to the Westlake
Facility Price and shall be paid to Seller at the Westlake Facility Closing
in
the manner provided in Section 2.1.
The
parties shall provide the applicable closing deliveries at the Westlake Facility
Closing in accordance with the terms and conditions of this Agreement. The
representations and warranties made by Sellers, Licensees and Buyers in this
8
Agreement
with respect to (i) the Westlake Facility Assets and (ii) the authority to
consummate the Westlake Facility Closing shall be true in all material respects
as of the Westlake Facility Closing Date. Sellers, Licensees and Buyers shall
continue to comply with the interim operating covenants and other pre-closing
agreements contained herein with respect to the Westlake Facility until the
Westlake Facility Closing Date. Closing expenses with respect to the Westlake
Facility Closing shall be allocated between the parties as provided in Article
13.
If the
Westlake Facility Closing does not occur solely due to Buyer’s default under
this Agreement, Seller shall be entitled to retain the Westlake Facility
Deposit, which shall not be considered liquidated damages pursuant to Section
7.4 hereof, and Seller shall have such additional remedies as are available
at
law or in equity.
Notwithstanding
anything contained herein to the contrary, in the event that Buyer has not
obtained HUD approval within one hundred twenty (120) days after the Closing
Date, then Buyer may, in its sole discretion, at anytime thereafter until it
receives HUD approval provide Seller and Licensees with notice that it no longer
desires to purchase the Westlake Facility Assets (“Westlake
Termination Notice”)
and
the balance of the Deposit shall be promptly returned to Buyer in accordance
with the terms and conditions of the Escrow Agreement; provided, that Buyer
or
its designee shall continue to operate and manage the Westlake Facility pursuant
to the terms of the Westlake Management Agreement until the Westlake Facility
is
sold to a third party. In such event, Seller will use good faith efforts to
sell
the Westlake Facility as promptly as practicable; provided, that Sellers shall
not be obligated to sell the Westlake Facility for an amount that is less than
the Westlake Facility Price.
3.5. California
Facilities.
The
parties hereby acknowledge that the Manager (“California
Manager”)
for
the Facilities located in California (“California
Facilities”)
is
named in the applicable Operator License for each such California Facility.
Accordingly, such California Manager must be a party to any Sale and Leaseback
Agreement or Transition Services Agreement described in Section 3.3 with respect
to any California Facility. In the event that the California Manager refuses
to
sign any such agreement and enter into a reasonable management agreement, Buyer,
in its sole discretion, upon notice to Seller and Licensees may elect to delay
Closing with respect to the Sale Assets and Assumed Obligations associated
with
or related to the California Facilities (collectively, “California
Facility Assets”)
until
such time as Buyer has obtained the Operator Licenses (“California
Operator Licenses”)
for
the California Facilities (“Delayed
California Closing”).
In
the
event of a Delayed California Closing, (i) the Purchase Price shall be reduced
by the amount of the Purchase Price allocated to the California Facility Assets
(“California
Facility Price”)
in
Schedule 2, (ii) the amount of the Deposit that may be applied against the
reduced Purchase Price at Closing shall be an amount equal to the Deposit less
a
proportionate share of the Deposit allocable to the California Facility Assets
(“California
Facility Deposit”)
and
(iii) the California Facility Deposit shall be held in escrow as more
particularly described in the Escrow Agreement. In addition, at the California
Facility Closing (as hereinafter defined), the parties shall make the prorations
and adjustments provided in Article 10
with
respect to the California Facility Assets.
The
closing with respect to the California Facility Assets (“California
Facility Closing”)
shall
be extended until the fifth business day after the date that Buyer obtains
the
9
California
Operator Licenses (“California
Facility Closing Date”).
The
purchase price for the California Facility Assets shall be equal to the
California Facility Price and shall be paid to Seller at the California Facility
Closing in the manner provided in Section 2.1.
The
parties shall provide the applicable closing deliveries at the California
Facility Closing in accordance with the terms and conditions of this Agreement.
The representations and warranties made by Sellers, Licensees and Buyers in
this
Agreement with respect to (i) the California Facility Assets and (ii) the
authority to consummate the California Facility Closing shall be true in all
material respects as of the California Facility Closing Date. Sellers, Licensees
and Buyers shall continue to comply with the interim operating covenants and
other pre-closing agreements contained herein with respect to the California
Facilities until the California Facility Closing Date. Closing expenses with
respect to the California Facility Closing shall be allocated between the
parties as provided in Article 13.
If the
California Facility Closing does not occur solely due to Buyer’s default under
this Agreement, Seller shall be entitled to retain the California Facility
Deposit, which shall not be considered liquidated damages pursuant to Section
7.4 hereof, and Seller shall have such additional remedies as are available
at
law or in equity.
3.6. Kansas
Facility.
The
parties hereby acknowledge that the Manager (“Kansas
Manager”)
for
the Facility located in Overland Park, Kansas (“Kansas
Facility”)
is
named in the applicable Operator Licenses for the Kansas Facility. Accordingly,
the Kansas Manager must be a party to any Sale and Leaseback Agreement or
Transition Services Agreement described in Section 3.3 with respect to Kansas
Facility. In the event that the Kansas Manager refuses to sign any such
agreement, Buyer, in its sole discretion, upon notice to Seller and Licensees
may elect to either (i) retain the Kansas Manager to manage the Kansas Facility
for a period of time post-Closing until the applicable Operator Licenses have
been obtained, or (ii) delay Closing with respect to the Sale Assets and Assumed
Obligations associated with or related to the Kansas Facility (“Kansas
Facility Assets”)
until
such time as Buyer has obtained the Operator Licenses (“Kansas
Operator Licenses”)
for
the Kansas Facility (“Delayed
Kansas Closing”).
Further, in the event that a Sale and Leaseback Agreement or Transition Services
Agreement described in Section 3.3 is found to be impermissible under applicable
regulatory requirements, then Buyer, in its sole discretion, upon notice to
Seller and Licensees may elect to have a Delayed Kansas Closing.
In
the
event of a Delayed Kansas Closing, (i) the Purchase Price shall be reduced
by
the amount of the Purchase Price allocated to the Kansas Facility Assets
(“Kansas
Facility Price”)
in
Schedule 2, (ii) the amount of the Deposit that may be applied against the
reduced Purchase Price at Closing shall be an amount equal to the Deposit less
a
proportionate share of the Deposit allocable to the Kansas Facility Assets
(“Kansas
Facility Deposit”)
and
(iii) the Kansas Facility Deposit shall be held in escrow as more particularly
described in the Escrow Agreement. In addition, at the Kansas Facility Closing
(as hereinafter defined), the parties shall make the prorations and adjustments
provided in Article 10
with
respect to the Kansas Facility Assets.
The
closing with respect to the Kansas Facility Assets (“Kansas
Facility Closing”)
shall
be extended until the fifth business day after the date that Buyer obtains
the
Kansas Operator Licenses (“Kansas
Facility Closing Date”).
The
purchase price for the Kansas Facility Assets shall be equal to the Kansas
Facility Price and shall be paid to Seller at the Kansas Facility Closing in
the
manner provided in Section 2.1.
The
parties shall provide the applicable closing deliveries at the Kansas Facility
Closing in accordance with the terms and conditions of this
10
Agreement.
The representations and warranties made by Sellers, Licensees and Buyers in
this
Agreement with respect to (i) the Kansas Facility Assets and (ii) the authority
to consummate the Kansas Facility Closing shall be true in all material respects
as of the Kansas Facility Closing Date. Sellers, Licensees and Buyers shall
continue to comply with the interim operating covenants and other pre-closing
agreements contained herein with respect to the Kansas Facility until the Kansas
Facility Closing Date. Closing expenses with respect to the Kansas Facility
Closing shall be allocated between the parties as provided in Article
13.
If the
Kansas Facility Closing does not occur solely due to Buyer’s default under this
Agreement, Seller shall be entitled to retain the Kansas Facility Deposit,
which
shall not be considered liquidated damages pursuant to Section 7.4 hereof,
and
Seller shall have such additional remedies as are available at law or in
equity.
3.7. Colorado
Facilities.
In the
event that a Sale and Leaseback Agreement or Transition Services Agreement
described in Section 3.3 is found to be impermissible under applicable
regulatory requirements, then Buyer, in its sole discretion, upon notice to
Seller and Licensees, may elect to delay the Closing (“Delayed
Colorado Closing”)
with
respect to the Sale Assets and Assumed Obligations (“Colorado
Facility Assets”)
associated with or related to the Facilities located in the State of Colorado
(“Colorado
Facilities”).
