ASSET PURCHASE AGREEMENT by and among WESTPORT HOLDINGS BRADENTON, LIMITED PARTNERSHIP, a Delaware limited partnership, WESTPORT NURSING BRADENTON, L.L.C., a Florida limited liability company, ARC BRADENTON MANAGEMENT, INC., a Tennessee corporation,...
EXHIBIT
10.7
by
and
among
WESTPORT
HOLDINGS BRADENTON, LIMITED PARTNERSHIP,
a
Delaware limited partnership,
WESTPORT
NURSING BRADENTON, L.L.C.,
a
Florida
limited liability company,
ARC
BRADENTON MANAGEMENT, INC.,
a
Tennessee corporation,
ARC
BRADENTON LLC,
a
Tennessee limited liability company,
and
SENIOR
HOUSING PARTNERS III, L.P.,
a
Delaware limited partnership
Dated
as
of March 17, 2006
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Asset
Purchase Agreement dated as of March 17, 2005 (this “Agreement”)
by and
between Westport Holdings Bradenton, Limited Partnership, a Delaware limited
partnership (“Westport
Holdings”),
Westport Nursing Bradenton, L.L.C., a Florida limited liability company
(“Westport
Nursing,”
and
together with Westport Holdings, each, a “Seller”
and
collectively, the “Sellers”),
ARC
Bradenton Management, Inc., a Tennessee corporation (the “Buyer’s
Manager”),
ARC
Bradenton LLC, a Tennessee limited liability company (“ARC
Bradenton”),
and
Senior Housing Partners III, L.P., a Delaware limited partnership (“SHP,”
and
together with ARC Bradenton and their permitted assigns, the “Buyer”).
RECITALS
WHEREAS,
Westport Holdings is the owner of a retirement campus consisting of 501
units
(including 6 guest suites) located in Manatee County, Florida (the “Retirement
Center”);
WHEREAS,
Westport Nursing is the owner of a skilled nursing facility licensed for
120
beds and an assisted living facility licensed for a minimum of 140 beds
located
adjacent to the Retirement Center (the “Health
Center,”
and
together with the Retirement Center, the “Facility”);
WHEREAS,
pursuant to a Lease, dated as of May 1, 2003, and subsequently amended
by letter
agreement dated May 20, 2005 (the “Health
Center Lease”),
among
Westport Nursing, BR & SNF, Inc. and BALF, Inc. (together with BR & SNF,
Inc., the “Health
Center Operator”),
and
other agreements entered into concurrently with the Health Center Lease,
the
Health Center is leased and operated by the Health Center Operator;
WHEREAS,
the Sellers desire to sell to the Buyer, and the Buyer wishes to purchase
from
the Sellers, certain assets relating to the Facility, upon the terms and
conditions set forth herein;
WHEREAS,
the Sellers desire to transfer to the Buyer, and the Buyer is willing to
assume
from the Sellers, certain liabilities, upon the terms and conditions set
forth
herein; and
WHEREAS,
the Buyer has entered, or will enter, into a management agreement with
the
Buyer’s Manager to operate the Facility;
NOW,
THEREFORE, in consideration of the foregoing premises, the respective covenants,
representations and warranties and agreements hereinafter contained, and
other
good and valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto, intending to be legally bound hereby,
hereby
agree as follows:
DEFINITIONS
Section
1.1 Certain
Defined Terms.
As used in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
of
any
party means any person or entity controlling, controlled by or under common
control with such party.
“AHCA
Assurances”
means
Buyer’s receipt of commercially reasonable assurances that the Florida Agency
for Health Care Administration will issue the Skilled Nursing Facility
License
(Standard) and the Assisted Living Facility License (Standard) in the name
of
Buyer (or any lessee, manager or other operator, as deemed appropriate
by Buyer)
in due course following the Closing, which licenses will be effective as
of the
Closing Date.
“Business
Day”
shall
refer to a day, other than a Saturday or a Sunday, on which commercial
banks are
not required or authorized to close in New York City.
“Buyer
Regulatory Approvals”
means,
to the extent deemed reasonably necessary by Buyer for the acquisition
of the
Purchased Assets by the Buyer or its designees (which may be any lessee,
manager
or other operator, as deemed appropriate by Buyer) and the operation of
the
Retirement Center or the Health Center by the Buyer (or any such designees)
in
substantially the same manner as currently operated, approval for participation
in Medicaid, V.A. and Medicare and any approvals required by the Florida
Agency
for Health Care Administration and the Florida Office of Insurance Regulation,
including the AHCA Assurances.
“Contracts”
means
all agreements, contracts, leases, subleases, purchase orders, commitments,
contractual licenses and instruments to which either of the Sellers or
the
Health Center Operator is a party or by which any of them is bound and
which
relate to the Facility or the Purchased Assets (other than Life Care Contracts),
including other contracts with residents (other than Life Care Contracts);
all
utilities, maintenance and other service agreements; all leases or other
occupancy agreements with respect to the Real Property; all leases of personal
property; and the Collective Bargaining Agreements.
“Collective
Bargaining Agreements”
means
collectively the Westport Senior Living SEIU Collective Bargaining Contract,
dated as of June 1, 2004 and The Inn & Nursing Center at Freedom Village
SEIU Collective Bargaining Contract, dated as of June 1, 2004.
“Entrance
Fee Deferred Revenue”
means
the aggregate amount of deferred revenue outstanding as of the date immediately
preceding the Closing Date and attributable to the Life Care Contracts
(other
than Life Care Contracts with grantors under the Freedom Village Master
Trusts),
all as determined by generally accepted accounting principles, which aggregate
deferred revenue was $17,853,482 at June 30, 2005, as set forth on the
Interim
Balance Sheet.
“Entrance
Fee Receivables”
means
any entrance fees that are unpaid or due to the Sellers and outstanding
as of
the Closing Date.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“Excess
Liabilities”
means,
the amount by which (A) the aggregate amount of Master Trust Debt, Refundable
Entrance Fee Liabilities and Entrance Fee Deferred Revenue, in each
case
determined in accordance with generally accepted accounting principles,
exceeds
(B) the Excess Liabilities Cap. For purposes of the calculation in clause
(A)
above, Master Trust Debt shall be included only to the extent, if any,
that it
is not otherwise included in Refundable Entrance Fee Liabilities.
“Excess
Liabilities Cap”
means
the greater of (i) $50,000,000 or (ii) if the Closing has not occurred
before
May 1, 2006, other than solely as a result of a material breach by the
Sellers’
of their obligations under this Agreement, $50,500,000. For purposes of
this
definition of “Excess Liabilities Cap,” the Sellers’ failure to complete the
Remediation shall not constitute a material breach of their obligations
under
this Agreement, provided that the Sellers’ were otherwise in compliance with
their obligations under Section 6.13. Notwithstanding the foregoing, the
Excess
Liabilities Cap shall be increased to $51,000,000 upon the later of (i)
July 1,
2006 and (ii) the tenth day following the Remediation Completion Date (the
“Second
Increase Date”).
The
Excess Liabilities Cap shall be further increased by another $500,000 for
each
30-day period following the Second Increase Date that occurs prior to the
Closing.
“Excluded
Contracts”
means
all contracts and agreements of Seller(s) and the Health Center Operator,
and
all contracts and agreements that affect, encumber or bind the Facility
in any
manner, that are not Transferred Contracts.
“Freedom
Village Master Trusts”
means
the Freedom Village Master Trusts described on Schedule
4.10.
A.) “Health
Center Assets”
means
collectively the Related Assets as defined and described in Section 7 of
the
Health Center Lease; all replacement equipment and furniture as described
in
Section 7 of the Health Center Lease; any other equipment or furniture
in use at
the Health Center that does not constitute replacement equipment or furniture
as
described in Section 7 of the Health Center Lease; and any other assets
used in
the operation of the Health Center that are included within the definition
of
Purchased Assets (excluding, however, any accounts receivable of the Health
Center Operator existing on the Closing Date). The Health Center Assets
comprise
a portion of the Purchased Assets.
A.) “HIPAA”
means
the Health Insurance Portability and Accountability Act of 1996.
“Life
Care Contracts”
means
all executory life-care residency and care contracts, all residency and
care
agreements, and any addendums thereto related to the Facility.
“Master
Trust Debt”
means
(i) the aggregate amount of debt of the Sellers secured by liens granted
in
connection with the Freedom Village Master Trusts, which aggregate amount
of
debt was $3,525,726 at June 30, 2005, as set forth on the Interim Balance
Sheet,
less (ii) the deferred entrance fees attributable to the Freedom Village
Master
Trusts, the amount of which was $512,695 at June 30, 2005, as set forth
on the
Interim Balance Sheet.
“Material
Adverse Effect”
means
a
material adverse effect on the assets, physical condition, financial condition
or operations of the Facility, taken as a whole; provided however, a Material
Adverse Effect shall not include an adverse effect, directly or indirectly,
arising out of or resulting from an event or series of events or circumstances
generally affecting (i) the senior
living
industry generally, (ii) the United States economy or the Florida economy
in
general; (iii) national or international political or social conditions,
including, without limitation, the engagement by the United States in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack upon the
United
States or any of its territories, possessions, diplomatic or consular offices,
or upon any military installation, equipments or personnel of the United
States;
or (iv) changes in generally accepted accounting principles.
“Person”
means
any individual, firm, corporation, partnership, limited liability company,
trust, joint venture, Governmental Entity or other entity.
“Pre-Closing
Tax Period”
means
all taxable periods ending on or before the Closing Date and the portion
ending
on the Closing Date of any taxable period that includes, but does not end
on the
Closing Date.
“Real
Property”
means
the Land, Buildings, Improvements and other rights, interests and assets
described in paragraphs (i) through (iv) of Section
2.1(a).
“Refundable
Entrance Fee Liabilities”
means
the aggregate amount of refundable entrance fees outstanding as of the
date
immediately preceding the Closing Date under the Life Care Contracts (other
than
Life Care Contracts related to the Freedom Village Master Trusts), as determined
in accordance with generally accepted accounting principles, which aggregate
refundable entrance fees were $25,657,669 at June 30, 2005, as set forth
on the
Interim Balance Sheet.
“Remediation
Completion Date”
the
date that is the later of (i) the date of the Sellers’ delivery of the CIH
Certificate; or (ii) in the event that PSI delivers a Remediation Deficiency
Notice pursuant to Section 6.13 within four (4) Business Days following
the
delivery of the CIH Certificate, the date when the deficiencies contained
in the
Remediation Deficiency Notice have been cured.
“Straddle
Entrance Fee Refunds”
means
the aggregate amount of unpaid entrance fee refunds as of the date immediately
preceding the Closing Date owing to prior residents of the Facility whose
Life
Care Contracts have been terminated, but are not then due to such prior
residents as a result of any applicable grace period set forth in such
terminated Life Care Contracts. Straddle Entrance Fee Refunds shall not
include
any entrance fee refunds that are overdue beyond the expiration of any
applicable payment grace period.
“Subsidiary”
of
any
person means another person, an amount of the voting securities, other
voting
ownership or voting partnership interests of which is sufficient to elect
at
least a majority of its Board of Directors or other governing body (or,
if there
are no such voting interests, 50% or more of the equity interests of which)
is
owned directly or indirectly by such first person or by another subsidiary
of
such first person.
“Tax
Return”
means
any report, return, document, declaration or other information or filing
required to be supplied to any Taxing Authority with respect to Taxes,
including
any amendment made with respect thereto.
“Tax”
or
“Taxes”
means
all forms of taxation imposed by any Federal, state, local or other Taxing
Authority, including income, franchise, property, sales, use, excise,
employment, unemployment, payroll, social security, estimated, value added,
ad
valorem, transfer, recapture, withholding, health and other taxes of any
kind,
including any interest, penalties and additions thereto.
“Taxing
Authority”
means
any Federal, state or local government, any subdivision, agency, commission
or
authority thereof or any domestic quasi-governmental body exercising tax
regulatory authority.
“Transfer
Taxes”
means
all sales, use, transfer, registration, recording, ad valorem, privilege,
documentary, gross receipts, registration, conveyance, excise, license,
stamp or
similar Taxes and fees arising out of, in connection with or attributable
to the
transactions effected pursuant to this Agreement, and any deficiency, interest
or penalty asserted with respect thereto.
“Transferred
Contracts”
means
(i) the Life Care Contracts that are specifically identified on Schedule
4.8
(as
updated through the Closing Date to include Life Care Contracts entered
into by
Sellers after August 17, 2005 in accordance with the terms of this Agreement);
(ii) all Contracts set forth on Schedule
4.10
(as
updated through the Closing Date to include Contracts entered into by the
Sellers after August 17, 2005 in accordance with the terms of this Agreement)
to
the extent that such Contracts may be (a) assigned to the Buyer without
consent
(or for which the consent to such assignment is obtained prior to Closing),
and
(b) terminated by the Sellers or the Health Center Operator, and by Buyer
after
the Closing Date, without cause upon not more than 30 days’ notice and without
the payment of any penalty, fee or other payment resulting from the termination
thereof (but not any other Contracts on Schedule
4.10);
and
(iii) any other Contracts specifically identified on Schedule
2.9.
Notwithstanding anything herein to the contrary, the Transferred Contracts
shall
not include the Collective Bargaining Agreements, the Multiemployer Pension
Plans or the Medical Director Agreement between Freedom Village Nursing
Center
and Werther X. Xxxxxxxxx.
Section
1.2 Other
Defined Terms.
The
following terms have the meanings defined for such terms in the Sections
set
forth below:
Term
|
Section
|
|
Accounts
Receivable
|
Section
2.1(a)(xiv)
|
|
Acquisition
|
Section
3.1
|
|
Additional
Xxxxxxx Money Deposit
|
Section
2.4(a)
|
|
Agreement
|
Preamble
|
|
Ancillary
Agreements
|
Section
4.2
|
|
Application
Completion Notice
|
Section
6.4(b)
|
|
Application
Date
|
Section
6.4(b)
|
|
Approval
Date
|
Section
6.4(b)
|
|
Approved
CIH
|
Section
6.13
|
|
ARC
|
Section
6.5(d)
|
|
Assignment
and Assumption Agreement
|
Section
3.2(b)(ii)
|
|
Assumed
Liabilities
|
Section
2.2
|
Term
|
Section
|
Audited
Financial Statements
|
Section
4.15(a)
|
|
breaching
party
|
Section
7.5
|
|
Buildings
|
Section
2.1(a)(ii)
|
|
Buyer
|
Preamble
|
|
Buyer
Indemnitees
|
Section
11.2
|
|
Buyer
Material Adverse Effect
|
Section
5.3
|
|
Buyer’s
Manager
|
Preamble
|
|
CBA
Employees
|
Section
6.5(a)
|
|
Chapter
651 Application Completion Date
|
Section
6.4(b)
|
|
CIH
Certificate
|
Section
6.13
|
|
Closing
|
Section
3.1
|
|
Closing
Date
|
Section
3.1
|
|
Closing
Escrow Agreement
|
Section
2.4(a)
|
|
COBRA
|
Section
2.3(j)
|
|
Code
|
Section
2.4(c)
|
|
Confidentiality
Agreement
|
Section
6.3
|
|
Consent
|
Section
4.3
|
|
Covenant
Claim
|
Section
11.7
|
|
Deed
|
Section
3.2(a)(i)
|
|
Xxxxxxx
Money Deposit
|
Section
2.4(a)
|
|
Xxxxxxx
Money Deposit Escrow Agreement
|
Section
2.4(a)
|
|
Effective
Time
|
Section
3.1
|
|
Eligible
Employees
|
Section
6.5(a)
|
|
Employees
|
Section
4.14
|
|
Escrow
Agent
|
Section
2.4(a)
|
|
Excluded
Assets
|
Section
2.1(b)
|
|
Excluded
Liability
|
Section
2.3
|
|
Facility
|
Recitals
|
|
Financial
Statements
|
Section
4.15(a)
|
|
Financing
|
Section
5.6(a)
|
|
Fund
|
Section
11.3
|
|
Governmental
Entity
|
Section
4.3
|
|
Hazardous
Substances
|
Section
4.9
|
|
HC
Occupancy Agreements
|
Section
4.8(a)
|
|
Health
Center
|
Recitals
|
|
Health
Center Agreement Indemnities
|
Section
2.1(a)(xvii)
|
|
Health
Center Agreements
|
Section
2.1(b)(iv)
|
|
Health
Center Assignee
|
Section
12.4
|
|
Health
Center Audited Financial Statements
|
Section
4.23(a)
|
|
Health
Center Interim Balance Sheet
|
Section
4.23(a)
|
|
Health
Center Interim Financial Statements
|
Section
4.23(a)
|
|
Health
Center Lease
|
Recitals
|
|
Health
Center Operator
|
Recitals
|
|
Holdback
Amount
|
Section
2.4(a)
|
Term
|
Section
|
ID
Number
|
Section
4.8(a)
|
|
Improvements
|
Section
2.1(a)(iii)
|
|
Indemnified
Party
|
Section
11.4(a)
|
|
Indemnifying
Party
|
Section
11.4(a)
|
|
Initial
Xxxxxxx Money Deposit
|
Section
2.4(a)
|
|
Interim
Balance Sheet
|
Section
4.15(a)
|
|
Interim
Financial Statements
|
Section
4.15(a)
|
|
Investigation
Period
|
Section
2.5(a)
|
|
Key
|
Section
4.8(g)
|
|
Land
|
Section
2.1(a)(i)
|
|
Leases
|
Section
4.7(c)
|
|
Liens
|
Section
4.7(b)
|
|
Losses
|
Section
11.2
|
|
Monetary
Liens
|
Section
7.2(d)
|
|
Multiemployer
Pension Plan
|
Section
6.5(c)
|
|
New
CBA
|
Section
6.5(a)
|
|
Non-CBA
Employees
|
Section
6.5(a)
|
|
Notice
of Material Breach
|
Section
7.5
|
|
Objection
Notice
|
Section
7.2(d)
|
|
Permitted
Exceptions
|
Section
7.2(d)
|
|
Permitted
Liens
|
Section
4.7(b)
|
|
PHI
|
Section
6.8
|
|
PIM
|
Section
12.1
|
|
XXXX
|
Section
2.2(ii)
|
|
Plans
|
Section
4.17(b)
|
|
Prudential
|
Section
4.25
|
|
PSI
|
Section
6.13
|
|
PTE
84-14
|
Section
4.25
|
|
Purchase
Price
|
Section
2.4(a)
|
|
Purchased
Assets
|
Section
2.1(a)
|
|
QPAM
|
Section
5.9(b)
|
|
Receiving
Party
|
Section
7.5
|
|
Release
|
Section
4.9
|
|
Remaining
Payment
|
Section
2.4(a)
|
|
Remediation
|
Section
6.13
|
|
Remediation
Deficiency Notice
|
Section
6.13
|
|
Remediation
Plan
|
Section
6.13
|
|
Report
|
Section
6.13
|
|
Representation
Claim
|
Section
11.7
|
|
Required
Consent
|
Section
2.10(c)
|
|
Resident
List
|
Section
4.8(a)
|
|
Response
Notice
|
Section
7.2(d)
|
|
Retirement
Center
|
Recitals
|
|
Security,
Waiting List and Sale Deposits
|
Section
2.1(a)(x)
|
Term
|
Section
|
SEIU
|
Section
6.5(a)
|
|
Seller
|
Preamble
|
|
Sellers
|
Preamble
|
|
Sellers
Indemnitees
|
Section
11.3
|
|
Sellers
Insurance Policies
|
Section
4.18
|
|
Surety
Period
|
Section
6.5(c)
|
|
Survey
|
Section
7.2(d)
|
|
Taking
|
Section
9.2(c)
|
|
Third
Party Claim
|
Section
11.4(a)
|
|
Title
Commitment
|
Section
7.2(d)
|
|
Title
Company
|
Section
7.2(d)
|
|
Transferred
Employee
|
Section
6.5(a)
|
|
Transferred
Permits
|
Section
2.1(a)(xiii)
|
|
Westport
Holdings
|
Preamble
|
|
Westport
Nursing
|
Preamble
|
PURCHASE
AND SALE OF ASSETS
(a) Transfer
of Purchased Assets.
