Exhibit (c)
FORM OF
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May __,
1998, is made and entered into by and between Healthcare Properties, L.P., a
Delaware limited partnership ("HCP"), Capital Senior Living Properties, Inc., a
Texas corporation (the "COMPANY"), and Capital Senior Living Merger, LLC, a
Delaware limited liability company ("MERGER SUB").
RECITALS:
A. Merger Sub, upon the terms and conditions of this Agreement and in
accordance with the Delaware Limited Liability Company Act ("DLLCA") and the
Delaware Revised Uniform Limited Partnership Act ("DRULPA") will merge with HCP,
with HCP as the surviving entity (the "MERGER").
B. The Members of Merger Sub have approved and adopted this Agreement
and the transactions contemplated hereby.
C. The general partner of HCP has approved and adopted this Agreement
and the transactions contemplated hereby, has determined that the Merger is fair
and in the best interests of HCP and its Interest Holders (as hereinafter
defined) and has recommended approval and adoption of this Agreement by the
holders (the "INTEREST HOLDERS") of Interests in HCP ("INTERESTS" shall be as
defined in the Partnership Agreement (as hereinafter defined) of HCP).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, conditions and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DLLCA and DRULPA, at the
Effective Time (as defined in SECTION 1.3 of this Agreement), Merger Sub shall
be merged with and into HCP. As a result of the Merger, the separate limited
liability company existence of Merger Sub shall cease and HCP shall continue as
the surviving entity of the Merger (the "SURVIVING ENTITY"). The name of the
Surviving Entity shall continue after the Effective Time to be HealthCare
Properties, L.P.
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "CLOSING") shall take place (a) at the
offices of Jenkens & Xxxxxxxxx, a Professional Corporation, 0000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000-0000, at 9:00 a.m., local time, on the second
business day immediately following the day on which the last to be fulfilled or
waived of the conditions set forth in ARTICLE VI shall be fulfilled or waived in
accordance herewith (other than conditions with respect to actions the
respective parties hereto will take at the Closing), or (b) at such other time,
date or place as HCP, the Company and Merger Sub may agree. The date on which
the Closing occurs is hereinafter referred to as the "CLOSING DATE."
1.3 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in ARTICLE VI of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware, in
such form as is required by, and executed in accordance with the relevant
provisions of, the DLLCA and DRULPA (the date and time of the completion of such
filing being the "EFFECTIVE TIME").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in Section 18-209 of the DLLCA and Section 17-211 of
DRULPA. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of Merger Sub and HCP shall vest in the Surviving Entity, and all
debts, obligations, liabilities and duties of each of Merger Sub and HCP shall
become the debts, obligations, liabilities and duties of the Surviving Entity.
After giving effect to the conversion of interests provided for in Article II
hereof, the sole general partner of HCP shall continue to be Capital Realty
Group Senior Housing, Inc., the sole limited partner of HCP shall be
Xxxxxxx-Xxxxxx Depository, Inc. and the sole Interest Holder of HCP shall be the
Company.
1.5 CERTIFICATE OF LIMITED PARTNERSHIP. At the Effective Time, the
Certificate of Limited Partnership of the Surviving Entity shall be the
Certificate of Limited Partnership of HCP as in effect immediately prior to the
Effective Time.
1.6 PARTNERSHIP AGREEMENT. At the Effective Time and without further
action on the part of HCP or Merger Sub, the Partnership Agreement of the
Surviving Entity shall be the Partnership Agreement of HCP in effect as of the
Effective Time, except that the sole general partner of HCP shall continue to be
Capital Realty Group Senior Housing, Inc., the sole limited partner shall be
Xxxxxxx-Xxxxxx Depository, Inc. and the sole Interest Holder of HCP shall be the
Company..
1.7 DEFINED TERMS. Capitalized terms not otherwise defined herein
shall be as defined in SECTION 8.3.
ARTICLE II
CONVERSION OF INTERESTS IN HCP
2.1 CONVERSION OF INTERESTS. At the Effective Time, by virtue of the
Merger and without any action on the part of HCP, or any partner thereof, or the
Company or Merger Sub:
(a) the Interests in HCP issued and outstanding immediately
prior to the Effective Time that are owned by Interest Holders, other
than the Company, shall be converted into the right to receive
$___________ cash per Unit; and
(b) except as set forth in subsection (a) of this SECTION 2.1
hereof, the Interest Holders, other than the Company, and the limited
partners, other than Xxxxxxx-Xxxxxx
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Depository, Inc., of HCP immediately prior to the Effective Time shall
not have any continuing interest in or ownership claim against HCP; and
(c) the Interest Holders, other than the Company, and the
limited partners of HCP, other than Xxxxxxx-Xxxxxx Depository, Inc.,
immediately prior to the Effective Date shall no longer be partners or
Interest Holders in HCP and the sole general partner of HCP shall
continue to be Capital Realty Group Senior Housing, Inc., the sole
limited partner of HCP shall be Xxxxxxx-Xxxxxx Depository, Inc. and the
sole Interest Holder of HCP shall be the Company.
2.2 CONSTITUENT DOCUMENTS. The existing Partnership Agreement of HCP
and the existing Certificate of Limited Partnership of HCP shall survive the
Merger and the Articles of Organization and Limited Liability Company Agreement
of Merger Sub shall be canceled and terminated as of the Effective Time.
2.3 PAYMENT FOR INTERESTS
(a) At or prior to the Effective Time, the Company shall
designate a disbursing agent reasonably satisfactory to HCP to act as the
Exchange Agent in the Merger (the "EXCHANGE AGENT") for purposes of disbursing
the merger consideration pursuant to SECTION 2.1 of this Agreement. Promptly
after the Effective Time, the Company will provide the Exchange Agent funds
necessary to make the payments contemplated by SECTION 2.1 on a timely basis.
(b) As soon as practicable after the Effective Time, the
Company shall cause the Exchange Agent to mail, by first class mail, to each
holder of record (other than the Company) of issued and outstanding Units of the
HCP Interests immediately prior to the Effective Time a form letter of
transmittal (the "LETTER OF TRANSMITTAL") for return to the Exchange Agent with
the Interest Holder's instructions for the payment of the merger consideration
for each of such holder's Units. The Exchange Agent, as soon as practicable
following receipt of any such Letter of Transmittal, duly executed, and any
other items specified by the Letter of Transmittal, shall pay, by check or
draft, to such Interest Holder an amount equal to the product of (i) the number
of Units confirmed by such Interest Holder and (ii) the merger consideration per
Unit. No interest will be paid or accrued on the merger consideration. If
payment is to be made to a person other than the person in whose name the
Interest is registered, it shall be a condition of payment that such Interest
Holder requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the Interest Holder.
2.4 NO FURTHER RIGHTS OR TRANSFERS. At and after the Effective Time,
each holder of issued and outstanding Units of HCP Interests, other than the
Company, prior to the Effective Time shall cease to have any rights as Interest
Holders of HCP, except for the right to the payment provided pursuant to SECTION
2.1 of this Agreement. No transfer of Units outstanding immediately prior to
the Effective Time shall be made on the transfer books of the Surviving Entity
after the Effective Time.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HCP
HCP hereby represents and warrants to the Company and Merger Sub as
follows:
3.1 CORPORATE MATTERS.
3.1.1 ORGANIZATION, POWER, AND STANDING. HCP is a limited
partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware, and is qualified to do business in
each state in which it is now doing business, and has all requisite
partnership power and authority to execute, deliver, and perform this
Agreement, to own, lease, or otherwise use its assets (the "ASSETS"), and
to consummate the transactions contemplated hereby.
