Exhibit 2.07
PURCHASE AND SALE AGREEMENT
SAN DIEGO REAL ESTATE
This Agreement is made and entered into this19th day of November, 1996
by and between San Diego Health Associates Limited Partnership, a Delaware
limited partnership ("Seller") and Regency Rehab Properties, Inc., a California
corporation ("Purchaser").
ARTICLE I
PURCHASE AND SALE
1.01. On the terms and subject to the conditions set forth herein,
Seller does hereby agree to sell to Purchaser and Purchaser does hereby agree to
acquire from Seller all of Seller's right, title and interest in and to the
following:
(a) The hospital condominium unit more particularly described in
Exhibit 1.01(a)(1) (the "Hospital Condominium Unit") and the improvements
thereon that comprise the free standing rehabilitation hospital with 57 acute
rehabilitation beds and 53 skilled nursing facility beds and commonly known as
Continental Rehabilitation Hospital of San Diego, 555 Washington Street, San
Diego, California (the "Hospital"), including without limitation the Seller's
interest under the Condominium Plan, the Hospital/Medical Offices Declaration
and the Master Declaration, the Articles of Incorporation and Bylaws of the
Association and the Maintenance Agreement (as all such terms are defined in
Exhibit 1.01(a)(1), which documents are collectively referred to herein as the
"Condominium Documents"), Seller's membership in the Association and the
Seller's interest under the "Hospital Sublease" dated October 26, 1992 between
Oliver McMillan Village Hillcrest 2, L.P. (predecessor in interest to Lennar
U.S. Partners, L.P.), as ground sublessor, to Seller, as ground sublessee (the
"Ground Sublease").
(b) The lessor's interest under the "Amended and Restated Lease
Rehabilitation Hospital of San Diego" dated October 26, 1992 between Seller, as
lessor, and San Diego Rehab Limited Partnership, a Delaware limited partnership
("SDRLP"), as lessee, as amended by First Amendment to Amended and Restated
Lease dated as of October 28, 1992 (as amended, the "Hospital Lease").
(c) Seller's interest under the Parking Agreement between Oliver
McMillan Village Hillcrest 2, L.P. (predecessor in interest to Lennar U.S.
Partners, L.P.), as grantor, and Seller, as grantee, dated October 26, 1992,
providing the parking rights for the Hospital (the "Parking Agreement").
Hereinafter the Hospital Condominium Unit, the Seller's interest under
the Hospital Lease, the Ground Sublease and the Parking Agreement will sometimes
be collectively referred to as the "Seller's Assets."
1.02. Subject to the terms and conditions set forth in this Agreement,
Purchaser shall assume and agree to pay, perform and discharge the following
liabilities and obligations (the "Assumed Liabilities"):
(a) The liabilities and obligations of Seller under the
Condominium Documents which relate to the
periods on and after the Closing Date; and
(b) The liabilities and obligations of Seller as the lessor
under the Hospital Lease and Ground
Sublease which relate to periods on and after the Closing Date; and
(c) The liabilities and obligations of Seller as the grantee under the
Parking Agreement which relate to periods on and after the Closing Date.
1.03. Except for the Assumed Liabilities, no obligation or liability of
Seller relating to or arising from the Seller's Assets prior to the Closing Date
is to be assumed by Purchaser.
ARTICLE II
PURCHASE PRICE
2.01. The purchase price for Seller's Assets shall be Thirteen Million
Three Hundred Thousand and no/100 Dollars ($13,300,000) (the "Purchase Price")
which shall be payable in cash at Closing concurrently with the transfer of the
Seller's Assets to, and the assumption of the Assumed Liabilities by, Purchaser,
which cash shall be paid at Closing, subject to adjustment to reflect the costs,
expenses and prorations for which Seller and Purchaser are responsible under
Paragraph 4 hereof.
ARTICLE III
CLOSING
3.01. Provided that all of the conditions to closing set forth in
Paragraphs 12.01 and 12.02 have been satisfied or waived, the purchase and sale
of the Seller's Assets shall occur effective as of 12:01 a.m. on January 1, 1997
unless extended by mutual agreement of the parties (the "Outside Closing Date").
Closing shall occur at offices of Lawyers Title Insurance Company at 10:00 am or
at such other time and place as may be agreed upon by the parties in order to
ensure closing of the transactions provided for herein by the Outside Closing
Date. The actual date of Closing is referred to herein as the "Closing Date."
3.02. At Closing, Seller shall deliver title to the Hospital
Condominium Unit and the Seller's interest under the Hospital Lease, the Ground
Sublease and the Parking Agreement to Purchaser free and clear of all liens and
encumbrances other than the following (collectively, the "Permitted
Exceptions"):
(a) Liens for real and personal property taxes which are not yet
due and payable;
(b) The title matters listed in Exhibit 3.02(b); and
(c) Such liens as may be approved or deemed approved by Purchaser
pursuant to Paragraph 10.01.
3.03. Title to the Seller's Assets shall be conveyed to Purchaser at
Closing by Seller's delivery of
the following documents:
(a) Seller shall deliver a Grant Deed in the form attached hereto
as Exhibit 3.03(a) (the "Grant
Deed").
(b) Seller shall deliver an Assignment of Lease in the form attached
hereto as Exhibit 3.03(b) (the "Hospital Lease Assignment Agreement").
(c) Seller shall deliver an Assignment of Lease in the form attached
hereto as Exhibit 3.03(c) (the "Ground Sublease Assignment Agreement").
(d) Seller shall deliver an Assignment of Seller's interest in the
Parking Agreement in the form attached hereto as Exhibit 3.03(d)(the "Parking
Assignment").
ARTICLE IV
COSTS AND PRORATIONS
The costs of the transaction and the expenses related to the ownership
and operation of the Seller's Assets shall be allocated between Seller and
Purchaser as follows:
4.01. Seller and Purchaser shall share on a 50-50 basis any transfer or
excise taxes due on the transfer of title to the Hospital Condominium Unit or
Seller's interest in the Hospital Lease, the Ground Sublease or the Parking
Agreement to Purchaser.
4.02. Seller shall pay the base premium for a standard ALTA owner's
policy of title insurance for the Hospital Condominium Unit in the amount of the
Purchase Price, insuring Purchaser's title to the Hospital Condominium Unit;
Purchaser shall pay the cost of any premiums for extended coverage which
Purchaser may elect to secure, including the cost of the ALTA survey ("Survey")
required to obtain the same, any lender's coverage which it elects or is
required to secure in connection with its acquisition of the Seller's Assets or
financing thereof and any title endorsements which it elects to obtain or is
required to obtain to satisfy the requirements of its lender.
4.03. Purchaser shall pay the cost of any environmental Phase I
assessment of the Seller's Assets which Purchaser elects to secure prior to
Closing.
4.04. Any rent due to Seller under the terms of the Hospital Lease
shall be prorated as of the Closing Date, it being understood and agreed that
there will be no proration with respect to the payment of any real and personal
property taxes, ground rent, rent, and assessments under the Condominium
Documents or other expenses related to the ownership of the Hospital Condominium
Unit or the ownership or operation of the Hospital as Seller has no
responsibility for such costs and expenses under the terms of the Hospital Lease
but SDRLP is solely responsible therefor under the terms thereof.
4.05. Seller and Purchaser shall each pay their own attorneys fees
incurred in connection with the preparation and negotiation of this Agreement
and the consummation of the transaction provided for herein.
4.06. Purchaser and Seller shall share recording fees related to the
recording of the conveyancing documents and any escrow fees on a 50-50 basis.
4.07. Seller shall pay the cost of obtaining and recording any releases
and consents necessary to deliver title to the Seller's Assets in accordance
with the terms of this Agreement. Without limitation of the foregoing, Seller
shall pay any reasonable attorneys fees, processing fees and other fees and
expenses contemplated by the terms of the Ground Sublease, the Condominium
Documents or the Parking Agreement as a condition to securing any consents to a
transfer or assignment thereof.
4.08. Purchaser shall pay any filing fees due with respect to the
transaction evidenced by this Agreement and those other Purchase and Sale
Agreements listed in Exhibit 4.08 (the "Other Agreements") under the Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
4.09. Purchaser shall reimburse Seller at Closing for any prepaid
expenses and deposits which relate to the period on and after the Closing Date.