At the
Closing the Sellers shall sell, transfer, assign and deliver to the Buyer,
and
the Buyer shall purchase, acquire and accept from the Sellers, all of the
right,
title and interest of the Sellers in, to and under the
following assets related to the Facility (collectively, the “Purchased
Assets”):
(i) subject
to the Permitted Exceptions, fee simple title to all of those certain parcels
of
land located in Bradenton, Florida and more particularly described in
Schedule
2.1(a)(i)
(the
“Land”);
(ii) subject
to the Permitted Exceptions, fee title to all improvements presently erected
on
the Land (the “Buildings”);
(iii) subject
to the Permitted Exceptions, fee title to all fixtures attached to the
Buildings
which are owned by the Sellers, including, but not limited to, the heating,
plumbing, electrical, lighting, air conditioning and pool systems (the
“Improvements”);
(iv) all
estates, rights, privileges, easements, agreements, appurtenances, development
rights, sewer and utility rights, and any other governmental entitlements
belonging or in anywise appertaining to the Land and Buildings;
(v) all
furniture, fixtures, machinery, equipment and other chattels which are
used in
the day to day operations of the Facility, including, but not limited to:
beds,
furniture
and furnishings, medical equipment, linens, window furnishings, carpets
and
floor coverings, appliances, televisions, wheelchairs, canes, walkers,
kitchen
equipment, dining room furniture, pool equipment, beauty parlor equipment,
exercise equipment, etc., including the fixed assets set forth on Schedule
2.1(a)(v);
(vi) all
supplies and inventory at the Facility including all foodstuffs,
pharmaceuticals, cleaning and maintenance supplies and spare parts;
(vii) all
cars,
trucks, buses, vans and other motor vehicles owned by the Sellers and used
in
connection with the operation of the Facility as set forth on Schedule
2.1(a)(vii);
(viii) all
trademarks, trade names, including “Freedom Village,” trademark registrations,
signs, logos or other intangible property rights used in the operation
of the
Facility, if any, including all goodwill connected with or symbolized by
the use
thereof and all licenses, to the extent transferable;
(ix) all
Transferred Contracts;
(x) all
security deposits paid to the Sellers by residents, tenants and patients
and all
waiting list or sale deposits of any type, kind or nature (including any
deposit
that will be credited against the entrance fee) (the “Security,
Waiting List and Sale Deposits”);
(xi) all
rights that accrue to the Facility due to prepaid expenses (excluding prepaid
insurance premiums);
(xii) subject
to such confidentiality restrictions as may be imposed by applicable law
or to
which the Sellers are contractually bound, all books of account, and general,
financial, accounting and personnel records, and, to the extent transferable
by
the Sellers, medical records of residents or patients at the Facility (past
or
present);
(xiii) only
to
the extent assignable, all permits, consents, approvals, franchises or
authorizations from any Governmental Entity (collectively, the “Transferred
Permits”);
(xiv) all
accounts receivable of the Sellers for services rendered or products supplied
prior to the Closing Date (excluding Entrance Fee Receivables and any and
all
receivables relating to the operations of the Health Center as of the Closing
Date) (“Accounts
Receivable “);
(xv) to
the
extent transferable, all warranties and guarantees associated with the
Buildings, Improvements, furniture, fixtures, equipment and other personal
property;
(xvi) all
property and casualty insurance benefits (whether self-insured or insured
by a
third party), including rights and proceeds, arising from or relating to
the
Facility prior to the Closing Date, except to the extent expended in accordance
with this Agreement or necessary to reimburse Sellers for costs actually
paid by
Sellers, to the extent applicable in accordance with this Agreement, prior
to
Closing to repair or restore, to the extent applicable in
accordance
with this Agreement, any of the Purchased Assets damaged as a result of
a
casualty event;
(xvii) all
indemnities granted to Sellers by the Health Center Operator pursuant to
the
Health Center Agreements, except to the extent they relate to Excluded
Liabilities (the “Health
Center Agreement Indemnities”);
(xviii) all
Entrance Fee Receivables;
(xix) all
computer hardware, software, programs and operating systems used for the
keeping
of records and the operation of the Facility except any proprietary software
developed and owned exclusively by Seller; and
(xx) any
other
tangible or intangible asset of any kind or nature primarily used in connection
with the ownership or operation of the Facility that is not specifically
identified as an Excluded Asset.
(b) Excluded
Assets.
Notwithstanding anything to the contrary contained in this Agreement, the
Purchased Assets shall expressly exclude the following, and only the following,
assets and rights of the Sellers (collectively, the “Excluded
Assets”),
which
shall not be sold, transferred, assigned or delivered to the Buyer:
(i) all
cash,
cash equivalents, certificates of deposit, bank deposits and marketable
securities whether on hand or in accounts (other than the Security, Waiting
List
and Sale Deposits);
(ii) the
“Minimum Liquid Reserve” accounts owned or created by the Sellers pursuant to
Chapter 651, Florida Statutes;
(iii) insurance
policies and any prepaid insurance premiums, self-funded insurance programs
and
the assets or proceeds thereof (except to the extent described in Section
2.1(a)(xvi));
(iv) the
Health Center Lease, the Credit Agreement with the Health Center Operator,
including the right to receive repayment of borrowings thereunder, and
the
service agreements with the Health Center Operator (other than the Health
Center
Agreement Indemnities described in Section
2.1(a)(xvii))
(collectively, the “Health
Center Agreements”);
(v) all
Excluded Contracts, including, without limitation, the Collective Bargaining
Agreements, the Multiemployer Pension Plan and the Medical Director Agreement
between Freedom Village Nursing Center and Werther X. Xxxxxxxxx and all
assets,
properties and rights derived therefrom;
(vi) any
security deposits, claims for security deposits or rights to receive security
deposits paid by the Sellers with respect to the operation of the
Facility;
(vii) any
deposits, escrows, or reserves for real estate taxes, insurance, furniture,
fixtures and equipment or otherwise made to any lender of the
Sellers;
(viii) any
licenses, certificates of need, and other similar items, the transfer of
which
to the Buyer is prohibited by an applicable governmental rule or
regulation;
(ix) letters
of credit or deposits provided to utility companies or those provided for
any
other purpose;
(x) any
refunds or credits, claims for refunds or credits, or rights to receive
refunds
or credits with respect to the Facility paid or to be paid to the Sellers
or any
of their respective Affiliates (other than those arising under the Transferred
Contracts);
(xi) any
records (including accounting records) related to Taxes paid or payable
by the
Sellers or any of their Affiliates and all financial and Tax records that
form
part of the Sellers’ or any of their Affiliate’s general ledger;
(xii) all
documents, drafts and records received or prepared in connection with the
planning and sale of the Purchased Assets, including bids received from
third
parties and analyses relating to the Facility;
(xiii) all
employee benefit plans;
(xiv) the
organizational documents and other company and partnership records and
documents
having to do with the organization or operation of each of the Sellers;
(xv) all
claims, causes of action, choses in action, rights of recovery and rights
of
set-off of any kind, pertaining to, arising out of, and inuring to the
benefit
of the Sellers relating to matters arising prior to the Closing
Date;
(xvi) all
indemnities granted to Sellers by the Health Center Operator pursuant to
the
Health Center Agreements to the extent they relate to Excluded Liabilities;
and
(xvii) the
rights that accrue or will accrue to the Sellers under this Agreement and
any
other agreements, certificates and instruments relating to the sale of
the
Purchased Assets or otherwise delivered in connection with this
Agreement.
Section
2.2 Assumption
of Liabilities.
In
partial payment of the Purchase Price, the Buyer shall assume, and hereby
covenants and agrees to timely perform, pay or discharge, only the following
obligations, liabilities and commitments, and no other obligations, liabilities
or commitments whatsoever (collectively, the “Assumed
Liabilities”):
(i) all
of
the obligations, liabilities and commitments of the Sellers and the Health
Center Operator under the Transferred Contracts, but only to the extent
that
such obligations, liabilities and commitments relate to the period from
and
after the Closing Date or to the extent that Buyer receives a credit therefor
against the Purchase Price pursuant to Section
2.6,
and
specifically excluding any liability arising thereunder for a breach thereof
that occurred prior to the Closing Date;
(ii) all
of
the obligations, liabilities and commitments of the Sellers arising under
the
Sellers’ Personal Income Protection Plan (“XXXX”),
but
in the case of XXXX
deposit
liabilities, only to the extent set forth on Schedule
4.8(d)
(as
updated through the Closing Date);
(iii) all
of
the obligations, liabilities and commitments of the Sellers related to
or
otherwise in respect of the Freedom Village Master Trusts, but in the case
of
refund liabilities secured by the Freedom Village Master Trusts, only to
the
extent set forth on Schedules
4.8(a)
(as
updated through the Closing Date);
(iv) all
of
the obligations, liabilities and commitments of the Sellers to refund the
entrance fees or deposits under the Life Care Contracts that are listed
on
Schedule
4.8
(as
updated through the Closing Date) that are terminated on or after the Closing
Date;
(v) all
Straddle Entrance Fee Refunds;
(vi) all
liability for the amount of all accrued (vested or unvested) vacation,
personal
time, time off, holiday or sick leave as of the Closing Date for Transferred
Employees (which shall be assumed by Buyer’s manager or lessee), but only to the
extent that Buyer receives a credit therefor against the Purchase Price
pursuant
to Section
2.6(b);
and
(vii) to
the
extent not otherwise described in clauses (i) through (vi) of this Section
2.2,
any
specifically identified payment obligation(s) of the Sellers or the Health
Center Operator for which the Buyer receives a corresponding credit(s)
against
the Purchase Price pursuant to Section
2.6.
Section
2.3 Excluded
Liabilities.
Notwithstanding anything to the contrary contained in this Agreement, except
for
the Assumed Liabilities, Buyer shall not assume, or become responsible
in any
way for, any other liabilities or obligations of either of the Sellers
or the
Health Center Operator, or any other liabilities or obligations that relate
in
any way to the Purchased Assets or the ownership or operation of all or
any
portion of the Facility prior to the Closing Date (each, an “Excluded
Liability”)
which
shall include, without limitation, the following:
(a) all
Taxes
arising out of, relating to or in respect of the Facility imposed upon
the
Sellers for all taxable periods before the Closing, and all Taxes arising
from
the transactions contemplated hereby (except for Transfer Taxes as set
forth in
Section
2.8);
(b) all
obligations, liabilities and commitments of the Sellers to the extent arising
out of, relating to or in respect of the Excluded Assets;
(c) any
liability or obligation that arises or relates to the breach of, or default
under, any contract, agreement or obligation prior to the Closing
Date;
(d) any
liability arising out of any lawsuit, legal or regulatory proceeding, of
any
type, kind or nature pending as of the Closing Date or relating to the
operation
of the Facility prior to the Closing Date;
(e) any
liability arising or resulting from the non-compliance of the Facility
or its
operations with laws, rules or regulations, or any order of any Governmental
Entity prior to
the
Closing Date, other than any noncompliance, if any, that relates solely
to the
physical condition of the Real Property as of the Closing Date (subject
to the
representations and warranties specifically set forth in Article
IV);
(f) any
obligations, liabilities or commitments to pay any entrance fee or deposit
refunds under Life Care Contracts that are not specifically set forth on
Schedule
4.8
(as
updated through the Closing Date to include Life Care Contracts entered
into by
the Sellers after the August 17, 2005 in accordance with the terms of this
Agreement);
(g) any
XXXX
deposit refund liability that is not specifically identified on Schedule
4.8(d)
(as
updated through the Closing Date);
(h) any
Master Trust Debt not specifically identified on Schedule
4.8(a)
(as
updated through the Closing Date);
(i) any
liability or obligation relating to the termination of the Health Center
Agreements;
(j) other
than accrued vacation, personal time, time off, holiday, and sick leave
time
described in Section
2.2(vi)
above,
any liability, obligation or covenant owed to any employee (past or current)
to
the extent arising prior to, or accruing before, the Closing Date, including,
without limitation, any liabilities or obligations under Section 4980B
of the
Code and Sections 601 through 608, inclusive, of ERISA (collectively,
“COBRA”),
whether arising before or after the Closing Date;
(k) any
liability or obligation in respect of periods prior to the Closing Date
arising
under the terms of the Medicare, Medicaid, Veterans Administration, or
any other
third-party payor program, including without limitation any retroactive
denial
of claims or monetary penalties.
The
Sellers shall remain solely responsible for the Excluded Liabilities, and
shall
pay, discharge, or satisfy the Excluded Liabilities as the same come
due.
(a) In
addition to the Buyer’s assumption of the Assumed Liabilities, the aggregate
purchase price (the “Purchase
Price”)
for
the Purchased Assets shall be the payment of $95,000,000 in cash as follows:
(w)
$2,000,000 (the “Initial
Xxxxxxx Money Deposit”)
has
been paid by the Buyer ($1,000,000 on August 17, 2005 and $1,000,000 on
October
3, 2005) by wire transfer of immediately available funds to an account
designated by the Title Company, as escrow agent (the “Escrow
Agent”)
and is
being held by the Escrow Agent pursuant to the terms of the escrow agreement
(the “Xxxxxxx
Money Deposit Escrow Agreement”)
attached hereto as Exhibit A; (x) $1,000,000 (the “Additional Xxxxxxx Money
Deposit,” and together with the Initial Xxxxxxx Money Deposit, the “Xxxxxxx
Money Deposit”)
shall
be paid by the Buyer to Sellers by wire transfer of immediately available
funds
to the Escrow Agent to be held pursuant to the terms of the Xxxxxxx Money
Deposit Escrow Agreement upon the expiration of the Investigation Period
if
Buyer has not elected to terminate the Agreement in accordance with Section
2.5,
(y) $5,000,000 (the “Holdback
Amount”)
shall
be paid to the Escrow Agent at Closing pursuant to
the
terms
of the escrow agreement attached hereto as Exhibit B (the “Closing
Escrow Agreement”)
as
security for Sellers’ obligations and liabilities under this Agreement and the
Ancillary Agreements; and (z) $87,000,000, subject to adjustment pursuant
to
Sections
2.4(b)
and
2.6
(the
“Remaining
Payment”),
shall
be paid by the Buyer to the Sellers at the Closing by wire transfer of
immediately available funds to an account or accounts designated by the
Sellers.
All funds deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Xxxxxxx Money Deposit Escrow Agreement
or the
Closing Escrow Agreement, as the case may be.
(b) The
Remaining Payment to be paid by the Buyer to the Sellers at Closing shall
be
reduced by the following:
(i) an
amount, if any, equal to the amount by which the total amount of XXXX deposit
liabilities as of the date immediately preceding the Closing Date exceeds
$7,500,000;
(ii) an
amount
equal to the Excess Liabilities;
(iii) an
amount
equal to the Straddle Entrance Fee Refunds owed to prior residents of the
Facility that have terminated their Life Care Contracts and whose dwelling
units
have been resold prior to the Closing Date (which resale has actually closed
and
for which there is no corresponding Entrance Fee Deposit Receivable);
and
(iv) an
amount
equal to amounts remaining in the reserve accounts established under the
Health
Center Agreements, if any, to the extent that such accounts have been
transferred by the Health Center Operator to the Sellers.
(c) In
the
event that (i) the Remediation Completion Date occurs on or before May
15, 2006
and (ii) the Closing occurs on or after June 1, 2006, in addition to the
adjustments set forth in Section 2.4(b), the Remaining Payment to be paid
by the
Buyer to the Sellers at Closing shall be increased by $200,000, provided
that
the failure to close prior to June 1, 2006 is not caused by the Sellers’ failure
to act in good faith or use their reasonable efforts to cause the Closing
to
occur, as required by Section 6.4.
(d) The
Buyer
and the Sellers shall agree upon an allocation of the Purchase Price (and
all
other capitalized costs) and the amount of the Assumed Liabilities among
the
Purchased Assets consistent with Section 1060 of the Internal Revenue Code
of
1986, as amended (the “Code”),
and
the Treasury Regulations promulgated thereunder prior to Closing, which
allocation shall be attached hereto as Schedule
2.4(d).
Each of
the Buyer and the Sellers agree to file Internal Revenue Service Form 8594,
and
all federal, state and local Tax Returns (as hereinafter defined), in accordance
with any such agreed allocation as adjusted as provided herein. Each of
the
Buyer and the Sellers shall report the transactions contemplated by this
Agreement for Tax purposes in a manner consistent with the allocation determined
pursuant to this Section
2.4(d).
Except
as required by applicable law, the Buyer and the Sellers shall not take
any
position in any Tax Return, Tax proceeding or audit that is inconsistent
with
such allocation.
(a) The
Sellers shall give the Buyer full access to the Facility, upon reasonable
prior
notice during normal business hours, in order for the Buyer to timely conduct
its due diligence investigation of the Facility, the Purchased Assets and
the
operations and financial affairs of the Facility, including, but not limited
to,
detailed site visits to be conducted by the Buyer or its representatives,
and
the right of the Buyer or its representatives to conduct building and physical
plant inspections, Real Property surveys, environmental and engineering
tests,
investigations of the books and records and financial information of the
Sellers, employee interviews, inspections of all licensing reports and
information, inspections of medical records to the extent allowed under
applicable law, and other due diligence inspections and investigations.
The
Sellers shall have the right to have a representative present during any
employee interviews conducted by the Buyer. The Sellers shall deliver to
Buyer
copies of all Life Care Contracts as of the date hereof and all of the
agreements, licenses or other documents listed on the disclosure schedules
attached hereto within five (5) business days after the execution of this
Agreement. The Buyer shall have until the later of (i) March 30, 2006 and
(ii)
the date that is four Business Days following the Sellers’ delivery to the Buyer
of the disclosure schedules called for by this Agreement updated as of
December
31, 2005 or a subsequent date (the “Investigation
Period”)
to
conduct its investigation. On or before expiration of the Investigation
Period,
the Buyer, in its sole and absolute discretion, for any reason whatsoever,
by
notice to the Sellers on or before expiration of the Investigation Period,
shall
have the right, at its option, to terminate this Agreement on or before
such
date in which event the Xxxxxxx Money Deposit will be refunded to the Buyer
upon
delivery of the documents referred to below and neither party shall have
further
liability to the other on account of this Agreement, provided however,
that the
Buyer shall within ten (10) days of such termination, return to the Sellers,
or
certify to Sellers Buyer’s destruction of, all documents and materials delivered
to the Buyer by the Sellers pursuant to this Agreement. The provisions
of this
Section
2.5(a)
shall
survive the termination of this Agreement.
(b) The
Buyer
shall indemnify, hold harmless and defend the Sellers from and against
any loss,
damage, liability or claim for personal injury or property damage and any
other
loss, damage, liability, claim or lien to the extent arising from the acts
at or
upon the Real Property by the Buyer or any of its agents, contractors,
auditors,
engineers, attorneys, employees, consultants and other representatives.
