EXHIBIT 2.13
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of this 12th day of
January, 2006, is made and entered into by and between AHC ACQUISITIONS, INC., a
Delaware corporation ("Purchaser"), and the entities listed on Exhibit A-1
(collectively, "Seller").
RECITALS
A. Seller owns and operates certain assisted living, independent living and
skilled nursing facilities located in the States of Florida, Georgia and
Tennessee, together with the real property and all appurtenances thereto, all as
more particularly described on Exhibit B-1 (the "Owned Facilities"). Each Owned
Facility is licensed, to the extent required, for the number of nursing home
beds and assisted living units, respectively, as set forth on Exhibit B-1.
B. Seller leases certain assisted living and independent living facilities
located in the States of Alabama, California, Delaware, Florida, Louisiana,
Ohio, Tennessee, Virginia and Washington, together with the real property and
all appurtenances thereto, all as more particularly described on Exhibit C-1
(the "Leased Facilities"). Each Leased Facility is licensed, to the extent
required, for the number of assisted living units as set forth on Exhibit C-1
(the Owned Facilities and the Leased Facilities are sometimes referred to herein
individually as a "Facility" and collectively as the "Facilities").
C. The parties hereto desire to enter into this Agreement pursuant to which
Purchaser will purchase from Seller, and Seller will sell, convey, transfer and
assign to Purchaser, the following, hereinafter collectively referred to as the
"Assets":
(i) Seller's fee simple title in and to the real property on
which the Owned Facilities are located (the "Owned Real Property"), and Seller's
leasehold estate and all other rights, title and interest of Seller (including
without limitation any options to purchase or rights of first refusal) in and to
the real property on which the Leased Facilities are located (the "Leased Real
Property", which together with the Owned Real Property, is sometimes referred to
herein collectively as the "Real Property");
(ii) all buildings, structures, facilities, amenities, driveways,
walkways, parking lots and other improvements owned by Seller and located on the
Real Property (collectively, the "Improvements");
(iii) all right, title and interest of Seller in and to any
alleys, strips or gores adjoining the Real Property, any easements, rights of
way or other interests in, on, under or to, any land, highway, street, road or
right of way, open or proposed, in, under, across, abutting or benefiting the
Real Property, and any pending or future action for condemnation, eminent domain
or similar proceeding, or for any damage to the Real Property by reason of a
change of grade thereof, and all other accessions, appurtenant rights, and
privileges of Seller in and to the Real Property and the Improvements
(collectively, the "Appurtenances");
(iv) all furniture, fixtures, furnishings, vehicles and equipment
located at the Facilities (collectively, the "FF& E");
(v) all supplies, inventory, consumables, perishable and
nonperishable food products, and other similar tangible property used in the
operation of the Real Property and the Facilities (collectively, the
"Inventory");
(vi) all Tenant Leases and Personal Property Leases (as defined
in Section 2.10 below);
(vii) the Assumed Contracts (as defined in Section 5.3 below);
(viii) all Patient Care Contracts and all Residential Leases (as
defined in Section 2.7(b) below);
(ix) to the extent Seller's interest is assignable pursuant to
applicable law and to the extent Purchaser in its sole discretion elects to
assume the same, all licenses, permits, approvals, provider agreements and
certificates of need (to the extent Purchaser or its nominee(s) elect(s) to
assume same);
(x) all right, title and interest of Seller in and to any trade
names and all variations thereof, all architects and engineers plans and
specifications, all deposits, all marketing materials, telephone and facsimile
numbers relating to the Facilities (including all "800" numbers), all post
office box addresses associated with the Facilities, all software or other
computer programs used in the connection with the operation of the Facilities
which are by their terms assignable and all patient records and reports, and all
books and records of Seller relating to the Facilities and the operations
thereof; and
(xi) any and all other items of tangible and intangible personal
property owned or leased by Seller and used in connection with the use,
operation and maintenance of the Real Property and the Facilities (collectively,
the "Personal Property"), and all goodwill of Seller associated with the
businesses operated at the Facilities (the "Business").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and of the mutual
agreements, representations, warranties, conditions and covenants herein
contained, the parties hereto agree as follows:
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ARTICLE I.
PURCHASE AND SALE
1.1 Transfer of Assets. For the consideration hereinafter provided, Seller,
in accordance with the terms and subject to the conditions hereof, shall convey,
transfer and assign to Purchaser at Closing (as defined below), and Purchaser
shall purchase from Seller, the Assets. Notwithstanding anything to the contrary
contained herein, the Assets shall not include the following items
(collectively, the "Excluded Assets"):
(a) All bank accounts, cash, cash equivalents, securities and accounts
receivable (but only to the extent relating to periods prior to the Closing),
(including third party settlements) prepaid accounts (subject to the provisions
of Section 10.5), real estate tax and insurance escrows under loans (but only to
the extent such escrows do not relate to periods prior to the Closing) and
choses of action;
(b) All sums relating to Medicare or Medicaid rate adjustments
relating to periods prior to Closing;
(c) Refunds, rebates and dividends paid in respect of workers
compensation or other insurance premiums paid by Seller relating to periods
prior to the Closing Date, and refunds and additional recoveries by or payments
to Seller from any person for services, goods or supplies which were provided by
such person to Seller prior to the Closing Date;
(d) Seller's financial books and records, organizational documents,
minute books and other books and records relating to the maintenance and
operations of Seller as a legal entity;
(e) Those certain contracts set forth on Schedule 1.1(e), which do not
include the Assumed Contracts (as defined in Section 1.6); and
(f) Those additional items set forth on Schedule 1.1 attached hereto.
1.2 Closing.
(a) General. Unless this Agreement shall have been terminated pursuant
to an express right to terminate, as herein provided, the closing hereunder
shall occur at 10:00 a.m. EST on March 31, 2006; provided, however, the closing
may be extended as a result of the failure of the conditions precedent pursuant
to, and in accordance with, the provisions of Article VIII and IX and may also
be extended as to some of the Facilities pursuant to, and in accordance with,
the provisions of Section 12.18 of this Agreement, or as elsewhere provided in
this Agreement. The closing for any Facility hereunder is hereinafter referred
to as the respective "Closing" for such Facility, and the date on which such
Closing occurs is hereinafter referred to as the respective "Closing Date" for
such Facility. The parties agree that there may be multiple Closings and Closing
Dates pursuant hereto, and in each case in which such defined terms are used in
this Agreement, such terms shall refer to the respective Closing Date and
Closing for the respective Assets and Facilities for which the consummation of
the transactions contemplated
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hereby are occurring. All Closings hereunder shall be effective as of 11:59:59
p.m. on the respective Closing Date. On each Closing Date, all executed
documents required from Seller under Section 10.1(a) (the "Seller Documents")
and from Purchaser under Section 10.1(b) (the "Purchaser Documents") in order to
effectuate the consummation of the Closing with respect to the applicable
Facility shall be delivered to the offices of Williams Mullen P.C., Virginia
Beach, Virginia, or at such other date, time and place as the parties hereto may
determine by reasonable consent taking into account the relative location of the
parties and any lenders. In the event that there is more than one Closing
pursuant hereto, then the Purchase Price (as hereinafter defined) and the
Deposits (as hereinafter defined) shall be paid and applied pro rata in
accordance with Schedule 1.7 and all pro rations and adjustments shall be
applied only with respect to the portion of the Assets to which they relate, and
at Closing, the applicable cash portion of the Purchase Price shall be wire
transferred by Purchaser to the Escrow Agent, as defined below, on or before the
Closing Date. In addition, in the event that Seller's portion of the Purchase
Price is not delivered to Seller's account by 2:00 P.M. Eastern Standard Time on
or before the day after the Closing Date for the respective portion of the
Assets, then that respective portion of the Purchase Price shall be increased by
the Per Diem Amount for each day until Seller has received such funds by 2:00
P.M. Eastern Standard Time. The Per Diem Amount shall equal the product obtained
by multiplying (i) the difference obtained by subtracting the Assumed Debt (if
applicable) from the Purchase Price by (ii) seven percent (7%) divided by 365.
Notwithstanding the foregoing, Seller may deliver all of the Seller
Documents required hereunder with respect to the Closing to the Title Company,
as escrow agent (the "Escrow Agent") and/or Purchaser's counsel on or before the
Closing Date (to hold in escrow in accordance with customary conveyancing
practices subject to the consummation of the Closing) by mail or overnight
courier.
Notwithstanding the foregoing, Purchaser may deliver all of the
Purchaser Documents required hereunder with respect to the Closing to the Escrow
Agent and/or Seller's counsel on or before the Closing Date (to hold in escrow
in accordance with customary conveyancing practices subject to the consummation
of such Closing) by mail or overnight courier.
1.3 Purchase Price. The purchase price for the Assets shall be One Hundred
Twenty-Three Million Nine Hundred and Seventy-Three Thousand Two Hundred and
Eighty-Five Dollars ($123,973,285.00), plus the actual book value of the
Inventory on Seller's books and records as of December 31, 2005, not to exceed
$189,150.00 in the aggregate, all subject to the prorations and further
adjustments as provided for in this Agreement; provided, however, that if the
Required Consents (as hereinafter defined) of the landlord(s) are not obtained
pursuant to the terms hereof so as to transfer, assign and convey the Leased
Facilities (excluding the Leased Facility in New Port Richey, Florida (the "NPR
Leased Facility")) to Purchaser, then the purchase price shall be reduced to One
Hundred Five Million Eight Hundred and Ninety Two Thousand and Sixty-Eight
Dollars ($105,892,068.00) for the Owned Properties and the NPR Leased Facility.
The purchase price payable by Purchaser at Closing shall be referred to herein
as the "Purchase Price." The Purchase Price will be allocated among the Assets
as provided for in Section 1.7; provided, however, to the extent there are
multiple Closing Dates pursuant hereto, the portion of the Purchase Price
applicable to the book value of the Inventory shall be based upon the actual
book value applicable to the Facilities being conveyed as of such Closing Date
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and, to the extent the $189,150.00 aggregate amount is reached prior to the
final Closing Date hereunder, the portion of the Purchase Price for Inventory at
the Closing for the remaining Facilities shall be zero.
In connection with Seller's financing and/or operations of the
Facilities, Seller has made certain deposits which are held by third parties
(i.e., lenders, landlords and bond trustees), a list of which is set forth on
Schedule 1.3 (the "Third Party Deposits"). To the extent that Purchaser assumes
any of such loans, leases or similar financing, Purchaser shall be obligated
either to replace such Third Party Deposits or to pay to the Seller at the
Closing for Facilities to which such Third Party Deposits relate the amount of
such Third Party Deposits, which amounts shall be in addition to the Purchase
Price. Certain amounts listed as Third Party Deposits are subject to pro-ration
as more particularly described in Sections 10.3(b) and (c).
1.4 Earnest Money. Purchaser has delivered to Escrow Agent (pursuant to its
standard form escrow agreement reasonably acceptable to Purchaser and Seller) an
earnest money deposit in the amount of Five Hundred Thousand Dollars ($500,000)
(the "Initial Deposit"). Within two (2) business days after the Effective Date,
Purchaser shall deliver to Escrow Agent an additional sum of Two Million Dollars
($2,000,000) (the "Additional Deposit"). The Initial Deposit, Additional
Deposit, and all interest accrued thereon shall be allocated among the
Facilities as provided in Section 1.7, and are sometimes hereinafter referred
to, both individually as applicable to the respective Facilities and
collectively as the context may require, the "Deposits". Escrow Agent shall hold
the Deposits in one or more interest bearing accounts mutually acceptable to
Seller and Purchaser.
(a) In the event Closing occurs, the allocable portion of the Deposits
shall be applied against the allocable portion of the Purchase Price payable at
such Closing and Purchaser shall receive a credit therefor, subject to Section
12.18.
(b) In the event this Agreement is terminated as a result of (i)
Seller's default under this Agreement (whether or not Purchaser is in default),
(ii) the failure to satisfy any condition to Closing contained in Article VIII
or Article IX or for any Deferred Facility pursuant to Section 12.18, except to
the extent such failure has been caused, directly or indirectly, by Purchaser's
failure to satisfy its covenants or obligations under Article V, which covenants
or obligations by their terms must be satisfied on or before Closing, or (iii)
termination of this Agreement in accordance with Section 11.1 other than
pursuant to Section 11.1(c)(A), then the Escrow Agent shall return the Deposits
or remaining portion thereof to Purchaser, and the parties shall have no further
liability hereunder (except as may be expressly provided herein to survive the
termination).
(c) In the event Purchaser fails to complete Closing hereunder other
than as provided for in Section 1.4(b) above, then the Escrow Agent shall pay
the Deposits or remaining portion thereof to Seller, which payment of the
Deposits to Seller constitute Seller's full liquidated damages payment as
provided in Section 11.3(b) herein.
Upon the disbursement of the Deposits pursuant to Sections 1.4 (b) or
(c) above, this Agreement shall be null and void and the parties shall have no
further obligation to the other except for those matters which specifically
survive such a termination.
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1.5 Payment of Purchase Price. At each Closing, Purchaser shall pay the
respective portion of the Purchase Price, adjusted for any prorations, credits
and additions for the benefit of Purchaser or Seller as specified in this
Agreement, including, without limitation, a credit for any applicable Assumed
Debt, by wire transfer of immediately available federal funds to the Escrow
Agent.
1.6 Assumed Liabilities. At each Closing, Purchaser shall NOT assume any
liabilities or obligations of Seller whatsoever, fixed or contingent, other than
liabilities and obligations assumed by Purchaser at such Closing pursuant hereto
with respect to the following to the extent such obligations and liabilities
relate to periods after such Closing: (a) the Assumed Debt relating to such
Facilities for such Closing if applicable set forth on Schedule 1.6 (other than
the FNMA indebtedness shown on such schedule), (b) the Assumed Contracts
relating to the Facilities for such Closing, (c) all Patient Care Contracts and
Residential Leases for such Facilities, (d) the Assumed Leases for such
Facilities, if applicable, and (e) the Assumed Facility Leases for such
Facilities, if applicable ((a) - (e) are sometimes collectively referred to
herein as the "Assumed Liabilities"). Seller shall retain and discharge in the
ordinary course all liabilities and obligations of Seller other than the Assumed
Liabilities.
1.7 Allocation of Purchase Price. The Purchase Price and the Deposits shall
be allocated among the Assets at Closing as provided and as described on
Schedule 1.7 attached hereto. Seller and Purchaser each hereby covenant and
agree that neither will take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, in any
judicial proceeding or otherwise with any Governmental Authority (as hereinafter
defined) that is any way inconsistent with the terms of this Section 1.7 and
Schedule 1.7.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated herein, Seller represents and warrants
the following, each of which warranties and representations is material to and
is relied upon by Purchaser:
2.1 Organization and Qualification. The entities that comprise Seller are
duly organized and validly existing and in good standing under the laws of each
of their respective states of organization, each with full corporate power and
authority to carry on its respective business as currently being conducted and
to own or lease and operate the Assets it owns or leases as and in the places
now owned, leased or operated, respectively.
2.2 Authority; Binding Effect.
(a) Seller has, and at each Closing will have, the full and
unrestricted corporate right, power and authority to execute, deliver and
perform this Agreement and to consummate the transactions and perform all
obligations contemplated hereby and in all agreements, instruments and documents
being or to be executed and delivered by Seller in connection with such
transactions ("Related Documents").
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(b) This Agreement and each Related Document, upon due execution and
delivery by Seller, will constitute the legal, valid, and binding obligation of
Seller, enforceable in accordance with its respective terms.
(c) The consummation of the transactions contemplated herein has been
duly authorized and approved by the board of directors of each of Seller's
General Partners, respectively.
2.3 Licenses. Schedule 2.3 sets forth all permits, licenses, Medicaid,
Medicare and other provider agreements and other authorizations issued and
required by Governmental Authorities in connection with the ownership,
maintenance and operation of the Facilities, including, without limitation, such
licenses required for the operations of the Facilities as assisted living and
skilled nursing facilities (collectively, the "Licenses"), and except as set
forth on Schedule 2.3, the Licenses are in good standing and Seller has not
received written notice that Seller is in violation of any restriction, rule or
regulation affecting possession and use thereof. Seller agrees to provide
Purchaser with copies of the existing Licenses promptly after the Effective Date
to the extent not previously provided. Seller is the holder of all the Licenses.
2.4 Governmental Authorities. Except as set forth on Schedule 2.4 attached
hereto, Seller is not required to submit any notice, report or other filing with
any federal, state, municipal, foreign or other governmental or regulatory
authority (a "Governmental Authority" or "Governmental Authorities") in
connection with its execution or delivery of this Agreement or any of the
Related Documents or the consummation of the transactions contemplated hereby
and no consent, approval or authorization of any Governmental Authority is
required to be obtained by Seller in connection with the execution, delivery and
performance of this Agreement.
2.5 Taxes. Except as set forth in Schedule 2.5 attached hereto, all real
property taxes and assessments, and all personal property taxes and assessments,
in connection with the Assets allocable to the period prior to Closing have been
paid or, by the time of each Assets' respective Closing, will be paid or
prorated between the parties hereto. In addition: (i) all income, sales, bed and
franchise taxes due and payable by Seller, if any, and all interest and
penalties thereon, if any, have been paid in full; (ii) all tax returns required
to be filed by Seller, if any (including, without limitation, all sales,
franchise and payroll tax returns and reports), have been properly and timely
filed, and correctly reflect the tax position of Seller, and all taxes
respectively due under such tax returns have been paid thereby or will be paid
in the ordinary course of Seller's business; (iii) Seller is not subject to a
claim for deficiency or other action in connection with any taxes; (iv) no tax
returns of Seller have been or are being examined by the Internal Revenue
Service or any state or local Governmental Authority; and (v) all tax returns
filed by Seller after the date hereof, covering periods prior to and including
each Closing Date, will be properly and timely filed (giving consideration for
allowable extensions) and all taxes respectively due under such tax returns will
be timely paid.
2.6 No Defaults. Except as set forth on Schedule 2.6, the execution,
delivery and performance of this Agreement and any of the Related Documents by
Seller does not and will not:
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(a) Conflict with or result in any breach of the provisions of, or
constitute a default under the articles of incorporation, bylaws, articles of
organization, or operating agreement, as the case may be, of any entity
comprising Seller;
(b) Violate any restriction to which Seller is subject or, with or
without the giving of notice, the passage of time, or both, violate (or give
rise to any right of termination, cancellation or acceleration under) any
mortgage, deed of trust, license, lease, indenture or other material agreement
or instrument, whether oral or written, to which Seller is a party, or by which
it or the Assets are bound, which will not be satisfied, assigned or terminated
on or prior to each Closing as a result of the transactions contemplated in this
Agreement, or result in the termination of any such instrument or termination of
any provisions in such instruments that will have a Material Adverse Change on
the Facilities, individually or in the aggregate and result in the creation or
imposition of any lien, charge or encumbrance upon the Assets;
(c) Create any liens or other encumbrances on the Assets in favor of
third parties;
(d) Constitute a violation of any applicable rule, regulation, law,
statute, ordinance, or any judgment, decree, writ, injunction or order of
Governmental Authority; or
(e) Result in the breach or violation of any of the warranties and
representations herein set forth by Seller.
