ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF GLOUCESTER, INC.,
as Buyer
and
AMERICAN RETIREMENT HOMES, INC.,
as Seller
and
XXXXXXX CORPORATION
as successor and former general partner of
Retirement Home of Gloucester Limited Partnership
Dated as of January 24, 1997
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF GLOUCESTER, INC., a Delaware
corporation ("Buyer"), AMERICAN RETIREMENT HOMES, INC., a Virginia corporation
("Seller" or "Manager"), and XXXXXXX CORPORATION, a Virginia corporation
("General Partner" or "Xxxxxxx Corporation" and, together with Seller,
collectively, the "Operators" and individually, an "Operator") and successor to
and former general partner of Retirement Home of Gloucester Limited Partnership
formerly a Virginia limited partnership. For purposes of this Agreement, the
term "Seller" shall also include "Xxxxxxx Corporation" to the extent "Xxxxxxx
Corporation" shall on or prior to the Closing (as hereinafter defined) hold any
right, title or interest in and to the Business (as hereinafter defined), the
Facility (as hereinafter defined) or any other asset of Retirement Home of
Gloucester Limited Partnership.
RECITALS
WHEREAS, pursuant to the Addendum to Contract, dated January 23, 1997,
between Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxx, on the one hand, and Retirement Home of Gloucester
Limited Partnership, on the other hand, Xxxxxxx Corporation has assigned,
conveyed and otherwise transferred to Seller all of its right, title and
interest in and to the Facility and certain other assets, used in connection
with the Facility and the Business;
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility, the Business and substantially all of the other assets of Seller used
in connection with the Facility and the Business, upon the terms and conditions
hereinafter set forth; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
A. Definitions. The following capitalized terms used in this
Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), used with respect to any
Person, shall mean the possession, directly or indirectly, whether by contract
or otherwise, of the power to direct or cause the direction of the management
and policies of such Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Xxxxxxx Development Corporation, a Virginia corporation.
Xxxx of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller of
owning, planning, developing, using for the Intended Purpose, operating and
maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner for the benefit of Seller
pursuant to authority granted under the Partnership Agreement, the Existing
Management Agreement or otherwise or (iii) any of the Acquisition Assets are
bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner is a
party thereto under a Contract for the benefit of Seller pursuant to authority
granted under the Partnership Agreement, the Existing Management Agreement or
otherwise, such other Operator Affiliate will assign to Buyer at Closing and,
upon such assignment, those Contracts under which Buyer will assume the
obligations arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition,
equitable interest, option, pledge, voting trust, right of first refusal, or
restriction of any kind, including any restriction on use, voting or dividends
(in the case of any security), transfer, receipt of income, or exercise of any
other attribute of ownership) or other thing commonly known as an encumbrance;
and "Encumber" means the creation of any Encumbrance.
Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup"), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as the same may be amended from time to time, or any successor law and the
rules and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%)
percent of the Purchase Price shall be held in escrow by the Escrow Agent as
security for Seller's indemnification obligations under this Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
Existing Management Agreement: The Management Agreement dated October
1, 1994 between Seller and Manager pursuant to which Manager has been managing
the Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"Gloucester House", and comprised of an assisted-living facility, containing 48
licensed beds and approximately 15,805 square feet and the related amenities.
Financing Source: Any Person which provides financing for the
transactions contemplated by this Agreement, including any Person which may
acquire the Facility (and/or any of the other Acquisition Assets) and
concurrently lease the same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Retirement Home of Portsmouth Limited Partnership, Xxxxxxx
Corporation as successor to Retirement Home of Gloucester Limited Partnership,
BDC, Ghent Arms Limited Partnership, Retirement Home of Virginia Beach Limited
Partnership, Xxxxxxx Corporation and its principal shareholder, Seller and its
principal shareholder, Buyer and the other Affiliates of Integrated Living
Communities, Inc., which are "Buyers" under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "Gloucester House" and all derivations
and variations thereof, and any other trade names, service xxxx, logo, symbol,
trade dress, design, or representation or expression of any thereof, or
registration or application for registration thereof, or any invention, trade
secret, technical information, know-how, proprietary right (including
Resident/Patient lists, supplier lists and operating manuals) or intellectual
property used by an Operator Affiliate in connection with the operation of, or
otherwise pertaining to, the Property or the Business but specifically excluding
software and computer programs licensed by a third party to an Operator
Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
County of Gloucester, State of Virginia, consisting of approximately 2.8497
acres and more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: As defined in the initial paragraph hereof.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
Operator Affiliates: Collectively, Seller, General Partner, Seller and
each of the principal shareholders of each of General
Partner and Seller, respectively.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and Xxxxx Xxxxx, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
a. all equipment, machinery, furniture and furnishings, Inventory,
vehicles and other tangible personal property (including all components thereof)
(whether or not set forth on Exhibit B), now or on the Closing Date located in,
on or used in connection with (A) the Facility (and whether or not affixed to
the facility) or (B) the Business, including all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air cooling and
air conditioning systems, apparatus, sprinkler systems, fire and theft
protection equipment, built-in oxygen and vacuum systems, tools, repair parts,
appliances and communications equipment, to the extent any of the foregoing
items are not Fixtures and are not conveyed to Buyer as part of the Facility
pursuant to the Deed, and those specific items of tangible personal property
(including any vehicles which are used for the Business) described on Exhibit B;
and
b. all Resident and/or Patient Agreements and other Designated Contracts,
telephone numbers and Resident/Patient records and invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property, inventory, occupancy, withholding, payroll, gift,
estate or inheritance tax), levy, assessment, tariff, impost, imposition, toll,
duty (including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or for any authority or payable (including pursuant to any tax-sharing
agreement or pursuant to any agreement, arrangement or understanding relating to
the sharing or payment of any such tax, levy, assessment, tariff, impost,
imposition, toll, duty, deficiency or fee).
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Xxxx of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Xxxxxxx Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Ghent Arms Limited Partnership, Retirement Home of Virginia Beach
Limited Partnership, and Xxxxxxx Corporation, each as sellers of assisted living
facilities and the related business, Buyer and other Affiliates of Integrated
Living Communities, Inc. which are purchasing such facilities and businesses
pursuant to this Agreement and the other Acquisition Agreements, and Seller.
Year End Financial Statements: As defined in Section 6.3.
B. Construction of Certain Terms. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, (i) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; (ii) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP, as at the time applicable; (iii) all references in this
Agreement to designated "Articles," "Sections", "Schedules", "Exhibits" and
other subdivisions are to the designated Articles, Sections, Schedules and
Exhibits and other subdivisions of this Agreement; (iv) the word "including"
shall have the same meaning as the phrase "including, without limitation," and
other phrases of similar import; (v) the words "herein, " "hereof " and
"hereunder' and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision; and (vi) all
references to this Agreement shall include all Schedules and Exhibits attached
hereto.
C. Disclosure Letter . The disclosures in the Disclosure Letter, and
those in any supplement thereto, relate only to the representations and
warranties in the Section of this Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement. In the event of
any inconsistency between the statements in the body of this Agreement and those
in the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty in a specific Section of this Agreement), the statements in the body
of this Agreement will control.
D. Parties' Intent . The parties intend that the assets to be conveyed to
Buyer pursuant to Section 2.1 include all of the assets employed in and
necessary to operate the Facility and the Business in substantially the manner
as the Business has heretofore been operated.
E. Knowledge . Wherever a representation is made in this Agreement based
upon the knowledge of an Operator (whether or not expressly after due inquiry),
it shall be deemed to have been made by such Operator after due inquiry of the
Manager of the Facility and each of the principal shareholders of the General
Partner and the Manager.
I. ARTICLE
TERMS OF THE SALE AND PURCHASE
A. Assets to Be Sold. Subject to the terms and conditions of this
Agreement, at Closing, Seller (and the other Operator Affiliates to the extent
such assets are owned by them) will sell, convey, assign, transfer and deliver
to Buyer and/or Buyer's designee or assignee as provided in Section 13.11, and
Buyer and/or Buyer's designee or assignee, will purchase and acquire, as a going
concern, the Facility and all of the assets, properties (real or personal,
tangible or intangible), rights, prepaid expense items and business goodwill
used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
B. Excluded Assets. Notwithstanding Section 2.1, the Acquisition Assets
do not include: (1) claims for refunds of Taxes and other governmental charges
of whatever nature for periods prior to the Closing Date; (2) Accounts
Receivable; (3) the minute books, stock records and corporate seal of Seller or,
subject to Buyer's right to review and obtain copies of same as provided in
Section 13.8, Seller's financial books and records (whether in paper or computer
format), provided, however, Resident/Patient records are Acquisition Assets; (4)
Contracts other than the Designated Contracts; (5) Seller's bank accounts, cash
and cash equivalents and securities (except that deposits and trust funds held
for Residents/Patients shall be transferred to Buyer (or trust accounts
designated by Buyer for such Residents/Patients); (6) the Purchase Price and
rights under this Agreement; (7) personal property located at the Facility which
is owned by the Residents/Patients; and (8) the assets, properties, and rights
listed in Schedule 2.2 (collectively, the "Excluded Assets").
