PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this
“
Agreement ”)
is made and entered into this ____ day of October, 2006 by and
between
PITA GENERAL CORPORATION ,
an Illinois corporation ( “
PITA ”)
and
AHC TENANT, INC a
Delaware Corporation (“
Tenant ”)
(PITA and Tenant referred to collectively as “
Seller” ),
each of the entities listed in
Exhibit A attached
hereto (“
Licensees ”)
and
BREA EMERITUS LLC ,
a Delaware limited liability company (the “
Buyer ”).
RECITALS
WHEREAS ,
PITA is the owner of fee title to the twenty five (25) healthcare
facilities identified on
Exhibit B attached
hereto and made a part hereof as the “
Facilities ”
(each being referred to herein individually as a “
Facility ”);
and
WHEREAS, PITA leased
the Facilities to Tenant pursuant to a Master Lease dated July 16,
1999 (the “
Master Lease ”)
; and
WHEREAS, Tenant
has entered into Sublease Agreements (“
Regulatory Subleases ”)
for each of the Facilities with the Licensees listed on
Exhibit C attached
hereto and made part hereof, which entities have secured and
maintained the required licenses to operate the Facilities;
and
WHEREAS ,
the Regulatory Subleases provide that, for income tax purposes,
Tenant is the owner of all assets of the Facilities;
and
WHEREAS ,
the Regulatory Subleases terminate upon the termination of the
Master Lease; and
WHEREAS, the
Licensees have entered into Consulting and Services Agreements (the
“
C&S Agreements ”)
with management companies (“
Managers ”)
listed on
Exhibit D for
the provision of designated services necessary for the operation of
the Facilities; and
WHEREAS ,
Seller desires to sell, transfer, convey and assign (and Licensees,
by quitclaim instrument, desire to sell, transfer, convey and
assign) to Buyer, and Buyer desires to acquire, assume and accept
from Seller and Licensees (to the extent of any interest Licensees
may have therein), certain land, personal property and other assets
associated with the Facilities (the “
Sale Assets ,”
as further defined herein) and assume the “
Assumed Obligations ,”
as further defined herein, to the extent of their respective
interests in the Sale Assets and Assumed Obligations, on and
subject to the terms and conditions contained in this Agreement;
and
WHEREAS ,
simultaneous with the closing of the transactions contemplated by
this Agreement, Tenant, the Licensees and the Managers shall enter
into and execute one or more Operations Transfer Agreements (each a
“
Transfer Agreement ”)
with Buyer, in the form of
Exhibit E (subject
to any third party manager’s review and comment), pursuant to
which Tenant, the Licensees, and Managers shall transfer the
operations of the Facilities, and all of their respective rights,
titles and interests therein and thereto, to Buyer or Buyer’s
designee, and Buyer
shall
accept transfer of the operations of the Facilities
pursuant
to the terms of the Transfer Agreements; and
WHEREAS ,
simultaneous with the closing of the transactions contemplated by
this Agreement, Seller and Licensees shall enter into and execute
an Assignment and Assumption Agreement (the “
Assignment and Assumption Agreement ”),
in the form of
Exhibit F ,
pursuant to which Seller and Licensees shall sell, transfer,
convey, and assign to Buyer and Buyer shall purchase, acquire,
assume, and accept from Seller and Licensees, all of their
respective right, title and interest in and to any assets (to the
extent transferable) associated with the Facilities that are not
otherwise sold, transferred, conveyed, assumed, or assigned to
Buyer and Buyer shall assume and agree to pay the Assumed
Obligations pursuant to the terms hereof.
NOW, THEREFORE ,
for good and valuable consideration, the receipt and sufficiency of
which are acknowledged hereby, the parties hereto agree to
incorporate the above recitals into this Agreement as if fully
rewritten herein and further agree as follows:
1.
Sale .
Seller agrees to sell, convey, and assign (and Licensees, by
quitclaim instrument, agree to sell, convey and assign) to Buyer,
and Buyer agrees to purchase from Seller and Licensees, for the
Purchase Price (as hereinafter defined), and on the terms and
conditions set forth in this Agreement, the Sale Assets (and, with
respect to the Licensees, any interest they may have therein). The
Licensees are conveying their interest in all of the Sale Assets,
to the extent that the Licensees have any interest in the Sale
Assets, as an accommodation to Buyer to eliminate any claim or
allegation that Buyer is not obtaining title to the Sale Assets as
provided for herein.
1.1.
For purposes of this Agreement, the term “
Sale Assets ”
shall be deemed to mean on a collective basis:
(a)
The Land .
The parcels of land legally described on
Exhibit G attached
hereto and made a part hereof, together with all rights, easements
and interests appurtenant thereto of Seller that run with the land
including, but not limited to, any streets or other public ways
adjacent to the Land and any water or mineral rights owned by
Seller or Licensees (collectively, the “
Land ”)
subject to the Permitted Encumbrances set forth in
Schedule 1 .
(b)
The Improvements .