3.1.2 AUTHORIZATION AND ENFORCEABILITY. This Agreement has
been duly authorized, executed, and delivered by HCP, constitutes the
legal, valid, and binding obligation of HCP and is enforceable against
HCP in accordance with its terms, except to the extent such
enforceability may be limited by bankruptcy, reorganization, insolvency,
or similar laws of general applicability governing the enforcement of the
rights of creditors or by the general principles of equity (regardless of
whether considered in a proceeding at law or in equity).
3.1.3 COMPLIANCE WITH CHARTER DOCUMENTS. The execution,
delivery, and performance of this Agreement by HCP and the consummation
by HCP of the transactions contemplated hereby will not violate or
conflict with or constitute a default under any term of the PARTNERSHIP
AGREEMENT (herein so called) or Certificate of Limited Partnership of
HCP. Attached hereto as SCHEDULE 3.1.3 is a true and complete copy of
the Partnership Agreement and Certificate of Limited Partnership (with
all amendments to each) of HCP in effect as of the date hereof.
3.1.4 NO BREACH, ETC. The execution, delivery, and performance
of this Agreement by HCP will not conflict with or result in a breach of
or default by HCP under any term, condition, or provision of any order,
writ, injunction, decree, contract, agreement, or instrument to which HCP
is a party or subject or by which HCP may be bound; will not result in
the creation or imposition of any lien, charge, or encumbrance of any
nature upon any of the Assets; and will not give to others any interest
or rights in, or with respect to, any of the Assets.
3.2 HCP'S FINANCIAL STATEMENTS. Attached as SCHEDULE 3.2.1 are the
financial statements of HCP for the years ending December 31, 1994, December 31,
1995, December 31, 1996, and December 31, 1997, all of which have been audited
by KPMG Peat Marwick LLP ("HCP'S ANNUAL FINANCIAL STATEMENTS"). HCP's Annual
Financial Statements (including the notes thereto) are, to the best knowledge of
HCP, prepared in conformity with generally accepted accounting principles. HCP
shall promptly deliver to the Company and Merger Sub, HCP's unaudited financial
statements for the period(s) from January 1, 1998, to the end of the month
immediately prior to the date hereof.
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3.3 CHARACTER OF OPERATIONS; COMPLIANCE WITH LAWS.
3.3.1 COMPLIANCE GENERALLY. To the best knowledge of HCP,
neither the execution and delivery of this Agreement by HCP nor the
consummation by HCP of any transaction contemplated hereby does or will
violate or give rise to any violations or default under any Legal
Requirement assuming the Company and/or Merger Sub secure all necessary
approvals from federal, state, and local governmental and administrative
agencies having jurisdiction thereof required for the Merger. HCP does
not have actual knowledge that the operation of the Operated Facility as
heretofore or currently conducted was or is in violation of, or that HCP
is in default under any Legal Requirement. HCP has not received any
notice of any impending order or requirement which would cause additional
expenditures by HCP to be made to bring the Facilities and the Assets
into compliance with any Legal Requirement.
3.3.2 NO BRIBES, ILLEGAL PAYMENTS. Neither HCP nor any general
partner of HCP, nor, to the best knowledge of HCP, any employee or agent
of HCP, has directly or indirectly given or agreed to give any gift,
contribution, payment, or similar benefit to any supplier, customer,
governmental employee or other Person who was, is, or may be in a
position to help or hinder HCP or any Facility (i) which could subject
HCP, the Company or Merger Sub to any damage or penalty in any civil,
criminal, or governmental litigation or proceeding, or (ii) the
non-continuation of which in the future could reasonably be expected to
result in a material adverse effect on the business, operations, assets,
prospects, or condition, financial or otherwise, of HCP.
3.3.3 HCP'S LICENSES. SCHEDULE 3.3.3 attached hereto contains
a true and complete list of all currently effective licenses, permits,
approvals, certificates of need, qualifications, Medicaid and Medicare
certifications and the like, which have been issued to HCP by any
governmental agency (whether federal, state, local, or other) in
connection with the ownership and the operation of the Operated Facility
(collectively, "LICENSES"). HCP's Licenses are all of the licenses,
permits, approvals, certificates of need, qualifications, Medicaid and
Medicare certifications and the like which are necessary for the
ownership and operation by HCP of the Operated Facility. HCP's Licenses
are in full force and effect and no such License is conditional or
restricted.
3.3.4 COMPLIANCE WITH STATE LICENSURE, MEDICARE AND MEDICAID
CERTIFICATION REQUIREMENTS. To the best knowledge of HCP, the Operated
Facility currently meets, and as of the Closing Date shall meet, in all
material respects, all standards and conditions for the operation and
licensure of senior living facilities to the extent such standards and
conditions are applicable to such Facility and, if eligible, for
participation in the Medicare and Medicaid programs under federal, state,
and local governmental laws, rules, regulations, guidelines, standards,
and conditions, and is not subject to any variances or waivers with
respect to licensure or operational requirements.
3.3.5 RETURNS, REPORTS, ETC. To the best knowledge of HCP, all
Medicare and Medicaid cost reports and all sales and use tax returns
necessary to be filed by HCP with respect to the Operated Facility with
any governmental authorities on or prior to the date hereof, as well as
those to be filed on or prior to the Closing Date, have been, or will be,
accurately completed in all material respects. HCP has no obligations to
the state in which
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the Operated Facility is located for reimbursement of Medicaid
depreciation recapture liabilities or to the United States Government
for Medicare overpayment liabilities.
3.3.6 WORK ORDER, STATEMENTS OF DEFICIENCIES. To the best
knowledge of HCP, there are no pending work orders or statements of
deficiencies relating to the Operated Facility which have been required
or issued by any state department of health or Medicare or Medicaid
certification agency, or any insurance company, police or fire
department, sanitation, health or work authorities or any other federal,
state, or municipal authority. HCP shall provide to the Company and
Merger Sub a copy of any such work order or statement of deficiencies
received by HCP after the date hereof within five (5) days after receipt
thereof.
3.3.7 ENVIRONMENTAL MATTERS. To the best knowledge of HCP, HCP
is not subject to any type of enforcement actions or compliance order for
any violation or alleged violation of any environmental laws, rules,
standards, or regulations relating to the Premises or any Facility,
including, but not limited to, those related to waste-management, air
pollution control, waste-water treatment or noise abatement. HCP has not
received any notice or citation for noncompliance by HCP with respect to
any of the foregoing relating to the Premises or any Facility. To the
best knowledge of HCP:
(i) HCP has not been notified that any person's
health has nor may have been impaired (including any past or
present employee) as the result of the use, existence, or disposal
of Hazardous Materials or Infectious Wastes on the Premises.
(ii) Except as set forth on SCHEDULE 3.3.7, there are
no underground fuel storage tanks located at the Premises.
(iii) To the best knowledge of HCP, the Premises are
not contaminated with any Hazardous Materials or Infectious Waste
and neither HCP nor any of HCP's employees or agents, have placed
or permitted the placement of any Hazardous Materials or
Infectious Waste in, on, or over the Premises; to the best
knowledge of HCP, the Premises do not appear on any state or
Federal Comprehensive Environmental Responsibility, Compensation
and Liability Act, or Super Fund lists as being classified as a
hazardous waste site; and the Premises have not been used as a
plant or site where Hazardous Materials or Infectious Waste was
subjected to treatment, storage, disposal, or recovery.