The
Buyer understands and agrees that any on-site inspections of the Real Property
shall occur at reasonable times agreed upon by the Sellers and the Buyer
after
not less than two (2) Business Days prior notice to the Sellers and shall
be
conducted so as not to interfere unreasonably with the operation of the
Facility. The Sellers shall have the right to have a representative present
during any such inspections. If the Buyer desires to do any invasive testing
of
the Real Property, the Buyer shall do so only after notifying the Sellers
and
obtaining the Sellers’ prior written consent thereto, which may be subject to
reasonable terms and conditions as may be proposed by the Sellers. The
Buyer
shall not permit any liens to attach to any portion of the Real Property
prior
to the Closing Date. The Buyer shall (i) restore the Real Property, at
its own
expense, to the same condition which existed prior to any inspections or
other
activities of the Buyer thereon; and (ii) be responsible for and pay any
and all
liens by contractors, subcontractors, materialmen, or laborers performing
the
inspections or any other work pursuant to the Buyer’s investigation of the
Facility. All contractors and others performing any tests and studies on
the
Real Property shall first present to the Sellers reasonably satisfactory
evidence that such party is adequately insured in order to reasonably protect
the Sellers from any loss, liability, or damage arising out of the performance
of such tests or studies.
The
provisions of this Section
2.5(b)
shall
survive any termination of this Agreement and a closing of the transaction
contemplated hereby.
(a) Except
as
otherwise set forth in this Section
2.6,
all
revenues and expenses of the Facility applicable to the period of time
before
and after the Closing shall be allocated between the Sellers and the Buyer
as
provided herein. Pursuant to such allocation, the Sellers shall be entitled
to
all revenue (other than Accounts Receivable, Entrance Fee Receivables and
receivables of the Health Center Operator) and shall be responsible for
all
expenses for the period of time up to but not including the Closing Date,
and
the Buyer shall be entitled to all revenue and shall be responsible for
all
expenses for the period of time from, after and including the Closing Date.
Such
allocations and adjustments shall be shown on the closing statement to
be
executed by the parties on the Closing Date (with such supporting documentation
as the parties hereto may reasonably require being attached as exhibits
to the
closing statement) and shall increase or decrease (as the case may be)
the cash
amount payable by the Buyer to the Sellers at Closing. All prorations shall
be
made on the basis of the actual number of days in the year and month in
which
the Closing occurs or in the period of computation. No prorations or allocations
shall be made with respect to Entrance Fee Receivables, Accounts Receivable
or
receivables of the Health Center Operator, except to the extent specifically
set
forth in Section
2.6(c)
of this
Agreement.
(i) Without
limiting the generality of the foregoing, the following items of revenue
and
expense shall be allocated and prorated at Closing: utility charges; water
and
sewer charges; real estate taxes and all other public and governmental
taxes,
charges and assessments; charges for oil and heating services; charges
under the
Transferred Contracts; and assessments against the Real Property or the
Facility
or its operations. Notwithstanding the foregoing, the Buyer shall be responsible
for establishing new utility accounts with its vendors to be effective
on the
Closing Date.
(ii) The
Sellers shall be responsible for payments owing on deliveries made prior
to the
Closing Date. The Buyer shall be responsible for payments owing on deliveries
made on or after the Closing Date.
(iii) The
Sellers shall receive a credit for any prepaid expenses in connection with
any
Assumed Liabilities on or after the Closing Date. The Buyer shall receive
a
credit for that portion of any monthly fees paid to the Sellers or the
Health
Center Operator prior to the Closing Date under the Life Care Contracts,
the HC
Occupancy Agreements, or other contracts with residents that relate to
periods
from and after the Closing Date.
(b) The
Buyer
shall receive a credit against the Purchase Price for the amount of all
accrued
(vested or unvested) vacation, personal time, time off, holiday or sick
leave
for the Transferred Employees on the Closing Date. To the extent that any
Transferred Employee is terminated by the Buyer (or its manager or lessee)
as a
result of the Buyer (or its manager or lessee) not receiving a satisfactory
post-closing background check, drug test or license verification for such
Transferred Employee, then the Buyer (or Buyer’s manager, lessee or other
designee) shall promptly following such termination pay to the Sellers
an amount
equal to the
closing
credit for accrued (vested or unvested) vacation, personal time, time off,
holiday or sick leave attributable to such terminated Transferred Employee
to
the extent Sellers have the legal obligation to pay such terminated Transferred
Employee such amount.
(c) The
Purchase Price due to Sellers shall be increased by an amount equal to
the
product obtained by multiplying the amount of Accounts Receivable transferred
to
Buyer at Closing that is less than 90 days outstanding by .95. Notwithstanding
anything herein to the contrary, for purposes of this Section
2.6(c),
Accounts Receivable shall not include any deferred entrance fees deducted
from
Master Trust Debt pursuant to clause (ii) of the definition
thereof.
(d) If
the
parties ascertain any error in any adjustment following Closing or if certain
adjustments are approximated to facilitate Closing, the parties covenant
and
agree to promptly readjust such items when the correct information becomes
available.
(e) Buyer
shall receive a credit against the Purchase Price for the amount, if any,
required to complete the items designated on Schedule
6.1(b)(viii)
as
“Ongoing” or “Planned” (i.e., all items not designated on such Schedule as being
“Completed”) that are not actually completed as of the Closing Date, provided,
however, that the credit, if any, for the final three items set forth on
such
schedule (Kitchen A/C Repairs, Veranda Dining Room Remodeling and Paint
Ext. of
Landings) shall be equal to the lesser of the cost to complete such items
or the
bid price for such items set forth on such Schedule.
(f) If
Buyer,
in its sole discretion, elects to proceed with the Closing even though
the
Remediation has not been completed, Buyer shall receive a credit against
the
Purchase Price, in an amount reasonably agreed upon by the Sellers and
Buyer at
that time, in the amount required to complete the Remediation that is not
actually completed as of the Closing Date.
(g) If
accurate allocations cannot be made at Closing because current bills are
not
obtainable (as, for example, in the case of utility bills and/or real estate
or
personal property taxes), the parties shall allocate such revenue or expenses
at
Closing on the best available information, subject to adjustment upon receipt
of
the final xxxx or other evidence of the applicable revenue or expense.
The
obligation to make the adjustment shall survive the Closing of the transaction
contemplated by this Agreement. Any revenue received or expense incurred
by the
Sellers, the Buyer or Health Center Operator with respect to the Facility
after
the date of Closing shall be promptly allocated in the manner described
herein
and the parties shall promptly pay or reimburse any amount due. If the
Buyer and
the Sellers are unable to agree on the closing statement allocations on
the
Closing Date, the Closing shall occur and a preliminary closing statement
shall
be signed with respect to such amounts and issues that are agreed upon
by the
Buyer and the Sellers. With respect to any closing statement amounts or
issues
that are not agreed upon at Closing, the Sellers and the Buyer shall thereafter
work in good faith to resolve, allocate or prorate such amounts or issues;
provided that if such amounts or issues are not fully agreed upon and paid
within ninety (90) days after the Closing, then, in such event, such amounts
or
issues shall be submitted to an independent certified public accountant
reasonably acceptable to the Buyer and the Sellers for final resolution
and the
Buyer and the Sellers agree to be bound by the determination of such accountant.
The costs and expenses incurred in connection with the services of such
accountant shall be borne and paid equally by the Sellers,
on
the
one hand and the Buyer, on the other hand. The provisions of all of Section
2.6
shall
survive the Closing.
Section
2.7 Security,
Waiting List and Sale Deposits.
From
and after the Closing, the Sellers shall be relieved of any and all
responsibility in connection with Security, Waiting List and Sale Deposits
held
by the Sellers on behalf of residents, tenants or patients and any other
funds
of the residents, to the extent that such Security, Waiting List and Sale
Deposits and funds are actually delivered to the Buyer or Buyer receives
a
credit therefor against the Purchase Price and are included in the Assumed
Liabilities, and, to that extent, the Buyer shall indemnify the Sellers
and
their Affiliates and hold them harmless from and against any claim, liability,
cost or expense (including reasonable attorneys’ fees) incurred by them with
respect thereto. The provisions of this Section
2.7
shall
survive the Closing.
Section
2.8 Transfer
Taxes.
The
Buyer shall pay all Transfer Taxes; provided,
however,
that
the Sellers shall use reasonable efforts to avail themselves of any available
exemptions from any such Transfer Taxes and shall reasonably cooperate
with
Buyer to reduce such Transfer Taxes to the extent legally permissible.
Each of
the Sellers, the Buyer and their respective Affiliates shall execute and
deliver
all instruments and certificates as are necessary to enable such other
parties
to comply with any filing requirements relating to any such Transfer
Taxes.
Section
2.9 Transferred
Contracts.
On or
before the expiration of the Investigation Period, the Buyer shall determine,
in
its sole and absolute discretion, which Contracts that are not already
included
in clauses (i) through (iii) of the definition of Transferred Contracts
will be
assumed by Buyer, and will provide Sellers with a Schedule
2.9
specifically identifying such additional Contracts to be included as Transferred
Contracts.
(a) Sellers
shall use commercially reasonable efforts to obtain all Consents reasonably
requested by the Buyer and required for the transfer of the Transferred
Contracts to Buyer. Notwithstanding anything to the contrary in this Agreement,
this Agreement shall not constitute an agreement to assign any Transferred
Contract or any claim, right or any benefit arising under or resulting
from such
Transferred Contract if an attempted assignment thereof, without the Consent
of
a third party, would constitute a breach, default or violation of such
Transferred Contract. If any transfer or assignment by the Sellers or any
of
their Affiliates to, or any assumption by the Buyer of, any interest in,
or
obligation, liability or commitment under, any Transferred Contract requires
the
Consent of a third party, then such transfer, assignment or assumption
shall be
made subject to such Consent being obtained.
(b) If
any
such Consent is not obtained prior to the Closing Date, the Closing shall
nonetheless take place on the terms set forth herein. In which event, the
Buyer
may, with respect to each Transferred Contract for which a Consent has
not been
so obtained, cause the Sellers to provide or cause to be provided all
commercially reasonable assistance to the Buyer (not including the payment
of
any consideration) reasonably requested by the Buyer to secure such Consent
after the Closing and cooperate with the Buyer (at the Buyer’s expense) in any
lawful and commercially reasonable arrangement reasonably proposed by the
Buyer
under which
(x) the
Buyer
shall obtain (without infringing upon the legal rights of such third party
or
violating any applicable law) the economic claims, rights and benefits
under the
subject Transferred Contract(s), and (y) the Buyer shall assume any related
economic burden (including the amount of any related Tax costs imposed
on the
Sellers or any of their Affiliates) with respect to the subject Transferred
Contract and the claims, rights or benefits arising under or resulting
from the
subject Transferred Contract(s) agreement.
(c) Notwithstanding
Section
2.10(b)
to the
contrary, with respect to any Consent that is identified by Buyer on or
before
the end of the Investigation Period as a required Consent (“Required
Consent”),
Buyer
may elect with respect to each Transferred Contract for which the Required
Consent has not been obtained, to either cause Sellers to comply with
Section
2.10(b)
or elect
to have the Sellers retain the subject Transferred Contract(s) and all
liabilities and obligations associated therewith (in which event, such
Transferred Contract(s) shall be considered to be an Excluded Contract(s)
and
all such liabilities and obligations shall be included in Excluded
Liabilities).
CLOSING
Section
3.1 Closing.
Unless
the Sellers and Buyer otherwise agree, the closing (“Closing”)
of the
sale and purchase of the Purchased Assets and the assumption of the Assumed
Liabilities contemplated hereby (collectively, the “Acquisition”)
shall
take place at the offices of Xxxxxxx, Xxxxxxxxx LLP, 2 Park Avenue, New
York,
New York, on the later of (a) Xxxxx 00, 0000, (x) within fifteen (15) days
following the receipt of the Buyer Regulatory Approvals (subject to Buyer’s
right in its sole and absolute discretion to waive the Buyer Regulatory
Approvals that do not constitute AHCA Assurances) and (c) the satisfaction
of
the condition to closing set forth in Section 7.2(j). The date on which
the
Closing occurs is hereinafter referred to in this Agreement as the “Closing
Date.”
The
Closing shall be deemed to be effective as of 12:01 a.m., Eastern time,
on the
Closing Date (the “Effective
Time”).
(a) Deliveries
by the Sellers.
At the
Closing, the Sellers shall cause to be delivered to the Buyer the
following:
(i) a
special
warranty deed in the name of the Buyer, which deed shall convey fee simple
title
to the Real Property in accordance with Section
7.2(d)
(the
“Deed”);
(ii) all
such
bills of sale and assignments and other instruments and documents reasonably
requested by the Buyer, and in form and substance reasonably satisfactory
to the
Sellers, as may be necessary to evidence the sale of the Purchased Assets
to the
Buyer; it being understood that such bills of sale and other instruments
and
documents shall not require the Sellers to make any additional representations,
warranties or covenants, express or implied, not expressly contained in
this
Agreement;
(iii) the
Closing Escrow Agreement, duly executed by Sellers;
(iv) a
non-foreign certification (in form and substance reasonably satisfactory
to the
Buyer) that satisfies the requirements of Treasury Regulation Section
1.1445-2(b)(2);
(v) a
certificate of recent date as to the good standing of Sellers in their
respective jurisdictions of organization and in the State of
Florida;
(vi) a
certified copy of the minutes of a meeting of the general partner or member
of
the Sellers, as the case may be, approving the transactions contemplated
herein
and authorizing the Sellers to enter into this Agreement and the Ancillary
Agreements and to perform their obligations hereunder and thereunder, in
a form
satisfactory to Buyer and the Title Company;
(vii) a
certificate reconfirming that Sellers’ representations under Section
4.25
are true
and correct in all material respects; and
(viii) such
other documents as Buyer may reasonably request for the purpose of facilitating
the consummation of the Acquisition.
(b) Deliveries
by the Buyer.
At the
Closing, the Buyer shall cause to be delivered to the Sellers the
following:
(i) immediately
available funds in an amount equal to the Remaining Payment, subject to
the
prorations, adjustments and credits set forth in this Agreement, in the
manner
set forth in Section
2.4(a);
(ii) the
Assignment and Assumption Agreement in the form of Exhibit
C
annexed
hereto (the “Assignment
and Assumption Agreement”),
dated
the Closing Date, and all other instruments of assumption and other documents
reasonably requested by the Sellers to confirm the Buyer’s obligation to duly
assume and timely pay, perform and discharge the Assumed
Liabilities;
(iii) the
Closing Escrow Agreement, duly executed by Buyer;
(iv) a
certified copy of the minutes of a meeting of the board of directors of
the
Buyer approving the transactions contemplated herein and resolving to enter
into
this Agreement and the Ancillary Agreements; and
(v) such
other documents as Sellers may reasonably request for the purpose of
facilitating the consummation of the Acquisition.
REPRESENTATIONS
AND WARRANTIES OF THE SELLERS
The
Sellers make the following representations and warranties to the Buyer
as of
August 17, 2005 subject to and qualified by any fact or facts disclosed
in the
Schedules hereto that are provided to the Buyer as required in this
Agreement.
Section
4.1 Organization.
Each of
the Sellers has been duly organized, is validly existing and in good standing
under the laws of the state of its formation. Westport Holdings is duly
qualified to do business as a foreign limited partnership and is in good
standing under the laws of the State of Florida.
Section
4.2 Authority;
Execution and Delivery; Enforceability.
Each of
the Sellers has full limited partnership power or limited liability company
power, as the case may be, and authority to execute this Agreement and
the other
agreements and instruments to be executed and delivered in connection with
this
Agreement (the “Ancillary
Agreements”)
to
which it is a party and to consummate the transactions contemplated to
be
consummated by it by this Agreement and such Ancillary Agreements. Each
of the
Sellers has taken all limited partnership or limited liability company
action,
as the case may be, required by its relevant organizational documents to
authorize the execution and delivery of this Agreement and the Ancillary
Agreements to which it is a party and to authorize the consummation of
the
Acquisition and the other transactions contemplated hereby and thereby.
Each of
the Sellers has duly executed and delivered this Agreement and prior to
the
Closing will have duly executed and delivered each Ancillary Agreement
to which
it is a party, and this Agreement constitutes, and each Ancillary Agreement
to
which either of them is a party will after the Closing constitute, its
legal,
valid and binding obligation, enforceable against it in accordance with
its
terms subject, as to enforcement, to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors’ rights generally
and to general equitable principles (whether considered in an action at
law or
in equity).
Section
4.3 No
Conflicts or Violations; No Consents or Approvals Required.
No
consent, approval, authorization or similar type of action (“Consent”)
of, or
registration, declaration or filing with, any Federal, state or local court
of
competent jurisdiction, governmental agency, authority, instrumentality
or
regulatory body (“Governmental
Entity”),
is
required to be obtained or made by or with respect to the Sellers in connection
with the execution, delivery and performance of this Agreement, the Ancillary
Agreements to which one or more of them is a party or the consummation
of the
Acquisition, other than the Buyer Regulatory Approvals.
Section
4.4 No
Conflicts.
The
execution and delivery by each of the Sellers of this Agreement does not,
and
each Ancillary Agreement to which it is a party will not, and the consummation
of the transactions contemplated to be consummated by the Sellers in this
Agreement and such Ancillary Agreements will not, conflict with, or result
in
any breach of or constitute a default under, or result in the creation
of any
Lien (as hereinafter defined) (other than Permitted Liens (as hereinafter
defined) or Liens caused by the Buyer) upon any of the Purchased Assets
under,
any provision of (x) such Sellers’ organizational documents; (y) any Contract to
which a Seller is a party or by which any of the Purchased Assets are bound;
or
(z) any judgment, order or decree, or statute, law, ordinance, rule or
regulation applicable to the Sellers or any of the Purchased Assets.
Section
4.5 Compliance
with Laws.
Except
as set forth on Schedule
4.5,
the
Retirement Center and, to the knowledge of the Sellers after reasonable
inquiry
to the Health Center Operator, the Health Center, has been operated in
compliance with all laws, rules and regulations applicable to the conduct
of its
business as currently conducted by the Sellers and the
Health
Center Operator, respectively. Except as set forth on Schedule
4.5,
the
Facility is fully licensed by the State of Florida and the Health Center
is in
good standing as a health care provider under the Medicare and Medicaid
program
as administered by the federal government and the State of Florida. No
notice or
communication has been received by any of the Sellers or, to the knowledge
of
Sellers after reasonable inquiry to the Health Center Operator, by the
Health
Center Operator from any Governmental Entity that there exists with respect
to
the Facility any condition which violates any law, rule or regulation which
condition has not been rectified.
Section
4.6 Litigation.
There
is no litigation or proceeding pending, or, to the Sellers’ knowledge,
threatened against any of the Sellers with respect to the Facility or,
to the
Sellers’ knowledge, otherwise relating to the Facility, except as set forth in
Schedule
4.6.
(a) The
Sellers have not received any notice of a taking, condemnation, assessment
or
eminent domain proceeding, actual or proposed, with respect to the Real
Property.
(b) The
Sellers own the Real Property in fee simple, free and clear of all mortgages,
liens, security interests, charges, claims, pledges or other encumbrances
of any
kind (collectively, “Liens”),
except (i) such Liens as are set forth on Schedule
4.7;
(ii)
mechanics’, carriers’, workmen’s repairmen’s or other like Liens arising or
incurred in the ordinary course of business; (iii) Liens for ad valorem
Taxes
and other governmental charges that are not due and payable or that may
thereafter be paid without penalty; and (iv) other title or survey matters
which
become Permitted Exceptions pursuant to Section
7.2(d)
(subject
to the provisions of Section
7.2(d)
regarding the payment of Monetary Liens at Closing, the Liens described
in
clauses (i), (ii), (iii) and (iv) above are referred to collectively as
“Permitted
Liens”).
(c) Set
forth
on Schedule
4.7
is a
list of all leases in effect with respect to the Facility under which any
Persons (other than residents under Life Care Contracts) lease space at
the
Facility from the Sellers (the “Leases”),
and
other than the Leases and Life Care Contracts, Sellers have not entered
into nor
do they have any knowledge of any other agreement giving any party the
right to
use or occupy any part of the Facility.