4.10. Seller shall pay any reasonable attorneys fees, processing fees
and other fees and expenses contemplated by the terms of that Amended and
Restated Credit Agreement dated September 26, 1995 between Seller and
NationsBank of Texas, N.A. (the "Seller's Credit Agreement"), as a condition to
securing consent to the sale of the Seller's Assets and Purchaser shall pay any
reasonable attorneys' fees, processing fees and other fees and expenses
contemplated by the terms of the Credit Agreement dated December 28, 1995
between Regency Health Services, Inc. and NationsBank of Texas, N.A.
ARTICLE V
POSSESSION
On the Closing Date, Purchaser shall be entitled to possession of the
Seller's Assets, subject only to the rights of SDRLP under the Hospital Lease.
ARTICLE VI
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby warrants and represents to Purchaser that, except as otherwise
specifically set forth in the disclosure letter addressed to Purchaser and dated
the date hereof (the "Seller Disclosure Letter"):
6.01. Status of Seller. Seller is a duly organized, validly existing
Delaware limited partnership and is duly qualified to do business in the State
of California and is in good standing under the laws thereof. Horizon/CMS
Healthcare Corporation ("Horizon") is a duly organized, validly existing
Delaware corporation and is in good standing under the laws thereof.
6.02. Validity and Conflicts. This Agreement is valid, binding and
enforceable against Seller in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
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). Subject to Seller obtaining
those Third Party Consents and Regulatory Approvals (as defined below) for which
it is responsible under the terms hereof, the execution of this Agreement and
the consummation of the transactions contemplated herein in accordance with the
terms hereof will not result in a breach of the terms and conditions of nor
constitute a default under or violation of Seller's Partnership Agreement or any
law, regulation, court order, mortgage, note, bond, indenture, agreement,
license or other instrument or obligation to which Seller is now a party or by
which any of Seller's Assets may be bound or affected or any agreement, option,
understanding or commitment or any or privilege granted by Seller to any other
party to purchase or otherwise acquire the Seller's Assets or result in the
acceleration of or an increase in the interest rate payable under any
indebtedness other than indebtedness of Seller which does not relate to the
Hospital Condominium Unit or which is to be discharged by Seller as of the
Closing Date.
6.03. Authority. Subject to Seller obtaining those Third Party Consents
and Regulatory Approvals for which it is responsible under the terms hereof,
Seller has full partnership power and authority to execute and to deliver this
Agreement and all related documents, and to carry out the transactions
contemplated herein and therein. Seller further has full power and authority (i)
to own and lease the Hospital Condominium Unit as the same is presently owned
and leased and (ii) to conduct its business as the same is now being conducted.
6.04. Absence of Liabilities. There are no material liabilities
with respect to the Hospital
Condominium Unit of which Seller has knowledge and which Seller has failed to
disclose to Purchaser.
6.05. The Licenses. To the extent not obtained by SDRLP under the
Hospital Lease in accordance with the requirements thereof, Seller has all
material licenses, permits and authorizations, if any, necessary for the lawful
ownership and leasing under the terms of the Hospital Lease of the Hospital
Condominium Unit (the "Seller Licenses"). True and correct copies of all of the
Seller Licenses are attached hereto as Exhibit 6.05. Seller has not received
written or verbal notice of any action or proceeding which 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 Seller Licenses.
6.06. Compliance with Law. Seller has no knowledge that the
improvements of which the Hospital Condominium Unit comprises a part were not
constructed and have not been maintained in substantial compliance with all
applicable health and safety laws, regulations, ordinances, standards and orders
issued by any municipal, county, state or federal agency having authority there
over and with all applicable municipal health, building and zoning laws and
regulations (including, without limitation, the building, zoning and life safety
codes) where the failure to comply therewith would have a material adverse
effect on the business, property, condition (financial or otherwise) of the
Hospital Condominium Unit or the operation of the Hospital under the terms of
the Hospital Lease and there are no outstanding cited deficiencies or work
orders issued to Seller with respect to the Hospital Condominium Unit for which
it is responsible (as compared to for which SDRLP is responsible under the
Hospital Lease in accordance with the terms thereof) under any of the foregoing
which have not been corrected as of the date hereof or which will not be
corrected as of the Closing Date.
6.07. Books and Records. All of the Seller's books and records
relating to the Seller's Assets are
true and correct in all material respects.
6.08. Title. Seller has title to all of the Seller's Assets free
and clear of all liens, charges
and encumbrances other than the liens provided for in Paragraph 3.02. Seller
has not received notice of any
pending or threatened condemnation proceedings with respect to the Hospital
Condominium Unit.
6.09. Taxes and Tax Returns. All tax and other related returns, reports
and filings of any kind or nature, required to be filed by Seller prior to date
of execution of this Agreement with respect to the Hospital Condominium Unit for
which Seller (as compared to SDRLP under the Hospital Lease) is responsible 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 Seller's
ownership and leasing under the terms of the Hospital Lease of the Hospital
Condominium Unit have been timely paid, except to the extent that the same are
being duly contested in good faith in accordance with applicable law.
6.10. Environmental Issues.
(a) Except in accordance, and in compliance, with any and all
applicable local, state and federal governmental laws, regulations and
requirements (collectively, the "Environmental Laws") relating to environmental
and occupational health and safety matters, and hazardous materials, substances
or wastes (as defined under any applicable Environmental Laws), Seller has (i)
not released into the environment or discharged, placed or disposed of any such
hazardous materials, substances or wastes or caused the same to be so released
into the environment or discharged, placed or disposed of at, on or under the
Hospital Condominium Unit other than to the extent the same will not have a
material adverse affect on the condition, financial or otherwise, of the
Hospital Condominium Unit, (ii) not installed any underground storage tanks at
or under the Hospital Condominium Unit and (iii) at all times maintained or
caused to be maintained the Hospital Condominium Unit in compliance with all
Environmental Laws, except where the failure to so comply would not have a
material adverse affect on the condition, financial or otherwise, of the
Hospital Condominium Unit.
(b) With respect to the Hospital Condominium Unit prior to the date of
the Seller's ownership thereof, to the best of Seller's knowledge after due
inquiry of the Director of Plant Operations at the Hospital, (i) except to the
extent permitted by applicable Environmental Laws, no hazardous materials,
substances or wastes were located on or at the Hospital Condominium Unit or were
released into the environment or discharged, placed or disposed of in, on or
under the Hospital Condominium Unit, (ii) except to the extent permitted by
applicable Environmental Laws, no underground storage tanks are or were located
at the Hospital Condominium Unit, (iii) the Hospital Condominium Unit is not
located on property which was used as a dump for waste material, and (iv) the
Hospital Condominium Unit has at all times complied with, all Environmental
Laws, except to the extent in each of the foregoing clauses (i) through (iv)
that any such non-compliance would not have a material adverse effect on the
Hospital Condominium Unit. Seller has not received any written notice from any
governmental authority or any written complaint from any third party with
respect to its alleged noncompliance with, or potential liability under, any
Environmental Laws at the Hospital Condominium Unit which remains unresolved as
of the date hereof.
(c) Seller will use its reasonable efforts to provide to Purchaser any
written assessments prepared by or on behalf of Seller concerning the hazardous
waste conditions at the Hospital Condominium Unit which are currently in the
possession of Seller.
6.11. Necessary Action. Seller 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 Seller (i) to enter into and to deliver this Agreement and any and
all documents and agreements executed by Seller in connection herewith or in
furtherance hereof and (ii) to carry out the terms hereof and thereof and the
transaction contemplated herein and therein, which action shall include, but not
be limited to, obtaining the Third Party Consents and Regulatory Approvals for
which Seller is responsible hereunder. No other action by or on behalf of Seller
is or will be necessary to authorize the execution, delivery and performance of
this Agreement and any documents and agreements executed by Seller in connection
herewith or consummation of the transactions contemplated herein, other than
securing those Third Party Consents and Regulatory Approvals (as those terms are
defined below) for which Seller is responsible under the terms hereof. Seller
represents and warrants that as of the date of execution of this Agreement, it
has secured the consent of its partners and of the Board of Directors of Horizon
to the execution of this Agreement and of any documents and agreements necessary
to carry out the terms hereof and for the consummation of the transactions
contemplated by this Agreement. Nothing herein shall be construed as a guarantee
by Seller that it will be able to secure the Third Party Consents or Regulatory
Approvals for which it is responsible, but rather this paragraph shall be
limited to Seller's representation and warranty that it will use its best
efforts to secure such Third Party Consents and Regulatory Approvals.