3.3.8 LITIGATION. Except as set forth on SCHEDULE 3.3.8
attached hereto, there is no litigation, at law or in equity, or any
proceeding before or investigation by any federal, state, or municipal
court, board, or other governmental or administrative agency or any
arbitrator, against HCP in connection with the operation of the Operated
Facility or otherwise affecting the Assets, or questioning or challenging
the validity of this Agreement or actions to be taken hereunder, pending
or, to the best of HCP's knowledge, threatened, involving a claim of
$10,000 or more ($40,000 in the aggregate), nor has HCP given notice to
any insurers (for notice or adjustment purposes) of any claim against
HCP. No judgment, decree, or order of any federal, state, or municipal
court, board, or other governmental or administrative agency or any
arbitrator (i) has been issued, to the best of HCP's knowledge, against
any Person other than HCP which could have any material
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adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of HCP, or (ii) has been issued
against HCP.
3.4 ASSETS AND LIABILITIES.
3.4.1 CONDITION OF CERTAIN ASSETS. To the best knowledge of
HCP, all buildings, fixtures, machinery and equipment included in the
Operated Facility, including, without limitation, all heating, air
conditioning, electrical and life safety equipment/systems installed on
the Premises of the Operated Facility, are in good working order,
ordinary wear and tear excepted, and the roof of the Operated Facility is
in good repair, ordinary wear and tear excepted.
3.4.2 WARRANTIES AND GUARANTEES. To the best knowledge of HCP,
SCHEDULE 3.4.2 attached hereto contains a true and complete list of all
written warranties and guarantees currently in effect in connection with
the buildings and other improvements on the Premises including by way of
illustration, and not by way of limitation, any warranties on the roofs
of the buildings and any warranties and guarantees in connection with any
heating, air conditioning, or other equipment in, or about said buildings
or improvements and any rights HCP may have against their general
contractors or their subcontractors.
3.4.3 INVENTORY. All items of Inventory included in the Assets
consist and will consist of, as of Closing, items of a quality
customarily used by HCP in the ordinary course of its business.
3.4.4 TRADE NAMES. HCP has the right to use the names of its
Operated Facility as set forth in SCHEDULE B attached hereto in the
market area of the Operated Facility, and HCP has not licensed or entered
into any agreement to permit any person or entity to use such Facility
name or any variation thereof. To the best knowledge of HCP, the use of
such Facility names by HCP does not, and the use of such Facility names
by the Company and/or Merger Sub in the market areas of the Operated
Facility in a manner consistent with HCP's past practices will not, as of
the Closing Date, conflict with any rights to any similar name owned by
any other person or entity.
3.4.5 LIABILITIES. Except as set forth in the Schedules
attached hereto, to the best knowledge of HCP, there are no liabilities
of HCP affecting the Assets, whether absolute, contingent, or fixed,
liquidated or unliquidated, matured or not yet due, of any nature,
including tax liabilities, other than liabilities expressly accounted for
and disclosed in HCP's Annual Financial Statements or HCP's unaudited
financial statements.
3.4.6 LIENS AND ENCUMBRANCES. HCP has good and marketable
title to all of the Assets owned by HCP. As of the date hereof, to the
best knowledge of HCP, the Assets are not subject to any Liens or
encumbrances other than those Liens and encumbrances included in the
Permitted Exceptions, and such other Liens or encumbrances which shall be
paid and released at Closing. Upon consummation of the Merger, the
Assets will not be subject to any Lien except (i) any Lien included in
the Permitted Exceptions, (ii) any Lien created by the Company and/or
Merger Sub, if any, and (iii) any Lien insured against by title
insurance.
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3.4.7 TAXES. To the best knowledge of HCP, all taxes, excises
and assessments against the Assets due and payable by HCP on or before
the date hereof have been paid. As of Closing, there will be no unpaid
or outstanding taxes or assessments against the Assets or any part
thereof owed by HCP (except only taxes and assessments not yet due and
payable as of the Closing Date). To the best knowledge of HCP, there are
no agreements, waivers or other arrangements providing for an extension
of time with respect to the assessment of any type of tax or deficiency
against HCP with respect to the Assets owned by HCP, nor are there any
actions, suits, proceedings, investigations, or claims for additional
taxes and assessments asserted by any taxing authority with respect to
the Assets owned by HCP of which HCP has notice.
3.4.8 CERTAIN REAL ESTATE MATTERS. To the best knowledge of
HCP, there are no pending real estate tax abatement actions or
proceedings, there is no unrepaired casualty damage to the Premises and
there are no pending or, to the best knowledge of HCP, threatened eminent
domain or condemnation proceedings, with respect to the Premises. The
Premises are each located on separate and independent tax parcels.
3.4.9 TENANT AND PATIENT ACCOUNTS. Except as set forth in
SCHEDULE 3.4.9 attached hereto, as of the date hereof, no tenants or
patients at the Operated Facility (nor third party payors responsible for
such patients) are delinquent in the payment of their bills owed to HCP
nor are any of the operator lessees delinquent in the payment of rent
unless the leases of the Leased Facilities. At Closing, HCP shall
provide the Company and Merger Sub with an update to SCHEDULE 3.4.9
certified as of the Closing Date.
3.5 CONTRACTUAL MATTERS.
3.5.1 CONTRACTS. Schedule 3.5.1 attached hereto contains a
true and complete list of all material written contracts, agreements, and
leases (other than (i) material agreements described in SECTION 3.6.1
hereto (the "LABOR CONTRACTS"); and (ii) occupancy agreements of the
Operated Facility (the "OCCUPANCY AGREEMENTS")), between HCP and any
other person or entity currently in effect in connection with the
Operated Facility (together with the Labor Contracts and Occupancy
Agreements, collectively referred to herein as the "CONTRACTS"). HCP has
heretofore delivered to the Company and Merger Sub a true and complete
copy of each such Contract listed in SCHEDULE 3.5.1. Each Contract is in
full force and effect, and, neither HCP nor, to the best knowledge of
HCP, any other party to any Contract is in default of its respective
obligations thereunder, and to the best knowledge of HCP, no event exists
which, with notice or passage of time, would become an event of default
by HCP thereunder.
3.5.2 OCCUPANCY AGREEMENTS. Attached as SCHEDULE 3.5.2.1
hereto are true and complete copies of the current standard forms of
occupancy agreements entered into between HCP and tenants or patients at
the Operated Facility (the "OCCUPANCY AGREEMENT FORMS"). There are no
agreements under which tenants or patients entering the Facility
subsequent to the adoption by HCP of the applicable Occupancy Agreement
Form currently occupy all or any part of the Operated Facility which
materially deviate from the Occupancy Agreement Forms. There are no
undisclosed amendments or agreements to such residency agreements, nor
any special rates, services, or concessions promised by HCP to any
residents or patients of the Operated Facility except as disclosed in
SCHEDULE 3.5.2.2 attached hereto.
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3.5.3 INSURANCE. Attached as SCHEDULE 3.5.3 hereto is a list
of all insurance coverage maintained by HCP as of the date hereof in
connection with the Premises and the operation of the Operated Facility.
All such insurance coverage is in full force and effect (with no overdue
premium) in the amounts set forth on SCHEDULE 3.5.3. HCP agrees to
maintain the insurance coverage listed in SCHEDULE 3.5.3 without material
change thereto through the Closing Date. Certificates evidencing such
insurance coverage will be supplied by HCP to the Company and Merger Sub
at either the Company's or Merger Sub's request. HCP shall promptly
inform the Company and Merger Sub of any non-renewal, material change,
cancellation, or replacement of any such insurance coverage prior to
Closing. In the event of any non-renewal, material change, or
cancellation of the insurance coverage currently maintained by HCP
hereunder, the Company and Merger Sub shall have the right during the
period prior to Closing to provide replacement insurance generally
comparable to the insurance coverage currently maintained by HCP, at
HCP's expense.