(a) Set
forth
on Schedule
4.8(a)
are
lists (the “Resident
List”)
setting forth for each of the residents of the Retirement Center and for
each
resident/patient of the Health Center as of June 30, 2005; (i) a unique
number
(“ID
Number”)
assigned by Sellers for each resident(s) or patient(s); (ii) the type of
apartment or unit occupied by such resident(s) or patient(s); (iii) the
type of
Life Care Contract or the residency or admission agreement (“HC
Occupancy Agreement”)
executed by such resident(s) or patient(s); (iv) the amount of the entrance
fee
paid by such resident(s) that is refundable; (v) the move in date for each
Life
Care Contract resident; (vi) the monthly service fees payable by such
resident(s); (vii) the sex of the resident(s) or patient(s) with regard
to each
Life Care Contract resident or patient; (viii) the amount of Master Trust
Debt,
if any, attributable to such resident(s) as of June 30, 2005; and (ix)
the
amount of deferred revenue recorded by the Sellers for the applicable Life
Care
Contract as of June 30, 2005 and the amount of annual amortization of earned
income applicable to such Life Care
Contract.
Each such Life Care Contract and HC Occupancy Agreement is assignable to
Buyer
without the consent of the subject resident(s).
(b) Intentionally
left blank
(c) Set
forth
on Schedule
4.8(c),
delineated by ID Number, is a list of all Security, Waiting List and Sale
Deposits paid by a resident or potential resident to the Sellers or the
Health
Center Operator.
(d) Set
forth
on Schedule
4.8(d),
delineated by ID Number, is a list of XXXX deposit liabilities as of the
date of
the Interim Balance Sheet.
(e) Except
as
set forth on Schedule
4.8(e),
utilizing the ID Number, the
Sellers have not received any notice of, and are not aware of, any material
default or breach of their obligations under any of the Life Care Contracts
which default or breach has not been cured.
(f) Except
as
set forth on Schedule
4.8(f),
utilizing the ID Number, none of the patients, tenants or residents of
the
Facility have been given any concessions or considerations for the rental
or use
of any patient rooms or apartments by the Sellers.
(g) A
true,
correct and complete list (the “Key”)
setting forth the ID Number of each resident, tenant or patient and each
resident’s, tenant’s and patient’s name and date of birth, formatted to permit
Buyer to use the Key to identify each individual resident, patient and
tenant to
which the information on Schedule
4.8(a),
Schedule
4.8(c),
Schedule
4.8(d),
Schedule
4.8(e)
and
Schedule
4.8(f)
relates,
has been provided to Buyer. As used in this Section
4.8,
the ID
Number shall not be the resident(s)’ or patient(s)’ social security number or
any other number or identifier set forth at 45 CFR § 164.514(b).
Section
4.9 Environmental.
The
Sellers have not caused or permitted the Facility to be used to generate,
manufacture or refine, transport, treat, store, handle, dispose, transfer,
produce or process Hazardous Substances (as hereinafter defined) or other
dangerous or toxic substances, or solid waste, except in compliance with
all
applicable federal, state and local laws or regulations, and have not caused
or
permitted the Release (as hereinafter defined) of any Hazardous Substances
affecting the Facility, and to Seller’s knowledge, there are no Hazardous
Substances at the Facility in any amount that would violate applicable
laws. Any
above ground storage tank that is located, or has been located, on the
Land has
been maintained and operated in accordance with all applicable laws. As
used
herein, (a) “Hazardous
Substances”
includes any pollutants, dangerous substances, toxic substances, hazardous
wastes, hazardous materials, or hazardous substances as defined in or pursuant
to the Resource, Conservation and Recovery Act (42 U.S.C. Section 6901,
et seq.)
as amended, the Comprehensive Environmental Response, Compensation and
Liability
Act (42 U.S.C. Section 9601, et seq.) as amended, the Clean Water Act (33
U.S.C.
Section 1251, et seq.) as amended, or any other federal, state or local
environmental law, ordinance, rule or regulation and (b) “Release”
means
releasing, spilling, leaking, pumping and pouring, admitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping.
(a) Schedule
4.10
sets
forth a complete list of all Contracts, which constitute all of the contracts
that are material to the business and operations of the Facility or that
have
terms that will continue following the Closing. At or prior to Closing,
Sellers
will deliver to the Buyer a true, correct and complete copy of each Contract,
including any modifications thereto.
(b) Except
as
set forth in Schedule
4.10(b),
the
Sellers are not in material breach of, or default under, any Contract and,
to
the knowledge of the Sellers, no event has occurred that, with notice or
lapse
of time would constitute such a breach or default or permit termination
under
such Contract.
(c) Except
as
set forth in Schedule
4.10(c),
to the
knowledge of the Sellers, no other party to any Contract is in material
breach
thereof or default thereunder and, to the knowledge of the Sellers, no
event has
occurred that, with notice or lapse of time would constitute such a breach
or
default or permit termination, modification or acceleration under such
Contract.
Section
4.11 Title
to Assets.
Except
as set forth on Schedule
4.11,
the
Sellers have good and valid title to the Purchased Assets (other than the
Health
Center Assets). The Purchased Assets, including the Health Center Assets,
are
free and clear of all Liens, other than Permitted Liens.
Section
4.12 Permits.
All
permits, consents, licenses, certificates of need, approvals and authorizations
from any Governmental Entity relating to the operation of the Facility
are
described in Schedule
4.12,
and to
Seller’s knowledge, such permits, consents, licenses, certificates of need,
approvals and authorizations are sufficient to allow the Facility to be
operated
in its current fashion. Except as set forth on Schedule
4.12,
(i) the
Sellers are in compliance with the terms and conditions of any permit,
consent,
license, certificate of need, approval or authorization relating to the
operation of the Retirement Center; (ii) to the knowledge of the Sellers
after
reasonable inquiry to the Health Center Operator, the Health Center Operator
is
in compliance with the terms and conditions of any permit, consent, license,
certificate of need, approval or authorization relating to the operation
of the
Health Center; and (iii) during the past twelve (12) months, the Sellers
have
not (and, to the knowledge of Sellers after reasonable inquiry to the Health
Center Operator, the Health Center Operator has not) received written notice
of
any violation of any permit, consent, license, certificate of need, approval
or
authorization relating to the operation of the Facility that remains
uncured.
(a) Except
as
set forth on Schedule
4.13,
(i) all
Tax Returns required to be filed by the Code or by applicable state or
local Tax
laws with respect to the Purchased Assets for Pre-Closing Tax Periods have
been
timely filed or will be timely filed; and (ii) all Taxes due with respect
to
such Tax Returns have been paid in full or will be paid in full by the
due date
thereof.
(b) The
Sellers are not “foreign persons” within the meaning of Section 1445 of the
Code.
Section
4.14 Employees.
Schedule
4.14
sets
forth the name, title and total compensation of each person employed at
or
leased to the Facility (the “Employees”),
including all accrued (whether vested or unvested) vacation, personal time,
time
off, holiday or sick leave for such Employees; date of hire; wage rate;
and
benefits received by such Employees or pension or benefit plans in which
such
Employees participate. Except as set forth on Schedule
4.14,
none of
the Sellers is a party to any employment contract with any of the
Employees.
(a) The
Sellers have made available to the Buyer (i) the audited consolidated balance
sheets of the Sellers at December 31, 2003 and December 31, 2004 and the
related
audited consolidated statements of income and cash flows for the fiscal
years
then ended (the “Audited
Financial Statements”),
and
(ii) the Sellers’ unaudited consolidated balance sheet at June 30, 2005 (the
“Interim
Balance Sheet”)
and
the related unaudited statement of income for the six-month period then
ended
(the “Interim
Financial Statements,”
and
together with the Audited Financial Statements, the “Financial
Statements”).
The
Financial Statements, (i) present fairly the financial condition and results
of
operations of the Sellers as of the dates thereof or for the periods covered
thereby, and (ii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except (x) as set forth on
Schedule
4.15
and (y)
that the Interim Financial Statements are subject to normal recurring year-end
adjustments (which will not be material in the aggregate) and do not contain
all
footnotes required under generally accepted accounting principles.
(b) To
the
knowledge of Sellers, except as set forth on Schedule
4.15,
there
are no liabilities relating to the Retirement Center or the Purchased Assets,
(other than the Health Center Assets) of a type required to be set forth
on a
balance sheet prepared in accordance with generally accepted accounting
principles, except for liabilities accurately reflected or reserved against
in
the Interim Balance Sheet or the Health Center Interim Balance Sheet and
liabilities incurred in the ordinary course of business of Sellers and
the
Health Center Operator since the date of the Interim Balance Sheet.
Section
4.16 No
Brokers.
Except
for Rockwood Realty Associates, L.L.C. (whose fees and expenses will be
the sole
responsibility of the Sellers), no broker, finder, agent or similar intermediary
has acted for or on behalf of the Sellers or any of their Affiliates in
connection with this Agreement or the transactions contemplated by this
Agreement, and no broker, finder, agent or similar intermediary is entitled
to
any broker’s, finder’s or similar fee or other commission in connection
therewith based on any agreement, arrangement or understanding with the
Sellers
or any of their Affiliates, or any action taken by the Sellers or any of
their
Affiliates.
(a) Except
as
set forth on Schedule
4.17,
on or
prior to the date hereof, Sellers and the Health Center Operator (including
any
entity required to be aggregated with Sellers or the Health Center Operator
under Section 414 of the Code) have not sponsored, or participated in,
a defined
benefit pension plan (as defined in Section 3(35) of ERISA), nor have Sellers
or
the Health Center Operator (including any entity required to be aggregated
with
Sellers under
Section
414 of the Code) ever contributed to, or participated in, a multiemployer
plan
(as defined in Section 4001(a)(3) of ERISA).
(b) Except
as
set forth on Schedule
4.17,
with
respect to the Facility’s Employees, neither Sellers or the Health Center
Operator maintain, contribute to, or participate in, any benefit agreement,
plan, arrangement or practice including any employee benefit plan as defined
in
Section 3(3) of ERISA (the “Plans”).
(c) Except
as
set forth on Schedule
4.17,
all of
the Plans are in material compliance with all applicable laws, including
the
Code and ERISA.
Section
4.18 Insurance.
Schedule
4.18
contains
a true and complete list of all policies of property, fire, casualty, liability
(general and professional), life, workers’ compensation, libel and slander, and
other forms of insurance of any kind (except title insurance policies)
relating
to the Purchased Assets (other than the Excluded Assets) or the business
and
operations of the Facility and owned or held by Sellers as of August 17,
2005
(the “Sellers
Insurance Policies”).
All
such policies are: (a) in full force and effect; and (b) valid, outstanding,
and
enforceable policies, and the policy holder is not in default in any material
respect thereunder.
Section
4.19 Affiliated
Transactions.
Except
as set forth on Schedule
4.19,
(a)
none of the Transferred Contracts has as a party thereto an Affiliate of
Sellers, and (b) there are no and, during the immediately preceding two
(2)
years, there have been no other transactions or arrangements between Sellers
and
their Affiliates that were not entered into on arm’s length terms.
Section
4.20 Insolvency.
Neither
Seller is insolvent and each Seller has the ability to pay all of its debts
as
they come due, and further is not involved in, and is not contemplating,
any
bankruptcy, reorganization or insolvency proceeding of any kind.
(a) Except
as
described on Schedule
4.21,
since
the date of the Interim Balance Sheet and the Health Center Interim Balance
Sheet, as applicable, Sellers have, and, to Sellers’ knowledge after reasonable
inquiry of the Health Center Operator, the Health Center Operator has,
conducted
the business and operations of the Facility in the ordinary course of
business.
(b) Since
the
date of the Interim Balance Sheet and the Health Center Interim Balance
Sheet,
as applicable, no event has occurred that could reasonably be deemed a
Material
Adverse Effect.
(c) Except
as
described on Schedule
4.21,
since
August 17, 2005, the Sellers have not (i) taken any of the actions enumerated
in
Section 6.1(b) or (ii) failed to take any of the actions set forth in Section
6.1(c), other than the actions described in Sections 6.1(c)(vi) and
(c)(vii).
Section
4.22 Trademarks,
Etc.
To
Sellers’ knowledge, with respect to the conduct of the business of Sellers
conducted at the Facility, except for the Masterpiece Living
trademark
and
as
set forth on Schedule
4.22,
Sellers
do not own or use any trademarks, trade names, copyrights or service marks,
and
with respect thereto, Sellers have not received any notice or claim of
conflict
with the asserted rights of others. To Sellers’ knowledge, except for payments
required to be made pursuant to the Confidentiality and License Agreement,
dated
as of April 2, 2005, between Masterpiece Alliance Foundation, Inc. and
Westport
Holdings, Sellers are not required to pay any royalty, license fee or similar
type of compensation in connection with the conduct of the business at
the
Facility.
(a) The
Sellers have provided to the Buyer (i) the audited consolidated balance
sheets
of the Health Center Operator at December 31, 2003 and December 31, 2004
and the
related audited consolidated statements of income and cash flows for the
fiscal
years then ended (the “Health
Center Audited Financial Statements”),
and
(ii) the Health Center Operators’ unaudited consolidated balance sheet at
December 31, 2005 (the “Health
Center Interim Balance Sheet”)
and
the related unaudited statement of income for the twelve-month period then
ended
(the “Health
Center Interim Financial Statements,”
and
together with the Audited Financial Statements, the “Health
Center Financial Statements”).
To
the Sellers’ knowledge, the Health Center Financial Statements do not contain a
misstatement or omission of financial information required to be set forth
on a
balance sheet or income statement prepared in accordance with generally
accepted
accounting principles consistently applied, except (x) as set forth on
Schedule
4.23
and (y)
that the Health Center Interim Financial Statements are subject to normal
recurring year-end adjustments (which will not be material in the aggregate)
and
do not contain all footnotes required under generally accepted accounting
principles.
To the
Sellers’ Knowledge, the Health Center Financial Statements have been prepared in
accordance with the applicable provisions of the Health Center
Agreements.
(b) To
the
knowledge of Sellers after reasonable inquiry to the Health Center Operator,
except as set forth on Schedule
4.23,
there
are no liabilities relating to the Health Center or the Purchased Assets
relating to the Health Center of a type required to be set forth on a balance
sheet prepared in accordance with generally accepted accounting principles,
except for (i) liabilities accurately reflected or reserved against in
the
Health Center Interim Balance Sheet; and (ii) liabilities incurred in the
ordinary course of business of the Health Center Operator since the date
of the
Health Center Interim Balance Sheet.
Section
4.24 Condition
of the Facility.
Sellers
do not have any actual knowledge of any material defects to the physical
structure of the Facility, ordinary wear and tear excepted.
REPRESENTATIONS
AND WARRANTIES OF BUYER
The
Buyer
hereby represents and warrants to the Sellers as follows:
Section
5.1 Organization
of the Buyer.
The
Buyer is a limited liability company duly organized, validly existing and
in
good standing under the laws of the State of Delaware.
Section
5.2 Authority;
Execution and Delivery; Enforceability.
The
Buyer has full limited liability company power and authority to execute
this
Agreement and the Ancillary Agreements to which it is a party and to consummate
the transactions contemplated by this Agreement and the other transactions
contemplated hereby and thereby. The Buyer has taken all limited liability
company action required by its organizational documents to authorize the
execution and delivery of this Agreement and the Ancillary Agreements to
which
it is a party and to authorize the consummation of the transactions contemplated
by this Agreement and the other transactions contemplated hereby and thereby.
The Buyer has duly executed and delivered this Agreement and prior to the
Closing will have duly executed and delivered each Ancillary Agreement
to which
it is a party, and this Agreement constitutes, and each Ancillary Agreement
to
which it is a party will after the Closing constitute, its legal, valid
and
binding obligation, enforceable against it in accordance with its terms
subject,
as to enforcement, to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors’ rights generally and to
general equitable principles (whether considered in an action at law or
in
equity).
Section
5.3 No
Conflict or Violations, No Consents or Approvals Required.
No
Consent of, or registration, declaration or filing with any Governmental
Entity
is required to be obtained or made by or with respect to the Buyer in connection
with the execution, delivery and performance of this Agreement, the Ancillary
Agreements to which it is a party or the consummation of the transactions
contemplated by this Agreement, other than the Buyer Regulatory Approvals.
The
execution and delivery by the Buyer of this Agreement do not, and each
Ancillary
Agreement to which it is a party will not, and the consummation of the
transactions contemplated by this Agreement and such Ancillary Agreements
will
not, conflict with, or result in any breach of or constitute a default
under, or
result in the creation of any Lien upon any of the properties or assets
of the
Buyer under, or require Consent under any provision of (x) the Buyer’s
organizational documents, as amended to date; (y) any contract to which
the
Buyer is a party or by which any of its properties or assets is bound;
or (z)
any judgment, order or decree, or statute, law, ordinance, rule or regulation
applicable to the Buyer or any of its properties or assets, other than,
in the
case of clauses (y) and (z) above, any such items that would not reasonably
be
expected to have a material adverse effect on the ability of the Buyer
to
consummate the transactions contemplated by this Agreement (a “Buyer
Material Adverse Effect”).
Section
5.4 Proceedings.
There
is not any (i) outstanding judgment, order or decree against the Buyer
or any of
its subsidiaries; (ii) suit, action or proceeding pending, or to the knowledge
of the Buyer, threatened against the Buyer or any of its subsidiaries;
or (iii)
investigations by any Governmental Entity that are pending or threatened
against
the Buyer or
any
of
its subsidiaries that, in any such case, would reasonably be expected to
have a
Buyer Material Adverse Effect.
Section
5.5 No
Brokers.
No
broker, finder, agent or similar intermediary has acted for or on behalf
of the
Buyer in connection with this Agreement or the transactions contemplated
by this
Agreement, and no broker, finder, agent or similar intermediary is entitled
to
any broker’s, finder’s or similar fee or commission in connection therewith
based on any agreement, arrangement or understanding with the Buyer or
any
action taken by the Buyer.
(a) The
Buyer
has preliminary non-binding financing arrangements that it believes will
be
sufficient to enable it to consummate the transactions contemplated by
this
Agreement. The financing required to consummate the transactions contemplated
by
this Agreement is referred to in this Agreement collectively as the
“Financing.”
The
Buyer does not have any reason to believe that the Financing will not be
available to the Buyer on a timely basis to consummate the transactions
contemplated by this Agreement.
(b) As
of the
Closing and immediately after consummating the transactions contemplated
by this
Agreement, the Buyer will not (i) be insolvent (either because its financial
condition is such that the sum of its debts is greater than the fair value
of
its assets or because the present fair salable value of its assets will
be less
than the amount required to pay its probable liability on its debts as
they
become absolute and matured); (ii) have unreasonably small capital with
which to
engage in its business, including the operation of the Facility; or (iii)
have
incurred, or plan to incur, debts beyond its ability to repay such debts
as they
become absolute and matured.
(a) The
Buyer
is an “accredited investor” as defined in Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
The Buyer has such knowledge and experience in business and financial matters,
and in particular retirement communities similar to the Facility, that
it is
able to evaluate the merits and risks of investment in the Facility and
has
sufficient income and net worth so that it is able to bear the economic
risk of
loss of its entire investment. The Buyer further acknowledges that it has
had
the opportunity to ask questions of the Sellers and their management and
to
examine such supplemental documentation as it deemed necessary to make
an
informed decision concerning its investment in the Facility. The Buyer
has
relied solely upon its own independent investigation and the Sellers’
representations in making its decision to acquire the Purchased Assets
and the
Assumed Liabilities.