6.12. Litigation. There is no, nor has Seller received written or
verbal notice of any, litigation, administrative investigation or other
proceeding pending or, to the best of Seller's knowledge based on written notice
with respect thereto, threatened against or relating to Seller by any
governmental authority having jurisdiction over Seller or by any other party
which seeks to challenge Seller's title to the Seller's Assets or Seller's right
or ability to consummate the transaction provided for herein or to impose any
lien on Seller's Assets not permitted by the terms of this Agreement. Seller is
not a party to nor is Seller bound by any orders, judgments, injunctions,
decrees or settlement agreements under which it may have continuing obligations
as of the date hereof or as of the Closing Date and which are likely to
materially restrict or affect Seller's present business operations. The right or
ability of Seller to consummate the transaction contemplated herein has not been
challenged by any governmental agency or any other person and Seller has no
knowledge of the occurrence of any event which would provide a reasonable basis
for any such litigation, investigation or other proceeding.
6.13. The Hospital Lease and the Ground Sublease. True and correct
copies of the Hospital Lease and the Ground Sublease (collectively, the
"Leases") have been provided by Seller to Purchaser. The Leases remain in full
force and effect and have not been amended or modified except as set forth in
Article 1. Seller has not received from any other party to either of the Leases
any written notice that Seller is in default of its obligations under the Leases
nor does Seller have knowledge of any events which, with the passage of time or
the giving of notice, would constitute a material default thereunder. Seller
enjoys exclusive, peaceful and undisturbed possession under the Ground Sublease
(subject to the Hospital Lease). There are no security deposits posted with
respect to the Leases.
6.14. Insurance. All of the insurance required to be maintained by
Seller with respect to the Hospital Condominium Unit and the other Seller's
Assets and the Hospital is maintained by SDRLP under the terms of the Hospital
Lease. All of such insurance names Seller as an additional insured or loss payee
thereunder and, to the best of Seller's knowledge based on Seller having not
received any notice of termination or cancellation as of the date hereof, all of
such insurance is in full force and effect as of the date hereof.
6.15 Condominium Documents. Seller has provided to Purchaser true,
correct and complete copies of the Condominium Documents. The Condominium
Documents remain in full force and effect and have not been amended or modified
except as set forth in Article 1. Seller has not received from any other party
to any of the Condominium Documents any written notice that Seller is in default
of its obligations thereunder nor does Seller have knowledge of any events
which, with the passage of time or the giving of notice, would constitute a
material default thereunder by any party thereto. There are no condominium
governing documents or agreements, other than the Condominium Documents, that
establish, modify or govern the rights of owners of condominium units that are
subject to the Condominium Documents.
6.16. Parking Agreement. Seller has provided Purchaser with a true and
correct copy of the Parking Agreement and the Settlement Agreement executed by
Seller on October 31, 1996 with respect thereto. The Parking Agreement is in
full force and effect and has not been modified or amended but has been
interpreted by the terms of the Settlement Agreement. Seller is not in default
of any of its obligations under the Parking Agreement nor is Seller aware of any
default or any action or omission which, with the passage of time or the giving
of notice or both, would constitute a default under the Parking Agreement by any
party thereto. At Closing, Seller shall deliver to Purchaser a duly executed
assignment of the Parking Agreement.
6.17. Disclosure. No representation or warranty by or on behalf of
Seller contained in this Agreement, as those representations have been modified
by the terms of Seller's Disclosure Letter, if applicable, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material facts which are necessary in order to make the statements contained
herein in light of the circumstances under which they were made, not misleading.
ARTICLE VII
PURCHASER REPRESENTATIONS AND WARRANTIES
Purchaser hereby warrants and represents to Seller that, except as otherwise
specifically set forth in the letter from Purchaser to Seller dated the date
hereof (the "Purchaser Disclosure Letter"):
7.01. Status of Purchaser. Purchaser is a corporation duly
incorporated, validly existing and in
good standing under the laws of the State of California. Regency Health
Services, Inc. ("Regency") is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.
7.02. Validity and Conflicts. This Agreement is valid, binding and
enforceable against Purchaser in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
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 Articles of Incorporation or Bylaws 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 any
of its assets may be bound or affected, subject, however, to Purchaser obtaining
those Third Party Consents and Regulatory Approvals for which it is responsible
under the terms hereof.
7.03. Authority. Subject to obtaining the Third Party Consents and
Regulatory Approvals which it and/or Seller are required to use their best
efforts to secure, 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. Purchaser further has full power
and authority (i) to own and lease the Hospital Condominium Unit from and after
the Closing Date as the same are presently owned and leased and (ii) to conduct
its business from and after the Closing Date as the same is now being conducted.
7.04 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 (i) to enter into and to deliver this Agreement and any
and all documents and agreements executed by Purchaser in connection herewith or
in furtherance hereof and (ii) to carry out the terms hereof and thereof and the
transactions contemplated herein and therein, which action shall include, but
not be limited to, obtaining the Third Party Consents and Regulatory Approvals
for which Purchaser is responsible hereunder. 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 by
Purchaser in connection herewith or consummation of the transactions
contemplated herein, other than securing those Third Party Consents and
Regulatory Approvals for which Purchaser is responsible under the terms hereof.
Purchaser represents and warrants that as of the date of execution of this
Agreement, it has secured the consent of its Board of Directors and of the Board
of Directors of Regency to the execution of this Agreement and of any documents
and agreements necessary to carry out the terms hereof and for the consummation
of the transactions contemplated by this Agreement. Nothing herein shall be
construed as a guarantee by Purchaser that it will be able to secure the Third
Party Consents or Regulatory Approvals for which it is responsible, but rather
this paragraph shall be limited to Purchaser's representation and warranty that
it will use its best efforts to secure such Third Party Consents and Regulatory
Approvals.
7.05. Litigation. There is no, nor has Purchaser received written or
verbal notice of any, litigation, administrative investigation or other
proceeding pending or, to the best of Seller's knowledge based on written notice
with respect thereto, threatened by any governmental authority having
jurisdiction over Purchaser or by any other party or which challenges
Purchaser's ability to consummate the transaction provided for herein. Purchaser
is not a party to or bound by any orders, judgments, injunctions, decrees or
settlement agreements under which it may have continuing obligations as of the
date hereof or as of the Closing Date and which are likely to materially
restrict or affect the business operations of Purchaser either before or after
the Closing. The right or ability of Purchaser to consummate the transaction
contemplated herein has not been challenged by any governmental agency or any
other person and Purchaser has no knowledge of the occurrence of any event which
would provide a reasonable basis for any such litigation, investigation or other
proceeding.
7.06. Taxes and Tax Returns. All tax and other related returns, reports
and filings of any kind or nature, required to be filed by Purchaser prior to
date of execution of this Agreement with respect to its operations 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 Purchaser's operations
have been timely paid, except to the extent that the same are being duly
contested in good faith in accordance with applicable law and adequate reserves
therefor are reflected on Purchaser's financial statements or will be reflected
in any subsequent financial statements prepared by Purchaser.
7.07. Disclosure. No representation or warranty by or on behalf of
Purchaser contained in this Agreement, as those representations have been
modified by the terms of Purchaser's Disclosure Letter, if applicable, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material facts which are necessary in order to make the statements
contained herein in light of the circumstances under which they were made, not
misleading.
ARTICLE VIII
BROKER
Each party hereby represents, covenants, and warrants to the other that
it has employed no broker or finder in connection with the transaction
contemplated herein. Each party agrees to pay any commission or finder's fee
which may be due on account of the transaction contemplated herein to any other
broker or finder employed by it, and to indemnify the other party hereto against
any claim for any commission or finder's fee made by any other broker 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.