3.6 LABOR MATTERS.
3.6.1 EMPLOYMENT RELATED CONTRACTS. HCP has provided to the
Company and Merger Sub all written employment agreements relating to any
employees of HCP and all written compensation, pension, retirement,
welfare, profit sharing, incentive, or other similar written plans
relating to any employee of HCP. HCP has also advised Merger Sub of all
plans, agreements, arrangements, or practices which constitute "fringe
benefits" to any of the employees of HCP, including, without limitation,
group medical insurance, group life insurance, disability insurance, and
related benefits. A complete list of all of the foregoing is attached
hereto as SCHEDULE 3.6.1.
3.6.2 EMPLOYEE COMPENSATION AND BENEFITS. To the best
knowledge of HCP, attached hereto as SCHEDULE 3.6.2 is a true and
complete list of all current employees of HCP, and their current level of
compensation, which list shall be true and correct as of the Closing Date
in all material respects except for those changes specifically authorized
by SECTION 5.1 hereof and except for the addition or removal of employees
in the ordinary course of business.
3.6.3 LABOR RELATIONS. To the best knowledge of HCP, no
employee of HCP is currently part of any collective bargaining unit or
represented by any collective bargaining representative, and no petition
has been filed or proceeding instituted by any such employee or group of
employees with any labor relations board seeking recognition of a
bargaining representative. There are no strikes, grievances, disputes,
or controversies with individual employees, except for disputes and
controversies with individual employees arising in the ordinary course of
business consistent with past experience which do not and will not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, prospects, or conditions, financial or
otherwise, of HCP, the Company or Merger Sub.
3.7 OTHER REPRESENTATIONS.
3.7.1 COMPLETENESS AND ACCURACY OF CONTRACTS AND DOCUMENTS. To
the best knowledge of HCP, all copies of contracts and documents
delivered by HCP to Merger Sub in connection with the transactions
contemplated hereby are complete and accurate in
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all respects, and no such contract or agreement has been amended or
modified in any respect.
3.7.2 NO MISREPRESENTATIONS. To the best knowledge of HCP, HCP
has not made an untrue statement of material fact in any instrument,
certification, or statement furnished to the Company or Merger Sub, nor
has HCP omitted to state a material fact necessary to make the statements
contained herein or therein not misleading.
3.8 HCP'S COVENANTS REGARDING TRANSFER OF OWNERSHIP APPROVALS AND
NOTICE. The Company or Merger Sub shall file all notices and other documents
with applicable federal, state, and local governmental authorities as required
under law to effect the Merger and, to the extent applicable, the continuation
of each currently effective Medicare and Medicaid provider agreement and HCP's
Licenses. HCP shall assist and cooperate with the Company and Merger Sub with
all such filings and other action required to be taken by the Company or Merger
Sub to accomplish the foregoing.
3.9 FINDER'S OR BROKER'S FEE. Except for the commission payable to
Capital Realty Group Brokerage, Inc., HCP has not engaged in any conduct that
has given or will give rise to any liability for any fee, compensation, or
reimbursement for expenses to any agent, finder, or broker, either in the nature
of a finder's fee or otherwise, in connection with the transactions contemplated
hereby.
3.10 CAPITALIZATION. As of the date hereof, HCP has 4,172,457 Units
issued and outstanding. Except for the aforesaid Units which are issued and
outstanding, no other Units have been agreed to be issued or are reserved for
issuance.
3.11 BEST KNOWLEDGE OF HCP DEFINED. The representations and warranties
made to the Company and Merger Sub by HCP in this ARTICLE III and elsewhere in
this Agreement to the best knowledge of HCP are limited to the current actual
knowledge of the executive officers of the corporation which is the general
partner of HCP, and the recertification required of HCP at Closing shall
likewise be qualified to the then current actual knowledge of said officers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MERGER SUB
The Company and Merger Sub hereby represent and warrant to HCP as
follows:
4.1 ORGANIZATION, POWER, AND STANDING. The Company is a corporation
organized and validly existing under the laws of the State of Texas, and has all
requisite power to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby. Merger Sub is a limited
liability company organized and validly existing under the laws of the State of
Delaware, and has all requisite power to execute, deliver, and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 AUTHORIZATION AND ENFORCEABILITY. This Agreement has been duly
authorized, executed, and delivered by the Company and Merger Sub, constitutes
the legal, valid, and binding obligation of the Company and Merger Sub, and is
enforceable against the Company and Merger Sub in accordance with its terms,
except to the extent such enforceability may be limited by
10
bankruptcy, reorganization, insolvency, or similar laws of general
applicability governing the enforcement of the rights of creditors or by the
general principles of equity (regardless of whether considered in a
proceeding at law or in equity).
4.3 COMPLIANCE WITH CHARTER DOCUMENTS. The execution, delivery, and
performance of this Agreement by the Company and Merger Sub and the consummation
by the Company or Merger Sub of the transactions contemplated hereby will not
violate or conflict with or constitute a default under any term of the Charter
or By-laws of the Company or Merger Sub.
4.4 NO BREACH, ETC. The execution, delivery, and performance of this
Agreement will not conflict with or result in a breach of or default by the
Company or Merger Sub under any material term, condition, or provision of any
order, writ, injunction, decree, contract, agreement, or instrument to which the
Company or Merger Sub is a party or subject or by which it is bound.
4.5 LITIGATION. There is no litigation, at law or in equity, or any
proceeding before or investigation by any federal, state, or municipal court,
board or arbitrator, against the Company or Merger Sub, pending or, to the best
of the Company's and Merger Sub's knowledge, threatened, which, if adversely
determined, would have a material effect on the Company or Merger Sub.
4.6 COVENANTS REGARDING TRANSFER OF OWNERSHIP APPROVALS AND NOTICES.
The Company and/or Merger Sub shall file all applications and other documents
with applicable federal, state, and local governmental authorities as required
under law to effect the Merger and the continuation of each currently effective
HCP Medicare and Medicaid provider agreement and HCP's Licenses.
4.7 FINDER'S OR BROKER'S FEE. Neither the Company nor Merger Sub has
engaged in any conduct that has given or will give rise to any liability for any
fee, compensation, or reimbursement of expenses to any agent, finder, or broker,
either in the nature of a finder's fee or otherwise, in connection with the
transactions contemplated hereby.
4.8 THE COMPANY'S AND MERGER SUB'S KNOWLEDGE DEFINED. The
representations and warranties made to HCP by the Company and Merger Sub in this
ARTICLE IV and elsewhere in this Agreement to the best knowledge of the Company
and/or Merger Sub are limited to the current actual knowledge of the executive
officers of the Company and the recertification required of the Company and
Merger Sub at Closing shall likewise be qualified to the then current actual
knowledge of said officers.
ARTICLE V
CERTAIN AGREEMENTS OF THE PARTIES.