1. Purchase Price. The purchase price for the Acquisition Assets will be
Three Million Five Hundred Seventy Thousand Dollars ($3,570,000.00), subject to
upward or downward adjustment as hereinafter provided (as adjusted, the
"Purchase Price").
2. The Purchase Price (without giving effect to any post-Closing
adjustments) shall be paid by Buyer to Seller as follows:
(i) Two Hundred Sixty-Three Thousand Three Hundred
Ninety-Seven and 67/100 Dollars ($263,397.67) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
C. Prorations and Purchase Price Adjustments. (a) On the Closing Date,
the following shall be apportioned and prorated as of the Closing Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets (including
charges for sewer, water, drainage or other services) assessed
for the tax year in which the Closing Date occurs;
(ii) personal property taxes attributable to
the Personal Property for the tax year in which the Closing
Date occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final xxxx or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of current
utility and fuel bills. If the Closing shall occur before the tax rate is fixed,
the apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding tax year applied to the latest assessed valuation, and
shall be subject to adjustment upon receipt by Buyer of notice of the tax rate
for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
D. Allocation of Purchase Price. After the Closing, the parties
agree to make consistent use of the allocation, fair market value and useful
life of the Purchase Price in any and all filings, declarations and reports with
the Internal Revenue Service in respect thereof, including the reports required
to be filed under Section 1060 of the Code, if applicable. Buyer shall prepare
and deliver IRS Form 8594 to Seller within forty-five (45) days after the
Closing Date.
E. Assumption of Liabilities.(a) Subject to the terms and conditions
of this Agreement, at Closing, Buyer shall assume and thereafter in due course
fully satisfy those obligations arising under the Designated Contracts which are
assignable and are assigned by Seller to Buyer, with respect to, and only with
respect to, performance of obligations (including payments to be made on account
of services) to be rendered thereunder after the Closing Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
F. Consents to Assignments. (a) The Operators will use their best efforts
and shall diligently proceed to obtain all Consents of all Persons necessary to
permit the assignment of the Designated Contracts or to assign or transfer any
of the other Acquisition Assets. In the event that any of the Acquisition Assets
are not assignable, or the Person(s) from whom a Consent to any such assignment
or transfer, fail(s) or refuse(s) to Consent thereto before the Closing Date,
Buyer shall have no obligation to assume and will not assume any such Designated
Contract and shall have no obligation to purchase any such Acquisition Asset. In
addition, this Agreement shall not constitute an agreement to assign or transfer
any such Acquisition Asset or part thereof or any right or benefit arising
thereunder or resulting therefrom if an attempted assignment or transfer
thereof, without the Consent of such Person, would constitute a breach thereof
or in any way affect the rights of Buyer or Seller thereunder. Notwithstanding
the foregoing, all references in this Agreement or any other Transaction
Document (other than the Deed, any Xxxx of Sale and Assignment and any other
instrument or document conveying title to any Acquisition Assets) to
"Acquisition Asset" or "Acquisition Assets" shall continue to have the meaning
set forth in Section 2.1 without giving effect to this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
II. ARTICLE
CLOSING
1. Closing. The purchase and sale of the Acquisition Assets provided
for in this Agreement (the "Closing") shall take place on January 27, 1997 (the
"Originally Scheduled Closing Date") at the offices of Buyer's financing source
(or counsel therefor), or at such other place, time or date as Seller and Buyer
may mutually agree to. The Originally Scheduled Closing Date, any other such
date as Seller and Buyer may mutually agree to as the date on which the Closing
shall occur, and any other date to which the same may be extended by Seller or
Buyer as hereinafter provided, are each herein referred to as a "Scheduled
Closing Date" and the latest of such Scheduled Closing Dates is herein referred
to as the "Closing Date".
2. If, prior to or by the Originally Scheduled Closing Date, any
Governmental Authority with jurisdiction over the licensing of the Facility has
not issued to Buyer a license to operate the Facility immediately upon Buyer's
acquisition of the Acquisition Assets, then, in such event, provided (i) Buyer
shall have furnished to such Governmental Authority all information requested by
such Governmental Authority as of such date in connection with its application
for the issuance of such license, (ii) this Agreement, the other Acquisition
Agreements and the Unification Agreement shall have been executed by all of the
parties thereto and (iii) First American Title Insurance Company of New York, as
escrow agent under the Deposit Escrow Agreement shall have been authorized by
the parties thereto to release the Escrow Deposit to the General Partner, then
Buyer shall be entitled to extend the Closing Date for a period of up to ninety
(90) days (the "Extension Period").
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of this Agreement by Buyer pursuant to
this Section 3.1(c), however, shall release or relieve any Operator or other
Operator Affiliate of any liability that they may have for any breach of any
representation, warranty, covenant or obligation of an Operator in this
Agreement or of any Operator Affiliate in any Transaction Document.
3. In the event that the Closing is to take place through an escrow
or sub-escrow, the Operator Affiliates and Buyer shall mutually execute and
deliver to Title Insurer, as escrow holder, joint escrow and/or recording
instructions consistent with this Agreement on or prior to the Closing Date. In
the event of any conflict between the provisions of this Agreement and any such
escrow and/or recording instructions and/or any general instructions required by
Title Insurer to be executed by Buyer and Seller, or any other Operator
Affiliate in connection therewith, the provisions of this Agreement and the
Unification Agreement shall control.
4. Items to Be Delivered by Seller at Closing. At the Closing,
subject to the terms and conditions of this Agreement, Seller shall deliver, or
cause to be delivered to Buyer or, if the Closing is to take place in escrow, to
Title Insurer in escrow, such instruments as shall be necessary to convey to
Buyer or its designee or assignee good and marketable title to the Acquisition
Assets, free and clear of all Encumbrances (except for Permitted Encumbrances).
Among other things, Seller will deliver to Buyer or, if applicable, Title
Insurer in escrow:
a. A full warranty deed (the "Deed") in the form of Exhibit C, which Deed
shall be duly executed, acknowledged and in recordable form. The Deed
shall include (if applicable) the appropriate state, county and local
real estate transfer tax declaration of real estate value or other
affidavit as to the tax due upon the sale.
b. One or more Bills of Sale and Assignments in the form of Exhibit B,
duly executed and acknowledged by each of the Operators.
c. "FIRPTA" affidavit or certificate in form and substance satisfactory to
Buyer and in conformance with Section 1445(b)(2) of the Code, to the
effect that Seller is not a foreign person and such other affidavits or
certificates as may be reasonably required by Buyer to the effect that
Buyer is not required to withhold taxes from the payment of sale
proceeds to Seller under any other applicable Law.
d. Uniform Commercial Code Form 3s in favor of Seller, for filing with the
appropriate state and local authorities, for the release of any
Encumbrance (other than a Permitted Encumbrance) covering any of the
Acquisition Assets as to which Uniform Commercial Code Form 1s have
been filed.
e. If the Closing shall not occur on the date hereof, a certificate
executed by each Operator wherein the Operators represent and warrant
to Buyer that, except as otherwise stated in such certificate, each of
the Operators' representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure
Letter that were delivered by Seller to Buyer prior to the Closing
Date).
f. A certificate of the Secretary of Seller certifying true and correct
copies of Seller's Organizational Documents, which certificate and the
accompanying Organizational Documents shall be in form and substance
reasonably satisfactory to Buyer.
g. Opinion of Seller's Counsel opining as to the matters set forth on
Exhibit E and otherwise in form and substance satisfactory to Buyer.
h. The Escrow Agreement duly executed and acknowledged by Seller, General
Partner and each other Operator Affiliate and Escrow Agent.
i. The originals of all Designated Contracts, title instruments in the
Operators' or the Manager's possession pertaining to the Acquisition
Assets and the original Governmental Authorizations.
j. All other Transaction Documents to which Seller or any other Operator
Affiliate is a party duly executed and delivered by each such party.
k. All other proper instruments required for the conveyance of good and
marketable title to the Acquisition Assets or required by Title Insurer
for the issuance of the Title Policy.
5. In addition, at the Closing, Seller shall deliver or cause to be
delivered possession of the Facility and other Acquisition Assets (including
keys and combinations for obtaining entry or access thereto).
A. Items to Be Delivered by Buyer at Closing . Among other things, Buyer
will deliver to the Escrow Agent:
a. The Assumption of Designated Contracts Agreement, executed
by Buyer.
b. A certificate executed by Buyer representing and warranting to
Seller that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date.
c. A certificate of the Secretary of Buyer certifying true
and correct copies of resolutions adopted by Buyer's Board of Directors
authorizing the execution, delivery and performance of this Agreement
and the other Transaction Documents to be executed by Buyer and the
incumbency of the officers of Buyer authorized by such resolutions to
execute this Agreement and take other actions in furtherance of this
Agreement.
d. The Escrow Agreement duly executed and acknowledged by Buyer and
the Escrow Agent.
e. All other Transaction Documents to which Buyer is a party duly
executed and delivered by Buyer.
B. Other Closing Documents. Each party shall execute and deliver such
other instruments and take such other actions as either party or the Title
Insurer or Buyer's Financing Source may reasonably request in order to
effectuate the purposes of this Agreement.
III. ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
A. Performance . Each of the Operators shall have
performed each and all of the covenants and obligations required to be performed
by it under this Agreement on or prior to the Closing.
B. Representations and Warranties . Each and all of
the representations and warranties of the Operators hereunder shall be true and
correct on and as of the Closing Date, as if made as of the Closing Date.
C. Closing Documents . Seller shall have delivered
(or caused to have been delivered) to Buyer each of the items to be delivered by
Seller or an Operator Affiliate at Closing pursuant to Sections 3.2 and 3.4.
Seller shall have paid or shall have made arrangements for the payment of those
costs and expenses required to be paid by Seller pursuant to Section 13.2.
D. Title Insurance . Buyer shall have received, at
Buyer's expense, a commitment from Title Insurer satisfactory to Buyer for the
issuance, at standard rates, of an ALTA extended coverage (but without exception
for creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
E. Survey . Buyer shall have received, at Buyer's
expense, and approved either (a) a final "as-built" ALTA survey of the Facility
completed in accordance with the Minimum Standard Detail requirements for
ALTA/ACSM Land Title Surveys, with additional Title A survey requirements,
jointly established and adopted by ALTA and ACSM in 1992 that meets the
requirements of a Class A Survey as defined therein, certified within thirty
(30) days of the Closing Date or (b) such other form of property survey which is
in form, substance and all other respects satisfactory to Buyer and its
Financing Source in their sole discretion. Such survey shall (i) be certified to
Buyer, Title Insurer, and Buyer's Financing Source, if any, as being true and
accurate, and such certification shall include the acreage of the Land and a
statement that the Land is not located in a Flood Hazard Area; (ii) identify
thereon all telephone, water, sewage, electricity, gas and other utility
facilities to the points of connection; and (iii) show no encroachments onto or
conflicts with any adjacent property other than pursuant to easements
appurtenant to the Facility or such other agreements with the affected landowner
approved by Buyer and which are, in turn, insured under the Title Policy.
F. Entitlements . Buyer shall have received and
approved with respect to the Facility copies of (a) the applicable zoning
ordinances and map marked to show the location of such Facility and certified by
an appropriate Governmental Authority to be complete and accurate; (b) evidence
that such zoning ordinances and the general plans/specific plans and all other
land use regulations of the applicable municipal jurisdictions and all
Encumbrances, if any, affecting the Facility permit the transfer of the Facility
and use thereof for its Intended Use (and reconstruction and resumption of use
in the event of damage, destruction, or cessation of use) as a matter of right
for an unlimited time period and not merely as a legal nonconforming use; (c)
all licenses, certificates, approvals and authorizations, including plot plan
and subdivision approvals, zoning variances, sewer, building, foundation,
grading and other permits and all other authorizations required by Governmental
Authorities or by any applicable covenants, conditions and restrictions for the
use and operation of the Facility for its Intended Use, in each instance in
accordance with all applicable Legal Requirements; and (d) evidence satisfactory
to it that (i) the Facility holds all Governmental Authorizations required for
the operation thereof for its Intended Use, including from the Virginia
Department of Social Services; and (ii) the Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding, or threatened, notices of deficiency resulting from any survey of
the Facility which have not been fully responded to with an acceptable plan of
correction with which the Facility is being operated in compliance.
G. No Material Adverse Change . Since the date of the
Interim Financial Statements, there has not been any material adverse change in
the business, results of operations, assets, liabilities, condition (financial
or otherwise), operations or prospects of Seller, or the Business or the
Facility, and no event has occurred or circumstance exists that may result in
such a material adverse change, and Buyer shall have received evidence
satisfactory to it to that effect.
H. Consents . The Consents of all Persons necessary
for the consummation of the transactions contemplated hereby and for Buyer to
conduct the Business shall have been obtained, including Consents required, if
any, under the Designated Contracts, all Governmental Authorizations, any tax
clearance or similar Consent, the Consent of Buyer's (or its parent company's)
lenders to the extent required, if any. None of the Consents (i) shall have been
conditioned upon the modification, cancellation or termination of any Designated
Contract, easement, right or other Consent with respect to the Facility, or (ii)
shall impose on the Buyer any material condition or provision or requirement
with respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
I. Completion of Other Transactions . Each of the
transactions contemplated by this Agreement, the other Acquisition Agreements
and the Unification Agreement shall have been consummated contemporaneously.
ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
Performance . Buyer shall have performed each and all
of the covenants and obligations required to be performed by it on or prior to
the Closing;
Representations and Warranties . Each and all of the
representations and warranties of Buyer hereunder shall be true and correct on
and as of the Closing Date, as if made as of the Closing Date; and
Consents . Seller shall have received a certificate
of the Secretary or other officer of Buyer certifying a copy of the resolutions
of the Board of Directors of Buyer authorizing Buyer's execution, delivery and
performance of this Agreement and the other Transaction Documents to be executed
by Buyer and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in furtherance of
this Agreement.
Closing Documents . Buyer shall have delivered (or
caused to have been delivered) to Seller each of the items to be delivered by
Buyer at Closing pursuant to Sections 3.3 and 3.4.
Completion of Other Transactions and Entering Into of
Other Agreements . Each of the transactions contemplated by the Unification
Agreement shall have been consummated contemporaneously with the consummation of
the transactions contemplated by this Agreement and Buyer shall have entered
into each of the other agreements contemplated to be entered into by Buyer
pursuant to the Unification Agreement.
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
Organization and Good Standing .
(i) Seller (A) is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and (B) has full power, authority and legal right to execute and
deliver and to perform and observe the provisions of this Agreement and the
other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Seller conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Seller has delivered to Buyer true and complete
copies of its Organizational Documents, as currently in effect.
(iii) B (as defined in the Indemnification Agreement)
is the sole shareholder of Seller.
(i) General Partner (A) is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
General Partner conducts no activities and neither owns nor uses properties in
any other jurisdiction which requires it, under the laws of such jurisdiction,
to qualify to do business as a foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement)
is the sole shareholder of General Partner.
Authority; No Conflict; Consents .
This Agreement constitutes and, when executed and
delivered, the other Transaction Documents to which an Operator is or is to
become a party will constitute, legal, valid and binding obligations of each of
Seller and General Partner, respectively, enforceable against such Person in
accordance with their respective terms. Each of the Operators have the absolute
and unrestricted right, power, authority and legal capacity to execute and
deliver this Agreement and such other Transaction Documents to which such Person
is or is to become a party is and to perform their respective obligations
hereunder and thereunder.
Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the transactions contemplated by
this Agreement by Seller, General Partner, Manager or the Bullocks will,
directly or indirectly (with or without notice or lapse of time):
contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify, any of the Organizational Documents of such
party or any Contract or any agreement to which such party (whether or not
Seller is a party thereto) or any Acquisition Assets may be subject;
contravene, conflict with, or result in a violation
of any applicable Law to which such party or any Acquisition Assets may be
subject or give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated by this Agreement or to exercise
any remedy or obtain any relief under any Law to which such party or any of the
Acquisition Assets may be subject;
contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Authority the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Seller or that otherwise relates to
the Business, the Facility or any other the Acquisition Assets;
cause Buyer to become subject to, or to become liable
for the payment of, any Tax for the Business's operations prior to the Closing;
cause any of the Acquisition Assets to be reassessed
or revalued by any Governmental Authority (except to the extent that any of the
same would customarily be reassessed or revalued by such Governmental Authority
upon a sale of such asset); or
result in the imposition or creation of any
Encumbrance (except a Permitted Encumbrance) upon or with respect to any
Acquisition Assets.
Except for those Governmental Authorizations and
Consents under Designated Contracts indicated, respectively, in Section 6.17 and
Section 6.11(c) of the Disclosure Letter, no notices to, or Consents from, any
Person are required in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Operators'
obligations under this Agreement, including the transfer and assignment of any
Governmental Authorization or other Acquisition Asset necessary or desirable for
Buyer to conduct the Business.
Financial and Operating Statements.
Seller has delivered to Buyer: (a) unaudited balance sheets
and related statements of profits and losses for the Facility and the Business
as at and for each of the calendar years ended December 31, 1994 and 1995,
together with the review reports thereon of Xxxxxxx & Company, LLC, independent
public accountants (the "Year End Financial Statements"), (b) an unaudited
balance sheet and the related statement of profits and losses for the Facility
and the Business as at and for the ten (10) months ended October 31, 1996 (the
"Interim Financial Statement"), including, in each case, with the notes thereto.
All such financial statements and notes fairly present the financial condition
and the results of operations for the Facility and the Business as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP subject to normal, immaterial changes
resulting from year-end adjustments. The financial statements referred to in
this Section 6.3 reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements. No financial statements of any Person other than
Seller would be required by GAAP to be included in the consolidated financial
statements of Seller. Seller has also delivered to Buyer a report of net
operating income adjustments detailing all adjustments to revenue and expenses
at the Facility level that represent obligations that will not be assumed by
Buyer hereunder for the calendar years ended December 31, 1994 and December 31,
1995 and for the ten (10) months ended October 31, 1996. Such report is true,
correct and complete and is based on assumptions that were true, correct and
reasonable when made but was not prepared in accordance with GAAP. All such
financial statements and reports have been prepared from and in accordance with
the books and records of Seller.