ARTICLE IX
SELLER COVENANTS
9.01. Pre-Closing Date. Seller covenants that between the date
hereof and the Closing Date, except
as contemplated by this Agreement or with the consent of Purchaser, which
consent shall not be unreasonably
withheld, conditioned or delayed:
(a) Seller will enforce the obligations of SDRLP under the Hospital
Lease, including but not limited to, any obligations which require SDRLP to
fulfill any obligations imposed on Seller under the Ground Sublease and the
Parking Agreement.
(b) Seller will not sell or agree to sell the Hospital Condominium Unit
nor otherwise enter into any agreements materially affecting the Hospital
Condominium Unit;
(c) Seller will not, except in the ordinary course of business, enter
into any contract or commitment affecting any of the Seller's Assets or incur
any additional indebtedness or amend, extend or renew any current debt
instruments, whether in the ordinary course of business or otherwise, nor will
Seller declare or pay any dividend or other distribution with respect to any of
the Seller Assets nor pledge the accounts receivable of Seller as security for
any indebtedness or lease agreements executed, amended or extended by Seller
after the date hereof; provided, however, that nothing herein shall be construed
as prohibiting (i) Seller from incurring inter-company indebtedness to Horizon
and/or Continental Medical Systems, Inc. ("CMS"), (ii) Horizon and/or CMS from
incurring debt, the proceeds of which may be made available to Seller directly
or by means of a working capital loan from Seller's general partner to Seller or
(iii) Seller from executing any and all documents necessary to amend any debt
instruments under which Horizon and/or CMS may be the borrower and Seller a
guarantor;
(d) During normal business hours, Seller will provide Purchaser and its
agents and employees with access on twenty-four (24) hours notice to the books
and records of Seller relating to the Hospital Condominium Unit provided they do
not interfere with the operation thereof;
(e) If and to the extent Seller has not delegated responsibility
therefor to SDRLP under the Hospital Lease, Seller will maintain the Hospital
Condominium Unit in substantial compliance with all applicable municipal,
county, state and federal laws, regulations, ordinances, standards and orders as
now in effect (including, without limitation, the building, zoning and life
safety codes as currently applied with respect thereto) where the failure to
comply therewith could have a material adverse effect on the business, property,
condition (financial or otherwise) or operation thereof;
(f) If and to the extent Seller has not delegated responsibility
therefor to SDRLP under the Hospital Lease, Seller will take all reasonable
action to achieve substantial compliance with any laws, regulations, ordinances,
standards and orders applicable to the Hospital Condominium Unit which are
enacted or issued after execution of this Agreement and become effective or
require compliance prior to the Closing where the failure to comply therewith
could have a material adverse effect on the business, property, condition
(financial or otherwise) or operation thereof;
(g) Within ten (10) days after Seller's receipt of Purchaser's title,
UCC search and survey objections pursuant to Paragraph 10.01, Seller shall
advise Purchaser whether it intends to correct the defects to which Purchaser
has objected;
(h) If and to the extent Seller has not delegated responsibility
therefor to SDRLP under the Hospital Lease, Seller will file all returns,
reports and filings of any kind or nature, or secure timely extensions for the
filing thereof, required to be filed by Seller including, but not limited to,
state and federal tax returns with respect to the Hospital Condominium Unit and
will timely pay all taxes or other obligations which are due and payable with
respect thereto where the failure to pay the same is reasonably likely to result
in the imposition of a lien on the Hospital Condominium Unit not permitted by
the terms of this Agreement;
(i) Unless specifically prohibited by law, Seller will use its best
efforts to cause all of the conditions to Closing set forth in Paragraphs 12.01
and 12.02 which are within Seller's control to be satisfied prior to the Outside
Closing Date and Seller will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the consummation
of the transactions contemplated by this Agreement or which is intended to cause
any representation, warranty or covenant made by Seller in this Agreement;
(j) Neither Seller nor any of its partners, advisors or others
authorized to act on its behalf shall directly initiate or solicit discussions
relating to any alternative acquisition proposal or similar transaction
including, without limitation, a merger or other business combination involving
Seller or any of the Seller's Assets, or offer to acquire or convey in any
manner, directly or indirectly, all or substantially all of the equity interests
in Seller or the Seller's Assets; provided, however, that public announcements
of the transaction contemplated by this Agreement shall not be prohibited
hereby;
(k) Seller will proceed with all due diligence to secure the
Regulatory Approvals and Third Party
Consents for which it is responsible under the terms hereof; and
(l) Seller will cooperate with Purchaser, at Purchaser's cost and
expense, in any audits relating to the Hospital Condominium Unit which Purchaser
elects to conduct in order to comply with any requirements applicable to it
under the federal securities laws.
9.02. Closing Date. On the Closing Date, Seller will deliver the
following to Purchaser or to a
designated escrow agent in accordance with any written escrow instructions
executed by Seller and Purchaser:
(a) A certificate of Seller dated as of the Closing Date, certifying on
behalf of Seller in such detail as Purchaser may reasonably specify the
fulfillment of the conditions set forth in Paragraphs 12.02 (a) and (b) and
setting forth the incumbency of the partners or the officers of the partners
executing documents on behalf of Seller, a copy of the resolutions adopted by
Seller's Partners authorizing the transaction provided for herein and the
execution of this Purchase Agreement and the other documents contemplated herein
and attaching a certificate of good standing issued by each of the California
and Delaware Secretary of State within no more than thirty (30) days prior to
Closing;
(b) The duly executed Grant Deed;
(c) The duly executed Hospital Lease Assignment Agreement and
the duly executed Ground Sublease
Assignment Agreement;
(d) The duly executed Parking Assignment;
(e) Written Escrow Instructions;
(f) An Estoppel Certificate in substantially the form attached hereto
as Exhibit 9.02(f) duly executed by the lessor under the Ground Sublease and the
grantor under the Parking Agreement;
(g) An opinion of the General Counsel of Horizon in form and
substance reasonably acceptable to
Purchaser; and
(h) Evidence that Seller has secured all of the Regulatory Consents and
Third Party Approvals for which Seller is responsible under the terms of this
Agreement.
In addition, on the Closing Date, the Seller shall pay the closing
costs for which it is responsible under Article IV and shall cause to be made
available to Purchaser at the Hospital any and all plans and specifications with
respect to the Hospital Condominium Unit which may be in Seller's possession.
9.03. Post-Closing. Seller covenants and agrees that after the
Closing Date it will:
(a) Cooperate with Purchaser in the event its parent corporation is
required to include audited financial statements with respect to the Hospital
Condominium Unit in its filings with the United States 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, may be reasonably necessary to
assure, complete and evidence the full and effective transfer and conveyance of
Seller's Assets.
(c) Fulfill any obligations which it may have under this Agreement
which survive Closing in accordance with the terms hereof or which, by agreement
of the parties, have not been fully performed as of the Closing Date and the
performance of which, by written agreement of the parties, has been extended
until after the Closing Date.
ARTICLE X
PURCHASER COVENANTS
10.01. Pre-Closing Date. Purchaser covenants that between the
date hereof and the Closing Date,
except as contemplated by this Agreement or with the consent of
Seller, which consent shall not be
unreasonably withheld, conditioned or delayed:
(a) Within ten (10) days after the date of this Agreement advise Seller
of its objections to any UCC Search Reports, title report or title insurance
commitment and/or survey of the Hospital Condominium Unit which Purchaser may
elect to obtain; provided, however, that Purchaser shall not have the right to
object to any of the Permitted Exceptions. If Seller refuses to correct some or
all of the title, survey or lien defects objected to by Purchaser within the
time period reflected in Paragraph 9.01(o) or to give Purchaser reasonable
assurances that the same will be corrected as of the Closing Date, Purchaser
shall have ten (10) days to advise Seller of its decision to close,
notwithstanding the defects, or of its election to terminate this Agreement, in
which case neither party shall have any further rights or obligations hereunder.
If Purchaser does not give notice of termination within this ten (10) day
period, it will be deemed to have waived its objections and to have accepted
such title, survey or lien defects.
(b) Purchaser will proceed with all due diligence to obtain
the Third Party Consents and
Regulatory Approvals for which it is responsible under the terms hereof; and
(c) Unless specifically prohibited by law, Purchaser will use its best
efforts to cause all of the conditions to Closing set forth in Paragraphs 12.01
and 12.02 which are within its control to be satisfied prior to the Outside
Closing Date and Purchaser will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the consummation
of the transactions contemplated by this Agreement.