(b) Except
for the representations and warranties specifically set forth in Article
IV and
except as otherwise provided herein, the Buyer acknowledges and agrees
that any
purchase of the Purchased Assets hereunder shall be “AS IS”, “WHERE IS”, and
“WITH ALL FAULTS”. The Buyer further acknowledges that except for
representations and warranties made by the Sellers in this Agreement, no
representations or warranties have or will be made by the Sellers, their
employees, agents or representatives, or relied upon by the Buyer as to
the
physical
condition
of the Real Property. The Buyer, at its sole cost and expense, will, prior
to
the expiration of the Investigation Period, make all such tests, investigations
and studies as are necessary or desirable to determine the suitability
of the
Facility for the Buyer’s intended purpose. Following the expiration of the
Investigation Period, the Buyer will be deemed to have satisfied itself
with
respect to the Real Property and accepted the Real Property in its “AS IS”,
“WHERE IS”, condition, and “WITH ALL FAULTS” except for the representations and
warranties specifically set forth in Article IV. For the purposes of this
Agreement the “physical condition of the Real Property” shall mean the quality,
nature and adequacy of the physical condition of the Real Property, including,
without limitation, the quality of the design, labor and materials used
to
construct the Improvements included in the Real Property; the condition
of
structural elements, foundations, roofs, glass, mechanical, plumbing,
electrical, HVAC, sewage, boilers, and utilities; the geology, flora fauna,
soils, subsurface conditions, groundwater, landscaping, drainage and irrigation
of or with respect to the Real Property; the location of the Real Property
in or
near any special taxing district, flood hazard zone, wetlands areas, protected
habitat, geological fault or subsidence zone, hazardous waste disposal
or
clean-up site, or other special area; the existence, location or condition
of
ingress, egress, access, and parking; the condition of the personal property
and
any fixtures; and the presence of any asbestos or other Hazardous Substances,
dangerous or toxic substance, material or waste in, on, or under or about
the
Real Property and the Improvements located thereon; or as to whether the
physical condition of the Real Property complies with applicable zoning,
building, health, safety, structural, mechanical and environmental and
all other
laws, codes and regulations.
(c) The
Buyer
further acknowledges and agrees that, (i) other than the representations
and
warranties of the Sellers specifically contained in Article IV of this
Agreement
or in the Deed or the Ancillary Agreements, none of the Sellers, any of
their
Affiliates or any other person has made any representation or warranty
(including, without limitation, as to merchantability, suitability or fitness
for a particular purpose, or quality as to the Purchased Assets or as to
the
condition or workmanship thereof, or the absence of any defects therein,
whether
latent or patent) either expressed or implied (A) with respect to the Facility,
Purchased Assets, Assumed Liabilities or transactions contemplated hereby,
or
(B) as to the accuracy or completeness of any information regarding the
Facility, Purchased Assets, Assumed Liabilities or transactions contemplated
hereby furnished or made available to the Buyer and its representatives.
Without
limiting the generality of the foregoing, the Buyer acknowledges and agrees
that
the Sellers do not make any representations or warranties relating to the
maintenance, repair, condition, design, performance or marketability of
any
Purchased Asset, including merchantability or fitness for a particular
purpose.
Section
5.8 No
Knowledge of Misrepresentations or Omissions.
The
Buyer does not have any knowledge that any of the representations and warranties
of the Sellers made in this Agreement are not true and correct in all material
respects. The Buyer does not have any knowledge of any material errors
in, or
material omissions from, any Schedule to this Agreement.
COVENANTS
OF THE SELLERS AND THE BUYER
(a) Ordinary
Course of Business.
Except
for matters (i) expressly consented to by the Buyer after the date hereof
in
writing with specific reference to this Section
6.1
(which
consent will not be unreasonably withheld or delayed), or (ii) otherwise
specifically contemplated by the terms of this Agreement, from the date
of this
Agreement to the Closing Date, the Sellers shall (x) operate the Retirement
Center in the ordinary course in a manner consistent with past practice
and (y)
exercise their respective rights under the Health Center Agreements in
the
ordinary course in a manner consistent with past practice.
(b) Negative
Covenants of Sellers.
From
the date hereof to the Closing Date, Sellers shall not, without the prior
written consent of the Buyer with specific reference to this Section
6.1
(which
consent shall be given or refused in Buyer’s sole and absolute discretion,
provided that the Buyer’s failure to grant or withhold consent within five
Business Days following the Sellers’ written request for consent shall be deemed
a grant of consent by the Buyer):
(i) sell,
assign, lease or transfer any of the Purchased Assets, or remove any item
of
personal property from the Facility, except, in each case, for the purpose
of
repair or replacement or as otherwise in the ordinary course of business;
(ii) enter
into any new Lease or Contract (other than Life Care Contracts) or amend
any
existing Contract, except in the ordinary course of business, and if such
new
Lease or Contract or amendment shall have an individual value in excess
of
$25,000, it shall be terminable upon less than 90 days’ prior notice without
cause and without payment of any fee or penalty;
(iii) enter
into any Life Care Contracts, except in the forms of Life Care Contracts
approved by Buyer (as set forth on Schedule
6.1(b)(iii)
and in
accordance with the range of selling prices, entrance fee refunds and service
fees set forth on Schedule
6.1(b)(iii)
attached
hereto);
(iv) create,
assume or permit to exist any Lien upon any of the Purchased Assets, except
for
Permitted Liens and Liens existing as of the date of this Agreement that
will be
discharged prior to or on the Closing Date;
(v) waive
any
material right relating to the Facility or the Purchased Assets, except
in the
ordinary course of business;
(vi) allow
the
levels of inventories, supplies and materials to vary materially from those
customarily maintained, or defer delivery of any inventories, supplies
or
materials outside the ordinary course of business;
(vii) intentionally
omitted;
(viii) defer
any
regularly scheduled maintenance or capital replacement items, including
without
limitation failing to use reasonable efforts to complete prior to
the
Closing
Date all of those items set forth on Schedule
6.1(b)(viii),
or fail
to repair or replace any emergency repair item; or
(ix) waive
or
amend, or consent to the Health Center Operator’s failure to perform, any of the
Health Center Operator’s obligations under the Health Center
Agreements.
(c) Affirmative
Covenants of Sellers.
From
and after the date of this Agreement until the Closing Date, the Sellers
shall:
(i) use
their
respective commercially reasonable efforts to keep, or to cause to be kept,
all
Sellers Insurance Policies, or suitable replacements therefor, in full
force and
effect;
(ii) preserve
their existence and keep their business organization intact; maintain existing
franchises and licenses relating to the Retirement Center and the operation
thereof in accordance with this Agreement; pay when due all obligations
and
liabilities arising under the Transferred Contracts to which they are a
party;
and use commercially reasonable efforts to preserve for Buyer the relationships
of the Retirement Center with suppliers, employees, residents and others
with
whom the Retirement Center has business relationships;
(iii) maintain
the Purchased Assets in a manner that is in compliance with all legal
requirements and that is consistent with the Facility’s ordinary course of
business;
(iv) pay
all
of their liabilities as they come due;
(v) pay
and
perform, in the ordinary course of business, obligations under the Transferred
Contracts to which either of the Sellers is a party in accordance with
the
respective terms and conditions of such Transferred Contracts;
(vi) within
thirty (30) days following the end of each calendar month prior to the
Closing
Date, deliver to Buyer true and complete copies of the unaudited balance
sheets
and related unaudited statements of income of, or relating to, the Facility
for
the month then ended, together with the notes, if any, related thereto,
which
shall have been prepared from and in accordance with the books and records
of
the Facility in a manner consistent with the Interim Financial Statements
and
the Interim Health Center Financial Statements, and which shall fairly
present
the financial position and results of operations of the Facility as of
the date
and for the period indicated. All liabilities of the Sellers, the Health
Center
Operator or the Facility will be accurately reflected or reserved against
in
such monthly balance sheets, except for liabilities incurred in the ordinary
course of business of the Facility and in accordance with the provisions
of this
Agreement since the date of such financial statements. In connection with
the
delivery of such financial statements, Seller also shall deliver true and
complete copies of the adjusted trial balances used to prepare such financial
statements;
(vii) within
thirty (30) days following the end of each calendar month prior to the
Closing
Date, and as of the Closing Date, deliver to Buyer updated Schedules
2.1(a)(v),
4.8(a),
4.8(c)
and
4.8(d);
(viii) promptly
notify the Buyer of any fact or condition that (i) causes or constitutes
a
breach of Sellers’ representations, warranties or covenants under this
Agreement; or (ii) would reasonably be likely to cause such a breach;
and
(ix) cause
to
be removed, at or prior to the Closing Date, those Liens on the Purchased
Assets
that do not constitute Permitted Exceptions.
(x) UST
Closure Documentation.
The
Sellers shall use their reasonable best efforts to provide to the Buyer
prior to
the Closing documentation satisfactory to Buyer confirming the appropriate
closure in accordance with applicable law relating to the removal of two
underground storage tanks from the Land in 1993.
(d) Notwithstanding
anything to the contrary contained in this Article VI, the obligations
of the
Sellers with respect to the operations of the Health Center and the Purchased
Assets that relate to the Health Center shall be limited to the enforcement
of
its rights under the Health Center Agreements. Any action or omission by
the
Health Center Operator that is inconsistent with the provisions of this
Article
VI shall promptly be disclosed to Buyer, but shall not constitute a breach
or
default of the Sellers’ obligations under this Article VI unless the Sellers
allowed, permitted, approved or consented to such action or omission.
(e) Notwithstanding
anything to the contrary contained in this Article VI, the Sellers may
terminate
or fail to renew, in accordance with its terms, any contract identified
by Buyer
as requiring a Required Consent if Sellers have used commercially reasonably
efforts to obtain the Required Consent and have not received the Required
Consent within thirty (30) days following the Sellers’ request.
Section
6.2 Access
to Information.
The
Sellers shall, and shall cause their Affiliates to, afford to the Buyer
and its
accountants, counsel and other representatives full access, upon reasonable
prior notice during normal business hours during the period prior to the
Closing, to the personnel, properties, books, Contracts, commitments and
records
relating to the Facility (other than the Excluded Assets); provided,
however,
that
such access does not unreasonably disrupt the normal operations of the
Sellers
or any of their Affiliates relating to the Facility. Sellers shall notify
the
Buyer in writing of any material adverse change in the financial position
or
earnings of the Facility after the date hereof and prior to the Closing
Date and
any unexpected emergency or other unanticipated material adverse change
in the
business of the Facility and of any governmental complaints, investigations,
inspections or adjudicatory proceedings (or communications indicating that
the
same may be contemplated) (including providing copies of such complaints
or
reports of investigations, inspections or proceedings), and shall keep
Buyer
fully informed of such events and permit Buyer’s representatives to participate
in all discussions relating thereto.
In
addition, within five (5) days prior to Closing, Sellers shall complete
an
inventory of all items of furniture, fixtures, equipment and other assets
described in Section
2.1(a)(v)
(excluding those that are insignificant), which shall be in form and scope
reasonably satisfactory to Buyer.
In
addition, Sellers shall use their commercially reasonable best efforts
to cause
the Health Center Operator to reasonably cooperate with Buyer during the
period
prior to the Closing and to provide Buyer with copies of all documents
that the
Health Center Operator is required to provide to Sellers (or any of Sellers’
lenders) pursuant to the terms of the Health Center Agreements and any
other
information reasonably requested by the Buyer with respect to the operation
of
the Health Center or the Health Center Assets. Nothing contained in this
Section
6.2
shall
obligate the Sellers to breach any duty of confidentiality owed to any
person
whether such duty arises contractually, statutorily or otherwise.
Section
6.3 Confidentiality.
The
Buyer acknowledges and confirms that the information being provided to
it in
connection with the transactions contemplated by this Agreement is subject
to
the terms of a confidentiality agreement between the Buyer and Rockwood
Realty
Associates, L.L.C. (the “Confidentiality
Agreement”),
the
terms of which are incorporated herein by reference. Effective upon, and
only
upon, the Closing, the Confidentiality Agreement shall terminate with respect
to
information relating solely to the Facility; provided,
however,
that
Buyer further acknowledges and confirms that any and all other information
provided to it by the Sellers or their representatives concerning the Sellers
and their Affiliates shall remain subject to the terms and conditions of
the
Confidentiality Agreement after the Closing Date.
(a) On
the
terms and subject to the conditions of this Agreement, each of the Sellers
and
the Buyer shall use its reasonable best efforts to cause the Closing to occur,
including taking all reasonable actions necessary to comply promptly with
all
legal requirements that may be imposed on it or any of their Affiliates
with
respect to the Closing.
(b) Without
limiting the generality of the foregoing, the Buyer agrees: (i) to prepare
and
submit applications required to obtain the Buyer Regulatory Approvals to
the
applicable Governmental Entities within ten (10) days after the date of
this
Agreement (the “Application
Date”),
(ii)
to use its good faith efforts (not including the payment of any money other
than
routine application fees and the like) to receive confirmation from the
Florida
Office of Insurance Regulation that the Buyer’s application (or the application
of Buyer’s manager, lessee or other designee) pursuant to Chapter 651, Florida
Statutes is complete (the “Application
Completion Notice”)
no
later than April 30, 2006 (the “Chapter
651 Application Completion Date”),
and
(iii) to use its good faith efforts (not including the payment of any money
other than routine application fees and the like) to obtain the Buyer Regulatory
Approvals by July 1, 2006 (the “Approval
Date”).
To
the extent there is any existing violation at the Facility that must be
corrected in order for Buyer to obtain the Buyer Regulatory Approvals,
Sellers
must make any such corrections at their sole cost and expense, provided
that the
Sellers shall have the right to terminate the Agreement in the event that
the
estimated costs and expenses to correct any such violations exceed more
than
$250,000 and the Buyer does not agree to pay the amount in excess of $250,000.
The Buyer has no knowledge of any pending or threatened governmental actions
which would prohibit or delay it from obtaining such approvals. The Buyer
shall
promptly notify the Sellers upon the receipt or delay in receipt of any
Buyer
Regulatory Approvals.
(a) Offers
of Employment.
The
Buyer’s Manager shall extend offers of employment to all of the employees of
the
Sellers, the Health Center Operator or any of their Affiliates that are
working
at the Facility and that are subject to the Collective Bargaining Agreements
(“CBA
Employees”)
pursuant to the terms and provisions of the new collective bargaining agreement
attached hereto as Exhibit
D
(the
“New
CBA”).
The
Buyer’s Manager shall extend offers of employment to substantially all of the
employees of the Sellers, the Health Center Operator or any of their Affiliates
that are working at or leased to the Facility and that are not subject
to the
Collective Bargaining Agreements (the “Non-CBA
Employees”,
and
together with the CBA Employees, the “Eligible
Employees”)
which
offers shall be subject to post-closing background checks, pre-closing
drug
testing, license verifications and, in the case of Non-CBA Employees, customary
and reasonable employment policies. Buyer’s Manager shall extend offers of
employment to and retain at least that number of employees as shall be
necessary
for Sellers to avoid liability under the WARN Act. All such offers made
to
Non-CBA Employees will be on an “at will” basis, and at substantially the same
salary or wage level, bonus opportunity, benefits and conditions of employment.
The Sellers shall terminate the employment of all Eligible Employees who
accept
the Buyer’s Manager offer of employment (each Eligible Employee accepting the
Buyer’s manager and/or lessee’s offer of employment being hereinafter referred
to as a “Transferred
Employee”)
immediately prior to the Closing Date, and Sellers shall pay all compensation
due to the Transferred Employees prior to the Closing Date, including all
salaries, wages, unemployment taxes, FICA taxes and withholding taxes,
but
excluding all accrued (vested or unvested) vacation, personal time, time-off,
holiday or sick leave for the Transferred Employees to the extent that
Buyer has
received a credit therefor against the Purchase Price pursuant to Section
2.6(b).
Sellers
shall be responsible for all severance liability, if any, for those employees
that are not Transferred Employees and those Transferred Employees that
fail, or
do not receive satisfactory, post-closing background checks, drug tests
or
license verifications.
(b) Multiemployer
Pension Plans.
Intentionally omitted.
(c) Buyer’s
Manager or Lessee.
All of
the parties hereto hereby acknowledge that Buyer shall not assume any
responsibility for, or any obligations or liabilities relating to, the
Transferred Employees, or under any employment agreements or arrangements,
and,
except as specifically provided in Section 2.2(vi), such obligations and
liabilities shall not be deemed to be part of the Assumed Liabilities.
All
obligations to the Transferred Employees after the Closing Date, including
any
obligations included as part of the Assumed Liabilities under Section 2.2(vi)
and any obligations under Section 6.5(a), shall be assigned to, and assumed
and
subject to indemnification by Buyer’s Manager. American Retirement Corporation
(“ARC”)
has
guaranteed the obligations of ARC Bradenton Management, Inc., ARC’s wholly-owned
subsidiary, under this Agreement, pursuant to a Guaranty attached hereto
as
Exhibit
E.
To the
extent that the obligations under Section 6.5(a) and the Assumed Liabilities
under 2.2(vi) have been so assumed by Buyer’s Manager and guaranteed by ARC, the
Buyer shall have no responsibility, liability or obligation
therefor.
Section
6.6 Notice
of Breach.
From
the date hereof through the Closing Date, if any party obtains knowledge
of any
material fact that causes such party to reasonably believe that
any
of
the representations, warranties or covenants of the other party(ies) set
forth
in this Agreement are untrue or inaccurate in any respect, then such party
shall
inform the other party(ies) of such fact promptly after obtaining knowledge
thereof. Notwithstanding the foregoing, the failure by any party to provide
any
such notice shall not relieve the other party(ies) from, or serve as the
basis
of a defense in respect of, the breach of the representation, warranty
or
covenant at issue.
Section
6.7 Updating
Schedules.
Sellers
will promptly supplement or amend the various Schedules to this Agreement
to
reflect any fact or condition that causes or constitutes a breach of any
of
Sellers’ representations, warranties and covenants in this Agreement. In
addition, within ten (10) days (or the applicable time period set forth
in
Section
6.1)
following the end of each calendar month prior to the Closing Date and
as of the
Closing Date, Sellers will deliver to Buyer supplements or amendments to
the
Schedules to this Agreement to reflect events and circumstances that occur
between the date of this Agreement and Closing in compliance with the terms
and
provisions of this Agreement, which, if existing, occurring or known on
the date
of this Agreement, would have been required to be set forth or described
in such
Schedules or which are necessary to correct any information in such Schedules
which has been rendered inaccurate by such events and circumstances. Any
such
supplement or amendment to the Schedules to this Agreement shall not affect
any
rights of Buyer under Articles VII, VIII or XI (except to the extent
specifically set forth in Section
7.5).
Section
6.8 HIPAA
Cooperation.
Each
party agrees to cooperate with the other so as to allow compliance with
the
applicable sections of HIPAA in responding to individuals regarding their
rights
under HIPAA, including, but not limited to, responding to individuals’ requests
for (i) access to protected health information (“PHI”)
under
45 C.F.R. § 164.524; (ii) amendments to PHI under 45 C.F.R. § 164.526; and (iii)
accountings of disclosures of PHI under 45 C.F.R. § 164.528.
Section
6.9 Non-Solicitation
Agreement.