Books and Records . The books of account and other
records of Seller (including any such books and records kept by the General
Partner or the Manager on behalf of Seller) pertaining to the Facility or other
Acquisition Assets, all of which have been made available to Buyer, are complete
and correct in all material respects, reflect in all material respects all
transactions affecting the Business, the Facility and the other Acquisition
Assets and have been kept and maintained in accordance with sound business
practices.
No Undisclosed Liabilities or Material Adverse Change .
Except as set forth in Section 6.5(a) of the
Disclosure Letter, Seller has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Interim Financial Statement and current liabilities incurred in the
ordinary course of business of Seller since the respective dates thereof.
Since the date of the Interim Financial Statements,
there has not been any material adverse change in the business, results of
operations, assets, liabilities or the condition (financial or otherwise), or
prospects of the Business or the Facility, or any damage or destruction of the
Facility by fire or other casualty, whether or not covered by Insurance, and the
Operators and the Manager have, and until the Closing, will have, operated the
Facility only in the normal course. The Operator Affiliates have identified and
communicated to Buyer all material information with respect to any fact or
condition that might adversely affect the future prospects (financial, licensure
status or otherwise) of the Business or the Facility.
Taxes; FIRPTA .
Seller has filed all Tax Returns that are required to
have been filed in any jurisdiction, has paid all Taxes shown to be due and
payable on such Tax Returns and, before they have become delinquent, has paid
all other Taxes levied upon Seller or its properties, assets (including the
Acquisition Assets), income or franchises, to the extent such Taxes have become
due and payable, except for any Taxes (i) as set forth in Section 6.6 of the
Disclosure Letter or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which Seller has established adequate reserves in accordance with
GAAP in the Interim Financial Statements. The Operator Affiliates know of no
basis for any other Tax or assessment that could be assessed against Seller. The
charges, accruals and reserves on the Interim Financial Statements in respect of
Taxes for all fiscal periods are adequate. Seller's income tax returns have
never been audited.
Buyer is not required to withhold taxes from the
payment of sale proceeds to Seller under the Code or any applicable state,
commonwealth or local tax Laws. Seller is not a foreign person for purposes of
Section 1445 of the Code.
Title, Condition and Sufficiency of the Facility.
Seller has delivered or made available to Buyer
copies of all title insurance policies, opinions, abstracts, and surveys in the
possession of Seller and relating to the Facility. Seller owns good indefeasible
and marketable fee simple title to the Facility, free and clear of all
Encumbrances other than the Permitted Encumbrances. All of the Improvements
located on the Land are situated solely within the boundaries of the Land and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
No exception to title to or other Encumbrance and no
interest in the Facility will interfere with the use of the Facility for its
Intended Use or cause the value of the Facility to be materially less than the
portion of the Purchase Price allocated thereto.
There are no leases or other agreements granting any
Person (other than Seller) the right to use or occupy any part of the Facility
other than the Resident and/or Patient Agreements set forth in Section 6.7(c) of
the Disclosure Letter, and no Person has any ownership interest (other than
Seller) or option or right of first refusal to acquire any ownership interest in
the Facility or any part thereof.
The Facility is structurally sound, is in good
operating condition and repair (normal wear and tear excepted) and is not in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The Improvements (including the
heating, ventilating and air conditioning, plumbing, electrical, mechanical and
drainage systems, and roof) are in good operating condition, repair and working
order, and have passed all previous safety and/or licensing inspections, the
last such inspection being on the date set forth in the Disclosure Letter, and
such systems are adequate for the use of the Facility for its Intended Use.
Except as set forth in Section 6.7(e) of the
Disclosure Letter, the Improvements (including all roads, parking areas, curbs,
sidewalks, sewers and other utilities) have been completed and installed in
accordance the Plans and Specifications which were approved by the appropriate
Governmental Authorities. Permanent certificates of occupancy and all other
Governmental Authorizations which were required to be issued for the
Improvements have been issued and are in full force and effect; and the
requisite annual fire safety and life safety inspections as were required to be
conducted for the Improvements, have been conducted.
The maintenance, operations and use of the
Improvements comply with (i) all Legal Requirements, (ii) any certificate of
occupancy or other Governmental Authorizations issued for the Facility and (iii)
all restrictive covenants and other Permitted Encumbrances. No Operator
Affiliate has received or is aware of the issuance of any notice of
noncompliance or violation from any Governmental Authority regarding the
Facility or any part thereof or the use thereof.
Current local zoning ordinances, general plans and
other applicable land use regulations and all private covenants, conditions and
restrictions, if any, affecting the Property, permit the transfer of the
Facility and the use of the Facility for its Intended Use (and reconstruction
and resumption of such use in the event of damage, destruction or cessation of
use) as a matter of right for an unlimited time period and not merely as a legal
non-conforming use.
To the best knowledge of the Operators, (i) there is
no plan, study or effort by any Governmental Authority which in any way affects
or would affect the present use or zoning of the Facility or any part thereof;
(ii) there is no existing, proposed or contemplated plan to widen, modify or
realign any street or highway or existing, proposed or contemplated Condemnation
proceedings that would affect the Facility in any way whatsoever; and (iii) no
subdivision plan or plans (preliminary or otherwise) have been filed with
respect to the Land.
The Land is adjacent to and has direct access to each
abutting street. All streets adjoining or traversing the Land have been
dedicated to and accepted by the local municipal authorities and the means of
ingress and egress, parking, access to public streets and drainage facilities
are adequate for the use of the Facility for its Intended Use. There are no
easements traversing or contiguous to the Land which are not disclosed in
Section 6.7(i) of the Disclosure Letter or which interfere with the use and
operation of the Facility for its Intended Use.
All public utilities, including telephone, gas,
electric power, sanitary and storm sewer and water, required for the operation
of the Facility either enter the Facility through adjoining public streets, or
if they pass through adjoining private land, do so in accordance with valid
recorded easements held by Seller. Such utilities are adequate for use of the
Facility for its Intended Use.
The Facility is not located within an area of special
risk with respect to natural or man-made disasters or hazards, including any
Flood Hazard Area.
There are no adverse geological or soil conditions
affecting the Facility.
The Facility is a legal lot or parcel which for all
purposes may be mortgaged, conveyed and otherwise dealt with as separate parcels
and is not taxed together with any other property.
There is no proceeding pending to which a Operator
Affiliate is a party relating to the assessed valuation of the Facility and no
assessment for public improvements have been made against the Facility that
remain unpaid. All public improvements ordered, commenced or completed prior to
the date of this Agreement or prior to the Closing Date shall be paid for in
full by the Seller prior to the Closing.
Except as set forth in Section 6.7(o) of the
Disclosure Letter: (i) Seller and the Facility are, and at all times prior to
the date hereof have been, in full compliance with, and have not been and are
not in violation of or liable under, any Environmental Law, (ii) there are no
underground storage tanks or Hazardous Materials currently located in or on the
Facility, and to the best of the Operators' knowledge (after due inquiry) no
such tanks have ever been located on the Facility and no such Hazardous
Materials have ever been present, used, stored, generated, treated or Released
from or on or disposed of or on or transported to or from the Facility; (iii) no
Environmental Claims have been made or, to the best of the Operators' knowledge
(after due inquiry), threatened by any Person against Seller or the Facility;
and (iv) to the best of the Operators' knowledge (after due inquiry), there are
no current, and have been no, businesses engaged in the storage, treatment or
disposal of Hazardous Materials on any property adjacent to the Land.
Section 6.7(p) of the Disclosure Letter lists all
reports received during the last five (5) years from any Governmental Authority
with respect to the Facility, true and complete copies of such reports to Buyer.
Title, Condition And Sufficiency of the Personal Property.
Except for the security interest(s) listed and
described in Section 6.8(a) of the Disclosure Letter, Seller has good and
marketable title to the Personal Property, including, but not limited to, the
motor vehicle set forth on Schedule 2.1 hereto, subject to no Encumbrance or
restraint on transfer whatsoever. No other person has any right to the use or
possession of any of the Personal Property and, except as set forth in Section
6.8(a) of the Disclosure Letter, no currently effective financing statement with
respect to the Personal Property has been filed in any jurisdiction, and Seller
has not signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement.
Except as set forth in Section 6.8(a) of the Disclosure Letter, none of the
Personal Property is subject to a conditional sale, lease, security interest or
similar arrangement. During the last five (5) years, the Facility and the
Business have been conducted only under the trade name "Gloucester House" and/or
the former partnership name of Retirement Home of Gloucester Limited
Partnership.
All of the tangible Personal Property is in good
operating condition and repair, is not in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature or
cost and is functioning in the manner and for the purpose for which it was
intended. All of the Personal Property is in material compliance with all Legal
Requirements, and is sufficient and suitable to enable the Buyer to operate the
Facility and the Business in a normal and efficient manner.
Inventory.