All improvements located on the Land ,
including,
but not limited to, the Facilities, and all other structures,
systems, fixtures and utilities associated with, and utilized in,
the ownership and operation of the Facilities (all such
improvements being collectively referred to as the “
Improvements ”
and, together with the Land, collectively referred to herein as the
“
Real Property ”).
(c)
Personal Property .
All tangible personal property of
Seller and Licensees (i) located
on or in the Real
Property or
(ii) used in connection with the ownership, operation
and
maintenance of the Facilities (the “
Personal Property ”),
including, but not limited, to, all, if any, building materials,
supplies, hardware, and carpeting owned by Seller or Licensees and
Seller’s and Licensees’ right, title and interest in
and to any “
Consumables ”,
which are hereby defined to be the inventory of
food,
dietary supplies, medical supplies, floor stock, maintenance
supplies, paper goods, linens, laundry supplies and all other
consumables, disposable items used in the operation of the
Facilities as of the Closing (as defined herein), and other
inventory maintained in connection with Seller’s and
Licensees’ ownership and operation of the Facilities as
of the Closing (the “
Inventory ”).
(d)
Intangible Personal Property .
Each and all of the following items of intangible property owned by
Seller or Licensees and utilized in
connection with the ownership and operation of the Facilities
(collectively, the “
Intangibles ”):
(i) to the extent assignable or transferable, all
right, title and interest
of
Seller and Licensees in
and to each and every guaranty and warranty concerning the
Improvements and the Personal Property, including, without
limitation, any roofing, air conditioning, heating, elevator or
other guaranty or warranty relating to the construction,
maintenance or replacement of the Improvements or any portion
thereof; (ii) all
right, title and interest
in
and to all guaranties and warranties given to Seller or Licensees
that have not expired (either on a “claims made” or
occurrence basis) in connection with the operation, construction,
improvement, alteration or repair of the Improvements; (iii) to the
extent assignable or transferable ,
all right, title and the
interest
of
Seller or Licensees in, to and under all governmental permits,
licenses, authorizations, operating rights and approvals associated
with the physical construction of the Improvements (not including
any permits, licenses, authorizations or approvals associated with
the operation of the Facilities as health care facilities or
otherwise); (iv) to the extent assignable, the telephone numbers of
each of the Facilities; and
(v)
to the extent assignable or transferable, all
right, title and interest
of
Seller and Licensees in,
to and under any certificate of need, operating rights from a
governmental authority related to the construction and/or operation
of any Facility for the use of a specified number of beds in a
skilled nursing facility and/or assisted living facility, and any
other activities carried on by Seller or Licensees in the
Facilities, or alteration of any such Facility or modification of
services provided at such Facility .
Provided, however, the trade names and logos under which the
Facilities have been operated or used by Seller and Licensees in
connection with the operation of the Facilities are not part of the
Sale Assets and all uses of them at the Facilities shall cease upon
the Closing.
(e)
Business Records .
To the extent that Seller and Licensees have ownership, control or
the right to obtain copies thereof, all of the following maintained
by, issued to or held by Seller or Licensees or used in connection
with the operation, maintenance and use of the Facilities: books
and records relating to the Facilities or the operation thereof,
including, without limitation, files, invoices, forms, accounts,
correspondence, patient records, technical, accounting and
procedural manuals, employment records, actuarial studies, studies,
reports or summaries relating to any environmental matters, and
other books and records relating to the ownership, maintenance or
operation of any of the Facilities or any of the Sale Assets,
surveys, engineering or environmental reports and other studies,
investigations or depictions of the Facilities or the Sale Assets
(collectively, the “
Business Records ”)
to the extent Seller or Licensees have the right under applicable
law to convey or transfer them.
(f)
Provider Agreements .
All Provider Agreements and for purposes of this Agreement, the
term “
Provider Agreements ”
shall mean, to the extent they are assignable, any provider
agreements held by or issued to Seller or Licensees or any Facility
under which the Facilities are eligible to receive payment under
(i) Title XVIII (“
Medicare ”),
Title
XIX (“
Medicaid ”)
or
any other governmental or quasi-governmental third party payor
programs, (ii) any private or quasi-private healthcare
reimbursement or private payor programs (including so-called
“HMO” and “PPO” programs) (herein,
“
Third Party Payor Programs ”),
and (iii) any other agreement, arrangement, program or
understanding with any federal, state or local governmental agency
or organization or private organization pursuant to which the
Facilities qualify for payment or reimbursement for medical or
therapeutic care or other goods or services rendered or supplied to
any resident. Notwithstanding the above, the parties hereby
acknowledge that Buyer intends to apply for its own Medicare and
Medicaid provider numbers and, unless it notifies Seller and
Licensees at least thirty (30) days prior to the Closing Date, the
Buyer will not assume any of the Seller’s and
Licensees’ Medicare and Medicaid Provider
Agreements.
(g)
Facility and Admission Agreements
.