5.1 CONDUCT OF HCP PRIOR TO CLOSING. HCP covenants and agrees that,
through the period prior to Closing: (i) the Assets, including, without
limitation, the Operated Facility, shall be operated in the ordinary course of
business and in a manner consistent with HCP's past practice, and HCP will use
its best efforts to maintain existing levels of occupancy and payor mix at the
Operated Facility; (ii) no sale, disposition, removal, or encumbrance of any
Assets, outside of the ordinary course of business, shall be made without the
approval of the Company and Merger Sub; (iii) except in accordance with
established practice and rates of increase, HCP shall
11
not pay or obligate itself to pay any bonus, pension, retirement, insurance,
death, or other form of incentive or special compensation to any employee,
agent, partner, or shareholder, or make any increase in rates of pay of any
employees, agents, partners, or shareholders without the approval of the
Company and Merger Sub; (iv) except for closing expenses contemplated by this
Agreement as HCP's obligation, no contract, agreement, lease, or other
obligation providing for the payment of consideration or the occurrence of
indebtedness of more than Five Thousand Dollars ($5,000) in any one instance,
Ten Thousand Dollars ($10,000) in the aggregate, shall be executed, entered
into, or made by HCP in connection with the operation of the Assets, without
the approval of the Company and Merger Sub; (v) no increase shall be made in
the usual rates charged to tenants or patients at the Operated Facility
without the approval of the Company and Merger Sub; (vi) HCP will replace the
Inventory used in the operation of the Operated Facility as and when required
in the ordinary course of business and the quantity and quality of the
Inventory at Closing shall be substantially the same as exists on the date
hereof; (vii) no order for equipment, machinery, furniture, furnishings, or
accessories which was placed by HCP prior to the date hereof shall be
canceled by HCP after the Effective Date without the approval of the Copany
and Merger Sub; (viii) as soon as possible, but not less than twenty-four
(24) hours, prior to the submission of any plan of correction to any state
licensure or Medicaid or Medicare correction authorities, HCP shall submit a
copy thereof to the Company and Merger Sub; (ix) HCP shall use its best
efforts to preserve the business operation of the Operated Facility and to
preserve for the Company and Merger Sub the good will of HCP's suppliers, the
patients and tenants in the Operated Facility, and others having business
relations with the Operated Facility; (x) except as otherwise directed by the
Company and Merger Sub, HCP shall use its best efforts to retain the services
of the Operated Facility's current management-level and professional
employees and to maintain existing staffing patterns; and (xi) HCP shall not
pay any sums to any partner of HCP or any Affiliate of HCP except in the
ordinary and necessary course of the operations of the Facilities, PROVIDED,
HOWEVER, that such payments are comparable to that which would be charged and
received by a non-affiliated business for the same or similar goods or
services.
5.2 PREPARATION FOR CLOSING. Each party hereto shall use its best
efforts to assist the other to apply for and obtain any such permits, licenses,
authorization, and approvals required by the other party under applicable
federal, state, and local law in order to effect the Merger and complete this
transaction. HCP, the Company and Merger Sub shall use their best efforts to
bring about the fulfillment of each of the conditions precedent to the
obligations of the other party set forth in this Agreement.
5.3 PROHIBITED ACT. HCP will not merge or consolidate with or into
any other corporation, partnership or trust, sell, lease, or otherwise dispose
of any of the Assets (except in accordance with SECTION 8.1 hereof), sell any
additional partnership interests, liquidate, or dissolve, nor agree to do any of
the foregoing.
5.4 ACCESS TO INFORMATION. On and prior to the Closing Date, HCP
shall permit the Company, Merger Sub, the Company's and Merger Sub's counsel,
accountants, engineers, consultants, and other authorized representatives
thereof to have full and complete access to its documents, books, and records to
the extent the same are related to the transactions contemplated hereunder and
to make copies during normal business hours of such financial and operating data
and other information with respect to related businesses and properties as the
Company, Merger Sub or any of its authorized representatives shall reasonably
request to the extent such data and information are related to the transactions
contemplated hereunder. HCP shall deliver such additional information and
copies of documents, books, and records relating to the businesses and
12
properties of HCP as may be reasonably requested by the Company or Merger Sub or
any of its authorized representatives. Except as expressly provided otherwise
in this Agreement, any investigation undertaken by the Company or Merger Sub
hereunder shall not diminish the Company's or Merger Sub's right to rely on
HCP's representations and warranties.
5.5 EXPENSES OF TRANSACTION. HCP, the Company and Merger Sub each
agree to be responsible for all fees of their respective attorneys for services
rendered in connection with this transaction and the same shall be paid outside
of Closing.
5.6 FURTHER ASSURANCES. Each of the parties hereto, upon the request
from time to time of any other party hereto and without further consideration,
will do each and every act and thing as may be necessary or reasonably requested
to consummate the transactions contemplated hereby including without limitation
executing, acknowledging, and delivering assurances, assignments, powers of
attorney, and other documents and instruments; furnishing information and copies
of documents, books, and records (including, without limitation, tax records);
filing reports, returns, applications, filings, and other documents and
instruments with governmental authorities; and cooperating with the other party
hereto in exercising any right or pursuing any claim, whether by litigation or
otherwise, other than rights and claims running against the party from whom or
which such cooperation is requested.
5.7 ACCESS. HCP hereby grants to Merger Sub and its agents the right
to enter upon the Premises at any reasonable time or times to verify the
Fairness Opinion.
5.8 BANKRUPTCY. If, prior to Closing, HCP, the Company or Merger Sub
shall file a voluntary petition in bankruptcy or shall be adjudicated as
bankrupt or insolvent, or shall file any petition or answer so seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief for itself under any present or
future federal, state, or other statute, law, or regulation relating to
bankruptcy, insolvency, or other relief for debtors; or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver, or liquidator of HCP,
the Company or Merger Sub or of all or any part of the Assets, or of any or all
of the royalties, revenues, rents, issues, or profits thereof, or shall make any
general assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due ("BANKRUPT"), then the
non-Bankrupt party may terminate this Agreement. If the Company and Merger Sub
consent in writing to any of the foregoing actions taken by or against HCP, then
the Company and Merger Sub shall waive the right to terminate the Agreement on
account of this SECTION 5.8.
5.9 PRESENTATION TO INTEREST HOLDERS. HCP shall, promptly after the
date of this Agreement, take all actions necessary in accordance with the DRULPA
and its Charter to present the Merger and this Agreement to the Interest Holders
of HCP for their consideration and approval by the vote thereof. HCP shall
consult with the Company and Merger Sub in connection with such vote and shall
use its best efforts to cause such vote to occur as soon as possible. HCP shall
use its reasonable efforts to solicit from Interest Holders the approval and
adoption of this Agreement and to secure the vote of Interest Holders required
by the DRULPA and its Charter to approve and adopt the Merger and this
Agreement. The general partner of HCP hereby agrees that it will approve the
Merger and will recommend that the Interest Holders approve and adopt this
Agreement and the Merger on the terms and conditions set forth in this
Agreement. HCP shall cause its general partner (a) not to withdraw, modify or
change its recommendation of this
13
Agreement or the Merger and (b) to continue to recommend to HCP the approval
and adoption of this Agreement and the Merger on the terms and conditions set
forth in this Agreement.
5.10 PUBLIC ANNOUNCEMENTS. Except as otherwise required by applicable
law or the rules of The New York Stock Exchange, neither HCP, the Company nor
Merger Sub shall, or permit any of its subsidiaries or Affiliates to, issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
5.11 STATE TAKEOVER STATUTES. HCP and the Company and Merger Sub will
take all steps necessary to exempt the transactions contemplated by this
Agreement from, and if necessary challenge the validity of, any applicable state
takeover law.
ARTICLE VI
CONDITIONS PRECEDENT TO THE CONSUMMATION OF THE MERGER
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment (or waiver) at or prior to the Effective Time of the following
conditions:
(a) The consummation of the transactions contemplated hereby
shall not have been restrained, enjoined or prohibited by any order or
injunction of any court or governmental authority of competent
jurisdiction.