10.02. Closing Date. On the Closing Date, Purchaser will deliver to
the Escrow Agent (unless Seller
and Purchaser agree in writing in the Escrow Instructions to handle the same
outside of escrow) the following:
(a) A certificate of a responsible officer of Purchaser dated as of the
Closing Date certifying on behalf of Purchaser in such detail as Seller may
reasonably specify the fulfillment of the conditions set forth in Paragraphs
12.01 (a) and (b) and setting forth the incumbency of the officers executing
documents on behalf of Purchaser, a copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the transaction provided for herein
and the execution of this Purchase Agreement and the other documents
contemplated herein and attaching a certificate of good standing issued by the
California Secretary of State within no more than thirty (30) days prior to
Closing;
(b) The cash due at Closing pursuant to Paragraph 2.01;
(c) Duly executed Escrow Closing Instructions;
(d) An opinion of the General Counsel of Regency in form and
substance reasonably acceptable to
Seller;
(e) The duly executed Hospital Lease Assignment Agreement and
the duly executed Ground Lease
Assignment Agreement; and
(f) The duly executed Parking Assignment.
10.03. Post-Closing. After the Closing Date, Purchaser will:
(a) Provide Seller with access during normal business hours to any
books or records which Seller may need to file or to defend tax returns or other
filings filed prior to or subsequent to the Closing Date which relate to the
period prior to the Closing Date or which Seller may require for any other
lawful purpose other than litigation commenced by Seller against Purchaser under
the terms of this Agreement and maintain all such books and records for a period
of one year after the Closing Date, at which time Purchaser shall give Seller
notice of Seller's right to remove such books and records from the Hospital.
Seller shall have a period of thirty (30) days after receipt of such notice to
advise Purchaser whether it intends to exercise its removal right and, in the
event Seller elects to do so, Seller shall have a period of thirty (30) days
thereafter in which to arrange, at its sole cost and expense, for the removal of
any or of such books and records from the Hospital, subject to Purchaser's right
to retain copies of any or all of such removed books and records.
(b) Take such actions and properly execute and deliver such further
instruments as Seller may reasonably request to assure, complete and evidence
the transaction provided for in this Agreement.
(c) Fulfill any obligations which it may have under this Agreement
which survive Closing in accordance with the terms thereof or which, by
agreement of the parties, have not been fully performed as of the Closing Date
and the performance of which, by written agreement of the parties, has been
extended until after the Closing Date.
(d) To provide such notice as may be required after Closing to each
regulatory authority having jurisdiction over the Hospital Condominium Unit, the
consent of which was not required as a condition to Closing but notice to which
is required or recommended after Closing.
ARTICLE XI
MUTUAL COVENANTS
11.01. General Covenants. Following the execution of this Agreement,
Seller and Purchaser agree:
(a) If any event should occur, either within or without the knowledge
or control of any party, which would prevent fulfillment of the conditions to
the obligations of any party hereto to consummate the transactions contemplated
by this Agreement, to use its or their reasonable efforts to cure the same as
expeditiously as possible;
(b) To cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions which 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;
(c) To deliver such other instruments of title, certificates, consents,
endorsements, assignments, assumptions and other documents or instruments, in
form reasonably acceptable to the party requesting the same and its counsel, as
may be reasonably necessary to carry out and/or to comply with the terms of this
Agreement and the transactions contemplated herein;
(d) 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 having, or which, insofar as can reasonably be foreseen could
have, a material adverse effect on such party or which would cause or constitute
a material breach of any of the representations, warranties or covenants of such
party contained herein; and
(e) To promptly provide the other (or its counsel) 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.
11.02. Hart-Scott-Rodino Filing. If and to the extent applicable:
(a) Purchaser and Seller agree to file, and to cause any other person
obligated to do so as a result of its shareholdings or other ownership interests
in Seller, with the Antitrust Division of the United States Department of
Justice and the Federal Trade Commission a Notification and Report Form in
accordance with the notification requirements of the HSR Act and to use its and
their best efforts to achieve the prompt termination or expiration of the
waiting period or any extension thereof provided for under the HSR Act as a
prerequisite to the consummation of the transactions provided for herein.
(b) Nothing herein shall be construed as requiring Seller to (i) sell
or otherwise dispose of any of the Seller Assets which are the subject of this
Agreement or the Other Agreements which either alone or in the aggregate, with
all such other sales or dispositions, would constitute the sale or disposition
of a "significant subsidiary" (as defined in Rule 1-02 of Regulation S-X of the
rules and regulations of the Commission), (ii) take any action, the consummation
of which cannot be conditioned on the consummation of the transactions
contemplated by this Agreement, where such action would have a material adverse
effect on Seller or (iii) take any action which either would have a material
adverse effect on the operations, business or financial condition of Seller or
would materially impair the value of the transaction contemplated herein to
Seller or Purchaser.
(c) Nothing herein shall be construed as requiring Purchaser to (i)
sell or otherwise dispose of any of its assets which either alone or in the
aggregate, with all such other sales or dispositions, would constitute the sale
or disposition of a "significant subsidiary," (ii) take any action, the
consummation of which cannot be conditioned on the consummation of the
transactions contemplated by this Agreement, where such action would have a
material adverse effect on Purchase or (iii) take any action which either would
have a material adverse effect on the operations, business or financial
condition of Purchaser or would materially impair the value of the transaction
contemplated herein to Seller or Purchaser.
11.03. Third Party Consents/Regulatory Approval. Each of Purchaser and
Seller will use its best efforts to obtain prior to the Closing Date all
consents, approvals and licenses necessary to permit the consummation of the
transactions contemplated by this Agreement and the Other Agreements, including,
but not limited to, such licensure and certification approval in the State of
California as may be necessary to enable Purchaser to lawfully own and/or lease
the Hospital Condominium Unit from and after the Closing Date (the "Regulatory
Approvals"), and the consent of its lenders, lessors and other third parties to
the extent required under any loan documents, lease agreements, management
agreements or other instruments to which it is a party, including, but not
limited to, the consent of the lessor or licensor under the Ground Sublease and
the Parking Agreement if and to the extent required by the terms thereof (the
"Third Party Consents"), provided, however, that the consent of the holders of
the bonds issued by Purchaser's parent corporation under that Indenture dated as
of June 28, 1996 in the original principal amount of $50,000,000 and that
Indenture dated as of October 12, 1995 in the original principal amount of
$110,000,000 shall not be deemed to be a required Third Party Consent, it being
understood and agreed that Purchaser has represented that the transaction as
contemplated herein will not require the consent of such bondholders.
11.04. Public Announcements. The parties shall consult with each
other prior to the issuance by
either party of any press release or any written statement with respect to this
Agreement or the transactions
contemplated hereby.
11.05. Costs. Except as otherwise specifically provided herein, each
party shall bear its own costs and expenses with respect to securing the Third
Party Consents and Regulatory Approvals, including complying with the
requirements of the HSR Act, for which it is responsible hereunder.
ARTICLE XII
CONDITIONS
12.01. Purchaser Conditions. All obligations of Purchaser under
this Agreement are subject to the
fulfillment, prior to or as of the Outside Closing Date (as defined
below), of each of the following
conditions any one or more of which may be waived in writing by Purchaser:
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct at and as of the Closing Date as though such
representations and warranties were then again made, other than any
representations or warranties which specifically relate to an earlier period,
which shall have been true as of the date thereof.
(b) Seller shall have performed all of its obligations under this
Agreement that are to be performed by it prior to or as of the Closing Date.
(c) Purchaser and Seller shall have received the Third Party Consents
and Regulatory Approvals and shall have satisfied any and all conditions to the
effectiveness thereof.
(d) Other than with respect to a default identified in the Seller
Disclosure Letter as of the date of this Agreement or any defaults identified
after the date of this Agreement in any amendments to the Seller Disclosure
Letter, which amendments are not objected to by Purchaser, Seller shall not be
in default, where said default cannot be cured by the Closing Date, under any
mortgage, contract, lease or other agreement to which Seller is a party or by
which Seller is bound and which will affect or relate to the Seller's Assets
after the Closing.