2.7 Contracts.
(a) Schedule 2.7(a) attached hereto includes a true and correct list
as of the Effective Date of all outstanding contracts or agreements, except (i)
those contracts which are cancelable on thirty (30) days notice without penalty
or premium and which require annual payments of less than Four Thousand Dollars
($4,000) per contract and (ii) the Patient Care Contracts, the Residential
Leases, the Personal Property Leases and the Facility Leases (such contracts and
agreements, excluding (i) and (ii), collectively the "Contracts") whether
written or oral, relating to the Assets, and Seller has provided to Purchaser
true and complete copies of each such Contract. Seller has not received written
notice of any default, and to the knowledge of Seller, there is no default,
existing or continuing by Seller or any other party, under the terms of any
Contracts, and, to Seller's knowledge, each Contract is in full force and effect
and is valid and enforceable by Seller in accordance with its terms, assuming
the due authorization, execution and delivery thereof by each of the other
parties thereto.
(b) Included on Schedule 2.7(b) are specimen patient admission
agreements ("Patient Care Contracts") and specimen residential leases
("Residential Leases") and a rent roll dated as of August 31, 2005 for each
Facility setting forth all such agreements in effect as of the Effective Date.
All Patient Care Contracts and all Residential Leases are terminable by the
patient or resident therein named upon thirty (30) days notice. Except set forth
on Schedule 2.7(b), all patients and residents of the Facilities have executed
Patient Care Contracts or Residential Leases and all Patient Care Contracts and
all Residential Leases do not vary in any material respect from the terms of the
specimen agreements attached hereto, were entered into on
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an arms' length basis and do not provide for payment of a single sum in exchange
for lifetime care or other prepaid services.
(c) Schedule 2.7(c)(i) is list of all debt instruments (the "Debt
Documents") executed and delivered in connection with all indebtedness
outstanding with respect to the Assets and currently held or serviced by HUD,
FNMA, the IDAs and the Tax Exempt Issuers (as all such terms are defined in
Section 4.16 below). Except as set forth on Schedule 2.7(c)(ii) Seller hereby
represents and warrants that Seller is in compliance with all material
representations, warranties, covenants, requirements and conditions under the
Debt Documents.
2.8 Title to Property and Related Matters.
(a) Seller has received no written notice of and Seller has no
knowledge of (a) any violations of any covenants or restrictions against the
Assets, or (b) any violations of any zoning codes or ordinances or other laws,
rules or regulations of any Governmental Authorities applicable to the Assets.
Seller has no knowledge of any agreements, documents, or instruments which are
not recorded among the land records but which affect the title to any Facility.
Seller has good and marketable title to the Assets, free and clear of all
mortgages, liens, pledges, charges or encumbrances of like kind or character,
except for (i) the indebtedness evidenced by the Debt Documents; (ii) statutory
liens for taxes and other impositions which are not yet delinquent; (iii) the
matters defined as "Permitted Encumbrances" in Section 4.10(b) hereof, and
except for such encumbrances as will be cured or removed by Seller as of the
Closing for such portion of the Assets encumbered thereby.
(b) Seller is the holder of valid and existing leasehold estates, as
lessee, of the Facilities constituting the Leased Facilities, for the terms set
forth in and pursuant to the terms of the leases (collectively, the "Facility
Leases") for the Leased Facilities. True and complete copies (including
amendments, if any) of the Facility Leases have been delivered to Purchaser and
are listed on Schedule 2.8(b). All of the Facility Leases are in full force and
effect, Seller is not in default under and Seller has not received written
notice of, and Seller does not have any knowledge of, any default or breach
under any of the Facility Leases by any party thereto. To the knowledge of
Seller, no event has occurred which with the giving of notice or lapse of time,
or both, would cause a breach or a default by any party under the Facility
Leases.
(c) All Facilities are supplied with such utilities as are necessary
for the operation of such Facilities as currently operated and for their
intended purposes.
(d) Each of the Owned Facilities and the Leased Facilities abuts on
and has direct vehicular access to a public road, or has access to a public road
via a permanent irrevocable easement benefiting the Real Property upon which
such Facility is located, and Seller has no knowledge of, and has received no
notice that alleges any breach or default under any instrument creating such
easement or attempting to terminate or revoke such easement.
(e) There are no pending rezoning or other pending land use compliance
actions affecting the Assets and Seller has not received written notice of and
has no knowledge of any threatened or contemplated rezoning or other land use
compliance actions affecting or which will affect the Assets. The current use of
each Leased Facility and Owned Facility is
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either lawfully permitted either as a currently conforming use or as a fully
legally "grandfathered use".
(f) At the Closing and except for liabilities arising under the
contracts listed on Schedule 2.13, which liabilities will be paid by Seller or
if such contracts are assumed by Purchaser, credited to Purchaser pursuant to
Section 4.24, Seller shall not be indebted to any contractor, laborer, mechanic,
materialman, architect or engineer for work, labor or services performed or
rendered, or for materials supplied or furnished, in connection with the Assets
for which any such person could lawfully claim a lien against the Assets, and,
except with respect to amounts less than $20,000 and then only to the extent
Purchaser is indemnified or otherwise protected by bonding or title insurance
with respect to such matters and lien at the expense of Seller, in form and
substance satisfactory to Purchaser.
(g) There are no condemnation or eminent domain proceedings pending,
or, to the knowledge of Seller, threatened or contemplated against the Assets or
any part thereof, or access thereto, and Seller has not received notice, oral or
written, of the desire of any public authority or other entity to take or use
the Assets or any part thereof. Between the date hereof and the Closing, Seller
will give Purchaser prompt written notice of any actual or any threatened or
contemplated condemnation of any part of the Assets of which it receives written
notice or obtains knowledge.
(h) There are no parties (other than Seller) in possession of the
Assets, or any portion thereof, other than tenants under the Tenant Leases set
forth in Schedule 2.8(h) who are in possession of space to which they are
entitled and patients pursuant to the Patient Care Contracts and residents
pursuant to Residential Leases, all of whom (with additions and deletions as
experienced by Seller in the ordinary course of business) are set forth on the
rent rolls attached as part of Schedule 2.7(b).
(i) There are no outstanding options or rights of first refusal to
purchase the Assets or any portion thereof or interest therein, other than
rights running in favor of Seller, all of which are being assigned as part of
the Assets.
2.9 Hazardous Substances. For purposes of this Agreement, "Environmental
Laws" means the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Section
6901 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), 42 U.S.C. Sections 9601 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act, the Occupational
Safety and Health Act, and all other applicable state, county, municipal,
administrative or other environmental, hazardous waste or substance, health
and/or safety laws, ordinances, rules, regulations, judgments, orders and
requirements of any Governmental Authority relating or pertaining to the (A) any
aspect of the environment, (B) preservation or reclamation of natural resources,
(C) the management, release and threatened release of Hazardous Substances, (D)
response actions and corrective actions regarding Hazardous Substances, (E) the
ownership, operation and maintenance of personal and real property which manages
or releases Hazardous Substances or at which Hazardous Substances are managed,
(F) common law torts, including so-called "toxic torts", and (G) environmental
or ecological conditions on, under or about the Assets, and all amendments and
regulations promulgated thereunder. For purposes of this Agreement, "Hazardous
Substance" shall mean, in
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a regulated quantity, any and all substances, wastes, materials, pollutants,
contaminants, compounds, chemicals or elements which are defined or classified
as a "hazardous substance", "hazardous material", "toxic substance", "hazardous
waste", "pollutant", "contaminant" or words of similar import under any
Environmental Law, including without limitation all dibenzodioxins and
dibenzofurans, polychlorinated biphenyls (PCBs), petroleum hydrocarbon,
including crude oil or any derivative thereof, raw materials used or stored in
the Facility and building components including, but not limited to, friable
asbestos-containing materials which contain Hazardous Substances and mold of a
type or in amounts that may present a health hazard.
(a) Except as set forth on Schedule 2.9(a), to Seller's knowledge, the
Assets do not contain any Hazardous Substance, except for Hazardous Substances
typically used in, and in quantities necessary for the day-to-day operation of,
the Facilities and which are commonly used in other similar facilities,
including but not limited to cleaning fluids, insecticides and medicines (the
"Common Products"), which Common Products have been used, transported, stored
and disposed of by Seller in compliance with all applicable Environmental Laws;
(b) Except as set forth on Schedule 2.9(b), there is no pending or
threatened litigation or proceeding before any Governmental Authority in which
any person or entity alleges the presence, release or threat of release of any
Hazardous Substance or violation of Environmental Laws at a Facility;
(c) Except as set forth on Schedule 2.9(c), Seller has not received
any notice of, and has no knowledge that, any Governmental Authority or employee
or agent thereof has determined, or threatens to determine, or is investigating,
that there is a presence, release or threat of release or placement on, in or
from the Assets, or the generation, transportation, storage, treatment, or
disposal at the Assets, of any Hazardous Substance. Seller shall notify
Purchaser promptly of its receipt of any such notice or knowledge after the
Effective Date;
(d) Except as set forth on Schedule 2.9(d), Seller has owned and
operated the Assets in compliance with all applicable Environmental Laws, has
obtained all necessary permits under the Environmental Laws for Seller's
operations on the Assets, and has not used any of the Assets for the generation,
storage, manufacture, use, transportation, disposal or treatment of Hazardous
Substances, other than as described in Section 2.9(a) above;
(e) Except as set forth on Schedule 2.9(e), there has been no
discharge of any Hazardous Substance on or from any of the Assets during the
time of Seller's ownership or occupancy thereof; and
(f) Seller has delivered to Purchaser copies of all reports or tests
prepared for Seller in its possession, if any, with respect to the compliance of
the Facilities or the Real Property with the Environmental Laws and/or the
presence of Hazardous Substances on the Facilities or the Real Property.
2.10 Leases. Schedule 2.10 attached hereto contains a true and correct list
of all leases (inclusive of all amendments) of all machinery, equipment and
other tangible property leased to Seller which are used at or relate primarily
to the Facilities (the "Personal Property Leases"), all
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leases of space in the Facilities by Seller to third party service providers
(the "Tenant Leases" and collectively with the Personal Property Leases, the
"Leases"). Except as disclosed on Schedule 2.10, each Lease is in full force and
effect; all rents due on or before the date hereof under each Lease have been
timely paid and there has not been and there is no ongoing issue or dispute as
to past rental payments; in each case, Seller is landlord under the Tenant
Leases and the lessee identified on Schedule 2.10, has been in peaceable
possession since the commencement of the original term of such Lease and neither
Seller, nor, to the knowledge of Seller, any other party to such Lease is in
default in any respect thereunder; and no waiver, indulgence or postponement of
Seller's obligations thereunder has been granted by the lessor or of lessor's
obligations by Seller; and Seller has no knowledge or and has not received
written notice that there exists any occurrence, event, condition or act which,
upon the giving of notice or the lapse of time or both, would become a default
by Seller (or, to the knowledge of Seller, any lessor or tenant) under any such
Lease.
2.11 Transfer of Assets. On each Closing Date, the Assets for which the
Closing is occurring, will be transferred to Purchaser pursuant to this
Agreement.
2.12 Survey Reports, Etc. Seller has delivered to Purchaser true and
complete copies of all survey reports, waivers of deficiencies, plans of
correction, and any other investigation reports issued with respect to the
Facilities (collectively, "Licensing Surveys") for the three (3) year period
preceding September 30, 2005, and Seller shall also promptly deliver to
Purchaser any Licensing Surveys filed, arising, or involving the Facilities
between the Effective Date and the Closing Date for such Facilities. There are
no material deficiencies or violations noted in any Licensing Surveys, and
except as set forth on Schedule 2.12, Seller has remedied, discharged and
complied with all applicable plans of correction, such that there are no current
violations or deficiencies with respect to any of the Licenses.
2.13 Capital Expenditures. Except as set forth in Schedule 2.13, and except
for routine expenditures for repairs and replacements in connection with the
ongoing maintenance and upkeep of the Facilities, which Seller completed prior
to December 31, 2005, Seller does not have any outstanding contracts for capital
expenditures relating to the Facilities, nor does it have any agreement,
obligations or commitments for capital expenditures relating to the Facilities,
including, without limitation, additions to property, plant, equipment or
intangible capital assets.
2.14 Absence of Notices. Except as disclosed on Schedule 2.14, Seller has
not received any written notice, and has no knowledge, that any material
customer or supplier of Seller intends to discontinue, substantially alter
prices or terms to, or significantly diminish its relationship with the
Facilities as a result of the transaction contemplated hereby or otherwise.
2.15 Patient Records. Except as provided on Schedule 2.15, Seller has
received no written notice, and has no knowledge: (a) that patient and resident
records used or developed in connection with the Business conducted at the
Facilities have not been maintained in accordance with any applicable federal,
state or local laws or regulations governing the preparation, maintenance of
confidentiality, transfer and/or destruction of such records, and (b) of any
material deficiency in the patient or resident records and other relevant
records of the Facilities used or developed in connection with the operation of
the Business conducted at the Facilities.
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2.16 Advance Payments and Patient Funds. The accounting for advance
payments and patient trust fund accounts provided to Purchaser by Seller
pursuant to the provisions of Section 10.3 hereof is complete and accurate in
all material respects.
2.17 Medicare and Medicaid Participation.
(a) Except as set forth on Schedule 2.17,
(i) each of the Facilities that has historically received
Medicare or Medicaid reimbursement is eligible to receive payment without
restriction under Title XVIII ("Medicare") and Title XIX ("Medicaid") of the
Social Security Act and is a "provider" with valid and current provider
agreements and with one or more provider numbers with the federal Medicare and
all applicable state Medicaid and successor programs. For purposes of this
provision, Medicare, Medicaid, CHAMPUS, TRICARE and other federal, state or
local governmental reimbursement programs, or successor programs to any of the
above, are referred to as "Government Programs".
(ii) each of the Facilities, if any, that has historically
received payments under CHAMPUS or TRICARE is or was, as the case may be, a
"provider" with valid provider agreements, as applicable, and with one or more
provider numbers with CHAMPUS and/or TRICARE, if still currently a "provider".
(iii) to the extent that one or more of the Facilities
participated in Government Programs, each of the Facilities that participated
was/is in compliance with the conditions of participation of the Government
Programs in which they participated (or participate), in all respects.
(iv) Seller currently holds such necessary licenses, agreements
and certificates pertaining to Medicare and Medicaid provider agreements entered
into with the State of Florida, the United States, and any municipality or other
Governmental Authority body that authorizes Seller to conduct its business at
the Facilities as presently operated.
(b) All cost reports of Seller and the Facilities for the Government
Programs which are required to be filed on or prior to the date hereof have been
properly filed and are complete in all material respects, and there are no
outstanding overpayments, set offs or adjustments to any Government Programs
resulting from current or previous audits.
2.18 Third Party Payor Reimbursement. All billing practices of Seller with
respect to the Facilities to all third party payors, including the Government
Programs and private insurance companies, have been in compliance with all
applicable laws, regulations and policies of such third party payors and
Government Programs in all material respects. Seller has received no written
notice that Seller has billed or received any payment or reimbursement in excess
of amounts permitted by applicable law, except to the extent cured or corrected
and all penalties or interest discharged in connection with such cure or
correction.
2.19 Licensed Beds and Units. The number of licensed skilled nursing beds
and assisted living units at the Facilities is as set forth on Schedule 2.19.
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2.20 Intellectual Property. Other than (i) the rights to use certain names
associated with the Facilities, and (ii) any software or other computer programs
used in the connection with the operation of the Facilities, each of which
Seller is transferring to Purchaser subject to the applicable licenses
associated with such software programs and pursuant to the terms and provisions
of this Agreement, Seller has no other Intellectual Property of any kind other
than the trade names "Edwinola Retirement Community" and "Fairways Pines at Sun
N Lake", which Seller is retaining in connection with its continued ownership
and operation of the facilities to which such names relate. Such names and
software are listed on Schedule 2.20 attached hereto. For these purposes,
"Intellectual Property" shall mean, collectively, all: (i) United States or
foreign patents, patent applications, patent disclosures, and all renewals,
reissues, divisions, continuations, extensions or continuations-in-part thereof;
(ii) trademarks, service marks, trade dress, trade names, fictitious names,
corporate names, and registrations and applications for registration thereof;
and (iii) copyrights (registered or unregistered), registrations and
applications for registration thereof, including all renewals, derivative works,
enhancements, modifications, updates, new releases or other revisions thereof.
2.21 Financial Statements. Seller has delivered to Purchaser the documents
listed on attached Schedule 2.21 certified by the chief financial officer of
Seller which contains: (i) copies of the following financial statements
(collectively, the "Financial Statements"): (a) individual Facility income
statements for the fiscal years ended 2002, 2003 and 2004; (b) individual
Facility income statements consolidated and consolidating balance sheet and
statements of income, changes in stockholders equity (the "Most Recent Financial
Statements") as of and for the eight (8) month period ended August 31, 2005 (the
"Most Recent Fiscal Month End") for the Seller. The Financial Statements
(including the notes thereto) have been prepared on the accrual basis of
accounting applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of Seller and Facilities as of such dates
and the results of operations of Seller and the Facilities for such periods;
(ii) a schedule of capital improvements to the Facilities for the fiscal years
ended 2002, 2003 and 2004; (iii) copies of Seller's audited financial
statements, for the periods ending December 31, 2002, 2003 and 2004 which
financial statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and which present fairly
the financial condition of Seller as of such dates and the results of operations
of Seller for such periods, and (iv) the rent roll which is true, complete and
accurate in all material respects through August 31, 2005 as set forth on
Schedule 2.7(b). During the term of this Agreement, Seller shall deliver to
Purchaser monthly individual Facility income statements and updated rent rolls
not later than the 15th day of the next succeeding calendar month. On not less
than five (5) business days prior written notice from Purchaser, Seller agrees
to provide Purchaser's auditors sufficient access to information and personnel
to obtain all of the information they reasonably require to prepare audited
financial statements of the Owned and Leased Facilities for fiscal years 2002,
2003, 2004 and 2005 and comparable unaudited interim financial statements from
January 1, 2006 through each Closing Date. Seller also agrees to cause an
executive officer of Seller with knowledge concerning the financial affairs of
the Owned and Leased Facilities to execute and deliver a representation letter
to Purchaser's auditors with respect to all financial information delivered to
Purchaser and its auditors, in a form and substance substantially similar to
what would have been executed and delivered to the auditors had Seller been
preparing audited financial statements for such time periods with respect to the
Owned and Leased Facilities.
