1
EXHIBIT 10.3
PURCHASE AGREEMENT
AND AGREEMENT TO COMPLETE CONSTRUCTION
OMEGA HEALTHCARE INVESTORS, INC.
OMEGA (KANSAS), INC.
AND
STERLING HOUSE CORPORATION
ALS-CLARE BRIDGE, INC.
ALTERRA HEALTHCARE CORPORATION
Alterra Sterling House of Bloomington
Alterra Sterling House of Jeffersonville
Alterra Clare Bridge Cottage of Jeffersonville
Alterra Sterling House of Kokomo
Alterra Clare Bridge of Wichita
Alterra Clare Bridge Cottage of New Philadelphia
Alterra Clare Bridge Cottage of SW Oklahoma City
Alterra Clare Bridge Cottage of Goodlettesville I
Alterra Clare Bridge of Silverdale
Alterra Sterling House of Briargate
Dated as of June 14, 1999
2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II PURCHASE AND SALE......................................................................................9
2.01. Agreement to Sell and Buy.......................................................................9
2.02. No Assumption of Liabilities...................................................................10
2.03. "As Is" Purchase...............................................................................10
ARTICLE III PURCHASE PRICE.......................................................................................10
3.01. Payment........................................................................................10
3.02. First Payment of Additional Purchase Price.....................................................10
3.03. Subsequent Payment of Additional Purchase Price................................................10
3.04. Limitation on Additional Purchase Price........................................................11
3.05. Termination of Obligation to Pay Additional Purchase Price.....................................11
ARTICLE IV CLOSING...............................................................................................11
ARTICLE V........................................................................................................11
5.01. Transfer Taxes.................................................................................11
5.02. Sales Taxes....................................................................................11
5.03. Title Insurance................................................................................11
5.04. Survey/ UCC Search Reports.....................................................................12
5.05. Environmental Reports/Remediation..............................................................12
5.06. Attorneys' Fees................................................................................12
5.07. Recording Costs................................................................................12
5.08. Releases.......................................................................................12
5.09. Transaction Fee................................................................................12
5.10. Other Items....................................................................................12
ARTICLE VI POSSESSION............................................................................................12
ARTICLE VII SELLERS' AND ALTERRA'S REPRESENTATIONS AND WARRANTIES................................................13
7.01. Status of Seller and Alterra...................................................................13
7.02. Validity and Conflicts.........................................................................13
7.03. Authority......................................................................................13
7.04. Financial Statements...........................................................................13
7.05. Absence of Adverse Change......................................................................14
7.06. The Licenses...................................................................................14
7.07. Compliance with Law............................................................................15
7.08. Residents......................................................................................15
7.09. Books and Records..............................................................................16
7.10. Taxes and Tax .................................................................................16
i
3
7.11. Environmental Issues...........................................................................16
7.12. Necessary Action...............................................................................16
7.13. Litigation.....................................................................................17
7.14. Sensitive Payments.............................................................................17
7.15. Title..........................................................................................17
7.16. The Facilities.................................................................................17
7.17. Inventories....................................................................................18
7.18. The Facility Agreements........................................................................18
7.19. Resident Roster................................................................................18
7.20. Disclosure.....................................................................................18
7.21. Insurance......................................................................................19
7.22. Plans and Specifications.......................................................................19
7.23. Authorizations and Permits.....................................................................19
7.24. Total Construction Costs.......................................................................19
ARTICLE VIII PURCHASER REPRESENTATIONS AND WARRANTIES............................................................19
8.01. Status of Purchaser............................................................................19
8.02. Validity and Conflicts.........................................................................20
8.03. Authority......................................................................................20
8.04. Necessary Action...............................................................................20
ARTICLE IX BROKER; INVESTMENT BANKER.............................................................................20
ARTICLE X SELLERS AND ALTERRA COVENANTS..........................................................................21
10.01. Closing Date...................................................................................21
10.02. Post Closing....................................................................................21
ARTICLE XI PURCHASER COVENANTS...................................................................................22
11.01. Closing Date....................................................................................22
11.02. Post Closing....................................................................................22
ARTICLE XII MUTUAL COVENANTS.....................................................................................22
12.01. General Covenants...............................................................................22
12.02. Public Announcements............................................................................23
ARTICLE XIII COMPLETION ESCROW; DISBURSEMENT.....................................................................23
13.01. Completion Escrow..............................................................................23
13.02. Construction and Development of the Construction Facilities....................................23
13.02.01. Commencement and Completion of Construction..................................23
13.02.02. Purchaser's Architect........................................................24
13.02.03. Plans and Specifications.....................................................24
13.02.04. Character of Construction....................................................24
13.02.05. Construction Contract and Architectural/Engineering Agreement................25
ii
4
13.02.06. Records and Reports..........................................................25
13.02.07. Access.......................................................................26
13.02.08. Damage by Fire or Other Casualty.............................................26
13.02.09. Payment of Costs.............................................................26
13.03. Disbursements from Completion Escrow...........................................................27
13.04. Limitation on Disbursements....................................................................28
13.05. Sufficiency of Completion Holdback.............................................................28
13.06. Payments to Contractor, Subcontractors and Suppliers...........................................29
13.07. Purchaser's Right to Cure......................................................................29
13.08. Application of Advances........................................................................29
13.09. Construction or Other Liens....................................................................29
13.10. Conditions to Final Payment....................................................................29
ARTICLE XIV GUARANTY OF COMPLETION; FORCE MAJEURE................................................................30
14.01 Guaranty of Completion.........................................................................30
14.02 Force Majeure..................................................................................30
ARTICLE XV INDEMNIFICATION.......................................................................................31
15.01. Sellers' and Alterra's Indemnification..........................................................31
15.02. Procedure.......................................................................................32
ARTICLE XVI MISCELLANEOUS........................................................................................32
16.01. Notices.........................................................................................32
16.02. Assignment......................................................................................33
16.03. Sole Agreement..................................................................................33
16.04. Captions........................................................................................33
16.05. Severability....................................................................................33
16.06. Counterparts....................................................................................33
16.07. Knowledge Defined...............................................................................33
16.08. Third Party Beneficiary.........................................................................34
16.09. Attorneys' Fees.................................................................................34
16.10. Construction....................................................................................34
16.11. Survival........................................................................................34
16.12. Governing Law...................................................................................34
16.13. Arbitration of Disputes Following Closing.......................................................35
16.14 Joint and Several...............................................................................35
iii
5
PURCHASE AGREEMENT
AND AGREEMENT TO COMPLETE CONSTRUCTION
THIS PURCHASE AGREEMENT (the "Agreement") is executed and delivered as
of this 14th day of June, 1999 (the "Effective Date") by and between STERLING
HOUSE CORPORATION, a Kansas corporation ("Sterling"), ALS CLARE BRIDGE, INC., a
Delaware corporation ("ALS-Clare"), (Sterling and ALS-Clare are each referred to
herein as a "Seller" and, collectively, as "Sellers"), ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation ("Alterra"), OMEGA HEALTHCARE INVESTORS,
INC., a Maryland corporation ("Omega"), and OMEGA (KANSAS), INC., a Kansas
corporation ("Omega-Kansas").
The circumstances underlying the execution and delivery of this
Agreement are as follows:
A. Capitalized terms used but not otherwise defined herein have the
respective meanings given them in Article I below.
X. Xxxxxxx are the owner of Sellers' Assets. Sellers desire to sell,
and Purchaser desires to acquire, Sellers' Assets on the terms and conditions
set forth in this Agreement.
C. Upon Closing, Purchaser desires to lease to Lessee, and Alterra
desires to cause Lessee to lease from Purchaser, the Sellers' Assets on the
terms and conditions of the Master Leases.
D. Certain of the Facilities being transferred pursuant to this
Agreement are under construction. With respect to such Facilities, the parties
desire Sellers complete the construction after Closing and, to assure
completion, deposit the Completion Holdback into the Completion Escrow.
E. As a material inducement for Purchaser to purchase the Sellers'
Assets pursuant to this Agreement, Purchaser desires that Alterra, and Alterra
desires to, guarantee completion of construction of the Facilities.
NOW, THEREFORE, Sellers, Alterra and Purchaser agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the respective meanings given them
below:
"Actual Cash Flow" means at any given time the actual Cash Flow for the
Facilities determined on a trailing three (3) month basis.
6
"Additional Cash Flow" means, at any given time, the Annualized Actual
Cash Flow less the Expected Cash Flow.
"Additional Purchase Price" means the amount, if any, to be paid by
Purchaser to Sellers as additional purchase price in excess of the Closing
Payment and determined pursuant to, and paid according to, Article III.
"Affiliate" means any Person which, directly or indirectly, Controls or
is Controlled by or is under common Control with another Person.
"Annualized Actual Cash Flow" means the Actual Cash Flow annualized.
"Capital Expenditure Amount" means $100,250 times the increase, if any,
in the CPI during the period commencing on the Commencement Date and ending on
the date with respect to which the calculation of Additional Purchase Price is
to be made.
"Cash Flow" shall have the meaning assigned to it in the Master Leases.
"Charter Documents" means the articles of incorporation, certificate of
formation, operating agreement, bylaws, resolutions, minutes and other documents
that govern the organization of a Seller, Alterra or Purchaser, as the case may
be.
"Claim" means a claim for indemnification pursuant to Section 15.01 of
this Agreement.
"Closing" means the consummation of the transactions contemplated by
this Agreement.
"Closing Date" means the Effective Date.
"Closing Payment" means the lesser of (i) THIRTY-FOUR MILLION
EIGHTY-FIVE THOUSAND DOLLARS ($34,085,000) and (ii) the amount determined
pursuant to the Supplemental Letter.
"Completed Facilities" means the Facilities identified on Schedule 1(a)
as being open and operating.
"Completion Date" means the date identified on Schedule 1(a) as the
date which is Sellers' best faith estimate of the date each Facility will be
open and operating.
"Completion Escrow" means the escrow account with Escrow Agent into
which the Completion Holdback will be deposited pursuant to clause (i) of
Article III.
2
7
"Completion Holdback" means the amount determined pursuant to the terms
of the Supplemental Letter which will be deposited into the Completion Escrow.
"Construction Budgets" means the detailed budget for the construction
of the Construction Facilities attached as Schedule 1(b), which sets forth
Sellers' best faith estimate of the Project Costs on an itemized basis and
designates each item by amount, whether such item constitutes an item of Hard
Costs or Soft Costs and the amount of proceeds, if any, of the Completion
Holdback allocable to each item of Hard Costs and Soft Costs.