All rights of Seller or Licensees in, to and under all contracts,
leases, agreements, vehicle leases, commitments and other
arrangements, and any amendments or modifications, used or useful
in the operation of the Facilities as of the date hereof or made or
entered into by Seller or Licensees between the date hereof and the
Closing Date in compliance with this Agreement (the “
Facility Agreements ”),
including but not limited to occupancy, residency, lease, tenancy
and similar written agreements entered into in the ordinary course
of the Business with residents of the Facilities (“
Admission Agreements ”).
1.2.
Excluded Sale Assets .
Notwithstanding
any provision of this Agreement to the contrary, the Sale Assets
shall not include the following (collectively, the “
Excluded Assets ”),
and any such Excluded Assets or proceeds therefrom that Buyer may
have or obtain post-Closing shall be delivered promptly to Seller
and Licensees:
(a)
Any and all rights in and to claims or causes of action of Seller
and Licensees against third parties (including, without limitation,
for indemnification) with respect to, or which are made under or
pursuant to, other Excluded Assets ;
(b)
Any and all accounts receivable arising or accruing in connection
with the operation of the Facilities on or prior to the Closing
Date and to the extent related to the period prior to the Closing
Date (the “
Retained Receivables ”);
(c)
Subject to Article 11
,
any and all rights of Seller or Licensees to coverage or benefits
under any insurance policies in force as of the Closing Date with
respect to any liabilities that may have arisen or accrued through
the Closing Date;
(d)
Any Inventory disposed of or consumed between the date hereof and
the Closing Date in accordance with the terms and provisions of
this Agreement ;
(e)
Any records relating to Excluded Assets and to liabilities
other
than the Assumed Obligations;
(f)
Any and all cash, bank deposits and other cash equivalents,
certificates of deposit, marketable securities and cash deposits
made by Seller or Licensees to secure contract obligations accrued
through the Closing Date;
(g)
Personal property of Seller’s, the Licensees’ or the
Managers’ officers or employees located in their respective
personal offices at the Facilities ;
(h)
Originals of all financial and other records of Seller and
Licensees (except records related to operation of the Facilities or
to residents of the Facilities) ;
(i)
All other assets of Seller and Licensees not located on or used in
connection with the operation of the Facilities;
(j)
All trade names, assumed names and logos under which any of the
Facilities has been operated or used by Seller or Licensees in
connection with the operation of any of the Facilities
;
and
(k)
All operating procedure manuals, training manuals and proprietary
business forms of Seller and Licensees.
1.3.
Assumption of Obligations .
Buyer shall,
at Closing, assume any
and all responsibilities, liabilities and obligations of Seller and
Licensees to pay, discharge and perform when due all liabilities
and obligations of Seller or Licensees or Managers arising under
the Facility Agreements that accrue or arise after Closing
(collectively, the “
Assumed Obligations ”).
The Assumed Obligations shall be prorated as of the Closing Date in
accordance with Article 10
.
The
parties hereby acknowledge that Buyer is not assuming any
obligations or liabilities of Seller, Licensees or Managers that
arose or accrued prior to the Closing Date except as specifically
set forth herein.
2.
Purchase Price
.
2.1.
Payment of Purchase Price.
(a)
The total purchase price for the Sale Assets (the “
Purchase Price ”)
to be paid to Seller by Buyer shall be equal to the sum of One
Hundred Ninety Million and no/100 Dollars ($190,000,000). It is
expressly agreed and acknowledged that no portion of the Purchase
Price shall be paid or payable to the Licensees or
Managers.
(b)
Buyer will pay the Purchase Price by (a) depositing, within one (1)
business day of Buyer’s receipt of a fully executed copy of
this Agreement, Fifteen Million and no/100 Dollars ($15,000,000)
(together with any accrued interest thereon, the “
Deposit ”)
with Chicago Title Insurance Company
(the
“
Escrow Agent ”)
pursuant to the terms of the escrow agreement dated the date hereof
between the Escrow Agent, Buyer and Seller and Licensees (the
“
Escrow Agreement ”)
and (b) paying the balance of the
Purchase
Price at Closing by electronic wire transfer of immediately
available funds to the Escrow Agent for disbursement to Seller
in accordance with this Agreement.
(c)
Subject to Article 7
,
the entire Deposit is non-refundable and will be released from
escrow and disbursed by the Escrow Agent to Seller either (i) at
Closing as payment of a portion of the Purchase Price or (ii) upon
termination of this Agreement.
2.2.
Allocation of the Purchase Price
.
The
Purchase Price shall be allocated among each of the Facilities in
accordance with
Schedule
2 .
Seller and Buyer agree that the form of the transactions and the
consideration provided for in this Agreement were arrived at on the
basis of arm’s length negotiation between Seller and
Licensees and Buyer, and shall be respected by each of them for
federal, state, local and other tax reporting purposes, including
filings on Internal Revenue Service Form 8594, and that neither of
them will assert or maintain a position inconsistent with the
forgoing. The Buyer and Seller and Licensees hereby agree and
acknowledge that no portion of the Purchase Price is allocable to
the Licensees or the Manager.