In
the
event of a Delayed Colorado Closing, (i) the Purchase Price shall be reduced
by
the amount of the Purchase Price allocated to the Colorado Facility Assets
(“Colorado
Facility Price”)
in
Schedule 2, (ii) the amount of the Deposit that may be applied against the
reduced Purchase Price at Closing shall be an amount equal to the Deposit less
a
proportionate share of the Deposit allocable to the Colorado Facility Assets
(“Colorado
Facility Deposit”)
and
(iii) the Colorado Facility Deposit shall be held in escrow as more particularly
described in the Escrow Agreement. In addition, at the Colorado Facility Closing
(as hereinafter defined), the parties shall make the prorations and adjustments
provided in Article 10
with
respect to the Colorado Facility Assets.
The
closing with respect to the Colorado Facility Assets (“Colorado
Facility Closing”)
shall
be extended until the fifth business day after the date that Buyer obtains
the
Colorado Operator Licenses (“Colorado
Facility Closing Date”).
The
purchase price for the Colorado Facility Assets shall be equal to the Colorado
Facility Price and shall be paid to Seller at the Colorado Facility Closing
in
the manner provided in Section 2.1.
The
parties shall provide the applicable closing deliveries at the Colorado Facility
Closing in accordance with the terms and conditions of this Agreement. The
representations and warranties made by Sellers, Licensees and Buyers in this
Agreement with respect to (i) the Colorado Facility Assets and (ii) the
authority to consummate the Colorado Facility Closing shall be true in all
material respects as of the Colorado Facility Closing Date. Sellers, Licensees
and Buyers shall continue to comply with the interim operating covenants and
other pre-closing agreements contained herein with respect to the Colorado
Facility until the Colorado Facility Closing Date. Closing expenses with respect
to the Colorado Facility Closing shall be allocated between the parties as
provided in Article 13.
If the
Colorado Facility Closing does not occur solely due to Buyer’s default under
this Agreement, Seller shall be entitled to retain the Colorado Facility
Deposit, which shall not be considered liquidated damages pursuant to Section
7.4 hereof, and Seller shall have such additional remedies as are available
at
law or in equity.
11
4. Seller’s
and Licensees’ Representations and Warranties.
Seller
and Licensees represent, warrant and covenant to Buyer that the following
matters are true as of the date hereof and shall be true in all material
respects as of the Closing Date:
4.1. Ownership.
PITA is
the owner, in fee simple, of the Real
Property,
and
together with Tenant and Licensees, has good and marketable title to the
remainder of the Sale Assets, subject only to the Permitted Encumbrances.
4.2. Status.
PITA is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois and Tenant is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each Licensee is a limited liability company duly organized and validly existing
and in good standing under the laws of the State of Indiana as set forth in
Exhibit
A.
PITA,
Tenant and the Licensees are duly qualified to do business as a foreign
corporation or limited liability company in the states in which the Facilities
are located.
4.3. Authority.
The
execution and delivery of this Agreement and all documents to be executed by
it
pursuant to this Agreement by Seller and/or Licensees, and the performance
of
this Agreement and all documents to be executed by it pursuant to this Agreement
by Seller and/or Licensees, have been duly authorized by Seller and/or
Licensees, and this Agreement is binding on Seller and Licensees and enforceable
against Seller and Licensees in accordance with its terms except as
enforceability may be restricted, limited or delayed by applicable bankruptcy
or
other laws affecting creditors’ rights generally and except as enforceability
may be subject to general principles of equity. The execution of this Agreement
and the consummation of the transactions contemplated in this Agreement do
not
and will not result in a breach of the terms and conditions of, nor constitute
a
default under or violation of, Seller’s or Licensees’ articles of incorporation,
bylaws or any law, regulation, court order, or any mortgage, note, bond,
indenture, agreement, license or other instrument or obligation to which Seller
or Licensees are now a party or by which any of portion of the Sale Assets
may
be bound or affected and that is material to Seller’s and Licensees’ business.
At the Closing, the Seller and Licensees shall cause the Secured Debt to be
prepaid in full and all liens and security interests encumbering any of the
Sale
Assets and securing the Secured Debt shall be released and discharged in
full.
4.4. Notices
of Violations.
Except
as set forth on Exhibit
H,
since
April 1, 2003, and except as set forth on Exhibit
H to
Seller’s and Licensees’ knowledge prior to April 1, 2003, Seller and Licensees
have not received any written notices, orders, demands or other directives
from
any governmental authorities or quasi-governmental authorities or their agents
and contractors pertaining to any uncured material violations of any applicable
laws, ordinances, rules, regulations, codes, licenses, permits and
authorizations pertaining to the operation of the Facilities, including but
not
limited to all applicable federal and state health
care laws, rules and regulations, including, without limitation those relating
to the payment or receipt of illegal remuneration, including 42 U.S.C.
§ 1320a-7b(b) (the Medicare/Medicaid anti-kickback statute), 42 U.S.C.
§ 1395nn (the Xxxxx Statute), 42 U.S.C. § 1320a-7a, 42 U.S.C.
§ 1320a-7b(a), 42 U.S.C. § 1320a-7b(c), and applicable state
anti-kickback laws.
Notwithstanding
anything herein to the contrary, Seller shall be responsible for any
(i) fines
or
penalties relating to periods prior to Closing or (ii) post-Closing capital
expenditures in excess of $2,500, that are required solely in
12
connection
with the OSHA inspection of September 26, 2006 - October 3, 2006 of the Facility
located in Denver, Colorado, as disclosed in Exhibit H hereto.
4.5. Litigation.
To
Seller’s and Licensees’ knowledge, and except as disclosed on Exhibit
I
attached
hereto and made a part hereof, there are no pending or currently threatened
in
writing, judicial, municipal or administrative proceedings affecting the Sale
Assets or in which Seller or Licensees are parties by reason of Seller’s or
Licensees’ ownership of the Sale Assets or any portion thereof in each case
other than those that could not reasonably be expected to have a material effect
on Seller and Licensees or the Facilities, nor that will have any material
effect on the Facilities from and after the Closing Date.
4.6. Operator
Licenses and Provider Agreements.
Except
as disclosed in Exhibit
H,
the
Licenses have been issued, and, to Seller’s and Licensees’ knowledge, are in
good standing with respect to, any and all permits, licenses, regulatory
approvals, approvals, certificates of need, accreditations and comparable
authorizations (collectively, “Operator
Licenses”)
from
all applicable governmental and quasi-governmental authorities that have
jurisdiction over any aspect of the Facilities or over the operation thereof)
necessary for the use, operation and maintenance of the applicable Facility
in
the current use and the conduct of Seller’s and Licensees’ business therein. The
Licensees have obtained and, to Seller’s and Licensees’ knowledge, are in good
standing with respect to any and all material Provider Agreements under which
the Seller or Licensees and/or the applicable Facility is entitled to receive
payment or reimbursement under Medicare, Medicaid or any Third Party Payor
Programs.
To the
best knowledge of Seller and Licensees all Operator Licenses and Provider
Agreements are in full force and effect and Seller and Licensees have complied
with such Agreements in all material respects.
4.7. No
Reimbursement Audits or Appeals.
To
Seller’s and Licensees’ knowledge, there are no current, pending or outstanding
Medicaid, Medicare or other Third Party Payor Programs’ investigations, audits
or appeals pending at the Facilities other than those, if any, identified on
Exhibit
J
attached
hereto.
4.8. Cost
Reports.
Except
as set forth in Exhibit
K,
any and
all Medicare cost reports for all applicable Facilities that were due after
April 1, 2003, and to Seller’s and Licensees’ knowledge prior to April 1, 2003,
have been filed with the appropriate government agency or contractor by the
required filing date. Except as indicated on Exhibit
K,
to the
Seller’s and Licensees’ knowledge there have been no determined overpayments
between Seller and Licensees, on the one hand, and any Medicare fiscal
intermediary, on the other hand, regarding the filed cost reports of a Facility
other than with respect to adjustments thereto made in the ordinary course
of
business.
4.9. Penalties
or Exclusion from Government Programs.
Since
April 1, 2003, and to Seller’s and Licensees’ knowledge prior thereto, neither
Seller or Licensees nor any senior management, officers or directors have been
(i) excluded from participating in any federal health care program (as defined
in 42 U.S.C. §1320a-7b (f)), (ii) subject to sanction pursuant to 42 U.S.C.
§1320a-7a or 1320a-8, or (iii) convicted of a crime described at 42 U.S.C.
§1320a-7b.
4.10. Compliance
Program.
Except
as set forth in Exhibit
L,
(a)
Seller and Licensees are not a party to a Corporate Integrity Agreement with
the
Office of Inspector General of the
13
Department
of Health and Human Services, and (b) Seller and Licensees have no ongoing
reporting obligations pursuant to any settlement agreement entered into with
any
governmental authority.
4.11. United
States Person.
PITA,
Tenant and each Licensee are each a “United States Person” within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended.