"Construction Facilities" means the Facilities identified on Schedule
1(a) as being under construction and for which a Construction Budget has been
attached as Schedule 1(b).
"Construction Insurance" means the following insurance policies
covering the Construction Facilities: (i) hazard or builder's risk insurance
with an extended coverage endorsement acceptable to the Purchaser in an amount
equal to the full replacement cost of the Construction Facilities, and (ii)
comprehensive public liability insurance insuring against bodily injury and
property damage, and which shall contain an endorsement in favor of Purchaser or
name Purchaser as first loss payee, as the case may be, and shall require
written notification to Purchaser not less than thirty (30) days before
cancellation or expiration and shall not permit amendment or modification
without Purchaser's prior written consent. The Construction Insurance may be
consolidated in one insurance policy at Sellers' option. The builder's risk
policy must be written on an all-risk basis and on a completed-value form
(non-reporting basis) for the full replacement cost of the Improvements. Upon
Purchaser's request, Sellers shall deliver to Purchaser a certificate of
insurance addressed to Purchaser evidencing worker's compensation and public
liability insurance of the construction manager or general contractor, as the
case may be, for the Construction Facilities.
"Consumables" means the food and other consumable inventories located
at the Facilities on the Closing Date.
"Consumer Price Index or CPI" means the United States Department of
Labor, Bureau of Labor Statistics Revised Consumer Price Index for All Urban
Consumers (1982=84=100), U.S. City Average, All Items, or, if that index is not
available at the time in question, the index designated by such Department as
the successor to such index, and if there is no index so designated, an index
for an area in the United States that most closely corresponds to the entire
United States, published by such Department, or if none, by any other
instrumentality of the United States.
"Contractor's Overhead" means costs incurred by Sellers and set forth
on the Construction Budgets for contractor's overhead and profit.
"Control" (and its corollaries "Controlled by" and "under common
Control with") means possession, directly or indirectly, of the power to direct
or cause the direction of the management
3
8
and policies of a Person, through the ownership of voting securities,
partnership interests or other equity interests.
"Controversy" means a controversy between a Seller or Alterra and
Purchaser that (a) arises following the Closing Date, (b) relates to this
Agreement, any other agreement between a Seller or Alterra and Purchaser, any
instrument or document delivered pursuant to or in connection with this
Agreement or the transactions contemplated by this Agreement and (c) a Seller or
Alterra and Purchaser are unable to settle between themselves.
"Developer's Fees" means the fees and commissions, including
Developer's Overhead, payable to Sellers, Alterra or any Affiliate of Alterra
for services rendered in connection with the development, construction
management or leasing of the Construction Facilities, as set forth on the
Construction Budget.
"Developer's Overhead" means costs incurred by Sellers and set forth on
the Construction Budget for developer's overhead and profit.
"Facilities" means, collectively, the Completed Facilities and the
Construction Facilities.
"Facilities Licenses" means all material licenses, permits and
authorizations necessary for the lawful operation of the Facilities as the
Completed Facilities currently are operated and as the Construction Facilities
will be operated upon completion, including all licenses, permits and
authorizations necessary to (a) lawfully operate all beds contained or to be
contained in the Facilities as assisted living home beds; and (b) provide
licensed assisted living services.
"Financial Statements" means the financial statements for Alterra and
the Facilities requested by Purchaser and relating to the operations of the
Facilities and of Alterra for the fiscal years 1996, 1997 and 1998 and for
fiscal year 1999 to date.
"Effective Date" means the date set forth in the Preamble of this
Agreement.
"Environmental Laws" means any and all applicable local, state and
federal governmental laws, rules, regulations, ordinances, administrative orders
and requirements relating to environmental and/or occupational health and safety
matters.
"Escrow Agent" means the Title Company or such other person as agreed
to the by the parties to this Agreement.
"Expected Cash Flow" means the sum of (A) the Capital Expenditure
Amount plus (B) the quotient of (i) the Purchase Price Paid to Date divided by
(ii) the Purchase Price Multiplier.
4
9
"Event of Force Majeure" is any event or condition, not existing as of
the Closing Date, not reasonably foreseeable as of such date and not reasonably
within the control of Sellers and Alterra, that prevents in whole or in material
part the performance by Sellers and Alterra of their obligations under Articles
XIII and Section 14.01 or that renders the performance of such obligations so
difficult as to make such performance commercially unreasonable. Without
limiting the foregoing, Events of Force Majeure shall include acts of state,
riots, war, prolonged shortage of energy supplies, epidemics, fire, flood,
hurricane, typhoon, earthquake, or explosion.
"Facilities" means the Real Property and Personal Property constituting
the assisted living facilities identified on attached Schedule 1(a).
"GAAP" means generally accepted accounting principles.
"Hard Costs" means costs paid to construct and complete the
Construction Facilities, including without limitation, demolition costs, site
preparation costs, contractor's fees, and costs of labor and material paid or
necessarily incurred by Sellers in connection with the construction of the
Construction Facilities, but excluding Developer's Fees, Developer's Overhead
and Contractor's Overhead, and the contingency reserve, if any, set forth on the
Construction Budget.
"Hazardous Substances" means any materials, substances or wastes deemed
to be hazardous or toxic under any applicable Environmental Laws.
"Indemnified Person" means a person entitled to indemnification
pursuant to Article XV of this Agreement.
"Indemnitor" means a person or persons responsible for indemnifying an
Indemnified Person pursuant to Article XV of this Agreement.
"Indiana Facility" means the Alterra Sterling House of Bloomington.
"Intangible Property" means to the extent transferable under applicable
law, all consents, authorizations, variances or waivers, licenses, permits and
approvals given or issued by any governmental or quasi-governmental agency,
department, board, commission, bureau or other entity or instrumentality having
jurisdiction over the Facilities, but excluding the Facility Licenses.
"Kansas Facility" means the Facility identified on Schedule 1(a) as
being located in State of Kansas.
"Lessee" means AHC Properties, Inc., a Delaware corporation.
5
10
"MAI Appraisal" means an appraisal, in form and substance satisfactory
to Purchaser, prepared by an appraiser who is a Member of the Appraisal
Institute and is experienced in appraising properties of the same nature, and in
the same geographical vicinity, as the Facility being appraised.
"Management Agreements" means the management agreements pursuant to
which the Alterra has agreed to manage the Facilities and Sublessees have agreed
to pay to Alterra fees therefor.
"Master Leases" means (i) a Master Lease, in form and substance
satisfactory to Purchaser and Alterra, executed and delivered by Purchaser and
Lessee concurrently with the Closing, pursuant to which Purchaser leases to
Lessee, and Lessee leases from Purchaser, all of the Facilities other than the
Kansas Facility and (ii) a Master Lease, in form and substance satisfactory to
Purchaser and Alterra, executed and delivered by Omega-Kansas and Lessee
concurrently with the Closing, pursuant to which Omega-Kansas leases to Lessee,
and Lessee leases from Omega-Kansas, the Kansas Facility.
"Omega Capitalization Rate" means the average yield to Purchaser on
leases, entered into during the one hundred twenty (120) days preceding the date
of the payment of such portion of Additional Purchase Price, of assisted living
and/or dementia care facilities to lessees whose creditworthiness, alone or, as
to any such lease or leases which are guaranteed, in combination with that of
the guarantor or guarantors thereof, is similar to the creditworthiness of
Lessee and Alterra on June 14, 1999.
"Omega Rent Multiplier" means (A) one (1) divided by (B) (i) the Omega
Capitalization Rate divided by (ii) the following amount during the following
periods:
On or Before
------------
December 31, 2001 1.2
December 31, 2002 1.25
December 31, 2003 1.28
June 30, 2004 1.31
"Permitted Encumbrances" means the matters set forth on attached
Schedule 1(d).
"Person" means any natural person, trust, partnership, corporation,
joint venture, limited liability company or other legal entity.
"Personal Property" means all equipment, furniture, fixtures, inventory
(including linens, dietary supplies and housekeeping supplies, but specifically
excluding food and other consumable inventories) and other tangible personal
property owned (but not leased) by a Seller and located on the Real Property and
Facilities, but excluding (a) cash, cash equivalents or accounts receivable
6
11
relating to the period prior to the Closing Date, (b) proprietary brochures,
computers and computer software and any vehicles, and (c) those items of
personal property identified on attached Schedule 1(g).
"Portfolio Stabilization Appraisal" means the MAI Appraisal conducted
with respect to the Facilities after the Portfolio Stabilization Date.
"Portfolio Stabilization Appraisal Date" means the date on which the
Portfolio Stabilization Appraisal is delivered to Purchaser.
"Portfolio Stabilization" shall have the meaning assigned to it in the
Master Leases.
"Portfolio Stabilization Date" means the date on which Portfolio
Stabilization occurs.
"Project Costs" means all Hard Costs, Soft Costs, Developer's Fees,
Contractor's Overhead and other costs and fees associated with the construction
of the Construction Facilities.
"Property Documents" means all Resident Agreements; environmental
reports; structural reports and geological reports; governmental licenses,
permits and approvals; service and maintenance contracts; existing surveys of
the Real Property, including any as-built surveys for the improvements; wetland
reports; soils reports; architectural drawings, plans and specifications; and
engineering tests and reports.
"Purchase Price" means the sum of (i) the Closing Payment plus (ii) the
Additional Purchase Price.
"Purchase Price Paid to Date" means at any given time the sum of (i)
the Closing Payment plus (ii) the amount of Additional Purchase Price previously
paid.
"Purchase Price Multiplier" means the lesser of (A) Omega Rent
Multiplier and (B) following number on or before the following dates:
On or Before Purchase Price Multiplier
------------ -------------------------
December 31, 1999 8.032
December 31, 2000 7.933
December 31, 2001 7.739
December 31, 2002 7.249
December 31, 2003 6.906
June 30, 2004 6.583
7
12
"Purchaser" means Omega with respect to all Facilities other than the
Kansas Facility and Omega-Kansas with respect to the Kansas Facility.