3.
Closing .
The consummation of the purchase and sale of the Sale Assets
contemplated herein (“
Closing ”)
shall occur at 3:00 p.m. Central time on December 1, 2006 (or
December 15, 2006, if Buyer elects to change the Closing Date in
accordance with Section 3.3
),
at the offices of the Escrow Agent, or at such other time or place
or on such other date as is mutually agreed to by the parties (the
“
Closing Date ”).
3.1.
BUYER ACKNOWLEDGEMENT .
BUYER
ACKNOWLEDGES AND AGREES THAT BUYER IS ACQUIRING THE SALE ASSETS ON
AN “AS-IS WHERE-IS” BASIS AND ASSUMING THE ASSUMED
OBLIGATIONS, WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS
OR IMPLIED OTHER THAN THE EXPRESS REPRESENTATIONS CONTAINED IN THIS
AGREEMENT) BY SELLER OR LICENSEE AND IN EACH CASE SUBJECT ONLY TO
PERMITTED ENCUMBRANCES. SELLER AND LICENSEE HAVE NOT MADE NOR SHALL
BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED OTHER THAN THE EXPRESS REPRESENTATIONS
CONTAINED IN THIS AGREEMENT) OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE VALUE, HABITABILITY, USE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE SALE
ASSETS (OR ANY PART THEREOF), THE ASSUMED OBLIGATIONS, OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE SALE ASSETS (OR ANY PART THEREOF),
OTHER THAN THE EXPRESS REPRESENTATIONS CONTAINED IN THIS AGREEMENT,
ANY USE OF THE SALE ASSETS, ANY BUSINESS OR BUSINESSES CONDUCTED
THEREIN, THE VALUE OR FINANCIAL STATUS OF THE SALE ASSETS OR THE
FACILITIES, AND SELLER AND LICENSEE SHALL NOT BE LIABLE FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT THEREON OR THE FAILURE OF THE SALE
ASSETS, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT
FROM AND AFTER THE CLOSING DATE. BUYER HAS OR PRIOR TO THE DATE
HEREOF WILL HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT THE SALE
ASSETS, ASSUMED OBLIGATIONS, AND ANY AND ALL BUSINESSES OR
OPERATIONS CONDUCTED THEREIN. IT IS UNDERSTOOD AND AGREED THAT
BUYER IS PURCHASING THE SALE ASSETS AND ASSUMING THE
ASSUMED
OBLIGATIONS AS SPECIFICALLY SET FORTH IN THIS AGREEMENT.
SELLER AND LICENSEES HAVE MADE NO REPRESENTATIONS AND
WARRANTIES AND SHALL MAKE NO REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO ANY OF THE BUSINESSES OR OPERATIONS CONDUCTED
IN THE SALE ASSETS, OTHER THAN THE EXPRESS REPRESENTATIONS
CONTAINED IN THIS AGREEMENT. BUYER REPRESENTS AND WARRANTS TO
SELLER AND LICENSEES, WITHOUT ANY LIMITATION WHATSOEVER, THAT
IT IS ENTERING INTO THIS AGREEMENT SOLELY ON THE BASIS OF THE
RESULTS OF BUYER’S OWN INSPECTIONS, AND ALL RISKS
INCIDENT TO THE MATTERS DESCRIBED IN THIS SECTION
3.1
,
AS BETWEEN SELLER AND LICENSEES ON THE ONE HAND, AND BUYER, ON
THE OTHER HAND, ARE TO BE BORNE BY BUYER.
3.2.
Consent Condition. Seller
and Licensees acknowledge and agree that Buyer’s obligation
to purchase the Sale Assets in accordance with the terms specified
in this Agreement is subject to obtaining the consent of ZC
Specialty Insurance Company (the “
Surety ”),
which has issued a financial surety bond with respect to certain
secured indebtedness that encumbers the Sale Assets (the
“
Secured Debt ”),
which consent Seller and Licensees represent and warrant, has been
obtained on or before the date of this Agreement.
3.3.
Licensure .
Buyer shall be responsible for filing and obtaining all requisite
Operator Licenses (as hereinafter defined) attributable to the
change of ownership and operation of the Facilities and Buyer shall
file, on or before October 16, 2006, all applications that Buyer
reasonably believes are required to obtain the Operator Licenses.
Obtaining all Operator Licenses necessary in Buyer’s
reasonable opinion to operate the Facilities as of the Closing Date
shall not be a condition precedent to the sale and assumption as
set out herei n.