All food, beverages, pharmaceuticals and medical
supplies comprising Inventory on supply at the Facility are fit for the purposes
for which they are intended, meet all governmental standards therefor and are of
merchantable quality. All linens, clothing and similar items comprising the
Inventory located at the Facility are in good condition, reasonable wear and
tear excepted.
On the Closing Date, there will be in supply at the
Facility Inventory (to be included as part of the Acquisition Assets) which are
in a quantity and condition customary and sufficient to meet Buyer's needs in
operating the Business and the Facility in a manner similar to that in which the
Business and the Facility have been operated by Seller prior to the Closing
Date.
Section 6.9(c) of the Disclosure Letter
contains a list of all suppliers of Inventory to Seller.
No Operator and, to the best of such Operator's knowledge (after due inquiry),
no other Operator Affiliate has received any notice, or has any reason to
believe, that any significant supplier will cease selling Inventory to Seller or
to Buyer at any time after the Closing Date on terms and conditions not
substantially similar to the terms and conditions on which such Inventory are
currently being sold to Seller.
Intellectual Property.
Section 6.10(a) of the Disclosure Letter sets forth a
complete and accurate list of all Intellectual Property owned by, or (even if
not included in the Acquisition Assets) licensed to, Seller or (even though not
an Acquisition Asset) General Partner or the Manager, and sets forth separately
which are owned by, and which are licensed to, Seller, General Partner and the
Manager. Such Intellectual Property is sufficient to conduct the Business being
conducted at the Facility.
No proceeding is pending (or, to the best of the
Operators' knowledge, after due inquiry, threatened) against any Operator that
alleges that any Operator or other Operator Affiliate is infringing upon any
intellectual property asset (including the name Gloucester) of any Person or
that challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any Operator Affiliate's (or Buyer's, to
the extent an Acquisition Asset, upon consummation of the transactions
contemplated by this Agreement) use of the Intellectual Property. No event has
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any such proceeding.
No Person has been granted the right, or been
permitted, to use any Intellectual Property owned by, or licensed to, Seller. To
the best knowledge (after due inquiry) of each Operator, no Person is believed
to be infringing upon the Intellectual Property.
Contracts.
Section 6.11(a) of the Disclosure Letter contains a
complete and accurate list, including its term and summary of financial terms,
of each Contract, other than the Resident and/or Patient Agreements set forth in
Section 6.11(b) of the Disclosure Letter, to which Seller is subject or bound
that is in existence and which pertains to the Business of the Facility or to
which any of the Acquisition Assets are subject. Seller has delivered to Buyer
true and complete copies of each such Contract.
Section 6.11(b) of the Disclosure Letter sets forth a
listing, as of the date of this Agreement, of the names of all
Residents/Patients at the Facility, the date of admission of each such
Resident/Patient and the rental amounts payable and the term of each related
Resident and/or Patient Agreement and a material variation in such Resident
and/or Patient Agreement from the Seller's standard form thereof (in addition to
the rental amount and term indicated in Section 6.11(b) of the Disclosure
Letter).
Each Designated Contract is in full force and effect,
is valid and enforceable in accordance with its terms and is (except as noted in
Section 6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost
or modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
Seller has not given to or received from any other
Person, at any time since January 1, 1996, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Designated Contract, which
individually or in the aggregate would constitute a material violation or breach
of or default under any such Designated Contract. Section 6.11(d) of the
Disclosure Letter sets forth the names of Residents/Patients from or to whom
Seller has received or given (whether or not written) any such notice or
communication (whether or not of a material nature) on a chronic or repeat
basis. The parties to the Designated Contracts (other than the Seller) are not,
to the best of the Operators' knowledge, in default of their respective
obligations under any of such Designated Contracts, and there has not occurred
any event which, with the passage of time or giving of notice (or both), would
constitute such a default or breach under any of such Designated Contracts.
There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable by or to Seller under, any Designated Contracts.
Except as described in Section 6.11(f) of the
Disclosure Letter, each Designated Contract has been entered into in the
ordinary course of business on an arm's-length basis with an unaffiliated third
party and has been entered into without the commission of any act, alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any applicable Law.
Insurance. Section 6.12 of the Disclosure Letter contains a
complete and correct list of all forms of Insurance held or owned by Seller or
(even though not an Acquisition Asset) the General Partner or the Manager
pertaining in any way to the Facility or other Acquisition Assets, or to the
Operators or the Manager which, although not specifically covering the Facility
or other Acquisition Assets would cover activities conducted at or in connection
with the Facility or other Acquisition Assets or liability arising therefrom,
including a description of the name of the insurer and the insured, the amount
of coverage, the type of insurance included under each such policy and a brief
description of any claims made thereunder during the past five (5) years and in
the case of any bond or agreement, a description thereof and the name of the
surety or indemnifying party. All such Insurance is in full force and effect,
all premiums due on such policies have been paid, and no Operator nor, to the
best of its knowledge (after due inquiry), any other Operator Affiliate has been
advised by any Insurance carriers of an intention to terminate or modify any
such Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
Employees.
Section 6.13(a) of the Disclosure Letter contains a
complete and accurate list of the following information for each employee
(separately indicating any who are not Business Employees, as defined in Section
9.1), director, independent contractor, consultant and agent of Seller,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable regularly scheduled hours of employment;
and all payroll-related liabilities or obligations of Seller.
To the best knowledge (after due inquiry) of the
Operators, no current employee of Seller is a party to, or is otherwise bound
by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement that (i) was breached or
violated by employment with, or services performed for, Seller or (ii) will
adversely affect the ability of such employee to perform his or her duties with
Buyer.
Labor Matters.
Except as disclosed in Section 6.14(a) of the
Disclosure Letter, Seller has not been, and is not now, a party to nor bound by
or subject to any collective bargaining agreement or other labor Contract.
During the last five (5) years, there has not been or, to the Operators'
knowledge, threatened strike, slowdown, picketing, lockout or work stoppage, or
any labor arbitration or proceeding in respect of the grievance of any employee,
application or complaint filed by an employee, employee group or union with the
National Labor Relation Board or any other Governmental Authority,
organizational activity, or other labor dispute against or affecting the
Business or the Facility. No application for certification of a collective
bargaining unit is pending or, to the Operators' knowledge, is threatened
against Seller or the Facility. To the best of the Operators' knowledge, after
due inquiry, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. Seller and the Manager have
complied in all respects with all applicable Legal Requirements (including, if
applicable, the Worker Adjustment and Retraining Notification Act) relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, social security and similar Taxes,
occupational safety and health, and plant closing (including, if applicable,
with respect to the transactions contemplated by this Agreement) of employees at
the Facility. Seller is not liable for the payment of any taxes, fines,
penalties, or other amounts (including sums related to EEOC or employment
discrimination charges, complaints or settlements), however designated, for
failure to comply with any of the foregoing Legal Requirements.
Section 6.14(b) of the Disclosure Letter sets forth a
complete and accurate list of all judicial or agency determinations, settlements
or conciliations of complaints, claims, charges or citations against Seller or
the Manager since January 1, 1991, arising under the National Labor Relations
Act, the Fair Labor Standards Act, the Immigration Reform and Control Act, the
Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Americans with Disability
Act of 1990, 42 U.S.C. ss. 1981, and any other Law, relating to employment
discrimination, occupational safety and health, employee benefits, or wages and
hours of employees.
Benefit Plans.
Seller has not established, maintained, sponsored,
contributed to (including any Multiemployer Plan as defined in Section
4001(a)(3) of ERISA), been required to contribute to, or otherwise participated
in any employee benefit plan, program, agreement or arrangement under which any
present or past employee of Seller or any ERISA Affiliate of Seller may be
entitled to any benefits (including death, health, medical, deferred
compensation, bonus or other arrangements), whether written or oral, whether
formal or informal, whether or not insured, and whether legally binding or not,
other than Seller's sick and vacation pay policies, neither of which is subject
to ERISA and true and correct copies of which have heretofore been delivered by
Seller to Buyer.
Except as set forth in Section 6.15(b) of the
Disclosure Letter, all payments required to have been made by Seller or Manager
under such sick pay and vacation pay policies have been made.
Compliance with Laws; Deficiencies. Except as set forth in Section
6.16 of the Disclosure Letter:
No Operator nor, to the best of its knowledge (after
due inquiry), no other Operator Affiliate has received, at any time since
January 1, 1991, any notice or other communication (whether oral or written)
from any Governmental Authority or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with, any
Legal Requirement pertaining to the Facility, the use thereof or the Business
conducted thereat, or (B) any actual, alleged, possible, or potential obligation
on the part of Seller to undertake, or to bear all or any portion of the cost
of, any Cleanup or other corrective, remedial, mitigation, response or other
action of any nature (including any investigation, study, sampling, monitoring
or testing) with respect to the Facility;
Except as described in Section 6.16(b) of the
Disclosure Letter, there is no pending nor, to the best knowledge of the
Operators (after due inquiry) is there any threatened or contemplated,
investigation or inquiry, proceeding, suit, claim (including any Environmental
Claim), action or litigation, or administrative, arbitration or other proceeding
or governmental investigation or inquiry against Seller or any of the
Acquisition Assets. The Operators have delivered to Buyer copies of all
pleadings, correspondence and other documents relating to each matter listed in
Section 6.16(b) of the Disclosure Letter. The matters listed in Section 16(b) of
the Disclosure Letter (either individually or in the aggregate) will not have a
Material Adverse Effect on the business, operations, assets (including the
Acquisition Assets) or prospects of Seller, the Facility or the Business. There
is no pending, nor, to the best knowledge of the Operators (after due inquiry)
threatened, proceeding against the Operators or any other Operator Affiliate
that challenges or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
There has occurred no event nor does any circumstance
exist that (with or without notice or lapse of time) may constitute or result in
a violation or a failure on the part of the Operators or, to the best of
knowledge of the Operators (after due inquiry), on the part of any other
Operator Affiliate to comply with, any Legal Requirement pertaining to the
Facility, the use thereof or the Business.
Except as set forth in Section 6.16(d) of the
Disclosure Letter, no Operator nor any of the assets (including the Acquisition
Assets) owned or used by Seller in connection with the Business or the Facility
nor, to the best of its knowledge (after due inquiry), any other Operator
Affiliate, is, or during the past five years was, subject to any judgment,
decree, injunction or order of any Governmental Authority.
Section 6.16(e) of the Disclosure Letter sets forth a
true and complete list of all violations and deficiencies found or alleged by
any Governmental Authority with respect to the Facility or Seller within the
past three (3) years. All such violations and deficiencies have been fully
withdrawn by the applicable Governmental Authority or remedied. No violations or
deficiencies found or alleged by any Governmental Authority with respect to the
Facility or Seller (whether or not listed in said Section 6.16(e) of the
Disclosure Letter) will result in any adverse effect upon Buyer in its operation
of the Facility or conduct of the Business or upon any of the transactions
contemplated herein (including any adverse effect upon any application by Buyer
for any Governmental Authorization required for Buyer's operation of the
Facility) or otherwise have any Material Adverse Effect.
No Operator, nor to the best knowledge of the
Operators, any other Person associated with or acting for or on behalf of an
Operator, has directly or indirectly in connection with the conduct of the
Business (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, or (iii) to obtain special concessions or for special concessions
already obtained or (b) established or maintained any fund or asset that has not
been recorded in the books and records of Seller.
Governmental Authorizations. Seller has (in good standing) all
requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization.
Affiliated Relationships. Except as disclosed in Section 6.18 of
the Disclosure Letter, neither Seller, General Partner or the Manager, nor any
partner, shareholder, director or officer thereof , or any member of such
Person's immediate family, has, or at any time within the last two (2) years has
had, a material ownership interest in any business that is or was a party to any
business relationships or arrangement of any kind relating to the operation of
the Facility or the Business.
Residents/Patients; Licensed Beds And Fees.
Seller has cared for the Residents/Patients located
at any time at the Facility in accordance with recognized standards pertaining
to assisted living facilities. Seller does not have any agreement with any of
its Residents/Patients which have been prepaid for more than one month.
Section 6.19(b) of the Disclosure Letter sets forth a
true and correct list of: (i) the maximum number of permitted licensed assisted
living care beds at the Facility; (ii) the number of beds or units presently
occupied at the Facility; (iii) the current standard rates and other fees and
amounts charged by Seller to Residents/Patients at the Facility; (iv) any
Residents/Patients having special rates or fee arrangements, together with a
list of such special rates or description of such special arrangements.
Brokers or Finders. No Operator Affiliate has dealt with any broke
or agent in connection with the sale of the Acquisition Assets and no Operator
has any knowledge of any Person who would be entitled to a brokerage or finder's
fee or agent's commission or other similar payment in connection with the sale
of the Acquisition Assets or the transactions contemplated hereby as a result of
Seller's dealings.
Disclosure.
No representation or warranty or other statement made
by any Operator or any other Operator Affiliate in this Agreement, in the
Disclosure Letter or in any document, certificate or instrument furnished or to
be furnished by any Operator Affiliate to Buyer and no financial or operating
statement furnished or to be furnished by any Operator Affiliate to Buyer is or
will be false or misleading as to any material fact, or omits or will omit to
state a material fact necessary to make the statements contained therein or, in
light of the circumstances in which they were made, not misleading. The Operator
Affiliates have provided to Buyer all material information related to the
Acquisition Assets and the Business.
The Operators have no knowledge of any fact (other
than general economic or industry conditions) that would have, or as far as the
Operators can reasonably foresee could have, a Material Adverse Effect.
Bankruptcy. No insolvency proceeding of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors (including any assignment for the benefit of creditors),
voluntary or involuntary, affecting Seller, General Partner or any other
Operator Affiliate (other than as a creditor) or the Acquisition Assets, is
pending or is being contemplated, or to the Operators' best knowledge (after due
inquiry) is being threatened, against Seller, General Partner or any other
Operator Affiliate by any other Person, and neither Seller nor any other
Operator Affiliate has made any assignment for the benefit of creditors or taken
any action in contemplation of, or which would constitute the basis for, the
institution of any such insolvency proceedings.
Third Party Provider Liabilities.
Except as set forth in Section 6.23 of the Disclosure
Letter, no services provided by Seller at the Facility have ever been reimbursed
by Medicaid or Medicare or, since January 1, 1995, any other third party
provider (including any managed care organization). Since January 1, 1995,
Seller has not received any notice of recoupment from and has no liability for
reimbursements of any third party reimbursement source (inclusive of managed
care organizations) and Seller is not aware of any basis for the assertion of
any such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
Due Diligence Information. Seller has delivered or caused to be
delivered or furnished to Buyer for its review true and complete copies of all
of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and, to the extent applicable, in good standing
under the laws of the State of Delaware; is, or will be on the Closing Date,
duly qualified and authorized to do business in the Commonwealth of Virginia;
and has full power, authority and legal right to execute and deliver and
(subject to obtaining requisite Governmental Authorizations) to acquire and
operate the Facility and the Business and to perform and observe the provisions
of this Agreement, and all other Transaction Documents to which it is or is to
become a party and otherwise to carry out the transactions contemplated
hereunder.
Authority. This Agreement constitutes and, when executed an
delivered, all the other Transaction Documents to which Buyer is or is to become
a party will constitute, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms. Buyer has
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and such other Transaction Documents to which it is or is to
become a party and to perform its obligations hereunder and thereunder.
Certain Proceedings. There is no pending proceeding that has been
commenced, nor, to the knowledge of Buyer, threatened against Buyer that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated by this
Agreement.
Brokers or Finders. Buyer has not dealt with any broker or agent in
connection with the purchase of the Acquisition Assets or the transactions
contemplated hereby as a result of Buyer's dealings and Buyer knows of no Person
who would be entitled to a brokerage or finder's fees or agent's commissions or
other similar payment.
Due Diligence Review. Buyer acknowledges that Seller has delivered
or furnished to Buyer information, documents, reports and records which Buyer
requested in connection with its due diligence review of the Facility and other
Acquisition Assets and that Buyer has been afforded the opportunity to inspect
the Facility. The foregoing notwithstanding, such review and/or inspection is
not intended to diminish or impair the representations and warranties made by
Seller, General Partner or any other Operator Affiliate hereunder or under any
other Transaction Document.
ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
Access and Investigation. Between the date of this Agreement and
the Closing Date, Seller will (and the General Partner will cause Seller to):
(a) afford Buyer and its representatives and prospective Financing Sources and
their representatives (collectively, "Buyer's Advisors") full and free access to
Seller's personnel, properties, Contracts, books and records, financial and
operating data and other information and documents pertaining to the Acquisition
Assets and the Business, (b) furnish Buyer and Buyer's Advisors with copies of
all such Contracts, books and records, and other existing documents and data as
Buyer may reasonably request, (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating and other relevant data and information as Buyer
may reasonably request, and (d) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the properties,
assets and financial condition of Seller, the Acquisition Assets and the
Business. Seller shall cause its accountants to cooperate with Buyer and to
disclose the results of audits and financial statement reviews relating to
Seller and/or to the Facility and to produce the work papers relating thereto.
No such investigation by Buyer or its representatives shall affect any of the
Seller's representations and warranties in this Agreement or Buyer's right to
rely thereon. Buyer shall conduct its investigation hereunder in such manner as
will not cause any unreasonable disruption to the business of the Facility.
Maps, Plans, Surveys, Etc. Seller shall deliver, or cause to
be delivered, to the Buyer all existing plans, maps, surveys, descriptions, and
title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
Operation of Seller's Business. Between the date of this Agreemen
and the Closing Date, Seller will (and the General Partner will cause Seller
to):
conduct the Business of Seller only in the ordinary
course of business;
use their best efforts to preserve intact Seller's
current business organization, keep available the services of the current
officers, employees and agents of Seller, and maintain the relations and good
will with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with Seller;
confer with Buyer concerning operational matters of a
material nature;
otherwise report periodically to Buyer concerning the
status of the Business, including its operations and financial
condition, including delivering to Buyer monthly operating statements
for the Facility and the Business within thirty (30) days after the end
of each calendar month between the date of this Agreement and the
Closing;;
make no material changes in management personnel
without prior notice to Buyer;
maintain the Acquisition Assets in a state of repair
and condition consistent with the requirements of this Agreement and
normal conduct of the Business, not dispose of or Encumber or permit
the disposition or Encumbrance of the Acquisition Assets;
use their best efforts to keep in full force and
effect and not amend, or waive or permit to be amended or waived,
Insurance covering Seller, the Facility or the other Acquisition Assets
or any other material rights relating primarily or exclusively to the
Business or the Acquisition Assets;
maintain all books and records relating to the
Business in the usual, regular and ordinary manner;
(i) maintain Inventory at least at current levels and in any event at
levels that are customary and sufficient to operate the Facility for its
Intended Use;
(j) not amend or permit to be amended any Contract related to the
Acquisition Assets or the Business except in the ordinary and usual practice of
the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances upon the
Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or assumed
any Contract related to the Acquisition Assets or the Business except in the
ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach of any
Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to the
Facility without the written approval of Buyer, other than (i) renovations and
repairs to the Facility which have been disclosed to Buyer and which are to be
completed prior to the Closing Date and (ii) those required by or in order to
retain or maintain in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by Law for
the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly with any and
all Legal Requirements affecting the Acquisition Assets and all orders of any
board of fire underwriters or other similar bodies, and promptly, and in no
event later than twenty-four (24) hours from the time of its receipt of any
notice of non-compliance, notify Buyer of any failure of Seller to comply with
the same; and
(q) not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their control, which would
cause any of Seller's and the General Partner's' representations and warranties
contained in this Agreement to be untrue.
Required Consents. As promptly as practicable after the date
of this Agreement, Seller will make all filings required to be made by it in
order to consummate the transactions contemplated by this Agreement. Between the
date of this Agreement and the Closing Date, Seller and the General Partner
will: (a) cooperate with Buyer with respect to all filings and provide all
information that Buyer elects to make or provide or is required to make or
provide in order to consummate the transactions contemplated by this Agreement
(including, with potential Financing Sources), and (b) cooperate with Buyer in
obtaining all Consents which Buyer considers necessary or appropriate in order
to consummate the transactions contemplated hereby.
Notification; Supplements to Disclosure Letter. Prior to the
Closing, the Operators will promptly notify Buyer in writing of (i) all events,
circumstances, facts, conditions or occurrences arising subsequent to the date
of this Agreement which could result in any of Seller's or General Partner's
representations becoming untrue or incorrect in any respect and (ii) all other
material developments affecting the Acquisition Assets or the Business or the
prospects thereof. Should any such event, circumstance, fact, condition or
occurrence require any change in the Disclosure Letter (if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
No Negotiation. Until such time, if any, as this Agreement is
terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the Business or the Acquisition Assets
or the partnership interests in Seller or merger of Seller or a similar
transaction involving Seller.
Best Efforts. Between the date of this Agreement and the Closing
Date, the Operators will use their best efforts to cause the conditions in
Section 4 to be satisfied.
ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
Information on Business Employees. On and prior to the Closing
Date, Buyer will be given reasonable access to the personnel records (including
performance appraisals, disciplinary actions, grievances) of all Business
Employees.
Employment of Business Employees by Buyer.
Effective as of 11:00 pm on the date of the Closing,
Seller will terminate the employment of all Business Employees and Buyer shall
offer employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
No Operator Affiliate, directly or indirectly, shall
solicit the employment of any Business Employee.
It is understood and agreed that accepted employment
with Buyer will be on an "at will" basis and may be terminated by Buyer or by an
employee at any time for any reason and with or without notice (subject to any
written agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her accrued and unpaid vacation and sick employer paid
leave as of the Closing. In the event that any such Rehired Employee uses any of
such vacation or sick leave during said 180-day period while it is an employee
of Buyer or otherwise becomes entitled to be paid for the same during said
period, Seller agrees to pay to Buyer promptly after demand setting forth
reasonable detail therefor the amount of accrued vacation or sick leave pay paid
to such Rehired Employees during said period.
Seller shall be responsible for the payment of all
wages and other remuneration due to employees of Seller with respect to their
services prior to 11:00 pm on the date of the Closing and, if and to the extent
applicable, the payment of any termination or severance payments due to, and
will comply with all Legal Requirements relating to, any employee who did not
accept Buyer's offer of employment. Seller shall provide Buyer with completed
I-9 forms and attachments with respect to all Rehired Employees, except for such
employees as Seller shall warrant are exempt from such requirement.
Buyer shall not have any responsibility, liability or
obligation, whether to Business Employees, former employees, their beneficiaries
or to any other Person with respect to, and the Operators shall, jointly and
severally, indemnify and hold Buyer harmless with respect to, any unlawful
employment, labor or immigration practice arising from, or as a consequence of,
the Operators' or the Manager's conduct of the Business prior to the Closing, or
any employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
Notwithstanding anything contained in this Section,
the provisions of this Section are not intended to, and shall not in any way be
construed to, confer upon any Person other than the parties hereto any rights or
remedies hereunder.
ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
Damage and Destruction. Seller shall have the risk of loss or
damage to the Property and liability arising out of the Business or the
Acquisition Assets from any cause whatsoever prior to the Closing Date. In the
event of any loss or damage to the Property, the following procedure shall be
used, Buyer may: (a) elect to extend the Closing Date for a period up to one
hundred eighty (180) days and require Seller to repair or replace such damaged
or destroyed Property, and, in which event Seller shall be entitled to retain
the Insurance proceeds and shall promptly proceed, at Seller's expense, to
repair or replace such damaged or destroyed Property; the Purchase Price shall
not be affected or adjusted in any way provided such damage or destruction is
fully repaired or replaced; (b) elect to proceed with the transaction
contemplated herein, and have the Insurance proceeds concerning the loss
assigned at Closing to Buyer, and if all or part of the loss is not covered by
Insurance, reduce the Purchase Price payable at the Closing by an amount equal
to the uninsured loss in which event Seller shall not be obligated to repair or
replace such damaged or destroyed Property; or (c) if the aggregate loss or
damage to the Property (from one or more events) at or prior to the Closing
exceeds ten (10%) percent of the Purchase Price, or would take longer than
thirty (30) days to repair or replace, elect to terminate this Agreement, in
which event neither Seller nor Buyer shall have any further rights or
obligations to the other hereunder.
Condemnation. In the event that prior to the Closing all or
any portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
ARTICLE
INDEMNIFICATION
Indemnification Agreement. The Operators indemnification and
reimbursement obligations arising from or in connection with any breach of any
representation, warranty or covenant made by them or another Operator Affiliate
in this Agreement and the Buyer's indemnification and reimbursement obligations
arising from or in connection with any breach of any representation, warranty or
covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
Independent Investigation. The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
ARTICLE
MISCELLANEOUS COVENANTS
Confidentiality. Between the date of this Agreement and the Closing
Date, the parties to this Agreement will maintain in confidence, and will cause
their respective directors, officers, partners, employees, agents and advisors
to maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is in the "public domain" or already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication. If the transactions
contemplated by this Agreement are not consummated, each party will return or
destroy (as determined in writing by the other party) as much of such written
information as the other party may reasonably request. Whether or not the
Closing takes place, the Operators waive any cause of action, right, or claim
arising out of the access of Buyer or its representatives to any trade secrets
or other confidential information except for the intentional competitive misuse
by Buyer of such trade secrets or confidential information (including forms,
manuals, policies and other Intellectual Property).
Public Announcements. Any general public announcements or similar
media publicity with respect to this Agreement or the transactions contemplated
herein shall be at such time and in such manner as Buyer shall determine;
provided that nothing herein shall prevent either party, upon notice to the
other, from making such written notices as such party's counsel may consider
advisable in order to satisfy the party's legal and contractual obligations in
such regard.
Non-Competition. (a) Seller shall not engage or participate in any
effort or act to induce any of the suppliers, associates, employees, independent
contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no
Operator Affiliate shall, directly or indirectly, for or on behalf of itself or
any other person, firm, entity or other enterprises, have a proprietary interest
in, be employed by, be a director or manager of, act as a consultant for, be a
partner in, give advice to, loan money to or otherwise associate with, any
person, enterprise, partnership, association, corporation, joint venture or
other entity which directly or indirectly engages in the business of owning,
operating or managing any facility of any type, licensed or unlicensed, which is
engaged in or provides assisted living care, nursing home care, senior housing,
adult day care, retirement housing, Alzheimer care living facility or adult
congregate living care anywhere within a twenty (20) mile radius of the
Facility, except that (i) any Operator Affiliate may operate any of the above
types of facilities for low income residents (defined as a facility with a base
rate of less than $1,250 per month, to be adjusted annually for changes in the
Consumer Price Index from January 1, 1997 using as the Consumer Price Index for
all Urban Wage Earners and Clerical Workers, 1982 -84 = 100, All Items for
Washington, D.C., Maryland and Virginia as published by the United States Bureau
of Labor Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained
in this Article 12 are reasonable and necessary to protect the legitimate
business interests of Buyer and that any violation thereof would result in
irreparable harm to Buyer for which the remedy at law would be inadequate.
Accordingly, the Operators agree that upon the violation by them of any of the
restrictions contained in this Article 12, Buyer shall be entitled to obtain
from any court of competent jurisdiction a preliminary and permanent injunction,
as well as any other relief provided at law or equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted in such a manner
or for such a time (or both) as is adjudged to be reasonable.
ARTICLE
GENERAL PROVISIONS
Survival. All covenants, representations and warranties made
by Seller and Buyer hereunder or in any certificates or other instruments
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and Closing.
Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In
addition, the following expenses will be paid by the following respective
parties:
Seller will pay:
any and all state, municipal or other documentary,
transfer, stamp, sales, use or similar taxes payable in connection with the
delivery of any instrument or document provided in or contemplated by this
Agreement, or the transactions contemplated hereby, together with interest and
penalties, if any, thereon;
any and all broker's fees or similar fees claimed by
any Person acting by or on behalf of Seller in connection with the transactions
contemplated hereby.
Buyer will pay
all expenses of or related to the issuance of the
title insurance commitment and policy (including the costs of any survey
required by Buyer and the Title Insurer), chain of title reports, and all closer
escrow fees and charges;
the cost of any environmental report, market and
feasibility study and appraisal prepared for Buyer at Buyer's request, and the
expenses of or related to Buyer's Due Diligence Review;
the charges for or in connection with the recording
and/or filing of any instrument or document provided for herein or contemplated
by this Agreement or any agreement or document described or referred to herein;
and
any and all broker's fees or similar fees claimed by
any Person acting by or on behalf of Buyer in connection with the transactions
contemplated hereby.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
Arbitration. The parties hereto shall submit to arbitration any
dispute, controversy or claim arising out of or relating to this Agreement or
any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
Notices. Any notice, consent, approval, demand or other
communication required or permitted to be given under this Agreement or any
other Transaction Document (a "notice") shall be in writing, shall be delivered
to the addressee at the address set forth below (or at such other address as
shall be designated hereunder by notice to the other parties) personally, by
FedEx (or other equivalent national overnight courier) for next Business Day
delivery or by registered or certified United States mail, return receipt
requested, in each case with the cost of delivery prepaid or for the account of
the sender and shall be deemed to have been given (a) when delivered, if
delivered in person, (b) on the next Business Day, if sent by FedEx (or other
equivalent national overnight courier) or (c) five (5) Business Days after
mailing, if mailed by registered or certified United States mail. The respective
addresses of the parties for notice are as follows:
If to Buyer: Integrated Living Communities of
Gloucester, Inc.
Bernwood Centre
00000 Xxx 00 Xxxx, Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Paretts Xxxxxx, Esq.
If to Operator
Affiliates: Xxxxxxx Corporation
000 Xxxxxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxxxx
with a copy to: Xxxxxx, Hamlett, Lowry, Xxxxxxxxx & Tweel, P.C.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx Xxxxxxxx, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
Financial Statement Audits. The Operators shall use their best
efforts to cause Seller's Auditors to deliver to Buyer at Buyer's expense,
within sixty (60) days following the Closing Date, such audited financial
statements of Seller necessary to comply with Rule 3-05 of Regulation S-X
promulgated by the Securities and Exchange Commission for filing by Integrated
Living Communities, Inc. with a Current Report on Form 8-K regarding the
transactions contemplated herein, and to cause Seller's Auditors to cooperate
with Buyer's Auditors in preparing the required pro forma financial statements
for filing therewith. Notwithstanding the level of review of the Facility's
financial statements by Buyer pursuant to Section 8.1 above, Seller shall
cooperate with Buyer and its independent certified public accountants, if Buyer
deems it necessary or desirable, to audit the balance sheets, statements of
operations and statements of cash flow of Seller for up to three (3) calendar
years ended prior to Closing. Without limiting the foregoing, the Operators
shall make available all information requested by Buyer or its auditors, and the
Operators (and their chief executive and chief financial officers) shall execute
and deliver to the auditors all representation letters requested by Buyer's
auditors. Such audits shall be conducted at Buyer's expense.
Intentionally omitted.
Copies of Books and Records. The Operators shall, for a period of
five (5) years after the Closing Date, provide to Buyer copies, whether in paper
or computer format, as may be reasonably requested from time to time by Buyer,
of Seller's financial and tax books and records and Manager's financial records
insofar as they relate to the operation of the Facility and the Business prior
to the Closing.
Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. No delay in exercising any right or remedy
shall constitute a waiver thereof, and no waiver by Buyer or any Operator of any
covenant of this Agreement shall be construed as a waiver of any preceding or
succeeding breach of the same or any other covenant or condition of this
Agreement.
Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Letter of Intent) and constitutes (along with the Transaction
Documents, including the Unification Agreement, referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by each of the parties.
Assignments, Successors and Third Party Beneficiaries.
No party may assign any of its rights under this
Agreement without the prior consent of the other party which will not be
unreasonably withheld, except that Buyer may assign all or certain of its
rights, duties and obligations hereunder to one or more Affiliates of Buyer, or,
in connection with the financing or refinancing of Buyer's purchase of the
Acquisitions Assets, to a real estate investment trust or other Financing Source
or its Affiliate, without the prior written consent of Seller, provided that in
the instance of any such assignment Buyer shall not be released from any of, and
remain responsible for its obligations under, this Agreement.
This Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties.
Except as otherwise expressly provided in this
Section, this Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns and nothing in this Agreement will be construed to give
any Person other than the parties to this Agreement or their respective
successors and assigns any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement.
Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section Headings. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect the construction
or interpretation of this Agreement.
Governing Law. This Agreement will be governed by and construe
under the laws of the Commonwealth of Virginia without regard to conflicts of
laws principles.
Counterparts. This Agreement may be executed in one or mor
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF GLOUCESTER, INC.
By: ______________________________________
Xxxx Xxxxx, Chief Financial Officer
AMERICAN RETIREMENT HOMES, INC.
By: ______________________________________
Xxxxxxxxx X. Xxxxxxx, President
XXXXXXX CORPORATION
By: ______________________________________
Xxxxx X. Xxxxxxx, President
TABLE OF CONTENTS
Page
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ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 11
TERMS OF THE SALE AND PURCHASE 11
2.1 Assets to Be Sold 11
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 12
2.5 Allocation of Purchase Price 13
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 13
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 15
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 17
ARTICLE 4 17
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 17
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 18
4.7 No Material Adverse Change 19
4.8 Consents 19
4.9 Completion of Other Transactions 19
ARTICLE 5 19
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 19
5.1 Performance 20
5.2 Representations and Warranties 20
5.3 Consents 20
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into
of Other Agreements 20
Page
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ARTICLE 6 20
REPRESENTATIONS AND WARRANTIESOF OPERATORS 20
6.1 Organization and Good Standing 20
6.2 Authority; No Conflict; Consents 21
6.3 Financial and Operating Statements 22
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 23
6.6 Taxes; FIRPTA 23
6.7 Title, Condition and Sufficiency of the Facility 24
6.8 Title, Condition And Sufficiency of the Personal Property 26
6.9 Inventory 26
6.10 Intellectual Property 27
6.11 Contracts 27
6.12 Insurance 28
6.13 Employees 29
6.14 Labor Matters 29
6.15 Benefit Plans 30
6.16 Compliance with Laws; Deficiencies 30
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 32
6.19 Residents/Patients; Licensed Beds And Fees 32
6.20 Brokers or Finders 32
6.21 Disclosure 33
6.22 Bankruptcy 33
6.23 Third Party Provider Liabilities 33
6.24 Due Diligence Information 33
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 34
7.2 Authority 34
7.3 Certain Proceedings 34
7.4 Brokers or Finders 34
7.5 Due Diligence Review 34
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc. 35
8.3 Operation of Seller's Business 35
8.4 Required Consents 37
8.5 Notification 37
8.6 No Negotiation 37
8.7 Best Efforts 37
Page
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ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 38
ARTICLE 10 39
DAMAGE, DESTRUCTION OR CONDEMNATION 39
10.1 Damage and Destruction 39
10.2 Condemnation 39
ARTICLE 11 40
INDEMNIFICATION 40
11.1 Indemnification Agreement 40
11.2 Independent Investigation 40
ARTICLE 12 40
MISCELLANEOUS COVENANTS 40
12.1 Confidentiality 40
12.2 Public Announcements 41
12.3 Non-Competition 41
ARTICLE 13 42
GENERAL PROVISIONS 42
13.1 Survival 42
13.2 Expenses 42
13.3 Arbitration 43
13.4 Notices 43
13.5 Further Assurances 44
13.6 Financial Statement Audits 44
13.7 Intentionally omitted 45
13.8 Copies of Books and Records 45
13.9 Waiver 45
13.10 Entire Agreement and Modification 45
13.11 Assignments, Successors and Third Party Beneficiaries 45
13.12 Severability 46
13.13 Section Headings 46
13.14 Governing Law 46
13.15 Counterparts 46
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EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Xxxx of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