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2.22 No Litigation. Except as set forth on Schedule 2.22 attached hereto,
there are no actions, suits, claims, governmental investigations or other legal
or administrative proceedings, or any orders decrees or judgments in progress,
pending or in effect, or, to the knowledge of Seller, threatened against or
relating to Seller, the Facilities, Seller's operation of the Facilities, any of
the Assets, or against or relating to the transactions contemplated by this
Agreement, and there are none pending in state courts, or in any federal courts,
or, to the knowledge of Seller, pending in other jurisdictions or threatened in
writing, at law or in equity, by or before any federal, state or municipal court
or other governmental agency, department, commission, board, bureau,
instrumentality or other Governmental Authority. The matters set forth on
Schedule 2.22 if decided adversely will not materially and adversely affect the
Assets, Seller, or Seller's operation of the Facilities or the Business.
2.23 Compliance with Medicare and Medicaid Law.
(a) Except as set forth on Schedule 2.23 attached hereto, there is no
litigation, claim, proceeding or investigation currently pending against Seller
or relating to the Facilities for any violation or alleged violation of, and
Seller has received no written notice, and Seller has no knowledge, of any
threat of any suit, action, claim, dispute, investigation, agency review or
other proceeding pursuant to or involving, (i) the False Claims Act, 31 U.S.C.
Sections 3729 et seq., (ii) the Civil Monetary Penalties Law, 42 U.S.C Section
1320a-7a, (iii) federal or state anti-kickback statutes, including but not
limited to 42 U.S.C. 1320a-7b, (iv) federal or state referral laws, including
but not limited to 42 U.S.C. Section 1395nn, (v) regulations promulgated
pursuant to any of the foregoing statutes, or (vi) any other federal or state
law or regulation of general applicability to health care fraud, governing or
regulating the management of health care providers, or governing or regulating
medical billing or reimbursement, including all applicable Medicare and Medicaid
statutes and regulations (collectively the "Medicare/Medicaid Laws").
(b) Seller, and each of the Facilities have timely filed all forms,
applications, reports, statements, data and other information required to be
filed with federal, state or local entities under federal or state laws or
regulations in connection with the Medicare/Medicaid Laws, including but not
limited to cost reports required to be filed with respect to the Facilities, as
more fully set forth in Section 2.17 hereof.
(c) The Facilities have the number of licensed skilled nursing beds
and certified beds as set forth in Schedule 2.19 and all billing to the
Government Programs has been consistent with these certification designations.
(d) There are no outstanding bed taxes or other fees owing to state
licensing authorities or any of the Government Programs.
(e) There are no outstanding Life Safety Code deficiencies for any of
the Facilities.
(f) There are no outstanding waivers for any Life Safety Code
deficiencies.
(g) There are no pending Medicare or Medicaid audits by any
Governmental Agency except as set forth on Schedule 2.23(g).
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2.24 Absence of Certain Changes or Events. Since September 1, 2005, all of
the parties comprising Seller have not:
(a) Suffered any Material Adverse Change in the financial condition,
assets, or liabilities of the Facilities, or the operation of the Facilities,
individually or in the aggregate;
(b) Other than in the ordinary course of business, consistent with
past practices, granted any increase in the compensation payable or to become
payable by Seller to any of its officers, employees or agents employed at the
Facilities (except compensation granted to new employees who are hired in the
ordinary course of business on substantially similar terms to existing employees
with comparable duties and experience);
(c) Sold, transferred or otherwise disposed of, or agreed to sell,
transfer or otherwise dispose of, any assets relating to or in connection with
the Facilities having a fair market value at the time of sale, transfer or
disposition of $25,000 or more in the aggregate, or cancelled, or agreed to
cancel, any debts or claims relating primarily to the Facilities in the amount
of $10,000 or more in the aggregate; or
(d) Made any change in any method of accounting or accounting practice
relating to the Facilities.
2.25 Condition of Assets.
(a) Except as set forth on Schedule 2.25, all of the Assets are in
Seller's possession or control and are located at or on the Leased Facilities or
the Owned Facilities.
(b) Except as disclosed on Schedule 2.25, all of the Assets are, to
Seller's knowledge, in good repair and working order, subject to normal wear and
tear.
2.26 Employee and Labor Relations. Except as provided under Schedule 2.26:
(a) Compliance. Seller is in compliance with all federal, state or
other applicable laws, domestic or foreign, and all rules, regulations,
ordinances, orders and decrees of Governmental Authorities respecting employment
and employment practices concerning the Facilities (collectively "Employment
Laws").
(b) No Claims. No legal claim in respect of application for
employment, employment, the terms or conditions of employment, the handling of
benefits or termination of employment of any person has been asserted or
threatened, against Seller or any of its subsidiaries, in connection with the
operation of the Facilities.
(c) No Labor Actions. No labor strike, picketing action, dispute,
slowdown or stoppage, or unfair labor practices are actually pending or, to the
knowledge of Seller, threatened against, or involving, Seller or any of the
Facilities.
(d) No Bargaining Agreements. Seller is not a party to any collective
bargaining agreement, and no collective bargaining agreement is currently being
negotiated by
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Seller. To Seller's knowledge no petitions for representation have been filed
against any of the Facilities nor have any demands been made for recognition.
(e) ETO. Under Seller's employment policies, Seller is not obligated
to pay employees for earned sick pay upon the termination of employment
regardless of the reason thereof and Seller does not accrue sick pay as an
obligation on its books and records. Seller's employment policies do not allow
or otherwise provide for personal days.
(f) At-Will Employees. All employees at the Facilities are employees
of Seller and are employees-at-will.
(g) WARN Compliance. Seller has taken, as required by law, any and all
actions necessary to comply with the Worker Adjustment and Retraining
Notification Act ("WARN"), or state statute of similar import, with respect to
any event of occurrence affecting the Facilities since the effective date of
WARN.
2.27 Employee Benefit Employee Benefit Plans.
(a) Except as disclosed on Schedule 2.27, Seller has never maintained
any defined benefit plan within the meaning of section 414(l) of the Internal
Revenue Code of 1986.
(b) Except as disclosed on Schedule 2.27, Seller has never been
obligated to contribute to any multi-employer plan within the meaning of ERISA
Section 3(37).
(c) Schedule 2.27 sets forth an accurate and complete list of all
Employee Benefit Plans (as defined hereinafter) and specifies which Seller
sponsors each of said Employee Benefit Plans. "Employee Benefit Plans" mean all
benefit plans and benefit arrangements in which Seller's employees at the
Facilities participate.
(d) Each Employee Benefit Plan has, at all times, been maintained and
operated in compliance, in all material respects, with its terms and
requirements of all applicable Employee Benefit Plans, including, without
limitation, ERISA, as amended, and the Internal Revenue Code of 1986, as amended
(the "Code").
(e) Seller shall remain responsible for maintaining all Employee
Benefit Plans in compliance with applicable law and Purchaser shall have no
obligation with respect to any of Seller's Employee Benefit Plans at any time.
2.28 Inventory and Supplies. As of the Effective Date and at each
Facility's respective Closing, the Inventories are and will be in sufficient
quantity and condition for the normal operation of the Business at the
Facilities and in compliance with all requirements of Governmental Authorities.
At each Facility's respective Closing, the Inventories will be in substantially
the same quantity as on December 31, 2005.
2.29 Professional Liability Insurance. Attached as Schedule 2.29 are either
copies of or a list of the certificates of the professional liability insurance
carried by Seller with respect to the Facilities, and upon request by Purchaser,
Seller shall make copies of any policies and provide same to Purchaser.
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2.30 Truth of Warranties, Representations, and Statements. All of the
statements, representations, and warranties made by Seller in this Agreement and
the statements and information set forth in the attached Schedules are true and
accurate in every material respect.
Notwithstanding anything else to the contrary herein, any reference in this
Agreement to "knowledge," of Seller shall be deemed to mean the actual knowledge
of George P. Wagner, Jr., Alan D. Parrish, William Filippone and each of
Seller's regional vice presidents after due inquiry by such persons of the
resident directors and executive directors of the Facilities, all in their
representative capacities as employees, officers or directors of Seller and not
in their individual capacities.
PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT EXCEPT WITH RESPECT TO THE
FOREGOING REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE II ABOVE, OR
THAT WHICH MAY BE EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT (IF AT ALL) OR
IN THE SELLER DOCUMENTS OR RELATED DOCUMENTS, THE ASSETS ARE TO BE CONVEYED BY
SELLER TO PURCHASER IN "AS-IS, WHERE-IS" CONDITION WITHOUT WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, AS TO ZONING, PHYSICAL CONDITION,
ENVIRONMENTAL CONDITION, SUITABILITY FOR A PARTICULAR PURPOSE OR ANY OTHER
MATTER WHATSOEVER.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated herein, Purchaser represents and warrants the
following, each of which warranties and representations is material to and is
relied upon by Seller:
3.1 Corporate Organization; Etc. Purchaser is a corporation duly organized
and validly existing under the laws of the State of Delaware with full power and
authority to own all of its properties and assets and to carry on its business
as it is now being conducted.
3.2 Authorization, Binding Effect. Purchaser has, and at each Closing will
have, the full and unrestricted right, power and authority to execute, deliver
and perform this Agreement and to consummate the transactions and perform all
obligations contemplated hereby and in all agreements, instruments and documents
being or to be executed and delivered by Purchaser in connection with such
transactions. The consummation of the transactions contemplated herein have been
duly authorized and approved by all necessary corporate action of Purchaser.
This Agreement and each such other agreement, instrument and document, upon due
execution and delivery by Purchaser, will constitute the legal, valid, and
binding obligation of Purchaser, enforceable in accordance with its terms.
3.3 No Violation. Purchaser is not subject to or obligated under any
certificate of incorporation, bylaw, law, or rule or regulation of any
Governmental Authority, or any agreement or instrument, or any license,
franchise or permit, or subject to any order, writ, injunction or decree which
would be in any material respect breached or violated by the execution, delivery
or performance of this Agreement.
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3.4 No Litigation. Purchaser is not a party to, or defending or subject to,
any investigation, litigation, arbitration or other legal proceeding, nor is any
such legal proceeding threatened, which would, have a Material Adverse Change on
Purchaser's ability to execute, deliver and perform this Agreement and the
documents and transactions contemplated hereby.
3.5 Truth of Warranties, Representations, and Statements. All of the
statements, representations, and warranties made by Purchaser in this Agreement
are true and accurate in every material respect.
ARTICLE IV.
COVENANTS OF SELLER
From the date hereof and until the respective Closing for each of the
Facilities and to the extent thereafter as contemplated herein, except as
otherwise consented to or approved by Purchaser in writing, Seller covenants and
agrees as follows:
4.1 Regular Course of Business. Seller shall (a) operate the Facilities in
a manner substantially consistent with applicable requirements of all
Governmental Authorities, Seller's past practices and industry standards for
operation of assisted living, independent living and skilled nursing facilities
(with the understanding that Seller shall not be required to make any capital
expenditures except (i) as provided for in Seller's 2005 budget and which have
not been completed as of the execution of this Agreement, or (ii) as needed on
an emergency basis or as otherwise required to maintain the Facility or
Facilities in a good operating condition or (iii) as required under Section
4.24); (b) maintain the Assets in good order and repair, reasonable wear and
tear excepted and otherwise in sufficient repair, order, and condition,
sufficient to satisfy the representations and warranties as to the condition and
quantity of the Assets set forth in Article II: (c) comply with all applicable
laws, rules, regulations and requirements with respect to the Assets and the
operation thereof, including without limitation all required regulatory
standards of any Governmental Authorities with regulatory jurisdiction over the
Facilities and compliance with all Governmental Programs; (d) timely pay all
rents and other payments due on or before the Closing under, and use its
commercially reasonable efforts to otherwise maintain and comply with, all
Assumed Debt, all Assumed Contracts, all Tenant Leases, all Personal Property
Leases, all Facility Leases, all Patient Care Contracts and all Residential
Leases without change except as expressly provided herein; (e) not make any
changes or modifications in any Assumed Contracts, Tenant Leases, Personal
Property Leases, Facility Leases, Patient Care Contracts, Residential Leases and
Debt Documents or incur any further obligations or surrender any rights
thereunder other than as routinely occur in the ordinary course of business; (f)
not enter into any agreements or leases which would have had to be disclosed on
any schedule hereto had such agreements or leases been entered into prior to the
Effective Date other than as terminable, without penalty, upon advance notice of
thirty (30) days or less; (g) keep in full force and effect present insurance
policies through the Closing Date or other comparable insurance coverage; and
(h) use its commercially reasonable efforts to maintain in good standing all
Licenses necessary to operate the Facilities and to maintain all goodwill of
patients, residents, employees and vendors.
4.2 Borrowing. Seller shall not create or permit to become effective any
mortgage, pledge, lien, encumbrance or charge of any kind upon the Assets other
than the Permitted Liens.
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4.3 Full Access and Disclosure.
(a) Seller shall, upon reasonable prior notice, afford to Purchaser
and its counsel, accountants, environmental consultants, engineers, appraisers
and other authorized representatives reasonable access during business hours to
the Facilities, and all computer systems, books and records in any way relating
to the Assets and/or the Facilities, including, but not limited to, the roof,
all equipment (fixed and movable), heating and cooling systems, and any and all
vehicles, financial data and records, operating data and other information
reasonably requested, including the most recent financial statements, cost
reports, inspection reports, plans of correction with respect to Licensing
Surveys (all with respect to the past three (3) years), current room rates
(including dates and amounts of increases), census data and patient mix, payroll
information, Medicaid reports, employment agreements, personnel policies,
occupancy agreements with patients, leases, and all contracts, agreements,
correspondence and other documents relating to outside contractors, vendors,
consultants, or other outside parties relating to the Facilities and to which
any one or more of the Facilities are now or may become a party in order that
Purchaser may have full opportunity to make such reasonable investigations of
the Assets and the Facilities as Purchaser shall desire to make. Such access
shall include the right to meet with all personnel, subject to Purchaser's
obligation to comply with the confidentiality provisions set forth in this
Agreement. Purchaser shall provide Seller with at least two (2) days' advance
notice by telephone of the date, time, place and expected attendees for any
visits to the Facilities. Seller shall furnish such additional financial and
operating data and other information as Purchaser and its representatives shall
from time to time reasonably request, and Seller shall supplement or amend any
information, written or otherwise, previously delivered or otherwise disclosed
to Purchaser with respect to any matter hereafter arising which, if existing or
occurring at the Effective Date, would have been required to be set forth or
disclosed.
(b) Purchaser hereby agrees to indemnify and hold harmless Seller
against: (i) any physical damages or physical injuries associated with
completion of such inspections or investigations resulting from the actual
negligence of Purchaser or its agent, and (ii) claims by third parties for
monies due incidental to such inspections or investigations, which undertaking
shall survive the termination of this Agreement or the conveyance of the Assets
by Seller to Purchaser for the period of one (1) year. Purchaser further
undertakes that any damage occasioned to the Real Property, Personal Property or
the Facilities caused by such inspections or investigations shall be cured by
restoring the Real Property, Personal Property or portion of the Facilities
disturbed or damaged back to its pre-entry and pre-disturbed state. Purchaser's
parent company, Alterra Healthcare Corporation, is executing this Agreement for
the sole purpose of guarantying the obligations and covenants of Purchaser under
this Section 4.3(b).
4.4 Consents. Seller shall use its commercially reasonable efforts to
obtain, on or prior to each Closing, all applicable consents necessary for
Seller to fulfill their obligations to consummate the transactions contemplated
hereby.
4.5 Compliance With Laws. Seller shall comply in all material respects with
all applicable laws, rules, regulations and requirements of all Governmental
Authorities, in conjunction with the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
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4.6 Taxes. Seller shall file federal, state, local, and, to the extent
applicable, estimates and reports and pay all amounts then due, for all periods
through and including each Closing Date to the extent necessary to transfer the
Assets to Purchaser in accordance with the terms of this Agreement.
4.7 No Disposition of Assets. Seller shall not sell, lease or otherwise
dispose of or distribute any of the Assets or properties related thereto or
necessary for operation of the Facilities and, to the extent depleted in the
ordinary course, Seller shall restock and replenish any portion of the Assets
consumed or used during the term of this Agreement.
4.8 Further Documentation. Seller agrees that for a two (2) year period of
time following the final Closing hereunder, upon request by Purchaser, it will
do, execute, acknowledge, and deliver, or cause to be done, executed,
acknowledged, and delivered, all such further acts, deeds, assignments,
transfers, conveyances and assurances as may be reasonably required, without
enlarging or extending any liability of Seller beyond what is otherwise
contemplated by this Agreement in any manner and without requiring the
expenditure of funds by Seller, in order to more fully assign, grant, transfer,
convey, assure and confirm to Purchaser, or to its successors and assigns, or
for aiding and assisting in collecting and reducing to possession, any or all of
the Assets to be sold to Purchaser pursuant to this Agreement or transitioning
the operations of the Facilities to Purchaser.
4.9 Confidentiality. Seller will use its commercially reasonable efforts to
keep confidential all information relating to the terms of this Agreement and
all information relating to Purchaser, its officers and directors (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any Governmental Authority) and such information shall
not at any time be used for the advantage of Seller or its representatives,
except as otherwise contemplated by this Agreement, or disclosed to third
parties (including employees at the Facilities) by Seller or its
representatives.
4.10 Title Insurance and Survey; Governmental Approvals.
(a) Seller has provided to Purchaser a copy of all currently effective
title insurance policies and plats and surveys in its possession that relate to
the Real Property.
