UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): March 31, 1999
COMMERCIAL ASSETS, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-2262 84-1240911
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
3410 South Galena Street, Suite 210 80231
Denver, Colorado (Zip Code)
(Address of principal executive offices)
(303) 614-9410
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address,
if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On March 31, 1999, Commercial Assets, Inc. (the "Company") acquired a
manufactured home community located in Tampa, Florida from Lake Shore Villas,
Inc., The Inn at Lakeshore Villas, Ltd., and Lakeshore Villa Health Care, LTD.
The community consists of 290 developed homesites. The developed homesites are
95% occupied.
The consideration for the community was determined through arms-length
negotiations with the sellers. Total consideration for the community was
$8,300,000 of which $8,000,000 was paid in cash on hand and $300,000 represents
estimated initial capital expenditures to be made at the community by the
Company. The Company generally intends to continue to utilize the assets
acquired in the transaction as rental properties which is the same manner as
they were employed prior to the acquisition.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. Certain information
included in this Report, the Company's Annual Report to Stockholders and other
Company filings (collectively "SEC Filings") under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended (as well as
information communicated orally or in writing between the dates of such SEC
Filings) contains or may contain information that is forward looking, including,
without limitation, statements regarding projections of the Company's future
financial performance, cash flow, dividends and anticipated returns on real
estate investments. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include: general economic and business
conditions; interest rate changes; financing and refinancing risks; risks
inherent in owning real estate or debt secured by real estate; future
development rate of homesites; competition; the availability of real estate
assets at prices which meet the Company's investment criteria; the Company's
ability to reduce expense levels, implement rent increases and use leverage; and
other risks set forth in the Company's Securities and Exchange Commission
filings. Readers should carefully review the Company's financial statements and
the notes thereto, as well as the risk factors described in the SEC Filings.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements
The required financial statements will be filed by amendment within 60
days.
(b) Pro Forma Financial Information
The required pro forma financial information will be filed by amendment
within 60 days.
(c) Exhibits
Exhibit No. Description
10.12 Restated Purchase Agreement dated as of April 20,
1998, between Lake Shore Villas, Inc., The Inn at
Lakeshore Villas, Ltd., and Lakeshore Villa Health
Care, LTD. and Senior Care Group, Inc., Heights
Healthcare Company, L.L.C., Community Acquisition and
Development Corporation, CAX Lakeshore, L.L.C. and
Lakeshore Utilities, L.L.C.
10.12(a) Seventh Amendment to Purchase Agreement dated as of
March 30, 1999, between Heights Healthcare Company,
L.L.C., CAX Lakeshore, L.L.C., Lakeshore Utilities,
L.L.C. and Senior Care Group, Inc. and Lake Shore
Villas, Inc., The Inn at Lakeshore Villas, LTD. and
Lakeshore Villa Health Care, LTD.
10.12(b) Agreement to Assign dated as of March 31, 1999,
between Heights Healthcare Company, L.L.C. and CAX
Lakeshore, L.L.C.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMERCIAL ASSETS, INC.
Date: April 13, 1999
By: /s/David M. Becker
------------------------------
David M. Becker
Chief Financial Officer
RESTATED PURCHASE AGREEMENT
LAKE SHORE VILLAS, INC.,
a Florida corporation
THE INN AT LAKESHORE VILLAS, LTD.,
a Florida limited partnership
and
LAKESHORE VILLA HEALTH CARE, LTD.,
a Florida limited partnership
(collectively, the "Sellers")
and
SENIOR CARE GROUP, INC.
a Pennsylvania non-profit corporation
HEIGHTS HEALTHCARE COMPANY, L.L.C.
COMMUNITY ACQUISITION AND DEVELOPMENT CORPORATION
a Delaware corporation
CAX LAKESHORE, L.L.C.
and
LAKESHORE UTILITIES, L.L.C.
(collectively, the "Purchaser")
April 20, 1998
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TABLE OF CONTENTS
Page
Article I
ASSETS TO BE SOLD
Section 1.01. Assets to be Sold.......................................... 2
Section 1.02. Assets Excluded from Sale.................................. 3
Section 1.03. Assumed Contracts.......................................... 3
Section 1.04. Excluded Liabilities....................................... 3
Article II
PURCHASE AND SALE
Section 2.01. Purchase and Sale.......................................... 4
Article III
PURCHASE PRICE, PAYMENT TERMS
Section 3.01. Purchase Price of Assets and Allocation.................... 4
Section 3.02. Payment.................................................... 4
Article IV
TITLE INSURANCE, SURVEY AND INSPECTION PERIOD
Section 4.01. Title Insurance and Survey................................. 5
Article V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
Section 5.01. Binding Contracts.......................................... 8
Section 5.02. Ownership and Title to the Premises........................ 8
Section 5.03. Matters of Survey.......................................... 9
Section 5.04. Compliance with Laws....................................... 9
Section 5.05. Insurance Policies......................................... 9
Section 5.06. Assumed Contracts.......................................... 9
Section 5.07. Condemnation............................................... 9
Section 5.08. No Violation............................................... 9
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Section 5.09. Performance of Obligations................................. 9
Section 5.10. Taxes...................................................... 9
Section 5.11. Maintenance of Inventory................................... 10
Section 5.12. Sellers' Cooperation....................................... 10
Section 5.13. Recapture of Depreciation or Other Assessments............. 10
Section 5.14. Licensure.................................................. 10
Section 5.15. Investigations............................................. 10
Section 5.16. Judgments.................................................. 10
Section 5.17. Contracts.................................................. 10
Section 5.18. Taxes...................................................... 10
Section 5.19. Employees.................................................. 11
Section 5.20. Trade Names................................................ 11
Section 5.21. Licensure Standards and Permits............................ 11
Section 5.22. Normal Operations.......................................... 11
Section 5.23. Pending Litigation......................................... 11
Section 5.24. Homeowners' Association Notification....................... 11
Section 5.25. Full Disclosure............................................ 11
Section 5.26. Medicare; Medicaid......................................... 11
Section 5.27. Survival of Representations and Warranties................. 12
Article VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Section 6.01. Organization............................................... 12
Section 6.02. Enforceability............................................. 12
Section 6.03. No Violation............................................... 12
Section 6.04. Broker..................................................... 12
Section 6.05. Absence of Litigation...................................... 12
Section 6.06. Unsolicited Offer.......................................... 13
Section 6.07. Survival of Representations and Warranties................. 13
Article VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 7.01. Performance by the Sellers................................. 13
Section 7.02. Production of Records...................................... 13
Section 7.03. Representations and Warranties True at Closing............. 13
Section 7.04. No Material Changes........................................ 14
Section 7.05. Delivery of Documents...................................... 14
Section 7.06. Opinion of Counsel......................................... 14
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Article VIII
CONDITIONS TO SELLERS' OBLIGATIONS
Section 8.01. Representations and Warranties True at Closing............. 15
Section 8.02. Compliance with the Agreement.............................. 15
Section 8.03. Government Approvals....................................... 15
Article IX
CLOSING
Section 9.01. Closing Date............................................... 15
Section 9.02. Delivery of Documents by Sellers........................... 16
Section 9.03. Delivery of Documents by Purchaser......................... 17
Section 9.04. Prorations................................................. 17
Section 9.05. Expenses and Costs of Premises............................. 17
Section 9.06. Brokers' Fees and Finders' Fees............................ 17
Section 9.07. Accounts Receivable/Payable; Accounting, Services.......... 17
Section 9.08. Security Deposits and Patient Assets....................... 18
Section 9.09. Commission Due Broker...................................... 18
Section 9.10. Taxes...................................................... 18
Section 9.11. Employees.................................................. 18
Section 9.12. Retention of Employees..................................... 19
Section 9.13. Possession................................................. 19
Section 9.14. Personnel Records.......................................... 19
Section 9.15. Provider Number............................................ 19
Section 9.16. Utility Services........................................... 19
Section 9.17. Procedure Relating to Motor Vehicles....................... 19
Section 9.18. Other Actions and Instruments.............................. 19
Section 9.19. Letter of Credit........................................... 20
Article X
RISK OF LOSS
Section 10.01. Risk of Loss............................................... 24
Article XI
DEFAULT
Section 11.01. Default by Sellers......................................... 24
Section 11.02. Default by Purchaser....................................... 24
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Article XII
INDEMNIFICATION AND ARBITRATION
Section 12.01. By Purchaser............................................... 25
Section 12.02. By Sellers................................................. 25
Section 12.03. Claim for Indemnification.................................. 25
Section 12.04. Successors and Assigns..................................... 25
Section 12.05. Arbitration................................................ 26
Section 12.06. Payment of Claims.......................................... 28
Section 12.07. Survival of Representations and Warranties................. 28
Article XIII
RECORDS
Section 13.01. Records.................................................... 28
Article XIV
MISCELLANEOUS
Section 14.01. Appraisals................................................. 29
Section 14.02. Confidentiality............................................ 29
Section 14.03. Notices.................................................... 29
Section 14.04. Governing Law.............................................. 30
Section 14.05. Waiver..................................................... 30
Section 14.06. Captions................................................... 31
Section 14.07. Entire Agreement........................................... 31
Section 14.08. Agreement Binding on Assign................................ 31
Section 14.09. Counterparts............................................... 31
Section 14.10. Further Assurances......................................... 31
Section 14.11. Exhibits................................................... 31
Section 14.12. Assignment................................................. 32
Section 14.15. Time of Essence............................................ 32
Section 14.16. Non-Competition............................................ 33
Section 14.17. No Assumption of Liabilities............................... 33
Section 14.18. Material Adverse Changes................................... 33
Section 14.19. Effective Date............................................. 33
Section 14.20. Notices to Appropriate State Agencies...................... 33
Section 14.21. No Recordation of Agreement................................ 33
Section 14.22. Transactional Expenses..................................... 33
Section 14.23. Exclusive Jurisdiction..................................... 33
Section 14.24. Waiver..................................................... 33
Section 14.25. Public Announcements....................................... 34
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Section 14.26. Complete Agreement......................................... 34
Section 14.27. Radon Disclosure........................................... 34
Section 14.28. Gender; Number............................................. 34
Section 14.29. Headings................................................... 34
Section 14.30. Counterparts............................................... 34
Section 14.31. Escrow Agreement........................................... 34
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RESTATED PURCHASE AGREEMENT
THIS RESTATED PURCHASE AGREEMENT (the "Agreement") is made effective as
of the 20th day of April, 1998 by and between HEIGHTS HEALTHCARE COMPANY, L.L.C.
("HHCC"), COMMUNITY ACQUISITION AND DEVELOPMENT CORPORATION ("Community
Acquisition"), CAX LAKESHORE, L.L.C. ("CAX"), LAKESHORE UTILITIES, L.L.C.
("Utility LLC") and SENIOR CARE GROUP, INC. ("Senior Care") (collectively, the
"Purchaser"), and (i) LAKE SHORE VILLAS, INC., a Florida corporation, (ii) THE
INN AT LAKESHORE VILLAS, LTD., a Florida limited partnership, and (iii)
LAKESHORE VILLA HEALTH CARE, LTD., a Florida limited partnership, (collectively,
the "Sellers").
W I T N E S S E T H :
WHEREAS, Lake Shore Villas, Inc. is the owner of a 290-lot mobile home
park and two commercial lots located on U.S. 41 at Sinclair Hills Road and North
Florida Avenue, The Inn at Lakeshore Villas, Ltd., is the owner of a 120-unit
(156 bed) adult congregate living facility ("ACLF") and Lakeshore Villa Health
Care, Ltd. is the owner of a 179-bed nursing home (the "Nursing Home") located
in Hillsborough County, Tampa, Florida (collectively, the "Premises"), and more
particularly described in Exhibit 1.01(a) attached hereto and incorporated
herein by reference;
WHEREAS, the ACLF and Nursing Home forming a part of the Premises are
presently licensed and authorized under the applicable laws, rules and
regulations of the State of Florida to provide assisted living care and skilled
nursing services and facilities, respectively, for their residents;
WHEREAS, Sellers have agreed to sell the Premises, together with all
improvements thereon and the assets owned by Sellers described herein used in
the operation of the ACLF, the Nursing Home and the Mobile Home Park, and
Purchaser has agreed to purchase the same upon the terms and conditions
hereinafter set forth;
WHEREAS, Heights Healthcare Company, L.L.C. ("HHCC") and the Sellers
entered into this Agreement on April 20, 1998, as amended by the First Amendment
to Purchase Agreement dated July 20, 1998, the Second Amendment to Purchase
Agreement dated August 5, 1998, the Third Amendment to Purchase Agreement dated
September 30, 1998, the Fourth Amendment to Purchase Agreement dated November
12, 1998, the Fifth Amendment to Purchase Agreement dated December 30, 1998 and
the Sixth Amendment to Purchase Agreement dated January 31, 1999;
WHEREAS, HHCC has assigned or will assign its right to purchase the
mobile home park, including the "Manning Drive Assets" (together the "Mobile
Home Park") to CAX, an affiliate of Community Acquisition (Community Acquisition
and CAX collectively referred to herein as "CADC"); HHCC has assigned or will
assign its right to purchase the Sewer Plant to the Utility LLC; HHCC has
assigned or will assign its right to purchase the two commercial parcels
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commonly referred to as Parcel III (E and F) as more particularly described in
Exhibit 1.01(a) of the Purchase Agreement (the "Commercial Parcels") to Florida
Avenue Limited Partnership ("FALP"); HHCC has assigned its right to purchase the
ACLF to Lakeshore Villas Joint Venture (the "ACLF Joint Venture"); and HHCC has
assigned its right to purchase the Nursing Home to Lakeshore Villas Health Care
Center Joint Venture (the "Nursing Home Joint Venture");
WHEREAS, HHCC and the ACLF Joint Venture have terminated the assignment
by HHCC to the ACLF Joint Venture of the right to purchase the ACLF, and HCC and
the Nursing Home Joint Venture have terminated the assignment by HHCC to the
Nursing Home Joint Venture of the right to purchase the nursing home;
WHEREAS, HHCC has assigned its right to purchase the ACLF and the
Nursing Home to Senior Care Group, Inc. ("Senior Care"); and
WHEREAS, Purchaser and Sellers desire to restate this Agreement as of
the 31st day of January 1999 in order to incorporate the amendments to the
Agreement as set forth in the First through Sixth Amendments to Purchase
Agreement and to define further the obligations of CADC as the purchaser of the
Mobile Home Park, including the Sewer Plant, the obligations of FALP as
Purchaser of the Commercial Parcels and the obligations of Senior Care as the
purchaser of the ACLF and the Nursing Home.
NOW, THEREFORE, in consideration of the foregoing recitals, which
constitute a material element of this Agreement, and mutual covenants and
agreements herein contained, the parties do hereby covenant and agree as
follows:
Article I
ASSETS TO BE SOLD
Section 1.01 Assets to be Sold. The Sellers shall sell and the
Purchaser, or its assigns, shall buy the following real and personal property
(collectively the "Assets"):
(a) The Premises described in Exhibit 1.01(a), including the
following improvements:
(i) the Mobile Home Park consisting of 290 lots
including the "Manning Drive Assets" which is leased and
operated as an adult congregate living facility, the Sewer
Plant (as defined below) and the Commercial Parcels;
(ii) the ACLF, consisting of 120 units/156 beds,
operating as a licensed adult congregate care facility; and
(iii) the Nursing Home, operating as a skilled
nursing facility for 179 beds.
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(b) All of Sellers' tenements, hereditaments, easements and
rights appurtenant to the Premises including, but without limiting the
generality thereof, all of the Sellers' rights, titles and interests in
and to streets, alleys or other public ways adjacent to the Premises,
all utilities operated, easements for public utilities, the sewer
plant, all sewers and service drainage systems and easements, all
rights, of connection to the sewers, cable TV system, and all rights of
ingress and egress, on the terms conditions and covenants hereinafter
set forth;
(c) Except as provided in Section 1.02, all personal property
located on the Premises including, but not limited to, all furniture,
furnishings, fixtures, equipment, patient records, inventory and
supplies, including but not limited to dishes, silverware, utensils,
lawn and garden machinery, maintenance equipment and tools, computer
software and vehicles owned by Sellers and used in connection with the
operation of the Premises, which property is listed in Exhibit 1.01(c)
(hereafter collectively referred to as the "Personalty");
(d) All of Sellers' leases, contracts and agreements relating
to the operation of the Premises described in Exhibit 1.01(d), attached
hereto and incorporated herein which leases contracts and agreements
shall constitute the "Assumed Contracts";
(e) Sellers' interest in and to the trade names by which any
of the Premises are known;
(f) Any warranties in existence to the premises, the
Personalty and the Assumed Contracts; and
(g) All goodwill associated with Sellers.
Section 1.02. Assets Excluded from Sale. The Assets listed in Exhibit
1.02 shall not be sold and shall remain the property of Sellers (the "Excluded
Assets").
Section 1.03. Assumed Contracts. At closing Sellers shall assign to
Purchaser and Purchaser shall assume the leases, contracts and agreements set
forth in Exhibit 1.01(d) (collectively, the "Assumed Contracts"), and shall
agree to perform and pay when due and owing all debts, liabilities and
obligations under all of the Assumed Contracts, accruing from and after the
Closing Date.
Section 1.04. Excluded Liabilities. It is expressly understood by the
parties that Purchaser is acquiring from Sellers only the Assets and Assumed
Contracts. Except as specifically set forth in this Agreement, Sellers shall
retain and agree to perform and pay when owing, or on other terms satisfactory
to Purchaser and Sellers, all debts, liabilities, and obligations arising out of
Sellers' operation of the Premises prior to the Closing Date (as defined in
Section 9.01), including, but not limited to, accounts payable, accrued
liabilities, deferred compensation arrangements, pension plans and labor
agreements, and any income tax liabilities arising out of the operation of the
Premises prior to the Closing Date, or which may be due and owing, or become due
and owing, by Sellers with respect to or on account of the transactions
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contemplated by this Agreement. Purchaser is not acquiring, and shall not be
responsible for any of Sellers' liabilities or obligations except as set forth
specifically in this Agreement.
Article II
PURCHASE AND SALE
Section 2.01. Purchase and Sale. Sellers agree to sell and convey the
Assets to Purchaser, and Purchaser agrees to purchase the Assets from Sellers,
subject to the terms and conditions set forth herein.
Article III
PURCHASE PRICE, PAYMENT TERMS
Section 3.01. Purchase Price of Assets and Allocation. Subject to the
adjustments set forth herein, Purchaser, or its assigns, shall pay to Sellers,
as the total Purchase Price for all the Assets purchased, the sum of THIRTY-FOUR
MILLION TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($34,250,000) (the "Purchase
Price"), to be allocated in accordance with Exhibit 3.01 attached hereto and
made part hereof.
Section 3.02. Payment. Subject to conditions, representations and
warranties of Sellers as contained herein, payment of the Purchase Price for the
Assets shall be made by the Purchaser to the Sellers as follows:
(a) Deposit. On the execution of this Agreement, the sum of
ONE HUNDRED THOUSAND DOLLARS ($100,000) (the "Deposit") shall be
deposited into an interest bearing escrow account with Chicago Title
Insurance Company (or other title insurance company acceptable to
Seller) ("Escrow Agent") as a Deposit under this Agreement which sum
shall be increased by the amount set forth in Section 9.01 hereof in
the event the Purchaser elects to extend the Closing Date as provided
in Section 9.01. The parties hereby acknowledge that Purchaser has
deposited additional earnest money in the amount of ONE HUNDRED
THOUSAND DOLLARS ($100,000) (the "Additional Deposit"). At the Park
Closing (as defined in Section 9.01), the Escrow Agent shall deliver
TWENTY-FIVE THOUSAND DOLLARS ($25,000) of the Deposit to CADC. At the
ACLF/NH Closing (as defined in Section 9.01), the Escrow Agent shall
deliver SEVENTY-FIVE THOUSAND DOLLARS ($75,000) of the Deposit to HHCC,
provided that, CADC has received reimbursement in full for the
advancement of the initial deposit and other out-of-pocket expenses
pursuant to Section 14.13 of this Agreement, and shall deliver the
remainder of the Deposit and shall deliver the Additional Deposit to
the ACLF Joint Venture and the Nursing Home Joint Venture. In the event
that CADC has not received reimbursement in full for the advancement of
the initial deposit and other out-of-pocket expenses pursuant to
Section 14.14 of this Agreement, the Escrow Agent shall deliver
SEVENTY-FIVE THOUSAND DOLLARS ($75,000) of the Deposit to CADC at the
ACLF/NH Closing Date unless HHCC and CADC notify Sellers otherwise at
least five (5) business days prior to the ACLF/NH Closing Date. The
Deposit and the Additional Deposit are non-refundable except as
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otherwise provided herein or upon Seller's default.
(b) Extension Fee. The parties hereby acknowledge that
Purchaser has delivered to Sellers an extension fee in the amount of
THREE HUNDRED THOUSAND DOLLARS ($300,000). In the event that the Park
Closing Date and the ACLF/NH Closing Date occurs on or before June 30,
1999, Sellers hereby agree to deliver the extension fee of ONE HUNDRED
THOUSAND DOLLARS ($100,000) on the ACLF/NH Closing Date to the ACLF
Joint Venture and the Nursing Home Joint Venture. In the event that the
Park Closing Date and the ACLF/NH Closing Date is on or before April
30, 1999, the extension fee in the amount of TWO HUNDRED THOUSAND
DOLLARS ($200,000) shall be delivered on the ACLF/NH Closing Date by
Sellers to the ACLF Joint Venture and the Nursing Home Joint Venture.
However, in the event that the ACLF/NH Closing Date does not occur on
or before April 30, 1999, the payment by Purchaser of the additional
TWO HUNDRED THOUSAND DOLLARS ($200,000) as an extension fee shall not
be delivered to the ACLF Joint Venture and/or the Nursing Home Joint
Venture, shall not be credited to the cash to be paid at closing by
Purchaser and shall be deemed by the parties as additional
consideration for the extension of the Closing Date.
(c) Cash at the Park Closing. At the Park Closing, subject to
the adjustments herein provided for, CADC shall deliver to Sellers the
sum of EIGHT MILLION DOLLARS ($8,000,000) by certified check or federal
wire transfer. Credits and debits on the closing statement, and
additions to the Purchase Price required hereunder, will adjust the
cash at closing.
(d) Cash at the ACLF/NH Closing. At the ACLF/NH Closing,
subject to the adjustments herein provided for, Senior Care shall
deliver to Sellers the sum of TWENTY-SIX MILLION TWO HUNDRED AND FIFTY
THOUSAND DOLLARS ($26,250,000) by certified check or federal wire
transfer. Credits and debits on the Closing Statement and additions to
the Purchase Price required hereunder, will adjust the cash at Closing.
Article IV
TITLE INSURANCE, SURVEY AND INSPECTION PERIOD
Section 4.01. Title Insurance and Survey. Sellers shall convey good and
marketable title at the closing to the Premises described on Exhibit 1.01(a)
such title to be insurable by a Chicago Title Insurance Company, Attorneys'
Title Insurance Company, or another recognized title insurance company licensed
to do business in the State of Florida, at its usual insurance premium rates
without exception other than the usual printed form exceptions and the Permitted
Exceptions, as hereinafter defined. The matters described on Exhibit 4.01 and
additional matters which are expressly described as permitted title exceptions
elsewhere in this Agreement shall be the "Permitted Exceptions." As soon as
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practicable after the execution of this Agreement, but not less than thirty (30)
days after the date of this Agreement, Sellers shall provide, at their expense
an owner's title insurance commitment (the "Title Commitment") in favor of the
Purchaser showing title to the Real Property to be free and clear of all liens
and encumbrances of any kind except those indicated in Exhibit 4.01. The Title
Commitment shall be for an amount equal to that portion of the Purchase Price
allocated to real property and the improvements thereon, as provided in Exhibit
3.01. Purchaser shall order a current survey at Purchaser's expense. Sellers
shall deliver to Purchaser its most recent survey at the time Sellers deliver
the Title Commitment. If any exceptions appear in the Title Commitment, other
than those matters shown on Exhibit 4.01 or the standard printed exceptions and
exclusions from coverage customarily contained in an ALTA Owner's Policy (as
revised 10-17-92 with Florida Modifications) and that are unacceptable to
Purchaser, Purchaser shall, within twenty (20) days after receipt of the Title
Commitment and copies of all documents referred to therein as exceptions to
title, notify Sellers in writing of such fact and the reasons therefor
("Purchaser's Title Objections"). Upon expiration of said twenty (20) day
period, Purchaser shall be deemed to have accepted all exceptions to title and
all other matters shown on the Title Commitment (except for Purchaser Title
Objections if same are timely raised), and such exceptions shall be included in
the term "Permitted Exceptions" as used herein. Notwithstanding anything to the
contrary contained herein, Sellers shall have no obligation to bring any action
or proceeding or otherwise to incur any expense whatsoever to eliminate or
modify Purchaser's Title Objections. If Sellers are unable or unwilling to
eliminate or modify Purchaser's Title Objections to the reasonable satisfaction
of Purchaser, Purchaser may, as its sole and exclusive remedies, (a) terminate
this Agreement by notice in writing to Sellers by the earlier to occur of (i)
the Closing Date or (ii) five days following notice from Sellers that it is
unwilling or unable to eliminate or modify Purchaser's Title Objections or (b)
accept such title as Sellers can deliver without any reduction in the Purchase
Price, in which event such uncured Purchaser's Title Objections shall be
included in the term "Permitted Exceptions." If Purchaser does not elect to
terminate this Agreement within the period described in the immediately
preceding sentence, Purchaser shall be deemed to have accepted all exceptions to
title and all other matters shown on the Title Commitment and such exceptions
shall be included in the term "Permitted Exceptions." In the event of
termination pursuant to this Section, the parties shall have no further rights
or obligations hereunder and the Deposit shall be returned to Purchaser. In the
event the Survey shows any easement, right-of-way, encroachment, conflict,
protrusion or other matter affecting the Premises, other than the "Permitted
Exceptions" (as hereinafter defined), that in Purchaser's reasonable opinion has
a material adverse effect on the Purchaser's contemplated use of the Real
Property, Purchaser shall, within twenty (20) days after receipt of the Survey
and the Title Commitment and copies of all documents referred to as exceptions
therein, notify Sellers in writing of such fact and the reasons therefor
("Purchaser's Survey Objections"). Upon the expiration of said twenty (20) day
period, Purchaser shall be deemed to have accepted the form and substance of the
Survey and all matters shown thereon (except for the Purchaser's Survey
Objections if same are timely raised) and such matters shall be included in the
term "Permitted Exceptions" as used herein. The parties hereby acknowledge that
the twenty (20) day period referred to in the preceding sentence has expired.
Sellers hereby agree to proceed in good faith to address all remaining issues
concerning the form of the Title Commitment and the Survey. Nonetheless,
Purchaser acknowledges that such title and survey issues and the manner in which
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they are addressed by Sellers, shall not constitute a basis for a refund to
Purchaser of all or any part of the Deposit, or a basis for a default under this
Agreement.
Section 4.02. Inspection Period. Purchaser and Sellers hereby
acknowledge that the Inspection Period expired at 5:00 p.m. EST on August 17,
1998. Notwithstanding the foregoing, Sellers hereby agree that the due diligence
performed by CADC during the Inspection Period, including, but not limited to,
environmental reports, property inspection (including structural reports) and
survey will need to be updated by CADC prior to the Park Closing, because of the
delay occasioned by the time period necessary for Senior Care to obtain
financing. The costs for such additional due diligence update shall be paid by
CADC. CADC and CADC's agents (including contractors, inspectors and engineers)
shall have the right to enter the Mobile Home Park (including the Sewer Plant)
to conduct such due diligence activities provided that reasonable notice is
given to Sellers and reasonable precautions are taken to protect the Premises.
Sellers agree to cooperate in connection with the foregoing and agrees that CADC
and CADC's agents shall be provided, upon request, prompt access to the Mobile
Home Park (including the Sewer Plant). CADC shall have until March 12, 1999 to
complete all such due diligence activities and shall furnish to Sellers on or
before March 12, 1999 a report describing the results of the updated due
diligence investigation. All costs and expenses arising out of items and/or
information revealed in the updated due diligence report shall be repaired,
corrected and/or incurred on or before the Park Closing Date as provided below:
(a) Sellers' Obligation. Sellers shall at its sole cost and
expense up to an amount not to exceed TWENTY THOUSAND DOLLARS ($20,000)
either (i) repair and/or correct all of the items described in the
updated due diligence report on or before the Park Closing Date and/or
(ii) enter into an escrow agreement with CADC on the Park Closing Date
whereby Sellers agree to escrow an amount equal to 125% of the costs
estimated by Sellers and CADC to correct and/or repair all such items
described in the updated due diligence report which are not repaired
and/or corrected by Sellers prior to the Park Closing Date.
(b) HHCC's or Senior Care's Option. In the event that (i) the
costs to repair and/or correct the items set forth in the updated due
diligence report exceed TWENTY THOUSAND DOLLARS ($20,000) or (ii)
Sellers fail to correct and/or repair the items described in the
updated due diligence or refuse to escrow sufficient funds to repair
and/or correct such items as set forth in Section 4.02(a) above, HHCC
or Senior Care shall have the option either of (A) repairing and/or
correcting such items described in the updated due diligence report on
or before the Park Closing Date on behalf of Sellers or (B) entering
into an escrow agreement with CADC on the Park Closing Date whereby
HHCC or Senior Care agrees to escrow an amount equal to 125% of the
costs estimated by CADC and HHCC or Senior Care to correct and/or
repair such items described in the updated due diligence report which
are not repaired and/or corrected by Sellers and/or HHCC or Senior Care
prior to the Park Closing Date. Notwithstanding the foregoing, Sellers
shall reimburse and promptly indemnify HHCC or Senior Care for and in
respect of, and shall pay any and all costs and expenses, including
attorneys' fees, incurred by HHCC or Senior Care arising in connection
with the exercise by HHCC or Senior Care of its option(s) pursuant to
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this Section 4.02(b) provided that the total amount expended and
escrowed by Sellers pursuant to Section 4.02(a) and/or reimbursed by
Sellers to HHCC or Senior Care pursuant to this Section 4.02(b) shall
in no event exceed TWENTY THOUSAND DOLLARS ($20,000).
(c) CADC's Remedy. In the event that (i) Sellers fail or
refuse to fulfill their obligations as set forth in Section 4.02(a)
above and (ii) HHCC or Senior Care does not exercise the option(s) set
forth in Section 4.02(b) above, CADC may terminate its obligations
under this Agreement (and under the Agreement to Assign, as amended,
entered into by and between HHCC and Community Acquisition). In the
event of such termination by CADC, HHCC agrees to reimburse immediately
to CADC the deposit of ONE HUNDRED THOUSAND DOLLARS ($100,000)
previously advanced by CADC pursuant to the Agreement to Assign by and
between HHCC and Community Acquisition, as amended, and immediately
reimburse CADC for one hundred percent (100%) of the third party
out-of-pocket costs advanced by CADC in connection with the ACLF and/or
the Nursing Home.
Section 4.03. Audit of Mobile Home Park and Sewer Plant. Sellers
acknowledge and agree that CADC shall have the right to hire Ernst & Young, or
any other similar accounting firm, to audit the books and records of Sellers as
they relate to the Mobile Home Park and the Sewer Plant on or before March 12,
1999 in order to verify the income and expenses furnished by Sellers. Sellers
shall cooperate with CADC and its agents and representatives in making any
applicable reports, statements or information needed by CADC available for the
above stated purposes. CADC shall provide Sellers with reasonable prior notice
of the audit, which shall be performed during business hours.
Article V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
In order to induce the Purchaser to enter into and consummate this
transaction, Sellers make the following representations, warranties and
covenants, each of which is deemed to be material. Any, investigations made by
the Purchaser shall not relieve the Sellers from any of the matters warranted,
represented and covenanted. The Sellers represent and covenant that:
Section 5.01. Binding Contracts. The Sellers have full legal power and
authority to enter into and perform this Agreement in accordance with its terms,
and this Agreement has been duly and validly executed by the Sellers and,
assuming due execution and delivery by the Purchaser, constitutes the Sellers'
valid and binding obligation enforceable in accordance with its terms.
Section 5.02. Ownership and Title to the Premises. Sellers (a) have and
on the Closing Date will have good, marketable and indefeasible title in fee
simple to the Premises described in Exhibit 1.01(a), subject only to the
Permitted Exceptions; (b) have complied with all of the statutes and regulations
of the State of Florida regulating the occupancy and sale of manufactured home
parks, including the rights of any tenants or owners of manufactured homes on
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the lots owned by Sellers, and (c) have and on the Closing Date will have good
and marketable title to all Personalty described in Exhibit 1.01(c).
Section 5.03. Matters of Survey. To the best of Sellers' knowledge and
belief, there exist no encroachments of buildings on adjacent property onto the
Premises and no encroachments of improvements to the Premises on adjacent
property.
Section 5.04. Compliance with Laws. The Premises are being used and
operated by Sellers in full compliance with all laws, ordinances and regulations
including all building, zoning and insurance laws and regulations which affect
the Premises and the business operations conducted thereon.
Section 5.05. Insurance Policies. Sellers shall, up to and including
the Closing Date, at their own expense, maintain all existing policies of
insurance in full force and effect without change in any respect except for any
policy which may expire prior to closing. Sellers know of no insurer that
intends to cancel or not renew such insurance, or intends to increase the
premium to be paid for such insurance, or intends to exclude any risks from such
insurance which are not presently excluded, nor are Sellers aware of any facts
indicating that the Assets are not insurable as presently insured.
Section 5.06. Assumed Contracts. Exhibit 1.01(d) is a list of all
service and other contracts, equipment and other leases and agreements now in
effect to which the Sellers, in connection with the operation of the Premises,
are subject. Sellers shall make available true and complete copies of all such
agreements to Purchaser during the Inspection Period.
Section 5.07. Condemnation. Sellers know of no completed, pending or
planned condemnation action which affects or may affect, in any respect, the
Premises.
Section 5.08. No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will (a)
to Sellers' knowledge, constitute a violation of, or a default under, or
conflict with, any term or provision of any agreement respecting the Sellers; or
(b) to Sellers' knowledge, constitute a violation of, default under, or conflict
with, any contract, lease or other agreement to which the Sellers are a party or
by which the Sellers are bound where any such violation, default or conflict
would materially interfere with (i) the present business of the Sellers, or (ii)
the Sellers' use of the Assets in its business.
Section 5.09. Performance of Obligations. To the best of Sellers'
knowledge, the Sellers are not in default to the extent that the Premises will
be materially affected adversely under any license, permit, order,
authorization, grant, contract, agreement, lease, or other document, order, law
or regulation to which the Sellers are bound, and have complied in all material
respects with all applicable statutes and regulations of any governmental
authority having jurisdiction over it or that is applicable to its business,
including, but not limited to, the regulation of sales of mobile home lots in
the State of Florida and the operation of the ACLF and Nursing Home.
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Section 5.10. Taxes. Sellers have paid any and all taxes, license fees
or other charges levied, assessed or imposed upon the Premises, except those
which are not yet due and payable. All taxes, franchises, contributions and
other charges required to be paid to governmental agencies by the Sellers with
respect to their operations of the Premises up to the Closing Date will be paid
as they become due, and all ad valorem, real property and tangible personal
property taxes shall be prorated as of the Closing Date.
Section 5.11. Maintenance of Inventory. Sellers will not cause or
permit the level or value of their inventory of supplies to be materially
diminished below the levels customarily maintained in the ordinary course of
their respective business operations.
Section 5.12. Sellers' Cooperation. Sellers shall cooperate with
Purchaser and its agents and representatives in preparing any reports,
statements, or information needed by Purchaser to obtain the required approvals
and consents described in this Agreement. Sellers shall cooperate with the
Purchaser in its efforts to obtain third-party financing.
Section 5.13. Recapture of Depreciation or Other Assessments. All
recapture of depreciation or other costs connected with the Sellers'
participation in Medicare or Medicaid reimbursement programs through the Closing
Date with respect to the ownership and operation of the Premises by the Sellers
shall be and will remain the obligation of and shall be paid by Sellers. If,
after closing, Sellers shall elect to appeal in good faith any assessment or
recapture claim, and if Purchaser's future Medicare or Medicaid reimbursements
would be delayed, interrupted or withheld as a result, then and in such event,
Sellers agree to deposit the amount of said disputed claim into a special trust
account or take such other action pending the determination of such appeal so as
to permit Purchaser's future Medicare or Medicaid reimbursements to be paid
promptly without interruption or delay.
Section 5.14. Licensure. The 120-unit/156 bed ACLF and the 179-bed
Nursing Home are presently licensed with the State of Florida and the Nursing
Home is certified for Medicare and Medicaid.
Section 5.15. Investigations. Except as set forth in Exhibit 5.15,
Sellers are not charged with, received notice of, or so far as Sellers know, are
under investigation with respect to any violation of any provision of any
federal, state, or local law or administrative rule or regulation relating to
the Premises, nor have Sellers received any such notice within the last three
years.
Section 5.16. Judgments. No judgments are, or will be on the Closing
Date, outstanding against Sellers or the Premises which will adversely affect
the Premises being conveyed.
Section 5.17. Contracts. Sellers are not party to, nor are Sellers
otherwise bound by, any contract, agreement, commitment, or undertaking
pertaining to or affecting the assets or operations to be conveyed hereunder,
except the Assumed Contracts expressly disclosed to Purchaser in Exhibit
1.01(d). On the Closing Date, Sellers will not be in breach of their obligations
under any of the third party contracts.
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Section 5.18. Taxes. All Social Security, withholding, sales, personal
property, and unemployment insurance taxes to the city, state and federal
governments which are due or may become due by reason of the operation of the
Premises prior to the Closing Date have been paid or will be paid when due.
Sellers shall indemnify and hold Purchaser harmless from any liability for such
taxes or costs or attorney's fees related thereto.
Section 5.19. Employees. Sellers will pay, when due, all salaries,
bonuses, approved vacation rights, sick pay, and other employee benefits,
including severance payments, earned by and due to employees at the Premises
prior to the Closing Date.
Section 5.20. Trade Names. To the best of Sellers' knowledge and
belief, Sellers have and will have at the Closing Date, the exclusive right to
use the trade name "Lakeshore Villa Retirement Community" and derivatives
thereof in connection with the operation of the Premises and will have the right
to transfer to Purchaser the ownership of such trade name.
Section 5.21. Licensure Standards and Permits. The Premises, including,
but not limited to, the Nursing Home and ACLF, meets all standards for
applicable licenses, permits and certifications for operation under applied laws
and participation in the Medicare and Medicaid programs, subject to any waivers
granted by governing authorities which are listed on Exhibit 5.21. Sellers have
all required governmental permits to operate a mobile home park.
Section 5.22. Normal Operations. Sellers shall be solely responsible
for all financial operations of the Premises through the Closing Date, including
all debts relating to those operations. Specifically, Sellers shall be
responsible for all indebtedness to vendors and to Medicare for the operations
of the Premises prior to the Closing Date.
Section 5.23. Pending Litigation. Except as set forth in Exhibit 5.23,
no litigation is pending or threatened against any Seller.
Section 5.24. Homeowners' Association Notification. Sellers have
provided the officers of Lakeshore Villa Home Owners, Inc. with the notification
required by Section 723.071(2), Florida Statutes.
Section 5.25. Full Disclosure. No representation or warranty by the
Sellers in this Agreement or in any instrument, certificate or statement
furnished to Purchaser pursuant to, or in connection with the transaction
contemplated in this Agreement, contains or will contain any untrue statement of
material fact or omits or omit to state a material fact necessary to make the
statements contained in this Agreement.
Section 5.26. Medicare; Medicaid. Except as set forth in Exhibit 5.26,
Sellers presently comply and have at all times in the past compiled with all
Medicare and Medicaid and Florida laws, rules, regulations and requirements in
the conduct of the present business of Sellers, and Sellers have not received
any notice or inquiry from any governmental authority administering any of the
same, concerning or reflecting an actual or possible violation with respect to
any of the foregoing laws. Further, Sellers have not received any notice from
any private insurance carrier of any breach, failure or default with respect to
any insurance policy.
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Section 5.27. Survival of Representations and Warranties. The
representations and warranties made by the Sellers herein shall survive the
closing of this Agreement and the delivery of the deed to the Premises for two
years.
EXCEPT AS SPECIFICALLY SET FORTH HEREIN, THE SELLERS ARE SELLING THE
ASSETS TO THE PURCHASER "AS IS" AND WITH ALL FAULTS. EXCEPT AS SPECIFICALLY SET
FORTH HEREIN, ALL WARRANTIES, EXPRESS OR IMPLIED, ARE HEREBY DISCLAIMED AND
EXCLUDED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
Article VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
In order to induce the Sellers to enter into and consummate this
transaction, the Purchaser represents and warrants to the Sellers that:
Section 6.01. Organization. HHCC is a limited liability company
organized under the laws of the State of Tennessee; Senior Care is a non-profit
corporation organized under the laws of the Commonwealth of Pennsylvania;
Community Acquisition is a corporation organized under the laws of the state of
Delaware; CAX is a limited liability company organized under the laws of the
State of [ ]; and Utility, L.L.C. is a limited liability company organized under
the laws of the State of [ ]. Purchaser has the power to own its properties and
assets and to carry on its businesses as now conducted.
Section 6.02. Enforceability. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming due execution and delivery by
the Sellers, is enforceable against Purchaser in accordance with its terms.
Section 6.03. No Violation. The execution, delivery and performance of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereunder will not, at the closing, violate, with or without the
giving of notice or the lapse of time, or both, any provision of law applicable
to Purchaser and will not conflict with, or result in the breach or termination
of any provision of, or constitute a default under, any provision of any
indenture, mortgage, deed or trust, pension or retirement plan, or other
instrument or agreement, or any order, judgment or decree to which Purchaser is
a party or by which Purchaser is bound.
Section 6.04. Broker. Purchaser has not taken any action or dealt with
any person in any manner, other than the Broker, which will result in any
liability of Sellers for any brokerage fee commission or finder's fee with
respect to this Agreement or the transactions contemplated hereby.
Section 6.05. Absence of Litigation. Purchaser is not a party to any
action, suit, proceeding or to its knowledge, any investigation presently
pending, nor to its knowledge, are any claims threatened which are related to or
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might adversely affect the transactions contemplated by this Agreement.
Section 6.06. Unsolicited Offer. Purchaser acknowledges that its offer
to purchase the Assets embodied in this Agreement was not solicited by Sellers.
Section 6.07. Survival of Representations and Warranties. The
representations and warranties made by the Purchaser herein shall survive the
closing of this Agreement and the delivery of the deed to the Premises for two
years.
Article VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of the Purchaser to close this transaction is subject to
the following conditions and in the event any of the following conditions are
not met, the Purchaser shall have the right, at its election, to terminate this
Agreement.
Section 7.01. Performance by the Sellers. The Sellers shall have
complied with all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Sellers at or before the Closing Date.
Section 7.02. Production of Records. If requested in writing by
Purchaser, the Sellers shall make available to Purchaser within 10 days after
the date on which Purchaser executes this Agreement the following documents:
(a) Plans and specifications for improvements on the Premises
which Sellers may have in their possession;
(b) Any MAI appraisals or surveys Sellers may have in their
possession for the Premises (or which are in the possession of any of
Sellers' agents, representatives, or affiliates);
(c) Any zoning, platting, or building permits placing special
restrictions on the use of the Premises or future development of the
Premises;
(d) Personnel records, environmental reports, insurance
policies, contracts, leases and agreements described in Exhibit
1.01(d), the licenses and permits described in Exhibit 5.22 and the
litigation listed in Exhibit 5.23; and
(e) Copy of Prospectus certified by Sellers as filed with the
Florida Division of Mobile Homes and currently being used by Sellers.
Section 7.03. Representations and Warranties True at Closing. The
representations and warranties of the Sellers contained in this Agreement or in
any exhibit to this Agreement, or in any other certificate or document delivered
by Sellers pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, shall be true on and as of the Closing Date in
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all material respects as to those such representations and warranties as were
made on and as of such date.
Section 7.04. No Material Changes. On the Closing Date there shall have
been no material adverse changes in the operation or condition of the Premises
since the date of the execution of this Agreement. A ten percent decrease in the
occupancy of the ACLF, Nursing Home or Mobile Home Park from the date of this
Agreement to the Closing Date shall be a Material Adverse Change.
Section 7.05. Delivery of Documents. The Sellers shall have delivered
to Purchaser on the Closing Date all documents required to be delivered to
Purchaser by this Agreement.
Section 7.06. Opinion of Counsel. Purchaser shall have received the
favorable opinion of counsel to Sellers addressed to Purchaser dated the Closing
Date to the effect that: (a) Sellers have all right, power and authority to
enter into this Agreement and to sell the Assets as provided for herein, and
this Agreement, and any instrument or document executed in connection herewith,
has been duly executed and delivered by Sellers; (b) this Agreement, and all
instruments and documents executed in connection herewith, constitute valid and
binding obligations of Sellers, enforceable against Sellers in accordance with
their respective terms, except to the extent, if any, that enforcement may be
limited by bankruptcy and other laws effecting creditors' rights generally and
except that such counsel need not express any opinion on the availability of
equitable remedies; (c) the respective Sellers are corporations, limited
liability companies or partnerships duly organized, validly existing and in good
standing under the laws of the State of Florida and have full power and
authority to own the properties and to engage in the business and activities now
conducted by it; (d) except as disclosed on Exhibits 5.15 and 5.23 hereto, to
the best of such counsel's knowledge after inquiry, there are no material
actions, suits, claims, proceedings, investigations or litigation pending or any
facts known to such counsel which would give rise to any action, suit, claim,
proceeding, investigation, or litigation; and (e) to the best of such counsel's
knowledge, the Sellers are not in default with respect to any order, writ,
injunction, written request or decree of any court of federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality. Seller's counsel shall be entitled to rely on the opinion of
other attorneys representing the Sellers on matters which an opinion is
requested.
If any of the conditions set forth in this Section 7.06 have not been
satisfied, Purchaser may nevertheless elect to proceed with the consummation of
the transactions contemplated hereby. Any such election to proceed shall be
evidenced by a certificate signed on behalf of Purchaser by an officer of
Purchaser.
Article VIII
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of the Sellers to close this transaction are subject to
the following conditions and in the event any of the following conditions are
not met, Sellers shall have the right, at their election, to terminate this
Agreement.
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Section 8.01. Representations and Warranties True at Closing. The
representations and warranties of the Purchaser contained in this Agreement or
in any certificate or document signed by Purchaser pursuant to the provisions
hereof, or in connection with the transaction contemplated hereby, shall be true
on and as of the Closing Date in all material respects as though such
representations and warranties were made at and as of such date.
Section 8.02. Compliance with the Agreement. The Purchaser shall have
performed and compiled with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the closing.
Section 8.03. Government Approvals. Purchaser and its assignee, shall
have obtained from the appropriate governmental agencies all approvals, permits
and licenses necessary to transfer and operate the Premises as a Mobile Home
Park, Nursing Home and ACLF in the State of Florida, which approvals shall not
place any restrictions, impositions, or conditions on the subsequent operations
which would materially affect the operations of the Premises. This shall
include, but not be limited to, the issuance of the necessary licenses to
operate the Premises at the designated bed capacity and confirmation that there
are no Life Safety Code violations, as well as certification for participation
in the Medicare and Medicaid programs.
Article IX
CLOSING
Section 9.01. Closing Date. The closing shall take place at the offices
of Shackleford, Farrior, Stallings & Evans, P.A., 501 East Kennedy Blvd., Suite
1400, Tampa, Florida 33602 (or such other place as Sellers and Purchaser may
agree), subject to all necessary state and federal approvals and the approval of
Sellers' lender, and shall occur as follows: (a) the closing of the purchase of
the Mobile Home Park (including the Sewer Plant) by CADC from Sellers shall
occur on or before March 31, 1999 (the "Park Closing Date") and (b) the closing
of the purchase of the Commercial Parcels by FALP for the purchase price of ONE
HUNDRED DOLLARS ($100.00) and other good and valuable consideration from Sellers
and the closing of the purchase of the ACLF and the Nursing Home by Senior Care
from Sellers shall occur on the same date and shall occur no later than June 30,
1999 (the "ACLF/NH Closing Date"). If such date falls on a weekend or holiday,
the closing shall take place on the following business day. The parties hereby
acknowledge that Sellers' obligation to close separately the purchase of (a) the
Mobile Home Park (including the Sewer Plant) and (b) the Commercial Parcels,
ACLF and Nursing Home is conditioned upon Sellers receiving approval from their
lender for the separate sale of (a) the Mobile Home (including the Sewer Plant)
and (b) the Commercial Parcels, the ACLF and the Nursing Home. In the event that
such approval from Sellers' lender has not been obtained on or before March 12,
1999, the Park Closing Date shall occur on the same date as the ACLF/NH Closing
Date and shall be extended until June 30, 1999, and the date for the completion
of the update due diligence inspection and the completion of the audit of the
books and records shall be extended to a date which is fourteen (14) days prior
to the ACLF/NH Closing. The parties hereby agree that any references to "Closing
Date" in this Agreement shall mean the Park Closing Date and the ACLF/NH Closing
Date.
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Section 9.02. Delivery of Documents by Sellers. On the Closing Date,
Sellers shall deliver to the Purchaser the following properly executed documents
in addition to all other documents required to be delivered by Sellers as
provided for elsewhere in the Agreement:
(a) Special warranty deeds conveying fee simple marketable
title to the Premises to Purchaser, or its assigns, duly witnessed and
attested for recording in the State of Florida, free and clear of all
liens, restrictions and encumbrances other than Permitted Exceptions;
(b) An Assignment and Assumption Agreement with respect to the
Assumed Contracts;
(c) A general warranty bill of sale for all Personalty
described in Exhibit 1.02(c) attached hereto, including duly endorsed
certificates of title with respect to any motor vehicles to be
conveyed;
(d) An updated commitment for title insurance;
(e) Sellers' no-lien affidavit;
(f) Sellers' "FIRPTA" Affidavit in accordance with ss.1445 of
the Internal Revenue Code of 1986, as amended;
(g) Assignment of the trade names Lakeshore Villas, The Inn at
Lakeshore Villas, and Lakeshore Village Healthcare, Ltd. under which
the Sellers have been operating the businesses located on the Premises;
(h) An assignment of any unexpired warranties, guarantees and
indemnities in effect with respect to the Assets;
(i) Certified resolutions of all of Sellers' shareholders,
directors, and, as applicable, partners approving and authorizing the
transaction embodied herein.
(j) Sellers' closing statement and such other documents or
affidavits as may be required to obtain the title insurance policy free
and clear of all liens, restrictions and encumbrances other than
Permitted Exceptions.
(k) A true and correct copy of the Notice of Rental Increase
for 1999 which was provided by Sellers to the residents of the Mobile
Home Park on the Park Closing Date is attached to the Sixth Amendment
to Purchase Agreement as Exhibit A.
(l) A true and correct copy of the rent roll for the Mobile
Home Park as of January 1, 1998 and as of January 1, 1999 is attached
to the Sixth Amendment to Purchase Agreement as Exhibit B.
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Section 9.03. Delivery of Documents by Purchaser. On the Closing Date,
the Purchaser shall deliver to Sellers the following properly executed documents
in addition to all other documents required to be delivered by Purchaser under
this Agreement:
(a) The sum of THIRTY-FOUR MILLION TWO HUNDRED AND FIFTY
THOUSAND DOLLARS ($34,250,000), including the Deposit, by certified
check or Federal wire transfer to Sellers' bank (subject to
adjustment).
(b) Consulting Agreements between Senior Care and Roland A.
Goehring and David Goehring under which Roland A. Goehring and David
Goehring shall serve as consultants to the manager of the ACLF and the
Nursing Home which shall be selected by Senior Care and each shall be
paid consulting fees of $500 per month for 24 months following the
Closing Date. The form and content of the Consulting Agreement shall be
reasonably acceptable to Senior Care, Roland A. Goehring and David
Goehring.
Section 9.04. Prorations. Rents, fees, ad valorem taxes, utilities,
insurance and other obligations and charges shall be prorated (on a calendar
year basis) between the Purchaser and Sellers as of the close of business on the
day prior to the Closing Date. Unless otherwise agreed in writing prior to
closing, the Sellers will be entitled to receive all deposits posted with
utilities, contract deposits and similar prepaid items.
Section 9.05. Expenses and Costs of Premises. All expenses and costs of
the Premises will be paid by Sellers through the close of business on the day
prior to the Closing Date, including, but not limited to, employee wages and
benefits and any amounts due to Medicare/Medicaid intermediaries. None of these
obligations will be assumed by Purchaser. The operation of the Premises by the
Sellers and the income and expenses attributable thereto up to the close of
business of the day preceding the Closing Date shall be for the account of
Sellers, and thereafter for the account of Purchaser.
Section 9.06. Brokers' Fees and Finders' Fees. Sellers shall be solely
responsible and liable for payment of any fee, commission, or other compensation
which may be due to a broker or finder engaged by Sellers to sell the Premises.
Sellers shall indemnify and hold Purchaser harmless against and from any such
claim and all costs, expenses, and liabilities incurred in connection with such
claim, or any action or proceeding brought thereon (including, but without
limitation, attorney and witness fees, and court costs in defending against such
claim). Purchaser represents and warrants to Sellers that Purchaser has not
employed or dealt with any broker or finder in connection with this transaction
to whom Purchaser has agreed to pay a fee, and, if any person shall assert a
claim to a fee, commission, or other compensation on account of alleged
employment by Purchaser of a broker or finder or for performance of services to
Purchaser by a broker or finder in connection with this transaction, Purchaser
shall indemnify and hold Sellers harmless against and from any such claim and
costs, expenses and liabilities incurred in connection with such claim.
Section 9.07. Accounts Receivable/Payable; Accounting, Services.
Sellers shall retain all accounts receivable generated from Sellers' business
operations accrued through the close of business on the day preceding the
Closing Date and shall remain responsible for all accounts payable arising out
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of the operation of Sellers' business operations through the close of business
on the day preceding the Closing Date. For a period of one hundred eighty (180)
days after the Closing Date, Purchaser's accounting department shall continue to
collect Sellers' accounts receivable on Sellers' behalf and to pay Sellers'
payables as instructed by Sellers. Such services shall be provided without cost
to Sellers, except any fees or out of pocket expenses paid or incurred by third
parties at Sellers' direction to collect any accounts receivable shall be
Sellers' responsibility. Accounts collected shall be credited first to accounts
owed to Sellers and thereafter to amounts owed to Purchaser other than
designated funds from Medicare or Medicaid which receipts shall be applied as
designated on the checks received.
Section 9.08. Security Deposits and Patient Assets. All security
deposits, patient property and patient funds held by the Sellers shall be turned
over to the Purchaser at the closing, and Purchaser shall execute a receipt
therefor. Purchaser shall thereafter be responsible for seeing that such funds
and property are properly managed and held in escrow, and shall hold the Sellers
harmless from any and all liability in connection with any loss of any deposits,
property or funds as long as the same were delivered to Purchaser and are
specified on the receipt given therefor.
Section 9.09. Commission Due Broker. At the Park Closing, Sellers shall
pay to Hallmark Realty, Inc. (the "Broker") a commission equal to two percent
(2%) of the purchase price paid to Sellers in connection with the purchase of
the Mobile Home Park (including the Sewer Plant). At the ACLF/NH Closing, Seller
shall pay to the Broker a commission equal to two percent (2%) of the purchase
price paid to Sellers in connection with the purchase of the ACLF and the
Nursing Home.
Section 9.10. Taxes. Sellers shall pay all taxes and documentary stamps
required by the State of Florida relating to the recording of the deeds to the
Premises. With respect to the sale of the Personalty, Purchaser will obtain a
Florida Department of Revenue Sales Tax Dealer Registration prior to the Closing
Date. Purchaser shall be responsible for all sales or transfer taxes and fees
due on the sale of any Personalty to Purchaser to the extent the sale is not
exempt.
Section 9.11. Employees. Subsequent to the execution of this Agreement,
and subject to the reasonable objection of either party, Sellers shall determine
the timing and manner of advising employees at the Premises of this Agreement.
Sellers shall remain liable for and pay as they come due, all accrued vacation
benefits, accrued sick pay benefits, and accrued workers compensation premiums
in regard to those employees of Sellers who are not hired by Purchaser. With
respect to any of Sellers' employees who are hired by Purchaser, Purchaser shall
receive a credit against the Purchase Price for all such benefits that are
accrued and unpaid as of the close of business on the day prior to the Closing
Date. Thereafter, any and all benefits accrued for paid time off or severance
pay, and any and all distributions from pension or profit sharing plans or any
deferred compensation payable to employees hired by Purchaser by reason of their
employment prior to the Closing shall be the sole obligation of Purchaser. If
any employee voluntarily terminates his employment prior to Closing Date,
Sellers shall be responsible for the payment of any severance benefits due to
said employee.
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Section 9.12. Retention of Employees. Purchaser will make good faith
efforts to hire the current employees of the Sellers as of the Closing Date at
then-current levels of seniority and salary. To the extent applicable, the
Purchaser shall comply with the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. ss.2009, et. seq.
Section 9.13. Possession. Sellers shall deliver possession of the
Premises and the other Assets being sold to Purchaser at the closing.
Section 9.14. Personnel Records. In regard to any employees currently
employed by Sellers at the Premises who are hired by Purchaser following
Closing, all personnel records for those employees shall be transferred to
Purchaser at Closing. Purchaser shall maintain confidentiality of such records
as required by law.
Section 9.15. Provider Number. Purchaser shall obtain a new
Medicare/Medicaid provider number, which number shall be used exclusively by
Purchaser for billing purposes from and after the Closing Date.
Section 9.16. Utility Services. On the Closing Date or as soon
thereafter as practicable, the Sellers and the Purchaser will cooperate with
each other to arrange to disconnect or obtain final readings with respect to all
electricity, water, telephone, and other utilities serving the Premises that are
in the Sellers' name, and to have such services reconnected in or otherwise
transferred to the Purchaser's name immediately thereafter.
Section 9.17. Procedure Relating to Motor Vehicles. At the Closing, the
Purchaser and the Sellers shall execute an affidavit prepared by the Sellers for
use in transferring the certificates of title to the titled motor vehicles (and
trailers) included in the Assets. The affidavit shall identify each such motor
vehicle by year, make, model and vehicle identification number and shall set
forth the current odometer readings and the purchase price that the parties have
mutually agreed to allocate to each such motor vehicle. The sum allocated to
each motor vehicle shall not be less than 80% of the average loan value as
reported in the current NADA Used Car Guide (or another nationally recognized
pricing guide with respect to vehicles not listed in the NADA Used Car Guide).
Immediately following the closing, the Purchaser shall present the affidavit,
together with the original certificates of title, HSW Forms 8204 (Application
for Certificate of Title and/or Vehicle Registration) and proof of insurance
(i.e., an insurance certificate or binder) to the Florida Department of Motor
Vehicles to secure new certificates of title and registrations/license tags in
the Purchaser's name. All costs of transfers of motor vehicles up to $10,000
shall be paid by Purchaser. Any additional costs shall be paid by Sellers.
Section 9.18. Other Actions and Instruments. The Purchaser and the
Sellers shall take such other actions and shall execute and deliver such other
instruments, documents and certificates at the Closing as are required by the
terms of this Agreement or as may be reasonably requested by the Purchaser or
the Sellers in connection with the closing of the transactions contemplated by
this Agreement.
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Section 9.19. Letter of Credit.
(a) At the Park Closing, Sellers shall deliver to CADC, or its
assignee, an irrevocable standby letter of credit issued by a state or
national banking institution insured by the Federal Deposit Insurance
Corporation (the "Bank") in the face amount of ONE HUNDRED AND FIFTY
THOUSAND DOLLARS ($150,000) (the "L/C") which entitles CADC, or its
assignee, to draw on such instrument in the event Operating Costs (as
defined below) incurred by CADC, or its assignee, for the operation of
the Sewer Plant for any year during a three year period commencing on
the first day of the first full month following the Park Closing Date
exceeds the less of (i) ONE HUNDRED THOUSAND DOLLARS ($100,000) or (ii)
the amount of the Operating Costs incurred by Sellers for the operation
of the Sewer Plant for the twelve month period ending September 30,
1998 (the "Guaranteed Maximum Annual Costs"). Upon the occurrence of
any such event (a "Drawing Event"), CADC, or its assignee, shall have
the right, in its sole and absolute discretion, to draw on the L/C to
fund the amount by which the Operating Costs exceeds the Guaranteed
Maximum Annual Costs by delivering to the Bank a certificate signed by
an officer of CADC, or its assignee, stating the amount by which the
Operating Costs exceeded the Guaranteed Maximum Annual Costs and
appending thereto a detailed breakdown of Operating Costs for the
period in question. CADC, or its assignee shall deliver a copy of such
certificate and breakdown of Operating Costs to Sellers; provided
however, in no event shall any Drawing Event require the consent of
Sellers.
(b) The L/C shall have a term of not less than one year and
shall be maintained in force by renewal or replacement for a term of
three years. In the event Sellers fail to deliver a renewal or
replacement L/C to CADC, or its assignee, within ten business days
prior to the expiration of any L/C during the three year period
following the Closing Date, CADC, or its assignee, shall have the right
to draw on the L/C at any time within five business days prior to the
scheduled expiration of the L/C and have the Bank place the proceeds
thereof in escrow in accordance with the procedures set forth in
Section 3.2 of the L/C Procedures Agreement attached to the Purchase
Agreement as Exhibit 12.06(a).
(c) After any L/C draw has occurred, Sellers may elect to
contest CADC's, or its assignee's, right to retain the monies received
from the draw through an arbitration proceeding in accordance with the
procedures set forth in Section 12.05(a) of this Agreement; provided
that nothing contained herein shall entitle the Sellers to request the
Bank not to honor CADC's, or its assignee's, draw request.
(d) With the exception of draws on the L/C as provided in (a)
above, Sellers shall have no liability with respect to Operating Costs
for the Sewer Plant after the Park Closing.
(e) As used in this Section 9.19, the term "Operating Costs"
shall mean the aggregate of all direct costs of operating and
maintaining the Sewer Plant, determined in accordance with generally
accepted accounting principles and "Sewer Plant" shall mean the sewage
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treatment plant located on the Premises of the size and configuration
existing on the Closing Date.
Section 9.20. Miscellaneous Real Estate Matters. On the Park Closing
Date, Sellers and CADC hereby agree to enter into the agreements described in
subsections (a), (b) and (c) below subject to the reasonable approval of Senior
Care, Sellers hereby agree to assign all of its right, title and interest in and
to such agreements described in subsections (a), (b) and (c) below to Senior
Care on the ACLF/NH Closing Date and CADC and the Utility LLC hereby expressly
consents to the assignment of such agreements described in subsections (a), (b)
and (c) below by Sellers to HHCC or Senior Care as the purchaser of the ACLF and
the Nursing Home:
(a) Ground Lease. CADC hereby agrees to ground lease to
Sellers lots 269, 270, 271, 272, 273, 274 and 275 and a small portion
of property located east and south of the drainage area north of such
lots, which are located within the Mobile Home Park as legally
described in Exhibit 9.20(a) which shall be attached hereto (the
"Ground Lease Property") pursuant to a ground lease agreement, mutually
agreeable to Senior Care, CADC and Sellers, which shall be executed by
the parties on the Park Closing Date (the "Ground Lease"). CADC and
Sellers acknowledge and agree that the Ground Lease shall be for a term
of fifty (50) years at a fixed rental rate of THIRTY-SEVEN THOUSAND SIX
HUNDRED THIRTY EIGHT AND NO/100 DOLLARS ($37,638) per annum for the
first five (5) years of the Ground Lease. Any rentals received by CADC
from tenants who reside on the Ground Lease Property shall be applied
to reduce the amount of rentals due and payable by Sellers. CADC shall
obtain the prior written consent of Sellers prior to entering into
lease(s) for the use of any mobile homes located on the Ground Lease
Property. Sellers shall have the option of terminating the Ground Lease
on the fifth anniversary of the Ground Lease provided that Sellers
provide CADC with at least thirty (30) days written notice of the
election to terminate the Ground Lease and the Ground Lease Property is
restored to its original condition. Thereafter, beginning on January 1,
2004, the rental rate shall be increased annually by the greater of (i)
four percent (4%) per annum, or (ii) the corresponding increase in the
Consumer Price Index for the preceding year. CADC and Sellers hereby
acknowledge and agree that each party shall negotiate in good faith the
remaining terms of the Ground Lease. At the ACLF/NH Closing, HHCC or
Senior Care hereby agrees to reimburse Sellers for any rental payments
made by Sellers under the Ground Lease during the time period between
the Park Closing and the ACLF/NH Closing. The Ground Lease shall be
assignable to any Purchaser of the ACLF and Nursing Home.
(b) Utility LLC. CADC hereby agrees to form a limited
liability company, the Utility LLC, with Sellers, whereby CADC shall
own ninety-nine percent (99%) of the member interests and Sellers shall
own one percent (1%) of the member interests. The member's initial
capital contributions to the Utility LLC shall be $100.00 for Sellers
and $9,900.00 for CADC. The purpose of the Utility LLC shall be to own,
operate, maintain and manage the Sewer Plant located on the Premises.
CADC and Sellers agree to enter into a Sewer Treatment Agreement with
the Utility LLC, mutually agreeable to Senior Care, CADC and Seller,
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substantially in the form of Exhibit 9.20(b) (to be attached within ten
(10) days of the execution date of the Sixth Amendment to Purchase
Agreement) at the Park Closing, describing each member's access to the
services to be described in such agreement. Sellers agree that its
portion of the utility services shall be based upon a formula as more
particularly described in the Sewer Treatment Agreement which shall be
calculated in part based upon the historic usage of the sewer treatment
facilities, the fees paid by the ACLF, the Nursing Home and the Mobile
Home Park for the utility services and upon the gallons utilized by the
ACLF and the Nursing Home. The owner of the one percent (1%) interest
in the Utility LLC shall have the right during normal business hours
upon advance notice to review the books and records of the Utility LLC
to verify the accuracy of the amounts charged for the utility services
by the Utility LLC. CADC and Sellers hereby agree that each member of
the Utility LLC, shall grant the Utility LLC all easements which are
necessary for the operation of the Sewer Plant by the Utility LLC and
which are located on the portion of the Premises owned by each party or
its affiliates. In addition, Sellers agree to convey to the Utility LLC
ownership of all utility lines located on the Premises.
(c) Cross Easement Agreement. CADC and Sellers hereby agree to
negotiate in good faith to enter into a cross easement agreement,
mutually agreeable to Senior Care, effective as of the Park Closing
Date whereby each party shall grant to the other party certain
easements of ingress and egress and other easements necessary for the
full enjoyment of the portion of the Premises, including drainage and
utilities, owned by each party and/or its affiliates as mutually agreed
to by the CADC and Sellers and mutually agreeable to Senior Care.
Section 9.21. Remedial Work.
(a) Mobile Home Park. Pursuant to the Executive Summary report
prepared by EA Group, Inc. ("EA Group") based upon a July 1998 property
inspection, EA Group identified certain initial capital expenditures
(collectively, "ICEs") which are required to be made in connection with
the Mobile Home Park. These items are outlined in detail in the
"Immediate Needs Table" contained in the report prepared by EA Group
which is attached hereto and incorporated herein as Exhibit 9.21(a).
All the ICEs shall be repaired, corrected or incurred on or before the
Park Closing Date as provided below:
(i) Sellers' Obligation. Sellers shall at its sole
cost and expense either (i) repair and/or correct all of the
ICEs on or before the Park Closing Date and/or (ii) enter into
an escrow agreement with CADC on the Park Closing Date whereby
Sellers agree to escrow an amount equal to 125% of the costs
estimated by CADC and Sellers to repair and/or correct the
ICEs which are not repaired and/or corrected by Sellers prior
to the Park Closing Date.
(ii) HHCC's or Senior Care's Option. In the event
that Sellers fail to correct and/or repair the ICEs or refuse
to escrow sufficient funds to repair or correct the ICEs as
provided in Section 9.21(a)(i) above, HHCC or Senior Care
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shall have the option either of (A) repairing and/or
correcting the ICEs on or before the Park Closing Date on
behalf of Sellers and/or (B) entering into an escrow agreement
with CADC on the Park Closing Date whereby HHCC or Senior Care
agrees to escrow an amount equal to 125% of the costs
estimated by CADC and HHCC or Senior Care to repair and/or
correct the ICEs which are not repaired and/or corrected by
Sellers and/or HHCC or Senior Care prior to the Park Closing
Date. Notwithstanding the foregoing, Sellers shall reimburse
and promptly indemnify HHCC or Senior Care for and in respect
of, and shall pay any and all costs and expenses, including
attorneys' fees, incurred by HHCC or Senior Care arising in
connection with the exercise by HHCC or Senior Care of its
option(s) pursuant to this Section 9.21(a)(ii).
(iii) CADC's Remedy. In the event that Sellers fail
or refuse to fulfill their obligations as set forth in Section
9.21(a)(i) above and HHCC or Senior Care does not exercise the
option(s) to cure on behalf of Sellers as set forth in Section
9.21(a)(ii) above, CADC may terminate its obligations under
this Agreement (and under the Agreement to Assign, as amended,
entered into by and between HHCC and Community Acquisition).
In the event of such termination by CADC, HHCC agrees to
reimburse immediately to CADC the deposit of ONE HUNDRED
THOUSAND DOLLARS ($100,000) previously advanced by CADC
pursuant to the Agreement to Assign, as amended, and
immediately reimburse CADC for one hundred percent (100%) of
the third party out-of-pocket costs advanced by CADC in
connection with the ACLF and/or the Nursing Home.
(b) Sewer Plant. Sellers hereby agree to repair, replace
and/or correct all items contained in the report prepared by H2O (the
"H2O Report") which is attached hereto and incorporated herein as
Exhibit 9.21(b) at the Sewer Plant, to implement the recommendations of
H20 set forth in the H2O Report and to otherwise bring the Sewer Plant
into full compliance with the Department of Environmental Protection
("DEP"), Environmental Protection Commission of Hillsborough County
("EPC") and the final consent order to be entered into by Lakeshore
Villas, Inc. and the EPC (the "Consent Order"), a draft of which is
attached to the H2O Report (collectively referred to herein as the
"Repairs and Compliance"). Prior to the Park Closing Date, Sellers
shall furnish to CADC reasonable evidence that the Repairs and
Compliance to the Sewer Plant have been completed. In the event that
Sellers have not completed all of the Repairs and Compliance prior to
the Park Closing, Sellers and CADC hereby agree to enter into an escrow
agreement on the Park Closing Date whereby Sellers agree to escrow an
amount equal to 125% of the costs estimated by H2O to complete such
Repairs and Compliance. In the event that such amounts held in escrow
are not sufficient to complete all of the Repairs and Compliance, the
owner of the one percent (1%) interest in the Utility LLC (i.e.,
Sellers, HHCC or Senior Care ) shall be assessed the amount which
represents the difference between the amounts held in escrow for the
capital repairs to the Sewer Plant and the actual costs of the Repairs
and Compliance which shall be completed by either H2O or a contractor
under the supervision of H2O. Notwithstanding the foregoing, Sellers
shall reimburse and promptly indemnify HHCC or Senior Care as the owner
of the ACLF and Nursing Home for and in respect of, and shall pay any
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and all costs and expenses, including attorneys' fees, incurred by HHCC
or Senior Care arising in connection with the assessment by the Utility
LLC upon HHCC or Senior Care for the costs of completion of the Repairs
and Compliance to the Sewer Plant.
Article X
RISK OF LOSS
Section 10.01. Risk of Loss. The risk of loss or damage to the Premises
until the Closing Date shall be borne by Sellers. If the improvements on the
Premises are damaged by fire or other casualty before the Closing Date and can
be restored to substantially the same condition as existed on the date of this
Agreement within a period of 60 days thereafter and at a cost not to exceed One
Hundred Thousand Dollars ($100,000.00), Sellers shall promptly commence with the
restoration of the improvements. The Closing Date shall be extended for a period
not to exceed 60 days to permit Sellers time to restore such improvements. If
after a fire or other casualty any of the following shall happen:
(a) It is not possible for the Sellers to restore within 60
days the damaged improvements to the same condition as existed at the
date of this Agreement; or
(b) The cost of restoring the improvements exceeds Five
Hundred Thousand Dollars ($500,000.00), either the Purchaser or the
Sellers may elect to cancel this Agreement upon 10 days written notice
to the other, and the parties shall be released of any and all
obligations and liability hereunder. If neither party so elects, the
Sellers shall restore the improvements to the same condition which
existed at the date of this Agreement. Upon the completion of such
restoration, the parties shall proceed to close this transaction. The
determination of the adjuster employed by the insurance company
insuring the Premises shall be conclusive and binding on all parties as
to the cost of restoration or time required to restore the improvements
in the event there should be a dispute about such matters.
Article XI
DEFAULT
Section 11.01. Default by Sellers. If Sellers fail to perform any of
their obligations hereunder, Purchaser shall have the right to receive the
return of the Deposit and either: (a) declare this Agreement terminated, or (b)
sue for damages, specific performance, or both.
Section 11.02. Default by Purchaser. If Purchaser falls to tender the
Purchase Price and close hereunder if required to do so by this Agreement,
Sellers shall have the right to receive the Deposit as liquidated damages for
the failure of Purchaser to perform under this Agreement. The parties
acknowledge the difficulty of ascertaining actual damages; no other damages or
remedies shall be available to Sellers for Purchaser's failure to close.
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Article XII
INDEMNIFICATION AND ARBITRATION
Section 12.01. By Purchaser. The Purchaser shall defend and promptly
indemnify the Sellers and save and hold them harmless from, against, for and in
respect of, and shall pay any and all damages, losses, obligations, liabilities,
claims, encumbrances, deficiencies, costs and expenses, including, without
limitation, reasonable attorneys' fees and other costs and expenses incident to
any suit, action, investigation, claim or proceeding (all hereinafter
collectively referred to as "Losses") suffered, sustained, incurred or required
to be paid by the Sellers by reason of any breach or failure of observance or
performance of any representation, warranty, covenant, agreement or commitment
made by the Purchaser hereunder or relating thereto or as a result of any such
representation, warranty, covenant, agreement or commitment being untrue or
incorrect in any materials respect.
Section 12.02. By Sellers. The Sellers shall defend and promptly
indemnify the Purchaser and save and hold it harmless from, against, for and in
respect of, and shall pay any and all damages, losses, obligations, liabilities,
claims, encumbrances, deficiencies, costs and expenses, including without
limitation, reasonable attorneys' fees and other costs and expenses incident to
any suit, action, investigation, claim or proceeding (all hereinafter
collectively referred to as "Losses") suffered, sustained, incurred or required
to be paid by the Purchaser by reason of any breach or failure of observation or
performance of any representation, warranty, covenant, agreement or commitment
made by the Sellers hereunder or as a result of any such representation,
warranty, covenant, agreement or commitment being untrue or incorrect in any
material respect.
Section 12.03. Claim for Indemnification. For purposes of this Article
XII, the party entitled to indemnification shall be known as the "Injured Party"
and the party required to indemnify shall be known as the "Other Party." In the
event that the Other Party shall be obligated to the Injured Party pursuant to
this Article XII, or in the event that a suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which the Other Party may
become obligated to the Injured Party hereunder, the Injured Party shall give
prompt written notice to the Other Party of the occurrence of such event. The
Other Party agrees to defend, contest or otherwise protect against any such
suit, action, investigation, claim or proceeding at the Other Party's own cost
and expense. The Injured Party shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by counsel of its own
choice. In the event that the Other Party fails to timely defend, contest or
otherwise protect against any such suit, action, investigation, claim or
proceeding, the Injured Party shall have the right to defend, contest or
otherwise protect against the same and may make any compromise or settlement
thereof and recover the entire cost thereof from the Other Party, including,
without limitation, reasonable attorneys' fees, disbursements and all amounts
paid as a result of such suit, action, investigation, claim or proceeding or
compromise or settlement thereof.
Section 12.04. Successors and Assigns. All of the rights and
obligations of the Sellers and the Purchaser pursuant to Article 12 shall
survive any sale, assignment or other transfer by the Purchaser to or interest
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in any of the Shares or any part thereof and shall apply to and bind each and
every successor and assign of the Purchaser to any of the Shares.
Section 12.05. Arbitration.
(a) The Purchaser and Sellers agree that the arbitration
procedure set forth below shall be the sole and exclusive method for
resolving and remedying claims for money damages arising out of the
provisions of this Agreement (the "Disputes"). Nothing in this Section
12.05 shall prohibit either the Purchaser or the Sellers from
instituting litigation to enforce any Final Determination (as defined
below). The parties hereby agree and acknowledge that, except as
otherwise provided in this Section 12.05 or in the Commercial
Arbitration Rules of the American Arbitration Association as in effect
from time to time, the arbitration procedures and any Final
Determination hereunder shall be governed by, and shall be enforced
pursuant to applicable Florida law.
(b) In the event that either the Purchaser or the Sellers
assert that there exists a Dispute, such party shall deliver a written
notice to each other party involved therein specifying the nature of
the asserted Dispute and requesting a meeting to attempt to resolve the
same. If no such resolution is reached within ten (10) Business Days
after such delivery of such notice, the party delivering such notice of
dispute (the "Disputing Person") may, within forty-five (45) Business
Days after delivery of such notice, commence arbitration hereunder by
delivering to each other party involved therein a notice of arbitration
(a "Notice of Arbitration"). Such Notice of Arbitration shall specify
the matters as to which arbitration is sought, the nature of any
Dispute, the claims of each party to the arbitration and shall specify
the amount and nature of any damages, if any, sought to be recovered as
a result of any alleged claim, and any other matters required by the
Commercial Arbitration Rules of the American Arbitration Association in
effect from time to time to be included therein, if any.
(c) The Purchaser and the Sellers each shall select one
arbitrator expert in the subject matter of the Dispute (the arbitrators
so selected shall be referred to herein as the Buyer's Arbitrator" and
the "Sellers' Arbitrator," respectively). In the event that either
party fails to select an arbitrator as set forth herein with twenty
(20) calendar days from the delivery party fails of a Notice of
Arbitration, then the matter shall be resolved by the arbitrator
selected by the other party. The Sellers' Arbitrator and the
Purchaser's Arbitrator shall select a third independent, neutral
arbitrator expert in the subject mater of the dispute, and the three
arbitrators so selected shall resolve the matter according to the
procedures set forth in this Section 12.05. If the Sellers' Arbitrator
and the Purchaser's Arbitrator are unable to agree on a third
arbitrator within twenty (20) calendar days after their selection, the
Sellers' Arbitrator and the Buyer's Arbitrator shall each prepare a
list of three independent arbitrators. The Sellers' Arbitrator and the
Purchaser's Arbitrator shall each have the opportunity to designate as
objectionable and eliminate one arbitrator from the other arbitrator's
list with seven calendar days after submission thereof, and the
arbitrator shall then be selected by lot from the arbitrators remaining
on the lists submitted by the Seller's Arbitrator and the Buyer's
Arbitrator.
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(d) The arbitrator(s) selected pursuant to Section 12.05(c)
above will determine the allocation of the costs and expenses of
arbitration based upon the percentage which the portion of the
contested amount not awarded to each party bears to the amount actually
contested by such party. For example, if the Purchaser submits a claim
for $1,000 and if the Sellers contest only $500 of the amount claimed
by the Purchaser, and if the arbitrator(s) ultimately resolves the
dispute by awarding the Purchaser $300 of the $500 contested, then the
costs and expenses of arbitration will be allocated sixty percent (60%)
(that is, 300/500) to the Sellers and forty percent (40%) (that is,
200/500) to the Purchaser.
(e) The arbitration shall be conducted in Tampa, Florida under
the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time, except as modified by the
agreement of all of the parties to this Agreement. The arbitrator(s)
shall so conduct the arbitration that a final result, determination,
finding, judgment and/or award (the "Final Determination") is made or
rendered as soon as practicable, but in no event later than ninety (90)
Business Days after the delivery of the Notice of Arbitration not later
than ten (10) calendar days following completion of the arbitration.
The Final Determination must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may
be). The Final Determination shall be final and binding on all parties
and there shall be no appeal from or reexamination of the Final
Determination, except for fraud, perjury, evident partiality or
misconduct by an arbitrator prejudicing the rights of any party and to
correct manifest clerical errors.
(f) The Purchaser and the Sellers may enforce any Final
Determination in any state or federal court located in Tampa, Florida.
For the purpose of any action or proceeding instituted with respect to
any Final Determination, each party hereto hereby irrevocably submits
to the jurisdiction of such courts, irrevocably consents to the service
of process by registered mail or personal service and hereby
irrevocably waives, to the fullest extent permitted by law, any
objection which it may have or hereafter have as to personal
jurisdiction, the laying of the venue of any such action or proceeding
brought in any such court and any claim that any such action or
proceeding brought in any court has been brought in an inconvenient
form.
(g) Any party required to make a payment pursuant to this
Section 12.05 shall pay the party entitled to receive such payment
within ten (10) calendar days of the delivery of the Final
Determination to such responsible party. If any party shall fail to pay
the amount of any damages, if any, assessed against it within such ten
(10) calendar day period, the unpaid amount shall bear interest from
the date of such delivery at the lesser of (i) the prime rate of
interest published by the Board of Governors of the Federal Reserve
System as the "Bank Prime Loan" rate, in effect from time to time
(which rate shall be adjusted on the effective date of each change `in
such prime rate) plus two percent (2%) and (ii) the maximum rate
permitted by applicable usury laws. Interest on any such unpaid amount
shall be compounded semi-annually, computed on the basis of a 360-day
year consisting of twelve 30-day months and shall be payable on demand.
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In addition, such party shall promptly reimburse the other party for
any and all costs and expenses of any nature or kind whatsoever
(including but not limited to all attorney's fees) incurred in seeking
to collect such damages or to enforce any Final Determination.
Section 12.06. Payment of Claims. Subject to the provisions of this
Article 12, the Injured Party shall be entitled to payment from the other party
immediately upon receipt of a certified copy of a money judgment in favor of the
Purchaser issued by a court of competent jurisdiction together with a
certificate of an authorized officer of the Purchaser certifying that all
applicable appeals periods have expired relating to a Purchaser's Loss as
defined herein. The Sellers shall establish an escrow account for a period of
two (2) years in the initial amount of $500,000 (which may be reduced to
$250,000 after the first anniversary of the Closing Date), or in the
alternative, post a letter of credit in the amount of the escrow with an escrow
agreement setting forth the procedures for releasing the funds on a final
judgement by a final arbitrator. A copy of the L/C Procedures Agreement and
Escrow Agreement are attached hereto as Exhibits 12.06(a) and 12.06(b).
Section 12.07. Survival of Representations and Warranties. The
indemnification obligations set forth in this Article XII shall continue in
effect for a period of two years from the Closing Date.
Article XIII
RECORDS
Section 13.01. Records. For a period of three years after the Closing
Date, the parties shall keep full and accurate records of the information
required by this Agreement and each party shall maintain possession of those
records which relate to their ownership of the Premises, and shall make those
records and all others relating to this Agreement or required to be kept by this
Agreement available for review by a representative of the other party during
ordinary business hours, provided that the other party is given reasonable
notice in advance, in writing, of the intended record review. Sellers shall have
reasonable access to those records transferred to Purchaser for the purpose of
inspecting and copying such portion or all of those such records which are or
may be in any way related to any Medicare, Medicaid or tax audit or claim,
litigation, the conduct of administrative proceedings and any other actions or
claims relating to the Sellers' activities prior to the date of Closing. All
records will be retained by Purchaser in accordance with good business
practices, and no such records will be destroyed without affording the Sellers
30 days' prior written notice. Any party may, during such period, request that
the records to be destroyed be turned over to it. The party making such request
shall pay all reasonable costs in connection therewith. Nothing contained in
this Section shall permit Sellers access to any records of the Purchaser with
respect to Purchasers' activities after the Closing Date.
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Article XIV
MISCELLANEOUS
Section 14.01. Appraisals. The Purchaser may, at its option and cost,
obtain an MAI appraisal of the Premises. Sellers agree to allow Purchaser or its
representative access to the Premises for an appraisal. Obtaining an appraisal
shall not be deemed to be a condition precedent to closing.
Section 14.02. Confidentiality. The Purchaser will use any information
or documents (the "Due Diligence Information") provided by Sellers solely for
the purpose of the Purchaser's due diligence investigation of the Assets, and
unless and until the parties consummate the acquisition of the Assets, the
Purchaser, its affiliates, directors, officers, employees, advisors, and agents
(the "Purchaser's Representatives") will keep the Due Diligence Information
strictly confidential. The Purchaser will disclose the Due Diligence Information
only to the Representatives of the Purchaser who need to know such information
for the purpose of consummating the acquisition of the Assets. The Purchaser
agrees to be responsible for any breach of this confidentiality by any of the
Purchaser's Representatives. In the event the acquisition of the Assets is not
consummated, the Purchaser will return or deliver to the Sellers any materials
containing Due Diligence Information, together with any reports, surveys,
appraisals or other documents relating to the Assets obtained by the Purchaser,
or Purchaser shall certify in writing that all such materials or copies of such
materials have been destroyed. The Purchaser also will not use any Due Diligence
Information to compete with the Sellers in the event that the acquisition of the
Assets is not consummated. The provisions of this Section 14.02 will survive the
termination of this Agreement.
Section 14.03. Notices. Any notice, request, instruction or other
document which maybe delivered or given by a party hereunder, shall be deemed to
be given by either party upon being delivered personally or three days after
being mailed by certified mail, return receipt requested, postage prepaid and
addressed as follows:
To Sellers: Lakeshore Villas, Inc.
Lakeshore Villa Health Care, Ltd.
The Inn at Lakeshore Villas, Ltd.
c/o Roland A. Goehring, President
16001 Lakeshore Villa Drive
Tampa, FL 33613
With Copy to: Shackleford, Farrior, Stallings & Evans, P.A.
14th Floor
501 E. Kennedy Boulevard
Tampa, FL 33602
Attention: John I. Van Voris, Esq. and
Peter J. Kelly, Esq.
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To HHCC: Heights Healthcare Company, L.L.C.
Mr. David R. Vaughan, Managing Member
Suite 12
210 South Parsons Drive
Brandon, FL 33511
To CADC: Community Acquisition and Development Corporation
2637 McCormick Drive
Suite B
Clearwater, FL 33759
Attn: Joseph W. Gaynor
With Copy to: Annis, Mitchell, Cockey, Edwards and Roehn, P.A.
Suite 2100
201 N. Franklin Street
Tampa, FL 33602
Attn: Ms. Barbara Hardy
Senior Care: Senior Care Group, Inc.
6475 Holland Drive
Cumming, GA 30041
Attention: Mr. Robert E. Surtees
With Copy to: Kutak Rock
Suite 2100
225 Peachtree Street, N.E.
Atlanta, GA 30303-1731
Attention: Robert E. Altenbach, Esq.
To Broker: Hallmark Realty Corp.
Mr. David Vaughan
Suite 12
210 South Parsons Drive
Brandon, FL 33511
Section 14.04. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida, and
this Agreement shall be deemed to have been entered into in Tampa, Florida.
Section 14.05. Waiver. The terms, covenants, representations,
warranties and conditions of this Agreement can be waived only by written
instrument executed by the party waiving compliance. Failure of any party at any
time or times prior to the closing to require performance of any provision
hereof shall in no manner affect the right at a later time prior to the closing
to enforce the same. No waiver by any party of any condition or other breach of
any term, covenant, representation or warranty contained in this Agreement in
30
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any one or more instances shall be deemed to be or construed a waiver of any
other conditions or of the breach of any other term, covenant or warranty
contained in this Agreement.
Section 14.06. Captions. The captions and subdivisions contained in
this Agreement are for convenience and reference only and do not form a part of
this Agreement and are not intended to restrict or expand the text to which they
refer.
Section 14.07. Entire Agreement. This Agreement and the documents and
instruments contemplated hereby and thereby embody the entire agreement and
understanding between the parties and there are no other agreements,
representations, warranties and understandings, oral or written, between the
parties with respect to the subject matter of this Agreement. No alteration,
modification or change in this Agreement shall be valid unless in writing,
executed by the parties.
Section 14.08. Agreement Binding on Assign. This Agreement shall extend
to and be binding upon the Sellers, their successors and assigns and upon
Purchaser, its successors and assigns.
Section 14.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts together shall constitute one and the same instrument.
Section 14.10. Further Assurances. Purchaser and Sellers each agree
that it will, at any time prior to, at or after the Closing Date, duly execute
and deliver to the other any additional documents-and instruments which may
reasonably be determined as necessary in connection with the consummation of the
purchase and sale contemplated herein.
Section 14.11. Exhibits. The Exhibits to this Agreement are:
(a) Exhibit 1.1(a): Description of the Premises
(b) Exhibit 1.1(c): Description of the Personalty
(c) Exhibit 1.1(d): List of Assumed Contracts
(d) Exhibit 1.2: Excluded Assets
(e) Exhibit 3.1: Allocation of Purchase Price
(f) Exhibit 4.1: Permitted Exceptions
(g) Exhibit 5.15: Pending Investigations
(h) Exhibit 5.21: List of Medicare/Medicaid Waivers
(i) Exhibit 5.23: Pending Litigation
(j) Exhibit 5.26: Medicare/Medicaid
(k) Exhibit 9.20(a) Ground Lease Property
(l) Exhibit 9.20(b) Sewer Treatment Agreement
(m) Exhibit 9.21(a): List of Initial Capital Expenditures
(n) Exhibit 9.21(b) H2O Report
(o) Exhibit 12.6(a) L/C Procedures Agreement
(p) Exhibit 12.6(b) Escrow Agreement
(q) Exhibit 14.28: Chicago Titled Insurance Company's General
Conditions of Escrow
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Section 14.12. Assignment. This Agreement may not be assigned by
Purchaser without the prior written consent of Sellers, which consent shall not
be unreasonably withheld. Purchaser and Sellers hereby acknowledge that HHCC has
assigned or will assign its right to purchase the Mobile Home Park to CADC, its
right to purchase the Sewer Plant to the Utility LLC, its right to purchase the
Commercial Parcels to FALP and has assigned its right to purchase the ACLF and
the Nursing Home to Senior Care. Notwithstanding the foregoing, the parties
hereby acknowledge that in no event shall separate closings occur with respect
to the purchase of the ACLF and the Nursing Home. In addition, Sellers and HHCC
acknowledge that although HHCC has assigned or will assign its right to purchase
the Mobile Home Park to CAX, the Sewer Plant to the Utility LLC, the Commercial
Parcels to FALP and the ACLF and the Nursing Home to Senior Care, HHCC still
remains obligated to purchase the Assets as set forth in the Purchase Agreement
in the event that any of the assignees of HHCC are unable to consummate the
transactions contemplated by such assignments.
Section 14.13. Termination of Restated Purchase Agreement.
Notwithstanding anything to the contrary set forth in this Agreement or any
amendment to this Agreement by and between Sellers, HHCC, CADC and/or Senior
Care, in the event that Hillsborough County has not authorized the issuance of
industrial revenue bonds for a tax exempt bond offering by Senior Care to raise
proceeds in an amount at least equal to TWENTY-SIX MILLION TWO HUNDRED AND FIFTY
THOUSAND DOLLARS ($26,250,000) on or before __________, this Restated Purchase
Agreement shall be considered null and void, and Sellers and Purchaser shall be
bound by the terms and conditions set forth in the Purchase Agreement as amended
by the First Amendment to Purchase Agreement, the Second Amendment to Purchase
Agreement, the Third Amendment to Purchase Agreement, the Fourth Amendment to
Purchase Agreement, the Fifth Amendment to Purchase Agreement and the Sixth
Amendment as modified in accordance with this Section 18 of the Sixth Amendment.
Section 14.14. Return of CADC Deposit and Third Party Expenses. HHCC
and CADC hereby acknowledge that CADC previously advanced the sum of ONE HUNDRED
THOUSAND DOLLARS ($100,000) pursuant to the Agreement to Assign, as amended, by
and between HHCC and Community Acquisition which was used to pay Sellers the
initial deposit of ONE HUNDRED THOUSAND DOLLARS ($100,000) pursuant to Section
3.02(a) of this Agreement. In addition, in the Agreement to Assign by and
between HHCC and CAX, as amended, HHCC agreed to reimburse CADC for one hundred
percent (100%) of the third party out-of-pocket costs advanced by CADC in
connection with the ACLF and/or the Nursing Home. HHCC hereby agrees on the Park
Closing Date to reimburse CADC the sum of SEVENTY-FIVE THOUSAND DOLLARS
($75,000) and to reimburse CADC for one hundred percent (100%) of the third
party out-of-pocket costs advanced by CADC in connection with the ACLF and/or
Nursing Home.
Section 14.15. Time of Essence. Time is of the essence of this
Agreement.
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Section 14.16. Non-Competition. On and after the closing of the sale of
the Assets and for a period of three years thereafter, Sellers shall not own,
operate, or be otherwise engaged in the performance, sale, or delivery of any
medical nursing, or therapy services of a type normally offered by a licensed
nursing care facility, within a 25 mile radius of the Premises, nor shall
Sellers own, lease or operate a mobile home park or ACLF within the prescribed
radius of the Premises. Notwithstanding the term of this Agreement, the
provisions of this Section shall survive any termination or expiration of this
Agreement and shall remain enforceable beyond any such termination or
expiration.
Section 14.17. No Assumption of Liabilities. This Agreement is intended
as and shall be deemed to be an agreement for the sale of assets and none of the
provisions hereof shall be deemed to create any obligation or liability to any
person or entity that is not a party to this Agreement, whether under a
third-party beneficiary theory, laws relating to transferee liabilities, or
otherwise. Purchaser shall not assume and shall not discharge or be liable for
any debts, liabilities, or obligations of Sellers, whether known or unknown by
the Sellers at or before the closing, except those obligations specifically
assumed by Purchaser.
Section 14.18. Material Adverse Changes. Purchaser's obligation to
perform the terms of this Agreement are contingent upon there being no material
adverse changes to the operation or financial condition of the business
operations at the Premises prior to the scheduled closing date.
Section 14.19. Effective Date. This Agreement shall be effective on the
date it has been signed by both parties hereto.
Section 14.20. Notices to Appropriate State Agencies. Both Sellers and
Purchaser shall provide appropriate and timely prior notices to applicable state
agencies of the intent to transfer ownership of the Assets in regard to
licensure and Medicaid/Medicare Certification.
Section 14.21. No Recordation of Agreement. Neither this Agreement nor
any short form memorandum hereof shall be recorded among any public records.
Section 14.22. Transactional Expenses. Except as otherwise expressly
provided in this Agreement, the parties agree to bear their own fees and
expenses incident to the negotiation, preparation, execution, delivery and
performance hereof, including without limitation, the fees and expenses of their
respective counsel, accountants and other experts.
Section 14.23. Exclusive Jurisdiction. The parties agree that any legal
action or proceeding with respect to or arising out of this Agreement may be
brought only in the Hillsborough County, Florida Circuit Court or the United
States District Court for the Middle District of Florida, Tampa Division. By
execution of this Agreement, the parties hereby submit to the exclusive
jurisdiction of such courts and agree to accept the process of such courts.
Section 14.24. Waiver. The failure of any party to insist upon strict
performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder.
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Section 14.25. Public Announcements. The Purchaser and the Sellers
agree that neither will issue any press releases or make any public
announcements with respect to the transactions contemplated hereby without the
prior written approval of the other party. Notwithstanding the foregoing, each
of the parties hereto may respond to inquiries relating to this Agreement and
the transactions contemplated hereby by their respective employees and tenants
without any notice to or further consent of the other parties.
Section 14.26. Complete Agreement. The original Purchase Agreement and
the Exhibits thereto dated April 20, 1998 as amended by the First through Sixth
Amendments to Purchase Agreement and this restated Purchase Agreement contain
the entire agreement between the parties hereto with respect to the transactions
contemplated herein and, except as provided herein, supersede all previous oral
and written and all contemporaneous oral negotiations, commitments, writings and
understandings relating to the subject matter hereof.
Section 14.27. Radon Disclosure. As required by Florida law, the
Sellers make the following disclosure to Purchaser:
"RADON GAS: Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient quantities,
may present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding radon
and radon testing may be obtained from your county public health unit."
Section 14.28. Gender; Number. Words of gender may be read as
masculine, feminine, or neuter, as required by context. Words of number may be
read as singular or plural, as required by context.
Section 14.29. Headings. Headings used in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
Section 14.30. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall be deemed to be one and the same instrument.
Section 14.31. Escrow Agreement. The parties agree that the Escrow
Agent shall have no liability hereunder other than damages attributable to its
gross negligence or willful misconduct. In the event a dispute arises regarding
the disposition of the Deposit, Escrow Agent shall have the right to file an
interpleader action in the Hillsborough County, Florida Circuit Court or the
United States District Court for the Middle District of Florida and, upon the
tender of the Deposit with such court, Escrow Agent shall be relieved of all
responsibilities hereunder. The Chicago Title General Conditions of Escrow
attached hereto as Exhibit 14.29 are incorporated herein by reference.
[Remainder of page intentionally left blank]
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[Signature page to Purchase Agreement]
IN WITNESS WHEREOF, the parties have executed this Restated Purchase
Agreement as of this 29th day of January, 1999 but effective as April 20, 1998.
PURCHASER:
HEIGHTS HEALTHCARE COMPANY, L.L.C.
By /s/David R. Vaughan
-------------------------------
David R. Vaughan
Managing Member
COMMUNITY ACQUISITION AND DEVELOPMENT
CORPORATION, as assignee of Heights
HealthCare Company, L.L.C.
By /s/Joseph W. Gaynor
-------------------------------
Joseph W. Gaynor
President
SENIOR CARE GROUP, INC., as assignee of
Heights HealthCare Company, L.L.C.
By /s/Robert E. Surtees
-------------------------------
Robert E. Surtees
President
[Signatures continued on next page]
<PAGE>
SELLERS
LAKE SHORE VILLAS, INC.
By /s/Roland A. Goehring
-------------------------------
Roland A. Goehring
President
THE INN AT LAKESHORE VILLAS, LTD
By Lakeshore Villas, Inc.,
its General Partner
By /s/Roland A. Goehring
-------------------------------
Roland A. Goehring
President
LAKESHORE VILLA HEALTH CARE, LTD
By Lakeshore Villas, Inc.,
its General Partner
By /s/Roland A. Goehring
-------------------------------
Roland A. Goehring
President
SEVENTH AMENDMENT TO PURCHASE AGREEMENT
THIS SEVENTH AMENDMENT TO PURCHASE AGREEMENT (the "Amendment") is made
as of the 30 day of March 1999 by and between HEIGHTS HEALTHCARE COMPANY, L.L.C.
("HHCC"), CAX Lakeshore, L.L.C. ("CAX"), Lakeshore Utilities, L.L.C. ("Utility
LLC") and Senior Care Group, Inc. ("SCG") (collectively, the "Purchaser"), and
(i) LAKE SHORE VILLAS, INC., a Florida corporation, (ii) THE INN AT LAKESHORE
VILLAS, LTD., a Florida limited partnership, and (iii) LAKESHORE VILLA HEALTH
CARE, LTD., a Florida limited partnership, (collectively, the "Sellers").
W I T N E S S E T H :
WHEREAS, HHCC and Sellers entered into a Purchase Agreement dated
effective April 20, 1998 relating to the purchase and sale of a 290-lot mobile
home park, a 120-unit (156 bed) adult congregate living facility and a 179 bed
nursing home located in Hillsborough County, Tampa, Florida as amended by the
First Amendment to Purchase Agreement dated July 20, 1998, the Second Amendment
to Purchase Agreement dated August 5, 1998, the Third Amendment to Purchase
Agreement dated September 30, 1998, the Fourth Amendment to Purchase Agreement
dated November 12, 1998, the Fifth Amendment to Purchase Agreement dated
December 30, 1998 and the Sixth Amendment to Purchase Agreement dated January
31, 1999, as restated by the Restated Purchase Agreement entered into as of
January 29, 1999 (collectively, the "Purchase Agreement"); and
WHEREAS, Sellers and Purchaser desire to decrease the Purchase Price
(as such term is defined in Section 3.1 of the Purchase Agreement) in an amount
equal to the approximate amount for the repair and/or correction of (a) the
items described in the updated due diligence report as described in Section 4.2
on the Purchase Agreement (b) the initial capital expenditures identified in the
report prepared by EA Group, Inc. as described in Section 9.21(a) of the
Purchase Agreement and (c) the Repairs and Compliance as described in Section
9.21(b) of the Purchase Agreement; and
WHEREAS, Sellers and Purchaser desire to amend the allocation of the
Purchase Price; and
WHEREAS, Sellers and Purchaser desire to amend other provisions of the
Purchase Agreement.
NOW, THEREFORE, in consideration of the sum of Ten Dollars and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and Sellers hereby agree as follows:
<PAGE>
1. Purchase Price of Assets and Allocations. Section 3.1 of the
Purchase Agreement, entitled "Purchase Price of Assets and Allocation," shall be
deleted in its entirety and replaced with the following:
"Subject to the adjustments set forth herein, Purchaser, or
its assigns, shall pay to Sellers, as the total Purchase Price for all
of the Assets purchased, the sum of THIRTY-THREE MILLION NINE HUNDRED
AND FIFTY THOUSAND DOLLARS ($33,950,000) (the "Purchase Price"), to be
allocated in accordance with Exhibit 3.1 attached hereto and made part
hereof."
2. Cash at the Park Closing. Section 3.2(c) of the Purchase Agreement
entitled, "Cash at Closing," shall be deleted in its entirety and replaced with
the following:
"(c) Cash at the Park Closing. At the Park Closing, subject to
the adjustments herein provided for, CAX shall deliver to Sellers the
sum of SEVEN MILLION FIVE HUNDRED AND FIFTY THOUSAND DOLLARS
($7,550,000) by certified check or federal wire transfer, and Utility
LLC shall deliver to Sellers the sum of ONE HUNDRED AND FIFTY THOUSAND
DOLLARS ($150,000) by certified check or federal wire transfer. Credits
and debits on the closing statement, amounts delivered to HHCC pursuant
to Section 20 of the Sixth Amendment and additions to the Purchase
Price required hereunder, will adjust the cash at the closing."
3. Inspection Period. Notwithstanding anything to the contrary set
forth in Section 4.2 of the Purchase Agreement, CAX and Utility LLC hereby
acknowledge and agree that Sellers' and HHCC's or SCG's obligations to repair,
correct and/or incur all costs and expenses associated with the items revealed
in the updated due diligence report pursuant to Section 4.2(a) and Section
4.2(b) have been satisfied by the reduction in the Purchase Price and the
corresponding reduction in the amounts payable by CAX and Utility LLC at the
Park Closing.
4. Letter of Credit. Section 9.19(e) of the Purchase Agreement shall be
deleted in its entirety and replaced with the following:
"(e) As used in this Section 9.19, the term "Operating Costs"
shall mean the aggregate of all direct costs of operating and
maintaining the Sewer Plant, determined in accordance with generally
accepted accounting principles and all costs associated with repairing
equipment (including percolation ponds) associated with the operation
of the Sewer Plant and/or replacing equipment (including percolation
ponds) associated with the operation of the Sewer Plant which has been
certified by the independent operator of the Sewer Plant to be
inoperable and beyond economical repair, and "Sewer Plant" shall mean
the sewage treatment plant located on the Premises of the size and
configuration existing on the Closing Date."
5. Mobile Home Park. Notwithstanding anything to the contrary set forth
in Section 9.21(a) of the Purchase Agreement, CAX and Utility LLC hereby
acknowledge and agree that Sellers' and HHCC's or SCG's obligations pursuant to
Section 9.21(a)(i) and Section 9.21(a)(ii) to repair, correct and/or incur all
costs and expenses associated with ICEs (except for the storm and sanitary sewer
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<PAGE>
repairs as described in Section 13 below) have been satisfied by the reduction
in the Purchase Price and the corresponding reduction in the amounts payable by
CAX and Utility LLC at the Park Closing.
6. Sewer Plant. Notwithstanding anything to the contrary set forth in
Section 9.21(b) of the Purchase Agreement, CAX and Utility LLC hereby
acknowledge and agree that Sellers' obligations pursuant to Section 9.21(b) to
complete the Repairs and Compliance have been satisfied by the reduction in the
Purchase Price, the corresponding reduction in the amounts payable by CAX and
Utility LLC at the Park Closing and the posting of the letter of credit in
accordance with Section 9.19(e) of the Purchase Agreement.
7. Indemnification by Purchaser. Section 12.01 of the Purchase
Agreement entitled, "By Purchaser," shall be amended by adding the following to
the end of such section:
"In addition, CAX and Utility LLC (collectively, the
"Indemnifying Party") hereby agree that the Indemnifying Party shall
defend and promptly indemnify Sellers and their successors and assigns
and save and hold them harmless from, against, for and in respect of,
and shall pay any and all damages, losses, obligations, liabilities,
claims, encumbrances, deficiencies, costs and expenses, including
without limitation, reasonable attorneys' fees and other costs and
expenses, which arise in connection with (a) any violation by the
Indemnifying Party of the Lake Shore Villas MHP Consent Order 98-12244
DW by and between the Environmental Protection Commission of
Hillsborough County and Lake Shore Villas, Inc. (the "Consent Order")
and/or (b) any failure of the Indemnifying Party to comply with terms
and conditions contained in the Consent Order.
8. Letter of Credit for Payment of Claims. The second sentence in
Section 12.6 of the Purchase Agreement entitled, "Payment of Claims," shall be
deleted in its entirety and replaced with the following:
At the Park Closing, Sellers shall establish an escrow account
for a period of two (2) years in the initial amount of $117,000 (which
may be reduced to $58,500 after the first anniversary of the Park
Closing Date), or in the alternative, post a letter of credit in the
amount of the escrow with an escrow agreement setting forth the
procedures for releasing the funds on a final judgment by a final
arbitration. At the ACLF/NH Closing, Sellers shall establish an escrow
account for a period of two (2) years in the initial amount of $383,000
(which may be reduced to $191,500 after the first anniversary of the
Park Closing Date), or in the alternative, post a letter of credit in
the amount of the escrow with an escrow agent setting forth the
procedures for releasing the funds on a final judgment by a final
arbitration."
9. Exhibits. Section 14.11 of the Purchase Agreement, entitled
"Exhibits," shall be deleted in its entirety and replaced with the following:
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(a) Exhibit 1.1(a): Description of the Premises
(b) Exhibit 1.1(c): Description of the Personalty
(c) Exhibit 1.1(d): List of Assumed Contracts
(d) Exhibit 1.2: Excluded Assets
(e) Exhibit 3.1: Allocation of Purchase Price
(f) Exhibit 4.1: Permitted Exceptions
(g) Exhibit 5.15: Pending Investigations
(h) Exhibit 5.21: List of Medicare/Medicaid Waivers
(i) Exhibit 5.26: Medicare/Medicaid
(j) Exhibit 9.20(a) Ground Lease Property
(k) Exhibit 9.20(b) Sewer Treatment Agreement
(l) Exhibit 9.21(a): List of Initial Capital Expenditures
(m) Exhibit 9.21(b) H2O Report
(n) Exhibit 12.6(a) L/C Procedures Agreement
(o) Exhibit 12.6(b) Escrow Agreement
(p) Exhibit 14.28: Chicago Title Insurance Company's General
Conditions of Escrow
10. Exhibit 3.1. Exhibit 3.1 of the Purchase Agreement entitled,
"Allocation of Purchase Price," shall be deleted in its entirety and shall be
replaced with Exhibit 3.1 attached hereto.
11. Exhibit 5.23. Exhibit 5.23 of the Purchase Agreement entitled,
"Pending Litigation," shall be deleted in its entirety and replaced with Exhibit
5.23 attached hereto.
12. Post-Park Closing Matters.
(a) Ad Valorem Tax Bills. Within sixty (60) days following the
Park Closing, CAX hereby agrees that CAX will request that Hillsborough County
provide separate ad valorem tax bills with respect to the Ground Lease Property
and agrees that CAX will proceed with reasonable diligence to insure that
Hillsborough County complies with this request for separate ad valorem tax bills
with respect to the Ground Lease Property.
(b) Termination of Easements. The parties acknowledge that on
the date of the ACLF/NH Closing that certain Drainage Easement recorded in O.R.
Book 3494, Page 491 Public Records of Hillsborough County, Florida and that
certain Easement recorded in O.R. Book 5693, Page 948, Public Records of
Hillsborough Count for ingress and egress shall be terminated.
(c) Repairs to Storm and Sanitary Sewer. The parties hereby
agree that after the Park Closing Sellers shall continue to have the
responsibility for completing the repairs to the storm and sanitary sewer lines
on or before April 7, 1999.
13. No Further Modifications. Except as modified herein, all of the
terms and conditions of the Purchase Agreement remain unchanged and in full
force and effect.
14. Miscellaneous. This Amendment is an integral part of the Purchase
Agreement. Unless otherwise defined herein, any capitalized term used in this
Amendment
4
<PAGE>
shall have the meaning given to such term in the Purchase Agreement. This
Amendment may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall be deemed to be one and the
same instrument. An executed facsimile copy of this Amendment shall be binding
for all parties. All references to section numbers contained in this Amendment
shall refer to the section numbers set forth in the Purchase Agreement dated
April 20, 1998 as amended by the First through Sixth Amendments.
[Remainder of page intentionally left blank]
5
<PAGE>
[Signature page to Seventh Amendment to Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed this Seventh
Amendment to Purchase Agreement effective the day and year first above written.
PURCHASER:
HEIGHTS HEALTHCARE
COMPANY, L.L.C.
By /s/David R. Vaughan
-------------------------
David R. Vaughan
Managing Member
CAX LAKESHORE, L.L.C.
By Commercial Assets, Inc.,
Managing Member
By /s/Bruce E. Moore
-------------------------
Bruce E. Moore
President
LAKESHORE UTILITIES, L.L.C.
By Lakeshore Utilities, Inc.,
Managing Member
By /s/Bruce E. Moore
--------------------------
Bruce E. Moore
President
SENIOR CARE GROUP, INC.
By /s/Robert E. Surtees
--------------------------
Robert E. Surtees
Chairman
[Signatures continued on next page]
6
<PAGE>
[Signature page to Seventh Amendment to Purchase Agreement]
SELLERS:
LAKE SHORE VILLAS, INC.
By /s/Roland A. Goehring
-------------------------
Roland A. Goehring
President
THE INN AT LAKESHORE VILLAS, LTD.
By Lakeshore Villas, Inc.,
its General Partner
By /s/Roland A. Goehring
-------------------------
Roland A. Goehring
President
LAKESHORE VILLA HEALTH CARE, LTD.
By Lakeshore Villas, Inc.,
its General Partner
By /s/Roland A. Goehring
-------------------------
Roland A. Goehring
President
7
AGREEMENT TO ASSIGN
THIS AGREEMENT TO ASSIGN (the "Agreement") is dated this 31 day of
March, 1999 by and between HEIGHTS HEALTHCARE COMPANY, L.L.C. (the "Purchaser"),
a Tennessee limited liability company, and CAX LAKESHORE, L.L.C. (the
"Assignee"), a Delaware limited liability company.
W I T N E S S E T H
:
WHEREAS, the Purchaser and Lake Shore Villas, Inc., The Inn at
Lakeshore Villas, Ltd. and Lakeshore Villa Health Care, Ltd. (collectively, the
"Sellers") entered into a Purchase Agreement dated effective April 20, 1998
relating to the purchase and sale of a 290-lot mobile home park, a 120-unit (156
bed) adult congregate living facility and a 179-bed nursing home located in
Hillsborough County, Tampa, Florida as amended by the First Amendment to
Purchase Agreement dated July 20, 1998, the Second Amendment to Purchase
Agreement dated August 5, 1998, the Third Amendment to Purchase Agreement dated
September 30, 1998, the Fourth Amendment to Purchase Agreement dated November
12, 1998, the Fifth Amendment to Purchase Agreement dated December 30, 1998 and
the Sixth Amendment to Purchase Agreement dated January 31, 1999 (collectively,
the "Purchase Agreement"); and
WHEREAS, Purchaser desires to assign to Assignee pursuant to the
Purchase Agreement all of its right, title and interest (a) to purchase the
290-lot mobile home park (the "Mobile Home Park") as legally described on
Exhibit "A" and (b) to purchase all equipment associated with the operation of
the sewer and water treatment plant(s), all water and sewer lines associated
with the operation thereof and all buildings and improvements associated with
the operation thereof ("Sewer and Water Plant Equipment, Lines and Buildings),
as legally described on Exhibit "A," pursuant to the Purchase Agreement, and
Assignee desires to accept the same from Purchaser; and
WHEREAS, Section 14.12 of the Purchase Agreement as amended provides
that Purchaser may assign Purchaser's right to purchase the Mobile Home Park and
Sewer and Water Plant Equipment, Lines and Buildings to Assignee without the
prior written consent of the Sellers.
NOW, THEREFORE, for and in consideration of the sum of $10.00 paid by
Assignee to Purchaser, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
Section 1. Assignment. Purchaser does hereby transfer, set over and
assign unto Assignee all of Purchaser's right, title and interest to purchase
the Mobile Home Park and the Sewer and Water Plant Equipment, Lines and
Buildings from Sellers pursuant to the Purchase Agreement. Assignee hereby
accepts the foregoing assignment and assumes and agrees to pay, perform and
discharge any and all liabilities and obligations related to the purchase of the
Mobile Home Park and Sewer and Water Plant Equipment, Lines and Buildings to be
<PAGE>
performed by the Purchaser under the Purchase Agreement which are now existing
or which arise or accrue from and after the date hereof, including, but not
limited to, the payment of SEVEN MILLION FIVE HUNDRED AND FIFTY THOUSAND DOLLARS
($7,550,000) to Sellers as the purchase price for the Mobile Home Park and the
Sewer and Water Plant Equipment, Lines and Buildings.
Section 2. Additional Actions and Instruments. Each party will, from
time to time upon written request, take such actions and execute and deliver
such instruments as are reasonably necessary to effect the intent of this
Agreement.
Section 3. No Novation. By acceptance of this Assignment, Assignor
covenants and agrees that the Purchase Agreement remains in full force and
effect and no novation occurs through the assignment hereof.
Section 4. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
Section 5. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without reference
to the choice of law principles thereof. This Agreement may not be assigned by
Assignee in whole or in part without the written consent of Purchaser and
Sellers. This Agreement may not be modified except by a writing signed by both
parties. Any and all notices, elections, demands, requests and responses thereto
given with regard to this Agreement shall be given in the manner provided in,
and shall be controlled by, the provision relating to notices set forth in the
Purchase Agreement. This Agreement shall be binding upon and inure to the
benefit of each party hereto and its respective successors and assigns.
[Remainder of page intentionally left blank]
2
<PAGE>
[Signature page to Agreement to Assign ]
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date set forth above.
PURCHASER:
HEIGHTS HEALTHCARE
COMPANY, L.L.C.
By /s/David R. Vaughan
-------------------------------
David R. Vaughan
Managing Member
ASSIGNEE:
CAX LAKESHORE, L.L.C.
By Commercial Assets, Inc.
Managing Member
By /s/Bruce E. Moore
-------------------------------
Bruce E. Moore
President
3