Buyer
hereby agrees to use commercially reasonable efforts to obtain such
Operator Licenses in an expeditious manner. However, if Buyer is
unable, despite commercially reasonable efforts to comply with
applicable agency requirements that may be completed pre-Closing,
so as to assure Buyer that its license will be issued promptly
after Closing, then the applicable Licensee and Buyer shall enter
into a (i) Sale and Leaseback Agreement or (ii) Transition Services
Agreement, as appropriate to facilitate any necessary regulatory
approvals, for each Facility located in a state where licensing may
not occur promptly after Closing. Subject to such minor and
non-material economic changes as may be appropriate for each
particular circumstance and as may be required by applicable
regulatory authorities, the (i) Transition Services Agreement and
(ii) Sale and Leaseback Agreement shall be substantially in the
forms attached hereto as
Exhibit U (“
Sale and Leaseback Agreement ”)
and
Exhibit V (“
Transition Services Agreement ”)
respectively.
Notwithstanding anything contained herein to the contrary, in the
event that Buyer, despite using commercially reasonable efforts,
has not, on or before November 27, 2006, obtained Operator Licenses
or satisfied all conditions necessary to obtain reasonable
assurances from the applicable regulatory authorities that it will
obtain Operator Licenses promptly after Closing and satisfaction or
completion of customary post closing matters associated with
obtaining such Operator Licenses as reasonably determined by Buyer,
for at least sixteen (16) of the Facilities, then Buyer, in its
sole discretion, may elect to change the Closing Date to December
15, 2006. For the avoidance of doubt, delivering a copy of the
executed deed to the appropriate regulatory authority and/or a
survey of a Facility by the requisite regulatory authority are
examples of customary post closing matters. Buyer shall provide
Seller and Licensees with notice that it is exercising its option
to change the Closing Date on or before 11:59 p.m. Central time,
November 27, 2006 .
The immediately preceding sentence
and
the making of such election does not relieve Buyer of its
obligation to close or give rise to any right to terminate
this Agreement.
3.4.
Westlake Facility Closing .
The parties hereby acknowledge that the real property upon which
the Cypress Gardens at Westlake in Westlake, Ohio (“
Westlake Facility ”)
is
located (“
Westlake Property ”)
is subject to that certain (i) Commissioner’s Deed dated
February 28, 1995, and (ii) Foreclosure Sale Use Agreement dated
February 28, 1995, as amended by that certain Amendment to
Commissioner’s Deed and Foreclosure Sale Use Agreement dated
June 30, 1999 (collectively, “
HUD Agreement ”).
The HUD Agreement provides, among other things, that the Westlake
Property may not be transferred without the prior written approval
of the Department of Housing and Urban Development (“
HUD ”).
In order to obtain HUD’s approval, the Buyer must obtain a
“2530 Clearance” from HUD and submit (i) a written
request to HUD to approve the sale, (ii) a copy of the HUD
Agreement, and (iii) a copy of the Operator License in the name of
the Buyer or, if the application for the Operator License is
pending, then a copy of the applicable application, together with a
statement from the State of Ohio licensing agency that the Buyer is
authorized to operate the Westlake Facility under the existing
Operator License pending issuance to Buyer of its Operator License
(collectively, “
HUD Conditions ”).
Buyer
hereby agrees to diligently pursue in good faith the
satisfaction of the HUD Conditions and Seller and Licensee
hereby agree to cooperate and work with Buyer in good faith to
satisfy the HUD Conditions until Buyer obtains HUD approval or
provides Seller with a Westlake Termination Notice, as defined
hereinafter below. However, in the event that Buyer, despite
good faith efforts, has not satisfied the HUD Conditions and
obtained HUD approval on or before the Closing Date, then,
notwithstanding anything contained in this Agreement to the
contrary, the Sale Assets and Assumed Obligations associated
with or related to the Westlake Facility (collectively,
“
Westlake Facility Assets ”)
shall be excluded from the Closing.
In
such event, (i) the Purchase Price shall be reduced by the
amount of the Purchase Price allocated to the Westlake
Facility Assets (“
Westlake Facility Price” )
in Schedule 2, (ii) the amount of the Deposit that may be applied
against the reduced Purchase Price at Closing shall be an amount
equal to the Deposit less a proportionate share of the Deposit
allocable to the Westlake Facility Assets (“
Westlake Facility Deposit ”)
and (iii) the Westlake Facility Deposit shall be held in escrow as
more particularly described in the Escrow Agreement. In addition,
at Closing, Buyer, or its designee, and Westlake Senior Care, LLC
shall enter into a management agreement on such reasonable terms
and conditions as are to be agreed by the parties pursuant to which
Buyer or its designee shall operate and manage the Westlake
Facility on an interim basis (the “
Westlake Management Agreement ”).
Further, at the Westlake Facility Closing (as hereinafter defined),
the parties shall make the prorations and adjustments provided in
Article 10
with
respect to the Westlake Facility Assets.
The
closing with respect to the Westlake Facility Assets
(“
Westlake Facility Closing” )
shall be extended until the fifth business day after the date that
Buyer obtains HUD approval (“
Westlake Facility Closing Date ”).
The purchase price for the Westlake Facility Assets shall be equal
to the Westlake Facility Price and shall be paid to Seller at the
Westlake Facility Closing in the manner provided in Section
2.1
.