From
and after the date of execution and delivery of this Agreement by Sellers
until
the earlier of the termination of this Agreement or July 1, 2006, Sellers
will
not (and will not permit any Affiliate or any other person acting for or
on
behalf of Sellers or of any Affiliate thereof), without the prior written
consent of Buyer: (i) offer for sale the Facility or the Purchased Assets
(or
any portion thereof) or any ownership interest of any entity owning any
of the
Facility or the Purchased Assets; (ii) solicit offers to buy all or any
portion
of the Facility or the Purchased Assets or any ownership interest of any
entity
owning any of the Facility or the Purchased Assets; (iii) hold discussions
with
any party (other than Buyer) looking toward such an offer or solicitation
or
looking toward a merger, business combination or consolidation of any entity
owning any of the Facility or the Purchased Assets; (iv) enter into any
agreement with any party (other than Buyer) with respect to the sale or
other
disposition of the Facility or the Purchased Assets (or any portion thereof)
or
any ownership interest in any entity owning any of the Facility or the
Purchased
Assets or with respect to any merger, consolidation, business combination
or
similar transaction involving any entity owning any of the Facility or
the
Purchased Assets; or (v) furnish or cause to be furnished any information
with
respect to Sellers, the Facility or the Purchased Assets to any Person
that
Sellers or such Affiliate or any such Person acting for or on their behalf
knows
or has reason to believe is in the process of considering any such acquisition,
merger, consolidation, combination, reorganization or similar transaction.
If
Sellers or any such Affiliate or any such Person acting on
their
behalf receives from any Person (other than Buyer or a representative thereof)
any offer, inquiry or information request referred to above, it will promptly
advise such Person, in writing, of the terms of this Section
6.9.
Section
6.10 ERISA
Certifications.
Sellers
will execute certifications or add other provisions to the documents necessary
for Prudential and the Buyer to determine that Prudential and the Buyer’s
ownership will not cause a violation of ERISA requirements, to the extent
provided below. On or before the date which is ten (10) Business Days prior
to
Closing, Buyer will provide to Sellers the form (or forms) of ERISA
certifications and/or provisions which Buyer and Prudential will require
Sellers
to execute and deliver, at Closing, as a condition to Closing. On or before
seven (7) Business Days prior to Closing, Sellers will notify Buyer, in
writing,
of any objections Sellers may have to the form(s) of the certifications
and/or
provisions submitted; provided, however, that Sellers will not object to
any
such form(s) to the extent they merely require Sellers to make truthful
factual
representations. To the extent Sellers do not make valid objections to
the
submitted form(s) by the required date, Sellers will be obligated, as a
condition to Closing, to execute and deliver, at Closing, any or all of
the
submitted ERISA certifications or provisions required by Buyer. If Sellers
make
valid objections to the submitted form(s), Sellers will be obligated, as
a
condition to Closing, to execute and deliver the submitted certifications
or
provisions, modified appropriately to meet Sellers valid objections. The
parties
hereto hereby acknowledge that the Sellers shall have no liability whatsoever
to
Prudential or the Buyer in the event of any violation of ERISA by Prudential
or
the Buyer, except to the extent that the violation arises out of the facts
contained in any false statement made by Sellers in such ERISA
certifications.
Section
6.11 Office
of Insurance Regulation Approval.
In the
event that Buyer and Sellers mutually agree to proceed with the Closing
(or
Buyer elects in its sole discretion to proceed with Closing as set forth
in the
second sentence of this Section
6.11)
prior
to Buyer obtaining a certificate of authority from the Florida Office of
Insurance Regulation to operate the Facility as a life care facility, Sellers
and Buyer both hereby acknowledge and agree that the Acquisition will not
become
“final” until such time as Buyer is actually issued such a certificate of
authority.
If the
Florida Office of Insurance Regulation ultimately refuses to issue the
certificate of authority to Buyer, the Health Center Assignee shall continue
to
operate the Health Center pursuant to agreements mutually satisfactory
to
Sellers and the Health Center Assignee for such interim period of time
beginning
as of the date of such refusal and continuing for so long as may be reasonably
necessary for Sellers to find a replacement operator for the Health Center.
The
Health Center Assignee shall receive no compensation for such interim services,
but shall not be required to pay or incur any cost or expense relating
to the
operation of the Health Center for such interim period. The Health Center
Assignee shall remit to Sellers all revenues (net of expenses of operation)
relating to the operation of the Health Center during such interim
period.
Section
6.12 Health
Center Notification.
Within
five (5) days of signing this Agreement, Sellers shall give notice to the
Health
Center Operator that Sellers are terminating the Health Center Lease to
be
effective as of the Closing Date. Prior to the end of the Investigation
Period,
the Sellers shall provide the Buyer with a copy of a proposed agreement
to be
entered into between the Sellers and the Health Center Operator providing
for
the termination of the Health Center Agreements. The Sellers shall permit
the
Buyer a reasonable opportunity to
review
and comment on such materials prior to the Sellers’ circulation of the same to
the Health Center Operator. The Sellers will act reasonably in considering
any
comments that may be timely provided by the Buyer and its counsel with
respect
to such agreement prior to the Sellers’ circulation of the same to the Health
Center Operator. Prior to the Closing, the Sellers shall use their reasonable
best efforts to obtain estoppel certifications from (i) the trustee(s)
of the
Freedom Village Master Trusts and (ii) the Health Center Operator, both
in form,
scope and substance reasonably acceptable to the Buyer.
Section
6.13 CIH
Remediation.
The
Sellers have retained Environmental Safety Consultants, Inc., as a Certified
Industrial Hygienist (the “Approved
CIH”)
to
develop a comprehensive mold remediation protocol for the Facility. Such
mold
remediation protocol, as amended by an addendum delivered to the Buyer
prior to
the date hereof, is referred to herein as the “Remediation
Plan.”
The
Sellers shall use their reasonable best efforts, at their sole cost and
expense,
to continue to (i) remediate any mold contamination in accordance with
the
Remediation Plan; (ii) repair or replace any ceiling tile, sheetrock, wallboard
or similar building material as may be necessary to restore a remediated
area of
the Facility to its condition prior to such remediation; and (iii) clean
certain
components of the HVAC system in accordance with the Remediation Plan
(collectively, the “Remediation”),
all
prior to the date that is sixty (60) days after the date hereof. In addition,
the Sellers shall use their reasonable commercial efforts to continue to
remediate any reasonably obvious or known source of water intrusion at
the
Facility which caused, or may have caused, any mold colonization requiring
the
aforementioned remediation. Notwithstanding the foregoing, the Sellers
shall not
be required to repair, replace or upgrade any HVAC systems. At least five
(5)
business days prior to Closing, Sellers shall provide a written certification
(the “CIH
Certificate”)
from
the Approved CIH that the Mold Remediation work has been completed in accordance
with the Remediation Plan. Sellers agree to permit Professional Service
Industries (“PSI”)
and
Buyer to monitor the course of the Remediation and periodically perform
additional testing procedures. Within four (4) Business Days following
delivery
of the CIH Certificate, PSI shall reasonably and in good faith either (i)
confirm in writing its agreement with the CIH Certificate or (ii) provide
a
written report setting forth in reasonable detail the ways in which the
Remediation has not been completed in accordance with the Remediation Plan
(such
report, a “Remediation
Deficiency Notice”).
In
the event that the Sellers timely receive a Remediation Deficiency Notice,
the
Sellers shall use their reasonable best efforts to cure such deficiency
in a
timely manner.
CONDITIONS
TO CLOSING
Section
7.1 Conditions
to Each Party’s Obligation.
The
obligation of the Buyer to purchase and pay for the Purchased Assets and
the
obligation of the Sellers to sell, transfer, assign and deliver the Purchased
Assets to the Buyer is subject to the satisfaction (or waiver by the Buyer
and
the Sellers) on or prior to the Closing Date of the following
conditions:
(a) Master
Trust Consent.
The
Sellers and the Buyer shall have such consents as are required pursuant
to or
under the Freedom Village Master Trust Agreement, as amended to date, for
the
transactions contemplated by this Agreement, including, but not limited
to,
an
estoppel
certificate executed by the trustee(s) of the Freedom Village Master Trusts,
in
form and substance reasonably acceptable to Buyer.
(b) Certain
Buyer Regulatory Approvals.
The
Buyer shall have received the AHCA Assurances.
(c) No
Injunctions or Restraints.
No
applicable law, ordinance, rule, regulation or injunction enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect.
Section
7.2 Conditions
to Obligation of the Buyer.
The
obligation of the Buyer to purchase and pay for the Purchased Assets is
subject
to the satisfaction (or waiver by the Buyer) on or prior to the Closing
Date of
the following additional conditions:
(a) Representations
and Warranties (No Materiality Qualification).
The
representations and warranties of the Sellers in this Agreement that do
not
contain a materiality qualification of any kind shall be true and correct
in all
material respects as of August 17, 2005 and as of the Closing Date as though
made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects, on and as of such earlier date, and as of the Closing Date),
subject
to any matters that are permitted to occur pursuant to the provisions of
this
Agreement.
(b) Representations
and Warranties (Materiality).
The
representations and warranties of the Sellers in this Agreement that contain
a
materiality qualification of any kind shall be true and correct in all
respects
as of August 17, 2005 and as of the Closing Date as though made on the
Closing
Date, except to the extent such representations and warranties expressly
relate
to an earlier date (in which case such representations and warranties shall
be
true and correct in all respects, on and as of such earlier date, and as
of the
Closing Date), subject to any matters that are permitted to occur pursuant
to
the provisions of this Agreement.
(c) Performance
of Obligations of the Sellers.
The
Sellers shall have performed or complied in all material respects with
all
obligations and covenants required by this Agreement to be performed or
complied
with by the Sellers by the time of the Closing.
(d) Title
Insurance.
The
Buyer shall have received a title insurance commitment (the “Title
Commitment”)
from
the title company (the “Title
Company”)
chosen
by Sellers and reasonably acceptable to Buyer committing to issue to the
Buyer,
at Closing, an Owner’s Title Policy (on the latest standard ALTA Form B) in an
amount equal to the amount allocated to the Real Property pursuant to
Section
2.4(d),
at
promulgated rates and without additional premium, insuring that the Buyer
has
good and marketable title to the Real Property in fee simple, free and
clear of
Liens, except for Permitted Exceptions (as described below). Sellers shall
cause
the Title Commitment, together with legible copies of all documents referred
to
therein, to be provided to Buyer on or before ten (10) days after the date
of
this Agreement. Buyer shall obtain, at Buyer’s expense, a current and accurate
survey (“Survey”)
of the
Real Property (Sellers will deliver to Buyer, as part of the due diligence
materials, Sellers’ most recent
survey
of
the Real Property). If the Title Commitment notes, or the Survey shows,
any Lien
or encumbrance which the Buyer in its sole discretion is not willing to
waive,
the Buyer shall give notice of such fact in writing to the Sellers not
later
than five (5) Business Days prior to the end of the Investigation Period
(“Objection
Notice”).
Upon
receipt of the Objection Notice, Sellers shall notify Buyer, in writing
(“Response
Notice”),
which
of the matters set forth in Buyer’s Objection Notice will be cured by Sellers at
or prior to Closing. Sellers shall be obligated to cure any Lien which
is a
mortgage, security interest or other lien which can be satisfied with the
payment of money and which was created by the act or omission of Sellers
(“Monetary
Liens”),
other
than mortgages, security interests or other liens relating to the Freedom
Village Master Trusts that are of public record or previously provided
to Buyer.
Otherwise, Sellers shall not be obligated to cure any matters set forth
in
Buyer’s Objection Notice. However, if Sellers’ Response Notice informs Buyer
that Sellers will cure and remove certain matters described in Buyer’s Objection
Notice then, as a condition to Closing, Sellers shall be obligated to cure
the
matters described in Sellers’ Response Notice, as well as any Monetary Liens.
All matters shown in the Title Commitment and on the Survey to which Buyer
does
not object in Buyer’s Objection Notice or to which Buyer does object in its
Objection Notice but which Sellers are not obligated to and elect not to
cure
are referred to collectively herein as the “Permitted
Exceptions”.
At
Closing, if Sellers are not able to cure all Monetary Liens and any matters
which Sellers, in the Response Notice, agree to cure, Buyer may elect either
(i)
to terminate this Agreement and receive a full refund of the Xxxxxxx Money
Deposit, or (ii) to proceed with the Closing and receive a credit against
the
Purchase Price in the amount necessary to cure and remove all Monetary
Liens and
all matters which, in the Response Notice, Sellers agree to cure.
Notwithstanding anything to the contrary contained in this Agreement, nothing
herein shall be deemed to be a waiver by the Buyer of any title objections
which
appear subsequent to the effective date of Buyer’s Title Commitment, so long as
the Sellers are given notice of such subsequent objections within ten (10)
days
after the Buyer is made aware of them, and the Buyer shall have the same
obligations with respect to any such new objections as provided above in
this
Section
7.2(d).
Upon
receipt of notice from Buyer of any such new title objections, Sellers
must
again provide a Response Notice within two (2) business days thereafter
and
Sellers shall be obligated, as a condition to Closing, to cure any Monetary
Liens and any such new objections which Sellers commit to cure in the new
Response Notice. If there are any such new matters which Sellers, in their
new
Response Notice, do not commit to cure, Buyer may elect to terminate this
Agreement within two (2) Business Days of the new Response Notice and receive
a
full refund of the Xxxxxxx Money Deposit. If Buyer does not elect to terminate,
the newly discovered title objections which Sellers are not obligated cure,
and
do not elect to cure, shall become Permitted Exceptions. It shall be a
condition
to Buyer’s obligation to proceed with the Closing that Sellers’ shall have cured
all Monetary Liens and all other matters which Sellers’ have committed to cure
in any Response Notice.
(e) Buyer
Regulatory Approvals.
The
Buyer shall have received the Buyer Regulatory Approvals.
(f) No
Material Adverse Effect.
No
Material Adverse Effect (other than a condemnation, fire or other casualty
event
described in Article IX) shall have occurred following the date hereof
and no
event that would reasonably be expected to result in a Material Adverse
Effect
shall have occurred following the date hereof.
(g) Termination
of Health Center Agreements; Acquisition of Health Center Assets.
(i) The
Health Center Agreements shall have been terminated in their entirety pursuant
to a written instrument executed by the Health Center Operator effective
as of
the Closing Date, except for the Health Center Agreement Indemnities which
shall
survive in accordance with their terms.
(ii) The
Buyer
(or, if applicable, the Health Center Assignee) shall have acquired the
Health
Center Assets pursuant to the provisions of Section 8.5 of the Health Center
Lease, and the Sellers shall have assigned to the Buyer (or, if applicable,
the
Health Center Assignee), directly or indirectly, all of the Sellers’ rights (but
not their obligations) under said Section 8.5 of the Health Center Lease,
all
without the payment of any consideration of any type, kind or nature payable
by
the Buyer (including without limitation any consideration payable to the
Health
Center Operator under said Section 8.5 or Section 33.2 of the Health Center
Lease).
(h) ERISA.
Prudential and the Buyer shall be satisfied that their ownership interests
in
the Property, in the agreed form, will not cause a violation of ERISA
requirements and Sellers shall have executed and delivered certifications
and
documents, in the forms submitted by Buyer in accordance with the provisions
of
Section
6.10
above.
(i) Management
Agreements.
All
management agreements of the Sellers or the Health Center Operator in effect
at
the Facility shall be terminated as of the Closing Date.
(j) Mold
Remediation.
The
Remediation Completion Date shall have occurred.
Section
7.3 Conditions
to Obligation of the Sellers.
The
obligation of the Sellers to sell, transfer, assign and deliver the Purchased
Assets is subject to the satisfaction (or waiver by the Sellers) on or
prior to
the Closing Date of the following additional conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Buyer made in this Agreement shall
be true
and correct in all material respects, as of the date hereof and as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in
which
case such representations and warranties shall be true and correct in all
material respects, on and as of such earlier date).
(b) Performance
of Obligations of the Buyer.
The
Buyer shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied
with by the Buyer by the time of the Closing.
(c) ARC
Guaranty.
ARC
shall have executed and delivered to the Sellers the ARC Guaranty.
(d) Buyer’s
Manager Assumption Agreement.
The
Buyer’s Manager shall have executed and delivered to the Sellers an assumption
agreement reasonably satisfactory to
the
Sellers with respect to the employee matters being assumed by the Buyer’s
Manager pursuant to Section 6.5.
Section
7.4 Frustration
of Closing Conditions.
Neither
the Buyer nor the Sellers may rely on the failure of any condition set
forth in
this Article VII to be satisfied if such failure was caused by such party’s
failure to act in good faith or to use reasonable efforts to cause the
Closing
to occur, as required by Section
6.4.
Section
7.5 Effect
of Certain Waivers of Closing Conditions.
If
prior to the Closing any party (the “receiving
party”)
receives a Notice of Material Breach (as hereinafter defined), then such
receiving party may either (i) waive in writing any condition in Article
VII
applicable to the breach specified in such Notice of Material Breach and
elect
in its discretion to proceed with the Closing, or (ii) exercise its rights
under the applicable provisions of Article VIII of this Agreement. In the
event
that the receiving party elects in its discretion to waive the applicable
condition and proceed with the Closing as specified in clause (i) above,
and if
the breach so specified in the Notice of Material Breach was not, directly
or
indirectly, the result of any violation of any covenant in this Agreement
by the
breaching party, then the receiving party and its Affiliates shall not
be
entitled following the Closing to be indemnified pursuant to Article XI,
to xxx
for damages or to assert any other right or remedy for any losses arising
from
the breach specifically identified in such Notice of Material Breach. As
used
herein, “Notice
of Material Breach”
shall
mean a written notice from any party (the “breaching
party”)
to the
other party(ies) hereto that the breaching party has breached a representation
or warranty in this Agreement as a result of matters, facts, or circumstances
first arising after the date of this Agreement, which notice shall specify
in
detail the nature, scope, extent, circumstances and facts underlying such
material breach, and shall expressly acknowledge that such material breach
has
caused one or more of the conditions set forth in Article VII not to be
satisfied.
TERMINATION;
EFFECT OF TERMINATION
(a) Notwithstanding
anything to the contrary in this Agreement, this Agreement may be terminated
and
the transactions contemplated by this Agreement and the other transactions
contemplated by this Agreement abandoned at any time prior to the
Closing:
(i) by
mutual
written consent of the Sellers and the Buyer;
(ii) by
the
Sellers, upon written notice to the Buyer, upon a material breach of this
Agreement by the Buyer (subject to the right of the Buyer to cure the breach
of
any of its covenants, as opposed to its representations or warranties,
as
provided in Section
8.1(b)
hereof);
(iii) by
the
Buyer, upon written notice to the Sellers, upon a material breach of this
Agreement by the Sellers (subject to the right of the Sellers to cure the
breach
of any of their covenants, as opposed to their representations or warranties,
as
provided in Section
8.1(b)
hereof);
(iv) by
the
Sellers or the Buyer, if any suit, action or proceeding is commenced or
threatened by any Governmental Entity or other person directed against
the
consummation of the Closing or any other material transaction contemplated
under
this Agreement and either the Sellers or the Buyer, as the case may be,
reasonably and in good xxxxx xxxxx it impractical or inadvisable to proceed
in
view of such suit, action, proceeding or threat thereof;
(v) by
the
Sellers, if the Buyer has not submitted applications required to obtain
the
Buyer Regulatory Approvals to the applicable Governmental Entities on or
before
the Application Date;
(vi) by
the
Buyers or the Sellers, if the Buyer has not obtained the Buyer Regulatory
Approvals by the Approval Date (provided that Buyer may, in its sole and
absolute discretion, on or before the Approval Date, waive the condition
set
forth in Section
7.2(e),
except
to the extent that it applies to the AHCA Assurances, in which event Sellers
shall have no right of termination pursuant to this Section
8.1(vi));
(vii) by
the
Buyer or the Sellers, if the Closing Date has not occurred by August 1,
2006;
or
(viii) pursuant
to the terms of Sections
2.5
(Investigation Period), 6.4(b)
(Best
Efforts), 7.2(d)
(Title
Insurance) or Article IX (Risk of Loss);
provided,
however,
that
the party seeking termination pursuant to clauses (ii), (iii), (iv) or
(vii) is
not then in material breach of any of its representations, warranties,
covenants
or agreements contained in this Agreement.