(b) HCP has received the written opinion of Xxxx Xxxxxxxx,
Inc. to the effect that, as of the date of this Agreement, the merger
consideration to be received in the Merger by HCP's Interest Holders,
other than the Company, is fair, from a financial point of view, to the
Interest Holders in HCP. HCP will promptly deliver a copy of such
opinion to Merger Sub.
(c) The Merger and this Agreement shall have been approved
and adopted by the requisite vote of the Interest Holders of HCP in
accordance with DRULPA and HCP's Charter.
(d) All filings and registrations with, and notifications to,
all third parties, including, without limitation, lenders and all
appropriate regulatory authorities, required for consummation of the
transactions contemplated by this Agreement (other than the filing and
recordation of appropriate merger documents required by applicable law)
shall have been made, and all approvals and authorizations and consents
of all third parties, including, without limitation, lenders and all
regulatory authorities, required for consummation of the transactions
contemplated by this Agreement shall have been received and shall be in
full force and effect, except for such filings, registrations,
notifications, approvals, authorizations and consents the failure of
which to make or obtain would not have a material adverse effect on the
business or financial condition of HCP, the Company or Merger Sub.
14
(e) Since the date of the interim financial statements of HCP
delivered pursuant to Section 3.2, there shall not have been any material
adverse changes in the condition (financial or otherwise) of the assets,
properties or operations of HCP.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND MERGER SUB TO EFFECT
THE MERGER. The obligations of the Company and Merger Sub to effect the Merger
shall be subject to the fulfillment (or waiver), at or prior to the Effective
Time, of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the HCP contained in this Agreement
shall have been true and correct in all material respects at and as of
the date made and, except as contemplated or permitted by this Agreement,
at and as of the Effective Time as if made at and as of such time. The
Company and Merger Sub shall have received a certificate of the President
of the general partner of HCP, in his capacity as such, dated the Closing
Date, to the effect that each of the representations and warranties of
the HCP contained in this Agreement were true and correct in all material
respects as of the date made and, except as contemplated or permitted by
this Agreement, at and as of the Effective Time as if made at and as of
such time.
(b) AGREEMENTS AND COVENANTS. HCP shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or
prior to the Effective Time. The Company and Merger Sub shall have
received a certificate of the President of the general partner of HCP, in
his capacity as such, dated the Closing Date, to such effect.
(c) CONSENTS. All consents, authorizations, orders and
approvals of, or filings or registrations with, any Governmental Entity
required in connection with the execution, delivery and performance of
this Agreement shall have been obtained or made, except for filings
required under DLLCA and DRULPA in connection with the Merger and HCP
shall have obtained all consents, authorizations, waivers and approvals
required from third parties required under all Contracts by reason of the
Merger and the consummation of the transactions contemplated hereby,
except for such consents, authorizations, waivers and approvals where the
failure to obtain such could not reasonably be expected to result in a
material adverse effect on HCP.
(d) NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. There shall
not be pending or threatened any action, proceeding, claim or
counterclaim by any Governmental Entity or by any third party which seeks
to or would (i) prohibit or restrict the consummation of the Merger, (ii)
require the disposition of or the holding separate of any of the assets
of HCP or its subsidiaries or impose material limitations on the ability
of the Company, Merger Sub to control in any material respect the
business, assets or operations of either the Company or Merger Sub or
HCP, or (iii) have a material adverse effect on the Company's or Merger
Sub's business or materially impair the ability of HCP, the Company or
Merger Sub to perform their obligations hereunder. There shall not be in
effect any order, decree or injunction (whether preliminary, final or
appealable) of a United States federal or state court of competent
jurisdiction, and no statute, rule or regulation shall have been enacted
or promulgated by any Governmental Entity, which (A) prohibits or
restricts consummation of the Merger or the transactions contemplated
hereby, (B) requires the Company or Merger Sub to hold separate or
dispose of any of the assets of HCP or its
15
subsidiaries or imposes material limitations on the ability of the
Company or Merger Sub to control in any material respect the business,
assets or operations of the Company, Merger Sub or HCP, or (C) has a
material adverse effect on the business of the Company or Merger Sub
and their Affiliates or on HCP and its subsidiaries or materially
impairs the ability of HCP, the Company or Merger Sub to perform their
obligations hereunder.
(e) OPINION OF HCP'S COUNSEL. The Company and Merger Sub
shall have received an opinion of HCP's independent legal counsel, dated
as of the Closing Date, addressed to the Company and Merger Sub, in form
and substance reasonably satisfactory to the Company and Merger Sub and
their counsel.
6.3 CONDITIONS TO OBLIGATIONS OF HCP TO EFFECT THE MERGER. The
obligations of HCP to effect the Merger shall be subject to the fulfillment (or
waiver) at or prior to the Effective Time of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company and Merger Sub contained in
this Agreement shall have been true and correct in all material respects
at and as of the date made and, except as contemplated or permitted by
this Agreement, at and as of the Effective Time as if made at and as of
such time. HCP shall have received a certificate of the Managing Member
of Merger Sub and the President of the Company, in their capacity as
such, dated as of the Effective Time, to the effect that each of the
representations and warranties of the Company and Merger Sub contained in
this Agreement were true and correct in all material respects as of the
date made and, except as contemplated by this Agreement, at and as of the
Effective Time as if made at and as of such time.
(b) AGREEMENTS AND COVENANTS. The Company and Merger Sub
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by it at or prior to the Effective Time. HCP shall have
received a certificate of the Managing Member of Merger Sub and the
President of the Company, in their capacity as such, dated the Closing
Date, to that effect.
(c) CONSENTS. All consents, authorizations, orders and
approvals of, or filings or registrations with, any Governmental Entity
required in connection with the execution, delivery and performance of
this Agreement shall have been obtained or made, except for filings
required under the DLLCA and DRULPA in connection with the Merger, the
Company and Merger Sub shall have obtained all consents, authorizations,
waivers and approvals required from third parties required under all
material agreements and instruments by reason of the Merger and the
consummation of the transactions contemplated hereby, except for such
consents, authorizations, waivers and approvals where the failure to
obtain such could not reasonably be expected to result in a material
adverse effect on the Company or Merger Sub.