"Real Property" means the real property described on attached Schedule
1(h), together with (a) any buildings and other improvements located thereon or
to be located thereon upon completion of the Construction Facilities; (b) all
rights of Sellers, if any, in and to all air, mineral and riparian rights and
all tenements, hereditaments, privileges and appurtenances belonging or in any
way appertaining thereto; (c) any land lying in the bed of any street, road or
avenue adjoining the real property described on attached Schedule 1(h) to the
center line thereof, but only to the extent of Sellers' interest, if any,
therein; and (d) all easements, whether or not recorded, strips and
rights-of-way abutting, adjacent to, contiguous with or adjoining the real
property described on attached Schedule 1(h), but only to the extent of Sellers'
interest, if any, therein.
"Resident Agreements" means the admission agreements entered into by
Alterra with the current residents of the Facilities.
"Sellers' Assets" means the Real Property, the Facilities, the Personal
Property and the Intangible Property.
"Soft Costs" means the Transaction Fee; premiums for title, casualty
and other insurance required by Purchaser under this Agreement or the Master
Leases; the cost of recording and filing the Transaction Documents and any tax
levied upon such filing; real estate taxes and other assessments that Sellers or
Alterra are obligated to pay; fees and disbursements of the Purchaser's
attorneys, architects and engineers, appraisers, environmental engineers and
surveyors; architectural design and monitoring fees; permit fees; marketing
expenses; leasing and sales commissions; property management fees; and interest
(including any reserve for interest set forth on the Construction Budgets), fees
and miscellaneous transaction closing costs and charges payable by Sellers to
Purchaser as they become due and payable.
"Survey Requirements" means a survey that (a) is certified to
Purchaser, Sellers, Alterra and the Title Company; (b) is prepared in accordance
with the minimum standard detail requirements and classifications for ALTA/ASCM
land title surveys, as adopted in 1992 by ALTA/ASCM, including Table A
responsibilities and specifications 1-4, 6-11 and 13; and (c) otherwise is in
form satisfactory to Purchaser.
"Subleases" means the Subleases identified on Schedule 1(i).
"Sublessees" means the sublessees under the Subleases.
"Supplemental Letter" means the letter from Omega to Alterra dated as
of June 14, 1999, which supplements the Transaction Documents.
8
13
"Title Commitments" means title insurance commitments, issued by the
Title Company, dated after the date of this Agreement and committing the Title
Company to insure Purchaser's fee simple title to the Facilities, without the
so-called "standard exceptions", in the amount of the Purchase Price, together
with legible copies of all recorded documents referred to therein.
"Title Company" means Chicago Title Insurance Company.
"Title Insurance Policies" means the title insurance policies, issued
pursuant to the Title Commitments by the Title Company concurrently with the
Closing, that insures Purchaser's fee simple title to the Facilities, without
the so-called "standard exceptions", and subject only to the Permitted
Encumbrances. The Title Insurance Policies shall include the following
endorsements, to the extent available under the law of the state in which the
Facilities is located: (a) for the Completed Facilities, Form 3.1 completed
zoning endorsement and for the Construction Facilities, Form 3.0 zoning
endorsement; (b) comprehensive endorsement; (c) access endorsement; (d) survey
endorsement; (e) separate tax parcel endorsement; (e) contiguity endorsement (if
the Real Property on which the Facility is located consists of more than one
parcel); and (f) such other endorsements as Purchaser reasonably may require.
"Transaction Documents" means the following documents: the Master
Leases; the Purchase Agreement; the Supplemental Letter, any and all warranty
deeds, bills of sale, security agreements, guaranties, pledge agreements,
subordination agreements, collateral assignment of contracts, continued
performance agreements, such other documents as may evidence or secure the
transactions contemplated by this Agreement and the Master Leases, and any and
all amendments, modifications, extensions and renewals of any of the foregoing
documents.
"Transaction Fee" means the ONE HUNDRED SEVENTY-EIGHT THOUSAND NINE
HUNDRED THIRTY-TWO DOLLAR ($178,932) fee to be paid to Purchaser to induce
Purchaser to enter into the transactions provided for in this Agreement.
"UCC Search Report" means UCC search reports in the name of Sellers and
the Facilities conducted at the state and county level in the state in which the
Facilities are located and, if different, in the state in which a Seller is
organized and in the state in which a Seller's chief executive office is
located.
ARTICLE II
PURCHASE AND SALE
2.01. Agreement to Sell and Buy. On the terms and subject to the
conditions set forth herein, Sellers agree to sell to Purchaser, and Purchaser
agrees to acquire from Sellers, Sellers' Assets.
9
14
2.02. No Assumption of Liabilities. Except as specifically set forth in
this Agreement, Purchaser is not acquiring or assuming any liabilities
whatsoever, including, without limitation, those of Sellers with respect to
Sellers' Assets.
2.03. "As Is" Purchase. Purchaser is acquiring Sellers' Assets without
any express or implied warranties other than those specifically set forth in
this Agreement.
ARTICLE III
PURCHASE PRICE
3.01. Payment. The Purchase Price shall be payable as follows:
(i) Closing Payment in cash or other immediately available funds
at the Closing (subject to the adjustments set forth in this
Agreement); provided that Sellers deposit the Completion
Holdback into the Completion Escrow pursuant Article XIII; and
(ii) The Additional Purchase Price in cash or other immediately
available funds in accordance with this Article III.
Sellers and Purchaser agree that, for purposes of this Agreement, no portion of
the Purchase Price shall be allocated to the Personal Property or the Intangible
Property.
3.02. First Payment of Additional Purchase Price. If Portfolio
Stabilization occurs on or before June 30, 2004, then on the first day of the
first month following the Portfolio Stabilization Date, Purchaser shall pay to
Sellers the amount, if any, of Additional Purchase Price equal to the lesser of:
(i) ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000);
(ii) (A) ninety-five percent (95%) of the Portfolio Stabilization
Appraisal less (B) the Closing Payment; and
(iii) The Additional Cash Flow times the Purchase Price Multiplier.
3.03. Subsequent Payment of Additional Purchase Price. If Portfolio
Stabilization has occurred on or before June 30, 2002, then, on each of the
first and second anniversary dates of Portfolio Stabilization, if the aggregate
amount of Additional Purchase Price previously paid by Purchaser to Sellers
pursuant to this Article III as determined on such anniversary date is less than
the lesser of the amounts in Section 3.02(i) and 3.02(ii), then, on the first
day of the first month following such anniversary date, Purchaser shall pay to
Sellers, subject to Section 3.04, the amount,
10
15
if any, of Additional Purchase Price equal to the Additional Cash Flow times the
Purchase Price Multiplier.
3.04. Limitation on Additional Purchase Price. Notwithstanding anything
in this Agreement or any of the Transaction Documents to the contrary, the
aggregate amount of Additional Purchase Price required to be paid by Purchaser
to Sellers pursuant to this Article III shall not exceed the lesser of:
(i) ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000); and
(ii) (A) ninety-five percent (95%) of the Portfolio Stabilization
Appraisal less (B) the Closing Payment.
3.05. Termination of Obligation to Pay Additional Purchase Price.
Notwithstanding anything in this Agreement or any of the Transaction Documents
to the contrary, Purchaser shall have no obligation to pay any Additional
Purchase Price (i) if Portfolio Stabilization has not occurred on or before June
30, 2004, (ii) after the second anniversary of Portfolio Stabilization if it
occurs prior to June 30, 2002, or (iii) after the occurrence of a default or an
Event of Default under this Agreement, the Master Leases or any of the other
Transaction Documents.
ARTICLE IV
CLOSING
The purchase and sale of Sellers' Assets shall occur on the Closing
Date at the offices of counsel to the Purchaser, or at such other place as is
agreed upon by the parties.
ARTICLE V
COSTS AND PRORATIONS
The costs of the transaction and the expenses related to the ownership
and operation of the Sellers' Assets shall be allocated between Sellers and
Purchaser as follows:
5.01. Transfer Taxes. Sellers shall pay all state and county transfer
or excise taxes due on the transfer to Purchaser of title to the Real Property
and the Facilities and all assessments and taxes related to the recording of the
deed.
5.02. Sales Taxes. Sellers shall pay any sales tax due on the transfer
to Purchaser of title to the Personal Property.
5.03. Title Insurance. Sellers shall pay the cost of the Title
Commitments and the premiums for the Title Insurance Policies.
11
16
5.04. Survey/ UCC Search Reports. Sellers shall pay the cost of the
Surveys and the UCC Search Reports for the Facilities.
5.05. Environmental Reports/Remediation. Sellers shall pay for the cost
of the Phase I environmental assessments for the Facilities, or, at the option
of Purchaser, for any existing Phase I environmental assessments to be certified
to Purchaser for reliance by Purchaser thereon.
5.06. Attorneys' Fees. Sellers shall pay its attorneys' fees and the
attorneys' fees of Purchaser.
5.07. Recording Costs. Sellers shall pay all recording fees related to
the recording of the deeds.
5.08. Releases. Sellers shall pay the cost of obtaining and recording
any releases necessary to deliver title to Sellers' Assets in accordance with
the terms of this Agreement.
5.09. Transaction Fee. At the Closing, Sellers shall pay to Purchaser
the Transaction Fee.
5.10. Other Items. Neither Purchaser nor Omega-Kansas has any duty to
operate the Facilities from and after the Closing Date, such operations to be
accomplished solely by Lessee, as lessee under the Master Leases, or by Alterra
pursuant to the Management Agreement. Accordingly, Sellers, Lessee and Alterra
shall be responsible for (a) all revenues and expenses attributable to the
Facilities, whether attributable to the period before or after the Closing; (b)
real and personal property taxes, assessments and similar charges that are
levied against the Facilities, whether attributable to the period before or
after the Closing Date; (c) all utilities provided to the Facilities, whether
before or after the Closing Date; and (d) any amounts that have been prepaid, or
that remain to be paid, under any of the Admissions Agreements or any other
contracts affecting Sellers' Assets.
ARTICLE VI
POSSESSION
At Closing, Purchaser shall be entitled to possession of Sellers'
Assets, subject only to (a) the rights of the residents of the Facilities, (b)
any possessory rights granted to any person under the Permitted Encumbrances,
(c) such possessory rights of Sellers and Alterra required to allow them to
fullfill their obligations under Articles XIII and XIV with respect to
completing construction of the Construction Facilities, (d) the rights of Lessee
under the Master Leases, and (e) the rights of the Sublessees under the
Subleases.