(b) If
either
party believes the other to be in default of any of its covenants hereunder,
the
non-defaulting party shall provide the defaulting party with notice specifying
in reasonable detail the nature of such default. Subject to the provisions
of
this Agreement, if such default has not been cured by the earlier of: (a)
the
Closing Date, or (b) thirty (30) days after delivery of such notice, then
the
party giving such notice may (x) terminate this Agreement or (y) extend
the
Closing Date for a period not to exceed 90 days.
(c) If
this
Agreement is terminated in accordance with this Section
8.1,
other
than pursuant to Section
8.1(a)(ii),
the
Buyer and the Sellers shall instruct the Escrow Agent to disburse all amounts
held by the Escrow Agent, subject to and in accordance with, the terms
of the
Xxxxxxx Money Deposit Escrow Agreement, including any interest or other
proceeds
from the investment of funds held by the Escrow Agent, to the Buyer.
Notwithstanding anything in this Section
8.1
to the
contrary, if Buyer has performed or is in a position to and is willing
to tender
performance of all of its obligations under this Agreement and Sellers
have
breached any of the covenants or agreements to be performed by them under
this
Agreement, Buyer may elect (i) if such covenants and agreements are capable
of
being performed by Sellers, instead of terminating this Agreement pursuant
to
this Section
8.1,
to xxx
Xxxxxxx for specific performance and cause this Agreement to remain in
effect,
or (ii) if Buyer has the right to terminate this Agreement pursuant to
this
Section
8.1
as a
consequence of Sellers’ breach, to terminate this Agreement, receive a refund of
the Xxxxxxx Money Deposit and all interest or other proceeds from
the
investment
of funds held by the Escrow Agent and to xxx the Sellers for damages arising
from the Sellers’ breach.
(d) If
this
Agreement is terminated by the Sellers pursuant to Section 8.1(a)(ii),
then
the Sellers and the Buyer shall instruct the Escrow Agent to disburse all
amounts held by the Escrow Agent, subject to and in accordance with, the
terms
of the Xxxxxxx Money Deposit Escrow Agreement, including any interest or
other
proceeds from the investment of funds held by the Escrow Agent, to the
Sellers.
Section
8.2 The
Sellers’ Remedies Exclusive.
If this
Agreement is terminated by the Sellers and Section
8.1(d)
applies,
then the payment to the Sellers pursuant to Section
8.1(d)
shall
constitute liquidated damages and shall constitute full payment and the
exclusive remedy for any damages suffered by the Sellers. The Sellers and
the
Buyer agree in advance that actual damages would be difficult to ascertain
and
that the amount of the payment to be made to the Sellers pursuant to
Section
8.1(d)
is a
fair and equitable amount to reimburse the Sellers for damages sustained
due to
the Buyer’s breach of this Agreement.
(a) If
the
transactions contemplated by this Agreement are terminated as provided
herein:
(i) the
Buyer
shall, and shall cause each of its directors, officers, employees, agents,
representatives and advisors to, return to the Sellers, or certify the
destruction of, all documents and other material received from the Sellers
or
any of their Affiliates relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof; and
(ii) all
confidential information received by the Buyer, its directors, officers,
employees, agents, representatives or advisors with respect to the Facility
shall be treated in accordance with the terms of the Confidentiality Agreement,
which shall remain in full force and effect notwithstanding the termination
of
this Agreement.
Section
8.4 Effect
of Termination.
If this
Agreement is terminated and the transactions contemplated hereby are abandoned
as described in Section
8.1,
this
Agreement shall become null and void and of no further force and effect,
except
for the provisions of (a) Section
6.3
relating
to the obligation of the Buyer to keep confidential certain information
and data
obtained by it from the Sellers or the Sellers’ representatives; (b) Article
VIII; and (c) Article XII.
Section
8.5 Time
of the Essence.
Time
shall be of the essence in this Agreement.
RISK
OF LOSS
Section
9.1 Risk
of Loss.
Subject to the provisions of this Article IX, the Sellers shall bear the
risk of
loss with respect to the Purchased Assets until the Closing. Risk of Loss
shall
pass to the Buyer as of 12:01 a.m. on the Closing Date.
(a) If
all or
any portion of the Facility shall be subject to a “Taking” (as that phrase is
defined below) between the date of this Agreement and the Closing Date,
the
rights of the parties shall be as follows:
(i) If
such
Taking will in Buyer’s reasonable judgment be expected to have a Material
Adverse Effect, the Buyer may terminate its obligations under this Agreement
to
purchase the Purchased Assets by written notice to the Sellers within ten
(10)
days after the Sellers have given the Buyer notice of such Taking, or on
the
Closing Date, whichever is earlier. If the Buyer exercises its option to
terminate its obligations to purchase the Purchased Assets pursuant to
this
Section
9.2(a)(i),
the
Xxxxxxx Money Deposit shall be promptly returned to the Buyer and the parties
hereto shall be released from all further obligations hereunder, except
those
which expressly survive a termination of this Agreement.
(ii) If
such
Taking will not in Buyer’s reasonable judgment be expected to have a Material
Adverse Effect or the Buyer does not elect to terminate its obligations
to
purchase the Facility, the Buyer shall take an assignment of the Sellers’
interest in any condemnation award which may be payable to the Sellers
on
account of such Taking and shall close without reduction in the Purchase
Price
or change in any other term of this Agreement.
(b) The
Sellers agree to promptly furnish the Buyer with written notice of any
Taking or
proposed Taking.
(c) “Taking”
is
hereby defined to mean a taking or acquisition by a Governmental Entity
for any
public or quasi-public use, reason or purpose under any power of eminent
domain
or condemnation.
(a) In
the
event of damage to the Facility by fire or other casualty between the date
of
this Agreement and the date of Closing reasonably expected to cost more
than
$1,000,000 to repair, the rights of the parties shall be as
follows:
(i) The
Buyer
may terminate its obligations under this Agreement to purchase the Facility
by
written notice to the Sellers within ten (10) days after the Sellers have
given
the Buyer notice of such fire or casualty event, or on the Closing Date,
whichever is earlier. If the Buyer exercises its option to terminate its
obligations to purchase the Facility pursuant to this Section
9.3(a)(i),
the
Xxxxxxx Money Deposit shall be promptly returned to the Buyer and the parties
hereto shall be released from all further obligations hereunder, except
those
which expressly survive a termination of this Agreement.
(ii) In
the
event that the Buyer does not elect to terminate its obligation to purchase
the
Facility, the Closing shall take place without abatement of the Purchase
Price,
but the Sellers shall assign to the Buyer at the Closing all of their respective
interest in any insurance proceeds (except use and occupancy insurance,
rent
loss and business interruption insurance, and any similar insurance for
the
period preceding the Closing Date) that may be payable to the Sellers on
account
of any such fire or other casualty and provide Buyer a credit against the
Purchase Price in the amount of Sellers’ deductible.
(b) In
the
event that the damage caused by such fire or other casualty would reasonably
be
expected to cost less than $1,000,000 to repair, failure by the Sellers
to
repair such damage shall not constitute a breach or default under this
Agreement
and such damage shall have no effect on the obligations of the parties
to close
the transactions contemplated by this Agreement. The Sellers shall assign
to the
Buyer at the Closing all of their respective interest in any insurance
proceeds
(except use and occupancy insurance, rent loss and business interruption
insurance, and any similar insurance for the period preceding the Closing
Date)
that may be payable to the Sellers on account of any such fire or other
casualty
and provide Buyer a credit against the Purchase Price in the amount of
Sellers’
deductible.
(c) The
Sellers agree to promptly furnish the Buyer with written notice of any
fire or
casualty event at the Facility.
ACTIONS
BY THE SELLER AND THE BUYER
AFTER
THE CLOSING
(a) If
Sellers receive payment of any Accounts Receivable or Entrance Fee Receivables
assigned to Buyer, Sellers shall remit such payment to Buyer within five
Business Days of Sellers’ receipt. If the Buyer (or any of its assignees)
receives payment of any receivables relating to the Facility, other than
Accounts Receivable or Entrance Fee Receivables assigned to Buyer, the
Buyer
shall remit such payment to the Sellers within five Business Days of the
Buyer’s
receipt. The Buyer shall reasonably cooperate with the Sellers in the Sellers’
efforts to collect on any receivables not assigned to the Buyer hereunder,
including the Retained Receivables (as defined below).
(b) For
a
period of 180 days following the Closing Date (the “Collection
Period”)
the
Buyer, on behalf of the Sellers, will collect any receivables arising out
of the
operation of the Health Center prior to Closing, including that portion
of any
receivables generated after the Closing Date that relate to services provided
at
the Health Center prior to Closing (the “Retained
Receivables”),
in
the same manner and with the same diligence the Buyer uses to collect its
own
accounts receivable. In its collection efforts, the Buyer shall not be
liable to
the Sellers except for willful misconduct or gross negligence. During the
Collection Period, the Buyer shall provide the Sellers, or its designee
with any
information requested by the Seller or such designee regarding the status
of any
of the Retained Receivables or related collection efforts. For purposes
of this
Agreement, the term “Retained Receivables” shall not include fees
payable
to the Health Center Operator under (i) the Assisted Living Facility Service
Agreement, dated May 1, 2003, between Westport Holdings and the Health
Center
Operator or (ii) the Skilled Nursing Facility Service Agreement dated as
of May
1, 2003, between Westport Holdings and the Health Center Operator.
(c) The
Buyer
shall promptly deposit (but in no event more than five (5) business days
after
receipt), without offset or deduction, all collections received by the
Buyer on
account of the Retained Receivables into a bank account designated by the
Sellers, and the Buyer shall deliver a monthly accounting of such collections
and deposits to the Sellers. All amounts received by the Buyer from account
debtors included among the Retained Receivables that fail to designate
the
period to which they relate will first be applied first to such Retained
Receivables. The Buyer shall not settle or adjust the amount of any Retained
Receivables without the prior written authorization of the Sellers.
(d) Upon
the
written request of the Sellers, the Buyer shall permit the Sellers to have
reasonable access to the records of the Buyer and its Affiliates as may
be
reasonably necessary to audit the accountings required to be delivered
by the
Buyer hereunder in connection with its collection of the Retained Receivables.
The costs and expenses of such audit shall be paid by the Sellers.
(e) The
Buyer’s obligation to collect the Retained Receivables shall cease (i) with
respect to all Retained Receivables, at the conclusion of the Collection
Period;
and (ii) with respect to an individual Retained Receivable, when such receivable
becomes aged by more than 180 days; provided however, that, in each case,
the
Buyer shall continue to reasonably cooperate with the Sellers in the Sellers’
efforts to collect on any receivables not assigned to the Buyer hereunder,
including the Retained Receivables.
(f) The
Buyer
may delegate its responsibilities under this Section to the Buyer’s lessee of
the Health Center; provided that no such delegation by the Buyer shall
release
the Buyer from liability for a breach of this Section 10.1 by the Buyer
or the
Buyer’s lessee.
(a) Each
party agrees that it will cooperate with and make available to the other
party,
during normal business hours, all books and records, information and employees
(without substantial disruption of employment) retained and remaining in
existence after the Closing which are necessary or useful in connection
with any
Tax inquiry, audit, investigation or dispute, any litigation or investigation
or
any other matter requiring any such books and records, information or employees
for any reasonable business purpose. The party requesting any such books
and
records, information or employees shall bear all of the out-of-pocket costs
and
expenses (including, without limitation, attorneys’ fees, but excluding
reimbursement for salaries and employee benefits) reasonably incurred in
connection with providing such books and records, information or
employees.
(b) The
Buyer
agrees to retain all records relating to the finances and Taxes of the
Purchased
Assets for all pre-Closing Tax periods until the expiration of the statutes
of
limitation (including any extensions thereof) for the taxable period or
periods
to which such
records
relate. The Buyer and the Sellers agree to provide each other with such
information and assistance as is reasonably necessary, including access
to
records and personnel, for the preparation of any Tax Returns or for the
defense
of any Tax claim or assessment, whether in connection with an audit or
otherwise.
Section
10.3 Further
Assurances.
On the
terms and subject to the conditions contained herein, the Buyer and the
Sellers
shall after the Closing, (a) use commercially reasonable efforts to take,
or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements; (b) execute
any
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the transactions contemplated
hereunder or thereunder; and (c) cooperate with each other in connection
with
the foregoing.
INDEMNIFICATION
Section
11.1 Survival.
The
representations and warranties of the Sellers and the Buyer contained in
this
Agreement shall survive the Closing until the second anniversary of the
Closing
Date; provided, however, that insofar as any claim is made by the Buyer
for the
breach of any representation or warranty of the Sellers contained in Sections
4.13 (Taxes) or 4.17 (Employee Benefits Plans) herein, such representations
and
warranties shall, for purposes of such claim by the Buyer survive the Closing
until the expiration of the applicable statute of limitations governing
such
claims. To the extent that any covenant in this Agreement is to be performed
after the Closing, such covenant and a party’s right to recover damages
resulting from a breach of such covenant shall survive the Closing.
Section
11.2 Indemnification
by the Sellers.
Subject
to the limitations set forth in Section
11.6,
from
and after the Closing, the Sellers shall, jointly and severally, indemnify,
defend and hold harmless the Buyer, its Affiliates, the Health Center Assignee
and Buyer’s manager, and each of their respective officers, directors,
employees, stockholders, members, agents and representatives (collectively,
the
“Buyer
Indemnitees”)
from
and against any and all claims, losses, damages, liabilities, obligations
or
expenses, including reasonable legal fees and expenses (collectively,
“Losses”),
to
the extent relating, arising or resulting, directly or indirectly, from
any of
the following:
(i) any
breach of any representation or warranty of the Sellers contained in this
Agreement, the Schedules hereto, any certificate delivered by Sellers,
or the
Ancillary Agreements, without giving effect to any supplements to the schedules
hereto after the date hereof (but subject to the provisions of Section
7.5);
(ii) any
breach of any covenant of the Sellers contained in this Agreement or the
Ancillary Agreements;
(iii) any
Excluded Asset or Excluded Liability;
(iv) any
fees,
expenses or other payments incurred or owed by the Sellers to any agent,
broker,
investment banker or other firm or person retained or employed by them
in
connection with the transactions contemplated by this Agreement;
and
(v) all
liabilities relating to the ownership of the Purchased Assets or conduct
or
operation of the Facility, including both the Retirement Center and the
Health
Center, prior to the Closing Date, other than the Assumed
Liabilities.
Section
11.3 Fund
Indemnification.
In the
event that with respect to any period commencing on the Closing Date and
ending
the day preceding the fifth anniversary of the Closing Date, any Buyer
Indemnitee is assessed any withdrawal liability under Section 4201 of ERISA
from
the SEIU National Industry Pension Fund (the “Fund”) on account of all, or any
portion of, the Facility, or the Fund makes any claim or demand against
any
Buyer Indemnitee asserting any such withdrawal liability, then the Sellers
shall, jointly and severally, indemnify, defend and hold harmless the Buyer
Indemnitees from and against such withdrawal liability and any claims or
demands
with respect thereto, including reasonable legal fees and expenses.
Notwithstanding the foregoing, the Sellers shall have no indemnification
obligation under this Section 11.3 to the extent that the Buyer Indemnitees
are
not entitled to the benefit of the Fund’s five-year free look period on account
of: (i) contributions to the Fund by the Buyer’s manager (including any entity
required to be aggregated with the Buyer’s manager under Section 414 of the
Code) that equal or exceed two percent (2%) of the sum of all employer
contributions made to the Fund; (ii) an intentional waiver by the Buyer
Indemnitees of the benefits of the Fund’s five-year free look period; or (iii) a
statutory change in Section 4210 of ERISA that results in an elimination
or
reduction in the Fund’s five-year free look period as it applies to the Buyer
Indemnitees.
Section
11.4 Indemnification
by the Buyer.
From
and after the Closing, the Buyer shall indemnify, defend and hold harmless
the
Sellers and each of their Affiliates and each of their respective officers,
directors, employees, stockholders, agents and representatives (the
“Sellers
Indemnitees”)
from
and against any and all Losses, to the extent relating, arising or resulting,
directly or indirectly, from any of the following:
(i) any
breach of any representation or warranty of the Buyer contained in this
Agreement, the Ancillary Agreements, or any certificate of Buyer (but subject
to
Section
7.5);
(ii) any
breach of any covenant of the Buyer contained in this Agreement;
(iii) any
Assumed Liability;
(iv) any
fees,
expenses or other payments incurred or owed by the Buyer or its Affiliates
to
any agent, broker, investment banker or other firm or person retained or
employed by it in connection with the transactions contemplated by this
Agreement; or
(v) the
ownership of the Purchased Assets or conduct or operation of the Facility
from
and after the Closing Date.
(a) Procedures
Relating to Indemnification of Third Party Claims.
If any
party (the “Indemnified
Party”)
receives written notice of the commencement of any action or proceeding
or the
assertion of any claim by a third party or the imposition of any penalty
or
assessment for which indemnity may be sought under Sections
11.2,
11.3
or
11.4
(a
“Third
Party Claim”),
and
such Indemnified Party intends to seek indemnity pursuant to this Article
XI,
the Indemnified Party shall promptly provide the other party (the “Indemnifying
Party”)
with
written notice of such Third Party Claim, stating the nature, basis and
the
amount thereof, to the extent known, along with copies of the relevant
documents
evidencing such Third Party Claim and the basis for indemnification sought.
Failure of the Indemnified Party to give such notice will not relieve the
Indemnifying Party from liability on account of this indemnification, except
if
and to the extent that the Indemnifying Party is actually prejudiced thereby.
The Indemnifying Party will have thirty (30) days from receipt of any such
notice of a Third Party Claim to give notice to assume the defense thereof.
If
notice to the effect set forth in the immediately preceding sentence is
given by
the Indemnifying Party, the Indemnifying Party will have the right to assume
the
defense of the Indemnified Party against the Third Party Claim with counsel
of
its choice that is reasonably acceptable to the Indemnified Party. So long
as
the Indemnifying Party has assumed the defense of the Third Party Claim
in
accordance herewith, (i) the Indemnified Party may retain separate co-counsel
at
its sole cost and expense and participate in the defense of the Third Party
Claim, and (ii) the Indemnified Party will not file any papers or consent
to the
entry of any judgment or enter into any settlement with respect to the
Third
Party Claim without the prior written consent of the Indemnifying Party.
The
parties will use commercially reasonable efforts to minimize Losses from
Third
Party Claims and will act in good faith in responding to, defending against,
settling or otherwise dealing with such claims. The parties will also cooperate
in any such defense and give each other reasonable access to all information
relevant thereto. Whether or not the Indemnifying Party has assumed the
defense,
such Indemnifying Party will not be obligated to indemnify the Indemnified
Party
hereunder for any settlement entered into or any judgment that was consented
to
without the Indemnifying Party’s prior written consent. In addition, the
Indemnifying Party shall not, without the approval of the Indemnified Party
(which approval shall not be unreasonably withheld or delayed), compromise
a
Third Party Claim defended by the Indemnifying Party which would require
the
Indemnified Party to perform or take any action, or to refrain from performing
or taking any action, or to pay any additional Persons in the
future.
(b) Procedures
for Non-Third Party Claims.
The
Indemnified Party will notify the Indemnifying Party in writing promptly
of its
discovery of any matter that does not involve a Third Party Claim being
asserted
against or sought to be collected from the Indemnified Party, giving rise
to the
claim of indemnity pursuant hereto. The Indemnifying Party will have thirty
(30)
days from receipt of any such notice to give notice of dispute of the claim
to
the Indemnified Party. The Indemnified Party will reasonably cooperate
and
assist the Indemnifying Party in determining the validity of any claim
for
indemnity by the Indemnified Party and in otherwise resolving such matters.