The parties shall provide the applicable closing deliveries at the
Westlake Facility Closing in accordance with the terms and
conditions of this Agreement. The representations and warranties
made by Sellers, Licensees and Buyers in this
Agreement
with respect to (i) the Westlake Facility Assets and (ii) the
authority to consummate the Westlake Facility Closing shall be
true in all material respects as of the Westlake Facility
Closing Date. Sellers, Licensees and Buyers shall continue to
comply with the interim operating covenants and other
pre-closing agreements contained herein with respect to the
Westlake Facility until the Westlake Facility Closing Date.
Closing expenses with respect to the Westlake Facility Closing
shall be allocated between the parties as provided in
Article 13
.
If the Westlake Facility Closing does not occur solely due to
Buyer’s default under this Agreement, Seller shall be
entitled to retain the Westlake Facility Deposit, which shall
not be considered liquidated damages pursuant to Section 7.4
hereof, and Seller shall have such additional remedies as are
available at law or in equity.
Notwithstanding
anything contained herein to the contrary, in the event that
Buyer has not obtained HUD approval within one hundred twenty
(120) days after the Closing Date, then Buyer may, in its sole
discretion, at anytime thereafter until it receives HUD
approval provide Seller and Licensees with notice that it no
longer desires to purchase the Westlake Facility Assets
(“
Westlake Termination Notice ”)
and the balance of the Deposit shall be promptly returned to Buyer
in accordance with the terms and conditions of the Escrow
Agreement; provided, that Buyer or its designee shall continue to
operate and manage the Westlake Facility pursuant to the terms of
the Westlake Management Agreement until the Westlake Facility is
sold to a third party. In such event, Seller will use good faith
efforts to sell the Westlake Facility as promptly as practicable;
provided, that Sellers shall not be obligated to sell the Westlake
Facility for an amount that is less than the Westlake Facility
Price.
3.5.
California Facilities .
The parties hereby acknowledge that the Manager (“
California Manager ”)
for the Facilities located in California (“
California Facilities ”)
is named in the applicable Operator License for each such
California Facility. Accordingly, such California Manager must be a
party to any Sale and Leaseback Agreement or Transition Services
Agreement described in Section 3.3 with respect to any California
Facility. In the event that the California Manager refuses to sign
any such agreement and enter into a reasonable management
agreement, Buyer, in its sole discretion, upon notice to Seller and
Licensees may elect to delay Closing with respect to the Sale
Assets and Assumed Obligations associated with or related to the
California Facilities (collectively, “
California Facility Assets ”)
until such time as Buyer has obtained the Operator Licenses
(“
California Operator Licenses ”)
for the California Facilities (“
Delayed California Closing ”).
In
the event of a Delayed California Closing, (i) the Purchase
Price shall be reduced by the amount of the Purchase Price
allocated to the California Facility Assets (“
California Facility Price” )
in Schedule 2, (ii) the amount of the Deposit that may be applied
against the reduced Purchase Price at Closing shall be an amount
equal to the Deposit less a proportionate share of the Deposit
allocable to the California Facility Assets (“
California Facility Deposit ”)
and (iii) the California Facility Deposit shall be held in escrow
as more particularly described in the Escrow Agreement. In
addition, at the California Facility Closing (as hereinafter
defined), the parties shall make the prorations and adjustments
provided in Article 10
with
respect to the California Facility Assets.
The
closing with respect to the California Facility Assets
(“
California Facility Closing” )
shall be extended until the fifth business day after the date that
Buyer obtains the
California
Operator Licenses (“
California Facility Closing Date ”).
The purchase price for the California Facility Assets shall be
equal to the California Facility Price and shall be paid to Seller
at the California Facility Closing in the manner provided in
Section 2.1
.
The parties shall provide the applicable closing deliveries at the
California Facility Closing in accordance with the terms and
conditions of this Agreement. The representations and warranties
made by Sellers, Licensees and Buyers in this Agreement with
respect to (i) the California Facility Assets and (ii) the
authority to consummate the California Facility Closing shall be
true in all material respects as of the California Facility Closing
Date. Sellers, Licensees and Buyers shall continue to comply with
the interim operating covenants and other pre-closing agreements
contained herein with respect to the California Facilities until
the California Facility Closing Date. Closing expenses with respect
to the California Facility Closing shall be allocated between the
parties as provided in Article 13
.
If the California Facility Closing does not occur solely due to
Buyer’s default under this Agreement, Seller shall be
entitled to retain the California Facility Deposit, which shall not
be considered liquidated damages pursuant to Section 7.4 hereof,
and Seller shall have such additional remedies as are available at
law or in equity.
3.6.
Kansas Facility .