12
17
ARTICLE VII
SELLERS' AND ALTERRA'S REPRESENTATIONS AND WARRANTIES
Sellers and Alterra, jointly and severally, represent and warrant to
Purchaser, as of the Closing Date, that:
7.01. Status of Seller and Alterra. Sterling is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas and is duly qualified to do business as a foreign corporation in each
state in which a Facility owned by it is located. ALS-Clare is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business as a foreign corporation
in each state in which a Facility owned by it is located. Alterra is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to do business as a foreign
corporation in each state in which a Facility is located.
7.02. Validity and Conflicts. This Agreement is, and all documents to
be executed by Sellers or Alterra pursuant to this Agreement will be, their
valid and binding obligations, enforceable against them in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The execution of this Agreement and the
consummation of the transactions contemplated in this Agreement in accordance
with its terms have been approved by all necessary action of Sellers and Alterra
under their respective Charter Documents and do not and will not result in a
breach of the terms and conditions of, nor constitute a default under or
violation of, each Seller's Charter Documents, Alterra's Charter Documents or
any law, regulation, court order, mortgage, note, bond, indenture, agreement,
license or other instrument or obligation to which a Seller or Alterra is now a
party or by which any of Sellers' Assets may be bound or affected.
7.03. Authority. Sellers and Alterra each have full power and authority
to execute and to deliver this Agreement and all related documents and to carry
out the transactions contemplated herein and therein. Each Seller has full power
and authority (a) to own and operate the Facilities owned by it as the same
currently are owned and operated and (b) to conduct its business as the same
currently is being conducted.
7.04. Financial Statements. Sellers and Alterra have delivered to
Purchaser true and correct copies of the Financial Statements. Except as
otherwise noted in the Financial Statements or on attached Schedule 7.04, the
Financial Statements have been prepared in accordance with GAAP, consistently
applied, and fairly represent the financial condition, and accurately set forth
in all material respects, as and to the extent required by GAAP, the results of
the operations, of Alterra and the Facilities for the periods covered thereby,
subject to customary year end adjustments; provided,
13
18
however, that the Financial Statements which solely pertain to the Facilities
have not been prepared in accordance with GAAP, but rather on an accounting
basis consistent with those of Alterra. Alterra has delivered to Purchaser any
financial statements prepared by Alterra subsequent to the date of the Financial
Statements delivered by it to Purchaser, and such financial statements represent
fairly the financial condition, and set forth accurately in all material
respects the results of the operations, of Alterra and the Facilities for the
periods covered thereby.
7.05. Absence of Adverse Change. Since the date of the Financial
Statements delivered by Alterra to Purchaser, there has not been any material
adverse change in the financial condition, business, assets, liabilities,
results of operations or prospects of Alterra, Sellers or the Facilities
(individually or in the aggregate), whether in the ordinary course of business
or otherwise.
7.06. The Licenses. (a) Alterra has all Facilities Licenses applicable
to the Completed Facilities. Attached as Schedule 7.06(a) are true and correct
copies of the licenses issued most recently by the applicable health care
authorities with respect to the operation of the Completed Facilities. To the
best knowledge of Sellers and Alterra, it has not received written or verbal
notice (i) that any action or proceeding has been initiated or is proposed to be
initiated by the appropriate state or federal agency having jurisdiction
thereof, to revoke, withdraw or suspend any of the Facilities Licenses
applicable to the Completed Facilities or (ii) of any judicial or administrative
agency judgment or decision not to renew any of the Facilities Licenses
applicable to the Completed Facilities or (iii) of any licensure or
certification action of any other type applicable to the Completed Facilities.
(b) Alterra has applied for all Facilities Licenses applicable to the
Construction Facilities. Attached as Schedule 7.06(b) are true and correct
copies of the license applications filed with the applicable health care
authorities with respect to the operation of the Construction Facilities. To
Sellers' knowledge, upon completion of construction of the Construction
Facilities, no basis in law or fact will exist for the applicable health care
authorities to deny or delay the issuance of the Facilities Licenses for the
Construction Facilities.
(c) The Completed Facilities are not operated as Medicare or Medicaid
providers, there are no plans to operate the Completed Facilties as Medicare or
Medicaid providers, and the Completed Facilities receive substantially all of
their operating revenue from private pay residents. The Construction Facilities
will not be operated as Medicare or Medicaid providers and will receive
substantially all of their operating revenue from private pay residents.
14
19
7.07. Compliance with Law.
(a) Schedule 7.07(a) sets forth the most recent licensure or
certification surveys for the Facilities. A copy of each such licensure
or certification survey has been delivered to Purchaser. To the best
knowledge of Sellers and Alterra, the Facilities and their current
operation and use comply with all applicable municipal, county, state
and federal laws, regulations, ordinances and orders and with all
applicable municipal health and building laws and regulations
(including, without limitation, the building and life safety codes),
except to the extent that the failure to comply therewith would not
have a material adverse effect on the business, property, condition
(financial or otherwise) or operation thereof;
(b) To the best knowledge of Sellers and Alterra, no
governmental authority having jurisdiction over the Facilities has
issued any citations with respect to any deficiencies or other matters
that fail to conform to any applicable statute, regulation, ordinance
or bylaw and that have not been corrected as of the date hereof or that
shall not have been corrected on or prior to the Closing, except to the
extent that either (i) a waiver has been issued by the appropriate
authority, in which case a copy of such waiver is included in Schedule
7.07(b), or (ii) the deficiency or non-conformity will not have a
material and adverse effect on the financial condition or results of
the operations of such Facility; and
(c) To the best knowledge of Sellers and Alterra, none of
Sellers or Alterra has received written or oral notice from any
licensing or certifying agency supervising or having authority over the
Facilities, requiring them to be reworked or redesigned or additional
furniture, fixtures, equipment or inventory to be provided at the
Facilities so as to conform to or comply with any existing and
applicable law, code or standard, except where the requirement either
(i) has been fully satisfied prior to the Closing Date, (ii) will, as
of the Closing Date, be in the process of being satisfied in the
ordinary course of Sellers' business pursuant to the terms of a plan of
correction or other documentation submitted to and approved by the
appropriate authority, (iii) will, as of the Closing Date, be the
subject of a valid written waiver issued by the applicable licensing or
certifying agency or (iv) is included in the Construction Budget for
such Facility if such requirement pertains to a Construction Facility.
7.08. Residents. Except for notice provisions that are required by law
or that are contained in the Admissions Agreements provided to Purchaser by
Sellers with respect to the Facilities, there are no agreements with residents
of the Facilities that are not terminable by Sellers at will and that require
the owner of the Facilities to provide the care routinely provided at the
Facilities for the duration of the resident's stay at the Facilities for no
consideration.
15
20
7.09. Books and Records. All of the books and records of the
Facilities, including resident records, resident trust fund records and records
concerning all resident prepaid accounts, are true and correct in all material
respects.
7.10. Taxes and Tax Returns. All tax returns, reports and filings of
any kind or nature that a Seller or Alterra is required to file, prior to the
Effective Date of this Agreement, with respect to or affecting the Facilities
have been properly completed and timely filed, or extensions for the filing
thereof have been timely secured, with all such filings being in material
compliance with all applicable requirements and all taxes due with respect to a
Seller or Alterra have been timely paid.
7.11. Environmental Issues. To the best knowledge of Sellers and
Alterra, they have not released into the environment or discharged, placed or
disposed of any Hazardous Substances or caused the same to be so released into
the environment or discharged, placed or disposed of at, on or under the
Facilities, except (a) to the extent the same will not have a material and
adverse affect on the condition, financial or otherwise, of the Facilities
(whether the Facilities are considered individually or in the aggregate) and (b)
in accordance, and in compliance, with any and all applicable Environmental
Laws. To the best knowledge of Sellers and Alterra, (a) no Hazardous Substances
are located on or at the Facilities or have been released into the environment
or discharged, placed or disposed of in, on or under the Facilities, except to
the extent permitted by applicable Environmental Laws, (b) no underground
storage tanks are or have been located at the Facilities except for those that
have been closed, or currently are being maintained, in accordance with
applicable Environmental Laws, (c) the Facilities are not located on property
that has been used as a dump for waste material and (d) the Facilities comply
with, and at all times during the period of their operation by a Seller have
complied with, all Environmental Laws in all material respects. To the best
knowledge of Sellers and Alterra, neither Seller has received from any
governmental authority or third party written notice or a written complaint
alleging the failure of the Facilities to comply with, or the potential
liability of a Seller as a result of the noncompliance of the Facilities with,
any Environmental Laws or, if a Seller has received such a written notice or
written complaint from any governmental authority or third party, the alleged
noncompliance of the Facilities and/or liability of a Seller with respect
thereto has been resolved as of the Closing Date. Sellers and Alterra have made
available to Purchaser all written assessments that have been prepared by or on
behalf of a Seller or Alterra and that are in a Seller's or Alterra's possession
or under a Seller's or Alterra's reasonable control with respect to the
hazardous waste conditions at the Facilities.
7.12. Necessary Action. Each Seller and Alterra have duly and properly
taken or obtained or caused to be taken or obtained all action necessary for
Sellers and Alterra (a) to enter into and to deliver this Agreement and any and
all documents and agreements executed by a Seller or Alterra in connection
herewith and (b) to carry out the terms of this Agreement and the transaction
contemplated by it. No other action by or on behalf of a Seller or Alterra is or
will be necessary to authorize the execution, delivery and performance of this
Agreement and any documents and agreements executed or to be executed by a
Seller or Alterra in connection herewith or to authorize
16
21
the transactions contemplated by this Agreement. No consent of any third party
is or will be necessary in connection with the execution, delivery and
performance of this Agreement and any documents and agreements executed or to be
executed by a Seller or Alterra in connection herewith or in connection with the
consummation of the transactions contemplated by this Agreement.
7.13. Litigation. Except as set forth in Schedule 7.13, to the best
knowledge of Sellers and Alterra, neither Sellers nor Alterra have received
notice of any litigation, administrative investigation or other proceeding that
is pending or threatened with respect to or affecting a Facility, except where
the amount claimed is less than $25,000 in any single action or $50,000 in the
aggregate. Neither Sellers nor Alterra is a party to, nor are Sellers, Alterra
or the Facilities bound by, any orders, judgments, injunctions, decrees or
settlement agreements under which it or they may have continuing obligations as
of the date hereof or as of the Closing Date and that are likely to materially
restrict or affect the present or presently contemplated business operations of
the Facilities. To the best knowledge of Sellers and Alterra, the right or
ability of Sellers and Alterra to consummate the transaction contemplated herein
has not been challenged by any governmental agency or any other person.