(d) NO REGULATORY ACTION. No statute, rule or regulation
shall have been enacted or promulgated by any Governmental Entity which
seeks to or would (i) prohibit the consummation of the Merger or the
transactions contemplated hereby or (ii) materially impair the ability of
HCP to perform its obligations hereunder; and there shall not be in
effect any order, decree or injunction (whether preliminary, final or
appealable injunction)
16
of a United States federal or state court of competent jurisdiction
which (i) prohibits consummation of the Merger, or (ii) materially
impairs the ability of HCP to perform its obligations hereunder.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Merger
hereby contemplated may be abandoned at any time notwithstanding approval of
this Agreement by the Interest Holders of HCP, but prior to the Effective Time:
(a) by mutual written consent duly authorized by the Board of
Directors of the Company, the Members of Merger Sub and the general
partner of HCP;
(b) by the Company or Merger Sub, if there has been a
material breach of the representations and warranties of HCP contained in
this Agreement or if HCP has failed to comply in any material respect
with any of its covenants or agreements set forth in this Agreement, and
HCP shall not have cured such breach or failure within ten days of
receipt of written notice thereof from the Company or Merger Sub,
PROVIDED, HOWEVER, that if such breach or failure is incapable of cure
within such ten day period, the ten day cure period shall not apply;
(c) by HCP, if there has been a material breach of the
representations and warranties of the Company or Merger Sub contained in
this Agreement or if the Company or Merger Sub have failed to comply in
any material respect with any covenant or agreement on the part of the
Company or Merger Sub set forth in this Agreement, and the Company or
Merger Sub shall not have cured such breach or failure within ten days of
receipt of written notice thereof from HCP; PROVIDED, HOWEVER, if such
breach or failure is incapable of cure within such ten day period, the
ten day cure period shall not apply;
(d) by either HCP, the Company or Merger Sub, if any court of
competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting any of
the transactions contemplated hereby and such order, decree, ruling or
other action shall have become final and non-appealable preventing the
consummation of the Merger;
(e) by either HCP, the Company or Merger Sub, if the
Effective Time shall not have occurred on or before December 31, 1998;
PROVIDED that neither HCP, the Company or Merger Sub shall be entitled to
terminate this Agreement pursuant to this paragraph if such party's
material breach of this Agreement has been the cause of or resulted in
the failure of the Effective Time to occur at or prior to such time;
(f) by the Company or Merger Sub, if this Agreement and the
Merger shall fail to be approved and adopted by the affirmative vote of
the Interest Holders of HCP required under DRULPA and HCP's Charter;
17
(g) by either HCP, the Company or Merger Sub if there is in
effect any order, decree or injunction of a United States federal court
or a court of competent jurisdiction which shall have become final with
all opportunities to appeal having been exhausted or expired and which
(i) requires the Company or Merger Sub to hold separate or dispose of any
of the assets of HCP or its subsidiaries, or of the Company or Merger Sub
or its Affiliates, which are material to the financial condition,
properties, assets, liabilities, business, results of operations or
prospects of the Company or Merger Sub and its Affiliates or HCP and its
subsidiaries, or (ii) imposes material limitations on the ability of HCP,
the Company or Merger Sub to control in any material respect the
business, assets or operations of either HCP, the Company or Merger Sub;
or
(h) by the Company or Merger Sub, if the Board of Directors
of the general partner of HCP withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to the
Company or Merger Sub or to the likelihood of consummation of the Merger
or shall have resolved to do any of the foregoing.
7.2 EFFECT OF TERMINATION. Except as provided in SECTION 7.5 of this
Agreement, in the event of the termination of this Agreement pursuant to SECTION
7.1, this Agreement shall forthwith become void, there shall be no liability on
the part of HCP, the Company or Merger Sub or any of their respective officers
or directors to the other and all rights and obligations of any party hereto
shall cease, except that nothing herein shall relieve any party from its
obligations with respect to any breach of this Agreement.
7.3 AMENDMENT. This Agreement may be amended by HCP, the Company and
Merger Sub by action taken by or on behalf of their respective governing bodies
at any time prior to the Effective Time. This Agreement may not be amended
except by an instrument in writing signed by HCP, the Company and Merger Sub.
7.4 WAIVER. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other party or parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other party or parties contained herein or
in any document delivered pursuant hereto and (c) waive compliance by the other
party or parties with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
7.5 FEES, EXPENSES AND OTHER PAYMENTS.
(a) Subject to SECTION 7.5(c) and (d), all Expenses (as
defined in paragraph (b) of this SECTION 7.5) incurred by the parties
hereto shall be borne solely and entirely by the party which has incurred
such Expenses
(b) "EXPENSES" as used in this Agreement shall include all
out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its Affiliates) incurred by a party or
on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement,
the preparation, printing, filing and mailing of the solicitation of
Interest Holder approvals and all other matters related to the
consummation of the transactions contemplated hereby.
18
(c) HCP agrees that:
(i) HCP shall pay to the Company or Merger Sub in
same day funds the aggregate amount of all Expenses incurred by
the Company, Merger Sub and their Affiliates in connection with
this Agreement and the transactions contemplated hereby
(including fees and expenses of counsel, accountants, and
financial advisors incurred by the Company or Merger Sub) (the
"EXPENSE REIMBURSEMENT") if there shall be no material breach
of this Agreement by Merger Sub and the Company or Merger Sub
shall have terminated this Agreement in accordance with the
terms of SECTION 7.1(b) or SECTION 7.1(h).
(ii) HCP shall pay to the Company or Merger Sub in
same day funds a fee of [$2,000,000.00] (the "TERMINATION FEE")
upon demand and with the Expense Reimbursement, if (A) this
Agreement shall have been terminated; (B) there shall be no
material breach of this Agreement by the Company or Merger Sub
continuing at the time of such termination; and (C) any of the
following events shall have occurred: (I) HCP shall have breached
in any material respect the representations warranties, covenants
or conditions contained in this Agreement; or (II) the Board of
Directors of the general partner of HCP or any committee thereof
shall have withdrawn or modified or changed its approval or
recommendation of this Agreement or the Merger, or resolved to do
so, or shall have resolved to accept, accepted or recommended a
different proposal; or (III) HCP shall have entered into an
agreement with respect to an alternative transaction on or prior
to December 31, 1998.
(iii) The acceptance by the Company and Merger Sub of
a payment pursuant to SECTION 7.5(c) shall not constitute a waiver
of, or limit in any way its rights to pursue any and all remedies
for HCP's material breach of this Agreement.
(d) Any payment required to be made pursuant to SECTION
7.5(c) of this Agreement shall be made as promptly as practicable but not
later than five (5) business days after termination of this Agreement and
shall be made by wire transfer of immediately available funds to an
account designated by the Company or Merger Sub.
ARTICLE VIII
GENERAL PROVISIONS
8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Except as set forth in SECTION 8.1(b) of this Agreement,
the representations, warranties, covenants and agreements of each party
hereto shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any other party hereto, any
person controlling any such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Agreement.
19
(b) The representations and warranties in this Agreement
shall terminate at the Effective Time. This SECTION 8.1(b) shall not
limit any covenant or agreement of the parties hereto that by its terms
contemplates performance after the Effective Time.
8.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally, sent by nationally recognized overnight
courier service, mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of address) or sent by
electronic transmission to the telecopier number specified below:
(a) If to either the Company or Merger Sub, to:
Capital Senior Living Properties, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
with copies to:
Jenkens & Xxxxxxxxx
a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx XX
Telecopier No.: (000) 000-0000
(b) If to HCP, to:
Healthcare Properties, L.P.
c/o Capital Realty Group Senior Housing, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with copies to:
Xxxxx Xxxxxx & Xxxxxxx PC
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopier No.: (___) ______________
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8.3 DEFINED TERMS.
(a) CROSS REFERENCE TABLE. The following terms defined
elsewhere in this Agreement in the Sections set forth below shall have
the respective meanings therein defined:
Term Definition
---- ----------
"Agreement" Preamble
"Assets" Section 3.1.1
"Closing" Section 1.2
"Closing Date" Section 1.2
"Company" Preamble
"Contracts" Section 3.5.1
"Effective Time Section 1.3
"Environmental Testing" Section 5.5
"Exchange Agent" Section 2.3
"Expenses" Section 7.5(b)
"HCP" Preamble
"HCP's Annual Financial Statements" Section 3.2.1
"HCP's Interim Financial Statements" Section 3.2.1
"HCP's Licenses Section 3.3.3
"Labor Contracts" Section 3.5.1
"Merger Sub" Preamble
"Occupancy Agreement" Section 3.5.1
"Occupancy Agreement Forms" Section 3.5.3
"Partnership Agreement" Section 3.1.3
"PESA" Section 5.5
"Termination Fee" Section 7.5(c)(ii)
(b) CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(i) AFFILIATE. The term "Affiliate" shall mean (i)
any Person directly or indirectly controlling, controlled by or
under direct or indirect common control with HCP (or other
specified Person), (ii) any Person who is or has been within five
years of the time in question an officer, director or direct or
indirect beneficial holder of at least 5% of any class of the
outstanding capital stock or partnership interest of HCP (or other
specified Person), (iii) any Person of which HCP (or other
specified Person) or an Affiliate (as defined in clause (ii)
above) thereof shall, directly or indirectly, beneficially own at
least 5% of any class of outstanding capital stock or other
evidence of beneficial interest, and (iv) members of the immediate
family of any of the foregoing.