4.12. Taxes
and Tax Returns.
Seller
and Licensees have taken any and all actions pursuant to applicable federal
and
state tax laws relating to the timely filing of any and all federal, state,
local and foreign tax returns and have paid of any and all applicable tax
liabilities, as required, the nonpayment of which could result in a lien being
placed against the Sale Assets. Seller and Licensees have paid (or shall pay
as
required) all taxes imposed against Seller and Licensees with respect to which
Buyer could be held liable under applicable law, or the Sale Assets, or any
part
of it, could be subject to liens or claims, with respect to any period on or
prior to the Closing Date, under applicable law.
4.13. Bankruptcy/Dissolution
Event.
No
“Bankruptcy/Dissolution Event” (as defined below) has occurred with respect to
(a) Seller; (b) Tenant, or (b) any Licensee. “Bankruptcy/Dissolution
Event”
means
the occurrence of any of the following: (a) the commencement of a case under
Title 11 of the U.S. Code, as now constituted or hereafter amended, or under
any
other applicable federal or state bankruptcy law or other similar law; (b)
the
appointment of a trustee or receiver of any property interest; (c) an assignment
for the benefit of creditors; (d) an attachment, execution or other judicial
seizure of a substantial property interest; (e) the taking of, failure to take,
or submission to any action indicating an inability to meet its financial
obligations as they accrue; or (f) a dissolution or liquidation, death or
incapacity.
4.14. Personal
Property.
Exhibit
M
sets
forth a complete list of all Personal Property with an original aggregate cost
of Ten Thousand Dollars ($10,000) or more that Seller or Licensees acquired
after April 1, 2003, and Seller or Licensees hold good title to, and the entire
right, title, and interest in and to, the Personal Property, free and clear
of
any and all leases, liens, encumbrances, or other liabilities except as set
forth in Exhibit
N.
4.15. Operating
Statements.
Attached hereto as Exhibit
O
are
financial statements for the Facilities (the “Operating
Statements”).
To
the best knowledge of Seller and Licensees, the Operating Statements are full,
true and correct in all material respects and have been prepared in accordance
with standard accounting practices, consistently applied, and no material
adverse change has occurred since the respective dates thereof with the
exception that the interim Operating Statements do not include any footnote
disclosures or any customary year-end adjustments.
4.16. Tenant
Leases.
Exhibit
P
is a
full, true and correct rent roll and lease summary (the “Rent
Roll”)
for
each of the Facilities as of the date specified therein, which sets forth all
Admission Agreements with respect to the Facilities. Except as set forth in
the
Rent Roll, each Admission Agreement is in full force and effect, and the term
of
the same and the obligation to pay rent thereunder has commenced and the tenant
thereunder is in full possession and actual
14
occupancy
thereof. All brokerage commissions with respect to the Admission Agreements
have
been paid in full or will have been paid in full prior to the Closing Date
and
there are and will be no commissions payable with respect to renewals,
extensions or expansions of or under any Admission Agreements.
4.17. Existing
Agreements.
There
are no agreements or understandings (whether written or oral) relating to the
Facilities, except for the Permitted Encumbrances, the Admission Agreement,
the
Master Lease, the Regulatory Subleases and the Facility Agreements. All Facility
Agreements with respect to or affecting the Facilities are listed and described
in Exhibit
Q
which
will reasonably be expected to have liabilities or obligations thereunder
involving more than Ten Thousand Dollars ($10,000) in
the
aggregate within any 12 month period from and after the Closing
Date.
4.18. Hazardous
Materials.
To the
best knowledge of Seller and Licensees, Exhibit
S
is a
list of all environmental reports (the “Environmental
Reports”)
obtained by Seller and Licensees or in Seller’s and Licensees’ possession or
control with respect to the Facilities. Except as set forth in the Environmental
Reports, to the best knowledge of Seller and Licensees, there are (and have
been) no Hazardous Materials (as hereinafter defined) installed or stored in
or
otherwise existing at, on, in or under the Facilities in violation of any
applicable federal, state and local laws, ordinances, rules, regulations, and
other governmental requirements applicable to any of the Facilities. The term
“Hazardous
Material”
shall
mean asbestos, petroleum products, and any other hazardous waste or substance
which has, as of the date hereof, been determined to be hazardous or a pollutant
by the U.S. Environmental Protection Agency, the U.S. Department of
Transportation, or any instrumentality authorized to regulate substances in
the
environment which has jurisdiction over the Facilities.
4.19. ERISA.
Seller
and Licensees are not, and no portion of the Property is an asset of, an
“employee benefit plan” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”) (whether or not subject to
ERISA, and including, without limitation, governmental and foreign plans),
a
plan subject to Section 4975 of Internal Revenue Code of 1986, as amended,
or an
entity that is deemed to hold plan assets of any of the foregoing by reason
of
investment by an employee benefit plan or other plan in such
entity.
4.20. COBRA.
Seller
and Licensees are in compliance with all currently applicable Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
requirements respecting current or former employees. Seller and Licensees do
not
provide any retiree medical benefits to former employees.
4.21. Limitation
of Liability.
Buyer’s
exclusive post-Closing remedy for any damages hereunder shall be a claim or
action for breach of contract, or a breach of a representation or warranty.
The
maximum aggregate amount of damages recoverable against Seller and Licensees
with respect to any and all breaches, performance, non-performance, acts or
omissions hereunder will not exceed in the aggregate an amount equal to
$2,500,000. Notwithstanding
the foregoing, Buyer shall not be entitled to any payment of damages until
the
aggregate amount of all such damages exceeds One Hundred Thousand Dollars
($100,000), and then only to the extent such damages exceed $100,000. Moreover,
a claim or action for damages shall only be valid to the extent brought by
Buyer
in accordance with the provisions of this Agreement prior to the first
15
anniversary
of the Closing Date (or, if applicable pursuant to Sections 3.4 or 3.5 hereof,
with respect to Westlake Facility Assets or California Facility Assets, the
Westlake Facility Closing Date or the California Facility Closing Date,
respectively).
On the
Closing Date, Surety or Centre Solutions (US) Limited shall execute a guaranty
in favor of Buyer guaranteeing Seller’s and Licensees’ potential post-Closing
liability under this Agreement
(“Guaranty”).
5. Buyer’s
Representations and Warranties.
Buyer
represents, warrants and covenants to Seller and Licensees that the following
matters are true as of the date hereof and shall be true in all material
respects as of the Closing Date:
5.1. Authority.
The
execution and delivery of this Agreement by Buyer, and the performance of this
Agreement by Buyer, has been duly authorized by Buyer, and this Agreement is
binding on Buyer and enforceable against Buyer in accordance with its terms
except as enforceability may be restricted, limited or delayed by applicable
bankruptcy or other laws affecting creditors’ rights generally and except as
enforceability may be subject to general principles of equity.
5.2. Capacity.
Buyer
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. Buyer has the requisite power
and authority to enter into this Agreement, perform its obligations hereunder
and to conduct its business or operations as now being conducted.
5.3. Qualification.
Neither
Buyer nor any of its respective representatives, officers, directors, partners,
members, agents or employees has been disqualified from participating in either
the Medicare or Medicaid programs or under any Third Party Payor Programs.
Without limitation of the foregoing, neither Buyer nor any of its respective
officers, directors or managing employees or other employees or agents, or
other
persons required to be identified (Medicare Form 855) has engaged in any
activities which are prohibited under criminal law, or are cause for civil
penalties or mandatory or permissive exclusion from Medicare, or any other
state
health care program.
5.4. Availability
of Funds.
Buyer
has, or at Closing will have, the credit facilities or cash in amounts equal
to
the Purchase Price and will at the Closing have immediately available funds
in
cash, which are sufficient to pay the balance of the Purchase Price and to
pay
any other amounts payable pursuant to this Agreement and to consummate the
transactions contemplated by this Agreement. If
Buyer
is relying on financing to consummate the purchase of the Sale Assets, failure
to obtain any such financing shall not excuse Buyer’s performance
hereunder.
5.5. Sale
Assets.
Buyer’s
agreement to acquire the Sale Assets “as-is where-is”, as more particularly
provided in Section 3.1
hereof,
includes, subject to Section 8.1,
Buyer’s
acceptance of the state of title to the Land and matters of survey as disclosed
in the title commitments, title policies and surveys previously obtained by
and/or provided to Buyer and any updates thereto including, without limitation,
the Permitted Encumbrances.