7.14. Sensitive Payments. To the best knowledge of Sellers and Alterra,
neither Sellers nor Alterra have (a) made any contributions, payments or gifts
to or for the private use of any governmental official, employee or agent where
either the payment or the purpose of such contribution, payment or gift is
illegal under the laws of the United States or the jurisdiction in which made,
(b) established or maintained any unrecorded fund or asset for any purpose or
made any false or artificial entries on its books, (c) given or received any
payments or other forms of remuneration in connection with the referral of
patients that would violate the Medicare/Medicaid Anti-kickback Law, Section
1128(b) of the Social Security Act, 42 USC Section 1320a-7b(b), or any analogous
state statute, or (d) made any payments to any person with the intention or
understanding that any part of such payment was being made for any purpose other
than that described in the documents supporting the payment.
7.15. Title. Seller have good title to the Facilities, free and clear
of all liens, charges and encumbrances other than the Permitted Encumbrances and
any other items reflected in the Title Commitment, Survey and UCC Search Report.
Sellers have good title to the remainder of Sellers' Assets, free and clear of
all liens, charges and encumbrances.
7.16. The Facilities. The Completed Facilities are duly licensed to
operate the number of beds set forth on Schedule 1(a). Alterra has applied for
all licenses necessary under applicable law to operate the number of beds set
forth on Schedule 1(a) with respect to the Construction Facilities (other than
the Indiana Facility) as assisted living facilities. The Personal Property
relating to the Completed Facilities is all of the property necessary for the
lawful operation of the Completed Facilities at their current occupancy levels.
Upon completion of construction, the Personal Property relating to the
Construction Facilities will be all of the property necessary for the lawful
operation
17
22
of the Completed Facilities at their contemplated occupancy levels. To the best
knowledge of Sellers and Alterra, there is no action pending or recommended by
the appropriate state or federal agencies having jurisdiction thereof that, if
decided adversely to Sellers or Alterra, would have a material and adverse
effect on a Facility, its operations or business. To the best knowledge of
Sellers and Alterra, the building and improvements constituting the Facilities
have been constructed in compliance with the requirements of all laws at the
time of construction and all ordinances, rules, regulations and restrictions of
record applicable thereto, and all bills for labor and materials in connection
with the construction thereof have been paid in full or reserves have been
established to pay them. Except as disclosed in Schedule 7.16, Sellers and
Alterra have no knowledge of any latent or patent material defect or deficiency
with regard to the structures, roofs, soils, furniture, fixtures or equipment of
the Facilities that would materially impair the use or value of the Facilities,
and the structures, roofs, soils, furniture, fixtures and equipment of the
Facilities are in good working order and condition. Sellers and Alterra have no
knowledge of any latent or patent material defect or deficiency with regard to
the plumbing, mechanical, electrical or other systems of the Facilities that
would materially impair the use or value of the Facilities, and the plumbing,
mechanical, electrical and other systems of the Facilities are in good working
order and condition.
7.17. Inventories. At Closing, the Completed Facilities shall have an
inventory of perishable and non-perishable food, central supplies, linens,
housekeeping supplies, kitchen supplies and nursing supplies sufficient in
condition and quantity as may be required under all applicable laws and, to the
extent there exist no applicable laws that specifically identify the condition
and/or required quantity for any such supplies or inventory, then such inventory
and supplies shall be in such condition and quantity as customarily are
maintained by Sellers.
7.18. The Facility Agreements. All Admissions Agreement utilized, or to
be utilized, by Sellers, Alterra and Lessee at the Facilities shall conform with
all requirements of applicable law and shall be on a form approved by the
applicable state agency.
7.19. Resident Roster. Attached as Schedule 7.19 is a true and complete
resident roster that identifies each of the residents of the Completed
Facilities, the daily rate paid by each of the residents, and, with respect to
the private pay residents, the date through which each of them has paid.
7.20. Disclosure. No representation or warranty by or on behalf of
Sellers or Alterra contained in this Agreement, and no statement contained in
any certificate, list, exhibit or other instrument furnished or to be furnished
to Purchaser pursuant hereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material facts that are
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
18
23
7.21. Insurance. Sellers have maintained insurance policies that insure
the Facilities and the other Sellers' Assets continuously since Sellers'
acquisition thereof. Such insurance policies are written on an occurrence basis,
against physical damage, general liability, professional liability and worker's
compensation. Attached as Schedule 7.21 are descriptions of each such policy and
certificates of insurance evidencing such coverage.
7.22. Plans and Specifications. Sellers have delivered to Purchaser
accurate and complete copies of the Plans and Specifications and all other
contract documents requested by Purchaser, including all modifications thereof.
The Plans and Specifications and construction pursuant thereto and the use of
the Facilities contemplated thereby comply and will comply with all applicable
governmental laws and regulations and requirements, zoning and subdivision
ordinances, and standards and regulations of all governmental bodies exercising
jurisdiction over the Facilities, including health care licensing, environmental
protection, energy, equal employment regulations and appropriate supervising
boards of fire underwriters and similar agencies. Sellers and Alterra agree to
provide to Purchaser a certification of Sellers' architect to such effect as
well as the approvals of any governmental body or agency exercising jurisdiction
of the Facilities.
7.23. Authorizations and Permits. Sellers have obtained all required
permits, licenses, approvals and authorizations, including those required by the
Federal Environmental Protection Agency and any state or local authority charged
with the enforcement of regulations of such agency, and fully complied with all
building, safety, zoning and other requirements of any state, municipal or other
governmental authority pertaining to the construction of the improvements
capable of being complied with at the date hereof, and will obtain all such
permits, licenses, approvals and authorizations and will comply with all such
building, safety, zoning and other requirements hereafter.
7.24. Total Construction Costs. Sellers represents that the
Construction Budgets sets forth their best faith estimate of the total Project
Costs in connection with the development of the Construction Facilities. Prior
to the Closing Date, Sellers will have paid a sufficient amount of such costs so
that the remaining Project Costs will not exceed the Completion Holdback.
ARTICLE VIII
PURCHASER REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Sellers and Alterra, as of the
Closing Date, that:
8.01. Status of Purchaser. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and, to the extent required by applicable law, is authorized to transact
business in each state in which the Facilities are located.
19
24
8.02. Validity and Conflicts. This Agreement is, and all documents to
be executed by Purchaser pursuant hereto will be, the valid and binding
obligations of Purchaser, enforceable in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The execution of this Agreement and the consummation of the transactions
contemplated herein have been approved by the Board of Directors of Purchaser
and do not and will not result in a breach of the terms and conditions of, nor
constitute a default under or violation of, the Charter Documents of Purchaser
or any law, regulation, court order, mortgage, note, bond, indenture, agreement,
license or other instrument or obligation to which Purchaser is now a party or
by which its assets may be bound or affected.
8.03. Authority. Purchaser has full corporate power and authority to
execute and to deliver this Agreement and all related documents and to carry out
the transactions contemplated herein and therein.
8.04. Necessary Action. Purchaser has duly and properly taken or
obtained or caused to be taken or obtained, or prior to Closing will have duly
and properly taken or obtained or caused to be taken or obtained, all action
necessary for Purchaser (a) to enter into and deliver this Agreement and any and
all documents and agreements executed and to be executed by Purchaser in
connection herewith and (b) to carry out the terms of this Agreement and the
transactions contemplated by it. No consent of any third party is or will be
necessary, and no other action by or on behalf of Purchaser is or will be
necessary, to authorize the execution, delivery and performance of this
Agreement and any documents and agreements executed and to be executed by
Purchaser in connection herewith or to authorize the consummation of the
transactions contemplated herein.
ARTICLE IX
BROKER; INVESTMENT BANKER
Each party represents, covenants and warrants to the other that it has
employed no broker, finder or investment banker in connection with the
transaction contemplated in this Agreement. Each party agrees to pay any
commission, finder's fee or investment banker's fee that may be due on account
of the transaction contemplated in this Agreement to any broker, finder or
investment banker employed by it, and to indemnify the other party hereto
against any claim for any commission, finder's fee or investment banker's fee
made by any broker, finder or investment banker allegedly employed by it and
from and against any and all costs and expenses incurred in connection
therewith, including, but not limited to, reasonable attorneys' fees and costs.
20
25
ARTICLE X
SELLERS AND ALTERRA COVENANTS
10.01. Closing Date. On the Closing Date, Sellers will pay the closing
costs that Sellers are obligated to pay pursuant to this Agreement and Sellers
and Alterra will deliver, or cause to be delivered, to Purchaser such documents
or instruments as reasonably may be necessary to consummate the transactions
contemplated by this Agreement.
10.02. Post Closing. Sellers and Alterra covenant and agree that, after
the Closing Date, they will:
(a) At no cost to Sellers or Alterra, reasonably cooperate
with Purchaser if Purchaser is required to include audited financial
statements with respect to the Facilities in its filings with the
Securities and Exchange Commission;
(b) Take such actions and properly execute and deliver to
Purchaser such further instruments of assignment, conveyance and
transfer as, in the reasonable opinion of counsel for Purchaser and
Seller, reasonably may be necessary to assure, complete and evidence
the transfer and conveyance of Sellers' Assets as contemplated by this
Agreement;
(c) File the annual cost reports for the Facilities currently
within the periods required by Medicare, Medicaid and any other third
party payor and provide any additional documentation to support the
amounts claimed under such cost reports within such time periods;
(d) Furnish to Purchaser on or before July 31, 1999, with
respect to those Construction Facilities for which a certificate of
occupancy has not been issued by such date, the written agreements of
the construction manager or general contractor(s), as the case may be,
and the architect and/or engineer, each in form and substance
acceptable to Purchaser, that such construction manager, general
contractor, architect and/or engineer will, at the request of Purchaser
and upon payment of amounts payable under the contract, continue
performance of the contract notwithstanding any default of Sellers
under such contract and, with respect to the agreement to be executed
by the architect and/or engineer, that Purchaser will have the
unrestricted use of the Plans and Specifications without additional
charge;
(e) Within 90 days of Portfolio Stabilization, deliver to
Purchaser the Portfolio Stabilization Appraisal;
(f) Furnish to Purchaser on or before July 31, 1999, a final
"as built" survey of each Completed Facility prepared and certified in
accordance with the Survey Requirements;
21
26
(g) Furnish to Purchaser within 45 days of the Completion Date
of each Construction Facility, a final "as built" survey prepared in
accordance with the Survey Requirements;
(h) Prior to the completion of construction of the
Construction Facilities, maintain (or cause Lessee to maintain) the
Construction Insurance on Construction Facilities; and
(i) Furnish to Purchaser on or before June 30, 1999, the form
of Resident Agreement for the Completed Facilities; and
(j) Furnish to Purchaser within 45 days of the Completion Date
of each Construction Facility, the form of Resident Agreement for the
Completed Facilities; and
(k) Furnish to Purchaser with 60 days of the date of this
Agreement a copy of the Indiana Facility License.