Such
assistance and cooperation will include providing reasonable access to
and
copies of information, records and documents relating to such matters,
furnishing employees to assist in the investigation, defense and resolution
of
such matters and providing legal and business assistance with respect to
such
matters.
(c) In
connection with any notice from any Buyer Indemnitee pursuant to Sections
11.5(a)
or
(b)
above,
such Buyer Indemnitee may give notice of a claim under the Closing Escrow
Agreement. Neither the giving of, or the failure to give, a notice of a
claim
under the Closing Escrow Agreement will constitute an election of remedies
or
limit Buyer in any manner in enforcement of any other remedies that may
be
available to Buyer under this Agreement.
(a) Notwithstanding
the foregoing provisions of Section
11.2,
except
in the event of fraud, intentional misrepresentation or intentional wrongdoing
by either of the Sellers, (i) the Sellers shall not be liable, pursuant
to
Section
11.2(i)
or
(ii)
for any
Losses suffered by any Buyer Indemnitee until the aggregate of all Losses
claimed by the Buyer Indemnitees thereunder exceeds, on a cumulative basis,
an
amount equal to $500,000, and then only to the extent of any such excess;
(ii)
the Sellers shall not be liable pursuant to Section
11.2(i)
for
individual items relating to a breach of a representation or warranty in
Sections
4.5
or
4.12
where
the Loss relating thereto is less than $5,000, and the aggregate of all
such
Losses is less than $20,000; (iii) the aggregate liability of the Sellers
pursuant to Section
11.2
(but not
pursuant to Section
11.3)
for
Losses suffered by the Buyer Indemnitees shall in no event exceed $5,000,000;
and (iv) without limiting the limitation set forth in the preceding clause
(iii), the aggregate liability of the Sellers pursuant to Section
11.2
(but not
pursuant to Section
11.3)
for
Losses suffered by the Buyer Indemnitees with respect to matters or claims
of
which Sellers first receive notice pursuant to Section
11.5
after
the eighteen (18) month anniversary of the Closing Date shall in no event
exceed
$3,000,000 in the aggregate. The limitation set forth in the preceding
clause
(iv) shall not apply to any matter or claim that, directly or indirectly,
relates to or arises out of or in connection with, or results from, any
matter(s) or claim(s) of which Sellers have been notified pursuant to
Section
11.5
before
the eighteen (18) month anniversary of the Closing Date.
(b) Neither
party hereto shall be liable to any indemnitee for punitive damages or
such
other party’s lost profits claimed by such other party resulting from such first
party’s breach of its representations, warranties or covenants
hereunder.
(c) The
Buyer
acknowledges and agrees that, should the Closing occur, its sole and exclusive
remedy with respect to any and all claims relating to this Agreement, the
Facility, the Purchased Assets, the Excluded Assets, the Assumed Liabilities
or
the transactions contemplated hereby (other than claims of, or causes of
action
arising from, fraud, intentional misrepresentation or intentional wrongdoing
by
either Seller) shall be pursuant to the indemnification provisions set
forth in
this Article XI, and that amounts held by the Escrow Agent pursuant to
the
Closing Escrow Agreement shall constitute (i) the sole and exclusive source
of
recourse for the Buyer Indemnitees in connection with any claims made pursuant
to Section
11.2
(other
than claims of, or causes of action arising from, fraud, intentional
misrepresentation or intentional wrongdoing by either Seller) and (ii)
a
non-exclusive source of recourse for the Buyer Indemnitees in connection
with
any claims made pursuant to Section
11.3.
In
furtherance of the foregoing, the Buyer hereby waives, from and after the
Closing, any and all rights, claims and causes of action (other than claims
of,
or causes of action arising from, fraud, intentional misrepresentation
or
intentional wrongdoing by either Seller) the Buyer or any other Buyer Indemnitee
may have against the Sellers or any of their Affiliates or any of
their
respective
directors, officers and employees arising under or based upon any Federal,
state
or local statute, law, ordinance, rule or regulation or otherwise (except
pursuant to the indemnification provisions set forth in this Article
XI).
Section
11.7 Calculation
of Indemnity Payments.
The
amount of any Loss for which indemnification is provided under this Article
XI
shall be net of any amounts recovered by the Indemnified Party under insurance
policies with respect to such Loss. Such amount shall be (y) increased
to take
account of any net Tax cost actually incurred by the Indemnified Party
arising
from the receipt of indemnity payments hereunder (grossed up for such increase)
and (z) reduced to take account of any net Tax benefit actually realized
by the
Indemnified Party arising from the incurrence or payment of any such indemnified
amount. In computing the amount of any such Tax cost or Tax benefit, the
Indemnified Party shall be deemed to recognize all other items of income,
gain,
loss, deduction or credit before recognizing any item arising from the
receipt
of any indemnity payment hereunder or the incurrence or payment of any
indemnified amount.
Section
11.8 Time
Limits for Indemnification.
Any
indemnification claim (a “Representation
Claim”)
made
pursuant to Section
11.2(i)
or
Section
11.4(i)
shall be
forever barred unless the applicable Buyer Indemnitee or Sellers Indemnitee,
respectively, delivers a written notice of the Representation Claim to
the
Sellers or Buyer, respectively, in accordance with the procedures set forth
in
Section
11.5
prior to
expiration of the survival period with respect to the applicable representation
and warranty set forth in Section
11.1.
Any
indemnification claim (a “Covenant
Claim”)
made
pursuant to Section
11.2(ii)
or
Section
11.4(ii)
shall be
forever barred unless the applicable Buyer Indemnitee or Sellers Indemnitee,
respectively, delivers a written notice of the Covenant Claim to the Sellers
or
Buyer, respectively, in accordance with the procedures set forth in Section
11.5
prior to
the second anniversary of the Closing Date. The time limits set forth in
this
Section
11.8
shall
not apply to any claims under Section 11.3 or any claims based on fraud,
intentional misrepresentation or intentional wrongdoing, which claims may
be
made any time prior to the expiration of the applicable statute of limitations
governing those claims.
Section
11.9 Tax
Treatment of Indemnification.
For all
Tax purposes, the Buyer and the Sellers agree to treat (and shall cause
each of
their respective Affiliates to treat) any indemnity payment under this
Agreement
as an adjustment to the Purchase Price unless a final determination (which
shall
include the execution of an IRS Form 870-AD or successor form) provides
otherwise.
MISCELLANEOUS
Section
12.1 Prior
Diligence.
The
Buyer acknowledges that any concerns raised in connection with the diligence
investigation of the Facility conducted by PIM Bradenton LLC (“PIM”)
that
have been expressed in writing to the Sellers prior the date of this Agreement
have been accepted or resolved to the Buyer’s satisfaction or are otherwise
addressed by the terms of this Agreement. Notwithstanding anything contained
in
this Agreement to the contrary, the Buyer agrees that the existence of
any facts
or circumstances specifically noted in PIM’s October 14, 2005 letter to the
Seller regarding such diligence investigation shall not give rise to (i)
any
claims by the Buyer or any Buyer Indemnitee pursuant to the Agreement or
(ii) a
failure by the Sellers to satisfy any conditions to the closing of the
transactions contemplated by this Agreement. Notwithstanding the foregoing,
nothing contained in this Section 12.1 shall limit the rights of the Buyer
with
respect to a breach by the Sellers of their obligations under Section
6.1(b)(viii) or Section 6.13.
Section
12.2 Publicity.
From
the date hereof through the Closing Date, except as otherwise required
by law,
no public release or announcement concerning the transactions contemplated
hereby shall be issued by any party without the prior consent of the other
parties (which consent shall not be unreasonably withheld or delayed);
provided,
however, that each of the parties may make internal announcements to their
respective employees that are consistent with the parties’ prior public
disclosures regarding the transactions contemplated hereby.
Section
12.3 Post-Closing
Information.
Following the Closing, upon reasonable written notice to the Buyer, the
Buyer
shall afford or cause to be afforded to the Sellers and their affiliates
reasonable access to the personnel, properties, books, Contracts, commitments
and records relating to the Facility for any reasonable business purpose,
including in respect of litigation, insurance matters and financial reporting
of
the Sellers and their Affiliates.
Section
12.4 Refunds
and Remittances.
After
the Closing, if the Sellers or any of their Affiliates receive any refund
or
other amount which is a Purchased Asset or is otherwise properly due and
owing
to the Buyer or any of its Affiliates in accordance with the terms of this
Agreement, the Sellers promptly shall remit, or shall cause to be remitted,
such
amount to the Buyer at the address set forth in Section
12.8.
After
the Closing, if the Buyer or any of its Affiliates or their respective
assigns
receive any refund or other amount which is an Excluded Asset or is otherwise
properly due and owing to the Sellers, the Health Center Operator or any
of
their respective Affiliates in accordance with the terms of this Agreement,
the
Buyer promptly shall remit, or shall cause to be remitted, such amount
to the
Sellers at the address set forth in Section
12.8,
or to
the Health Center Operator, as the case may be. After the Closing, if the
Buyer,
its assignees or any of their respective Affiliates receive any refund
or other
amount which is related to claims (including workers’ compensation), litigation,
insurance or other matters for which the Sellers are responsible hereunder,
and
which amount is not a Purchased Asset, or is otherwise properly due and
owing to
the Sellers or the Health Center Operator in accordance with the terms
of this
Agreement, the Buyer promptly shall remit, or cause to be remitted, such
amount
to the Sellers at the address set forth in Section
12.8.
After
the Closing, if the Sellers or any of their Affiliates receive any refund
or
other amount which is related to claims
(including
worker’s compensation), litigation, insurance or other matters for which the
Buyer is responsible hereunder, and which amount is not an Excluded Asset,
or is
otherwise properly due and owing to the Buyer in accordance with the terms
of
this Agreement, the Sellers promptly shall remit, or cause to be remitted,
such
amount to the Buyer at the address set forth in Section
12.8.
Section
12.5 Assignment.
Neither
this Agreement nor any of the rights and obligations of the parties hereunder
may be assigned by any of the parties hereto without the prior written
consent
of the other party hereto; provided, however, that Buyer may assign this
Agreement to any joint venture, limited liability company or partnership
in
which Buyer or its Affiliates, and ARC or its Affiliates, are members or
partners. Notwithstanding the foregoing, and subject to compliance with
the
provisions thereof, no such assignment by the Buyer shall release Buyer
from
liability for a breach of this Agreement by the Buyer or its assignee.
Subject
to the first sentence of this Section
12.5,
this
Agreement shall be binding upon and inure to the benefit of the parties
hereto
and their respective successors and assigns and no other person shall have
any
right, obligation or benefit hereunder. Any attempted assignment or transfer
in
violation of this Section
12.5
shall be
void.
Section
12.6 No
Third-Party Beneficiaries.
Except
as provided in Article XII, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed
or
implied shall give or be construed to give to any person, other than the
parties
hereto and such assigns, any legal or equitable rights hereunder.
Section
12.7 Expenses.
Whether
or not the transactions contemplated by this Agreement are consummated,
except
as otherwise expressly provided herein, each of the parties hereto shall
be
responsible for the payment of its own respective costs and expenses incurred
in
connection with the negotiations leading up to and the performance of its
respective obligations pursuant to this Agreement and the Ancillary Agreements
including the fees of any attorneys, accountants, brokers or advisors employed
or retained by or on behalf of such party. Notwithstanding the foregoing,
the
Sellers shall pay the expenses of Title Commitment and title insurance
premiums
at promulgated rates based upon the amount stated in Section
7.2(d).
The
Buyer shall obtain and pay the cost of an updated Survey of the Real Property.
Costs of preparation of Closing documents and all other similar costs,
fees and
expenses of the Closing (except for Sellers’ attorney’s fees) shall be paid by
the Buyer.
The
substantially prevailing party in any litigation or proceeding to enforce
this
Agreement or any of the Ancillary Agreements shall be entitled to recover
from
the non-substantially prevailing party, in addition to any other amounts
that
the substantially prevailing party may recover under this Agreement or
the
Ancillary Agreements, all reasonable expenses that the substantially prevailing
party may have incurred in connection with such litigation or proceeding,
including accounting fees, expert fees and attorneys’ fees.
Section
12.8 Notices.
All
notices, requests, permissions, waivers, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have
been
duly given (i) five (5) business days following sending by registered or
certified mail, postage prepaid, (ii) when sent, if sent by facsimile;
provided
that the
facsimile transmission is promptly confirmed by telephone, (iii) when delivered,
if delivered personally to the intended recipient and (iv) one
(1)
business day after sending by overnight delivery via a national courier
service
that provides proof of delivery and, in each case, addressed to a party
at the
following address for such party:
If
to the
Sellers, addressed to:
Westport
Advisors, Ltd.
0000
XXX
Xxxxxxxxx, Xxxxx 000
Xxxx
Xxxxx, XX 00000
Attention:
Xxxxx Xxxxxx
Facsimile
Number: (000) 000-0000
With
a
copy to:
Xxxxxxx,
Xxxxxxxxx LLP
0
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxx
Facsimile
Number: (000) 000-0000
Rockwood
Realty Associates, LLC
000
Xxxxx
Xxxxxx
0xx
Xxxxx
Xxx
Xxxx,
XX 00000-0000
Attention:
Xxxxx Xxxx
Facsimile
Number: (000) 000-0000
If
to the
Buyer, addressed to:
Prudential
Investment Management
Xxx
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000-0000
Attn:
Xxxx X. Dark
Facsimile
Number: (000) 000-0000
With
copies to:
American
Retirement Corporation
000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention:
Chief Executive Officer
Facsimile
Number: (000) 000-0000
Bass,
Xxxxx & Xxxx PLC
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
Xxxxxxxxx 00000-0000
Attn:
T.
Xxxxxx Xxxxx
Facsimile
Number: (000) 000-0000
Xxxxxx
& Bird LLP
One
Atlantic Center
0000
Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000-0000
Attn:
Xxxx X. Xxxxxx
Facsimile
Number: (000) 000-0000
and
The
Prudential Insurance Company of America
PREI
Law
Department
Arbor
Circle South
0
Xxxxxx
Xxxxx, 0xx
Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxx X. Xxxxxx, Vice President, Corporate Counsel
Facsimile
Number: (000) 000-0000
If
to
Buyer’s Manager:
American
Retirement Corporation
000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention:
Chief Executive Officer
Facsimile
Number: (000) 000-0000
With
copies to:
Bass,
Xxxxx & Xxxx PLC
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
Xxxxxxxxx 00000-0000
Attn:
T.
Xxxxxx Xxxxx
Facsimile
Number: (000) 000-0000
or
to
such other address(es) as shall be furnished in writing by any such party
to the
other party hereto in accordance with the provisions of this Section
12.8.
Section
12.9 Headings.
The
descriptive headings of the several Articles and Sections of this Agreement
and
the Schedules to this Agreement and the Table of Contents to this Agreement
are
inserted for convenience only, do not constitute a part of this Agreement
and
shall not affect in any way the meaning or interpretation of this Agreement.
All
references herein to “Articles”, “Sections”, “Exhibits” or “Schedules” shall be
deemed to be references to Articles or Sections hereof or Exhibits or Schedules
hereto unless otherwise indicated.
Section
12.10 Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall
be
considered one and the same agreement, and shall become effective when
one or
more counterparts have been signed by each of the parties hereto
and
delivered,
in person or by telecopier, receipt acknowledged, to the other party hereto.
This Agreement may be executed and delivered by the parties hereto via
telecopier machine or other means of electronic delivery, which shall be
deemed
for all purposes as an original.
Section
12.11 Integrated
Contract; Exhibits and Schedules.
(a)
This Agreement, including the Schedules and Exhibits hereto, any written
amendments to the foregoing satisfying the requirements of Section
12.15
hereof
and the Ancillary Agreements, including the schedules and exhibits thereto,
constitute the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersede any previous agreements and
understandings between the parties with respect to such matters. All Exhibits
and Schedules annexed hereto or referred to herein are hereby incorporated
in
and made a part of this Agreement as if set forth in full herein. Any
capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein shall be defined as set forth in this Agreement.
Notwithstanding
anything herein to the contrary, any disclosures in the Schedules shall
be
deemed adequate to disclose an exception to a representation or warranty
made in
this Agreement to the extent that such representation or warranty is
specifically identified in such Schedule.
(b) The
Sellers,
the Buyer’s Manager and the Buyer, on behalf of itself and PIM, agree that this
Agreement supersedes and replaces the Asset Purchase Agreement dated as
of
August 17, 2005 (the “Prior
Agreement”),
between the Sellers and PIM Bradenton, which Prior Agreement has been terminated
and is of no force or effect.
Section
12.12 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Florida, without reference to its conflicts of law
principles.
Section
12.13 Jurisdiction.
Each
party irrevocably agrees that any legal action, suit or proceeding against
them
arising out of or in connection with this Agreement or the transactions
contemplated hereby shall be brought exclusively in the United States District
Court in which the Real Property is located, or, if such court does not
have
subject matter jurisdiction, the state courts of Florida for such area,
and
hereby irrevocably accepts and submits to the exclusive jurisdiction and
venue
of the aforesaid courts in person, with respect to any such action, suit
or
proceeding.
Section
12.14 WAIVER
OF JURY TRIAL.
EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY
OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
THE
TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING
HERETO.
Section
12.15 Amendments
and Waivers.
This
Agreement may be amended, modified, superseded or canceled and any of the
terms,
covenants, representations, warranties or conditions hereof may be waived
only
by an instrument in writing signed by each of the parties hereto or, in
the case
of a waiver, by or on behalf of the party waiving compliance. No delay
on the
part of
any
party
in exercising any right, power or privilege hereunder shall operate as
a waiver
thereof, nor shall any waiver on the part of any party of any right, power
or
privilege hereunder, nor any single or partial exercise of any right, power
or
privilege hereunder, preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege hereunder.
Section
12.16 Pre-Closing
Negligent or Tortious Acts.
Nothing
in this Agreement shall be construed or interpreted to impose any responsibility
or liability on Buyer to any third parties, whether as a successor to Sellers
or
under any other legal or equitable principle, for any negligent or tortious
acts
or omissions of Sellers, their lessees, managers, operators or employees,
prior
to the Closing Date. Sellers shall retain all liability and responsibility
under
the terms of this Agreement to third parties for their negligent and tortious
acts or omissions prior to the Closing Date.
[Signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized, all as
of the
day and year first set forth above.
WESTPORT
HOLDINGS BRADENTON, LIMITED PARTNERSHIP
By:
Westport Holdings Freedom Village, LLC,
its
General Partner
By:
_______________________________
Name:
Xxxxx Xxxxxx
Title:
President
WESTPORT
NURSING BRADENTON, L.L.C.
By:______________________________________
Name:
Xxxxx Xxxxxx
Title:
President
ARC
BRADENTON LLC
By:______________________________________
Name:
Title:
ARC
BRADENTON MANANGEMENT, INC.
By:______________________________________
Name:
Title:
SENIOR
HOUSING PARTNERS III, L.P.
By:______________________________________
Name:
Title:
[SIGNATURE
PAGE TO FREEDOM VILLAGE ASSET PURCHASE AGREEMENT]
EXHIBIT
A
XXXXXXX
MONEY DEPOSIT ESCROW AGREEMENT
EXHIBIT
B
CLOSING
ESCROW AGREEMENT
EXHIBIT
C
ASSIGNMENT
AND ASSUMPTION AGREEMENT
EXHIBIT
D
NEW
COLLECTIVE BARGAINING AGREEMENTS
EXHIBIT
E
ARC
GUARANTY
E-1