(ii) BY-LAWS. The term "By-laws" shall mean all
written rules, regulations and by-laws, and all other documents
(other than the Charter), relating to the management, governance
or internal regulation of a Person (other than an
21
individual) or interpretative of the Charter of such Person,
each as from time to time in effect.
(iii) CHARTER. The term "Charter" shall mean the
applicable certificate or articles of incorporation or
organization, statute, constitution, joint venture or partnership
agreement or articles or other charter documents of any Person
(other than an individual), each as from time to time in effect.
(iv) CODE. The term "Code" shall mean the Federal
Internal Revenue Code of 1986 or any successor statute, and the
rules and regulations thereunder, and in the case of any
referenced section of any such statute, rule or regulation, any
successor section thereto, collectively and as from time to time
amended and in effect.
(v) FACILITIES. The term "Facilities" shall mean
the eight (8) senior living facilities owned by HCP located on the
Land and listed on SCHEDULE B attached hereto. Facility shall
mean any one of the Facilities.
(vi) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. The
term "generally accepted accounting principles" shall mean
generally accepted accounting principles, as defined by the
Financial Accounting Standards Board and as applied by HCP in
preparing the Financial Statements and consistently followed.
(vii) GOVERNMENTAL ENTITY. The term "Governmental
Entity" shall mean any governmental or regulatory authority,
federal, state, local or foreign.
(viii) HAZARDOUS MATERIALS. The term "Hazardous
Materials" shall mean (i) any pollutant, contaminant or hazardous
substance (within the meaning of such terms under the federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and any implementing regulations) but
excepting Infectious Wastes or (ii) any hazardous or toxic
substance or material within the meaning of any federal, state or
local law applicable to HCP or the Premises, but excepting
Infectious Wastes.
(ix) INFECTIOUS WASTES. For purposes of each
Facility, the term "Infectious Wastes" shall mean such term as it
is defined in the Legal Requirements of the state in which the
Facility is located.
(x) INVENTORY. The term "Inventory" shall mean
HCP's entire inventory used or maintained in connection with the
Operated Facility, including, but not limited to, food,
pharmaceuticals, drugs, cleaning materials, liens and medical and
office supplies.
(xi) LAND. The term "Land" shall mean those certain
lots and parcels of land owned by HCP situated in the States of
Florida, Indiana, Massachusetts, South Carolina, Tennessee and
Texas and more fully described on SCHEDULE A attached hereto.
22
(xii) MORTGAGE DEBT. The term "Mortgage Debt" shall
mean the current mortgage debt related to the Facilities,
currently estimated at approximately $_________ as of the date
hereof.
(xiii) LEASED FACILITIES. The term "Leased Facilities"
shall mean the seven Facilities (other than the Operated Facility)
which are leased by HCP to independent third party operators.
Leased Facility shall mean any one of the Leased Facilities.
(xiv) LEGAL REQUIREMENT. The term "Legal Requirement"
shall mean any federal, state, local law, statute, standard,
ordinance, code, order, rule, regulation, resolution,
promulgation, or any order, judgment or decree of any court,
arbitrator, tribunal or governmental authority, or any license,
franchise, permit or similar right granted under any of the
foregoing, or any similar provision having the force and effect of
law.
(xv) LIEN. The term "Lien" shall mean (i) any
encumbrance, mortgage, pledge, lien, charge or other security
interest of any kind upon any property or assets of any character,
or upon the income or profits therefrom; or (ii) any arrangement
or agreement which prohibits the creation of such encumbrances,
mortgages, pledges, liens, charges or other security interests or
which restricts transfer of capital stock (other than restrictions
on transfer imposed by applicable securities laws) or other
property or assets.
(xvi) OPERATED FACILITY. The term "Operated Facility"
shall mean the Facility in Cambridge, Massachusetts which is
operated by a subsidiary of HCP.
(xvii) PERMITTED EXCEPTIONS. The term "Permitted
Exceptions" shall mean (i) the Mortgage Debt, (ii) real estate
taxes and assessments which are a lien but not yet due and payable
at Closing, (iii) zoning and building code ordinances and
regulations which are applicable to the Premises and have not been
violated, (iv) encumbrances which are shown on the surveys of the
Premises which are acceptable to Merger Sub, (v) rights of the
lessee operators of the Leased Facilities; (vi) rights of tenants
and patients occupying beds in the Facilities on the Closing Date,
and (vii) those exceptions to title which are accepted by Merger
Sub.
(xviii) PERSON. The term "Person" shall mean any
individual, partnership, corporation, association, trust, joint
venture, unincorporated organization, or entity, and any
government, governmental department or agency or political
subdivision thereof.
(xix) PREMISES. The term "Premises" shall mean the
fee interest in the Land and the buildings, including, without
limitation, the Facilities, structures, erections, appurtenances,
easements and improvements now thereon.
(xx) UNIT OR UNITS. The term "Unit" or "Units" shall
be as defined in the Partnership Agreement of HCP.
23
8.4. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.5 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
8.6 ENTIRE AGREEMENT. This Agreement (together with the Schedules
hereto) constitutes the entire agreement of the parties, and supersede all prior
agreements and undertakings, both written and oral among the parties, with
respect to the subject matter of this Agreement.
8.7 ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise.
8.8 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
8.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are in addition to, and not exclusive of, any rights or remedies
otherwise available.
8.10 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law.
8.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
8.12 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of any party to this Agreement to perform the provisions in
accordance with their specific terms or to otherwise breach such provisions,
including its failure to take all actions as are necessary on its part to the
consummation of the Merger, will cause irreparable injury to the other parties
to this Agreement for which damages, even if available, will not be an adequate
remedy. Accordingly, each of the parties hereto hereby consents to the issuance
of injunctive relief by any court of competent jurisdiction to compel
performance of any party's obligations, including an injunction to prevent
breaches, and to the granting by any such court of the remedy of specific
performance of the terms and conditions hereof.
24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
HCP:
HEALTHCARE PROPERTIES, L.P.,
a Delaware limited partnership
By: Capital Realty Group Senior Housing, Inc.
its general partner
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
MERGER SUB:
CAPITAL SENIOR LIVING MERGER, LLC,
a Delaware limited liability company
By: Capital Senior Living Properties, Inc.,
its Manager/Member
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE COMPANY:
CAPITAL SENIOR LIVING PROPERTIES, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
25
SCHEDULE A
Legal Description
(The Land)
26
SCHEDULE B
List of Facilities
and Trade Names
27
SCHEDULE 3.1.3
Charter Documents
28
SCHEDULE 3.2.1
HCP's Financial Statements
29
SCHEDULE 3.3.3
HCP's Licenses
30
SCHEDULE 3.3.8
Litigation
31
SCHEDULE 3.4.2
Warranties and Guarantees
32
SCHEDULE 3.4.9
Tenant and Patient Accounts
33
SCHEDULE 3.5.1
Contracts
34
SCHEDULE 3.5.2.1
Occupancy Agreement Forms
35
SCHEDULE 3.5.2.2
Amendments and Agreements Concerning Residency Agreement
36
SCHEDULE 3.5.3
Insurance
37
SCHEDULE 3.6.1
Employment Related Contracts
38
SCHEDULE 3.6.2
Employee Compensation and Benefits
39