5.6. Xxxx-Xxxxx-Xxxxxx.
Buyer
has
determined that no filings are required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR Act") in connection with the
transactions contemplated by this Agreement on the basis that the acquiring
person (as
16
defined
in the HSR Act and Rules) does not meet the jurisdictional threshold under
Section 7A(a)(2)(B)(ii)(II). Buyer indemnifies and holds the Seller and
Licensees harmless from and against any losses, costs, expenses, attorneys’
fees, fines, or penalties which any of the Licensees or Seller may incur,
suffer, sustain, or become subject to as the result of any claim or
determination that Seller was required to file Xxxx-Xxxxx-Xxxxxx applications
with the Federal Trade Commission and the Department of Justice.
6. Conduct
Prior to Closing.
During
the period commencing on the date of this Agreement and ending on the Closing
Date:
6.1. Continued
Operations.
Seller
and Licensees will operate the Facilities only in the ordinary course of
business consistent with past practices and with due regard to the proper
maintenance and repair of the Sale Assets, to the end that the Sale Assets,
and
any inventory levels, will be maintained substantially in the same condition
as
they were in at the date of this Agreement, ordinary wear and tear, insured
casualty loss and taking by eminent domain excepted.
6.2. Admission
Agreements.
Seller
and Licensees will continue to actively market (including the placing of
advertisements in accordance with its past business practices) and offer the
Facilities for lease in the same manner as prior hereto pursuant to its current
business practices and in accordance with the current market rent schedule
provided to Buyer prior to the date of this Agreement Date subject to certain
leasing incentives offered by Seller and Licensees from time to time disclosed
on Exhibit
Q,
provided that no leasing incentives to new residents that are not consistent
with Exhibit
Q that
are
to remain in effect after Closing may be given without Buyer’s consent. For the
avoidance of doubt, Seller and Licensees have not in the past accepted (i)
the
advance payment of rent, (ii) any lump sum payment, or (iii) an extraordinarily
large security deposit from any resident in exchange for a reduced monthly
rental payment.
6.3. Facility
Agreements.
Seller
and Licensees shall not enter into any additional Facility Agreements (other
than Admission Agreements) nor
shall
Seller and Licensees amend or extend any Facility Agreements without the prior
consent of Buyer with the exception of those Facility Agreements entered into,
extended or amended in the ordinary course of business and consistent with
past
business practices. Seller and Licensees shall terminate as of the Closing
Date
any Facility Agreement which is objected to by Buyer in writing at least ten
(10) days prior to the Closing Date, provided (i) such Facility Agreements
can
be terminated in accordance with their respective terms and (ii) Buyer agrees
in
writing to pay the cost of any termination fee or other expense incurred by
Seller or Licensees in terminating such Facility Agreement. Notwithstanding
anything contained herein to the contrary, Seller and Licensees may not (i)
extend or amend any existing Facility Agreement disclosed on Exhibit
R
or (ii)
enter into a new Facility Agreement that would have been required to be
disclosed on Exhibit
R
without
Buyer’s written consent, which cannot be unreasonably withheld, conditioned or
delayed, with the exception of any extended or amended Facility Agreement or
a
new Facility Agreement that is entered into in the ordinary course of business
and consistent with the past business practices of Seller and Licensees, and
that can be terminated upon thirty (30) days’ advance written notice without
penalty.
6.4. Seller’s
and Licensees’ Insurance.
Seller
and Licensees shall maintain their existing insurance policies for the
Facilities through the Closing Date.
17
6.5. Termination
of Agreements.
Except
to the extent expressly requested by Buyer in writing to the contrary, Seller,
Tenant and Licensees, as applicable, shall cause the Master Lease, each
Regulatory Sublease, and each of the C&S Agreements, to be terminated as of
Closing. To the extent that the Master Lease, any Regulatory Sublease, or any
C&S Agreement, or any memorandum thereof has been recorded, Seller, Tenant
and Licensee, as applicable, shall cause a release of same to be recorded on
the
Closing Date.
7. Termination.
7.1. Right
to Terminate.
Notwithstanding anything herein to the contrary, this Agreement and the
transactions contemplated hereby may be terminated at any time prior to the
Closing:
(a) by
the
written consent of Buyer, Seller and Licensees;
(b) by
Seller
or Licensees, if there has been (i) a material breach by Buyer in its obligation
to proceed to Closing pursuant to the terms of this Agreement (all conditions
to
such obligation having been satisfied in all material respects or waived by
Buyer);
(c) by
Buyer,
if there has been a material breach by Seller or Licensees of any of the
representations, warranties, covenants or agreements made by Seller or Licensees
in this Agreement, following written notice from Buyer, and Seller or Licensees
failing to cure any such material breach within ten (10) days of receipt of
such
notice, results in a material adverse change in the business, results of
operation, assets or financial condition of Seller and Licensees, collectively
and taken as a whole, or as a result thereof causes a material adverse impact
on
the condition, value or operations of the Facilities or Buyer’s investment
therein, each as determined from the perspective of a reasonable person in
Buyer’s position of such material breach by Buyer;
(d) by
Buyer,
pursuant to Article 11
hereof;
or
(e) by
prompt
notice given in accordance with Article 16,
by
Seller and Licensees if the Closing shall not have occurred at or before 11:59
p.m. on December 1, 2006, or 11:59 p.m. on December 15, 2006, if the Closing
Date is changed pursuant to Section 3.3;
provided, however, that the right to terminate this Agreement under this Section
7.1(e)
shall
not be available to Seller and Licensees if their failure to fulfill any of
their material obligations under this Agreement have been the cause of or
resulted in the failure of the Closing to occur on or prior to the aforesaid
date.
7.2. Certain
Effects of Termination.
In the
event of the termination of this Agreement by either Seller and Licensees or
Buyer as provided in Section 7.1:
(a) each
party, if so requested by the other party, will return promptly every document
furnished to it by the other party (or any subsidiaries, division, associate
or
affiliate of such other party) in connection with the transactions contemplated
hereby, whether so obtained before or after the execution of this Agreement,
and
any copies thereof (except for copies of documents publicly available) which
may
have been made,
18
and
will
use reasonable efforts to cause its representatives and any representatives
of
financial institutions and investors and others to whom such documents were
furnished promptly to return such documents and any copies thereof any of them
may have made;
(b) solely
with respect to any termination of this Agreement by Buyer pursuant to Section
7.1(c)
or
Section 7.1(d),
upon
termination of this Agreement, Buyer shall be entitled to the return of its
Deposit thereon plus, in the event the termination of this Agreement is pursuant
to Section 7.1(c)
and as
liquidated damages, the cost of any reasonable expenses incurred and paid by
Buyer to a third party in connection with this transaction (in all other
instances of termination the Deposit shall be paid to Seller); and
(c) the
Confidentiality Agreement (as defined herein) shall remain in
effect.
7.3. Remedies.
Notwithstanding any termination right granted in Section 7.1,
in the
event of the non-fulfillment of any condition to a party’s closing obligations,
in the alternative; such party may elect to do one of the
following:
(a) proceed
to close despite the non-fulfillment of any closing condition, it being
understood that consummation of the Closing shall be deemed a waiver of a breach
of any representation, warranty or covenant and of such party’s rights and
remedies with respect thereto to the extent that such party shall have actual
knowledge of such breach and the Closing shall nonetheless occur;
(b) decline
to close, and terminate this Agreement as provided in Section 7.1;
(c) with
respect to Seller and Licensees only, seek the remedy described in Section
7.4;
or
(d) with
respect to Buyer only, seek specific performance of this Agreement.
7.4. LIQUIDATED
DAMAGES.
IF THE
CLOSING DOES NOT OCCUR SOLELY DUE TO BUYER’S DEFAULT UNDER THIS AGREEMENT (ALL
CONDITIONS TO BUYER’S OBLIGATIONS HAVING BEEN SATISFIED OR WAIVED), IT WOULD BE
IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY
SUFFER. THEREFORE, THE PARTIES HAVE AGREED THAT A REASONABLE ESTIMATE OF THE
TOTAL DETRIMENT THAT SELLER WOULD SUFFER IN SUCH EVENT IS AND SHALL BE THE
RIGHT
TO RETAIN THE DEPOSIT TOGETHER WITH ANY AND ALL INTEREST THEREON AS
LIQUIDATED DAMAGES, AS SELLER’S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT.
SUCH LIQUIDATED DAMAGES ARE NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN
THE
MEANING OF APPLICABLE LAWS. THE PARTIES EXPRESSLY ACKNOWLEDGE THAT BUYER’S
FAILURE OR INABILITY TO OBTAIN THE NECESSARY OPERATOR LICENSES IS NOT A
CONDITION TO BUYER’S OBLIGATION TO CLOSE FOR PURPOSES OF THIS ARTICLE
7.
8. Seller’s
and Licensees’ Closing Deliveries.