The parties hereby acknowledge that the Manager (“
Kansas Manager ”)
for the Facility located in Overland Park, Kansas (“
Kansas Facility ”)
is named in the applicable Operator Licenses for the Kansas
Facility. Accordingly, the Kansas Manager must be a party to any
Sale and Leaseback Agreement or Transition Services Agreement
described in Section 3.3 with respect to Kansas Facility. In the
event that the Kansas Manager refuses to sign any such agreement,
Buyer, in its sole discretion, upon notice to Seller and Licensees
may elect to either (i) retain the Kansas Manager to manage the
Kansas Facility for a period of time post-Closing until the
applicable Operator Licenses have been obtained, or (ii) delay
Closing with respect to the Sale Assets and Assumed Obligations
associated with or related to the Kansas Facility (“
Kansas Facility Assets ”)
until such time as Buyer has obtained the Operator Licenses
(“
Kansas Operator Licenses ”)
for the Kansas Facility (“
Delayed Kansas Closing ”).
Further, in the event that a Sale and Leaseback Agreement or
Transition Services Agreement described in Section 3.3 is found to
be impermissible under applicable regulatory requirements, then
Buyer, in its sole discretion, upon notice to Seller and Licensees
may elect to have a Delayed Kansas Closing.
In
the event of a Delayed Kansas Closing, (i) the Purchase Price
shall be reduced by the amount of the Purchase Price allocated
to the Kansas Facility Assets (“
Kansas Facility Price” )
in Schedule 2, (ii) the amount of the Deposit that may be applied
against the reduced Purchase Price at Closing shall be an amount
equal to the Deposit less a proportionate share of the Deposit
allocable to the Kansas Facility Assets (“
Kansas Facility Deposit ”)
and (iii) the Kansas Facility Deposit shall be held in escrow as
more particularly described in the Escrow Agreement. In addition,
at the Kansas Facility Closing (as hereinafter defined), the
parties shall make the prorations and adjustments provided in
Article 10
with
respect to the Kansas Facility Assets.
The
closing with respect to the Kansas Facility Assets
(“
Kansas Facility Closing” )
shall be extended until the fifth business day after the date that
Buyer obtains the Kansas Operator Licenses (“
Kansas Facility Closing Date ”).
The purchase price for the Kansas Facility Assets shall be equal to
the Kansas Facility Price and shall be paid to Seller at the Kansas
Facility Closing in the manner provided in Section
2.1
.
The parties shall provide the applicable closing deliveries at the
Kansas Facility Closing in accordance with the terms and conditions
of this
Agreement.
The representations and warranties made by Sellers, Licensees
and Buyers in this Agreement with respect to (i) the Kansas
Facility Assets and (ii) the authority to consummate the
Kansas Facility Closing shall be true in all material respects
as of the Kansas Facility Closing Date. Sellers, Licensees and
Buyers shall continue to comply with the interim operating
covenants and other pre-closing agreements contained herein
with respect to the Kansas Facility until the Kansas Facility
Closing Date. Closing expenses with respect to the Kansas
Facility Closing shall be allocated between the parties as
provided in Article 13
.
If the Kansas Facility Closing does not occur solely due to
Buyer’s default under this Agreement, Seller shall be
entitled to retain the Kansas Facility Deposit, which shall
not be considered liquidated damages pursuant to Section 7.4
hereof, and Seller shall have such additional remedies as are
available at law or in equity.
3.7.
Colorado Facilities .
In the event that a Sale and Leaseback Agreement or Transition
Services Agreement described in Section 3.3 is found to be
impermissible under applicable regulatory requirements, then Buyer,
in its sole discretion, upon notice to Seller and Licensees, may
elect to delay the Closing (“
Delayed Colorado Closing ”)
with respect to the Sale Assets and Assumed Obligations
(“
Colorado Facility Assets ”)
associated with or related to the Facilities located in the State
of Colorado (“
Colorado Facilities ”).
In
the event of a Delayed Colorado Closing, (i) the Purchase
Price shall be reduced by the amount of the Purchase Price
allocated to the Colorado Facility Assets (“
Colorado Facility Price” )
in Schedule 2, (ii) the amount of the Deposit that may be applied
against the reduced Purchase Price at Closing shall be an amount
equal to the Deposit less a proportionate share of the Deposit
allocable to the Colorado Facility Assets (“
Colorado Facility Deposit ”)
and (iii) the Colorado Facility Deposit shall be held in escrow as
more particularly described in the Escrow Agreement. In addition,
at the Colorado Facility Closing (as hereinafter defined), the
parties shall make the prorations and adjustments provided in
Article 10
with
respect to the Colorado Facility Assets.
The
closing with respect to the Colorado Facility Assets
(“
Colorado Facility Closing” )
shall be extended until the fifth business day after the date that
Buyer obtains the Colorado Operator Licenses (“
Colorado Facility Closing Date ”).
The purchase price for the Colorado Facility Assets shall be equal
to the Colorado Facility Price and shall be paid to Seller at the
Colorado Facility Closing in the manner provided in Section
2.1
.
The parties shall provide the applicable closing deliveries at the
Colorado Facility Closing in accordance with the terms and
conditions of this Agreement. The representations and warranties
made by Sellers, Licensees and Buyers in this Agreement with
respect to (i) the Colorado Facility Assets and (ii) the authority
to consummate the Colorado Facility Closing shall be true in all
material respects as of the Colorado Facility Closing Date.