(e) Subject to Purchaser ordering the same, an ALTA title insurance
policy providing for extended owner's coverage shall have been issued to
Purchaser with respect to the Hospital Condominium Unit subject only to the
Permitted Exceptions (the "Title Insurance Policy").
(f) Subject to Purchaser ordering the same, Purchaser shall be
satisfied or, pursuant to Paragraph 10.01(a) shall be deemed to be satisfied,
with the Survey.
(g) Subject to Purchaser ordering the same, Purchaser shall be
satisfied, or pursuant to Paragraph 10.01(a) shall be deemed to be satisfied,
with the results of the UCC Searches.
(h) If applicable, the filing and waiting period requirements under the
HSR Act shall have been complied with and shall have expired or terminated.
(i) The closing of the transactions which are the subject of
the Other Agreements shall have
occurred.
12.02. Seller Conditions. All obligations of Seller under this
Agreement are subject to the
fulfillment, prior to or as of the Outside Closing Date, of each of the
following conditions any one or more
of which may be waived by Seller in writing:
(a) The representations and warranties of Purchaser contained in this
Agreement shall be true and correct at and as of the Closing Date as though such
representations and warranties were then again made, other than any
representations or warranties which specifically relate to an earlier period,
which shall have been true as of the date thereof.
(b) Purchaser shall have performed all of its obligations under this
Agreement that are to be performed by it prior to or as of the Closing Date.
(c) Purchaser and Seller shall have received the Third Party Consents
and Regulatory Approvals and shall have satisfied any and all conditions to the
effectiveness thereof; provided, however, that it shall not be a condition to
Seller's obligation to close hereunder that the landlord or licensor under the
Ground Sublease or the Parking Agreement has refused to release Seller from its
guarantee thereof or from primary liability thereunder.
(d) The closing of the transaction which are the subject of
the Other Agreements shall have
occurred.
ARTICLE XIII
TERMINATION
13.01. Termination. This Agreement may be terminated by
Purchaser or Seller upon the following
conditions:
(a) By mutual consent of the parties;
(b) By Purchaser if the conditions to Closing set forth in Paragraph
12.01 have not been satisfied through no fault of Purchaser or waived by
Purchaser by the Outside Closing Date;
(c) By Seller if the conditions to Closing set forth in Paragraph 12.02
have not been satisfied through no fault of Seller or waived by Seller by the
Outside Closing Date;
(d) By either party if the Closing has not occurred by the Outside
Closing Date or such later date as may be agreed upon in writing by Seller and
Purchaser; provided, however, that in the event all of the conditions to Closing
provided for in Paragraph 12 have been satisfied or waived by the Outside
Closing Date as the same may be extended in accordance with the terms of the
Other Purchase Agreements;
(e) By either party if the United States Department of Justice
or the Federal Trade Commission
requires any of the actions described in Paragraph 11.02;
(f) By either party in the event of a material adverse change in the
information contained in the other party's Disclosure Letter as a result of the
updating thereof by such other party.
(g) By Purchaser in the event that prior to the Closing Date a material
portion of any of the Hospital Condominium Unit or the Hospital is damaged or
destroyed by fire or other casualty or has been taken or condemned by any public
or quasi-public authority under the power or eminent domain; provided, however,
that in the event Purchaser fails to exercise its termination rights hereunder,
then it shall be conclusively deemed to have waived said right and Seller shall
assign to Purchaser all of its rights to any insurance proceeds or condemnation
award and all claims in connection therewith.
13.02. Neither party to this Agreement may claim termination
or pursue any other remedy referred to in Paragraph 13.01 on account of a breach
of a condition, covenant or warranty by the other, without first given such
other party written notice of such breach and not less than ten (10) days within
which to cure such breach. The Closing Date shall be postponed if necessary to
afford such opportunity to cure.
13.03. In the event of the termination of this Agreement by Seller
under either Paragraph 13.01(c) or Paragraph 13.01(d) where, in either case the
Closing has failed to occur as a result of a material breach by Purchaser of its
obligations hereunder or under the Other Agreements, Seller shall be entitled
either (A) to seek damages from Purchaser as a result of said breach or (B)
without the need to prove damages, to collect from Purchaser on written demand
the sum of Two Million Five Hundred Thousand and no/100 Dollars ($2,500,000) as
liquidated damages in full and complete settlement of any and all claims which
Seller may have against Purchaser hereunder and under the Other Agreements as a
result of said breach by Purchaser, it being understood and agreed that the
amount provided for in this clause (B) is intended to compensate Seller for the
damages suffered by it as a result of said breach without resort to the courts
and is not intended to be a limitation on the damages which Seller would be able
to seek to recover in the event it elects to proceed under clause (A).
13.04. In the event of the termination of this Agreement by Purchaser
under either Paragraph 13.01(b) or Paragraph 13.01(d) where, in either case the
Closing has failed to occur as a result of a material breach by Seller of its
obligations hereunder or under the Other Agreements, Purchaser shall have the
right either (A) to seek specific performance of Seller's obligations hereunder
or (B) to seek damages suffered by it as a result of said breach.
13.05. In the event of the termination of this Agreement pursuant to
Paragraphs 13.01(a), (e), (f) or (g), neither party shall have any further
rights or obligations hereunder.
ARTICLE XIV
INDEMNIFICATION
14.01. Seller shall indemnify and hold Purchaser harmless from and
against any and all damages, liabilities, losses, costs or expenses which it may
incur as a result of:
(a) Except as otherwise provided in this Agreement, the leasing or
ownership of Seller's Assets prior to the Closing Date, whether or not the same
are covered by Seller's insurance, including, but not limited to, any
obligations under the Condominium Documents, the Ground Sublease, the Parking
Agreement or the Hospital Lease (if and to the extent they relate solely to the
period prior to the Closing Date);
(b) Any misrepresentation or breach of warranty of Seller
set forth in this Agreement or
nonfulfillment of any agreement on the part of Seller under this Agreement;
(c) Any failure 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 and all actions, suits, proceedings, demands, assessments,
judgements, reasonable costs and other reasonable expenses, including, but not
limited to, reasonable attorney's fees, incident to the foregoing.
14.02. Purchaser shall indemnify and hold Seller harmless from and
against any and all damages, liabilities, losses, costs or expenses which it may
incur as a result of:
(a) Except as otherwise provided in this Agreement, any and all
obligations relating to the leasing or ownership of Seller's Assets from and
after the Closing Date including, but not limited to, any obligations under the
Condominium Documents, the Ground Sublease, the Parking Agreement or the
Hospital Lease (if and to the extent they relate solely to the period from and
after the Closing Date);
(b) Any misrepresentation or breach of warranty of Purchaser
set forth in this Agreement or
nonfulfillment of any agreement on the part of Purchaser under this Agreement;
and
(c) Any and all actions, suits, proceedings, demands, assessments,
judgements, reasonable costs and other reasonable expenses, including, but not
limited to, reasonable attorney's fees, incident to the foregoing.
14.03. Notwithstanding the foregoing, neither Purchaser nor Seller (the
"Non-Breaching Party") shall be entitled to seek damages from the other party
(the "Breaching Party") under Paragraphs 14.01(b) and 14.02(b), respectively,
for the breach of a representation or warranty set forth in this Agreement
unless the amount of the damages, liabilities, losses, costs or expenses
incurred by the Non-Breaching Party individually or in the aggregate with any
and all prior breaches hereunder or under that Purchase and Sale Agreement of
even date herewith between San Diego Rehab Limited Partnership, as Seller
("SDRLP"), and Regency Rehab Hospitals, as Purchaser, with respect to the right,
title and interest of SDRLP as lessee under the Hospital Lease, equals or
exceeds Fifty Thousand and no/100 Dollars ($50,000) (the "Representation and
Warranty Liability Threshold"). In the event the Representation and Warranty
Threshold is met, then the Non-Breaching Party shall be entitled to seek to
collect from the Breaching Party any and all damages, liabilities, losses, costs
or expenses suffered or incurred as a result of all such breaches of the
representations and warranties set forth herein on a first dollar basis and not
merely to recover damages in excess of the Representation and Warranty Liability
Threshold.