At
Closing (or such other times as may be specified below), Seller and/or Licensees
shall deliver or cause to be delivered to Buyer or its designees the following,
in form and substance reasonably acceptable to Buyer:
19
8.1. Deed.
A
limited
warranty deed which shall be the equivalent of an Illinois special warranty
deed, provided Buyer’s local counsel reasonably approves the form of the limited
warranty deed and the form is consistent with the form of limited warranty
deed
that is customary for such jurisdiction, for each Facility’s Real Property,
executed by Seller, in recordable form, conveying that Facility’s Real
Property
to Buyer
free and clear of all liens, claims and encumbrances except for the Permitted
Encumbrances. In this regard, and except as specifically provided herein, Seller
and Licensees will have no obligation to cure or otherwise remove or release
any
of the Permitted Encumbrances. As used herein, the term “Permitted
Encumbrances”
shall
mean covenants, conditions, restrictions, easements, liens, encumbrances, rights
of others and other title exceptions set forth on Schedule
1
to this
Agreement and encroachments and/or other matters disclosed on a survey of each
Facility’s Real Property provided to Buyer that Buyer does not object to within
ten (10) business days of receipt of such survey, however, Buyer shall have
no
right to object to survey matters that do not materially and adversely affect
the use of the particular Facility but
shall
specifically exclude any title matters first arising or appearing of record
after the date of this Agreement that could materially and adversely affect
Purchaser’s use of the Facility, and all construction financing, mortgages,
deeds of trust and monetary liens (including liens for delinquent taxes,
mechanics’ liens and judgment liens) affecting each Facility’s Real Property and
all indebtedness secured thereby, including the Secured Debt (collectively,
the
“Existing
Liens”)
to be
fully satisfied, released and discharged of record on or prior to the Closing
Date so that Buyer shall take title to each Facility’s Real Property free of the
same. The parties acknowledge that there are a number of Permitted Encumbrances
that a title company (“Title
Insurer”)
will
customarily remove or insure over with affidavits from Seller and/or Licensees,
clarifications from the Surveyor, or otherwise. In particular, the parties
have
designated with an asterisk those Permitted Encumbrances listed on Schedule
1
that the
parties reasonably believe the Title Insurer will remove or insure over as
an
exception to the title policy (“Designated
Permitted Exceptions”).
Seller and Licensees agree to use commercially reasonable efforts to work with
the Title Insurer to exclude or insure over the Designated Permitted Exceptions
from the title policy to be issued to Buyer, including executing affidavits
that
are customary in such transactions, pursuing estoppel certificates and other
matters that Seller and Licensee customarily perform to remove as exceptions
to
a title policy. However, Buyer hereby expressly acknowledges that the removal
of
any such Designated Permitted Exceptions is not a condition to
Closing.
8.2. Assignment
and Assumption Agreement.
The
Assignment and Assumption Agreement, executed by Seller and Licensees,
assigning, conveying and warranting to Buyer, or Buyer’s assignee, title to the
Personal Sale Assets and Inventory, free and clear of all liens, claims and
encumbrances except Permitted Encumbrances and the Assumed
Obligations.
8.3. Transfer
Agreement(s).
The
Transfer Agreement(s), executed by Licensee and Manager.
8.4. Business
Records.
Copies,
or to the extent available, originals, of all of the Business Records in
Seller’s and Licensees’ possession or reasonable control, to the extent not
already delivered to Buyer.
8.5. Keys.
Keys to
all locks located in the Improvements, to the extent in Seller’s and Licensees’
possession or reasonable control.
20
8.6. ALTA
Statement.
If
required by the Escrow Agent in order to issue the title policies, an affidavit
of title, ALTA (or comparable) statements, executed by Seller and Licensees
and
in form and substance acceptable to the Escrow Agent.
8.7. Closing
Statement.
A
closing statement conforming to the proration and other relevant provisions
of
this Agreement (the “Closing
Statement”).
8.8. Entity
Transfer Certificate.
Entity
Transfer Certification confirming that Seller and Licensees are a “United States
Person” within the meaning of Section 1445 of the Internal Revenue Code of
1986, as amended.
8.9. Certified
Resolutions.
Certified resolutions of Seller and Licensees authorizing the transaction and
incumbency certificate.
8.10. Discharges
of Liens and Security Interests.
Such
discharges, releases and termination statements or agreements necessary to
discharge, release and terminate all leases, liens and security interests
attached to the Sale Assets, including the Master Lease and the Regulatory
Subleases, other than the Assumed Obligations and Permitted
Encumbrances.
8.11. Possession
of the Facilities.
Seller
and Licensees will deliver possession of the Sale Assets to Buyer.
8.12. Other.
Such
other documents and instruments as may reasonably be required by Buyer, Tenant
or the Title Insurer and that may reasonably be necessary or appropriate to
consummate this transaction and to otherwise effect the agreements of the
parties pursuant to this Agreement. For a period of six (6) months after
Closing, Seller and Licensees shall execute and deliver to Buyer and/or the
Title Insurer such further documents and instruments as shall be reasonably
requested to effect this transaction and otherwise effect the agreements of
the
parties hereto including, but not limited to, customary title affidavits and
estoppel certificates necessary to have the Designated Permitted Exceptions
excluded from the title policy. Seller will reimburse Buyer for any reasonable
costs and expenses incurred and paid by Buyer to a third party within 180 days
after the Closing Date, in an amount not to exceed Fifteen Thousand Dollars
($15,000), for work associated with causing the Title Insurer to exclude or
insure over any Designated Permitted Exceptions from the title
policy.
8.13. Guaranty.
The
Guaranty executed in accordance with Section 4.21.
8.14. Sale
and Leaseback Agreements; Transition Services
Agreements.
Any
Sale and Lease Back Agreement or Transition Services Agreements executed in
accordance with Section 3.3.
9. Buyer’s
Closing Deliveries.
At
Closing Buyer shall cause the following to be delivered to Seller and Licensees
in form reasonably acceptable to Seller and Licensees with respect to those
Sale
Assets and Assumed Obligations subject to the Closing:
9.1. Purchase
Price.
The
balance of the Purchase Price shall be paid in accordance with Article
2
hereof.
21
9.2. Assignment
and Assumption Agreement.
The
Assignment and Assumption Agreement executed by Buyer assuming the Assumed
Obligations.
9.3. Closing
Statement.
A
closing statement conforming to the proration and other relevant provisions
of
this Agreement.
9.4. Certified
Resolutions.
Certified resolutions of Buyer authorizing the transaction and an incumbency
certificate.
9.5. Other.
Such
other documents and instruments as may reasonably be required by Seller and
Licensees or the Title Insurer and that may reasonably be necessary or
appropriate to consummate this transaction and to otherwise effect the
agreements of the parties pursuant to this Agreement. Buyer shall not withhold
any funds from Closing whatsoever. For a period of six (6) months after Closing,
Buyer shall execute and deliver to Seller and Licensees and/or the Title Insurer
such further documents and instruments as shall be reasonably requested to
effect this transaction and otherwise effect the agreements of the parties
hereto.
9.6. Transfer
Agreement(s). The
Transfer Agreement(s), executed by Tenant and Manager, and Buyer.
10. Prorations
And Adjustments.
10.1. Real
Estate Taxes.
All
real estate taxes and assessments accruing on the Facilities in respect to
the
current fiscal year of the applicable taxing authority in which the Closing
Date
occurs (the “Current
Tax Year”)
shall
be prorated between Seller and Buyer as of the Closing Date. Such real estate
taxes and assessments shall be prorated on a per diem basis based upon the
number of days in the Current Tax Year prior to the Closing Date (which shall
be
allocated to Seller) and the number of days in the Current Tax Year on and
after
the Closing Date (which shall be allocated to Buyer). In addition to its
pro-rata portion for the Current Tax Year, Seller shall be responsible for
real
estate taxes, assessments, and special assessments on the Facilities payable
in
respect to periods prior to the Current Tax Year, provided, however, if the
tax
xxxx from any prior year is not yet due and payable, Seller shall give Buyer
a
proration credit therefor. Upon the Closing Date and subject to the adjustment
provided for above, Buyer shall be responsible for real estate taxes and
assessments on the Facilities payable in respect to the Current Tax Year, all
periods after the Current Tax Year, and all periods prior to the Current Tax
Year, to the extent Seller gave Buyer a credit therefor.
10.2. Rents.
All
rentals and other resident charges, including any community fees and
reimbursements including reimbursements received from private, governmental
or
otherwise, received in respect to the month in which the Closing Date occurs
(the “Current
Month”),
shall
be prorated on a per diem basis based upon the number of days in the Current
Month, including the Closing Date and Buyer shall be entitled to pro-rated
portions for the remaining days in the Current Month. All rentals and other
resident charges received by Buyer from a resident after the Closing Date shall
be applied: first, to any rent due for a resident for the Current Month; second,
to any accrued and unpaid rent of such resident for the month immediately
preceding the Current Month; third, to any rent of the resident that has accrued
after the Current Month; and fourth, to the balance of any accrued and unpaid
rent of such resident. Consistent with Section 10.3,
Buyer
22
shall
promptly remit to Seller its share of any rentals and other resident charges
received after the Closing Date in accordance with the proration set forth
above. Buyer shall use commercially reasonable efforts to collect such amounts
for the benefit of Seller. No person or entity (other than Buyer) shall
institute an action against any resident for delinquent rentals and other
resident charges attributable to periods prior to the Current Month prior to
90
days after the Closing Date (“Restricted
Collection Period”).