ARTICLE XI
PURCHASER COVENANTS
11.01. Closing Date. On the Closing Date, Purchaser will pay the
closing costs for which Purchaser is responsible under this Agreement and
deliver or cause to be delivered the Purchase Price pursuant to Article III, as
adjusted in accordance with this Agreement, and such documents or instruments as
reasonably may be necessary to consummate the transactions contemplated by this
Agreement.
11.02. Post Closing. After the Closing Date, Purchaser will take such
actions and properly execute and deliver such further instruments as Sellers and
Alterra reasonably may request to assure, complete and evidence the transaction
provided for in this Agreement.
ARTICLE XII
MUTUAL COVENANTS
12.01. General Covenants. Following the execution of this Agreement,
each of Sellers, Alterra and Purchaser agree:
(a) To cooperate fully with each other in preparing, filing,
prosecuting and taking any other actions that are or may be reasonable
and necessary to obtain the consent of any governmental instrumentality
or any third party to accomplish the transactions contemplated by this
Agreement;
22
27
(b) To deliver such other instruments of title, certificates,
consents, endorsements, assignments, assumptions and other documents or
instruments as reasonably may be necessary to carry out and/or to
comply with the terms of this Agreement and the transactions
contemplated by it;
(c) To confer on a regular basis with the other, report on
material operational matters and promptly advise the other orally and
in writing of any change or event that would have a material adverse
effect on the consummation of the transactions contemplated by this
Agreement or that would constitute a material breach of any of the
representations, warranties or covenants of such party contained in
this Agreement; and
(d) To provide the other (or its counsel) promptly with copies
of all other filings made by such party with any state or federal
governmental entity in connection with this Agreement or the
transactions contemplated hereby.
12.02. Public Announcements. Sellers, Alterra and Purchaser shall
consult with the other regarding, and shall use reasonable best efforts to agree
upon, the form and content of any press release, public announcement or
statement with respect to this Agreement or the transactions contemplated by it.
ARTICLE XIII
COMPLETION ESCROW; DISBURSEMENT
13.01. Completion Escrow. Sellers agree, subject to and in accordance
with the terms and provisions of this Agreement, to deposit at Closing the
Completion Holdback with Escrow Agent in the Completion Escrow. The Construction
Holdback will be disbursed as construction is completed in accordance with
Section 13.03 below.
13.02. Construction and Development of the Construction Facilities.
13.02.01. Commencement and Completion of Construction. Sellers
have commenced substantial on-site development of the Construction Facilities as
of the Closing Date and, subject to a temporary suspension of performance
pursuant to Section 14.02, will continue diligently to complete the Construction
Facilities on or before the Completion Date and will supply such moneys and
perform such duties as may be necessary in connection therewith. The
Construction Facilities will be complete for purposes of this paragraph 13.02.01
only at such time as (i) all improvements to the Construction Facilities called
for in the Plans and Specifications have been installed or completed in a manner
satisfactory to Purchaser and (ii) the local public authority has issued a final
certificate of occupancy for the Construction Facilities subject only to such
conditions as may be acceptable to Purchaser.
23
28
13.02.02. Purchaser's Architect. Purchaser may retain the
services of architects and engineers, including architects and engineers
employed by Purchaser (the "Purchaser's Architect"), to act as Purchaser's agent
in reviewing the Plans and Specifications and the progress of construction and
in making such certifications and performing such other tasks and duties as
Purchaser deems appropriate. Sellers will pay all fees, costs and expenses of
the Purchaser's Architect within ten (10) days after demand by Purchaser;
provided, however, that Sellers will not be obligated to pay for Purchaser's
Architect more than $5,000 per Construction Facility or $40,000 in the
aggregate.
13.02.03. Plans and Specifications. Purchaser acknowledges its
approval of the Plans and Specifications. Except as provided below, Sellers will
not make, or cause or permit to be made, any change to the Plans and
Specifications unless a request for the change has been submitted in writing to
Purchaser and approved in writing by the construction manager or general
contractor, as the case may be, any tenants whose approval is required,
Purchaser and such other parties as Purchaser may require. Purchaser's approval
may be subject to such terms and conditions as Purchaser reasonably may
prescribe. Under no circumstances will any failure by Purchaser to respond to a
request for approval of a change in the Plans and Specifications be deemed to
constitute approval of the request. Sellers will deliver promptly to Purchaser
copies of all bulletins, addenda, change orders and modifications to the Plans
and Specifications.
Purchaser has the right at all times to require strict
compliance with the original Plans and Specifications, but Sellers may effect
changes in the Plans and Specifications from time to time, without first
obtaining Purchaser's approval, if (i) the changes do not impair the structural
integrity, design concept or architectural appearance of the Construction
Facilities or change the useable area of the Construction Facilities in any way,
(ii) the changes will not result in a default in any other obligation to any
other party or authority and (iii) the changes will not result in a net increase
or decrease in the total Project Costs of FIVE THOUSAND DOLLARS ($5,000) Dollars
or more in the case of any one change or FIFTY THOUSAND DOLLARS ($50,000)
Dollars or more in the aggregate for all changes. Notwithstanding the foregoing,
to the extent that the cost to complete the Construction Facilities exceeds the
Completion Holdback (whether or not as a result of any such changes in the
Plans), Sellers will be responsible for payment of the excess.
13.02.04. Character of Construction. All construction will be
in accordance with the Plans and Specifications, of sound materials, in good and
workmanlike manner, free and clear of all liens, claims and encumbrances (other
than the liens and security interests securing the obligations of the Lessee
under the Master Leases), and in compliance with all laws, ordinances,
regulations and restrictions affecting the Construction Facilities and all
requirements of all governmental authorities having jurisdiction over the
Construction Facilities and of the appropriate board of fire underwriters or
other similar body, if any, and any applicable health care authority related to
the Facility Licenses. Sellers will furnish Purchaser with evidence of such
compliance as Purchaser requires from time to time.
24
29
13.02.05. Construction Contract and Architectural/Engineering
Agreement. (i) A list of the construction manager(s) or general contractor(s),
as the case may be, and the architect and/or engineer, and the contracts under
which each is retained in connection with the Construction Facilities is
attached as Schedule 13.02.05. Any change to the construction manager(s) or
general contractor(s), as the case may be, and the architect and/or engineer in
connection with the Construction Facilities must be approved by Purchaser in
writing. Upon request of Purchaser, Sellers will promptly furnish to Purchaser
executed copies of the construction management agreement or general contract(s)
between Sellers and the construction manager or general contractor(s) covering
all work to be done in connection with the Construction Facilities and executed
copies of all subcontracts between the construction manager or general
contractor(s) and all of their subcontractors and suppliers. Upon request of
Purchaser, Sellers will promptly furnish to Purchaser any amendments or
modifications (including change orders) to any of the foregoing. Sellers will
not modify or amend or permit to be modified or amended (including by way of
change order) any construction management agreement, construction contract or
construction subcontract without Purchaser's prior written approval; provided,
however, that Purchaser's prior approval need not be obtained with respect to
any change order that results from a change in the Plans and Specifications with
respect to which Purchaser's consent is not required pursuant to Section
13.02.03 above. Upon request of Purchaser, Sellers will also furnish to
Purchaser an executed copy of the architectural and/or engineering agreement
between Sellers and the architect and/or engineer with respect to the
Construction Facilities.
(ii) Sellers will perform their obligations under the
contracts described in subparagraph (i) above, and will use reasonable best
efforts to cause each other party to such contracts to perform its obligations
under such contracts.
(iii) Sellers will enforce or cause to be enforced the prompt
performance of the contracts described in subparagraph (i) above and will allow
Purchaser to take advantage of all rights and benefits of such contracts. In
addition, upon completion of construction, Sellers will assign to Lessee under
the Master Leases all warranties given to Sellers under the contracts described
in subparagraph (i) above.
13.02.06. Records and Reports. Sellers and Alterra will keep
accurate and complete books and records relating to the construction of the
Construction Facilities, and Purchaser will have access thereto during usual
business hours upon 24 hours advance notice. Sellers and Alterra will furnish or
cause to be furnished to Purchaser from time to time, promptly upon request, (i)
copies and lists of all paid and unpaid bills for labor and materials with
respect to the Construction Facilities, (ii) Construction Budgets and revisions
thereof showing the estimated cost of the Construction Facilities and the source
of the funds required at any given time to complete and pay for the same, (iii)
receipted bills or other evidence of payment with respect to the cost of the
Construction Facilities, and (iv) such reports as to other matters relating to
the Construction
25
30
Facilities as Purchaser may request. This paragraph will supplement any similar
provision in the Master Leases between Purchaser and Omega-Kansas and Lessee.
13.02.07. Access. Notwithstanding anything to the contrary
contained in the Master Leases, Alterra will, and will cause Lessee to, permit
Purchaser's representatives to have access to the Construction Facilities at all
reasonable times and to conduct such investigations and inspections thereof as
Purchaser shall determine necessary, including without limitation in connection
with inspecting the Construction Facilities and all work done, labor performed
and materials furnished in connection with the construction thereof. Alterra
will, and will cause Lessee to, cooperate and cause the construction manager or
general contractor, as the case may be, to cooperate with Purchaser and its
representatives and agents during such inspections. Notwithstanding the
foregoing, Alterra will, and will cause Lessee to, be responsible for making
inspections as to the Construction Facilities during the course of construction
and will determine to their own satisfaction that the work done or materials
supplied by the contractors and subcontractors has been properly supplied or
done in accordance with applicable contracts. All inspections that may be
performed by Purchaser and its agents will be exclusively for the benefit of
Purchaser and will impose no obligation whatever upon Purchaser for the benefit
of any person. Sellers and Alterra will, and will cause Lessee to, hold
Purchaser harmless from, and Purchaser will have no liability or obligation of
any kind to Seller, Alterra, Lessee or creditors of any of them in connection
with, any defective, improper or inadequate workmanship or materials brought in
or related to the Construction Facilities, or any construction lien arising as a
result of such workmanship or materials. No inspection by Purchaser will create
any obligation on Purchaser or relieve Sellers, Alterra or Lessee of any
obligation.