ARTICLE XV
MISCELLANEOUS
15.01. 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 Seller: c/o Horizon/CMS Healthcare Corporation
6001 Indian School Road, N.E.
Albuquerque, NM 87110
Attn: Neal Elliott
Telephone No.: 505-878-6350
Facsimile No.: 505-881-6100
With copy to: Scot Sauder, Esq.
c/o Horizon/CMS Healthcare Corporation
6001 Indian School Road, N.E.
Albuquerque, NM 87110
Telephone No.: 505-878-6356
Facsimile No.: 505-881-6100
To Purchaser: Regency Rehab Properties, Inc.
2742 Dow Avenue
Tustin, CA 92680
Attn: Bruce Broussard
Telephone No.: 714-544-4443
Facsimile No.: 714-544-2441
with copy to: Regency Rehab Properties, Inc.
2742 Dow Avenue
Tustin, CA 92680
Attn: David Grant
Telephone No.: 714-544-4443
Facsimile No.: 714-544-2441
and with copy to: Randi S. Nathanson, Esq.
1411 Fourth Avenue
Suite 905
Seattle, WA 98101
Telephone No.: 206-623-6239
Facsimile No.: 206-623-1738
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.
15.02. Assignment. No party may assign, directly or indirectly, its
rights or obligations hereunder without the prior written consent of the other
party; provided, however, that Purchaser may assign its any or all of
Purchaser's rights and obligations hereunder effective at Closing to a real
estate investment trust (the "REIT") in connection with its financing of the
transaction provided for herein provided Seller first confirms to Purchaser
that, in its reasonable determination, such assignment will not have adverse
reimbursement consequences for Seller; and provided, further, that no such
assignment shall relieve Purchaser of its obligations hereunder. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns, including successors by
operation of law pursuant to any merger, consolidation or sale of assets
involving either party. In the event of an assignment of this Purchase Agreement
to a REIT, Purchaser shall advise Seller as to those documents and deliveries
contemplated by this Agreement which are to run in favor of the REIT rather than
Purchaser and those documents and deliveries contemplated by this Agreement
which will be delivered by the REIT rather than Purchaser, if any, it being
understood and agreed that in the event of such an assignment, the only right
which the REIT will assume is Purchaser's right to take title to the Seller's
Assets and the only obligation which the REIT will assume is Purchaser's
obligation to pay the purchase price in accordance with the terms hereof.
15.03 Sole Agreement. This Agreement may not be amended or modified in
any respect whatsoever except by instrument in writing signed by the parties
hereto. This Agreement, the Disclosure Letter of each of Seller and Purchaser
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.
15.04. 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.
15.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws
of the State of California.
15.06. 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.
15.07. 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.
15.08 Knowledge Defined. To the extent that any of the representations
and warranties contained in this Agreement are limited by the phrases "to the
knowledge of" or "Purchaser has no knowledge of" 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 after due and diligent
inquiry with respect thereto. To the extent that any of the representations and
warranties contained in this Agreement refer 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.
15.09. Expenses. Each party shall bear its own costs and
expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
15.10. Third Party Beneficiary. Nothing in this Agreement express or
implied is intended to and shall not be construed to confer upon or create in
any person (other than the parties hereto and their successors and permitted
assigns) any rights or remedies under or by reason of this Agreement, including
without limitation, any right to enforce this Agreement.
15.11. 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.
15.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event 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." The period covered by the
phrase "from and after the Closing Date" shall include the Closing Date.
15.13. Survival. The representations, warranties, covenants or
conditions set forth herein shall survive the Closing for a period of two years
after the Closing, other than the representation set forth in Paragraphs 6.12
and 6.13, which shall survive for the applicable statute of limitations;
provided, however, that in the event that, at anytime during that two year
period, any claim is made for a breach thereof, the same shall survive until a
final non-appealable resolution thereof. Nothing in this Paragraph 15.13 shall
be construed to limit the indemnity obligations of Seller and Purchaser under
Paragraph 14.01 which shall survive for as long as the matters to which they
relate survive by the terms of this Agreement or, if no such limitation is
provided for herein, which shall survive until the expiration of the applicable
statute of limitations with respect to the matters to which they relate.
15.14. Effectiveness of Agreement. This Agreement shall be of no
effect unless and until each of
the Other Agreements has been executed and delivered by the parties hereto or
thereto.
15.15. Identification of Documents Provided. Any and all documents
provided by Seller to Purchaser which are listed on the exhibits hereto shall be
numbered using a Bates sequential numbering system in order to ensure that there
are no disputes concerning what documents were so provided.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first set forth therein.
SAN DIEGO HEALTH ASSOCIATES
LIMITED PARTNERSHIP
By: SD Acquisition Corporation
Its: General Partner
By: ___________________________
Its: ____________________________
REGENCY REHAB PROPERTIES, INC.
By: ____________________________
Its: ____________________________
HORIZON GUARANTY
Horizon/CMS Healthcare Corporation, a Delaware corporation ("Horizon")
as a material inducement to Regency Rehab Properties, Inc. ("Purchaser") to
enter into the Purchase and Sale Agreement between San Diego Health Associates
Limited Partnership, as Seller and Purchaser dated November 19, 1996 (the
"Agreement"), hereby unconditionally, irrevocably and jointly and severally with
Seller, guarantees and promises to and for the benefit of Purchaser that (i) the
representations and warranties of Seller are true and correct as of the date of
execution of the Agreement and shall be true and correct as of the Closing Date
(as modified by any supplements to the Seller Disclosure Letter to reflect
events after the date hereof) and (ii) Seller shall perform all of its
obligations, covenants and agreements, including, but not limited to, its
indemnity obligations under Paragraph 14, to be performed on its part under the
Agreement. If Seller defaults under the Agreement, Purchaser may proceed
immediately against Horizon or Seller or both to enforce any rights it has under
the Agreement or this Guaranty. Notwithstanding the foregoing, the
representations and warranties of Seller will not survive beyond the periods
applicable thereto set forth in Paragraph 15.13 hereof and this Guaranty shall
not be construed to give Purchaser a claim or cause of action against Horizon
after the expiration of the applicable survival period for a breach by Seller of
any representation or warranty.
The liability of Horizon hereunder shall not be affected by:
(a) The renewal, extension, modification or termination of the
Agreement by lapse of time or otherwise (all of which are hereby
authorized by Horizon) or a release or limitation of the liability of
Seller or its estate in any bankruptcy or insolvency proceeding;
(b) Any extension in the time for making any payment due
under the Agreement or acceptance
of partial payment from Seller;
(c) The acceptance or release by Purchaser of any additional
security for the performance of
Seller's obligations under the Agreement;
(d) The failure during any period of time whatsoever of
Purchaser to attempt to collect any amount due under the Agreement or
to exercise any remedy available thereunder or any other security
instrument given as security for performance of the same, in the event
of a default in the performance by Seller in its obligations
thereunder;
(e) Any assignment or successive assignments of
Purchaser's interest under the Agreement
(whether absolute or as collateral);
(f) The assertion by Purchaser against Seller of any rights or
remedies reserved or granted to Purchaser under the Agreement,
including the commencement by Purchaser of any proceedings against
Seller upon the occurrence of a default thereunder; or
(g) Any dealings, transactions or other matter occurring
between Purchaser and Seller;
whether or not Horizon shall have knowledge or have been notified of or
agreed to any of the foregoing.
Horizon hereby expressly waives:
(a) Notice of acceptance of this Guaranty;
(b) Presentment, demand, notice of dishonor, protest and
notice of protest, and all other notices whatsoever, including, without
limitation, notice of any event or matter described in the first
paragraph hereof; provided, however, that nothing herein shall be
construed as a waiver by Horizon on its own behalf or on behalf of
Seller with respect to any notice required to be provided by Purchaser
under the terms of the Agreement;
(c) Any and all claims or defenses based upon lack of
diligence in:
(i) collection of any amount, the payment of which is
guaranteed hereby;
(ii) protection of any collateral or other security for
the obligations which are the
subject of this Guaranty;
(iii) realization upon any other security given for the
obligations which are the subject of
this Guaranty; or
(iv) the discharge, liquidation or reorganization of
Seller in bankruptcy or the rejection
of the Agreement by Seller or by a trustee in bankruptcy;
(d) Any and all defenses of suretyship; and
(e) Any defense based on the lack of consideration for this
Guaranty.
Nothing herein shall be construed, however, as a waiver by Horizon of
any of the defenses available to the Seller under the Purchase Agreement to the
extent Horizon is lawfully entitled to raise the same as a defense to its
obligations hereunder.
No delay or omission on the part of Purchaser in the exercise of any
right or remedy hereunder shall operate as a waiver thereof. All remedies of
Purchaser hereunder shall be in addition to, and exercisable consecutively or
concurrently in any combination with, any and all remedies available to
Purchaser by operation of law or under the Agreement, and Purchaser may exercise
its remedies hereunder without the necessity of any notice to Seller or Horizon
of nonpayment, nonobservance, nonperformance or other default by Seller under
the Agreement other than such notice as may be specifically required by the
terms of the Agreement prior to the exercising of such right or remedy.
Notwithstanding any provision of this Guaranty to the contrary, in the
event of the enforcement of this Guaranty by Purchaser, Purchaser shall be
entitled to collect from Horizon, Purchaser's costs of collection, including,
without limitation, reasonable attorneys' fees.
Horizon shall not be subrogated to any of the rights of Purchaser by
reason of any of the provisions of this Guaranty or by reason of the performance
by Guarantor of any of its obligations hereunder and Horizon shall look solely
to Seller for recoupment of any costs or expenses incurred by Horizon in
performing its obligations hereunder.
For so long as any of the obligations which are the subject of this
Guaranty remain outstanding Horizon shall, upon request, provide Purchaser with
its quarterly and annual financial statements as soon as the same are available
and with any other financial statements as may be reasonably requested by
Purchaser.
This Guaranty shall not be assignable by Horizon but shall be binding
upon the successors of Horizon. This Guaranty shall be assignable by Purchaser
in connection with a permitted assignment of the Agreement and shall inure to
the benefit of its successors and assigns.
If any term, restriction or covenant of this Guaranty is deemed illegal
or unenforceable, all other terms, restrictions and circumstances subject hereto
shall remain unaffected to the extent permitted by law; and if any application
of any term, restriction or covenant to any person or circumstances is deemed
illegal, the application of such term, restriction or covenant to other persons
and circumstances shall remain unaffected to the extent permitted by law.
Seller's Parent:
HORIZON/CMS HEALTHCARE CORPORATION,
a Delaware corporation
By: ______________________________
Neal M. Elliott
President
REGENCY GUARANTY
Regency Health Services, Inc., a Delaware corporation ("Regency") as a
material inducement to San Diego Health Associates Limited Partnership
("Seller") to enter into the Purchase and Sale Agreement between Seller and
Regency Rehab Properties, Inc. ("Purchaser") dated November 19, 1996 (the
"Agreement"), hereby unconditionally, irrevocably and jointly and severally with
Purchaser, guarantees and promises to and for the benefit of Seller that (i) the
representations and warranties of Purchaser are true and correct as of the date
of execution of the Agreement and shall be true and correct as of the Closing
Date (as modified by any supplements to the Purchaser Disclosure Letter to
reflect events after the date hereof) and (ii) Purchaser shall perform all of
its obligations, covenants and agreements, including, but not limited to, its
indemnity obligations under Paragraph 14, to be performed on its part under the
Agreement. If Purchaser defaults under the Agreement, Seller may proceed
immediately against Regency or Purchaser or both to enforce any rights it has
under the Agreement or this Guaranty. Notwithstanding the foregoing, the
representations and warranties of Purchaser will not survive beyond the periods
applicable thereto set forth in Paragraph 15.13 hereof and this Guaranty shall
not be construed to give Seller a claim or cause of action against Regency after
the expiration of the applicable survival period for a breach by Purchaser of
any representation or warranty.
The liability of Regency hereunder shall not be affected by:
(a) The renewal, extension, modification or termination of the
Agreement by lapse of time or otherwise (all of which are hereby
authorized by Regency) or a release or limitation of the liability of
Purchaser or its estate in any bankruptcy or insolvency proceeding;
(b) Any extension in the time for making any payment due
under the Agreement or acceptance
of partial payment from Purchaser;
(c) The acceptance or release by Seller of any additional
security for the performance of
Purchaser's obligations under the Agreement;
(d) The failure during any period of time whatsoever of Seller
to attempt to collect any amount due under the Agreement or to exercise
any remedy available thereunder or any other security instrument given
as security for performance of the same, in the event of a default in
the performance by Purchaser in its obligations thereunder;
(e) Any assignment or successive assignments of Seller's
interest under the Agreement
(whether absolute or as collateral);
(f) The assertion by Seller against Purchaser of any rights or
remedies reserved or granted to Seller under the Agreement, including
the commencement by Seller of any proceedings against Purchaser upon
the occurrence of a default thereunder; or
(g) Any dealings, transactions or other matter occurring
between Seller and Purchaser;
whether or not Regency shall have knowledge or have been notified of or
agreed to any of the foregoing.
Regency hereby expressly waives:
(a) Notice of acceptance of this Guaranty;
(b) Presentment, demand, notice of dishonor, protest and
notice of protest, and all other notices whatsoever, including, without
limitation, notice of any event or matter described in the first
paragraph hereof; provided, however, that nothing herein shall be
construed as a waiver by Regency on its own behalf or on behalf of
Purchaser with respect to any notice required to be provided by Seller
under the terms of the Agreement;
(c) Any and all claims or defenses based upon lack of
diligence in:
(i) collection of any amount, the payment of which is
guaranteed hereby;
(ii) protection of any collateral or other security for
the obligations which are the
subject of this Guaranty;
(iii) realization upon any other security given for the
obligations which are the subject of
this Guaranty; or
(iv) the discharge, liquidation or reorganization of
Purchaser in bankruptcy or the
rejection of the Agreement by Purchaser or by a trustee in
bankruptcy;
(d) Any and all defenses of suretyship; and
(e) Any defense based on the lack of consideration for this
Guaranty.
Nothing herein shall be construed, however, as a waiver by Regency of
any of the defenses available to the Purchaser under the Purchase Agreement to
the extent Regency is lawfully entitled to raise the same as a defense to its
obligations hereunder.
No delay or omission on the part of Seller in the exercise of any right
or remedy hereunder shall operate as a waiver thereof. All remedies of Seller
hereunder shall be in addition to, and exercisable consecutively or concurrently
in any combination with, any and all remedies available to Seller by operation
of law or under the Agreement, and Seller may exercise its remedies hereunder
without the necessity of any notice to Purchaser or Regency of nonpayment,
nonobservance, nonperformance or other default by Purchaser under the Agreement
other than such notice as may be specifically required by the terms of the
Agreement prior to the exercising of such right or remedy.
Notwithstanding any provision of this Guaranty to the contrary, in the
event of the enforcement of this Guaranty by Seller, Seller shall be entitled to
collect from Regency, Seller's costs of collection, including, without
limitation, reasonable attorneys' fees.
Regency shall not be subrogated to any of the rights of Seller by
reason of any of the provisions of this Guaranty or by reason of the performance
by Regency of any of its obligations hereunder and Regency shall look solely to
Purchaser for recoupment of any costs or expenses incurred by Regency in
performing its obligations hereunder.
For so long as any of the obligations which are the subject of this
Guaranty remain outstanding Regency shall, upon request, provide Seller with its
quarterly and annual financial statements as soon as the same are available and
with any other financial statements as may be reasonably requested by Seller.
This Guaranty shall not be assignable by Regency or by Seller but shall
be binding upon the successors of Regency and Seller.
If any term, restriction or covenant of this Guaranty is deemed illegal
or unenforceable, all other terms, restrictions and circumstances subject hereto
shall remain unaffected to the extent permitted by law; and if any application
of any term, restriction or covenant to any person or circumstances is deemed
illegal, the application of such term, restriction or covenant to other persons
and circumstances shall remain unaffected to the extent permitted by law.
Purchaser's Parent:
REGENCY HEALTH SERVICES, INC.
a Delaware corporation
By: ______________________________
Richard Matros
President