After
the expiration of the Restricted Collection Period, Seller and/or Licensees
may
undertake efforts to collect any remaining uncollected Retained Receivables.
In
no event shall Seller and Licensees be entitled to take any action against
a
resident which would result in a termination of any Admission Agreement or
the
resident’s right of occupancy thereunder.
10.3. Accounts
Receivable.
To the
extent permitted by law, Buyer shall use commercially reasonable efforts to
collect on Seller’s and Licensees’ behalf, all Retained Receivables relating to
outstanding invoices that remain unpaid as of the Closing Date in accordance
with Seller’s and Licensees’ customary practices for the collection of such
amounts and shall remit any amounts received therefor to an account designated
by Seller and Licensees on a weekly basis. Notwithstanding the
foregoing:
(a) Third
Party Payments.
Prior
to the Closing Date, Licensees will contact the applicable Medicaid agent for
all applicable Facilities and request that the agent mail or wire transfer
such
Medicaid payments directly to Licensees for all periods up to and including
the
Closing Date, it being understood that the applicable Medicaid agent will pay
Buyer for services rendered after it receives its Operator Licenses and any
applicable approvals required by Medicaid. Additionally, Licensees will contact
the applicable regional offices for the Centers for Medicaid & Medicaid
Services regarding Licensees’ electronic fund transfer of Medicare payments and
request that all amounts due Licensees for services provided on or before the
Closing Date be paid directly to Licensees, it being understood that the
applicable Medicare intermediary will pay Buyer for services rendered after
it
receives any applicable approvals required by Medicare. Following Closing,
Buyer
shall promptly notify Licensees of receipt of any Medicaid or Medicare vendor
payments that relate to the Facilities and that include any dates of service
up
to and including the Closing Date and Buyer shall promptly remit such funds
to
Licensees and Licensees shall promptly notify Buyer of receipt of any Medicaid
or Medicare vendor payments that relate to the Facilities and that include
any
dates of service after the Closing Date and Seller and Licensees shall promptly
remit such funds to Buyer, it being understood that Licensees’ obligation to
remit Medicaid or Medicare vendor payments is not triggered until Buyer has
obtained all applicable Medicare and Medicaid approvals necessary to receive
such funds.
(b) Private
Pay Payments.
Prior
to the Closing Date, Seller and Licensees shall prepare and send to the private
pay residents, patients or consumers their private pay invoices and any payments
from a third party for all periods through and including the Closing Date,
with
instructions notifying the private pay residents or responsible party to make
any such payment payable to Seller or such other party as Seller directs.
10.4. Operating
Expenses.
All
operating expenses (including all charges under Facility Agreements assumed
by
Buyer hereunder) payable or paid to each such service provider
23
in
respect to the billing period of such service provider in which the Closing
Date
occurs (the “Current
Billing Period”),
shall
be prorated on a per diem basis based upon the number of days in the Current
Billing Period prior to the Closing Date (which shall be allocated to Seller
and
Licensees) and the number of days in the Current Billing Period on and after
the
Closing Date (which shall be allocated to Buyer), and assuming that all charges
are incurred uniformly during the Current Billing Period. Any amounts which
have
been prepaid by Seller and Licensees to a service provider or other contract
party shall be prorated between Buyer and Seller and Licensees. At Closing,
Buyer shall provide Seller and Licensees with a credit for the amount of such
prepayment which is attributable to the term of such Service Contract which
has
not expired. If actual bills for the Current Billing Period are unavailable
as
of the Closing Date, then such proration shall be made on an estimated basis
based upon the most recently issued bills, subject to readjustment upon receipt
of actual bills.
10.5. Security
Deposits; Prepaid Rents; Resident Inducements.
Buyer
shall receive a credit against the Purchase Price for (a) prepaid rentals and
other resident charges, including any community fees for periods after the
Current Month, and (b) any security deposits (including any portion thereof
which may be designated as prepaid rent) made under Admission Agreements (and
if
applicable laws or any agreements require a landlord to be accountable for
interest on such security deposits, any accrued interest owed thereon at the
applicable legal rate).
10.6. Calculation.
The
prorations and credits shall be made on the basis of a written statement
approved by Buyer and Seller and Licensees. In the event any prorations or
credits made under this Article 10
shall
prove to be incorrect for any reason, then any party shall be entitled to an
adjustment to correct the same. Any item which cannot be finally prorated
because of the unavailability of information shall be tentatively prorated
on
the basis of the best data then available and re-prorated when the information
is available. Notwithstanding the foregoing, any re-proration shall be made,
if
at all, within ninety (90) days after the Closing Date (except with respect
to
taxes and assessments, in which case such re-proration shall be made within
thirty (30) days after the information necessary to perform such re-proration
is
available).
10.7. Items
Not Prorated.
Seller
and Licensees and Buyer agree that (a) none of the insurance policies relating
to the Facilities will be assigned to Buyer (and Seller and Licensees shall
pay
any cancellation fees or minimum earned premiums resulting from the termination
of such policies) and Buyer shall be responsible for arranging for its own
insurance as of the Closing Date; (b) utilities, including telephone,
electricity, water and gas, shall be read on the Closing Date to the extent
reasonably feasible; and (c) the Facilities will not be subject to any existing
liens, other than those items listed as Permitted Encumbrances. Accordingly,
there will be no prorations for insurance or utilities. Notwithstanding the
foregoing, in the event a meter reading is unavailable for any particular
utility, such utility shall be prorated in the manner provided in Section
10.4
above.
11. Casualty
and Condemnation.
11.1. Casualty.
If
prior
to the Closing one or more of the Facilities shall be damaged by fire or other
casualty, then Buyer shall take the Sale Assets as is and Seller and Licensees
hereby assign all insurance proceeds (including casualty and business
interruption insurance), or the right to receive the same, and the rights to
any
other claims arising as a result of the damage,
24
and
Buyer
shall receive a credit at Closing equal to any deductible or uninsured amount
related to such casualty. Notwithstanding the foregoing, if such casualty is
a
Material Event (as defined below), then Buyer, at its option, may terminate
this
Agreement by written notice to Seller and Licensees given on or before the
Closing Date, and upon such termination, the Deposit shall be returned to Buyer
and the parties shall have no further liability or obligation hereunder. As
used
in this Article 11,
a
“Material
Event”
means
either of the following: (a) a casualty resulting in damage or destruction
to
one or more of the Facilities, if the cost to restore the Facilities to the
condition immediately prior to such casualty is reasonably estimated to exceed
Twenty Million Dollars ($20,000,000); or (b) a taking or condemnation which
would impede access to one or more Facilities, reduce available parking below
that required by, or in general cause a violation of, any applicable law,
Admission Agreement or Facility Agreement, or result in a condemnation award
(“Condemnation
Award”)
reasonably estimated to exceed Twenty Million Dollars ($20,000,000). Further,
in
the event of (i) a casualty resulting in damage or destruction to a Facility
and
the cost to restore the Facility to the condition immediately prior to such
casualty is reasonably estimated to be in excess of Seven Hundred Fifty Thousand
Dollars ($750,000) or (ii) there is a condemnation with respect to a Facility
that a reasonable result would be a Condemnation Award in excess of Seven
Hundred Fifty Thousand Dollars ($750,000), then Buyer, at its option, may elect
not to purchase the Facility subject to the casualty or condemnation and the
Purchase Price of the Sale Assets will be reduced by the amount of the Purchase
Price allocated to such Facility as determined in accordance with Section
2.2.
11.2. Condemnation.
If prior
to the Closing (a) less than substantially all of a Facility shall be taken
by
condemnation or eminent domain, (b) there is any material taking of land lying
in the bed of any street or highway, open or proposed, in front of or adjoining
all or any part of the Land, or (c) there is any change of grade or closing
of
any such street or highway abutting or adjacent to the Land, that in any such
case would materially impair access to and from the Land or otherwise materially
interfere with its occupancy and use as an assisted living or skilled nursing
facility, then Buyer shall
be
entitled to no abatement of the Purchase Price by reason of such taking, change
of grade, or closing, and the proceeds of, or right to any proceeds of, any
award or payment in respect of such taking, change of grade, or closing are
hereby assigned to Buyer at the Closing. Notwithstanding the foregoing, if
such
taking is a Material Event, then Buyer, at its option, may terminate this
Agreement by written notice to Seller and Licensees given on or before the
Closing Date, and upon such termination, the Deposit shall be returned to Buyer
and the parties shall have no further liability or obligation
hereunder.