13.02.08. Damage by Fire or Other Casualty. If any of the
Construction Facilities is partially or totally damaged or destroyed by fire or
other casualty or taken under the power of eminent domain, proceeds of such
event will be applied as provided in the Master Leases.
13.02.09. Payment of Costs. Sellers or Alterra will pay when
due all obligations incurred by Sellers, Alterra or Lessee for the Construction
Facilities, including any cost for restoration incurred pursuant to paragraph
13.02.08 above.
26
31
13.03. Disbursements from Completion Escrow. Upon satisfaction of the
conditions set forth in subparagraphs (a) through (c) below, the Escrow Agent
may disburse from time to time (but no more frequently than once per month) to
Sellers proceeds of the Completion Holdback, subject to the limitations set
forth in Section 13.04 below:
(a) The Escrow Agent has received:
(1) a request for disbursement, in the form of
AIA (the "Request"), executed by an
executive officer of Alterra and setting
forth, among other things, the portion of
the Completion Holdback that Sellers then
are requesting be disbursed, the amount that
Sellers in good faith believe to be the cost
to complete construction (after disbursement
of the portion of the Completion Holdback
then being requested), a detailed breakdown
of the costs and expenses incurred in the
construction of the Construction Facilities
to the date of Request, a detailed cost
breakdown of the percentage of completion of
the construction of the Construction
Facilities (including both Hard Costs and
Soft Costs) to the date of the Request, the
amounts then due and unpaid with respect to
such construction, such other information or
documentation as may be required by the
Escrow Agent and the date upon which the
disbursement is desired, provided that the
date of the payment must not be less than
seven (7) Business Days after the date upon
which the Escrow Agent receives the Request
and the other items set forth in clauses
(ii) through (vi) below;
(2) A certification from Sellers, Alterra and
Lessees that, as of the date of the Request,
no Event of Default exists under this
Agreement or any of the Transaction
Documents, all representations and
warranties set forth in this Agreement and
all of the other Transaction Documents are
accurate and complete, and there are no
actions, suits or proceedings pending, or to
the knowledge of the person making the
certification, threatened or involving (or
that could involve) Sellers, Alterra or
Lessee or all or any part of the Facilities
and that could impair the Facilities or the
ability of Sellers, Alterra or Lessee to
perform under this Agreement or any of the
other Transaction Documents;
(3) Certificates of Sellers' architect and/or
engineer, Purchaser's Architect, if any, and
Sellers, certified to Purchaser, the Escrow
Agent and Sellers and certifying that (a)
the Request is correct and,
27
32
to the best of its knowledge, all work on
the Construction Facilities up to the date
thereof has been done in substantial
compliance with the Plans and Specifications
therefor; (b) to the date thereof, there has
been no material deviation from the budgeted
cost of the Construction Facilities or
construction progress schedule, except as
authorized by Sellers and approved by
Purchaser; and (c) the undisbursed portion
of the Completion Holdback will be
sufficient to meet all known costs to
complete the work covered by the Plans and
Specifications, after giving effect to all
amounts previously disbursed, plus the
amount then requested; and
(4) Evidence that Sellers have delivered the
items described in (i)-(iii) above to
Purchaser;
(2) Upon the request of Purchaser, the Escrow Agent is
prepared, without condition, to issue to Purchaser a
date-down endorsement, dated as of the date of the
disbursement, insuring Purchaser's title to the
Construction Facilities subject to no other
exceptions than are set forth on the Title Policies
delivered to Purchaser at closing; and
(3) The Escrow Agent has not received from Purchaser,
within five (5) Business Days after receipt of the
items described in subparagraph (a) above, written
notice from Purchaser disputing the matters set forth
in Sellers' submission pursuant to subparagraph (a)
above.
13.04. Limitation on Disbursements. In no event will the Escrow Agent
pay amounts in excess of the amounts actually paid out by Sellers for services
or materials incorporated into the Construction Facilities.
13.05. Sufficiency of Completion Holdback. Purchaser shall be entitled
to instruct the Escrow Agent not to make a disbursement or instruct the Escrow
Agent to make a disbursement in an amount less than the amount requested) if
Purchaser is not satisfied in its sole discretion that following the requested
disbursement the unpaid proceeds of the Completion Holdback budgeted for the
construction of the Construction Facilities will be at least equal to the sum of
(a) the estimated Soft Costs to complete the Construction Facilities in
accordance with the Plans and Specifications (including all costs in connection
with changes in the Plans and Specifications) and (b) 110% of the estimated Hard
Costs to complete the Construction Facilities in accordance with the Plans and
Specifications (including all costs incurred in connection with changes in the
Plans and Specifications). If at any time it appears to Purchaser that the
unpaid balance of the Completion Holdback is less than the amount required by
this Section, Purchaser may give written notice to Sellers specifying the amount
of the deficiency and Sellers immediately will deposit with Escrow
28
33
Agent the amount of the deficiency, which will be expended first in the same
manner as Completion Holdback before any further payment of the Completion
Holdback will be made by Purchaser. Purchaser may determine the cost of
construction of the Construction Facilities and Sellers will be obligated to pay
any sums so determined in excess of the Completion Holdback prior to any payment
under this Agreement.
13.06. Payments to Contractor, Subcontractors and Suppliers. In order
to induce the Escrow Agent to insure Purchaser's title to the Construction
Facilities without exception for the construction or mechanics' liens, the
Escrow Agent may make payments directly to any contractor, subcontractor or
supplier furnishing labor or materials to the Construction Facilities.
13.07. Purchaser's Right to Cure. If Sellers or Alterra fail to perform
any of Sellers' or Alterra's undertakings set forth in this Agreement or in any
other Transaction Document, Purchaser may, but will not be required to, perform
the same, and Sellers and Alterra, jointly and severally, will reimburse
Purchaser any amounts expended by Purchaser in so doing. In addition to the
foregoing, Purchaser may make require the Escrow Agent to pay the Completion
Holdback to Purchaser in payment of rent and other charges due under the Master
Leases without regard to whether such payments have been approved by Sellers.
13.08. Application of Advances. Sellers will apply each payment of
Completion Holdback against amounts due and payable for construction of the
Construction Facilities or obligations in connection therewith. Nothing
contained in this Agreement will impose upon Purchaser any obligation to see to
the proper application of the advances by Sellers or any other party.
13.09. Construction or Other Liens. In the event any construction or
other lien or encumbrance is filed or attached against the Construction
Facilities or any part thereof without the prior written consent of Purchaser,
Purchaser may, at its option and without regard to the priority of such
construction or other lien or encumbrance, and without regard to any defenses
that Sellers may have with respect to the lien or encumbrance, pay the same, and
Sellers and Alterra, jointly and severally, will reimburse all amounts expended
by Purchaser for such purpose within ten (10) days of written notice thereof.
13.10. Conditions to Final Payment. Purchaser shall be entitled to
instruct the Escrow Agent to withhold the final payment of the Completion
Holdback from the Completion Escrow unless and until all of the following
conditions have been fulfilled to Purchaser's satisfaction:
(1) All conditions for all previous disbursements have
been, and, as of the date of the final disbursement
continue to be, fulfilled.
29
34
(2) Purchaser and Escrow Agent have received, at least
seven (7) Business Days prior to the final payment,
the following items, all of which Sellers and Alterra
agree to obtain and submit to Purchaser at Sellers'
sole expense:
(1) A final "as built" survey prepared and
certified in accordance with the Survey
Requirements;
(2) Certificates of Sellers' architect and/or
engineer, Purchaser's Architect, if any, and
Sellers certified to both Purchaser and
Sellers and certifying that (a) to the best
of its knowledge, the Construction
Facilities are complete in accordance with
the Plans and Specifications therefor; (b)
to the date thereof, there has been no
material deviation from the budgeted cost of
the Construction Facilities or construction
progress schedule, except as authorized by
Sellers and approved by Purchaser; and (c)
the amount of the final payment will be
sufficient to meet all known costs to
complete the work covered by the Plans and
Specifications;
(3) A final, unconditional certificate of
occupancy for the Construction Facilities.
ARTICLE XIV
GUARANTY OF COMPLETION; FORCE MAJEURE
14.01 Guaranty of Completion. Subject to a temporary suspension of
performance pursuant to Section 14.02, but regardless of whether the cost
thereof exceeds the amount of the Completion Holdback, Sellers and Alterra will
diligently and continuously carry out or cause to be carried out the
construction of the Construction Facilities so as to insure the completion of
construction of the Construction Facilities, the opening of the Construction
Facilities and the acquisition of all Facilities Licenses for the Construction
Facilities, all by the applicable Completion Date. Regardless of whether the
cost thereof exceeds the amount of the Completion Holdback, Sellers and Alterra
will be responsible for payment of all costs of completing, opening and
licensing the Construction Facilities, including the payment of all costs in
excess of the Construction Budgets. Sellers and Alterra promptly will correct
any structural defects in the Construction Facilities or any departure from the
Plans and Specifications not previously approved by Purchaser. The approval or
absence of disapproval by Purchaser of any payment of Completion Holdback from
the Completion Escrow shall not constitute a waiver of Purchaser's right to
require compliance with this Article XIV.
14.02 Force Majeure. Upon the occurrence and during the continuance of
an Event of Force Majeure and the giving of written notice thereof to Purchaser,
Sellers and Alterra shall be
30
35
temporarily released without any liability on their part from the performance of
their obligations under Article XIII and Section 14.01, except for the
obligation to pay any amounts due and owing thereunder, but only to the extent
and only for the period that their performance of each such obligation is
prevented by the Event of Force Majeure. Such notice shall include a description
of the nature of the Event of Force Majeure, and its cause and possible
consequences. Sellers and Alterra shall promptly notify Purchaser of the
termination of such event. Upon the request of Purchaser, Sellers and Alterra
shall provide confirmation of the existence of the circumstances constituting an
Event of Force Majeure. Such evidence may consist of a statement of an
appropriate governmental department or agency where available, or a statement
describing in detail the facts claimed to constitute an Event of Force Majeure.