(b) Seller has obtained and provided to Purchaser: (i) updated ALTA
as-built real property surveys for each of the Facilities (each a "Survey" and
collectively the "Surveys"), and (ii) title commitment for each of the
Facilities (each a "Title Commitment" and collectively the "Title Commitments"),
issued by Land America through its national office in Orlando, Florida ("Title
Company"), which contain commitments of the Title Company to issue to Purchaser
title insurance policies on extended coverage 1970 or 1992 ALTA Owners Policy
forms, in form and substance reasonably acceptable to Purchaser (each a "Title
Policy" and collectively the "Title Policies") insuring the fee simple interest
of Purchaser in the Owned Facilities and valid leasehold estates in the Leased
Facilities, together with copies of all recorded exceptions to title referred to
therein (the "Exception Documents"). Each Title Commitment is or shall be in the
amount allocated to the Facilities and the Real Property and Improvements for
the applicable Facility as set forth on Schedule 1.7. Seller will cause all
standard exceptions (the
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"Standard Title Exceptions") to be deleted from the policies at the Closing,
including without limitation, executing Seller's affidavits, gap indemnities and
the like other than exceptions for such itemized matters shown on the Surveys to
which Purchaser does not object pursuant to the provisions hereof. Purchaser is
delivering to Seller a notice simultaneously herewith, approving or disapproving
in writing the Title Commitments and Surveys with respect to the Facilities (the
"Title Notice"), with any such notice of disapproval specifying the Exception
Documents or other matters to which Purchaser objects. The failure of Purchaser
to disapprove any matter reflected in the Title Reports or Survey with respect
to any Facility in the Title Notice shall be deemed a waiver by Purchaser of any
right to object to any matter so shown; provided, however, Seller shall be
unconditionally obligated to pay any outstanding indebtedness evidenced by, and
cause the release of any lien, mortgage, deed of trust, judgment, FiFa or other
encumbrance capable of being released through or as a result of the payment of
money (collectively, "Monetary Encumbrances") other than the Assumed Debt,
irrespective of whether Purchaser objects to same. Notwithstanding the
foregoing, Purchaser shall not have the right to disapprove any of the
following, all of which shall be deemed to be "Permitted Encumbrances"
hereunder: (A) matters created or consented to in separate written consent by
Purchaser, and (B) the Assumed Liabilities. Upon receipt of the Title Notice
from Purchaser disapproving any encumbrance or other matter reflected in the
Title Commitment or Survey with respect to any Facility, Seller shall have ten
(10) business days from the date of such notice in which to cure the same (which
cure may be effected by payment and discharge of the objectionable item or by
causing the Title Company to remove the same as an exception or affirmatively
insure over such item provided such affirmative insurance shall be reasonably
satisfactory to Purchaser and sufficient, in Purchaser's reasonable judgment, to
adequately address Purchaser's concerns with respect to such matter) and in the
event Seller shall fail or refuse to do so within said ten (10) business day
period, Purchaser shall have five (5) business days thereafter in which to
advise Seller in writing of Purchaser's election (x) to make such payments as
are necessary to effect releases of such claims Seller is not prepared to cure
and to proceed to Closing or (y) to terminate this Agreement in accordance with
Article XI with respect to the Facility or Facilities encumbered with such
objectionable lien, encumbrance or other matter, in which case the Purchase
Price shall be reduced by the amount allocated to such Facility as set forth on
Schedule 1.7 or (z) extend the Closing Date for such Facility in accordance with
the provisions of Section 12.18 to enable Purchaser and/or Seller to so cure.
Seller shall pay, or cause to be paid, all Monetary Encumbrances affecting or
recorded against the Facilities other than the Assumed Debt. In the event that
any update to any Title Commitment prior to or on the Closing Date for any
Facility reveals any new matter not previously shown or disclosed on the prior
Title Commitment for such Facility, then Purchaser shall have the same rights of
objection, termination and extension of the Closing Date, and Seller the same
obligations of cure, as set forth above. Notwithstanding the foregoing,
Purchaser shall have no right to object to title to the unimproved .72 acre
tract lying adjacent to the Jackson, Tennessee facility, although Purchaser may
in its sole discretion elect to not take title to such unimproved tract at the
Closing for the Jackson, Tennessee facility and, in such case, there shall be no
reduction in the applicable Purchase Price and then such tract shall be deemed
an Excluded Asset.
(c) Purchase has completed Purchaser's environmental due diligence of
the Assets and Purchaser is simultaneously herewith delivering to Seller a
notice objecting to certain environmental conditions at the Assets. Seller shall
have ten (10) business days from the date of Seller's receipt of such notice in
which to advise Purchaser whether or not Seller will cure the
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same prior to Closing, and if Seller fails or refuses to do so within said ten
(10) business day period, Purchaser shall have five (5) business days thereafter
in which to advise Seller in writing of Purchaser's election (x) to waive the
matters to which Purchaser objected and to proceed to Closing or (y) to
terminate this Agreement in accordance with Article XI with respect to the
Facility identified in such Purchaser's notice, in which case the Purchase Price
shall be reduced by the amount allocated to such Facility as set forth on
Schedule 1.7 or (z) extend the Closing Date for such Facility in accordance with
the provisions of Section 12.18 to enable Purchaser and/or Seller to so cure the
environmental condition.
4.11 Delivery of Inventory. At the Closing for each Facility, Seller shall
deliver to Purchaser by leaving at each of the Facilities all Inventory for such
Facility.
4.12 ETO Pay. Seller shall credit to Purchaser on the Closing Statement, as
of the Closing Date: (a) all earned and accrued vacation pay of all Transitioned
Employees (as defined in Section 5.6) for Facilities being conveyed on such
Closing Date, and (b) an amount equal to fifty percent (50%) of paid sick days
taken at such Facility for all employees during the twelve (12) month period
prior to such Closing Date, based upon Seller's records for such period
("Estimated Sick Pay") ((a) and (b) collectively "ETO"). Seller shall deliver to
Purchaser an updated schedule in accordance with Schedule 4.12 within five (5)
days prior to the Closing which shall include all ETO (i) as of the most recent
pay period preceding the Closing Date, and (ii) projected ETO as of the Closing
Date, which shall assume no further vacation or sick days for all Transitioned
Employees except for known scheduled vacation. The schedule shall list all ETO
of all Transitioned Employees, including the method of calculation of the ETO
and the dollar value thereof to the employees to whom the amounts are
potentially owed. Purchaser shall thereafter be responsible for all such ETO to
all such Transitioned Employees to the extent of the credit received from Seller
at Closing.
4.13 No Solicitation. Seller agrees, it shall not, after the date hereof
and before the Closing Date (including without limitation any extended Closing
Date hereunder), directly or indirectly, through any officer, director,
employee, agent or otherwise solicit, initiate or encourage submission of
proposals or offers from any person relating to any acquisition of all or any
portion of the Assets, or any assets of or equity interest in Seller or any
business combination involving Seller, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing.
4.14 Final Cost Report. Seller shall prepare a final cost report for each
Facility within the time frame required by law, but no later than one hundred
and twenty (120) days after the Closing Date for such Facility.
4.15 Employment Records. Except as may be prohibited by law, Seller shall
make available to Purchaser its employee records relating to all employees of
Seller, other than medical records. At each Closing, except as may be prohibited
by law, Seller shall transfer to Purchaser the medical records for the
Transitioned Employees at the respective Facilities.
4.16 Lease Consents and Estoppels.
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(a) Seller shall use its commercially reasonable efforts to obtain
from the lessors under the Facility Leases, lease estoppels substantially in the
form of attached Exhibit 4.16(a)(1), which shall include statements as to the
current rental rate and other amounts payable thereunder, the amounts of
reserves or escrows for taxes, insurance and CapEx and other reserves or
escrows, the amount of security deposits held, and certifying as to the absence
of any defaults thereunder and the absence of any events which, with the passage
of time, giving of notice, or both, could ripen into an event of default
thereunder ("Lessor Estoppels"). Seller shall also use its commercially
reasonable efforts to obtain written consent from the lessors to the assignment
of the Facility Leases and other leases, and to subleases of the same to, or
management agreements with, one or more affiliates of Purchaser, including the
applicable lessor's written agreement that the applicable Lease will not be
adversely impacted by any other agreement of Seller with lessor and any renewal
options will not require the renewal of the leases relating to other facilities
and shall include any consents required from any lenders holding outstanding
indebtedness secured by any Facility or Real Property to the extent necessary or
appropriate substantially in the form of attached Exhibit 4.16(a)(2) ("Lease
Consents"). Seller shall also use its commercially reasonable efforts to obtain
for Purchaser's benefit (i) subordination, non disturbance and attornment
agreements from all lenders holding underlying indebtedness with respect to the
Leased Facilities substantially in the form of attached Exhibit 4.16(a)(3), and
(ii) any consents required by the lenders holding the underlying indebtedness
secured by the New Port Richey Leased Facility and the Assumed Debt on the
Atrium Facility ((i) and (ii) collectively, "SNDAs"). The executed counterparts
of all Lessor Estoppels, Lease Consents and SNDAs from all lessors and
underlying lenders shall be delivered to Purchaser at least ten (10) days prior
to the Closing Date for the Leased Facilities to which they relate.
Notwithstanding any thing to the contrary herein, Seller shall be absolutely
obligated to obtain the Lease Consent, Lessor Estoppel and, if applicable SNDA,
with respect to the NPR Leased Facility. Seller shall have the right to seek the
lessor's and lender's consent to the release of Seller from liability under the
leases for the Leased Facilities, but such shall not be a condition precedent to
the completion of Closing hereunder with respect to the Owned Facilities and the
NPR Leased Facility. Purchaser shall replace any existing security deposits with
any of lessors under Facility Leases at the respective Closing for such
Facility, but shall not be required to provide additional security, or agree to
additional lease amendments in connection with obtaining the Lessor Estoppels,
Lease Consents or if applicable SNDAs.
(b) Receipt of all Lessor Estoppels, Lease Consents and SNDAs are part
of the "Required Consents" that are conditions precedent to Closing hereunder
and, to the extent Seller is unable to obtain such portion of the Required
Consents, the provisions of Sections 8.2 shall apply, except with respect to the
NPR Leased Facility, for which Seller's obligation shall be absolute.
(c) In the event that Seller is not released from any Facility Lease
other than the Facility Lease for the NPR Leased Facility, Purchaser shall
provide Seller with an indemnity as to any liability for any breach of such
Facility Lease by Purchaser first arising under such Facility Lease after the
Closing Date.
(d) Seller shall use commercially reasonable efforts, in cooperation
and coordination with Purchaser, to obtain the necessary lessor consents
hereunder, and any other consents required under this Agreement.
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(e) Seller and Purchaser agree that at the Closing for the NPR Leased
Facility, Seller shall use its commercially reasonable efforts to cause the
lessor of the NPR Leased Facility (the "NPR Lessor") to enter into an amendment
(the "NPR Lease Amendment") to the Facility Lease for the NPR Leased Facility
(the "NPR Lease") as follows:
(i) the NPR Lease Amendment shall provide that, absent an uncured
and continuing event of default by Purchaser/Tenant after notice and cure has
been provided to Tenant under the NPR Lease ("Tenant Default"), the amount that
Purchaser credits Seller for any escrows or reserves held by the lender (the
"NPR Lender") in connection with the outstanding indebtedness encumbering the
NPR Leased Facility (the "Existing NPR Debt"), and the amount that Purchaser
thereafter pays into any escrow or reserves following the assumption of the NPR
Lease (such amounts credited at Closing, together with such subsequent amounts
paid, collectively, "NPR Reserves") shall be available for Purchaser's use
during the term of the NPR Lease to pay taxes, to make capital repairs and other
uses permitted under the terms of the Existing NPR Debt, subject only to
Purchaser's obligation to comply with the requirements of the NPR Lender and the
NPR Lease. The NPR Lessor shall have no right in and to the NPR Reserves unless
Purchaser has defaulted under the NPR Lease after notice and opportunity to cure
as therein provided.
(ii) The NPR Lease Amendment shall also provide that, unless
there has been a Tenant Default under the NPR Lease, then (A) in the event the
Existing NPR Debt matures, whether by its terms, by acceleration, by prepayment
or otherwise ("NPR Debt Maturity"), and such NPR Debt Maturity occurs prior to
or simultaneously with the expiration of the term of the NPR Lease, or (B) in
all cases upon expiration or termination of the term of the NPR Lease, then the
NPR Lessor shall pay to Purchaser within ten (10) days of either the NPR Debt
Maturity or termination of the NPR Lease, as applicable (x) the full balance in
the NPR Reserves in the event of (A) above (subject to Tenant's obligation to
place reserves for taxes in escrow as required by the NPR Lessor's new lender or
to pay accrued but unpaid taxes when due pursuant to the terms of the NPR Lease)
OR (y) the full balance in the Tenant Reserves (defined below) in the event of
(B) above. If the NPR Lease is in the final two (2) years of the original Lease
term or an extended Lease term and NPR Debt Maturity has not yet occurred, then
Purchaser as tenant under the NPR Lease, shall be entitled to deposit into
escrow (the "NPR Escrow") with a third party escrow agent during the final two
years of the Lease term (unless Tenant sends a Renewal Notice to Landlord in
which event the Lease period affected shall be the final two years of the last
Renewal Period) on a monthly basis in equal installments an amount equal to the
amount needed to fully amortize the full amount of the NPR Reserves (subject to
proration for accrued but unpaid obligations such as real estate taxes and
insurance) that are anticipated to be on deposit at the final maturity of the
NPR Lease ("the Tenant Reserves"). The amount in the NPR Escrow shall be
disbursed to (i) Purchaser in the event the NPR Lease is terminated at the end
of the Lease term or (ii) to the NPR Lessor if the Lease term is renewed or
otherwise extended beyond the Lease Term, in which case the same NPR Escrow
arrangement shall be established, held and disbursed in the final two (2) years
of the extension term in accordance with the foregoing provisions, unless NPR
Debt Maturity has occurred and Tenant received the NPR Reserves or Tenant
Reserves, as applicable, from NPR Lessor as required hereunder during such
extended term. Notwithstanding the foregoing, Tenant shall at all times be
obligated to pay all sums required pursuant to the NPR Loan as more particularly
described in Section 3.1 of the NPR Lease. All amounts applied against the
Tenant Reserves shall be
25
deducted only from the rent described on Schedule 3.1 of the NPR Lease and shall
not affect the Tenant's obligation to pay all sums required pursuant to the
Loan. On receipt of a notice from Tenant to Landlord of Tenant's intent to
exercise the foregoing right with respect to the Tenant Reserves, Tenant shall
obtain within thirty (30) days, a written property inspection report from a
qualified, unrelated third party, engineering firm approved by the servicing
agent to the mortgagee, detailing whether the physical condition of the Facility
has been maintained in the condition required under the NPR Lease and detailing
the expected cost of any required maintenance or capital expenditures to bring
the Facility into compliance with the terms of the NPR Lease. Within ten (10)
days of receipt of such report, NPR Lessor shall deduct the cost of such
maintenance or capital expenditure items from the amounts otherwise payable to
Purchaser and adjust the amount being deposited into the NPR Escrow based on
such report. NPR Lessor's obligation to pay such amounts to Purchaser/Tenant
shall survive any termination or expiration of the term of the NPR Lease, unless
the Lease is terminated as a result of a breach or default by Tenant.
(iii) The NPR Lease Amendment shall further include the
following: (A) Purchaser shall have no obligation to make any sinking fund
payments; (B) the insurance requirements shall be modified to comply with
Purchaser's existing coverage provided that such requirements satisfy the NPR
Lender; (C) Section 8.1 of the NPR Lease shall be modified to provide that
Purchaser shall not decrease the number of units being operated by more than 3%
below the number of units at which Seller is currently operating the NPR Leased
Facility, but the requirement that Purchaser shall not decrease the number of
licensed beds shall remain; (D) Section 8.3 of the NPR Lease shall be modified
to eliminate subsection (i) and (iii); (E) the initial term of the NPR Lease
shall be extended until June 30, 2022 and the Rent set forth on Schedule 3.1 of
the NPR Lease shall increase at 4% per annum, compounded annually, for the
extension period; (F) Exhibit F of the NPR Lease shall be modified to require
Purchaser to deliver to the NPR Lessor such financial reports and financial
information as Purchaser is required to deliver to Nationwide Health Properties,
Inc. ("NHP") with respect to the NHP leased properties (the "NHP Leased
Properties"), and in the event that the NHP Leased Properties are excluded from
this transaction then Purchaser/Tenant shall deliver to the NPR Lessor copies of
such financial reports and financial information as is otherwise required
pursuant to the NHP Leases in effect as of Closing; (G) Section 17 of the NPR
Lease shall be deleted and a provision inserted that Purchaser shall have a
limited right to assign the NPR Lease, or to sublet the NPR Facility to any
entity wholly owned by and under common control with Purchaser or its parent
company, without in any manner releasing Seller from liability with respect to
the NPR Lease, to permit changes of control and to permit assignment of the NPR
Facility provided that such proposed assignee is reasonably acceptable to the
NPR Lessor, and provided that in any such instance, the NPR Lender consents to
such assignment; (H) Seller shall, at the time of assumption by Purchaser of the
NPR Lease, provide evidence or a legal opinion, reasonably satisfactory to
Purchaser, that Purchaser is not obligated to comply with or otherwise bound by
any of the terms, restrictions or provisions set forth in the Regulatory
Agreement entered into by the NPR Lessor and recorded in O.R. Book 5945, Page
1432 (the "NPR Lessor Regulatory Agreement"), (I) subject to full and timely
compliance by Purchaser/Tenant of its obligations under the NPR Lease, NPR
Lessor shall at all times during the term of the NPR Lease comply with all its
obligations under the NPR Loan, shall indemnify, defend and hold Purchaser
harmless with respect to any breach or noncompliance not caused, directly or
indirectly, by a Tenant Default and Purchaser shall have a right of offset
against the rent described on Section
26
3.1 of the NPR Lease as a result of NPR Lessor's breach or noncompliance, to the
extent Purchaser is damaged or incurs additional costs or expenses as a result
of such breach or noncompliance; (J) Purchaser shall be granted an opportunity
to negotiate the purchase of the NPR Leased Facility in good faith with the NPR
Lessor prior to the Closing of the NPR Leased Facility; and (K) all of the
foregoing is expressly subject to the Purchaser obtaining the consent of the NPR
Lender to the foregoing.
(iv) The Required Consents under this Agreement shall include the
NPR Lender's and NPR Lessor's consent to the foregoing and the NPR Lease
Amendment contemplated hereby.
4.17 Assumed Debt, Lender Consents and Estoppels. Purchaser is assuming at
Closing the existing debt listed on Schedule 1.6 for one of the Facilities,
which indebtedness is held or serviced by: the United States Department of
Housing and Urban Development ("HUD"), and Purchaser has agreed to pay any
prepayment penalties associated with the prepayment of the indebtedness also
listed on Schedule 1.6 and held or serviced by the Federal National Mortgage
Association ("FNMA"), which indebtedness shall be repaid at the Closing for the
Facility encumbered thereby. In addition, Purchaser has the right, but not the
obligation, to assume all or any portion of the existing debt listed on Schedule
4.17, which indebtedness is held or serviced by (a) certain industrial
development authorities (the "IDAs"), and (b) certain tax exempt authorities
("Tax Exempt Issuers"). The HUD indebtedness, together with any IDAs and Tax
Exempt Issuers indebtedness that Purchaser elects to assume and actually assumes
at Closing, are sometimes collectively referred to as the "Assumed Debt". Seller
shall use commercially reasonable efforts, in cooperation and coordination with
Purchaser, to obtain the necessary consents for Purchaser to assume the Assumed
Debt pursuant to the terms and conditions of the Debt Documents related thereto,
and to obtain estoppel letters from all such entities confirming compliance with
all required obligations under the applicable Debt Documents, all in form and
substance reasonably satisfactory to Purchaser. Purchaser will pay application
fees and similar costs and expenses and any assumption fee with respect to the
Assumed Debt up to, but not to exceed, one percent (1%) of the then outstanding
balance owed under the Assumed Debt in connection with obtaining the consents of
HUD, and, if applicable, the IDAs and the Tax Exempt Issuers. Seller will pay
any and all pre-payment penalties, break up fees, or other costs or expenses in
the event that Purchaser, in its sole discretion, elects not to assume the
indebtedness or any portion thereof held by the IDA or the Tax Exempt Issuers,
but Purchaser shall be responsible for prepayment penalties in connection with
the FNMA indebtedness. To the extent that any fees or expenses, including any
consents or assumption fees, exceed the 1% that Purchaser is obligated to pay
hereunder, and Seller is unwilling to pay such excess, then Seller shall notify
Purchaser within three (3) business days of notice to Seller from any lender of
the requirement to pay such fees or such access fees or expenses, and Purchaser
shall then have ten (10) business days thereafter in which to advise Seller in
writing of Purchaser's election (i) to pay such excess fees or expenses and
proceed to Closing or (ii) to terminate this Agreement as to the Facility
encumbered by such Assumed Debt pursuant to Section 11.1. Receipt of all lender
consents for all Assumed Debt hereunder are part of the Required Consents that
are conditions precedent to Closing hereunder and to the extent Seller is unable
to obtain such portion of the Required Consents, the provisions of Section 8.2
shall apply.
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4.18 Surveys. Seller shall provide to Purchaser any Licensure Surveys
including without limitation reports, waivers of deficiency, plans of
correction, and any other investigation reports issued with respect to the
Facilities between the Effective Date and the respective Closing Date for each
Facility.
4.19 Absence of Certain Changes or Events. Seller will not cause or permit
any of the following with respect to the employees at the Facilities: any new
bonus, percentage compensation, service award or other like benefit, or any
increase in the compensation payable or to become payable by Seller to any of
its employees (except compensation granted to new employees who are hired in the
ordinary course of business and then only upon terms consistent with other
employees having comparable duties and experience); or any change in the method
of calculating any presently existing bonus, percentage compensation, service
award or other like benefit, granted, made or accrued to or to the credit of any
of the employees or agents of Seller, or any increase in any employee welfare,
insurance, pension, retirement or similar payment or arrangement made or agreed
to by Seller pursuant to existing welfare, pension and retirement Employee
Benefit Plans and arrangements, deferred compensation, or other Employee Benefit
Plans.
4.20 Tail Insurance. On or prior to Closing, Seller shall obtain tail
insurance coverage in the amount of its existing insurance coverages, and
lasting for a period of two (2) years after Closing, with respect to their prior
operations at the Facilities, which coverage shall name Purchaser as a
co-beneficiary thereunder.
4.21 Key Employees; Non-Solicitation. Seller shall not terminate the
employment of any of the employees listed on Schedule 4.21(a) ("Key Employees")
without the prior consent of Purchaser. Seller shall promptly notify Purchaser
of any resignation of any such Key Employees and will consult with Purchaser
prior to replacing any such Key Employees. In addition, Seller for itself and on
behalf of its affiliates and principals set forth on Schedule 4.21(b) (the
"Restricted Parties") agrees that the Restricted Parties will not solicit any
existing employees at any of the Facilities between the Effective Date and the
final Closing Date hereunder, and will not solicit any Transitioned Employees
for a period of two (2) years after the final Closing Date. Seller shall cause
all Restricted Parties to execute and deliver written documentation evidencing
such consent and agreement to be bound by the provisions hereof simultaneously
herewith in the form attached hereto as Exhibit 4.21.
4.22 COBRA Compliance. Seller shall continue to be liable and responsible
for, and Purchaser shall incur no liability or responsibility with respect to,
any "Continuation Coverage" (as that term is defined by COBRA Section 4980B of
the Code and Section 601, et seq. of ERISA) for any employee of Seller
terminated at any time prior to Closing, from and after the Closing. Purchaser
specifically shall not assume, honor or accept any employee benefit plan of
Seller or its parent or affiliates, including but not limited to any "employee
benefit plan" within the meaning of Section 3(3) of ERISA and Seller shall be
solely responsible for satisfying all obligations (whether arising under
federal, state or local law or pursuant to contract) which may arise or which
may have arisen prior to the Closing Date in connection with the employment by
Seller of Seller's employees or the creation, funding, operation or termination
of any of the employee benefit plans that cover any of Seller's employees.
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4.23 Capital Expenditures. Seller shall complete all capital projects as
contemplated in Seller's 2005 budget, and all capital projects as needed on an
emergency basis or as otherwise required to maintain the Facility or Facilities
in good operating condition in a good and workmanlike manner, using materials
and labor, all consistent with the remainder of the Facilities, all at Seller's
sole cost and expense.
4.24 Roof and HVAC Repair/Replacement. Seller shall use its commercially
reasonable efforts to complete the roof repairs and replacement and the HVAC
replacement described on Schedule 2.25 on or before the Closing for the Facility
where such repairs and replacement are to be conducted. If any such repairs are
not complete on or before Closing, then Seller shall assign all of its rights to
the contracts listed on Schedule 2.25 to Purchaser and shall give Purchaser a
credit against the Purchase Price for such Facility in the amount of an estimate
of one hundred and five percent (105%) of the remaining costs owed under such
contracts, which amount shall be subject to the post closing reconciliation
process described in Section 10.5.
4.25 Changes in Representations and Warranties. Without in any way
expanding the obligations or liabilities of Seller under Article II hereof,
Seller shall have the obligation throughout the period from the Effective Date
through and including the Closing Date to give Purchaser prompt written notice
of any representation and warranty, made by Seller in Article II, which becomes
materially inaccurate or incorrect, to the extent Seller obtains knowledge of
such inaccuracy or incorrectness.
ARTICLE V.
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that:
5.1 Confidentiality. Purchaser will use its commercially reasonable efforts
to keep confidential all information relating to the terms of this Agreement,
all information relating to Seller, their officers and directors, and all
financial statements, drawings, designs, customer and supplier lists relating to
Seller received by it (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
governmental authority or disclosed pursuant to an order, subpoena or demand of
any governmental authority or as is necessary to be disclosed to lessors,
lenders, Governmental Authorities, Purchaser and its respective representatives
and third parties in order to consummate this transaction) and shall not at any
time be used for the advantage of Purchaser or its representatives, except as
otherwise contemplated by this Agreement, or disclosed to third parties by
Purchaser or its representatives. Notwithstanding the foregoing, Purchaser may
reveal to all of Seller's employees Purchaser's right to purchase the Assets and
Seller and Purchaser will jointly advise any such employees that such
information is to be held in strictest confidence and Purchaser and Seller will
comply with the provisions of Section 12.16.
5.2 Compliance with Laws. Purchaser shall comply in all material respects
with all applicable laws, rules, regulations and requirements of all
Governmental Authorities, in conjunction with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
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5.3 Assumption of Contracts and Leases. Purchaser has reviewed the
Contracts and, simultaneously herewith Purchaser shall give notice to Seller
indicating which of the Contracts that Purchaser wishes not to assume at Closing
(the "Rejected Contracts"). Hereafter, Seller shall notify all parties under the
Rejected Contracts that it is terminating such Contracts on or prior to the
Closing Date and Seller shall be responsible for all costs and expenses of such
termination, including any costs or expenses that arise after the Closing Date
in connection therewith. All other Contracts of Seller other than those that
Purchaser elects not to assume, are herein collectively referred to as the
"Assumed Contracts" and at Closing, Purchaser and Seller shall execute and enter
into the form of assignment and assumption agreement set forth herein in Exhibit
5.3 (the "Assignment and Assumption Agreement"). In addition, Purchaser agrees
to assume all the Leases set forth on Schedule 2.10, to the extent such Leases
are assumable in accordance with their terms and to the extent such Leases
relate to Owned Facilities and Leased Facilities acquired by Purchaser (the
"Assumed Leases") and the Facility Leases for the Leased Facilities acquired by
Purchaser hereunder (the "Assumed Facility Leases"), and Seller shall bear any
costs and expenses of obtaining any consents to such assumption of the Assumed
Contracts and the Assumed Leases, and in connection therewith, to the extent
that any such consents cannot be obtained, Seller shall bear all costs and
expenses of terminating such Contracts, Tenant Leases or Personal Property
Leases or shall continue to satisfy such contracts or leases in accordance with
their terms. All amounts payable under the Assumed Contracts, Assumed Leases and
Assumed Facility Leases shall be prorated through the Closing Date pursuant to
Section 10.5.
5.4 Patients; Patient Records. From and after the Closing Date for each
Facility, Purchaser shall be solely responsible for caring for the patients and
residents of such Facility in accordance with their contractual rights and in
accordance with law. Purchaser understands that all of the Seller's patient and
resident records are being transferred hereunder to Purchaser subject to the
requirements of applicable law. Purchaser agrees to maintain all such patient
and resident records for the requisite period prescribed by law, including any
and all applicable federal and state regulations. In addition, Purchaser agrees
to allow Seller, or Seller's agents or representatives upon reasonable advance
notice and at Seller's sole cost and expense, to examine from time to time such
records relating to the period of Seller's operation of the Facilities, to
promptly cooperate with Seller, Seller's agents or representatives in their
examination or review of such records, and to permit Seller to obtain copies
thereof, upon request.
5.5 Cooperation. Purchaser shall cooperate with Seller and provide
reasonable access to records in Purchaser's possession which are required by
Seller to respond to any litigation, government audit, and/or third-party payor
audit, upon reasonable advance notice. Seller shall be responsible for the cost
and expense of copying any records in Purchaser's possession or any costs of
third parties unrelated to Purchaser (e.g. record management companies) in
making the records available to Seller.
5.6 Employment. Purchaser agrees that prior to Closing for any Facility and
subject to Purchaser's normal employment screening process (i.e., background
check, drug-testing, etc.), Purchaser will tender offers of employment to
substantially all of Seller's employees at such Facility. Purchaser shall have
no obligation to tender offers of employment to any of Seller's employees whose
position is not related solely to a single Facility, such as those employees of
Seller who provide managerial oversight to more than one of Seller's Facilities,
any executive
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beyond the residence director or executive director level or any of Seller's
employees who provide accounting services to the Seller as a whole. Those
persons who accept an offer of employment from Purchaser are referred to herein
as "Transitioned Employees."
5.7 Consents, etc.
(a) Commencing promptly after the Execution Date, Purchaser shall make
all filings with Governmental Authorities, and use all reasonable efforts to
obtain all permits, approvals, authorizations and consents of all Governmental
Authorities required to consummate the transactions contemplated by this
Agreement, including, without limitation, filing applications to obtain the
requisite licenses to operate each of the Facilities. Each party shall furnish
promptly to each other all information that is not otherwise available to the
other party and that such party may reasonably request in connection with any
such filing. If there is a cost that must be incurred prior to Closing to
resolve any conditions relating to the Assets that is required by Governmental
Authorities as a result of a change of ownership survey and/or re-licensing
based upon an inspection by a Governmental Authority, then Seller shall pay the
cost of same. Seller shall be obligated to deliver to Purchaser upon Purchaser's
request all information and documentation within Seller's control to enable
Purchaser to make timely filings with the Governmental Authorities.
(b) Purchaser shall cooperate with Seller, on a commercially
reasonable basis, to obtain: (i) the Lessor Consents, Lease Estoppels and if
applicable the SNDAs in connection with the assignment by Seller to Purchaser of
the Facility Leases; and (ii) all necessary consents in connection with the
assignment and assumption of the Assumed Debt.
(c) The consents described in this Section 5.7 shall be referred to as
"Required Consents."
5.8 Further Documentation. Purchaser agrees that, for the two (2) year
period following the last Closing Date hereunder, upon request by Seller, it
will do, execute, acknowledge, and deliver, or cause to be done, executed,
acknowledged, and delivered, all such further acts, documents and assurances as
may be reasonably required, without enlarging or extending any obligations or
liability of Purchaser under this Agreement in any manner and without requiring
the expenditure of funds by Purchaser, as necessary to fully consummate the
transactions contemplated by this Agreement.
5.9 Changes in Representations and Warranties. Without in any way expanding
the obligations or liabilities of Purchaser under Article III hereof, Purchaser
shall have the obligation throughout the period from the Effective Date through
and including the Closing Date to give Seller prompt written notice of any
representation and warranty made by Purchaser in Article III, which becomes
materially inaccurate or incorrect, to the extent such inaccuracy or
incorrectness is brought to the knowledge and attention of Purchaser.
5.10 Licensure Inspections. Purchaser agrees that from and after any
respective Closing Date, Purchaser will not affirmatively seek or request any
physical plant survey or other relicensing inspection by any Governmental
Authority as a result of Purchaser's application for change of ownership or
change of operator, as applicable, for any Facility hereunder where such
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survey or inspection would not otherwise occur in the ordinary course of such
application process; provided, however the foregoing shall not prohibit
Purchaser from scheduling such surveys or inspections upon request of any
Governmental Authority.
ARTICLE VI.
OTHER COVENANTS
6.1 Accounts Receivable. Purchaser shall assume responsibility for the
billing and collection of payments on account of services rendered by Purchaser
at each Facility on and after the Closing Date for such Facility. Seller shall
retain all rights in and title to all pre-closing accounts receivable except to
the extent any portion relates in part to dates after such Closing Date. Seller
agrees that it will not evict any current residents at any of the Facilities
between the Effective Date and the Closing Date for such Facilities without
Purchaser's prior written consent, which consent shall not be unreasonably
withheld.
Seller's pre-Closing accounts receivable shall include all amounts due
Seller, whether billed or unbilled, as of the Closing Date, for all services and
ancillary services or products provided to any current or former residents by
Seller prior to the Closing Date.
For payments received by Purchaser on the account of private-pay
patients, Medicaid Recipient Resource patient amounts, Medicare co-pays and
managed care co-pays, where the applicable remittance advice does not specify
the dates of services for which payment is made, such payments shall be
processed, to the extent permitted by applicable law, first to Purchaser for the
current or next preceding month and any arrearages shall be credited to Seller.
All payments received by Purchaser from private pay patients which specify a
date of service before Closing or that are otherwise applied against Seller's
pre-Closing accounts receivable for such patients, shall be remitted to the
applicable Seller as payment against the applicable Seller's remaining
pre-Closing receivables due from those same patients within fifteen (15)
business days of its receipt thereof and any remaining amounts shall be retained
by Purchaser. In addition, Purchaser shall remit to Seller within five (5)
business days of its receipt thereof any third-party payor payments (Social
Security, Medicaid, etc.) received by Purchaser that apply to a pre-Closing
account of the resident/patient for whom the payment is made in accordance with
the dates of service indicated on the remittance, together with a copy of the
remittance advice. In addition, Purchaser shall remit to the Seller within five
(5) business days of its receipt thereof any repayment or reimbursement received
by Purchaser arising out of cost reports filed for the cost reporting period
ending prior to the Closing Date.
Seller agrees it shall remit to Purchaser within five (5) business
days of Seller's receipt thereof any payment received by Seller that pertains to
the period from and after the Closing Date.
Each party agrees that they will provide each other with any
information reasonably required to enable either party to complete its billing
to residents, patients and in private pay or Governmental Programs.
6.2 Licensing Matters.
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(a) If prior to the Closing there is a cost incurred to resolve any
conditions relating to the Facilities, Real Property or the Personal Property
subject to and required by Governmental Authorities as a result of a survey
and/or re-licensing inspection by any Governmental Authority (a "Pre-Closing
Licensing Survey"), Seller shall bear all such costs. However, Seller shall have
the right to control the manner in which such conditions are resolved provided
such conditions are all satisfied to the satisfaction of the Governmental
Authority prior to Closing. Purchaser shall not actively encourage a finding
that there are any such conditions that must be resolved.
(b) In connection with any Pre-Closing Licensing Survey and any other
re-licensing matters, Seller and Purchaser agree to cooperate fully with each
other in preparing, filing, prosecuting, and taking any other actions with
respect to any applications, requests, or actions that are or may be reasonable
and necessary to obtain the consent of any Governmental Authority.
(c) With respect to (i) any Pre-Closing Licensing Survey prior to
Closing, and (ii) any survey or other relicensing inspection by any Governmental
Authority conducted at any time during the three (3) month period after the
applicable Closing Date for any Facility as a result of Purchaser's application
for change of ownership or change of operator, as applicable, Seller agrees to
be responsible for all citations and/or deficiencies attributable to (i) solely
to pre-closing activities that violate a healthcare statute, rule or regulation
(and which violation did not first occur after the Closing Date) and/or (ii)
pre-closing conditions, and Seller shall correct and/or pay for such citations
and/or deficiencies to the extent applicable. Seller's responsibility shall
include correcting all non-compliances and/or citations, paying any and all
fines, providing a Plan of Correction (prior to Closing), providing and bearing
the expense for all consultants, staff, materials, supplies and equipment
necessary to complete the Plan of Correction, and achieve full compliance. To
the extent that such corrections cannot be completed prior to Closing, then
Seller shall be required to place in escrow an amount equal to one hundred
percent (100%) of the reasonable estimated cost of the corrections required in
the Plan of Correction.
ARTICLE VII.
INDEMNIFICATION
7.1 Agreement to Defend. In the event any action, suit, proceeding or
investigation of the nature specified in Section 7.2, Section 7.3, or Section
7.4 hereof is commenced, whether before or after the Closing, all of the parties
hereto agree to cooperate and to defend against and respond thereto as required
herein.
7.2 Indemnification by Seller.
(a) Subject to the limitations set forth in this Article VII, and the
other provisions of this Agreement, Seller shall, jointly and severally,
indemnify, protect, defend, exculpate and hold Purchaser, Purchaser's Permitted
Assignees and their partners, directors, members, shareholders, officers,
employees and agents (collectively, "Purchaser Indemnified Parties") harmless
from and against, and agree promptly to defend Purchaser Indemnified Parties
from and reimburse Purchaser Indemnified Parties for, any and all losses,
damages, costs,
33
expenses, liabilities, obligations and claims of any kind (including, without
limitation, costs of investigation, reasonable attorneys' fees and other legal
costs and expenses) ("Purchaser Indemnified Losses") which Purchaser Indemnified
Parties may at any time suffer or incur, or become subject to, as a result of or
in connection with:
(i) Any and all obligations of Seller of any nature whatsoever,
including without limitation, all liabilities and obligations with respect to
claims, damages, or injury, related to or arising out of the ownership or
operation of the Real Property, the Personal Property or the Facilities prior to
the respective Closing Date therefor, whether such obligation accrues or is
asserted before or after such Closing Date, except the Assumed Liabilities and
other such obligations as may be expressly assumed by Purchaser herein; and
(ii) Any breach or inaccuracy in any of the representations or
warranties made by Seller in or pursuant to this Agreement or in any instrument,
certificate or affidavit delivered by Seller at any Closing, or from any
misrepresentation in or omission from this Agreement or any Exhibit, Schedule,
certificate, or other executed document furnished or to be furnished to
Purchaser hereunder, excluding any breach of a representation of which one of
the Purchaser representatives listed on Schedule 7.2(a) had actual knowledge as
of the Effective Date.
(iii) A failure by Seller to materially carry out, perform,
satisfy and discharge any of its other covenants, agreements, undertakings,
liabilities or obligations under this Agreement or as set forth in any
instrument, certificate or affidavit delivered by Seller at any Closing;
(iv) Any and all claims, including any suit action or other
proceeding brought by applicable Governmental Authorities or quasi-governmental
authorities against Purchaser arising from the operation and ownership of any of
the Facilities by Seller before the respective Closing therefor;
(v) All of the obligations and liabilities of Seller accruing
with respect to the ownership or operation of the Facilities by Seller prior to
the respective Closing therefor pertaining to overpayments made with respect to
Medicaid, Medicare and other Government Program payments (an "Overpayment
Obligation");
(vi) Any and all liability or loss arising out of or relating to
any failure in connection with the transactions contemplated herein to comply
with the requirements of any laws or regulations relating to bulk sales or
transfers; and
(vii) Any and all claims relating to ETO made against Purchaser
by a Transitioned Employee for those amounts in excess of the ETO benefit which
Seller transferred to Purchaser at any Closing.
(b) Except as provided otherwise herein, (i) in determining the amount
of a Purchaser Indemnified Loss, any materiality qualifier (including, without
limitation, any qualification or reference as to material, materiality or
Material Adverse Change) in a
34
representation or warranty shall be ignored, (ii) the aggregate liability of the
Seller for Purchaser Indemnified Losses under this Article VII shall not exceed
an amount of Five Million Dollars ($5,000,000.00) ("Seller's Cap"), and (iii)
the Seller shall be liable for Purchaser Indemnified Losses only if the
aggregate Purchaser Indemnified Losses exceed an amount of Fifty Thousand
Dollars ($50,000) ("Seller's Basket"). The following items shall not be subject
to the Seller's Basket or Seller's Cap: Sections 7.2(a)(i), (iii), (iv), (v) and
(vi).
(c) Without in any way limiting Purchaser's rights under the
indemnification set forth in this Section 7.2, if Seller does not pay Purchaser
an amount claimed for a Purchaser Indemnified Loss within thirty (30) days
following Purchaser's demand therefor, then such claim shall be payable out of
an "Escrow Holdback" to be established as hereinafter set forth. At the Closing,
Purchaser shall deposit with Title Company, as escrow agent, out of the Purchase
Price the sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00) (the
"Escrow Holdback"). If Seller's leasehold interest in the Leased Facilities
(other than the NPR Leased Facility) is not assigned, transferred or conveyed to
Purchaser, then the amount of the Escrow Holdback shall be reduced to Two
Million Dollars ($2,000,000.00). Title Company shall hold the Escrow Holdback
and distribute the Escrow Holdback in accordance with the terms of an Escrow
Holdback Agreement to be entered into between the parties at Closing, in the
form attached hereto as Exhibit 7.2(c) (the "Escrow Holdback Agreement"). The
purpose of the Escrow Holdback Agreement shall be to provide readily available
funds for satisfaction of a claim for a Purchaser Indemnified Loss made within
twelve (12) months after the Closing Date. If, at the end of the twelve (12)
month escrow period, no claim for a Purchaser Indemnified Loss is being
asserted, pending or unresolved, then the Escrow Holdback (or the Escrow
Holdback less any claimed amount for a Purchaser Indemnified Loss) shall be
refunded to Seller.
(d) Claims for Purchaser Indemnified Losses by Purchaser Indemnified
Parties may only be brought by such Purchaser Indemnified Party if the Purchaser
(or Purchaser's Permitted Assignees, if applicable) joins in making such claim,
it being the parties intent that Purchaser Indemnified Parties other than
Purchaser (or Purchaser's Permitted Assignees, if applicable) not have a
separate and independent right to assert an indemnification claim pursuant to
this Agreement unless Purchaser (or Purchaser's Permitted Assignees, if
applicable) joins in making such claim.
7.3 Indemnification by Purchaser.
(a) Subject to the limitations set forth in this Article VII, and
other provisions of this Agreement, Purchaser shall indemnify, protect, defend,
exculpate and hold Seller, and their respective stockholders, partners,
directors, officers, employees and agents (collectively, "Seller Indemnified
Parties") harmless from and against, and agree promptly to defend Seller
Indemnified Parties from and reimburse Seller Indemnified Parties for, any and
all losses, damages, costs, expenses, liabilities, obligations and claims of any
kind (including, without limitation, costs of investigation, reasonable
attorneys' fees and other legal costs and expenses) ("Seller Indemnified
Losses") which Seller Indemnified Parties may at any time suffer or incur, or
become subject to, as a result of or in connection with:
(i) Any and all obligations of Purchaser of any nature
whatsoever, including without limitation, all liabilities and obligations with
respect to claims, damages, or
35
injury related to or arising out of the ownership or operation of the Real
Property, the Personal Property or the Facilities after the respective Closing
Date therefor, except such obligations as may be expressly assumed or retained
by Seller hereunder;
(ii) Any breach or inaccuracy of any of the representations or
warranties made by Purchaser in this Agreement or in any instrument, certificate
or affidavit delivered by Purchaser at any Closing, or from any
misrepresentation in or omission from this Agreement or any Exhibit, Schedule,
certificate, or other executed document furnished or to be furnished to Seller
hereunder, excluding any breach of a representation of which Seller had actual
knowledge as of the date of this Agreement;
(iii) Any failure by Purchaser to materially carry out, perform,
satisfy and discharge the Assumed Liabilities or any of Purchaser's other
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or as set forth in any instrument, certificate or affidavit delivered
by Purchaser at any Closing;
(iv) Any and all claims, including any suit, action, or other
proceeding brought by applicable Governmental Authorities or quasi-governmental
authorities against Seller arising from the ownership and operation of and of
the Facilities by Purchaser after the respective Closing therefor; and
(v) Any and all ETO claims made against Seller by a Transitioned
Employee as to whom Purchaser received a credit against the Purchase Price for
ETO pursuant to Section 10.3 hereof, but only to the extent that Purchaser
failed to provide the corresponding ETO benefit which it received from Seller
hereunder to such Transitioned Employee.
(b) Except as otherwise provided herein, (i) in determining the amount
of a Seller Indemnified Loss, any materiality qualifier (including, without
limitation, any qualification or reference as to material, materiality or
Material Adverse Change) in a representation or warranty shall be ignored, (ii)
the aggregate liability of the Purchaser for Seller Indemnified Losses under
this Article VII shall not exceed an amount of Five Million Dollars ($5,000,000)
("Purchaser's Cap"), and (iii) Purchaser shall be liable for Seller Indemnified
Losses only if the aggregate of such Seller Indemnified Losses exceed an amount
of Fifty Thousand Dollars ($50,000) ("Purchaser's Basket"). The following items
shall not be subject to the Purchaser's Basket or Purchaser's Cap: Sections
7.3(a)(i), (iii), (iv) and (v).
(c) Claims for Seller Indemnified Losses by Seller Indemnified Parties
may only be brought by such Seller Indemnified Party if the Seller joins in or
consents to making such claim, it being the parties intent that Seller
Indemnified Parties other than Seller not have a separate and independent right
to assert an indemnification claim pursuant to this Agreement unless Seller
joins in making such claim.
7.4 Notification of Claims.
(a) A party entitled to be indemnified pursuant to Section 7.2 or 7.3
(the "Indemnified Party") shall notify the party liable for such indemnification
(the "Indemnifying Party") in writing of any claim or demand which the
Indemnified Party has determined gives rise
36
or will likely give rise to a right of indemnification under this Agreement, as
soon as possible after the Indemnified Party becomes aware of such claim or
demand and has made such determination; provided, however, that the Indemnified
Party's failure to give such notice to the Indemnifying Party in a timely
fashion shall not result in the loss of the Indemnified Party's rights with
respect thereto except to the extent the Indemnified Party is prejudiced by the
delay. Subject to the Indemnifying Party's right to defend in good faith third
party claims as hereinafter provided, the Indemnifying Party shall satisfy its
obligations under this Article VII within thirty (30) days after the receipt of
written notice thereon from the Indemnified Party, it being agreed that the
Indemnifying Party need not satisfy such obligations during any period in which
the Indemnifying Party is defending in good faith the applicable third party
claim in the manner described hereinbelow.
(b) If the Indemnified Party shall notify the Indemnifying Party of
any claim or demand pursuant to Section 7.4(a), and if such claim or demand
relates to a claim or demand asserted by a third party against the Indemnified
Party which the Indemnifying Party acknowledges is a claim or demand for which
it must indemnify or hold harmless the Indemnified Party under Sections 7.2 or
7.3, the Indemnifying Party shall have the right to either (i) pay such claim or
demand or (ii) employ counsel reasonably acceptable to the Indemnified Party to
defend any such claim or demand asserted against the Indemnified Party. The
Indemnified Party shall have the right to participate in the defense of any such
claim or demand. The Indemnifying Party shall notify the Indemnified Party in
writing, as promptly as possible (but in any case reasonably in advance of the
due date for the answer or response to a claim) after the date of the notice of
claim given by the Indemnified Party to the Indemnifying Party under Section
7.4(a) of its election to defend in good faith any such third party claim or
demand. So long as the Indemnifying Party is defending in good faith any such
claim or demand asserted by a third party against the Indemnified Party, the
Indemnified Party shall not settle or compromise such claim or demand. The
Indemnified Party shall make available to such counsel all records and other
materials in the Indemnified Party's possession reasonably required by it for
its use in contesting any third party claim or demand. Whether or not the
Indemnifying Party elects to defend any such claim or demand, the Indemnified
Party shall have no obligations to do so.
(c) No Indemnified Party may settle or compromise any claim or consent
to the entry of any judgment with respect to which indemnification is being
sought hereunder without the prior written consent of the Indemnifying Party,
unless (i) the Indemnifying Party fails to assume and maintain the defense of
such claim pursuant to Section 7.4(b) or (ii) such settlement, compromise or
consent includes an unconditional release of the Indemnifying Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which in any manner affects, restrains or interferes with the
business of the Indemnified Party or any Affiliate of the Indemnified Party. An
Indemnifying Party may not, without the prior written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any judgment
with respect to which indemnification is being sought hereunder unless such
settlement, compromise or consent includes an unconditional release of the
Indemnified Party from all liability arising out of such claim and does not
contain any equitable order, judgment or term which in any manner affects,
restrains or interferes with the business of the Indemnified Party or any of the
Indemnified Party's Affiliates.
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7.5 Survival of Representations, Warranties and Covenants; Claims Period.
All of the representations and warranties of the parties contained in this
Agreement shall survive all Closings and continue in full force and effect for a
period of eighteen (18) months following the final Closing hereunder. All of the
other covenants of the parties contained in this Agreement to be performed after
Closing shall survive the final Closing hereunder until the earlier of (i) the
date such covenants are fully satisfied or (ii) five (5) years from the final
Closing Date. For purposes of this Agreement, a "Claims Period" shall be the
period after the final Closing Date during which a claim for indemnification may
be asserted under this Agreement by an indemnified party. The Claims Periods
under this Agreement shall commence on the final Closing Date and shall
terminate as follows:
(a) with respect to Purchaser Indemnified Losses arising under Section
7.2(a)(ii) with respect to any breach or inaccuracy of any representation or
warranty by Seller, the Claims Period shall terminate on the date that is
eighteen (18) months thereafter;
(b) with respect to Seller Indemnified Losses arising under Section
7.3(a)(ii) with respect to any breach or inaccuracy of any representation or
warranty of Purchaser, the Claims Period shall terminate on the date that is
eighteen (18) months thereafter; and
(c) with respect to all other Purchaser Indemnified Losses or Seller
Indemnified Losses arising under this Agreement, the Claims Period shall
continue five (5) years thereafter.
Notwithstanding the foregoing, if prior to the close of business on the last day
of the applicable Claims Period, an Indemnifying Party shall have been properly
notified as provided hereunder of a claim for indemnity hereunder and such claim
shall not have been finally resolved or disposed of at such date, such claim
shall continue to survive and shall remain a basis for indemnity hereunder until
such claim is finally resolved or disposed of in accordance with the terms
hereof. If any act, omission, disclosure or failure to disclosure shall form the
basis for a claim for breach of more than one representation or warranty, and
such claims have different periods of survival hereunder, the termination of the
survival period of one claim shall not affect a party's right to make a claim
based on the breach of representation or warranty still surviving.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
Each and every obligation of Purchaser under this Agreement, except for the
obligations of Purchaser to be fulfilled prior to the Closing and obligations
that survive termination of this Agreement, shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions set
forth in this Article VIII, unless waived in writing by Purchaser. In the event
that all of the conditions set forth in this Article VIII are not fully
satisfied on or before March 31, 2006, but the only remaining unsatisfied
conditions relate to no more than four (4) Facilities and all such Facilities
meet all of the requirements to constitute Deferred Facilities under Section
12.18, then Purchaser shall proceed to close on all other Facilities for which
all conditions have been satisfied, and the remaining Facilities shall be
Deferred Facilities subject to the provisions
38
of Section 12.18. In the event that all of the conditions set forth in this
Article VIII are not fully satisfied on or before March 31, 2006 and the
remaining unsatisfied conditions relate to more than four (4) Facilities, or
relate to four (4) or fewer Facilities but all such Facilities do not meet all
of the requirements to constitute "Deferred Facilities" under Section 12.18,
then Purchaser shall have the right to elect among the following in Purchaser's
sole and absolute discretion: (i) Purchaser may waive such conditions and
proceed with the closing of all Facilities pursuant hereto, which waiver shall
not prejudice any rights or remedies of Purchaser hereunder against Seller, (ii)
Purchaser may extend the Closing Date hereunder for all of the Facilities until
June1, 2006 or such earlier date as Purchaser shall specify in Purchaser's
notice to Seller of such extension, or (iii) Purchaser may proceed to close on
some, but not all, of the Facilities pursuant to the terms hereof, and to treat
the remainder of the Facilities as Deferred Facilities pursuant to Section 12.18
hereof, even if such Facilities do not meet all the requirements to constitute
Deferred Facilities under Section 12.18. In the event that Purchaser elects
option (ii) and, on June 1, 2006, any or all conditions set forth in this
Article VIII remain unsatisfied, then this Agreement shall terminate, and the
Deposits shall be returned to Purchaser pursuant to the provisions of Article IX
hereof. The following constitute material conditions to Purchaser's performance
hereunder:
8.1 Representations, Warranties; Performance. The representations,
warranties and covenants made by Seller herein and in the Related Documents,
shall be true and correct in all material respects as of the Effective Date and
at and as of the Closing, with the same effect as though made on such date. To
the extent Seller notifies Purchaser during the term of this Agreement of any
changes in conditions that change Seller's representations, warranties and
covenants since the Effective Date, and such changes, in Purchaser's reasonable
opinion, result in a Material Adverse Change to the Assets, Seller shall have
the right to cause the Closing for the Facility experiencing such Material
Adverse Change to be extended pursuant to Section 12.18 to enable Seller at
Seller's sole cost and expense to remedy such condition or give Purchaser the
right to terminate this Agreement with respect to the Facility experiencing such
Material Adverse Change. Seller shall have delivered to Purchaser a certificate
of Seller dated as of the Closing Date, in the form of attached Exhibit 8.1
certifying to such compliance and completion. The conditions to Closing
described above shall not be deemed unsatisfied, and Seller shall not be deemed
to have failed to perform or comply with or to be in breach or default of any
representation, warrant or covenant in this Agreement, unless and until the
condition remains unsatisfied, or the breach or default remains uncured for a
period of ten (10) days following written notice of such unsatisfied condition,
breach or default (as the case may be).
8.2 Required Consents and Approvals.
(a) Purchaser or its designee shall have obtained approvals for all
licenses, agreements, certificates and other consents from third parties and
Government Program agencies, including, without limitation, Medicare and
Medicaid provider agreements entered into with each applicable Governmental
Authority and the United States, if any, and any municipality, or other
governmental agency or administrative body that authorizes or regulates the
conduct of the Business at the Facilities as presently operated (individually
and collectively, "Governmental Approvals"), and all other Required Consents.
Seller shall cooperate to furnish all requested documentation needed for
Purchaser to obtain such approvals.
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(b) Notwithstanding Section 8.2(a):
(i) the failure to obtain the portion of the Required Consents
consisting of Lease Consents, Lessor Estoppels and SNDAs shall not be a
condition to the obligations of Purchaser hereunder to purchase the Owned
Facilities and to lease the NPR Leased Facility, and
(ii) if Seller has not obtained the portion of the Required
Consents consisting of Lease Consents, Lessor Estoppels and SNDAs by June 1,
2006, then Seller shall grant to Purchaser a right of first refusal to purchase
Seller's leasehold interest in the Leased Facilities (excluding the NPR Leased
Facility) for a period of two (2) years after delivery of an executed right of
first refusal. Such right of first refusal shall provide that Purchaser shall
have a period of five (5) business days to match any offer which Seller is
willing to accept with respect to the sale of all or any portion of Seller's
interest in such Leased Facilities upon the terms and conditions set forth in a
notice from Seller. If Purchaser declines to exercise such right (or fails to
respond) within the foregoing time period, then Seller shall be permitted to
contract for the sale of all or such portion of Seller's interest in the Leased
Facilities in accordance with the terms set forth in Seller's notice and shall
have a period of 180 days to complete such sale. If Seller fails to enter into a
contract upon the terms and conditions offered to Purchaser, or modifies the
economics of the offer as disclosed to Purchaser, or fails to consummate such
transaction within the foregoing 180 day period, then Seller shall not be
released or relieved of its obligations under this Section and Purchaser's
rights shall remain vested.
(c) There shall be no default, or event which with the passage of time
would constitute a default under any of the Facility Leases or any of the Debt
Documents relating to the Assumed Debt.
(d) Purchaser shall have received certified copies of resolutions duly
adopted by the Board of Directors of Seller's General Partner, as appropriate,
approving the transactions contemplated by this Agreement.
8.3 No Destruction or Condemnation of Property. The Facilities shall not
have suffered material damage, destruction or loss unless Purchaser elects to
extend the Closing Date for such Facility pursuant to Section 12.18. If after
the Effective Date one or more Facilities incur damage, destruction or loss
which is not material damage, destruction or loss, Seller shall be required to
repair any such damage, destruction or loss (in all instances to restore such
Facility to full functional status consistent with prior operations) before
Purchaser shall be obligated to proceed to the Closing for such Facility and to
purchase such Facility pursuant to this Agreement without adjustment in the
Purchase Price unless such Facility, and the Closing Date therefor shall be
extended for a period not to exceed thirty (30) days to complete such repair.
For the purposes of this Section, "material damage, destruction or loss," shall
mean damage to, or condemnation of, any one or more of the Facilities, the costs
of repair for which exceed five percent (5%) of the allocated value to any such
affected Facility as provided for in Schedule 1.7, or Three Million Dollars
($3,000,000.00) in the aggregate or which renders such Facility less than a
functional structure to continue to operate the Business therein.
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8.4 No Proceeding or Litigation. No injunction, judgment, order, decree,
ruling, or charge shall be in effect under any action, suit or proceeding before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator that (i) prevents
consummation of any of the transactions contemplated by this Agreement or (ii)
would cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, provided that Purchaser has not solicited or
encouraged any such action, suit or proceeding.
8.5 Title Insurance. Title to the Real Property shall be as required by
Section 4.10 above and Purchaser shall have received the title policies therein
described.
8.6 Material Adverse Change. There shall have been no "Material Adverse
Change". For purposes hereof, the term "Material Adverse Change" shall mean any
change or event or effect that is materially adverse to the business or
financial condition of the Facilities or the portion thereof for which the
Closing has not yet occurred, taken in the aggregate. Notwithstanding the
foregoing, a Material Adverse Change shall not be deemed to exist if the event
giving rise to such event or change was caused, directly or indirectly, by
Purchaser's breach of this Agreement.
8.7 Non-Competition Agreement. Seller and Purchaser shall execute and
deliver at Closing a non-competition agreement substantially in the form of
Exhibit 8.7 ("Non-Competition Agreement") containing the following terms: from
and after the Closing Date and for the period ending five (5) years after the
Closing, that the Restricted Parties shall not, directly or indirectly, within a
ten (10) mile radius of each of the Facilities in such Closing, own, operate or
lease any skilled nursing facility, assisted living facility, independent living
facility or continuing care retirement community. Purchaser shall be entitled to
injunctive relief to enforce these restrictions, as Seller recognizes that these
restrictions are reasonable as to territorial application and duration, that
they are necessary to protect Purchaser's investment contemplated hereby, and
that Purchaser will not have an adequate remedy at law in the event either of
these restrictions is violated. To the extent any court of competent
jurisdiction adjudicating the enforceability of this Section may deem any
restriction set forth herein to be unreasonable, whether as to territory,
duration, or otherwise, said restriction shall be given effect, and it is the
intent of the parties hereto that said restriction shall be given effect, to the
extent such court deems it to be reasonable.
8.8 Census Requirement.
(a) Definitions.
(i) "Residents" shall mean all residents and patients of the
Facilities pursuant to Patient Care Contracts and Resident Leases for which the
Closing is occurring.
(ii) "Weighted Average Census" shall mean the census of all the
Facilities for which the Closing is occurring for the most recent month then
ended, equal to the sum of the average number of Residents for the month for
such Facility, as normally recorded by Seller.
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(iii) "Actual Census" shall mean the Weighted Average Census of
all of the Facilities for which the Closing is occurring, determined as of ten
(10) days, or if such day is not a business day, then the next most recent
business day, before Closing. No Residents shall be included for purposes of
calculation of the Actual Census to the extent the Patient Care Contracts or
Resident Leases for such Residents contain terms that are materially different
than the terms set forth on the specimen agreements attached hereto as Schedule
2.7(b) or to the extent the rental and other sums payable thereunder are less
than the average rental and other sums payable under Patient Care Contracts or
Residence Leases in effect at the applicable Facility during the three (3)
months preceding the Effective Date, unless such contracts or leases are
identified on Schedule 2.7(b).
(b) Requirement. The Actual Census for the Facilities for which the
Closing is occurring shall not have decreased by one percent (1%) or more when
compared with the Weighted Average Census for such Facilities for the same
period in the prior calendar year. Attached as Schedule 8.8(b) is the Weighted
Average Census for all of the Facilities for the twelve (12) months ending
before the Effective Date, which Schedule shall be updated by Seller on a
monthly basis until Closing by the fifteenth (15th) day of each month after the
Effective Date.
8.9 Other Agreements. Seller shall have delivered into the Closing escrow
its countersigned copies of the Seller Documents.
ARTICLE IX.
CONDITIONS TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement, except for the
obligations to be fulfilled prior to the Closing and obligations that survive
termination of this Agreement, shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions unless waived in writing
by Seller:
9.1 Representations and Warranties; Performance. The representations,
warranties and covenants made by Purchaser herein, as supplemented by Purchaser
prior to the Closing, shall be true and correct in all material respects on and
as of the Effective Date and at and as of the Closing, with the same effect as
though made on such date, except to the extent the same specifically relate to
the date hereof or another specified date, and except for changes as permitted
or contemplated by this Agreement. Purchaser shall have performed and complied
with all covenants required by this Agreement and the Related Documents to be
performed and complied with by Purchaser prior to the Closing. Purchaser shall
have delivered to Seller a certificate of Purchaser executed by its President
(and if Purchaser's nominee is a limited liability company, executed by its
manager), dated such Closing Date, substantially in the form of attached Exhibit
9.1 certifying to such compliance and completion.
ARTICLE X.
CLOSING
10.1 Possession. Possession of all Assets sold hereunder shall be delivered
to Purchaser on the Closing Date for the portion of the Assets conveyed, and
Seller shall provide
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notices, in form provided by Purchaser and reasonably acceptable to Seller, to
Residents of such possession change if requested by Purchaser or if required by
law.
(a) Closing Documents. Seller shall deliver to Purchaser on the
Closing Date, as applicable to the Facilities being conveyed on such Closing
Date:
(i) duly executed Assignment and Assumption Agreement in the form
attached hereto as Exhibit 5.3;
(ii) duly executed Special Warranty Deeds for each Owned
Facility, in recordable form and otherwise sufficient to convey such Facility to
Purchaser pursuant to laws of the State in which each Facility is located, as
reasonably approved by Purchaser and Title Company;
(iii) Assignment of the Facility Lease for each Leased Facility,
in the form attached hereto as Exhibit 10.1(a)(iii), and Lease Termination
Agreements for the Facility Lease for the Crystal Bay Owned Facility.
(iv) duly executed Bills of Sale, in the form attached hereto as
Exhibit 10.1(a)(iv).
(v) such additional bills of sale and other appropriate
instruments of assignment and conveyance, in form mutually but reasonably
satisfactory to Purchaser and Seller, dated as of the Closing, conveying all
title to the Assets, including the Personal Property, free and clear of all
liens, liabilities, security interests or encumbrances except as otherwise
permitted herein;
(vi) an assignment of all intangible property necessary for the
operation of the Facilities including, without limitation, documents, chattel
paper, instruments, contract rights, deposit accounts, good will, going concern
value, general intangibles, the right to use the trade names and lists of phone
numbers, arising from or in connection with Seller's operation or use of any
part of the property, including without limitation the items set forth in
subparagraphs (vi) - (xi) on pages 2-3 hereof, but excluding all Excluded
Assets;
(vii) the duly executed Non-Competition Agreements in the form
attached hereto as Exhibit 8.7;
(viii) Lessor Consents, Lessor Estoppels and SNDAs for each
Leased Facility to the extent not previously delivered;
(ix) a then current rent roll certified by Seller as of such
Closing Date as true, complete and accurate in all material respects, which
shall include such information for the Residents as provided in Schedule 2.7(b);
(x) to the extent not already delivered by Seller, and to the
extent available, originals of all of the Leases, Contracts, Resident Contracts
and Licenses;
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(xi) evidence of the authority of Seller to execute and deliver
the applicable Seller Documents in order to effectuate the applicable Closing;
(xii) an affidavit in form satisfactory to obtain the Title
Insurance contemplated by Section 4.10 above, without exception for mechanic's,
materialman's or other statutory liens;
(xiii) subject to Section 4.15, employee records relating to
Transitioned Employees shall remain at the respective Facility;
(xiv) a closing statement setting forth in reasonable detail the
financial transactions contemplated by this Agreement, including, without
limitation the Purchase Price, all prorations, and the allocation of costs
specified herein;
(xv) a bring-down certificate reaffirming that the
representations and warranties are true and correct as of the Closing Date as
modified by Section 8.1;
(xvi) any other documents reasonably required by the title
insurance company;
(xvii) certificate and affidavit of non-foreign status in the
form attached hereto as Exhibit 10.1(a)(xvii); and
(xviii) the Amendment to the NPR Lease contemplated by Section
4.16(e) above.
(b) Purchaser shall deliver to Seller or cause to be delivered to
Seller on the Closing Date, in addition to the Deposits set forth in Section 1.4
hereof, the following:
(i) duly executed Assignment and Assumption Agreement in the form
attached as Exhibit 5.3;
(ii) Assignment of Lease for each Leased Facility, in the form
attached hereto as Exhibit 10.1(a)(iii);
(iii) a bring-down certificate reaffirming that the
representations and warranties are true and correct as of the Closing Date as
modified by Section 9.1;
(iv) a closing statement setting forth in reasonable detail the
financial transactions contemplated by this Agreement, including, without
limitation, the Purchase Price, all prorations, and the allocation of costs
specified herein (the "Closing Statement"); and
(v) any other documents reasonably required by the title
insurance company; and
(vi) certified copies of resolutions duly adopted by the Board of
Directors of Purchaser approving the transactions contemplated by this
Agreement.
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10.2 Patient Funds. Seller shall provide Purchaser with an accounting of
all funds belonging to Residents at the Facilities which are held by Seller in a
custodial capacity and an accounting of all advance payments received by it
pertaining to patients at the Facilities at least fifteen (15) days prior to
Closing for such Facilities, subject to adjustment within fifteen (15) days
following the Closing for such Facilities. Such accounting will set forth the
names of the Residents for whom such funds are held, the amounts held on behalf
of each Residents, and Seller's warranties that the accounting is true, correct,
and complete as of the Closing Date subject to adjustment during the fifteen
(15) day period referenced above.
At such Closing, subject to adjustment as aforesaid, Seller shall
transfer such funds to a bank account designated by Purchaser and Purchaser
shall, in writing, acknowledge receipt of and expressly assume all of Seller's
financial and custodial obligations with respect thereto, it being the intent
and purpose of this provision that, at such Closing, Seller will be relieved of
all fiduciary and custodial obligation with respect to such funds and that
Purchaser will assume all such obligations and be directly accountable to the
Residents with respect to all funds actually received by Purchaser.
Notwithstanding the foregoing, Seller will indemnify and hold
Purchaser Indemnified Parties harmless from all liabilities, claims, and
demands, in the event the amount of such funds, if any, transferred to Purchaser
bank account does not represent the full amount due to the Resident as of such
Closing.
10.3 Closing Adjustments.
(a) ETO. In accordance with Section 4.12 and Schedule 4.12, Seller
shall credit all ETO to Purchaser.
(b) Real Estate and Personal Property Taxes; Prorations. Real and
personal property taxes and assessments shall be prorated as of the Closing Date
for the Facility to which they relate. Said prorations shall be based on the tax
year of the municipality in which the Real Property and the Personal Property
are located and shall be based on the most recent available bill. Said
prorations shall be made on an accrual basis with reference to the most recent
available tax information with a post-closing reproration being made within
thirty (30) days after Seller's receipt from Purchaser of the actual final tax
bills for the applicable years. If such amounts are not paid by Seller to
Purchaser, or by Purchaser to Seller, as the case may be, within thirty (30)
days, then the amount owed shall accrue interest thereafter at the rate of 1.5%
per month; provided, however, that in no event will interest be charged in
excess of the amount permitted by applicable law.
(c) Other Prorations. Charges for water, fuel, gas, oil, heat,
electricity and other utilities, operating charges and prepaid amounts under
Assumed Contracts and Assumed Leases shall be prorated as of the Closing Date
for the Facility to which they relate but such amounts will not be paid pursuant
to the Closing Statement but shall instead be part of the post-closing
reconciliation process described in Section 10.5 below.
(d) Estimated Costs. All payables, including accounts payable for
Inventory, utilities, payroll, services, supplies, materials, etc. which accrue
prior to 11:59 p.m. on each
45
Closing Date shall be Seller's responsibility through such Closing Date and
shall be subject to the reconciliation process described in Section 10.5 below.
All payables, including accounts payable for Inventory, supplies, payroll,
services, materials, etc. which accrue after 11:59 p.m. on each Closing Date
shall be paid by Purchaser.
(e) Survival. This Section shall survive each Closing for a period of
two (2) years.
(f) Closing Statement Accounting. All calculations and prorations
under this Section 10.3 shall be made on the accrual basis of accounting.
10.4 Closing Costs.
(a) At or before each Closing, Seller shall pay fifty percent (50%) of
the following amounts in connection with such Closing (i) any escrow or closing
charges of the Title Company, (ii) the premium for the owner's title policy
issued to Purchaser including the cost of all customary endorsements for similar
commercial transactions remove the Standard Title Exceptions, but excluding any
other special endorsements, (iii) the costs of preparing the Surveys, and (iv)
any and all sales tax, documentary, stamp tax, transfer taxes or recording fees.
(b) At or before each Closing, Purchaser shall pay fifty percent (50%)
of the following amounts in connection with such Closing (i) any escrow or
closing charges of the Title Company, (ii) the premium for the owner's title
policy issued to Purchaser including the cost of all customary endorsements for
similar commercial transactions to remove the Standard Title Exceptions, but
excluding any other special endorsements, (iii) the cost of preparing the
Surveys with respect to the Facilities, (iv) any and all sales tax, documentary,
stamp tax, transfer taxes or recording fees. In addition, the Purchaser shall
pay the cost of any title insurance issued in favor of any lender of Purchaser,
and the costs associated with any inspections and investigations conducted by
Purchaser or its agents or representatives of the Assets.
10.5 Post-Closing Purchase Price Reconciliation. Within sixty (60) days
after each Closing Date, Purchaser shall deliver to Seller a revised Closing
Statement setting forth detailed calculations of the prorations for those items
subject to closing adjustments as set forth in Section 10.3 (the "Purchaser's
Closing Statement"). If Seller does not object to the calculations of the items
subject to adjustment set forth in Purchaser's Closing Statement within twenty
(20) days after receipt thereof, then the calculations set forth in Purchaser's
Closing Statement shall be final and binding on the parties. If Seller objects
to Purchaser's Closing Statement within twenty (20) days of the receipt thereof,
then Seller and Purchaser shall appoint, and if they cannot agree, Purchaser and
Seller's accountants shall appoint an independent accounting firm of certified
public accountants (the "Reviewing Accountants") to review the calculations set
forth on the Closing Statement. The Reviewing Accountants shall review the
prorations subject to closing adjustments set forth on the original Closing
Statement and compare them to the calculations of the prorations set forth on
Purchaser's Closing Statement and shall either accept or reject such changes,
item by item. The calculation of the prorations, as adjusted by the changes
accepted by the Reviewing Accountants, shall be final and binding on the
parties. On the later to occur of (i) one hundred and eighty (180) days after
Closing or (ii) the expiration of any review or dispute resolution period, the
parties shall pay any net amounts due to the other by
46
wire transfer of immediately available funds. The cost of the services provided
by the Reviewing Accountants shall be shared equally between Purchaser and
Seller.
ARTICLE XI.
TERMINATION AND ABANDONMENT
11.1 Method of Termination. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time on or before any
Closing:
(a) by mutual written consent of all of the parties hereto;
(b) by Purchaser by giving written notice to the Seller at any time
prior to the Closing (A) in the event the Seller has breached any
representation, warranty or covenant contained in this Agreement, in any
material respect, the Purchaser has notified the Seller of the breach, and the
breach has continued without cure for a period of thirty (30) days after the
notice of breach; provided, however, that if such breach cannot reasonably be
cured within thirty (30) days and the Seller is diligently proceeding to cure
such breach, this Agreement may not be terminated pursuant to this Section
11.1(b) until such time as is sixty (60) days following such notice or, if
shorter, for such period during which Seller shall continue to diligently seek
to cure such breach during such sixty (60) day period, (B) if a Material Adverse
Change has occurred, or (C) if the Closing for any of the Facilities other than
any Deferred Facilities pursuant to Section 12.18 shall not have occurred on or
before June 1, 2006, by reason of the failure of any condition precedent under
Article VIII hereof (unless the failure results primarily from the Purchaser
itself breaching any representation, warranty or covenant contained in this
Agreement); and
(c) by Seller giving written notice to the Purchaser (A) in the event
the Purchaser has breached any representation, warranty or covenant contained in
this Agreement in any material respect, the Seller has notified the Purchaser of
the breach, and the breach has continued without cure for a period of thirty
(30) days after the notice of breach; provided, however, that if such breach
cannot reasonably be cured within thirty (30) days and the Purchaser is
diligently proceeding to cure such breach, this Agreement may not be terminated
pursuant to this Section 11.1(c) until such time as is sixty (60) days following
such notice or, if shorter, for such period during which Purchaser shall
continue to diligently seek to cure such breach during such sixty (60) day
period, or (B) if the Closing shall not have occurred on or before June 1, 2006
for any of the Facilities other than any Deferred Facilities pursuant to Section
12.18 by reason of the failure of any condition precedent under Article IX
hereof (unless the failure results primarily from Seller breaching any
representation, warranty or covenant contained in this Agreement); or
(d) by Purchaser pursuant to Section 1.4(b), Sections 4.10(b), Section
4.10(c), 4.16(b), 4.17, 12.18, Article VIII or this Article XI.
Any termination pursuant to Section 11.1(b)(C) or Section 11.1(c)(B) relating to
less than all of the Facilities shall only terminate this Agreement as to such
Facilities so terminated, but shall not terminate this Agreement as to the
remainder of the Facilities.
11.2 Procedure Upon Termination. In the event of termination and
abandonment pursuant to Section 11.1 hereof, this Agreement shall terminate and
shall be abandoned, without
47
further action by any of the parties hereto, as to the Facility or Facilities
for which such termination relates. Any termination relating to less than all of
the Facilities as contemplated pursuant to the provisions hereof shall only
terminate this Agreement as to such Facilities so terminated, but shall not
terminate this Agreement as to the remainder of the Facilities. If this
Agreement is terminated for any reason:
(a) Each of the parties will redeliver all documents and other
material of any other party relating to the transactions contemplated hereby to
the party furnishing the same but only as relate to Facilities for which this
Agreement was terminated;
(i) All information received by any party hereto with respect to
the business of any other party (other than information which is a matter of
public knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
governmental authority) shall not at any time be used for the advantage of, or
disclosed to third parties by, such party to the detriment of the party
furnishing such information, but only as relate to Facilities for which this
Agreement was terminated;
(b) Other than on the basis of a breach of this Agreement prior to its
termination, no party hereto shall have any liability or further obligation to
any other party to this Agreement with respect to the Facilities for which this
Agreement was terminated other than the parties' respective obligations to pay
costs and expenses as provided herein and those obligations set forth under the
provisions of Sections 4.3(b), 4.9, 5.1, 12.4 and 12.6 hereof.
11.3 Effect of Termination; Remedies for Default and Disposition of the
Deposits.
(a) Seller Defaults. If the transaction herein provided shall not be
closed by reason of the failure of the satisfaction of the conditions benefiting
Purchaser under Article VIII hereof (and not as a result of Seller's default
under this Agreement), then, at Purchaser's election, (A) the Deposits shall be
returned to Purchaser, and neither party hereto shall have any further
obligation or liability to the other except with respect to those provisions of
this Agreement which expressly survive a termination of this Agreement, or (B)
Purchaser may specifically enforce this Agreement; provided, that any action by
Purchaser for specific performance must be commenced, if at all, within one
hundred eighty (180) days of the later to occur of Seller's default or June 1,
2006, the failure of which shall constitute a waiver by Purchaser of such right
and remedy. If Purchaser shall not have commenced an action for specific
performance within the aforementioned time period or so notified Seller of its
election to terminate this Agreement, then Purchaser's sole remedy shall be to
terminate this Agreement in accordance with clause (A) above. In the event
Purchaser commences an equitable action for specific performance, Seller hereby
acknowledges that Purchaser does not have an adequate remedy at law and that
injunctive relief and specific performance will not constitute a hardship to
Seller. In addition, in the event Purchaser prevails under any action under this
Section 11.3(a), Seller shall pay to Purchaser all its cost and expenses,
including reasonable attorney's fees incurred in pursuing such action.
In the event this Agreement is terminated by Purchaser in
accordance with Section 11.1(b) as a result of the Seller's breach of any
representation, warranty or covenant contained in this Agreement, in addition to
Purchaser's right to receive the return of the Deposits
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or to seek specific performance as aforesaid, the Seller shall be jointly and
severally liable to the Purchaser for any damages of the Purchaser as a result
of such breach.
Nothing in this Section, however, shall be construed to limit
Purchaser's rights or damages under any indemnities given by Seller to Purchaser
under this Agreement (and without limiting Purchaser's rights under Section 12.5
hereof).
(b) Purchaser Defaults. In the event that after the expiration of the
Due Diligence Period, without termination of this Agreement by Purchaser,
Purchaser shall not complete closing under this Agreement even though the
conditions benefiting Purchaser under Article VIII hereof were satisfied, and
neither party has terminated this Agreement pursuant to an express right to
terminate as herein provided, and Seller is not in default hereunder, then
Seller's sole remedy shall be to terminate this Agreement and to receive the
Deposits or such portion thereof that remain undisbursed as of such time as full
and complete liquidated damages. The parties acknowledge and agree that the
amount of damages which Seller may incur as a result of such termination may be
difficult to ascertain, and that the amount specified herein is a fair and
reasonable estimate thereof, after which the parties shall have no further
rights hereunder.
Nothing in this Section shall be construed to limit Seller's
rights or damages under any indemnities given by Purchaser to Seller under this
Agreement (and without limiting Seller's rights under Section 12.5 hereof).
(c) Disposition of the Deposits. In the event the transaction
contemplated by this Agreement shall close, the Deposits shall be applied as
partial payment of the applicable portion of the Purchase Price being paid at
such Closing or Closings.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
12.1 Amendment and Modification. This Agreement may be amended, modified
and supplemented only by written agreement of all the parties hereto with
respect to any of the terms contained herein.
12.2 Waiver of Compliance; Consent. Any failure of Seller on the one hand,
or Purchaser, on the other hand, to comply with any obligation, covenant
agreement or condition herein may be waived in writing by Purchaser, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 12.2.
12.3 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, or sent by facsimile transmission (provided a copy is thereafter
promptly mailed as hereinafter provided), or sent by overnight commercial
delivery service (provided a receipt is available with respect to such
delivery), or mailed by first-class registered or certified mail, return receipt
requested, postage
49
prepaid (and shall be effective when received, if sent by personal delivery or
by facsimile transmission or by overnight delivery service, or on the third
(3rd) day after mailing, if mailed):
(a) If to Seller, to:
American Senior Living Limited Partnership
3073 Horseshoe Drive South
Suite 100
Naples, FL 34104
Attention: Mr. George P. Wagner, Jr., CEO
Phone: (239) 262-8006
Fax: (239) 262-6209
with copies to (which shall not constitute notice):
Williams Mullen
222 Central Park Avenue
Suite 1700
Virginia Beach, VA 23462
Attention: Lawrence R. Siegel, Esq.
Phone: (757) 473-5309
Fax: (757) 473-0395
(b) If to Purchaser, to:
AHC Acquisitions, Inc.
c/o Alterra Healthcare Corporation
6737 W. Washington Street
Suite 2300
Milwaukee, Wisconsin 53214
Attention: Mark W. Ohlendorf, President
Phone: (414) 918-5403
Fax: (414) 918-5055
50
and to:
Brookdale Senior Living, Inc.
330 N. Wabash Avenue, Suite 1400
Chicago, IL 60611
Attention: Mr. Paul Froning, SVP and
Chief Investment Officer
Phone: (312) 977-3692
Fax: (866) 741-4764
with a copy (which shall not constitute notice) to:
Rogers & Hardin LLP
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, GA 30303-1601
Attention: Miriam J. Dent, Esq.
Phone: (404) 420-4608
Fax: (404) 525-2224
or to such other person or address as any party hereto shall furnish to the
other parties hereto in writing pursuant to this Section 12.3.
12.4 Brokers and Finders; Expenses. The parties hereto represent and
warrant to each other that none of them has retained any broker or finder in
connection with this transaction. Seller on the one hand, and Purchaser, on the
other, each agrees to indemnify the other for any losses incurred with respect
to a breach of this Section 12.4. Except as otherwise provided herein, each
party hereto shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
12.5 Attorney's Fees. In the event any proceeding or suit is brought to
enforce this Agreement, the prevailing party shall be entitled to all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by such party
in connection with any action, suit or proceeding to enforce the other's
obligations under this Agreement.
12.6 Assignment. This Agreement and all the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. Purchaser may assign the Agreement
and/or its right to acquire any one or more Facilities to one or more affiliates
that are either controlled or managed by Purchaser or under common control with
Purchaser without the prior written consent of Seller, provided that Purchaser
shall remain liable for all obligations of under this Agreement (each such
affiliate a "Purchaser's Permitted Assignee"). Other than the foregoing,
Purchaser may not assign this Agreement without first obtaining Seller's written
consent, which may be withheld in Seller's sole discretion. Upon an assignment
by Purchaser of its rights under the Agreement in accordance with this Section
12.6, Purchaser's assignee(s) shall be deemed to be the Purchaser hereunder (as
it relates to the Facilities subject to such assignment) and shall be the
beneficiary
51
of all of Seller's warranties, representations and covenants in favor of the
Purchaser under this Agreement. Notwithstanding anything to the contrary,
Purchaser shall be permitted to assign certain representations and warranties,
certain covenants and any indemnity obligation arising from such assigned
representations and warranties or covenants to its affiliate(s); provided,
however:
(a) Seller shall only be obligated to pay one party in connection with
any claim for indemnification with respect to a specific Facility brought for a
breach of a representation and warranty and/or covenant;
(b) Purchaser shall determine which party will receive indemnification
with respect to such claim and only one (1) party shall be permitted to make
such claim; and
(c) Any such claim shall be subject to Article VII of this Agreement.
12.7 Governing Law. This Agreement shall be governed by the laws of the
State of Florida as to, including, but not limited to, matters of validity,
construction, effect and performance but exclusive of its conflicts of laws
provisions.
12.8 Effective Date. All references in this Agreement to the "Effective
Date" shall mean and refer to January 11, 2006; provided, however, that solely
with respect to representations and warranties of Seller, the Effective Date
shall mean the earlier of the actual date specified in such representation or
warranty or Schedule thereto (if dated) or October 3, 2005.
12.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.11 Entire Agreement. This Agreement, which term as used throughout
includes the Exhibits and Schedules hereto, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to such subject matters contained herein.
12.12 Warranty of Authority. Each of the parties warrants that the persons
signing on their behalf have the right and power to enter into this Agreement
and to bind them to the terms of this Agreement.
12.13 Schedules. Nothing in any Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
applicable Schedule identifies the exception and the specific representation to
which it relates with reasonable particularity and describes the relevant facts
in reasonable detail. The Schedules are arranged in paragraphs
52
corresponding to the numbered and lettered paragraphs of the Agreement to which
such Schedule relates. Any fact or item disclosed on any Schedule hereto shall
not be deemed by reason only of such inclusion, to be material and shall not be
employed as a point of reference in determining any standard of materiality
under this Agreement.
12.14 Compliance with Bulk Sales Law. Subject to the indemnification of
Purchaser by Seller hereunder, Purchaser hereby waives compliance by Seller with
any applicable bulk sales law and any other similar laws with respect to the
transactions contemplated by this Agreement.
12.15 Reliance. The parties hereto in executing, and in carrying out the
provisions of, this Agreement are relying solely on the representations,
warranties and agreements contained in this Agreement or in any writing
delivered pursuant to provisions of this Agreement or at the Closing of the
transactions herein provided for and not upon any representation, warranty,
agreement, promise or information, written or oral, made by any person other
than as specifically set forth herein or therein.
12.16 Publicity. All pre-Closing publicity concerning the transactions
contemplated by this Agreement and all notices respecting publicity shall be
jointly planned, coordinated and released by and between Purchaser and Seller.
Neither party shall issue any press release or public announcement relating to
the subject matter of this Agreement without the prior written approval of the
other party, which approval shall not be unreasonably withheld or delayed;
provided, however, that any party may make the following public disclosures
(without consent of the other party): (a) if prior to Closing, any public
disclosure that such party believes in good faith is required by applicable law,
regulation or stock market rule (in which case the disclosing party shall use
reasonable efforts to advise the other party and provide them with a copy of the
proposed disclosure prior to making the disclosure) or (b) if post-closing,
disclosure of such of the principal terms of the transaction contemplated by
this Agreement that such party elects to make. Seller acknowledges and agrees
that Purchaser shall file a Current Report on Form 8-K with the Securities and
Exchange Commission announcing the transactions contemplated hereby, and that
Purchaser shall file this Agreement with such Current Report on Form 8-K or with
a Quarterly Report on Form 10-Q. The parties acknowledge and agree that
Purchaser's disclosure in Purchaser's Current Report on Form 8-K with respect to
the announcement of this transaction will be as set forth on Schedule 12.16, and
upon execution of this Agreement Purchaser will issue the press release attached
to the Form 8-K attached as Schedule 12.16.
12.17 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION BROUGHT ON OR WITH RESPECT TO
THIS AGREEMENT, INCLUDING TO ENFORCE OR DEFEND ANY RIGHTS HEREUNDER, AND AGREES
THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
12.18 Delayed Closing Date. If the sale or transfer of one or more
Facilities cannot be timely made as of March 31, 2006 because (i) a Required
Consent has not been obtained, or (ii) such Facility is subject to a material
deficiency in complying with all applicable laws, rules, regulations and
requirements of Governmental Authorities or Government Programs that would
result in a denial of payment for new admissions or preclude new admissions or
continued
53
participation in Government Programs, or (iii) any of the conditions precedent
set forth in Article VIII have not been satisfied or waived in writing by
Purchaser, or (iv) any other reason whereby pursuant to this Agreement either
party hereto is entitled to extend the Closing Date for such Facility and elects
to do so ((i) - (iv), collectively a "Delaying Event"), then the Closing Date
for such Facility shall be deemed to be extended, whereupon such Facility shall
be referred to as a "Deferred Facility", and the Closing with respect to the
Deferred Facility shall be delayed. Notwithstanding the foregoing, unless
Purchaser waives the following conditions, in its sole discretion, this Section
12.18 shall not be operative if any of the following occurs: (i) more than four
(4) Facilities proposed to be Deferred Facilities are Owned Facilities; (ii) the
allocated Purchase Price for all Facilities proposed to be Deferred Facilities
exceeds twenty-five percent (25%) of the total Purchase Price, or (iii) any
Facility proposed to be a Deferred Facility is on a campus, unless the other
Facility is also a Deferred Facility. In the event Purchaser in its sole
discretion elects to waive the foregoing conditions to the applicability of this
Section 12.18, then the parties hereto shall close on the remainder of the
Facilities that do not have Delaying Events (or which have Delaying Events that
Purchaser in its sole discretion elects to waive) and the Closing shall proceed
with respect to such Facilities. At such Closing, the Purchase Price paid shall
be net of the amounts allocated to any Deferred Facility, and the allocable
portion of the Deposits shall be credited to Purchaser as a portion of the
Purchase Price for the Facilities being acquired at such Closing, except Escrow
Agent shall hold back 150% of the allocable portion of the Deposits for any
Deferred Facility. Thereafter, the Closing with respect to any Deferred Facility
pursuant to this Section 12.18 shall take place as soon as practicable after the
Delaying Event for such Facility has been remedied or satisfied by Seller or
waived by Purchaser, provided that all of the terms, conditions and other
requirements applicable to the Closing shall have been satisfied (and remain
satisfied) (including, but not limited to, any conditions precedent) with
respect to such Deferred Facility, and such date will be deemed the "Closing
Date" with respect to such Deferred Facility. In the event the Closing with
respect to any Deferred Facility pursuant to this Section 12.18 does not occur
by November 30, 2006, absent an agreement between the parties to the contrary,
this Agreement shall terminate with respect to such Deferred Facility and the
Purchase Price shall be reduced by the amount allocated to such Facility in the
Agreement and the portion of the Deposit held by Escrow Agent for such Deferred
Facility shall be returned to Purchaser, and neither party shall have any
further rights or duties except as are expressly provided to survive.
[SIGNATURE PAGES FOLLOW]
54
IN WITNESS WHEREOF, the parties hereto have executed or have caused their
duly authorized officers to execute this Agreement as of the date first written
above.
AHC ACQUISITIONS, INC.,
a Delaware corporation
By: /s/ Kristin Ferge
-----------------------------------
Name: Kristin Ferge
---------------------------------
Title: Vice President
--------------------------------
Date: January 12, 2006
------------
FOR PURPOSES OF SECTION 4.3(B) ONLY:
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Kristin Ferge
-----------------------------------
Name: Kristin Ferge
---------------------------------
Title: Vice President
--------------------------------
Date: January 12, 2006
------------
[SELLER'S SIGNATURE PAGES TO FOLLOW]
55
IN WITNESS WHEREOF, the parties hereto have executed or have caused their
duly authorized officers to execute this Agreement as of the date first written
above.
AMERICAN SENIOR LIVING LIMITED
PARTNERSHIP, a Florida limited partnership
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-----------------------------------
Its: CEO
------------------------------
AMERICAN SENIOR LIVING OF FORT WALTON
BEACH, FL, LLC, a Florida limited
liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
AMERICAN SENIOR LIVING OF JACKSONVILLE,
LLC, a Florida limited liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
56
AMERICAN SENIOR LIVING OF JACKSONVILLE-SNF,
LLC, a Florida limited liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
AMERICAN SENIOR LIVING OF TITUSVILLE, FL,
LLC, a Florida limited liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
ASL SENIOR HOUSING, LLC, a Florida limited
liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
57
AMERICAN SENIOR LIVING OF DESTIN, FL, LLC,
a Florida limited liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
ASL OF NEW PORT RICHEY, FL, LLC, a Florida
limited liability company
By: American Senior Living Limited
Partnership
Its: Sole Member
By: American Senior Living, Inc.,
General Partner
By: /s/ George P. Wagner Jr.
-------------------------------
Its: CEO
--------------------------
58
EXHIBIT A-1
1. American Senior Living Limited Partnership, a Florida limited partnership
2. American Senior Living of Fort Walton Beach, FL, LLC, a Florida limited
liability company
3. American Senior Living of Jacksonville, LLC, a Florida limited liability
company
4. American Senior Living of Jacksonville-SNF, LLC, a Florida limited
liability company
5. American Senior Living of Titusville, FL, LLC, a Florida limited liability
company
6. ASL Senior Housing, LLC, a Florida limited liability company
7. American Senior Living of Destin, FL, LLC, a Florida limited liability
company
8. ASL of New Port Richey, FL, LLC, a Florida limited liability company
EXHIBIT B-1
OWNED FACILITIES
NUMBER
OF
FACILITY LOCATION OWNER BEDS/UNITS
-------- -------- ----- ----------
Atrium, (The) 9960 Regency Square Boulevard American Senior Living of ALF - 115
Duval County Jacksonville, LLC IL - 121
Jacksonville, FL 32225
Atrium Care & Rehab, The Atrium Way American Senior Living of SNF - 84
Duval County Jacksonville-SNF, LLC
Jacksonville, FL 32225
Crystal Bay Senior Living at Sandestin 2400 Crystal Cove Lane American Senior Living Limited ALF - 86
Walton County Partnership IL - 30
Destin, FL 32541
Jackson Oaks, together with adjacent 3131 North Highland American Senior Living Limited ALF - 49
..72 acre tract Madison County Partnership IL - 129
Jackson, TN 38305
Pennington Place 202 Walton Ferry Road American Senior Living Limited ALF - 49
Sumner County Partnership IL - 90
Hendersonville, TN 37075
Roman Court Assisted Living 1168 Chilio Road American Senior Living Limited ALF - 80
Floyd County Partnership
Rome, GA 30161
Sheridan Senior Living 504 Firetower Road American Senior Living Limited ALF - 54
Laurens County Partnership
Dublin, GA 31021
Westwood Retirement Resort and 1001 Mar Walt Drive American Senior Living of Fort SNF - 60
Westwood Health Care Center Okaloosa County Walton Beach, FL, LLC IL - 208
Fort Walton Beach, FL 32548
EXHIBIT C-1
LEASED FACILITIES
NUMBER
OF
FACILITY LOCATION ASL TENANT ENTITY BEDS/UNITS
-------- -------- ----------------- ----------
Cedar Springs 2505 Spring Avenue American Senior Living Limited ALF - 20
Morgan County Partnership ILF - 96
Decatur, AL 35601
Emerald Crossings at Muirfield 7220 Muirfield ASL Senior Housing, LLC ALF - 100
Franklin County
Dublin, OH 43017
Oakview Terrace 7220 Baillie Drive ASL of New Port Richey, FL, LLC ALF - 135
Pasco County
New Port Richey, FL 34653
Regency of Evergreen Valley 4463 San Felipe Road American Senior Living Limited ALF - 134
Santa Clara County Partnership
San Jose, CA 95135
Robinswood Pointe Senior Living 1640 148th Avenue S.E. American Senior Living Limited ALF - 82
King County Partnership
Bellevue, WA 98007
Sand Point Senior Living 1800 Harris Street American Senior Living of Titusville, ALF - 76
Brevard County FL, LLC IL - 63
Titusville, FL 32780
Southerland Place 7701 Poplar Avenue ASL Senior Housing, LLC ALF - 50
Shelby County
Germantown, TN 38138
Southerland Place 1414 N. Causeway Boulevard ASL Senior Housing, LLC ALF - 107
St. Tammany Parrish
Mandeville, LA 70471
Southerland Place 14016 Turnberry Lane ASL Senior Housing, LLC ALF - 100
Chesterfield County
Midlothian, VA 23113
Victorian Manor 105 Michelle Street American Senior Living Limited ALF - 55
Cullman County Partnership IL - 0
Hanceville, AL 35077
Windsor Place 6677 Lancaster Pike ASL Senior Housing, LLC ALF - 66
New Castle County
Hockessin, DE 19707