25
12. Employees.
12.1. WARN
Act.
In the
event any notice or payments to any employee employed at the Facilities by
Seller or Licensees as of the day immediately preceding the Closing Date
(“Facility
Employee”)
is
required under the Worker Adjustment Retraining Notification Act (the
“WARN
Act”)
or
other applicable plant closure law due either to actual or constructive
termination of employment, such notice or payments shall be the sole
responsibility of Seller and Licensees, at Seller’s and Licensees’ sole cost and
expense. Seller and Licensees, subject to Section 4.21,
agrees
to indemnify and hold Buyer harmless from any and all liabilities, costs or
expenses associated with or arising from any WARN Act requirements. Anything
to
the contrary notwithstanding, this Agreement shall not be deemed to create
or
grant to any Facility Employee any third party beneficiary rights or claims
or
any cause of action of any kind or nature.
12.2. Facility
Employees.
With
respect to the Facility Employees, Seller and Licensees shall be solely
responsible for all wages, salaries, bonuses, employment taxes, withholding
taxes, and all accrued vacation days, sick days and personal days accruing
prior
to Closing. Effective upon Closing, employment of all employees working at
the
Facilities shall be terminated by Seller and Licensees. On or before the day
that is ten (10) days after the date of this Agreement, Seller or Licensees
shall provide Buyer with a list of all employees at the Facilities and other
pertinent information including copies of employee files with respect to such
employees and the terms of employment of such employees, as requested by Buyer,
provided, however, Seller and Licensees shall not be required to provide Buyer
with any information in any employment file which violates Seller’s and
Licensees’ responsibility to such employee under any existing law and the
disclosure of confidential information which is not available for disclosure
without the express written consent of the employee. Buyer, or its affiliates,
shall hire all such terminated employees (“Terminated
Employees”).
Notwithstanding the above, Buyer may elect not to hire up to 49 Terminated
Employees (such employees hired by Buyer, or its affiliate, as applicable,
being
referred to herein as the “Retained
Employees”).
12.3. Health
Insurance.
Buyer
shall be responsible for providing all eligible Retained Employees with health
care coverage on and after the Closing Date sufficient to extinguish any rights
a Retained Employee may have to continuation of health care coverage under
Seller’s and Licensees’ health care plans including, but not limited to, COBRA
insurance coverage, if a Retained Employee so elects such coverage.
12.4. Other
Benefits. On
the
Closing Date, the Parties shall agree as to the amount of accrued vacation
pay,
sick pay, paid leave time or other similar benefits owed to Facility Employees
pursuant to established plans, programs, practices and arrangements accrued
prior to the Closing Date. On and after the Closing Date, Seller and Licensees
shall be solely responsible for the payment of any and all vacation pay, sick
pay, paid leave time or other similar benefit owed to Facility Employees
pursuant to established plans, programs, practices and arrangements accrued
prior to the Closing Date.
12.5. Post
Closing Liability.
Neither
Buyer, nor any affiliate of Buyer, shall have any obligation to continue the
employment of any Facility Employee and, subject to the terms of this Article
12,
shall
not be liable to any employee for any wages, salaries, bonuses, vacation days,
sick days or personal days in which said Facility Employee may have acquired
an
accrued or
26
vested
right by virtue of, or in connection with, their employment by Seller and
Licensees. Seller and Licensees shall and hereby agree to indemnify and save
Buyer, and its affiliates, harmless from and against any liability for wages,
salaries, bonuses, accrued vacation days, sick days and personal days to be
paid
to Facility Employees on account of services rendered prior to Closing.
Notwithstanding anything to the contrary herein contained, there shall be no
apportionment or proration of medical, pension, welfare benefits, other employee
benefits or other fringe benefits (hereinafter collectively referred to as
“benefits”)
and
Seller and Licensees shall remain liable for and hereby indemnifies and saves
Buyer, and its affiliates, harmless from and against all benefits due to
Facility Employees under plans in which Facility Employees participate prior
to
Closing, and all payments due on the plans providing such benefits. Seller
and
Licensees shall also remain responsible for and hereby indemnifies and saves
Buyer, and its affiliates, harmless from any severance pay which may become
due
to any of the Facility Employees whose employment ends at or prior to Closing
as
a result of this transaction, whether due to Seller’s and Licensees’ employment
policies or as a matter of law. Seller and Licensees agree to give all affected
Facility Employees written notice of termination of participation of employees
working at the Facilities in any applicable 401(K) or other pension or
retirement plan affecting the employees.
12.6. Advertising.
Seller
and Licensees will renew or maintain their yellow pages, assign those to Buyer,
work with Buyer to transition the ads in a timely manner. Nothing in this
Section 12.6
shall be
construed to imply that Buyer has the right to use any of Seller’s or Licensees’
trade names or trademarks
13. Closing
Expenses.
Seller
and Licensees will pay at Closing, all closing costs and expenses, pertaining
to
the release of the Existing Liens, including any fees or premiums of any nature,
associated with prepayment of the Existing Liens. Each party shall pay their
own
attorneys’ fees and expenses. Buyer shall be responsible for its due diligence
costs, including, without limitation, its environmental site assessments. The
parties shall share equally any closing or escrow fee that may be charged by
the
Escrow Agent and the cost of any surveys. Seller and Licensees shall pay the
cost of an
owner’s
extended
coverage title insurance policy to be issued to Buyer at Closing with respect
to
the Sale Assets (excluding the cost of any endorsements thereto that may be
requested by Buyer). All other costs and expenses associated with procuring
any
documentary, deed or transfer taxes and any fees or stamp duties imposed by
any
applicable state, county and municipalities in connection with the execution
and
delivery of the instruments of conveyance (collectively “Transfer
Taxes”),
shall
be shared between the parties equally. Prior to Closing, Parties shall determine
responsibility for Transfer Taxes in excess of $800,000.00 and Parties expressly
acknowledge that mortgage taxes are not included in the definition of Transfer
Taxes and are to be borne solely by Buyer.
14. Successors
and Assigns. The
terms, conditions and covenants of this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective nominees,
successors, beneficiaries and assigns. Buyer shall be entitled to assign this
Agreement in whole or in part, to any affiliate of Buyer, or designate a
separate affiliate to take title with respect to each of the Facilities.
Notwithstanding the above, any such assignment shall not relieve or release
Buyer of any of its obligations or liabilities under this
Agreement.
27
15. Survival.
Notwithstanding
any provision of this Agreement to the contrary, the obligations of the parties
under
Articles
4,
5,
10,
12,
18,
and
20
and
Section 8.12
shall
survive the Closing.
16. Notices.
Any
notice, demand or request which may be permitted, required or desired to be
given in connection therewith shall be given in writing and directed to Seller
and Licensees and Buyer as follows:
if
to
Seller or PITA
General Corporation and AHC Tenant, Inc.
Licensees: 00000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx,
Xxxxxxx 00000
Attention:
Xxx X. Xxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
with
a
copy to: Bose
XxXxxxxx & Xxxxx LLP
0000
Xxxxx Xxxxxxx Xxxxx
000
X.
Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxxx Xxxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
if
to
Buyer: The
Blackstone Group
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
with
a
copy to: Pircher,
Xxxxxxx & Xxxxx
000
Xxxxx
Xxxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Real Estate Notices (JDL)
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
with
a
copy to: Emeritus
Corporation
0000
Xxxxxxx Xxxxxx, #000
Xxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxx Xxxxxxxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
28
with
a
copy to: Xxxxxx
Pepper LLC
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxx XxXxxxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
or
to
such other address as either party may hereunder designate in
writing.
Notices
shall be deemed properly delivered and received (i) the same day when personally
delivered; or (ii) one day after deposit with Federal Express or other
commercial overnight courier; or (iii) the same day when sent by confirmed
facsimile. Any notice to be sent a party hereto may be sent by such party’s
attorney.
17. Benefit.
This
Agreement is for the benefit only of the parties hereto and their nominees,
successors, beneficiaries and assignees and no other person or entity shall
be
entitled to rely hereon, receive any benefit herefrom or enforce against any
party hereto any provision hereof. There are no third party
beneficiaries.
18. Brokerage.
Buyer
hereby represents, covenants, and warrants to Seller and Licensees that it
has
not employed any broker, agent or finder in connection with the transaction
contemplated herein and agrees to indemnify Seller and Licensees against any
claim for any commission made by any broker claiming to have been retained
by
Buyer. Sellers agree to pay the brokerage commission due to Marcus &
Millichap in connection with the transaction contemplated herein and hereby
represent, covenant and warrant to Buyer that they have not employed any other
broker, agent or finder in connection with the transaction contemplated herein,
and agree to indemnify Buyer against any claim for any commission made by any
broker, including Marcus & Millichap, claiming to have been retained by
Sellers. The foregoing indemnities shall survive the Closing.
19. Reasonable
Efforts.
Seller
and Licensees and Buyer shall use their reasonable, diligent and good faith
efforts, and shall cooperate with and assist each other in their efforts, to
obtain such consents and approvals of third parties (including, but not limited
to, governmental authorities and the Licenses), to the transaction contemplated
hereby, and to otherwise perform as may be necessary to effectuate transfer
the
Sale Assets to Buyer in accordance with this Agreement.
20. Miscellaneous.
20.1. Entire
Agreement.
This
Agreement and the Confidentiality Agreement constitute the entire understanding
between the parties with respect to the transaction contemplated herein, and
all
prior or contemporaneous oral agreements, understandings, representations and
statements, and all prior written agreements, understandings, letters of intent
and proposals, in each case with respect to the transaction contemplated herein,
are hereby superseded and rendered null and void and of no further force and
effect and are merged into this Agreement. Neither this Agreement, the
Confidentiality Agreement nor any provisions hereof or thereof may be waived,
modified, amended, discharged or terminated except by an instrument in
29
writing
signed by the party against which the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent
set
forth in such instrument. Except as expressly set forth in this Agreement,
Buyer
shall have no obligation to make any payments to or on behalf of Seller and
Licensees in connection with the transaction contemplated by this
Agreement.
20.2. Construction.
This
Agreement shall not be construed more strictly against one party than against
the other merely by virtue of the fact that it may have been prepared by counsel
for one of the parties, it being recognized that each of Seller, Licensees
and
Buyer have contributed substantially and materially to the preparation of this
Agreement. The headings of various sections in this Agreement are for
convenience only, and are not to be utilized in construing the content or
meaning of the substantive provisions hereof.
20.3. Knowledge.
The
parties acknowledge that the day to day operations of the Facilities have not
been managed by Seller and Licensees but by a management company under contract
with a Licensee. Whenever any statement herein is made “to Seller’s and
Licensees’ knowledge” or words of similar intent or effect of any party or
representative, such person shall make such statement only if such facts and
other information which, as of the date the representation is given, are
actually known to the party making such statement, which with respect to Seller
and Licensees means the knowledge of the President, Xxx Xxxxx, and Treasurer,
Xxxxxx X. Xxxxxx, without any independent investigation, other than consultation
with the executive directors of each of the Facilities who are identified on
Exhibit
T.
20.4. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Illinois.
20.5. Partial
Invalidity.
The
provisions hereof shall be deemed independent and severable, and the invalidity
or partial invalidity or enforceability of any one provision shall not affect
the validity of enforceability of any other provision hereof, provided that
the
intent and content of this Agreement are not substantially altered.
20.6. Conflict.
Notwithstanding there may have been a letter of interest executed by the
parties, Buyer and Seller and Licensees agree that the letter of interest and
anything contained therein shall have absolutely no effect upon or in any
fashion have any influence on this Agreement.
20.7. Confidential
Information; Publicity.
The
parties agree to continue to be bound by the terms and provisions of that
certain Confidentiality and Non-Disclosure Agreement dated as of July 27, 2006
(the “Confidentiality
Agreement”). The
Confidentiality Agreement is hereby incorporated into this Agreement by
reference and made a part of this Agreement and shall survive the execution
of
this Agreement notwithstanding the terms thereof. If a conflict arises between
the provisions of this Agreement and the provisions of the Confidentiality
Agreement, the provisions of the Confidentiality Agreement shall control.
Except
as
otherwise required by law or applicable stock exchange rules, press releases
and
other publicity concerning this transaction shall be made only with the prior
agreement of Seller and Licensees and Buyer (and in any event, the parties
shall
use all reasonable efforts to consult and agree with each other with respect
to
the content of any such required press release or other publicity). Except
as
otherwise
30
required
by law or applicable stock exchange rules, no such press releases or other
publicity shall state the amount of the Purchase Price.
20.8. Consent
to Jurisdiction.
The
parties hereto irrevocably agree that all actions or proceedings in any way,
manner or respect arising out of or from or related to this Agreement shall
be
litigated in Courts having situs within the State of Illinois. The parties
hereby consent and submit to the jurisdiction of any local, state or federal
courts located within Ohio and consent that all such service of process be
made
by certified mail directed to the party at the address stated herein and service
so made shall be deemed to be completed upon actual receipt thereof. The parties
hereby waive any right they may have to transfer or change the venue of any
litigation brought in accordance herewith.
20.9. Waiver
of Trial by Jury.
The
parties hereto knowingly, voluntarily and intentionally waive (to the fullest
extent permitted by applicable law) any right they may have to a trial by jury
of any dispute arising under or relating to this Agreement and agree that any
such dispute shall be tried before a judge sitting without a jury.
20.10. Time
of Essence.
Time is
of the essence of this Agreement and each and all of its
provisions.
[remainder
of page intentionally left blank]
31
IN
WITNESS WHEREOF,
the
parties hereto have executed this Purchase and Sale Agreement on the date first
above written.
PITA
GENERAL CORPORATION,
an
Illinois corporation
By:__
/s/
Xxx X. Hicks_________
Name:
Xxx
X. Xxxxx
Title:
President
AHC
TENANT, INC.,
a
Delaware corporation
By:_
/s/
Xxx X. Xxxxx ____________
Name:
Xxx
X. Xxxxx
Title:
President
BREA
EMERITUS LLC,
a
Delaware limited liability company
By:_/s/
Xxxxxxx X. Brandstrom_______
Name:
Xxxxxxx X. Xxxxxxxxxx
Title:
Authorized Signatory
|
LICENSEES
Boynton
Village SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ____________
Xxx
Xxxxx, President
|
|
Brea
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx __________
Xxx
Xxxxx, President
|
|
Charlotte
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _____________
Xxx
Xxxxx, President
|
|
Citrus
Heights SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _____________
Xxx
Xxxxx, President
|
|
Xxxx
County SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx __________
Xxx
Xxxxx, President
|
|
Colorado
Springs SeniorCare, LLC
By:
____________________________
Xxx
Xxxxx, President
|
|
Decatur
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, President
|
|
Denver
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ______________
Xxx
Xxxxx, President
|
|
Dunedin
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, President
|
|
|
Xxxxxxx
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, President
|
|
|
Xxxxxx
County SeniorCare, One, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, President
|
|
|
Xxxxxx
County SeniorCare, Two, LLC
By:
/s/ Xxx X. Xxxxx _____________
Xxx
Xxxxx, President
|
|
|
Mesa
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ______________
Xxx
Xxxxx, President
|
|
|
Overland
Park SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, Xxxxxxxxx
|
|
|
Xxxxxx
Ranch SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, President
|
|
|
Peoria
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _______________
Xxx
Xxxxx, President
|
|
|
Reno
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _____________
Xxx
Xxxxx, President
|
|
|
Roanoke
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ____________
Xxx
Xxxxx, President
|
|
Sarasota
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ___________
Xxx
Xxxxx, President
|
|
Sun
City West SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ______________
Xxx
Xxxxx, President
|
|
Tucson
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _____________
Xxx
Xxxxx, President
|
|
Xxxxx
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx _____________
Xxx
Xxxxx, President
|
|
West
Orange SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ______________
Xxx
Xxxxx, President
|
|
Westlake
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ______________
Xxx
Xxxxx, President
|
|
Whittier
SeniorCare, LLC
By:
/s/ Xxx X. Xxxxx ____________
Xxx
Xxxxx, President
|
List
of Schedules and Exhibits
Schedule
1 Permitted
Encumbrances
Schedule
2 Allocation
of the Purchase Price
Exhibit
A Licensees
Exhibit
B Facilities
Exhibit
C Regulatory
Subleases
Exhibit
D Management
Companies
Exhibit
E Transfer
Agreement
Exhibit
F Assignment
and Assumption Agreement
Exhibit
G Legal
Descriptions
Exhibit
H Facility
Violations
Exhibit
I Litigation
Exhibit
J Audits/Appeals
Exhibit
K Cost
Reports
Exhibit
L Compliance
Program
Exhibit
M Personal
Property
Exhibit
N Personal
Property Encumbrances
Exhibit
O Operating
Statements
Exhibit
P Rent
Roll
Exhibit
Q Leasing
Incentive Programs
Exhibit
R Facility
Agreements
Exhibit
S Environmental
Reports
Exhibit
T Facilities’
Directors
Exhibit
U Transition
Services Agreement
Exhibit
V Sale
and
Leaseback Agreement