Sellers, Licensees and Buyers shall continue to comply with the
interim operating covenants and other pre-closing agreements
contained herein with respect to the Colorado Facility until the
Colorado Facility Closing Date. Closing expenses with respect to
the Colorado Facility Closing shall be allocated between the
parties as provided in Article 13
.
If the Colorado Facility Closing does not occur solely due to
Buyer’s default under this Agreement, Seller shall be
entitled to retain the Colorado Facility Deposit, which shall not
be considered liquidated damages pursuant to Section 7.4 hereof,
and Seller shall have such additional remedies as are available at
law or in equity.
4.
Seller’s and Licensees’ Representations and
Warranties .
Seller and Licensees represent, warrant and covenant to Buyer that
the following matters are true as of the date hereof and shall be
true in all material respects as of the Closing Date:
4.1.
Ownership .
PITA is the owner, in fee simple, of the Real
Property ,
and together with Tenant and Licensees, has good and marketable
title to the remainder of the Sale Assets, subject only to the
Permitted Encumbrances.
4.2.
Status .
PITA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois and Tenant is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each Licensee is a limited
liability company duly organized and validly existing and in good
standing under the laws of the State of Indiana as set forth
in
Exhibit A .
PITA, Tenant and the Licensees are duly qualified to do business as
a foreign corporation or limited liability company in the states in
which the Facilities are located.
4.3.
Authority .
The execution and delivery of this Agreement and all documents to
be executed by it pursuant to this Agreement by Seller and/or
Licensees, and the performance of this Agreement and all documents
to be executed by it pursuant to this Agreement by Seller and/or
Licensees, have been duly authorized by Seller and/or Licensees,
and this Agreement is binding on Seller and Licensees and
enforceable against Seller and Licensees in accordance with its
terms except as enforceability may be restricted, limited or
delayed by applicable bankruptcy or other laws affecting
creditors’ rights generally and except as enforceability may
be subject to general principles of equity. The execution of this
Agreement and the consummation of the transactions contemplated in
this Agreement do not and will not result in a breach of the terms
and conditions of, nor constitute a default under or violation of,
Seller’s or Licensees’ articles of incorporation,
bylaws or any law, regulation, court order, or any mortgage, note,
bond, indenture, agreement, license or other instrument or
obligation to which Seller or Licensees are now a party or by which
any of portion of the Sale Assets may be bound or affected and that
is material to Seller’s and Licensees’ business. At the
Closing, the Seller and Licensees shall cause the Secured Debt to
be prepaid in full and all liens and security interests encumbering
any of the Sale Assets and securing the Secured Debt shall be
released and discharged in full.
4.4.
Notices of Violations .
Except as set forth on
Exhibit H ,
since April 1, 2003, and except as set forth on
Exhibit H
to
Seller’s and Licensees’ knowledge prior to April 1,
2003, Seller and Licensees have not received any written notices,
orders, demands or other directives from any governmental
authorities or quasi-governmental authorities or their agents and
contractors pertaining to any uncured material violations of any
applicable laws, ordinances, rules, regulations, codes, licenses,
permits and authorizations pertaining to the operation of the
Facilities, including but not limited to all applicable federal and
state health
care laws, rules and regulations, including, without limitation
those relating to the payment or receipt of illegal remuneration,
including 42 U.S.C. § 1320a-7b(b) (the Medicare/Medicaid
anti-kickback statute), 42 U.S.C. § 1395nn (the Stark
Statute), 42 U.S.C. § 1320a-7a, 42 U.S.C.
§ 1320a-7b(a), 42 U.S.C. § 1320a-7b(c), and
applicable state anti-kickback laws .
Notwithstanding
anything herein to the contrary, Seller shall be responsible for
any (i)
fines
or penalties relating to periods prior to Closing or (ii)
post-Closing capital expenditures in excess of $2,500, that are
required solely in
connection
with the OSHA inspection of September 26, 2006 - October 3,
2006 of the Facility located in Denver, Colorado, as disclosed
in Exhibit H hereto.
4.5.
Litigation .
To Seller’s and Licensees’ knowledge, and except as
disclosed on
Exhibit I attached
hereto and made a part hereof, there are no pending or currently
threatened in writing, judicial, municipal or administrative
proceedings affecting the Sale Assets or in which Seller or
Licensees are parties by reason of Seller’s or
Licensees’ ownership of the Sale Assets or any portion
thereof in each case other than those that could not reasonably be
expected to have a material effect on Seller and Licensees or the
Facilities, nor that will have any material effect on the
Facilities from and after the Closing Date.
4.6.
Operator Licenses and Provider Agreements
.
Except as disclosed in
Exhibit H ,
the Licenses have been issued, and, to Seller’s and
Licensees’ knowledge, are in good standing with respect to,
any and a
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