During the period that the performance by Sellers and Alterra has been suspended
by reason of an Event of Force Majeure, Purchaser may likewise suspend the
performance of all or part of its obligations under this Agreement to the extent
that such suspension is commercially reasonable and, notwithstanding anything in
this Agreement to the contrary, Escrow Agent shall make no disbursements from
the Construction Account.
ARTICLE XV
INDEMNIFICATION
15.01. Sellers' and Alterra's Indemnification. Subject to the
limitations contained herein and in Section 15.02, Sellers and Alterra, jointly
and severally (together, the "Indemnitors"), shall indemnify and hold Purchaser,
and its successors and assigns, and their employees, officers, and directors
(each an "Indemnified Party", and together, the "Indemnified Parties"), harmless
from and against any and all damages, losses, liabilities, costs, actions,
suits, proceedings, demands, assessments, and judgements, including, but not
limited to, reasonable attorney's fees and reasonable costs and expenses of
litigation, arising out of or in any manner related to any of the following
(unless arising solely out of the gross negligence or intentional misconduct of
an Indemnified Party):
(a) Except as otherwise provided in this Agreement, any and
all obligations relating to the ownership of Sellers' Assets and the
operation of the Facilities that exist immediately prior to the Closing
Date;
(b) Any misrepresentation of a material fact, breach of
warranty or nonfulfillment of any agreement on the part of Sellers or
Alterra under this Agreement or from any misrepresentations in any
certificate furnished or to be furnished to Purchaser hereunder;
(c) Any failure by Sellers or Alterra in connection with the
transaction contemplated herein to comply with the requirements of any
laws or regulations relating to bulk sales or transfers; and
(d) Any sums due by Sellers or Alterra for Medicare and
Medicaid adjustments arising from the operation of Facilities conveyed
pursuant to this Agreement.
31
36
For purposes of Section 15.01(a), an obligation shall be deemed to "exist"
immediately prior to the Closing Date if it relates to events that occurred
prior to the Closing Date even if it is not asserted until after the Closing
Date.
15.02. Procedure. If an Indemnified Party asserts that the Indemnitors
are subject to a Claim for indemnification pursuant to Section 15.01, the
Indemnified Party promptly shall notify the Indemnitors in writing of the Claim
and shall describe in the notice the Claim in sufficient detail in order to
permit the Indemnitors to evaluate the nature and cause of the Claim. If the
asserted Claim arises or is in connection with a claim, suit or demand filed by
a third party, the Indemnitors shall be entitled to defend against the Claim
with counsel reasonably satisfactory to the Indemnified Party. The Indemnified
Party may continue to employ counsel of its own, but such costs shall be borne
by the Indemnified Party as long as the Indemnitor continues to so defend. If
the Indemnitors fail to respond or does not admit responsibility for
indemnification, the Indemnified Party may take such necessary steps to defend
itself and any reasonable costs associated therewith may be included as part of
the asserted Claim for indemnification. For all Claims that are not Claims
arising from a third party, the Indemnitors shall notify the Indemnified Party
as to its assertion of whether the Claim is covered by this Article, including
specific reasons for non-coverage, within 30 days of receipt of written notice
from the Indemnified Party describing the Claim in reasonable detail.
ARTICLE XVI
MISCELLANEOUS
16.01. Notices. Any notice, request or other communication to be given
by any party hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, by overnight delivery, hand delivery or
facsimile transmission to the following address:
To Sellers or Alterra: Alterra Healthcare Corporation
000 X. Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With copy to Xxxxxx & Xxxxxx
(which shall not 2700 International Tower
constitute notice): 000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (404) 525-224
32
37
To Purchaser: Omega Healthcare Investors, Inc.
000 Xxxxxxx Xxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attn: F. Xxxxx Xxxxxxx and Xxxxx
Xxxxxx Xxxxxx
Telephone No.: 734/000-0000
Facsimile No.: 734/887-0201
With copy to Xxxxxx Xxxxxxx PLLC
(which shall not 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
constitute notice): Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Notices shall be deemed given three (3) business days after deposit in
the mail as provided herein or upon actual receipt if sent by overnight
delivery, facsimile transmission or hand delivery.
16.02. Assignment. No party may assign, directly or indirectly, its
rights or obligations hereunder without the prior written consent of the other
parties.
16.03. Sole Agreement. This Agreement may not be amended or modified in
any respect whatsoever except by an instrument in writing signed by the parties
hereto. This Agreement, the disclosure schedules for each of the parties and the
documents executed and delivered pursuant hereto constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior negotiations, discussions, writings and agreements between
them.
16.04. Captions. The captions of this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
16.05. Severability. Should any one or more of the provisions of this
Agreement be determined to be invalid, unlawful or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby.
16.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
16.07. Knowledge Defined. To the extent that any of the representations
and warranties contained in this Agreement is limited by the phrases "to the
knowledge of" or "to Sellers' knowledge" or "to the best knowledge of Sellers
and Alterra" or "Purchaser has no knowledge of"
33
38
or "Seller has no knowledge of" or words or phrases of similar import, the same
shall mean to the actual knowledge of any of the corporate officers or directors
of the party or its subsidiaries making said representation or warranty, except
that any representation or warranty made by Sellers with respect to the
Facilities or any of Sellers' Assets also shall mean the actual knowledge of the
Administrator and Director of Nursing of the Facilities. To the extent that any
of the representations and warranties contained in this Agreement refers to
verbal notice to a party, such notice shall be deemed to have been received if
delivered to any officer of such party or to an officer of one of its
subsidiaries.
16.08. Third Party Beneficiary. Nothing in this Agreement is intended
to or shall not be construed to confer upon or create in any person (other than
the parties hereto) any rights or remedies under or by reason of this Agreement,
including without limitation, any right to enforce this Agreement.
16.09. Attorneys' Fees. In the event of a dispute between the parties
hereto with respect to the interpretation or enforcement of the terms hereof,
the prevailing party in any action resulting therefrom shall be entitled to
collect from the other its reasonable costs and attorneys' fees, including its
costs and fees on appeal.
16.10. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean "including without limitation."
16.11. Survival. The representations, warranties, covenants or
conditions set forth herein shall survive the Closing.
16.12. Governing Law. THIS AGREEMENT AND THE TRANSACTION DOCUMENTS
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MICHIGAN. SELLERS AND ALTERRA CONSENT TO IN PERSONAM JURISDICTION BEFORE THE
STATE AND FEDERAL COURTS OF THE STATE OF MICHIGAN AND THE STATES IN WHICH THE
FACILITIES ARE LOCATED, AND AGREES THAT ALL DISPUTES CONCERNING THIS AGREEMENT
MAY BE HEARD, AT PURCHASER'S OPTION, IN THE STATE AND FEDERAL COURTS LOCATED IN
THE STATE OF MICHIGAN OR THE STATES IN WHICH THE FACILITIES ARE LOCATED. SELLERS
AND ALTERRA AGREE THAT SERVICE OF PROCESS MAY BE EFFECTED UPON SELLERS AND
ALTERRA UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE OF MICHIGAN OR
THE
34
39
STATES IN WHICH THE FACILITIES ARE LOCATED AND IRREVOCABLY WAIVES ANY OBJECTION
TO VENUE IN THE STATE AND FEDERAL COURTS OF THE STATE OF MICHIGAN OR THE STATES
IN WHICH THE FACILITIES ARE LOCATED.
16.13. Arbitration of Disputes Following Closing. If a Controversy
shall arise, the Controversy shall be determined by arbitration, which shall be
conducted in accordance with the rules and procedures of the American
Arbitration Association by three (3) arbitrators selected in accordance with its
procedures. The decision of the arbitrators shall be final and binding and shall
be enforceable in any court of competent jurisdiction. The decision of the
arbitrators shall set forth in writing the basis for the decision, and in
rendering such decision, the arbitrators shall not add to, subtract from or
otherwise modify the provisions of this Agreement and any other agreements,
documents and instruments executed pursuant to or in connection with this
Agreement. The expense of the arbitration shall be divided equally between
Alterra and Purchaser unless otherwise specified in award. The prevailing party,
as determined by the arbitrators, shall be entitled to recover its costs and
expenses, including attorney fees. The arbitration shall be conducted in
Detroit, Michigan. In any such arbitration, the parties shall be entitled to
conduct discovery in the same manner as permitted under Federal Rules of Civil
Procedure 27 through 37. No provision in this Section 16.13 shall limit the
right of any party to this Agreement to obtain provisional or ancillary remedies
from a court of competent jurisdiction before, after or during the pendency of
any arbitration. The exercise of such a remedy does not waive the right of any
party to arbitration. The Section shall not apply to any controversy that may
arise between the parties prior to the Closing.
16.14 Joint and Several. The liability of Sellers and Alterra under
this Agreement shall be joint and several.
Signatures on following pages.
35
40
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first set forth therein.
OMEGA HEALTHCARE INVESTORS,
INC., a Maryland corporation
June ____, 1999 By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Vice President and General Counsel
OMEGA (KANSAS), INC.,
a Maryland corporation
June ____, 1999 By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Vice President and General Counsel
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
June ____, 1999 By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxxx
Senior Vice President
STERLING HOUSE CORPORATION,
a Kansas corporation
June ____, 1999 By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxxx
Senior Vice President
ALS-CLARE BRIDGE, INC.,
a Delaware corporation
June ____, 1999 By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxxx
Senior Vice President
41
STATE OF MICHIGAN )
) ss:
COUNTY OF WASHTENAW )
The foregoing instrument was acknowledged before me on June ____, 1999,
by Xxxxx X. Xxxxxx who is the Vice President and General Counsel of Omega
Healthcare Investors, Inc., a Maryland corporation, and Omega (Kansas), Inc., a
Kansas corporation, on behalf of the corporations, who acknowledged the same to
be her free act and deed and the free act and deed of the corporations.
Notary Public, _______ County, Michigan
My commission expires:
STATE OF WISCONSIN )
) ss:
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on June ____, 1999,
by Xxxx X. Xxxxxxxxx who is a Senior Vice President of Alterra Healthcare
Corporation, a Delaware corporation, Sterling House Corporation, a Kansas
corporation, and ALS-Clare Bridge, Inc., a Delaware corporation, on behalf of
the corporations, who acknowledged the same to be his free act and deed and the
free act and deed of the corporation.
Notary Public, _______ County, Wisconsin
My commission expires:
