EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement dated as of July 31, 1996 (the
"Agreement") by and among Mariner Health Group, Inc., a Delaware corporation
("Mariner"), its wholly-owned subsidiary Mariner Health of Maryland, Inc., a
Delaware corporation (the "Buyer"), the sellers listed on Exhibit A attached
hereto (individually, a "Seller" and collectively, the "Sellers") and the
individuals and entities listed on Exhibit A (individually, a "Principal" and
collectively the "Principals"); the Sellers and the Principals are collectively
referred to herein as the "Seller Parties":
WITNESSETH:
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WHEREAS, Sellers' business operations which are the subject of this
Agreement (the "Business") involve (i) the operation of a 159-bed licensed
nursing facility known as Allegis Health and Rehabilitation Center-Silver
Spring, a 200-bed licensed nursing facility known as Allegis Health and
Rehabilitation Center - Xxxx Burnie, a 216-bed licensed nursing facility known
as Allegis Health and Rehabilitation Center - Mount Clare, an 86-bed licensed
nursing facility known as Allegis Healthcare Center - Circle Manor (the "Circle
Manor Facility"), a 166-bed licensed nursing facility known as Allegis Health
and Rehabilitation Center - Bethesda (the "Bethesda Facility"), a 186-bed
licensed nursing facility known as Allegis Health and Rehabilitation Center
Overlea, a 170-bed licensed nursing facility known as Allegis Health and
Rehabilitation Center - Kensington and a 284-bed licensed nursing facility known
as Allegis Health and Rehabilitation Center - Southern Maryland (individually, a
"Facility" and collectively, the "Facilities"); (ii) the operation of an
institutional pharmacy known as Technicare, L.L.C. ("Technicare"); (iii) the
operation of a company providing contract rehabilitation services known as Rehab
Solutions, L.L.C. ("Rehab Solutions"); (iv) the business of providing management
services under certain subacute management contracts of Allegis; and (v) the
business of providing PEN therapy services.
WHEREAS, Sellers are also engaged in the pursuit of various Development
Projects (as defined herein).
WHEREAS, Mariner, through Buyer, desires to purchase substantially all
of the assets used in the Business and the Development Projects from the Seller
Parties, and the Seller Parties desire to sell substantially all of the assets
used in the Business and the Development Projects to Buyer, upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of these premises and the
representations, warranties, agreements and indemnities set forth in this
Agreement, Buyer and the Seller Parties agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Certain Definitions. (a) For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" means, with respect to a specified Person, any Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person specified.
"Apportionment Date" means the first day of the month during which the
Closing occurs.
"Balance Sheets" mean the unaudited balance sheet of each Seller as of
the Balance Sheet Date.
"Balance Sheet Date" means May 31, 1996.
"Bethesda Sale" means the closing of the proposed sale by Allegis and
GHIA of an aggregate fifty percent (50%) interest in Bethesda, L.L.C. to
Suburban Hospital.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the
treasury regulations thereunder (including any amendments or any substitute or
successor provisions thereto).
"Commission" means the Securities and Exchange Commission.
"Escrow Agent" means PNC Bank, National Association, as escrow agent
under the Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles, as in effect
from time to time.
"Governmental Authority" means any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether federal, state or local (domestic or foreign).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
claim, charge, security interest, assessment, restriction or encumbrance of any
kind in respect of such asset.
"Material Adverse Change" means a material adverse change in the
business, assets, condition (financial or otherwise), result of operations or
prospects of the Business.
"Material Adverse Effect" means a material adverse effect on the
business, assets, condition (financial or otherwise), result of operations or
prospects of the Business.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a Governmental Authority.
"Proprietary Rights" means all (A) patents, patent applications, patent
disclosures and all related continuation, continuation-in-part, divisional,
reissue, re-examination, utility, model, certificate of invention and design
patents, patent applications, registrations and applications for registrations,
(B) trademarks, service marks, trade dress, logos, trade names, service names
and corporate names and registrations and applications for registration thereof,
(C) copyrights and registrations and applications for registration thereof, (D)
mask works and registrations and applications for registration thereof, (E)
computer software, data and documentation, (F) trade secrets and confidential
business information, whether patentable or nonpatentable and whether or not
reduced to practice, know-how, manufacturing and product processes and
techniques, research and development information, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information, (G) other
proprietary rights relating to any of the foregoing (including without
limitation associated goodwill and remedies against infringements thereof and
rights of protection of interest therein under the laws of all jurisdictions)
and (H) copies and tangible embodiments thereof.
"Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto and any amendment thereof.
"Securities Act" means the Securities Act of 1933, as amended and the
rules and regulations promulgated thereunder.
"Tax" means any federal, state, local or foreign income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Authority responsible for the imposition of any such tax.
1.2 Additional Definitions. Each of the following terms is defined in
the Section set forth opposite such term:
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Term Section
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Accounting Referee 2.7
Adjusted Base Amount 2.7
Adjusted Closing Amount 2.13
Allegis Exhibit A
Annualized Ratio 2.7
Arcola Exhibit A
Assumed Contracts 2.1
Assumed Debt 2.3
Assumed Liabilities 2.3
Base Amount 2.7
Benefit Arrangement 8.1
Bethesda L.L.C. Exhibit A
Beechwood 2.1
Business Recitals
Buyer Recitals
CERCLA 3.20
Circle Manor Exhibit A
Circle Manor Facility Recitals
Closing 2.12
Closing Amount 2.7
Closing Income Statement 2.7
Competing Facility 6.5
Consents 3.6
Development Projects 2.1(m)
EEOC 3.18
Employee Plan 8.1
Environmental Laws 3.20
Environmental Liabilities 3.20
ERISA 8.1
ERISA Affiliate 8.1
Escrow Agreement 2.6
Excluded Assets 2.2
Excluded Liabilities 2.4
Facility Recitals
Final Income Statement 2.14
Final Closing Amount 2.7
Final Post-Closing Amount 2.14
Financial Statements 3.7
First Post-Closing Amount 2.13
GHIA Exhibit A
Hazardous Substance 3.20
Heritage Harbour 2.1
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Interim Income Statement 2.13
Losses 11.2
Multiemployer Plan 8.1
Net Cash Amount 2.7
NLRB 3.18
Patient Trust Funds 2.11
Permits 3.13
Permitted Liens 3.10
Post-Closing Amount 2.14
Principal Recitals
Purchased Assets 2.1
Purchase Price 2.7
Real Property 3.10
Release 3.20
Repayment Obligation 6.10
Resident Admission Agreements 2.1
Second Annualized Ratio 2.13
Seller Recitals
Seller Parties Recitals
Technicare Exhibit A
Transferred Employee 8.3
Unpaid Benefit Amount 2.7
Upper Chesapeake 2.1
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, Buyer shall purchase and acquire from the Seller
Parties at the Closing, and the Seller Parties shall sell, transfer, assign and
deliver (or cause to be sold, transferred, assigned and delivered) to Buyer at
the Closing, all right, title and interest of the Seller Parties in and to all
of the assets, properties and business of every kind, nature and description,
wherever located, real, personal or mixed, tangible or intangible, which are
used in the conduct of the Business and/or the Development Projects by the
Seller Parties other than the Excluded Assets (collectively, the "Purchased
Assets"), free and clear of all Liens (except liens for Assumed Debt or liens
arising under Assumed Contracts and Permitted Liens), and including all right,
title and interest of the Seller Parties in, to and under the following (to the
extent used in the conduct of the Business and/or the Development Projects):
(a) the real property and leases of, and other interests in,
real property of Sellers, in each case together with all buildings, fixtures and
improvements (including without limitation Seller Parties' rights in any
renovation projects) erected thereon and easements and other rights appurtenant
thereto listed on Schedule 2.1(a);
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(b) all of Sellers' personal property and interests therein,
including machinery, equipment, furniture, office equipment, communications
equipment, computer equipment, vehicles, storage tanks, spare and replacement
parts, fuel and other tangible property used in connection with the Business,
wherever located (including such property and interests owned by the Seller
Parties in the possession of manufacturers, suppliers, customers, distributors,
sales representatives or others or in transit), including the items listed on
Schedule 2.1(b);
(c) all of Sellers' inventories of supplies, drugs, disposable
goods, labels, containers, bags and other packaging supplies, and other
materials of the Business, wherever located (including such inventories owned by
the Sellers in the possession of manufacturers, suppliers, customers,
distributors, sales representatives or others or in transit);
(d) all rights of Sellers' under those contracts, agreements,
leases, licenses, commitments, sales and purchase orders and other instruments
listed on Schedule 2.1(d) with respect to which Buyer gives Sellers written
notice of its intention to assume by August 16, 1996 together with any
additional contracts entered into by the Seller Parties in the ordinary course
of business with the written approval of Buyer with a statement of its intention
to assume such contracts (collectively, the "Assumed Contracts");
(e) all rights under those agreements with residents of any
Facility regarding admission and residency at any Facility (the "Resident
Admission Agreements");
(f) all prepaid expenses and deposits that relate to any
Facility or the operation of the Business, including ad valorem taxes, leases
and rentals (but excluding prepaid expenses and deposits relating to Excluded
Assets);
(g) all accounts receivable generated by the Business from and
after the Apportionment Date, including the Seller Parties' rights to payments
and reimbursements from private payors, Medicare, Medicaid or any other health
care reimbursement or payment intermediary arising from services provided from
and after the Apportionment Date;
(h) all rights, claims, credits, causes of action or rights of
set-off of Sellers against third parties relating to the Business or the
Purchased Assets arising after the Apportionment Date, including unliquidated
rights under manufacturers' and vendors' warranties;
(i) all Proprietary Rights owned or licensed, or used in the
Business, by the Seller Parties, including without limitation the right to use
the name of each Facility;
(j) to the extent transferable, all licenses, certificates of
need, permits or other governmental authorizations affecting, or relating in any
way to, the Business or the Purchased Assets, and all rights to operate the
Facilities' beds (including waiver beds), including the items listed on Schedule
2.1(j);
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(k) all books, records, files and papers, whether in tangible
or intangible form, used in, or relating in any way to, the Business or the
Purchased Assets, including sales and promotional literature, sales and purchase
correspondence, lists of present and former suppliers, lists of present and
former patients, personnel and employment records, and any information relating
to Taxes imposed on the Purchased Assets;
(l) the limited liability company ("LLC") interests held by
Allegis and GHIA Bethesda L.L.C.; provided that if the Bethesda Sale has not
occurred prior to the Closing, the Purchased Assets shall not include the LLC
interests in Bethesda L.L.C.;
(m) the interests of the Sellers in any development,
expansion, acquisition or renovation projects, prospects or opportunities, as
they may exist at the Closing Date, to be conveyed in each instance in a manner
acceptable to Buyer which is permitted by applicable laws and the agreements
related such projects, prospects or opportunities, including (i) Allegis'
interest in the development of a possible nursing home and retirement center in
Xxxx Arundel County, Maryland (the "Beechwood Project"), which is presently
intended to be conveyed by a transfer of the stock of Beechwood Heritage
Retirement Community, Inc. ("Beechwood Inc.") and the LLC interests in Allegis
Health and Living Center at Heritage Harbour, L. L. C. ("Heritage Harbour") (ii)
if the assets of Bethesda LLC are acquired pursuant to Section 2.2 (h) all of
the rights of the Bethesda, L. L. C. to renovate and expand its Facility (iii)
Allegis' interest in Upper Chesapeake Health and Living Center, L. L. C. ("Upper
Chesapeake"), (iv) Allegis' rights, if any, to the acquisition of land and
development rights for an assisted living center and skilled nursing facility in
Potomac, Maryland, and (v) opportunities to obtain additional nursing home
and/or subacute unit management agreements. (collectively, the "Development
Projects"); and
(n) all goodwill associated with the Business, the Development
Projects or the Purchased Assets, together with the right to represent to third
parties that Buyer is the successor to the Business and the Development
Projects.
2.2 Excluded Assets. Notwithstanding anything to the contrary set forth
in Section 2.1, the Seller Parties shall not sell, transfer, assign or deliver
(or cause to be sold, transferred, assigned or delivered) to Buyer, and Buyer
shall not purchase and acquire from the Seller Parties, any of the following
assets and properties, which shall remain the exclusive property of the Seller
Parties (collectively, the "Excluded Assets"):
(a) all of the Seller Parties' cash and cash equivalents on
hand and in banks, certificates of deposit and marketable securities as of the
close of business on the day prior to the Closing Date;
(b) all of the Seller Parties' accounts receivable and notes
receivable generated by the Business in the ordinary course consistent with past
practice before the Apportionment Date, including Sellers' rights to payments
and reimbursements from private payors, Medicare, Medicaid or any other health
care reimbursement or payment intermediary arising from services provided by
Sellers before the Apportionment Date together with all claims against third
parties arising prior to the Apportionment Date;
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(c) all rights of the Seller Parties under any letter of
credit;
(d) all rights of the Seller Parties to Tax refunds, proceeds
of insurance policies, all beneficial interests and insurance policies held in
the Global Health Management, Inc. Shareholder Trust dated as of April 1, 1995
and any life insurance policies covering the Principals;
(e) the stock or LLC interests of any Seller, except as
specifically set forth in Section 2.1(l) and (m) above;
(f) the corporate seals, charter documents, by-laws, minute
books and stock record books of Sellers, and such other records of Sellers that
relate exclusively to the organization or capitalization of Sellers;
(g) all property owned by any patient which may be located in
a Facility;
(h) assets held by Beechwood, Upper Chesapeake, Heritage
Harbour and Bethesda L.L.C.; provided that if the Bethesda Sale does not occur
prior to the Closing, the LLC interests of Allegis and GHIA in Bethesda L.L.C.
shall be Excluded Assets and the assets of Bethesda L.L.C. shall be Purchased
Assets;
(i) any office furniture of Xxxx X. Xxxx, Xxxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx and Xxxx X. Xxxxxxxxx; and
(j) any Purchased Assets sold or otherwise disposed of in the
ordinary course of the operation of the Business and not in violation of this
Agreement during the period from the date hereof through the Closing Date.
2.3 Assumption of Liabilities. As partial consideration for the sale,
transfer, assignment and delivery of the Business and the Purchased Assets and
upon the terms and subject to the conditions set forth in this Agreement, Buyer
shall assume, pay and perform the following liabilities and obligations of the
Seller Parties (collectively, the "Assumed Liabilities") from and after the
Closing and no others:
(a) all liabilities and obligations of Sellers arising after
the Apportionment Date under the Assumed Contracts which have been duly assigned
by Sellers to Buyer (other than liabilities or obligations attributable to any
failure by the Seller Parties to comply with the terms thereof);
(b) Sellers' obligation to provide earned sick leave and
vacation pay to the Transferred Employees to the extent of the purchase price
adjustment set forth in Section 2.7(f);
(c) except as provided in Article VIII, all accounts payable
arising out of the operation of the Business in the ordinary course consistent
with past practice from and after the Apportionment Date; and
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(d) all amounts outstanding under the indebtedness listed on
Schedule 2.3(d) (the "Assumed Debt").
2.4 Excluded Liabilities. Notwithstanding anything to the contrary set
forth in this Agreement, Buyer shall not assume, pay or perform any of the
following liabilities or obligations of the Seller Parties, which shall be
retained by and shall remain the exclusive responsibility of the Seller Parties
(collectively, the "Excluded Liabilities");
(a) all liabilities and obligations of the Seller Parties
arising on or before the Apportionment Date under the Assumed Contracts which
have been duly assigned by Seller to Buyer;
(b) except as provided in Article VIII and Sections 2.3(a) and
2.3(b), any liabilities or obligations of the Seller Parties relating to
employee benefits or compensation arrangements of any nature existing as of the
Closing Date, including any liabilities or obligations under any of Seller's
employee benefit agreements, plans or other arrangements listed on Schedule 8.2;
(c) any liability or obligation of the Seller Parties for
breach of contract, personal injury or property damage (whether based on
negligence, breach of warranty, strict liability or any other theory) caused by
or arising out of or resulting from, directly or indirectly, any alleged or
actual acts or omissions occurring on or before the Closing Date;
(d) except as set forth in Section 2.3(d), any liability or
obligation of the Seller Parties for money borrowed, whether such liabilities
and obligations were incurred in the operation of the Business or otherwise;
(e) any amounts due or that may be claimed or become due to
Medicare, Medicaid or any other health care reimbursement or payment
intermediary related to audit adjustments, disallowances, or reclassifications
on account of health care reimbursement cost report adjustments or other payment
adjustments, or any fines or other penalties attributable to any period ending
on or before the Apportionment Date;
(f) any form of Medicare, Medicaid or other health care
reimbursement recapture, adjustment, overpayment, penalty assessment or charge
whatsoever with respect to any period ending on or before the Apportionment
Date;
(g) any liability or obligation relating to an Excluded Asset;
(h) any liability or obligation of Seller to any present or
former officer, director or stockholder of Seller in his capacity as such;
(i) any Environmental Liability arising from, or attributable
to, the Business, the Development Projects or Purchased Assets on or before the
Closing Date;
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(j) any liability or obligation Taxes of the Seller Parties
which are attributable to either (i) events occurring during any period ending
on or before the Closing Date, including ownership of the Purchased Assets and
operation of the Business, or (ii) the consummation of the transactions
contemplated by this Agreement; and
(k) any and all other liabilities and obligations of every
kind of the Seller Parties incurred by the Seller Parties, other than the
Assumed Liabilities.
2.5 Nonassignable Contracts and Authorizations. To the extent that the
assignment of any Assumed Contract or Permit shall require the consent of any
other party thereto, or shall be subject to any option in any other person by
virtue of a request for permission to assign or transfer or by reason of or
pursuant to any transfer to Buyer, this Agreement shall not constitute a
contract to assign the same to the extent that an attempted assignment would
either constitute a breach thereof or in any way adversely affect the rights or
obligations of Buyer or the Seller Parties thereunder. The Seller Parties shall
use all reasonable efforts to procure consent to any such assignment. If any
such consent is not obtained, the Seller Parties shall cooperate with Buyer in
any reasonable arrangement requested by Buyer designed to provide for Buyer the
benefit, monetary or otherwise, of any such Assumed Contract or Permit,
including enforcement of any and all rights of the Seller Parties against the
other party thereto arising out of breach or cancellation thereof by such party
or otherwise. The Seller Parties shall promptly pay to Buyer when received all
monies received by the Seller Parties under any Purchased Asset or any claim or
right or any benefit arising thereunder after the Closing Date, except to the
extent the same represents an Excluded Asset.
2.6 Escrow Agreement. At the Closing, (i) the Seller Parties shall
execute and deliver to Buyer and the Escrow Agent a copy of the Escrow Agreement
in the form of Exhibit B (the "Escrow Agreement"), and (ii) Buyer shall deliver
to the Seller Parties a copy of the Escrow Agreement duly executed and delivered
by Buyer and the Escrow Agent.
2.7 Purchase Price and Adjustments. (a) Subject to the terms and
conditions of this Agreement, in reliance on the representations, warranties and
agreements of the Seller Parties set forth in this Agreement, and in
consideration of the sale, transfer, assignment and delivery by the Seller
Parties of the Purchased Assets and the Business, Buyer shall (i) assume the
Assumed Liabilities at Closing; (ii) pay to Sellers at Closing an amount equal
to $98,000,000, subject to adjustment as provided in this Article II; (iii) pay
to Sellers at the time set forth therein any additional amount due pursuant to
Section 2.13; and (iv) pay to Sellers on or before April 14, 1997 any additional
amount due pursuant to Section 2.14 ((i), (ii), (iii) and (iv) collectively
referred to herein as the "Purchase Price").
(b) Sellers shall deliver to Buyer prior to the Closing a
written statement which shall set forth as of the Apportionment Date the total
amount of principal and interest outstanding on the Assumed Debt and the
Purchase Price shall be decreased by such amount. Seller shall be solely
responsible for paying all other debt, charges and costs in connection with
Excluded Debt at the Closing.
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(c) As an adjustment to the Purchase Price, Buyer agrees to
pay Sellers at Closing the amount, if any, by which the Final Closing Amount
exceeds the Base Amount.
(i) The following terms, as used herein, have the
following meanings:
"Accounting Referee" means Ernst & Young LLP.
"Annualized Ratio" means the quotient obtained by
dividing 12 by the number of months included in the Closing Income Statement.
"Base Amount" means $98,000,000; provided that such
amount shall be adjusted to reflect the net effect of all Purchase Price
adjustments set forth in Section 2.7 other than those in Section 2.7(c).
"Closing Income Statement" means an income statement
for the Business including results of operations for the 1996 calendar year
through the eight months ending August 31, 1996 that (x) fairly presents the
results of operations of the Business for such period on a basis consistent with
the presentation in the 1996 budget set forth on Exhibit D attached hereto (the
"1996 Projections"), (y) includes line items substantially consistent with those
used in the preparation of the 1996 Projections and (z) is prepared in
accordance with the accounting policies and procedures described in Allegis's
audited financial statements for the year ended December 31, 1995 and on
Schedule 3.7 (the "1995 Audit"); provided that if such statement is not
delivered by Sellers on or prior to September 20, 1996, the Closing Income
Statement will only cover the seven months ending July 31, 1996.
"Closing Amount" means the product obtained by
multiplying (x) 6.7 (or 6.4 if the Bethesda Sale does not occur prior to
Closing) by (y) the product obtained by multiplying the Annualized Ratio by Net
Operating Income for the period reported in the Closing Income Statement after
deducting from Net Operating Income (if the Bethesda Sale occurs prior to the
Closing) fifty percent (50%) of the Net Operating Income of Bethesda L.L.C. ;
provided that such amounts shall be adjusted to reflect the net effect of all
Purchase Price adjustments set forth in Section 2.7 other than those in Section
2.7(c). Attached hereto as Exhibit E is an example, for purposes of illustration
only, of this calculation (without such other adjustments) based on Sellers'
budgeted results for the eight months ending August 31, 1996.
"Final Closing Amount" means the Closing Amount (i)
as shown in Sellers' calculation delivered pursuant to Section 2.7(c)(ii) if no
notice of disagreement with respect thereto is delivered by Buyer pursuant to
such Section or if such a notice of disagreement is delivered, (A) as agreed by
the parties pursuant to Section 2.7(c)(iii) or (B) in the absence of such
agreement, as shown in the Accounting Referee's calculation delivered pursuant
to Section 2.7(c)(iii); provided that the Final Closing Amount shall in no event
be more than Sellers' calculation of the Closing Amount delivered pursuant to
Section 2.7(c)(ii) nor less than Buyer's calculation of the Closing Amount
delivered pursuant to such Section; provided further that in no event shall the
Final Closing Amount be less than the $98,000,000 (adjusted to reflect increases
or
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decreases resulting from this Section 2.7 (other than Section 27(c)) or more
than $105,000,000 (adjusted to reflect increases or decreases resulting from
this Section 2.7 (other than Section 2.7(c)).
"Net Operating Income" means earnings of the Business
before interest, taxes, depreciation, amortization, rent and management fee
expenses, determined in accordance with generally accepted accounting principles
applied on a basis consistent with the 1996 Projections and the 1995 Audit,
except that amounts paid by Sellers for nonrecurring transaction-related
expenses incurred in connection with the transactions contemplated by this
Agreement (including the cost of preparing the Interim Income Statements and the
costs of removing asbestos and underground oil tanks) shall not be included as
an operating expense in calculating Net Operating Income.
(ii) Sellers will prepare the Closing Income
Statement, together with Sellers' calculation of the Closing Amount and its
proposed allocation of such amount in accordance with Section 2.10, and deliver
it to Buyer no later than September 20, 1996. If Buyer disagrees with Sellers'
calculation of the Closing Amount, Buyer may, within three (3) business days
after receipt of the Closing Income Statement, deliver a notice to Sellers
disagreeing with such calculation and setting forth Buyer's calculation of such
amount. Any such notice of disagreement shall specify those items or amounts as
to which Buyer disagrees, and Buyer shall be deemed to have agreed with all
other items and amounts contained in the Closing Income Statement and the
calculation of the Closing Amount delivered by Sellers pursuant to this Section.
(iii) If a notice of disagreement shall have been
delivered by Buyer pursuant to Section 2.7(c)(ii), the parties shall, during the
two (2) business days following such delivery, use their best efforts to reach
agreement on the disputed items or amounts in order to determine the Closing
Amount, which amount shall not be less than the amount shown in Buyer's
calculation thereof delivered pursuant to Section 2.7(c)(ii) nor more than the
amount shown in Sellers' calculation thereof delivered pursuant to such Section.
If, during such period, the parties are unable to reach agreement, they shall
promptly thereafter cause the Accounting Referee promptly to review this
Agreement and the disputed items or amounts for the purpose of calculating the
Closing Amount. In making such calculation, the Accounting Referee shall
consider only those items or amounts in the Closing Income Statement or Sellers'
calculation of the Closing Amount as to which Buyer has disagreed. The
Accounting Referee shall deliver to Buyer and Sellers, as promptly as
practicable, a report setting forth such calculation. Such report shall be final
and binding upon the parties hereto. The cost of such review and report shall be
borne (i) by Buyer if Sellers' calculation of the Closing Amount is closer to
the Final Closing Amount than Buyer's calculation thereof, (ii) by Sellers if
the reverse is true and (iii) otherwise equally by Buyer and Sellers.
(d) If, in accordance with Section 2.12, the Closing Date does
not occur on the first day of the month during which the Closing occurs, Sellers
shall prepare and deliver to Buyer at the Closing a written statement which
shall set forth (i) all cash payments and cash receipts by the Sellers Parties
in conducting the Business in the ordinary course consistent with past practices
during the period from the Apportionment Date through the close of business on
the day prior to
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the Closing Date and (ii) a calculation showing such cash receipts minus such
cash payments (the "Net Cash Amount"). If the Net Cash Amount is greater than
zero, the Purchase Price shall be decreased by the Net Cash Amount. If the Net
Cash Amount is less than zero, the Purchase Price shall be increased by an
amount equal to the absolute value of the Net Cash Amount.
(e) Sellers shall prepare and deliver to Buyer prior to the
Closing a written statement which shall set forth all prepayments of private pay
revenues on account of services to be rendered or supplied on or after the
Apportionment Date that were received by the Seller prior to the Apportionment
Date. All such prepayments shall be prorated between Sellers and Buyer as of the
Apportionment Date based on the number of days in the applicable period and the
number of days elapsed in the applicable period before for Sellers, and from and
after for Buyer, the Apportionment Date. The Purchase Price shall be decreased
by an amount equal to Buyer's pro rata share of such prepayments.
(f) Sellers shall deliver to Buyer prior to the Closing a
written statement which shall set forth the total amount of earned but unpaid
vacation pay, sick pay, and other bonuses or amounts payable in lieu of benefits
applicable to the period prior to the Apportionment Date which would be payable
to Transferred Employees of the Seller Parties if such Transferred Employees
remained with the Seller Parties long enough to use in full such unpaid vacation
pay, sick pay, attendance bonuses and other bonuses or amounts payable in lieu
of benefits (the "Unpaid Benefit Amount"). The Purchase Price shall be decreased
by the Unpaid Benefit Amount. In addition the Purchase Price payable at Closing
shall be increased by the cost of maintaining Sellers' employee benefit plans in
place pursuant to Section 8.4(d) hereof.
(g) All real property and personal property Taxes and real
property rental amounts attributable to the Purchased Assets shall be prorated
between Sellers and Buyer as of the Apportionment Date based on the number of
days in the applicable tax period or rental period and the number of days
elapsed in the applicable tax or rental period before for Sellers, and from and
after for Buyer, the Apportionment Date. As applicable, the Purchase Price shall
be decreased by an amount equal to Sellers' pro rata share of such taxes or rent
or increased to the extent such taxes or rent have been paid in advance by
Sellers.
(h) The Purchase Price shall be reduced by an amount equal to
the unpaid charges and expenses of the Business for public services and
utilities or arising under any continuing service contracts or leases (including
water, sewer, electric, gas and other utilities, parking, garbage removal and
maintenance agreements) relating to periods prior to the Apportionment Date but
which are paid or to be repaid by Buyer and increased by the amount of prepaid
operating expenses and deposits which accrued to the benefit of the Buyer for
periods subsequent to the Apportionment Date. The Seller Parties shall use all
reasonable efforts to have all utility
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meters read on the Apportionment Date, and to obtain bills or statements for
such charges and expenses for the period prior to the Apportionment Date, so
that such charges and expenses may be accurately determined.
(i) The Purchase Price shall be decreased by the amount of any
liabilities of Beechwood, Inc., Heritage Harbour, and Upper Chesapeake accrued
and outstanding as of the Apportionment Date.
(j) The Purchase Price shall be decreased by the amount of
retainage by Sellers with respect to accrued payments prior to the Apportionment
Date under certain ongoing renovation projects set forth on Schedule 2.1(a).
(k) If sufficient information is not available to accurately
determine the amount of any such cash receipts or payments, the Net Cash Amount,
prepaid revenues, the Unpaid Vacation Amount, the Unpaid Benefit Amount, real
property and personal property Taxes, and the actual costs incurred by Sellers
pursuant to Section 8.4(d), charges and expenses and the prorations based on
such amounts shall be estimated based on the best available information. With
respect to real property and personal property Taxes, the actual taxes from the
previous tax period shall be used if actual amounts are not available or
calculable. On January 14, 1997, adjustments shall be made, if necessary, based
on receipt of final bills or statements relating to the applicable period and no
further adjustments pursuant to this Section 2.7(k) shall be made after January
14, 1997.
(l) If the Bethesda Sale does not occur prior to Closing, the
Purchase Price payable at the Closing Date shall be increased by $2,291,000.
(m) Any statement delivered pursuant to this Section 2.7 shall
be in reasonable detail and accompanied by documentation sufficient to enable
Buyer to confirm the information set forth therein and shall otherwise be in
form and substance acceptable to Buyer.
2.8 Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(a) On the Closing Date, Buyer shall deliver to the Escrow
Agent (i) $1,221,127 which shall be held by the Escrow Agent pursuant to the
Escrow Agreement as security for the Seller Parties' performance of the
Repayment Obligation including their obligation to repay the Washington D.C.
Medicaid authority as set forth in Section 6.16 hereof; provided that upon
presentation by Seller of documentation reasonably satisfactory to Buyer
demonstrating a reduction in the estimated Repayment Obligation as set forth in
Schedule 6.10 due to settlements reached between the date hereof and the date
funds are delivered to the Escrow Agent, such funds shall be reduced by the
amount of the reduction in the estimated Repayment Obligation; and further
provided that such funds shall be increased by the amount, if any, by which
$228,007 exceeds the face amount of the security posted with the Maryland
Medicaid program; and (ii) $1,000,000 which shall be held by the Escrow Agent
pursuant to the Escrow Agreement as security for the Seller Parties' performance
of their obligations under Article XI, in each case by wire transfer of federal
or other immediately available funds to a bank account designated by the Escrow
Agent at least two business days prior to the Closing Date or, if Escrow Agent
fails to
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give Buyer written wire instructions, by delivery of a check payable in
immediately available funds to the order of the Escrow Agent;
(b) On the Closing Date, Buyer shall deliver to Sellers the
balance of the Purchase Price payable on the Closing Date by wire transfer of
federal or other immediately available funds to a bank account designated by
Sellers at least two business days prior to the Closing Date or, if Sellers fail
to give Buyer written wire instructions, by delivery of a check payable in
immediately available funds to the order of Sellers;
(c) On or before January 14, 1997, Buyer shall pay to Sellers
the amount, if any, by which the Adjusted Closing Amount exceeds the Adjusted
Base Amount and Sellers shall pay to Buyer the amount, if any, by which the
Adjusted Base Amount exceeds the Adjusted Closing Amount; and
(d) On or before April 14, 1997 Buyer shall pay to Sellers the
balance of the Purchase Price, if any, due pursuant to Section 2.14.
2.9 Transfer Taxes. The Seller Parties shall be liable for and pay all
applicable sales, documentary, recording, use, filing, transfer, recordation and
other Taxes payable as a result of the transfer of real and personal property
contemplated by this Agreement.
2.10 Allocation of Purchase Price. (a) The Purchase Price shall be
allocated among the Sellers and the Purchased Assets as set forth in this
Section 2.10, and the parties shall use such allocation as the basis for
reporting this transaction for all Medicare, Medicaid, other third party payor
and tax purposes. No party shall take a position in any conference with
representatives of Medicare, Medicaid, any other third party payor or
Governmental Authority (including the Internal Revenue Service), on any Return,
report or filing, or in any proceeding with any Governmental Authority that is
inconsistent with the Purchase Price allocation made in this Section 2.10.
(b) The Purchase Price shall be allocated among the Sellers as follows:
(i) First, to Technicare, in an amount equal to its Net
Operating Income multiplied by 7.5 (but not less that its Allocable Base Amount
and not greater that its Allocable Maximum Amount, as defined below);
(ii) Second, to Rehab Solutions, in an amount equal to its Net
Operating Income multiplied by 6.0 (but not less that its Allocable Base Amount
and not greater than its Allocable Maximum Amount);
(iii) Third, to Allegis with respect to its PEN Therapy
Business, in an amount equal to its PEN Therapy Net Operating Income Multiplied
by 6.0 (but not less than its PEN Therapy Allocable Base Amount and not greater
than its Allocable Maximum Amount);
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(iv) Fourth, to Allegis with respect to its non-PEN Therapy
Business, in an amount equal to its non- PEN Therapy Net Operating Income
multiplied by 1.65 (but not less than its non-PEN Therapy Allocable Base Amount
and not greater that its Allocable Maximum Amount); and
(v) Fifth, the balance of the Purchase Price shall be
allocated among the Sellers of the Facilities as provided in paragraph 2.10 (c)
below.
(c) The portion of the Purchase Price allocated among the Sellers of
the Facilities pursuant to (b) (v) above shall be allocated first to Circle
Manor, in the fixed amount of $2,500,000, and the balance in proportion to the
remaining Facilities' adjusted Net Operating Income (reduced, in the case of
Mount Clare and Southern Maryland, by the capitalized lease values shown on
Exhibit F all as shown on, and in accordance with the methodology illustrated
in, Exhibit F.
(d) The portion of the Purchase Price payable at Closing allocated to
each Seller shall be suballocated to asset types or categories as set forth for
each Seller on Exhibit G. Any additional payments of the Purchase Price under
Sections 2.13 and 2.14 shall be allocated to good will.
(e) The "Allocable Base Amount" for each seller shall be the Fixed,
specific amounts allocated to each Seller as shown on Exhibit G, illustrating
how the Purchase Price would be allocated if it equaled the Base Amount.
(f) The "Allocable Maximum Amount" for each Seller shall be the fixed,
specific amounts allocated to each Seller as shown on Exhibit G.
2.11 Patient Trust Funds. Attached hereto as Schedule 2.11 and as
Schedule 2.11A at the Closing is a written statement which shall set forth a
complete and accurate list of all amounts, if any, of monies or other property
of patients of the Facility held in trust by Sellers ("Patient Trust Funds") as
of the date hereof and as of the Closing Date, respectively. At the Closing,
Sellers shall assign, transfer and deliver to Buyer, as trustee and subject to
the same terms of trust, all such Patient Trust Funds. Buyer shall assume all
liability arising after the Closing Date. Any liability with respect to such
Patient Trust Funds arising or accruing on or before the Closing Date shall
remain the sole responsibility of Sellers.
2.12 Closing. Subject to the satisfaction or waiver of all conditions
precedent set forth in Article IX, the closing of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities (the "Closing")
shall be held at the offices of Xxxxxxxxx, Xxxxxxx & Xxxxx, Xxxx Xxxxxxx, 000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, on October 2, 1996 as of
October 1, 1996 or on such later date as the parties may agree, but in any event
prior to November 2, 1996; provided, however, if the Closing occurs any time
after the first day of a calendar month the Purchase Price shall be increased by
an amount calculated as interest on the portion of the Purchase Price payable at
Closing at a rate of 8.25% per annum, for each day between the first of the
month and the Closing Date (excluding the first day of the month and including
the Closing Date). If any condition in Article IX is not satisfied in any
material respect
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(or is not duly waived) at the Closing, any party whose obligations are subject
to such condition may extend (but in no event later than November 2, 1996) the
period in which the Closing must be consummated (during which period each other
party shall use its respective reasonable efforts to cause all such conditions
to be satisfied in all material respects) and the Closing shall occur four (4)
business days after the satisfaction of such conditions in accordance with the
extension granted (assuming all other conditions contained in Article IX are
satisfied as of such fourth business day). If all conditions are determined to
be satisfied in all material respects (or are duly waived) at the Closing
(whether or not delayed), the Closing shall be consummated. Buyer and each of
the Seller Parties shall use all reasonable efforts, on or prior to the Closing,
to execute and deliver all such instruments, documents or certificates as may be
necessary or advisable for the consummation at the Closing of the transactions
contemplated by this Agreement, including all warranty deeds, bills of sale,
instruments of assumption, endorsements, consents, assignments and other
agreements and instruments of conveyance and assignment reasonably necessary or
appropriate to vest in Buyer all right, title and interest in, to and under the
Purchased Assets. The parties agree that if the Closing is delayed beyond
October 5, 1996 solely by reason of a dispute under Section 2.7(c), the Closing
will occur three business days after such dispute is resolved, but in any event
prior to November 2, 1996.
2.13 Adjusted Closing Amount. (a) As an adjustment to the Purchase
Price, Buyer agrees to pay Sellers after Closing, in accordance with this
Section 2.13, the amount, if any, by which the Adjusted Closing Amount exceeds
the Adjusted Base Amount and Sellers agree to pay Buyer after Closing, in
accordance with this Section 2.13(e), the amount, if any, by which the Adjusted
Base Amount exceeds the Adjusted Closing Amount; provided that the total
Purchase Price paid to Sellers, as adjusted pursuant to Section 2.7(c) and this
Section 2.13 (exclusive of any other adjustments to the Purchase Price), shall
be no less than $98,000,000 and no more than $105,000,000.
(b) The following terms, as used herein, have the following
meanings:
"Second Annualized Ratio" means the quotient obtained by
dividing 12 by the number of months included in the Interim Income Statement.
"First Post-Closing Amount" means the product obtained by
multiplying (x) 6.7 (or 6.4 if the Bethesda Sale does not occur prior to
Closing) by (y) the product obtained by multiplying the Second Annualized Ratio
by Net Operating Income for the period reported in the Interim Income Statement
after deducting from Net Operating Income (if the Bethesda Sale occurs prior to
the Closing) fifty percent (50%) of the Net Operating Income of Bethesda L.L.C.,
as adjusted to reflect the net effect of all Purchase Price adjustments set
forth in Section 2.7 (other than those in Section 2.7(c)). Provided that the
amount determined above shall in no event be less than the Base Amount. Attached
hereto as Exhibit E is an example, for purposes of illustration only, of this
calculation based on Sellers' budgeted results for the eight months ending
August 31, 1996.
"Adjusted Base Amount" means the Base Amount plus any
adjustment made to the Purchase Price pursuant to Section 2.7(c).
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"Interim Income Statement" means an income statement for
the Business audited with an unqualified opinion by Xxxxxx Xxxxxxxx & Co. for
the nine months ending September 30, 1996 that (x) fairly presents the results
of operations of the Business for such period on a basis consistent with the
presentation in the 1996 Projections, (y) includes line items substantially
consistent with those used in the preparation of the 1996 Projections and (z) is
prepared in accordance with the accounting policies and procedures described in
the 1995 Audit and the procedures set forth in Schedule 3.7.
"Adjusted Closing Amount" means the First Post-Closing
Amount (i) as shown in Sellers' calculation delivered pursuant to Section
2.13(c) if no notice of disagreement with respect thereto is delivered by Buyer
pursuant to such Section or if such a notice of disagreement is delivered, (A)
as agreed by the parties pursuant to Section 2.13(d) or (B) in the absence of
such agreement, as shown in the Accounting Referee's calculation delivered
pursuant to Section 2.13(d); provided that the Adjusted Post-Closing Amount
shall in no event be more than Sellers' calculation of the First Post-Closing
Amount delivered pursuant to Section 2.13(c) nor less than Buyer's calculation
of the First Post-Closing Amount delivered pursuant to such Section.
(c) Sellers will prepare the Interim Income Statement and deliver
it to Buyer by December 11, 1996. If Buyer disagree with Sellers calculation of
the Post-Closing Amount, Buyer may, within fifteen (15) business days after
receipt of the Interim Income Statement, deliver a notice to Sellers disagreeing
with such calculation and setting forth Buyer's calculation of such amount. Any
such notice of disagreement shall specify those items or amounts as to which
Buyer disagree, and Buyer shall be deemed to have agreed with all other items
and amounts contained in the Interim Income Statement and the calculation of the
First Post-Closing Amount delivered by Sellers pursuant to this Section 2.13(c).
(d) If a notice of disagreement shall have been delivered by Buyer
pursuant to Section 2.13(c), the parties shall, during the five (5) business
days following such delivery, use their best efforts to reach agreement on the
disputed items or amounts in order to determine the Adjusted-Closing Amount,
which amount shall not be less than the amount shown in Buyer's calculation
thereof delivered pursuant to Section 2.13(c) nor more than the amount shown in
Sellers' calculation thereof delivered pursuant to such Section. If, during such
period, the parties are unable to reach agreement, they shall promptly
thereafter cause the Accounting Referee promptly to review this Agreement and
the disputed items or amounts for the purpose of calculating the First
Post-Closing Amount. In making such calculation, the Accounting Referee shall
consider only those items or amounts in the Interim Income Statement or Sellers'
calculation of the First Post-Closing Amount as to which Buyer has disagreed.
The Accounting Referee shall deliver to Buyer and Sellers, as promptly as
practicable, a report setting forth such calculation. Such report shall be final
and binding upon the parties hereto. The cost of such review and report shall be
borne (i) by Buyer if Sellers' calculation of the First Post-Closing Amount is
closer to the First Final Post-Closing Amount than Buyer's calculation thereof,
(ii) by Sellers if the reverse is true and (iii) otherwise equally by Buyer and
Sellers.
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(e) Any payment pursuant to this Section 2.13 shall be made at a
mutually convenient time and place (i) within 30 days after Buyer's delivery of
the documents referred to in Section 2.13(c) if no notice of disagreement with
respect to the First Post-Closing Amount is delivered by Sellers or (ii) if a
notice of disagreement with respect to the First Post-Closing Amount is so
delivered, then within 10 days after the earlier of (A) agreement between the
parties pursuant to Section 2.13(d) with respect to the First Post-Closing
Amount and (B) delivery of the calculation of the First Post-Closing Amount by
the Accounting Referee pursuant to Section 2.13(d); provided that in no event
shall payment be made after January 14, 1997 if the Adjusted-Closing Amount is
determined by such time. In addition, Buyer shall pay the undisputed portion, if
any, of the Final Post-Closing Amount on or before January 14, 1997. Buyer shall
deliver to Sellers the amount due, if any, pursuant to this Section 2.13 by wire
transfer of federal or other immediately available funds to a bank account
designated by Sellers at least two (2) business days prior to the scheduled
delivery of funds or, if Sellers fail to give Buyer written wire instructions,
by delivery of checks payable in immediately available funds to the order of
Sellers.
2.14 Final Post Closing Adjustment to Purchase Price. (a) As an
adjustment to the Purchase Price, Buyer agrees to pay Sellers after Closing, in
accordance with this Section 2.14, the amount, if any, by which the Final
Post-Closing Amount exceeds the Adjusted Closing Amount; provided that the total
Purchase Price paid to Sellers, as adjusted pursuant to Section 2.7(c) and this
Section 2.14 (exclusive of any other adjustments to the Purchase Price), shall
be no less than $98,000,000 and no more than $105,000,000.
(b) The following terms, as used herein, have the following
meanings:
"Post-Closing Amount" means the product obtained by
multiplying (x) 6.7 (or 6.4 if the Bethesda Sale does not occur prior to
Closing) by (y) Net Operating Income for the period reported in the Final Income
Statement after deducting from Net Operating Income (if the Bethesda Sale occurs
prior to the Closing) fifty percent (50%) of the Net Operating Income of
Bethesda L.L.C., as adjusted to reflect the net effect of all Purchase Price
adjustments set forth in Section 2.7 (other than those in Section 2.7(c)).
Provided that the amount determined above shall in no event be less than the
Base Amount. Attached hereto as Exhibit H is an example, for purposes of
illustration only, of this calculation based on Sellers' budgeted results for
the year ending December 31, 1996.
"Final Income Statement" means an income statement for the
Business for the year ending December 31, 1996 that (x) fairly presents the
results of operations of the Business for such period on a basis consistent with
the presentation in the 1996 Projections, (y) includes line items substantially
consistent with those used in the preparation of the 1996 Projections and (z) is
prepared in accordance with the accounting policies and procedures described in
the 1995 Audit and the procedures set forth in Schedule 3.7. Notwithstanding the
foregoing, the Final Income Statement shall be adjusted as necessary to
eliminate expenses (or savings) or any loss (or increase) of revenue
attributable to the sale of the Purchased Assets (including, for example,
nonrecurring transaction-related expenses incurred by Sellers in connection with
the transactions contemplated by this Agreement) or changes in accounting
procedures caused or implemented by
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Buyer with respect to the Business subsequent to the Closing Date, it being the
intent that the Final Income Statement shall reflect the financial performance
of the Business for the entire year as if no sale or changes in management or
accounting procedures had occurred during the period from and after the Closing
Date. Such income statement to be prepared at Buyer's cost.
"Final Post-Closing Amount" means the Post-Closing Amount
(i) as shown in Buyer's calculation delivered pursuant to Section 2.14(c) if no
notice of disagreement with respect thereto is delivered by Sellers pursuant to
such Section or if such a notice of disagreement is delivered, (A) as agreed by
the parties pursuant to Section 2.14(d) or (B) in the absence of such agreement,
as shown in the Accounting Referee's calculation delivered pursuant to Section
2.14(d); provided that the Final Post-Closing Amount shall in no event be more
than Sellers' calculation of the Post-Closing Amount delivered pursuant to
Section 2.14(c) nor less than Buyer's calculation of the Post-Closing Amount
delivered pursuant to such Section.
(c) Buyer will prepare the Final Income Statement and deliver it
to Sellers by March 1, 1997. If Sellers disagree with Buyer's calculation of the
Post-Closing Amount, Sellers may, within fifteen (15) business days after
receipt of the Final Income Statement, deliver a notice to Buyer disagreeing
with such calculation and setting forth Sellers' calculation of such amount. Any
such notice of disagreement shall specify those items or amounts as to which
Sellers disagree, and Sellers shall be deemed to have agreed with all other
items and amounts contained in the Final Income Statement and the calculation of
the Post-Closing Amount delivered by Buyer pursuant to this Section 2.14(c).
(d) If a notice of disagreement shall have been delivered by
Sellers pursuant to Section 2.14(c), the parties shall, during the five (5)
business days following such delivery, use their best efforts to reach agreement
on the disputed items or amounts in order to determine the Final Post-Closing
Amount, which amount shall not be less than the amount shown in Buyer's
calculation thereof delivered pursuant to Section 2.14(c) nor more than the
amount shown in Sellers' calculation thereof delivered pursuant to such Section.
If, during such period, the parties are unable to reach agreement, they shall
promptly thereafter cause the Accounting Referee promptly to review this
Agreement and the disputed items or amounts for the purpose of calculating the
Post-Closing Amount. In making such calculation, the Accounting Referee shall
consider only those items or amounts in the Final Income Statement or Buyer's
calculation of the Post-Closing Amount as to which Sellers have disagreed. The
Accounting Referee shall deliver to Buyer and Sellers, as promptly as
practicable, a report setting forth such calculation. Such report shall be final
and binding upon the parties hereto. The cost of such review and report shall be
borne (i) by Buyer if Sellers' calculation of the Post-Closing Amount is closer
to the Final Post-Closing Amount than Buyer's calculation thereof, (ii) by
Sellers if the reverse is true and (iii) otherwise equally by Buyer and Sellers.
(e) Any payment pursuant to this Section 2.14 shall be made at a
mutually convenient time and place (i) within 30 days after Buyer's delivery of
the documents referred to in Section 2.14(c) if no notice of disagreement with
respect to the Post-Closing Amount is delivered by Sellers or (ii) if a notice
of disagreement with respect to the Post-Closing Amount is so delivered, then
within 10 days after the earlier of (A) agreement between the parties pursuant
to
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Section 2.14(d) with respect to the Post-Closing Amount and (B) delivery of the
calculation of the Post-Closing Amount by the Accounting Referee pursuant to
Section 2.14(d); provided that in no event shall payment be made after April 14,
1997 if the Final Post-Closing Amount is determined by such time. In addition,
Buyer shall pay the undisputed portion, if any, of the Final Post-Closing Amount
on or before April 14, 1997. Buyer shall deliver to Sellers the amount due, if
any, pursuant to this Section 2.14 by wire transfer of federal or other
immediately available funds to a bank account designated by Sellers at least two
(2) business days prior to the scheduled delivery of funds or, if Sellers fail
to give Buyer written wire instructions, by delivery of checks payable in
immediately available funds to the order of Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLER PARTIES
The Seller Parties hereby jointly and severally represent and warrant
to Buyer as follows:
3.1 Corporate Existence and Power. Each Seller (except Allegis, Circle
Manor and Arcola) is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all power and authority necessary to enable it to own,
lease or otherwise hold its properties and assets and to carry on its business
as now conducted and currently proposed to be conducted. Allegis, Circle Manor
and Arcola are each a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
corporate power and authority necessary to enable it to own, lease or otherwise
hold its properties and assets and to carry on its business as now conducted and
currently proposed to be conducted. Each Seller is duly qualified to do business
as a foreign limited liability company or corporation, as the case may be, and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Each Seller has previously delivered to Buyer true and complete copies of the
certificate of formation and limited liability company agreement, or certificate
of incorporation and by-laws of such Seller, as the case may be, in all cases as
amended to date and as currently in effect.
3.2 Corporate Authorization. The execution, delivery and performance by
Seller Parties of this Agreement and the Escrow Agreement and the consummation
by the Seller Parties of the transactions contemplated hereby and thereby are
within the power and authority of such Seller Parties. This Agreement has been
duly authorized, executed and delivered by each of the Seller Parties and
constitutes a valid and binding obligation of each of the Seller Parties,
enforceable against each of the Seller Parties in accordance with its terms. The
Escrow Agreement has been duly authorized and, when executed and delivered by
each of the Seller Parties, will have been duly executed and delivered by each
of the Seller Parties and will constitute a valid and binding
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obligation of each of the Seller Parties, enforceable against each of the Seller
Parties in accordance with its terms.
3.3 Governmental Authorization. Except as set forth on Schedule 3.6, or
with respect to agreements which will not survive Closing, the execution,
delivery and performance of this Agreement and the Escrow Agreement by each of
the Seller Parties, and the consummation of the transactions contemplated hereby
and thereby by each of the Seller Parties, do not and will not require any
consent, approval or action by or in respect of, or any declaration, filing or
registration with, any Governmental Authority, other than compliance with any
applicable requirements of the HSR Act.
3.4 Non-Contravention. Except as set forth on Schedule 3.6, the
execution, delivery and performance of this Agreement and the Escrow Agreement
by each of the Seller Parties, and the consummation of the transactions
contemplated hereby and thereby by each of the Seller Parties, do not and will
not, with or without the giving of notice, the lapse of time or both: (i)
contravene or conflict with, if such Seller Party is not an individual, the
organizational documents of the Seller Parties, (ii) contravene or conflict with
or constitute a violation of any law, rule, regulation, judgment, injunction,
order or decree binding upon or applicable to the Purchased Assets, the Business
or the Seller Parties, (iii) require any consent, approval or other action by
any Person, contravene or conflict with or constitute a violation of or a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of any Seller or to a loss of any
benefit to which any Seller is entitled, under (A) any agreement, contract,
indenture, lease or other instrument to which any Seller is a party or by which
such Seller is bound or (B) any license, franchise, Permit or other similar
authorization held by any Seller, or (iv) result in the creation or imposition
of any Lien on any of the Purchased Assets.
3.5 Subsidiaries. Except as set forth on Schedule 3.5, Sellers do not
hold or own, directly or indirectly, any capital stock or other equity
securities of any other corporation or have a direct or indirect equity or
ownership interest in any Person.
3.6 Consents. Schedule 3.6 sets forth each agreement, contract or other
instrument binding upon the Seller Parties or any Permit requiring a consent as
a result of the execution, delivery or performance of this Agreement and the
Escrow Agreement or the consummation of the transactions contemplated hereby and
thereby (including without limitation any facility plant waivers) (the
"Consents").
3.7 Financial Statements. Seller has previously delivered to Buyer the
following financial statements (collectively, the "Financial Statements"):
(i) the audited combined balance sheet of Allegis as of
December 31, 1995 and the related combined statement of income, retained
earnings and members' equity and combined statement of cash flows for the year
ended December 31, 1995, together with the notes thereto, audited in accordance
with generally accepted accounting principles applied on a consistent basis both
as to classification of items and amounts and accompanied by the report thereon
of Xxxxxx Xxxxxxxx & Co.;
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(ii) the unaudited balance sheet of each Seller (except
Allegis) as of December 31, 1995 and the related statement of operations (except
Allegis) for the year ended December 31, 1995; and
(iii) the unaudited balance sheet of each Seller as of the
Balance Sheet Date and the related statements of operations and cash flows for
the period from the first day of the current fiscal year through the Balance
Sheet Date, together with the notes thereto.
The audited Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis both as to
classification of items and amounts (except as may be indicated therein or in
the notes thereto); each of the Financial Statements fairly presents the
financial position of each Seller as of its date or the results of operations or
changes in financial position, as is appropriate, of each Seller for the periods
then ended (subject, in the case of unaudited interim financial statements, to
normal year-end adjustments, which adjustments will not be material in amount or
effect). Except as may be set forth in the Financial Statements, all of the
revenues and expenses of each Seller reflected in the Financial Statements were
derived or incurred in the ordinary course of the Business. The account records
underlying the Financial Statements accurately and fairly reflect, in reasonable
detail, the transactions of each Seller, and each Seller's books of account have
been maintained in accordance with generally accepted accounting practices
applied on a consistent basis. Each Seller has previously delivered to Buyer a
complete and accurate accounts receivable aging report showing all of each
Seller's accounts receivable as of a recent date, specifying the name, invoice
number, amount and age of each account receivable. Attached as Schedule 3.7 is a
description of certain of the Seller's accounting policies and procedures used
in the Sellers' Business and in the preparation of the Financial Statements and
the Closing Income Statement.
3.8 Absence of Undisclosed Liabilities. No Seller has any liabilities
or obligations, and there is no basis for any assertion against any Seller of
any liability or obligation, except those liabilities or obligations which are
(a) fully reflected or adequately reserved against in the Balance Sheet, (b)
disclosed in this Agreement or in the Schedules hereto, or (c) incurred in the
ordinary course of business consistent with past practice since the Balance
Sheet Date, which in the aggregate are not material to Sellers. For the purposes
of this Agreement the phrase "liabilities or obligations" shall include any
direct or indirect indebtedness, claim, loss, damage, deficiency (including
deferred income tax and other net tax deficiencies), cost, expense, obligation,
guarantee, or responsibility, whether accrued, absolute or contingent, known or
unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured.
3.9 Absence of Certain Changes. Since December 31, 1995, each Seller
has conducted the Business in the ordinary course consistent with past practice,
and, except as set forth on Schedule 3.9, no Seller has:
(a) suffered any Material Adverse Change or any event,
occurrence, development or state of circumstances or facts which has had or
could reasonably be expected to result in or have a Material Adverse Effect on
the Business;
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(b) incurred, assumed or guaranteed any indebtedness for money
borrowed, or incurred any liabilities or obligations other than in the ordinary
course of business consistent with past practice and in any event not in excess
of $50,000 in the aggregate;
(c) paid, discharged or satisfied any claim, Lien or
liability, other than those (i) which were reflected or reserved against in the
Balance Sheet and which were paid, discharged or satisfied in the ordinary
course of business consistent with past practice or (ii) which were incurred and
paid, discharged or satisfied since the Balance Sheet Date in the ordinary
course of business consistent with past practice;
(d) permitted or allowed any of the Purchased Assets to be
mortgaged, pledged or subjected to any Lien other than as disclosed on Schedules
2.1(a) and 2.1(b) or 3.9(d);
(e) written down the value of any inventory, or written off as
uncollectible any notes, accounts or other receivables or any portion thereof
except in the ordinary course of business;
(f) leased or acquired any capital asset other than in the
ordinary course of business and in any event not in excess of $50,000 in the
aggregate;
(g) suffered any damage, destruction or other casualty loss
resulting in damage of $25,000 or more (whether or not covered by insurance)
affecting the Business or the Purchased Assets;
(h) entered into any transaction with any of its Affiliates,
other than in the ordinary course of, and pursuant to the reasonable
requirements of, the Business and upon terms that are no less favorable to it
than it could obtain in a comparable transaction with a Person who was not such
an Affiliate;
(i) made any material change in any method of financial or tax
accounting or any financial or tax accounting practice or in its method of
maintaining books and records;
(j) entered into or modified (except as may be required by
applicable law) any Employee Plan, or any trust agreement or insurance contract
related thereto, in respect of any of its present or former directors, officers
or employees;
(k) experienced any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any of its employees, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
of its employees;
(l) entered into any transaction, contract or agreement
relating to the Purchased Assets, the Business or the Development Projects
(including the acquisition or disposition of any of the Purchased Assets) or to
the relinquishment by the Seller Parties of any contract or other
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right, other than as set forth on Schedule 3.12, and transactions, contracts,
agreements and relinquishments entered into in the ordinary course of business
consistent with past practices and those contemplated by this Agreement;
(m) made any capital expenditure for additions or improvements
to property, plant and equipment, other than in the ordinary course of business
consistent with the 1996 Capital Budget provided to Buyer; or
(n) agreed to, or made any commitment to, do any of the
foregoing.
3.10 Title and Condition of Assets. (a) The Purchased Assets and the
Excluded Assets constitute, and on the Closing Date will constitute, all of the
assets and properties used or held for use in the conduct of the Business, and
are, and on the Closing Date will be, generally adequate to conduct the Business
as currently conducted. Sellers have good, valid and marketable title to, or a
valid leasehold interest in, the Purchased Assets, whether real, personal or
mixed, tangible or intangible, free and clear of all Liens, except (a) Liens
disclosed on Schedule 2.1(b) and 2.1(c), (b) Liens for Taxes incurred in the
ordinary course of business which are not yet due and payable and (c) Liens
disclosed and noted on the title commitments provided with respect to each
property (the "Permitted Liens"). The Purchased Assets include all of the assets
and properties of the Business that are reflected on the Balance Sheets, except
for the Excluded Assets and any of the Purchased Assets that may have been
consumed or disposed of in the ordinary course of the Business consistent with
past practices since the Balance Sheet Date or as permitted by this Agreement.
At the Closing, Sellers shall have sold, conveyed, transferred and assigned to
Buyer, and Buyer shall have acquired, good and marketable title to, or a valid
leasehold interest in, the Purchased Assets free and clear of all of Liens
except Permitted Liens and Assumed Debt.
(b) Schedule 2.1(a) describes all real property and leases of,
and other interests in, real property (in each case together with all buildings,
fixtures and improvements erected thereon and easements and other rights
appurtenant thereto) owned, held or used in the conduct of the Business by the
Seller Parties (the "Real Property"), all title insurance policies and surveys
with respect thereto, and all Liens thereon, specifying in the case of leases or
subleases, the name of the lessor or sublessor, the lease term and basic annual
rent. Schedule 2.1(a) contains a reasonably complete description of all material
renovation projects in process at any of the Facilities, including a list of all
contracts relating thereto and any amounts retained by Sellers under such
contracts. The Real Property includes all real property, and only such real
property, as is used or held for use in connection with the conduct of the
Business.
(c) Schedule 2.1(b) describes all personal property used or
held for use in connection with the conduct of the Business included in the
Purchased Assets, including but not limited to all machinery, equipment,
furniture, vehicles and other trade fixtures and fixed assets, and any Liens
thereon, specifying in the case of leases or subleases, the name of the lessor
or sublessor, the lease term and basic annual rent.
(d) All leases of Real Property or personal property are in
good standing and are valid, binding and enforceable in accordance with their
respective terms, and except as set forth
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on Schedule 3.10 (d) there does not exist under any such lease of real property
or personal property any material default or any event that, with notice or
lapse of time or both, would constitute a material default.
(e) Except as set forth on Schedule 3.10(e), the buildings,
structures and equipment included in the Purchased Assets have no material
defects, are in good operating condition and repair and have been reasonably
maintained consistent with standards generally followed in the industry (giving
due account to the age and length of use of same, and ordinary wear and tear),
are suitable for their present uses and, in the case of buildings and other
structures, such buildings and other structures (including without limitation,
the roofs thereof), are structurally sound.
(f) The buildings and structures included in the Purchased
Assets currently have access to (i) public roads or valid easements over private
streets or private property for such ingress to an egress from all such plants,
buildings and structures and (ii) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire protection, drainage
and other public utilities, as is necessary for the conduct of the Business.
(g) Except as shown on the surveys listed on Schedule 2.1(a),
none of the material structures on the Real Property encroaches upon real
property of another Person, and no structure of any other Person encroaches upon
any Real Property and there are no defects which are not shown on the surveys
listed on Schedule 2.1(a) relating to the Real Property which would be shown by
an accurate survey as of the date of this Agreement.
(h) Except as set forth on Schedule 3.10(h), no violation of
any laws, regulations or ordinances relating to zoning, environmental, city
planning or similar matters relating to the Business, the Development Projects
or any Purchased Asset currently exists or has existed at any time since January
1, 1991 (or the date of the Sellers' acquisition if later), except for
violations that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedules 3.10(h), 3.11, 3.20 or 3.15, there are no developments affecting
the Business or any of the Facilities pending or, to the knowledge of Seller,
threatened, which might materially detract from the value of such Business or
Facility materially interfere with any present or intended use of any such
Purchased Assets related to the Business or materially adversely affect the
marketability of such Purchased Assets related to the Business.
3.11 Litigation; Proceedings. Except as set forth on Schedule 3.11,
there is no action, suit, investigation or proceeding (or any basis therefor)
pending or, to the knowledge of the Seller Parties, threatened against or
affecting the Business, the Development Projects or any Purchased Asset before
any Governmental Authority that, if determined or resolved adversely in
accordance with the plaintiff's demands, would reasonably be expected to have a
Material Adverse Effect or that in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement. Except as set forth on Schedule 3.11, there is no action, suit or
proceeding pending or, to the knowledge of the Seller Parties, threatened by any
third party fiscal intermediary or carrier administering any state Medicaid
program or the Medicare program, by
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any Governmental Authority (including the Department of Health and Human
Services and any state Medicaid agency) or by any third party payor against the
Seller relating to the Business or the Purchased Assets, affecting the Business,
the Development Projects or the Purchased Assets or seeking to suspend payments
to, or recoup or offset over payments from, any Seller relating to the Business
or the Purchased Assets, other than routine administrative cost report review
and settlement proceedings.
3.12 Material Contracts. (a) Except as set forth on Schedule 2.1 (a),
2.1 (b) and 3.12, none of the Sellers is a party to or subject to:
(i) any lease (A) of real property or (B) providing for annual
rental of $20,000 or more;
(ii) any contract for the purchase of materials, supplies,
goods, services, equipment or other assets providing for payments by
any Seller of, or pursuant to which in the last year any Seller paid in
the aggregate, $20,000 or more;
(iii) any sales, distribution or other agreement providing for
the sale or provision by any Seller of materials, supplies, goods,
services, equipment or other assets that provides for payments to any
Seller of, or pursuant to which since December 31, 1995 any Seller
received in the aggregate, $20,000 or more;
(iv) any partnership, joint venture or other similar contract
arrangement or agreement;
(v) any contract or guarantee (other than endorsements of
negotiable instruments in the ordinary course of business consistent
with past practice) relating to indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by an asset) in excess of $20,000 which will
survive Closing;
(vi) any license agreement, management contract, franchise
agreement or agreement in respect of similar rights granted to or held
by any Seller;
(vii) any agency, dealer, sales representative or other
similar agreement;
(viii) any agreement, contract or commitment that
substantially limits the freedom of any Seller Party to compete in any
line of business or geographic area or with any Person, or to own,
operate, sell, transfer, pledge or otherwise dispose of or encumber any
Purchased Asset or that would so limit the freedom of Buyer after the
Closing Date;
(ix) any agreement, contract or commitment which is or relates
to an agreement with or for the benefit of any Affiliate of any Seller
Party;
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(x) any contract or agreement with any Governmental Authority
or third party fiscal intermediary or carrier administering any state
Medicaid program or the Medicare program, any state Medicaid program,
the Medicare program, any hospital, nursing facility or other inpatient
health care facility, health maintenance organization, preferred
provider organization or self-insured employer or other third party
payor;
(xi) any contract for personal services or employment
(including contracts with present or former directors, officers,
employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers) which provides for a specific
period of notice of termination of employment or payment in lieu
thereof, and any union contract, collective bargaining agreement or
other employee association agreements;
(xii) any agreement or arrangement providing for the payment
of any commission based on sales or revenues;
(xiii) any contract or agreement, not elsewhere specifically
disclosed pursuant to this Agreement, involving the payment or receipt
by any Seller of $20,000 or more; or
(xiv) any other agreements, contracts, leases, licenses, and
commitments to which any Seller is a party (or under which Seller may
be obligated or to which any Seller or any of its rights, properties or
assets may be subject or bound) which are material to the financial
condition, results of operations, business, property or prospects of
the Business.
(b) Each agreement, contract, plan, lease, arrangement and
commitment disclosed in any Schedule to this Agreement or required to be
disclosed pursuant to this Section 3.12 is a valid and binding agreement of such
Seller and is in full force and effect, and no Seller nor, to knowledge of the
Seller Parties, is any other party thereto, in default or breach in any material
respect under the terms of any such agreement, contract, plan, lease,
arrangement or commitment. There is no contract, agreement, commitment or
obligation to which any Seller is a party or is bound that at the time it was
entered into or made was, or is currently, known or expected by such Seller to
result in any loss to such Seller upon completion or performance thereof, or any
bid, offer or proposal which if accepted would result as such a contract,
agreement, commitment or obligation. Except as disclosed on Schedule 3.12, there
is no contract, agreement, commitment or obligation to which any Seller is a
party or is bound that requires or obligates any Seller (i) to provide any
services or goods to any Person for less than the standard published prices or
rates of such Seller, or (ii) to return or repay to any person any amounts
received, or to forego collection of accounts receivable or future payments,
from any Person in consideration of the performance of any services or the sale
of any goods.
3.13 Licenses and Permits. Schedule 2.1(j) correctly describes (a) each
license, franchise, permit or other similar authorization affecting, or relating
in any way to, the Business, together with the name of the Governmental
Authority or other Person issuing such license or permit (the "Permits") and (b)
each final certificate of need heretofore issued with respect to any Facility.
Except as set forth on the Schedule 2.1(j), such Permits are valid and in full
force and effect, and except as set forth on Schedule 3.15, the Seller Parties
have not received any notice of any claim,
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default, complaint, citation or other proceeding relating to any such Permit.
Except for Medicaid and Medicare participation agreements and the licenses
issued by the State of Maryland Department of Health and Hygiene and any
licenses or permits required to operate Technicare, and assuming the related
Consents have been obtained prior to the Closing Date, the Permits are
transferable by the Seller Parties, and none of the Permits will, assuming the
related Consents have been obtained prior to the Closing Date, be terminated or
materially impaired or become terminable as a result of the transactions
contemplated by this Agreement. Schedule 2.1(j) also sets forth a description of
each accreditation of the Facility. Each Seller has previously delivered to
Buyer complete and accurate copies of all such Permits, accreditation and
certificates of need. Upon consummation of such transactions, Buyer will,
assuming the related Consents have been obtained prior to the Closing Date, have
all of the right, title and interest in all the Permits. The parties further
acknowledge that the number of beds licensed for operation of the Facilities may
be subject to adjustment as follows: (i) the licensed bed capacity at Circle
Manor may be reduced by three beds when a new license is issued to Buyer, (ii)
the Bethesda Facility has received a CON to add 34 beds after completion of
renovations, (iii) the bed capacity at Kensington will be reduced to 165 beds
(from 170) upon completion of its renovation, and (iv) "waiver" beds have been
approved for Circle Manor (9 beds), Kensington (10 beds), Silver Spring (10
beds) Xxxx Burnie (10 beds) and Overlea (10 beds). For purposes of this Section
3.13, the "obtaining of Consents" shall include, where applicable, the surrender
of an existing permit, license or agreement by a Seller, the filing of a
completed application by Buyer and the compliance by Buyer with applicable laws
and regulations, the payment of any applicable fees, and the issuance of a new
permit, license or agreement in the name of Buyer.
3.14 Insurance Coverage. Schedule 3.14 sets forth a complete and
accurate list of all insurance policies and fidelity bonds covering the
Purchased Assets and the business, operations and employees of the Business, and
each Seller has previously delivered to Buyer complete and accurate copies of
all such policies and bonds. There is no claim by any of the Seller Parties
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due under all such policies and bonds have been paid, and the
Seller Parties are otherwise in full compliance with the terms and conditions of
all such policies and bonds. Such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage) have been effect since
February 1, 1990 (or when the Purchased Asset was acquired by Sellers) and
remain in full force and effect. Such insurance is adequate to cover all
reasonably foreseeable risks associated with the Business and is in such
amounts, with such deductibles and with such other terms as is prudent for a
business such as the Business. The Seller Parties do not know of any threatened
termination of, and has received no written notice of, any premium increase with
respect to, any of such policies or bonds.
3.15 Compliance with Laws. (a) Except as set forth on Schedules 3.10(h)
or 3.15, none of the Seller Parties is in violation of, and, to the knowledge of
the Seller Parties, is not under investigation with respect to and has not been
threatened to be charged with or given notice of any violation of, any law,
rule, ordinance or regulation, or judgment, order or decree entered by any
Governmental Authority, applicable to the Purchased Assets, the Business or the
Development Projects. Except as set forth on Schedules 3.10(h) or 3.15, there
exist no:
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(i) proceedings pending or, to the knowledge of the Seller
Parties, threatened, to change or redefine the present zoning
classification of all or any portion of the Real Property;
(ii) annexation or condemnation proceedings pending or, to the
knowledge of the Seller Parties, contemplated which may affect all or
any portion of the Real Property, or any realty appurtenant thereto;
(iii) special assessments pending or, to the knowledge of the
Seller Parties, proposed affecting all or any portion of the Real
Property, or any realty appurtenant thereto;
(iv) moratoria pending or, to the knowledge of the Seller
Parties, threatened affecting the availability of xxxxx, septic,
electric, gas and telephone services to the Real Property (in size and
capacity sufficient fully and adequately at all times to service the
Real Property for Buyer's continued use of the Facilities thereof as a
comprehensive care nursing facility without charge to or requirement
for contribution from Buyer); and
(v) to the knowledge of the Seller Parties, any other legal
impediments presently affecting the Purchased Assets or Sellers which
will materially interfere with either Buyer's continued use of the
Facilities as fully-licensed comprehensive care nursing facilities or
Buyer's continued conduct of the pharmaceutical and rehabilitation
businesses.
(b) Sellers have previously delivered or made available to
Buyer complete and accurate copies of the most recent safety, licensing and
certification inspections and surveys for the Facilities.
3.16 Medicare and Medicaid Cost Reports. Sellers have delivered or made
available to Buyer complete and accurate copies of all Medicare and Medicaid
cost reports relating to Technicare, Rehab Solutions and each Facility as filed
by the Seller Parties for the most recent three year period. The information
contained in such reports is true and correct in all material respects.
3.17 Intellectual Property. Schedule 3.17 sets forth a list of all
Proprietary Rights used or held for use in the conduct of the Business or the
Development Projects, specifying as to each, as applicable: (i) the nature of
such Proprietary Right; (ii) the owner of such Proprietary Right; (iii) the
jurisdictions by or in which such Proprietary Right is recognized without regard
to registration or has been issued or registered or in which an application for
such issuance of registration has been filed, including the respective
registration or application numbers; and (iv) licenses, sublicenses and other
agreements as to which the Seller Parties or any of their Affiliates is a party
and pursuant to which any Person is authorized to use such Proprietary Right,
including the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof. During the
three years preceding the date of this Agreement, no Seller has been sued,
charged in writing with, or been a defendant in any claim,
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suit, action or proceeding relating to the Business that has not been finally
terminated prior to the date hereof and that involves a claim of infringement of
any patents, trademarks, service marks or copyrights. None of the Seller Parties
have knowledge of any other claim or infringement by any Seller or of any
continuing infringement by any other Person of any Proprietary Rights. No
Proprietary Right is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by any Seller or
restricting the licensing thereof by any Seller to any Person. No Seller has
entered into any agreement to indemnify any other Person against any charge of
infringement of any patent, trademark, service xxxx or copyright, other than as
provided in routine leases and vendor agreements.
3.18 Employees and Agents. (a) Schedule 3.18 and 8.2 sets forth a
complete and accurate list of the name, current rate of compensation and any
vacation, holiday or sick pay, and any other compensation arrangements or
benefits of each current employee of the Business (together with a description
of any specific arrangements or rights concerning such employees that are not
reflected in any agreement or document referred to in Schedule 3.12). Except as
set forth on Schedule 3.18 and 8.2, no Seller currently has, nor has ever had,
any pension, profit sharing, bonus, incentive, sick leave or sick pay or other
plan applicable to any of the employees of the Business. No such employee has
any vested or unvested retirement benefits or other termination benefits, except
as described on Schedule 3.18 and 8.2.
(b) The Sellers are in compliance in all material respects
with all Federal and state laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and are not engaged in any
unfair labor or unlawful employment practice relating to the Business. Except as
set forth on Schedule 3.18, there is no unlawful employment practice or
discrimination charge involving any Seller pending before the Equal Employment
Opportunity Commission ("EEOC"), EEOC recognized state "referral agency" or any
other Governmental Authority. Except as set forth on Schedule 3.18, there is no
unfair labor practice charge or complaint against any Seller pending before the
National Labor Relations Board ("NLRB"). Except as shown on Schedule 3.12 none
of the employees of any Seller involved in the Business are represented by any
labor union. Except as set forth on Schedule 3.18, there is no labor strike,
dispute, slow down or stoppage actually pending or, to knowledge of the Seller
Parties, threatened against or involving or affecting any Sellers and no NLRB
representation question exists respecting any of the employees of Sellers
involved in the Business. Except as set forth on Schedule 3.18, no grievance or
arbitration proceeding relating to the employees of Sellers involved in the
Business is pending and no written claim therefor exists with respect to any
Seller Parties.
3.19 Finders' Fees. The Seller Parties have not directly or
indirectly dealt with anyone acting in the capacity of a finder or broker and
has not incurred any obligation for any finder's or broker's fee or commission
in connection with the transactions contemplated by this Agreement.
3.20 Environmental Compliance. (a) For purposes of this
Agreement, the following terms shall have the meanings set forth below:
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"CERCLA" means the Comprehensive Environmental Responses,
Compensation and Liability Act of 1980, as amended.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws (including common or case law), regulations,
ordinances, rules, judgments, judicial decisions, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements, or
governmental restrictions, relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic, radioactive or hazardous substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products, chemicals
or industrial, toxic, radioactive or hazardous substances or wastes or the
clean-up or other remediation thereof.
"Environmental Liabilities" means all liabilities arising in
connection with or in any way relating to the Purchased Assets or the Business,
or the use or ownership of the Purchased Assets or Business by Sellers, Seller
Parties or any of their Affiliates, whether vested or unvested, contingent or
fixed, actual or potential, which (i) arise under or relate to Environmental
Laws or arise in connection with or relate to any matter disclosed or required
to be disclosed in Schedule 3.20 and (ii) arise from or relate in any way to
actions occurring or conditions existing before the Closing Date.
"Hazardous Substance" means any toxic, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, regulated under Environmental Laws.
"Release" has the meaning specified in 42 U.S.C. ss. 9601(22).
(b) Except as disclosed in Sections 6.17 or 6.18 or on
Schedule 3.20:
(i) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is
pending, or to the knowledge of the Seller Parties, threatened by any
Governmental Authority or other Person (A) with respect to any actual
or alleged violation by the Seller Parties of any Environmental Law in
connection with the conduct of the Business or the ownership of the
Purchased Assets, (B) with respect to any actual or alleged failure by
the Seller Parties to have any environmental permit, certificate,
license, approval, registration or authorization required in connection
with the conduct of the Business or the ownership of the Purchased
Assets, or (C) with respect to any generation, treatment, storage,
recycling, transportation or disposal or Release of any hazardous
substance generated by the Business or the Purchased Assets.
(ii) In connection with the operation of the Business or the
ownership of the Purchased Assets, (A) each Seller on any property now
or previously owned or leased by any Seller has materially complied
with all Environmental Laws; (B) no polychlorinated
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biphenyls or urea formaldehyde is or has been present at any property
now or previously owned or leased by any Seller; (C) no asbestos is or
has been present at any property now owned or leased by any Seller; (D)
there are not underground storage tanks for Hazardous Substances,
active or abandoned, at any property now owned or leased by any Seller;
(E) no Hazardous Substance has been Released at, on or under any
property now or previously owned or leased by any Seller and (F) no
Hazardous Substance has been released or is present, in a reportable or
threshold planning quantity, where such a quantity has been established
by statute, ordinance, rule, regulation or order, at, on or under any
property now or previously owned or leased by any Seller.
(iii) In connection with the operation of the Business or the
ownership of the Purchased Assets, no Seller has transported or
arranged for the transportation (directly or indirectly) of any
Hazardous Substance to any location which is listed or proposed for
listing under CERCLA, or on any similar state list or which is the
subject of federal, state or local enforcement actions or other
investigations which may lead to claims against Buyer for clean-up
costs, remedial work, damages to natural resources or for personal
injury claims, including claims under CERCLA.
(iv) No oral or written notification of a Release of a
Hazardous Substance has been filed by or on behalf of any Seller with
respect to the Business or the Purchased Assets and no property now or
previously owned or leased by any Seller with respect to the Business
or the Purchased Assets is listed or, to the knowledge of any Seller,
proposed for listing, on the National Priorities List promulgated
pursuant to CERCLA or on any similar state list of sites requiring
investigation or clean-up.
(v) There are no environmental Liens on any of the Purchased
Assets, and no governmental actions have been taken or are in process
that could subject any of such Purchased Assets to such Liens. No
Seller would be required to place any notice or restriction relating to
the presence of Hazardous Substances at any property used in connection
with the operation of the Business in any deed to such property.
(vi) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in
the possession of any Seller in relation to any Purchased Assets which
have not been delivered to Buyer prior to the date hereof.
3.21 Patients. (a) Schedule 3.21 sets forth a complete and accurate
list, as of a recent date specified on such schedule, of the names of all
patients or residents of each Facility, and a copy of the form of Admission
Agreement with each of such patients or residents, including the amounts payable
thereunder, whether such patients are private pay patients, or payments are made
to any Seller by Medicare or Medicaid, Veterans Administration or CHAMPUS, or
any other healthcare reimbursement or payment arrangement, for or on behalf of
such patients, and, Schedule 3.21A will set forth at Closing in the case of
private pay patients, their anticipated date of conversion to Medicaid, if any.
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(b) No funds or other property belonging to any patients of
the Facilities are held by or have been entrusted to any Seller or any employee
of Sellers, except as disclosed on Schedule 2.11. All Patient Trust Funds held
for the benefit of residents of each Facility are in balance, will be in balance
as of the Closing, and have been kept in accordance with all requirements of
applicable law. Each Seller shall indemnify, defend and hold Buyer harmless
against any deficiencies in patient trust funds, as determined by such Seller,
Buyer, or a state agency, relating to the operation of any Facility prior to the
Closing. Each Seller shall promptly pay or refund any such deficiency to Buyer.
3.22 Status of Sellers. None of the Seller Parties is a "foreign
person" as defined by Section 1445 of the Code.
3.23 Inventories. The inventories set forth in the Balance Sheets were
properly stated therein at the lesser of cost or fair market value determined in
accordance with generally accepted accounting principles consistently applied by
each Seller. Since the Balance Sheet Date, the inventories of each Seller have
been maintained in the ordinary course of business. All such inventory is owned
free and clear of all Liens. All of the inventory recorded on the Balance Sheets
consists of, and all inventory, whether or not represented on the Balance
Sheets, on the Closing Date will consist of, items of a quality usable or
salable in the ordinary course of business consistent with past practices and
are and will be in qualities sufficient for the normal operation of the
businesses of each Seller consistent with past practice.
3.24 Zoning and Violation Notices. (a) The zoning classification of
Technicare, Rehab Solutions and each Facility is as set forth on Schedule 3.24.
Except as set forth on Schedule 3.10(h) and 3.15, neither the Seller Parties nor
any of their agents have received any notices of uncorrected violations of the
housing, building, safety, or fire ordinances with respect to Technicare, Rehab
Solutions or any Facility which are uncorrected and outstanding. Certification
statements respecting Technicare, Rehab Solutions and any Facility and showing
no violation of any zoning ordinance shall be requested by each Seller from the
municipality in which Technicare, Rehab Solutions and each Facility is located
and delivered at the Closing to the extent practices of such municipality
provide for issuing such certification.
(b) Except as set forth on Schedule 3.24, (i) the current
operations of the Facilities are permitted as of right (i.e., not as a
nonconforming use and without special exception or variance), (ii) the
Facilities are not subject to any zoning, subdivision or other judicial or
administrative case, proceeding or order which, in any way, limits or conditions
their present or future operation or expansion, and (iii) each Facility is
located on one or more parcels of land, each of which has been properly
subdivided from all other parcels of land in accordance with the laws and
regulations of the jurisdiction within which the land is located.
(c) The Seller Parties have not made, nor are the Seller
Parties aware of, any agreements or proffers, written or oral, to or involving
any Governmental Authority, homeowners association, or other Person which might
adversely affect, render more expensive or restrict the operation of the
Facilities other than Bethesda.
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3.25 Tax Matters. Each Seller has filed when due in accordance with all
applicable laws (or properly and timely filed an extension therefor) all Returns
required under applicable statutes, rules or regulations to be filed by such
Seller with respect to all Taxes. As of the time of filing, the Returns were
accurate and complete in all material respects. All Taxes due, and all
additional assessments received, have been paid or provided for on the Balance
Sheets (whether or not shown on any Return). No Seller is delinquent in the
payment of any Tax and has not requested any extension of time within which to
file or send any Return, which Return has not since been filed or sent. No
Seller has waived the statute of limitations in respect of any Taxes or agreed
to any extension of time with respect to any Tax assessment or deficiency. There
are no Liens for Taxes (other than for current Taxes not yet due and payable)
upon any of the Assets. None of the Assets (i) is property which is required to
be treated as being owned by any other person pursuant to the so-called "safe
harbor lease" provisions of former Section 168(f)(8) of the Code, (ii) directly
or indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code, or (iii) is "tax-exempt use property" within the meaning of
Section 168(h) of the Code. The transactions contemplated by this Agreement are
not subject to the tax withholding provisions of Code Section 3406, or of
subchapter A of Chapter 3 of the Code or of any other provision of law. Each
Seller has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to an accuracy-related penalty within the meaning
of Part II of Subchapter A of Chapter 68 of the Code.
3.26 Accuracy of Information. Neither this Agreement nor the Exhibits
or Schedules hereto or any certificate to be delivered at the Closing by the
Seller Parties to Buyer in connection with this Agreement or any of the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements made, in
light of the circumstances under which they are made, not misleading, or
contains a statement which is misleading. The statements contained in the
Exhibits and Schedules hereto or any certificate to be delivered at the Closing
by the Seller Parties to Buyer in connection with this Agreement or any of the
transactions contemplated hereby shall be deemed to constitute representations
and warranties under this Agreement to the same extent as if set forth in this
Agreement in full.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MARINER AND BUYER
Mariner and Buyer hereby represent and warrant to the Seller Parties as
follows:
4.1 Organization and Existence. Each of Mariner and Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate power and authority
necessary to enable it to own, lease or otherwise hold its properties and assets
and to carry on its business as now conducted.
4.2 Corporate Authorization. The execution, delivery and performance by
Mariner or Buyer of this Agreement and the Escrow Agreement and the consummation
by Mariner and Buyer of the transactions contemplated hereby and thereby are
within the corporate power and
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authority of Mariner and Buyer. This Agreement has been duly authorized,
executed and delivered by Mariner and Buyer and constitutes a valid and binding
obligation of Mariner and Buyer, enforceable against Mariner and Buyer in
accordance with its terms. The Escrow Agreement has been duly authorized and,
when executed and delivered by Mariner and Buyer, will have been duly executed
and delivered by Mariner and Buyer and will constitute a valid and binding
obligation of Mariner and Buyer, enforceable against Mariner and Buyer in
accordance with its terms.
4.3 Governmental Authorization. The execution, delivery and performance
of this Agreement and the Escrow Agreement by Mariner and Buyer, and the
consummation of the transactions contemplated hereby and thereby by Mariner and
Buyer, do not and will not require any consent, approval or action by or in
respect of, or any declaration, filing or registration with, any Governmental
Authority, other than (i) compliance with any applicable requirements of the HSR
Act; (ii) those required for Buyer to obtain (A) a determination of
nonreviewability from the State of Maryland Department of Health and Mental
Hygiene allowing the acquisition by Mariner and Buyer of the Facilities without
a certificate of need (individually, a "Determination Letter" and collectively
"Determination Letters"), (B) the licenses required for Buyer to operate a
nursing home at each Facility upon consummation of the transactions contemplated
by this Agreement; and (C) provider agreements with respect to each Facility
with Medicare and Medicaid effective as of the Closing; and (iii) those required
for Buyer to acquire the assets of Technicare, including approval of the United
States Drug Enforcement Agency (the "DEA") and any applicable State of Maryland
governmental agency.
4.4 Non-Contravention. The execution, delivery and performance of this
Agreement and the Escrow Agreement by Mariner and Buyer, and the consummation of
the transactions contemplated hereby and thereby by Mariner or Buyer, do not and
will not, with or without the giving of notice, the lapse of time or both: (i)
contravene or conflict with the certificate of incorporation or by-laws of
Mariner or Buyer, or (ii) assuming compliance with the matters referred to in
Section 4.3, contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, injunction, order or decree
binding upon or applicable to Mariner or Buyer.
4.5 Expertise; Financial Resources. Buyer and Mariner have sufficient
skill, experience and expertise to evaluate and inspect the Purchased Assets and
all materials provided by the Seller Parties related to the Business and the
Purchased Assets and to assess the risks associated with the transactions
contemplated by this Agreement. Buyer and Mariner have sufficient financial
resources to carry out the obligations of Buyer and Mariner hereunder.
ARTICLE V
COVENANTS OF ALL PARTIES
Each of the parties hereby covenants and agrees with the other parties
as follows:
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5.1 Cooperation. It shall cooperate fully with the other parties hereto
in furnishing any information or performing any action reasonably requested by
any such party, which information or action is necessary to the speedy and
successful consummation of the transactions contemplated by this Agreement or is
necessary, appropriate or desirable for the corporate purposes of Buyer. Subject
to its further rights under this Agreement, it shall use all reasonable efforts
to cause the Closing to occur at the earliest practicable time in accordance
with this Agreement.
5.2 Other Required Information. It shall furnish to the other parties
hereto any application or statement, and all information concerning itself and
its Affiliates as may be required to be set forth in any application or
statement, to be filed with any Governmental Authority in connection with the
transactions contemplated by this Agreement.
5.3 Miscellaneous Agreements and Consents. Subject to the terms and
conditions provided in this Agreement, it shall use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, appropriate or desirable to consummate the transactions
contemplated by this Agreement. It will use all reasonable efforts to obtain
consents of all third parties and Governmental Authorities necessary,
appropriate or desirable for the consummation of the transactions contemplated
by this Agreement.
ARTICLE VI
COVENANTS OF THE SELLER PARTIES
The Seller Parties hereby agree with Buyer as follows:
6.1 Conduct of the Business. From the date hereof through the Closing
Date, the Seller Parties shall, and shall cause each Seller to, conduct the
Business in the ordinary course consistent with past practice and use all
reasonable efforts to preserve intact the business organization, goodwill and
relationships with third parties of the Business, and to keep available the
services of the present employees of the Business. From the date hereof through
the Closing, the Seller Parties shall, and shall cause each Seller to:
(a) use all reasonable efforts to maintain the Facilities and
the Purchased Assets in substantially the state of repair, order and condition
as on the date hereof (reasonable wear and tear excepted);
(b) not sell, lease, license or otherwise dispose of any
Purchased Asset, or agree or commit to do so, except (i) pursuant to existing
contracts or commitments and (ii) in the ordinary course of business consistent
with past practice;
(c) not allow the inventory of supplies, drugs and other
disposable goods at Technicare, Rehab Solutions or any Facility to be materially
depleted from their levels as of the date hereof;
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(d) use all reasonable efforts to maintain in full force and
effect, without qualification or limitation, all Permits currently in effect
with respect to the Business;
(e) maintain in full force and effect the insurance policies
and binders currently in effect with respect to the Business;
(f) cause to be paid when due, all Taxes, assessments and
charges or levies imposed upon it with respect to or on the Business or any of
the Purchased Assets or which it is required to withhold and pay over, other
than any which it may contest in good faith;
(g) not take any action which would adversely affect their
title to any of the Real Property, or agree or commit to do so;
(h) not increase the rate of compensation of, or pay any bonus
to, any of its directors, officers or employees, or enter into or amend any
employment, management, consulting, deferred compensation, severance or other
similar contract or agreement or agree or commit to do any of the foregoing,
provided that Sellers may increase the rate of compensation of employees
employed at the Facilities in the ordinary course of business; and
(i) comply with all notification requirements under existing
union contracts, after previously notifying Mariner of such notices, and provide
Mariner with copies of such notices.
6.2 Discharge of Liabilities. The Seller Parties shall, and shall cause
each Seller to, pay all of the Excluded Liabilities as and when the same shall
become due and payable.
6.3 Access. The Seller Parties shall permit officers, employees,
agents, attorneys and accountants and other persons designated by Buyer full
access after reasonable notice during normal business hours to the properties,
books, contracts, commitments, tax returns, examination reports and surveys of
Governmental Authorities (including the Internal Revenue Service) and other
records of the Seller Parties relating to the Purchased Assets and the Business,
and shall furnish to such designees of Buyer such financial and operating data
and other information relating to the Purchased Assets and the Business as such
Persons may reasonably request. Unless prohibited by law or contract, such
designees of Buyer shall be furnished with accurate and complete copies of such
contracts, commitments and other records and all other information relating to
the Purchased Assets and the Business as such designees may reasonably request.
The Seller Parties shall cause their employees, accountants, attorneys,
financial advisors and other agents or representatives to cooperate with Buyer
in its investigation of the Business. The Seller Parties shall promptly inform
Buyer of any material developments related to the Business or the Purchased
Assets, including without limitation providing Buyer with status updates,
current drafts of documents and correspondence pertaining to the Bethesda Sale
and informing Buyer of the status of each development project undertaken by the
Seller Parties or the Affiliates which are included in the Purchased Assets.
6.4 Notices of Certain Events. The Seller Parties shall promptly notify
Buyer of:
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(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to their knowledge, threatened relating to or
involving or otherwise affecting the Seller Parties, the Purchased
Assets or the Business that, if it had existed on the date of this
Agreement, would have been required to have been disclosed pursuant to
Article III or that relate to the consummation of the transactions
contemplated by this Agreement; and
(iv) any matter arising or discovered after the date hereof
that, if existing or known on the date of this Agreement, would have
been required to be disclosed pursuant to Article III, or that
constitutes a breach or prospective breach of this Agreement by the
Seller Parties. The delivery of any such notice shall not affect
Buyer's remedies hereunder.
6.5 Noncompetition. (a) Until the third anniversary of the Closing
Date, the Principals shall not:
(i) directly or indirectly, operate, manage, own, control,
finance, be a consultant for or enter into a service contract with, any
Competing Facility. For purposes hereof, "Competing Facility" shall
mean any nursing home, hospital based subacute or nursing units or
health care facility or other entity of any type, licensed or
unlicensed, existing or to be constructed that provides nursing care,
whether personal, domiciliary, intermediate or skilled care services or
institutional pharmaceutical or rehabilitative services, and whether
existing or to be formed, that (A) competes in any way with Technicare,
Rehab Solutions, any Facility or any facility managed by Allegis as of
the date hereof (a "Managed Facility") or with Mariner Health of
Greater Laurel, and (B) is located within 15 miles of Technicare, Rehab
Solutions, any Facility or any Managed Facility or any site where a
certificate of need has been applied for or obtained by any entity
which is controlled by the Seller Parties. Provided that the foregoing
restriction shall not prohibit any Principal from owning publicly
traded securities of a Competing Facility or its parent or affiliates
which amounts to less than one percent of the total number of such
securities outstanding;
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(ii) engage, or participate in any effort to act to induce,
any of the patients, physicians, suppliers, associates, employees or
independent contractors admitted to, or employed by the Seller Parties
or any of their Affiliates at Technicare, Rehab Solutions, any Facility
or any Managed Facility as of the Closing Date, or by Buyer or any
Affiliate of Buyer or;
(iii) solicit the business of their respective patients
admitted prior to the Closing Date or solicit the physicians,
suppliers, associates, employees or independent contractors to cease
their business or employment relationship with Technicare, Rehab
Solutions or any Facility, Buyer or any Affiliate of Buyer.
Provided, however, that nothing in this Section 6.5 shall be
interpreted to prevent Xxxxx X. Xxxxxx from continuing as a member of the Board
of Directors of Genesis Health Ventures, Inc.
(b) Subject to the second sentence of this Section 6.5(b), if
any provision contained in this Section shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section, but this
Section shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If any of the restrictions or
covenants contained herein is held to cover a geographic area or to be for a
length of time which is not permitted by applicable law, or in any way construed
to be too broad or to any extent invalid, such provision shall not be construed
to be null, void and of no effect, but to the extent such provision would be
valid or enforceable under applicable law, a court of competent jurisdiction
shall construe and interpret or reform this Section to provide for a covenant
having the maximum enforceable geographic area, time period and other provisions
(not greater than those contained herein) as shall be valid and enforceable
under such applicable law. The Seller Parties acknowledge that Buyer would be
irreparably harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate Buyer for any such breach.
The Seller Parties agree that Buyer shall be entitled to injunctive relief
requiring specific performance by the Seller Parties of this Section, and the
Seller Parties hereby consent to the entry thereof.
6.6 Publicity. Except as otherwise required by applicable law, the
Seller Parties shall not issue any press release or make any other public
statement (including statements to employees of the Business) relating to this
Agreement or the transactions contemplated hereby without obtaining the prior
approval of Buyer to the contents and manner of presentation and publication
thereof.
6.7 Trademarks; Tradenames. Excepted as provided below, as soon as
practicable after the Closing Date, the Seller Parties shall eliminate the use
of all of the trademarks, trade names, service marks and service names included
in the Purchased Assets, in any of their forms or spellings, on all advertising,
stationery, business cards, checks, purchase orders and acknowledgments,
customer agreements and other contracts and business documents. Notwithstanding
the foregoing, the Seller Parties may continue to use their respective entity
names solely for purposes of collecting accounts receivables pursuant to Section
7.5, for paying
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obligations of the Sellers not assumed by Buyer, for the preparation of
financial statements, tax returns and similar activities associated with the
winding up of their respective corporate or limited liability company business.
6.8 No Negotiation with Third Parties. From the date hereof until the
earlier of the Closing Date or the date on which this Agreement is terminated,
the Seller Parties and their Affiliates, agents or representatives shall not,
directly or indirectly, encourage, solicit or engage in any discussions or
negotiations with, provide any information to, or approve any transaction with,
any Person concerning the possible purchase or sale of all or any part of the
Business or the Purchased Assets or the merger, consolidation or sale of capital
stock or other securities of any Seller or other similar transaction involving
any Seller, other than as permitted by this Agreement. The Seller Parties shall
promptly notify Buyer of any contact by any Person with respect to any such
possible transaction.
6.9 Medicare and Medicaid Reports. The Seller Parties shall, and shall
cause each Seller to, prepare, execute and file on a timely basis all interim
cost reports and all other reports and statements required to be filed with all
intermediaries and any other public or private third party payor or Governmental
Authority in connection with the transactions contemplated by this Agreement.
6.10 Repayment Obligations. Before the Closing, the Seller Parties
shall repay or make arrangements to repay (as required by applicable law) to all
Governmental Authorities with jurisdiction over the Facilities (including the
State of Maryland Department of Health and Mental Hygiene and the Health Care
Financing Administration) any amounts owed to such Governmental Authorities by
the Seller Parties with respect to the ownership of each Facility or the
operation of the Business prior to the Apportionment Date as set forth on
Schedule 6.10 (including without limitation (i) all depreciation recapture or
adjustment which may arise as a result of any healthcare reimbursement cost
report adjustments, audit adjustments, disallowances or reclassifications or
(ii) other payment adjustments pertaining to Medicare, Medicaid or other third
party payors for services provided prior to the Apportionment Date by Sellers
((i) and (ii) are collectively referred to herein as the "Repayment
Obligation")). The parties acknowledge that overpayments or underpayments to the
Seller Parties by the Medicaid or Medicare programs for periods ending prior to
the Apportionment Date may be discovered after the Closing, whether in
connection with an audit of a Facility or otherwise. The Seller Parties shall
remain liable for all such overpayments received by the Seller Parties to the
extent such amounts are not paid out of amounts held in escrow under the Escrow
Agreement. The Seller Parties shall be liable for and shall promptly pay all
depreciation recapture, and all recapture of property cost reimbursement, that
is required under the Medicaid or Medicare programs as a result of the
transactions contemplated by this Agreement.
6.11 Payment to Buyer for Expense Adjustments After Closing. If after
the Closing Date Buyer is required from time to time to pay any amounts for
Medicare, Medicaid or other third party payor cost adjustments, Taxes, workers'
compensation insurance premiums or other expenditures that relate to the
ownership of any Facility or operation of the Business before the Apportionment
Date (except to the extent the Purchase Price has been reduced pursuant to
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Section 2.7), Buyer shall promptly provide the applicable Seller written notice
and details of same. Such Seller shall, within 10 days of such written notice
from Buyer, pay to Buyer the amount of such required payment. If after the
Closing Date Buyer receives from time to time any amounts for Medicare, Medicaid
or other third party payer cost adjustments, Taxes, workers' compensation
insurance premiums or other expenditures that relate to the ownership of any
Facility or operation of the Business before the Apportionment Date (except to
the extent the Purchase Price has been reduced pursuant to Section 2.7), Buyer
shall, within 10 days of receipt of such amounts, pay to the applicable Seller
the amount so received. Any payment pertaining to ownership of any Facility or
operation of the Business from and after the Apportionment Date shall be the
responsibility of Buyer. Any appeals from any Medicare, Medicaid or other
third-party payor adjustments may be pursued by any Seller at such Seller's
cost. Final cost reports shall be submitted to Medicare by the time required by
applicable law and regulation.
6.12 Consents. The Seller Parties shall, and shall cause each Seller
to, use all reasonable efforts to obtain consents in writing to the transactions
contemplated by this Agreement (including the Consents) and such amendments,
assignments or modifications of such documents or instruments as may be required
so that the transactions contemplated by this Agreement shall not result in any
default with respect to any law, rule, regulation, order, decree, license,
agreement contract, commitment or instrument to which any of the Seller Parties
is a party or by which any of the Seller Parties or any of the Purchased Assets
is bound.
6.13 Accuracy of Representations and Warranties. The Seller Parties
shall not, and shall cause each Seller not to, (i) take, or agree to commit to
take, any action that would make any representation and warranty of the Seller
Parties inaccurate in any respect at, or as of any time prior to, the Closing
Date or (ii) omit, or agree or commit to omit, to take any commercially
reasonable action necessary to prevent any such representation or warranty from
being inaccurate in any respect at any such time.
6.14 Certain Required Disclosures. The Seller Parties acknowledge that
Mariner (i) is subject to the reporting requirements of the Exchange Act and may
from time to time register its securities for sale to the public under the
Securities Act and (ii) may be required to file with the Commission registration
statements, proxy statements or other reports and documents that include
historical and pro forma financial statements and other information regarding
the Business, the Purchased Assets and the Seller Parties, including the
information required by Rule 3-05 and Article 11 of Regulation S-X of the
Commission under the Securities Act and Exchange Act. The Seller Parties shall,
and shall cause each Seller to, assist in the preparation and filing of such
financial statements and information, including assisting Buyer or its
Affiliates in obtaining the cooperation of the accountants of the Seller
Parties. The Seller Parties further acknowledge that Mariner is a party to a
line of credit agreement with its commercial lenders and may be required to
disclose certain financial and other information regarding the Business, the
Purchased Assets and the Sellers to its commercial lenders and the Seller
Parties shall, and shall cause each Seller, to assist in providing such
information as required.
6.15 Completion of Renovation Projects. The Seller Parties shall, and
shall cause each Seller to, use all reasonable efforts to implement and/or
continue and to pay progress payments
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as they accrue for all renovation projects listed on Schedule 2.1(a). Sellers
Parties shall provide Buyer with updates on the progress of such projects as
reasonably requested by Buyer. Seller Parties shall provide at Closing a
schedule setting forth all work remaining to be done on such projects.
6.16 Washington D.C. Medicaid. The Sellers Parties shall use all
reasonable efforts to reach settlement and pay amounts due to the Washington D.
C. Medicaid authorities.
6.17 Asbestos. Between the date hereof and the Closing Date, the Seller
Parties will proceed expeditiously using commercially reasonable efforts to (i)
engage qualified contractors to remove or encapsulate any friable or damaged
asbestos containing materials (collectively, "ACM's"), identified by Buyer, from
each of the Facilities and (ii) institute operation and maintenance programs
with respect to any non-friable ACM's remaining in place at each such Facility.
All such work shall be at the expense of the Seller Parties and shall be
conducted in a manner reasonably acceptable to Buyer. The Seller Parties shall
obtain all necessary Permits and shall comply with applicable laws and
regulations in connection with their activities hereunder. If such work is not
completed on the Closing Date, the Seller Parties shall continue efforts to
complete the work as soon as practicable thereafter; however, the completion of
such work prior to Closing shall not be a condition precedent to Buyer's
obligations hereunder.
6.18 Underground Tanks. Between the date hereof and the Closing Date,
the Seller Parties will proceed expeditiously using commercially reasonable
efforts to (i) engage qualified contractors to remove all underground tanks
(collectively, "UGT's") from the following Facilities: Circle Manor, Kensington,
Bethesda, Overlea and Xxxx Burnie, and (ii) replace the removed UGT's with
above-ground tanks at such Facilities all in a manner reasonably acceptable to
Mariner. All such work shall be at the expense of the Seller Parties, except
that if the cost of the work exceeds $100,000, the Buyer and Mariner shall
reimburse the Seller Parties for 50% of the costs in excess of $100,000. The
Seller Parties shall obtain all necessary Permits and shall comply with
applicable laws and regulations in connection with its activities hereunder. If
such work is not completed on the Closing Date, the Seller Parties shall
continue efforts to complete the work as soon as practicable thereafter;
however, the completion of such work prior to the Closing shall not be a
condition precedent to Buyer's obligations hereunder.
6.19 June 30 Financial Statements. On or before September 1, 1996,
Sellers shall provide to Buyer the unaudited combined balance sheet of Allegis
for the six month period ending June 30, 1996 and a related statement of income
for such period (the "June 30 Financial Statements"), prepared on a basis
consistent with the Closing Income Statement, accompanied by a letter from
Xxxxxx Xxxxxxxx & Co. (the "Accountant's Report") (i) stating that they have
reviewed the June 30 Financials (but not as part of a formal accounting review),
(ii) setting forth in reasonable detail the differences between the amounts set
forth therein and the amount which would be shown thereon if they had been
prepared in accordance with generally accepted accounting principles and (iii)
noting any differences in reserve methodology or accounting estimates from the
methodology or estimates used in preparing the audited financial statements for
the year ended December 31, 1995.
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6.20 Development Projects. On or before August 16, 1996 Sellers will
provide a schedule of existing liabilities and obligations of Beechwood, Upper
Chesapeake, Heritage Harbour and Bethesda. No further material liabilities or
obligations shall be incurred by such entities and no material activities shall
be commenced from and after the date this schedule of liabilities is provided
without the prior consent of Mariner.
6.21 Employment Agreements. The parties shall use best efforts to
negotiate in good faith by August 15, 1996, employment agreements (the
"Employment Agreements") between Mariner (or an affiliate of Mariner) and each
of Xxxx Xxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxxx on
the general terms discussed by the parties on or before the date hereof.
ARTICLE VII
COVENANTS OF MARINER AND BUYER
Mariner and Buyer hereby covenant and agree with the Seller Parties as
follows:
7.1 Consents. Mariner and Buyer shall use all reasonable efforts to
obtain all consents and approvals of Governmental Authorities and other Persons
necessary for the consummation of the transactions contemplated by this
Agreement. Mariner and Buyer shall diligently file all requisite applications or
notices with such Governmental Authorities and shall diligently respond to any
comments thereon from such Governmental Authorities.
7.2 Access. After the Closing, Buyer shall permit the Seller Parties
and their agents, attorneys and accountants and other persons designated by the
Seller Parties full access after reasonable notice during normal business hours
to the books and records of the Business to the extent reasonably necessary to
enable the Seller Parties to file tax returns or to investigate any claim for
indemnification or otherwise exercise their rights hereunder, or to defend any
claim, action, suit or other legal proceeding involving the Seller Parties.
7.3 Confidentiality. Prior to the Closing Date and after any
termination of this Agreement, all information furnished by the Seller Parties
to Mariner or Buyer in connection with this Agreement and the transactions
contemplated hereby shall be kept confidential by (and shall be used by it only
in connection with this Agreement and the transactions contemplated by this
Agreement or as is necessary, appropriate or desirable for the corporate
purposes of Mariner or Buyer), except to the extent that such information (i) is
or becomes generally available to the public other than as a result of
disclosure by Mariner or Buyer or any of its respective directors, officers,
employees, agents or advisors, (ii) was within the possession of Mariner or
Buyer prior to its being furnished to Mariner or Buyer by or on behalf of the
Seller Parties, (iii) becomes available to Mariner or Buyer on a
non-confidential basis from a source other than Mariner or Buyer or any of their
respective directors, officers, employees, agents or advisors, or (iv) is
required to be disclosed by law or by the applicable rules of any securities
exchange or market, including disclosure required in any registration statement,
proxy statement or other report or document filed with the Commission or any
other Governmental Authority. Mariner and Buyer may disclose such information to
their respective directors, officers, employees, agents or advisors in
connection with the transactions contemplated by this Agreement so long as such
Persons are informed by Mariner or Buyer of the confidential nature of such
information and are directed by Mariner or Buyer, as the case may be, to treat
such information confidentially. If the transactions contemplated by this
Agreement shall fail to be consummated, Mariner and Buyer
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shall promptly cause all copies of documents or extracts thereof containing
information and data as to the Seller Parties to be returned or destroyed.
7.4 Publicity. Except as otherwise required by applicable law or by
applicable rules of any securities exchange or market, Mariner and Buyer shall
not issue any press release or make any other public statement relating to this
Agreement or the transactions contemplated hereby prior to the Closing without
obtaining the prior approval of Sellers to the contents and manner of
presentation and publication thereof.
7.5 Collection of Accounts Receivable. Buyer shall use all reasonable
efforts to assist the Seller Parties in the collection of accounts receivable
resulting from activities occurring or services rendered to patients at any
Facility prior to the Apportionment Date as set forth on Schedule 7.5 attached
hereto, to be updated and initialed by Buyer and Seller on the date of Closing.
In addition, Buyer shall assist Sellers by allowing examination by Sellers'
authorized representatives of relevant documentation in Buyer's possession after
the Closing Date, and by transferring to the applicable Seller any payments
Buyer may receive from any source whatsoever concerning Sellers' recovery of
accounts receivable as provided below. Any payments received by Buyer from
Medicare, Medicaid or other third party payors (and resource amounts due from
private funds) for services rendered prior to the Closing Date shall be mailed
to the applicable Seller within 10 days after receipt thereof by Buyer. Any
payments made by such payors and earmarked or itemized to certain time periods
preceding or following the Apportionment Date shall be applied to accounts
receivables arising for such time periods.
Buyer shall send out monthly statements consistent with its ordinary
business practices to all private pay patients for all outstanding charges for
services rendered by Sellers prior to the Apportionment Date. Any payments
received by Buyer from or on behalf of any private pay patients within 60 days
after the Closing Date will be attributed first to any outstanding balance for
services rendered or activities occurring prior to the Apportionment Date for
and on behalf of such patient, and shall be mailed to the applicable Seller
within 10 days after such determination by Buyer, except for any accounts
receivable arising prior to the Apportionment Date which (i) have been disputed
in writing by the patient, (ii) are over 60 days old at Closing or (iii) have
been previously compromised by any Seller. Sellers will provide to Buyer by
October 1, 1996, as Schedule 7.5A, a list for Technicare, Rehab Solutions and
each Facility as of August 31, 1996 of any such accounts. Within 15 days
following the Apportionment Date, each Seller will provide Buyer updated
Schedules 7.5 and 7.5A to include such information as of the Apportionment Date.
Any payments received by Buyer from or on behalf of any patients with private
pay liabilities after such 60-day period after Closing which are not identified
with a specific service date will be attributed first to any outstanding balance
for services rendered or activities occurring after the Apportionment Date for
and on behalf of such patient, and any excess shall be attributed to any
outstanding balance for such services or activities occurring prior to the
Apportionment Date, and such excess, if any, shall be mailed to the applicable
Seller within 10 business days after such determination by Buyer.
Except as hereinabove provided, the collection of any accounts
receivable due any Seller that have not been collected by Buyer or Sellers
within one (1) year after the Closing Date shall
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become the sole responsibility of Sellers, and Buyer shall have no further
obligation to assist any Seller with respect to collection thereof.
Until the second anniversary of the Closing Date, any Seller may,
during regular business hours and upon reasonable notice to Buyer, access, audit
and photocopy all accounts, reports and medical records related to services
rendered prior to the Closing in order to allow such Seller to document claims
or submittals to Medicare, Medicaid or other third party payors.
ARTICLE VIII
EMPLOYEE BENEFITS
8.1 Employee Benefits Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Benefit Arrangement" means an employment, severance or similar
contract, arrangement or policy and each plan or arrangement providing for
severance benefits, insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, pension or retirement benefits or for
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits that (i) is not an Employee Plan and (ii) is
maintained or contributed to by any Seller or any of its ERISA Affiliates.
"Employee Plans" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA
and (ii) is maintained or contributed to by any Seller or any of its ERISA
Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"Multiemployer Plan" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
8.2 ERISA Representations. The Seller Parties hereby jointly and
severally represent and warrant to Buyer as follows:
(a) Schedule 8.2 sets forth a complete and accurate list of
each Employee Plan and each Benefit Arrangement that covers any employee of the
Business, copies or descriptions of all of which have previously been furnished
to Buyer. With respect to each Employee Plan, each Seller has provided the most
recently filed Form 5500 and an accurate summary description of such plan. Each
Seller has provided Buyer with, or has caused to be provided to Buyer, complete
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age, salary, service and related data as of the most recent practicable date for
employees of the Business.
(b) No Seller nor any Seller's ERISA Affiliate maintains or
has ever maintained or contributed to any Multiemployer Plan or Employee Plan
subject to Title IV of ERISA.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Each Seller has
furnished to Buyer copies of the most recent Internal Revenue Service
determination letters with respect to each such Employee Plan. Each Employee
Plan has been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including but
not limited to ERISA and the Code, which are applicable to such Plan.
(d) Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement.
(e) With respect to the employees of the Business, there are
no employee post-retirement medical or health plans in effect, except as
required by Section 4980B of the Code.
(f) Except as disclosed in writing to Buyer prior to the date
hereof, there has been no amendment to, written interpretation of or
announcement (whether written or not written) by any Seller or any of their
ERISA Affiliates relating to, or change in employee participation or coverage
under, any Employee Plan or Benefit Arrangement which would increase materially
the expense of maintaining such Employee Plan or Benefit Arrangement above the
level of the expense incurred in respect thereof for the most recent fiscal
year.
(g) The Purchased Assets are not now nor will they with the
passage of time become subject to any Lien imposed under Code Section 412(n) by
reason of the failure of any Seller or their Affiliates to make timely
installments or other payments required by Code Section 412.
(h) No Employee of Sellers will receive or become entitled to
any bonus, retirement, severance or similar benefit or enhanced benefit solely
as a result of the transactions contemplated hereby, except as disclosed to
Mariner prior to payment. Any severance obligation of Sellers as result of
Buyer's decision not the hire an employee of Sellers as provided for in Section
8.1 shall be the sole responsibility of Sellers
(i) None of the Employee Plans or other arrangements listed on
Schedule 8.2 covers any non-United States employee or former employee of the
Business.
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(j) No "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any Employee
Plan.
(k) No tax under Section 4980B of the Code has been incurred
in respect of any Employee Plan that is a group health plan, as defined in
Section 5000(b)(1) of the Code.
8.3 Employees and Offers of Employment. On or prior to the Closing
Date, Buyer may in its sole discretion, but shall not be obligated to, offer
employment to any or all employees of the Business. Any such offers shall be at
such salary or wage and benefit levels and on such other terms and conditions as
Buyer shall in its sole discretion deem appropriate. The employees who accept
and commence employment with Buyer are hereinafter collectively referred to as
the "Transferred Employees." No Seller shall take any action that would impede,
hinder, interfere or otherwise compete with Buyer's effort to hire any
Transferred Employees. Buyer shall not assume responsibility for any Transferred
Employee until Closing.
8.4 Seller's Employee Benefit Plans. (a) The Seller Parties shall
retain all obligations and liabilities under the Employee Plans and Benefit
Arrangements in respect of each employee or former employee of Seller or any of
its ERISA Affiliates (including any beneficiary thereof) who is not a
Transferred Employee. Except as expressly set forth herein, each Seller or its
designated ERISA Affiliate shall retain all liabilities and obligations in
respect of benefits accrued as of the Apportionment Date by Transferred
Employees under the Employee Plans and Benefit Arrangements, and neither Buyer
nor any of its Affiliates shall have any liability with respect thereto. Except
as expressly set forth herein or unless included as an Assumed Contract, no
assets of any Employee Plan or Benefit Arrangement shall be transferred to Buyer
or any of its Affiliates or to any plan of Buyer or any of its Affiliates.
(b) With respect to the Transferred Employees (including any
beneficiary or dependent thereof), Sellers shall retain (i) all liabilities and
obligations arising under any group life, accident, medical, dental or
disability plan or similar arrangement (whether or not insured) to the extent
that such liability or obligation relates to contributions or premiums accrued
(whether or not payable), or to claims incurred (whether or not reported), on or
prior to the Closing Date, (ii) all liabilities and obligations arising under
any worker's compensation arrangement to the extent such liability or obligation
relates to the period prior to the Closing Date, including liability for any
retroactive xxxxxxx'x compensation premiums attributable to such period and
(iii) all other liabilities and obligations arising under the Employee Plans and
the Benefit Arrangements to the extent any such liability or obligation relates
to the period prior to the Apportionment Date, including without limitation
liabilities and obligations in respect of accruals through the Apportionment
Date under any bonus plan or arrangement, and any vacation plans, arrangements
and policies.
(c) With respect to any Transferred Employee (including any
beneficiary or dependent thereof) who enters a hospital or is on short-term
disability under any Benefit Arrangement on or prior to the Closing Date and
continues in a hospital or on short-term disability after the Closing Date, the
applicable Seller shall be responsible for claims and expenses incurred both
before and after the Closing Date in connection with such Person, to the extent
that
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such claims and expenses are covered by a Benefit Arrangement, until such time,
(if any) that, in the case of a Transferred Employee, such Person resumes
full-time employment with Buyer or one of its Affiliates and, in the case of any
beneficiary or dependent of a Transferred Employee, such Person's
hospitalization has terminated. With respect to any Benefit Arrangements
covering medical expenses and other costs relating to pregnancies and maternity
leave, Sellers shall be responsible for all claims (whether or not reported) and
expenses incurred during the period prior to and ending on the Closing Date, and
Buyer or one of its Affiliates shall be responsible for such benefit
arrangements covering such pregnancies and maternity leave for the period
subsequent to the Closing Date.
(d) Sellers shall arrange to continue in effect for a period
of 90 days after Closing all Employee Plans and Benefit Arrangements (other than
any 401(k) Plan operated by Sellers) and such continuation shall be at the
expense of Buyer. Sellers shall terminate no later than the Closing Date any
401(k) Plan operated by Sellers.
8.5 Buyer Benefit Plans. Buyer or one of its Affiliates will recognize
all service of the Transferred Employees with Sellers or any of their
Affiliates, only for purposes of eligibility to participate in those employee
benefit plans, within the meaning of Section 3(3) of ERISA, in which the
Transferred Employees are enrolled by Buyer or one of its Affiliates immediately
after the Closing Date.
8.6 No Third Party Beneficiaries. No provision of this Article VIII
shall create any third party beneficiary or other rights in any employee or
former employee (including any beneficiary or dependent thereof) of any Seller
or of any of their Affiliates in respect of continued employment (or resumed
employment) with either Buyer or the Business or any of its Affiliates, and no
provision of this Article VIII shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Employee Plan or Benefit Arrangement or any plan or arrangement that may be
established by Buyer or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify or terminate after the
Closing Date any such plans or arrangements of Buyer or any of its Affiliates.
8.7 COBRA. Sellers shall notify all of their respective
employees in writing of their rights with regard to any group health plan
coverage, shall timely collect and remit all premiums to the appropriate party,
and perform all other actions mandated by Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") as codified in Section 4980B of the
Code and that are required to be given, collected, or otherwise performed as a
result of the Closing under this Agreement.
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ARTICLE IX
CONDITIONS OF CLOSING
9.1 Conditions to Obligations of All Parties. The obligations of each
of Buyer and the Seller Parties under this Agreement to cause the transactions
contemplated by this Agreement to be consummated are, at its option, subject to
the satisfaction of the following conditions:
(a) Governmental Approvals. Buyer and Sellers shall have
received all approvals of Governmental Authorities, and Governmental Authorities
shall have taken all actions, required to permit the consummation of the
transactions contemplated by this Agreement and to permit Buyer to operate the
Business after the Closing, which shall include Buyer having obtained (i) a
Determination Letter, (ii) all licenses required for Buyer to operate a nursing
home at the Facilities upon consummation of the transactions contemplated by
this Agreement; (iii) agreements permitting the Facilities to participate in the
Medicaid and Medicare programs, and each of such approvals shall be in form and
substance satisfactory to Buyer and shall be in full force and effect on the
Closing Date; and (iv) approval from the DEA and any applicable State of
Maryland governmental agency.
(b) No Injunctions. There shall not be in force any order or
decree restraining or enjoining consummation of the transactions contemplated by
this Agreement or placing any limitation upon such consummation or to
invalidate, suspend or require modification of any provision of this Agreement.
(c) HSR Act Matters. All applicable waiting periods under the
HSR Act relating to the transactions contemplated by this Agreement shall have
expired or been terminated without the imposition of any conditions.
9.2 Conditions Applicable to Buyer. The obligations of Buyer under this
Agreement to cause the transactions contemplated by this Agreement to be
consummated are, at its option, subject to the satisfaction of the following
conditions:
(a) Performance of This Agreement. All the terms, covenants
and conditions of this Agreement to be complied with and performed by the Seller
Parties on or before the Closing Date shall have been fully complied with and
performed in all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties of the Seller Parties set forth in Article III
shall be true and correct in all material respects both on the date of this
Agreement and as of the Closing Date with the same force and effect as if such
representations and warranties were made anew at and as of the Closing Date,
except: (i) to the extent such representations and warranties are by their
express provisions made as of the date of this Agreement or another specified
date; and (ii) for the effect of any activities or transactions which may have
taken place after the date of this Agreement which are contemplated by this
Agreement.
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(c) No Material Adverse Change. Since the date of this
Agreement, there shall have been no Material Adverse Change in the Business.
(d) Certificate Concerning This Agreement. The Seller Parties
shall have furnished to Buyer a certificate dated the Closing Date, signed by or
on behalf of each Seller Party (individually or by such Seller Party's chief
executive officer and chief financial officer), to the effect that the
conditions set forth in Sections 9.2(a) through 9.2(c) have been satisfied.
(e) Opinion of Counsel. Buyer shall have received from counsel
to the Seller Parties an opinion dated the Closing Date substantially in the
form set forth in Exhibit C.
(f) Required Consents. The Seller Parties shall have obtained
Consents and such amendments, assignments or modifications of such agreements or
instruments as may be required so that the transactions contemplated by this
Agreement may be consummated and shall not result in any default with respect to
any law, rule, regulation, order, decree, license, agreement, contract,
commitment or instrument to which any of the Seller Parties is a party or by
which any of the Seller Parties, the Business or any of the Purchased Assets is
bound, including consents to, and approvals of, the sale, transfer and
assignment to Buyer of the Assumed Contracts. Notwithstanding the forgoing, the
inability of the parties to obtain any Consent with respect to any Development
Project shall not be a condition precedent to Buyer's obligations hereunder.
(g) Litigation. No action, suit, litigation, proceeding or
investigation shall (i) have been formally instituted and be pending with regard
to the transactions contemplated by this Agreement or (ii) be threatened by any
Governmental Authority with regard to the transactions contemplated by this
Agreement.
(h) Escrow Agreement. The Seller Parties shall have executed
and delivered the Escrow Agreement to Buyer and the Escrow Agent.
(i) Title Insurance. Buyer shall have obtained, at its
expense, an owner's title policy (owner's ALTA Policy Form B, as amended
10/17/70 and 10/17/84) from the title company selected by Buyer containing such
affirmative coverage and revealing no exceptions to coverage except Permitted
Liens and such other exceptions which in each case are acceptable to Buyer in
its sole discretion.
(j) Survey. Buyer shall have obtained a current as-built
survey of the Real Property, which shall be to ALTA standards and at Buyer's
expense, and shall be certified to Buyer, the title company insuring title and
Buyer's lenders, and shall show no defects in the Real Property except Permitted
Liens.
(k) Consent of Buyer's Lenders. Buyer and its Affiliates shall
have received the consent of their lenders to the consummation of the
transactions contemplated by this Agreement by September 15, 1996.
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(l) No Interference. No provision of any applicable law or
regulation, and no judgment, injunction, order or decree, shall restrain,
prohibit or otherwise interfere with the effective operation or enjoyment by
Buyer of all or any material portion of the Purchased Assets (excluding
Development Projects) or the Business.
(m) Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Buyer, and
Buyer shall have received copies of all such documents and other evidence as it
may reasonably request to establish the consummation of such transactions and
the taking of all proceedings in connection therewith.
(n) Employment Agreements. Buyer or an Affiliate of Buyer
shall have entered into the Employment Agreements in a form agreeable to Buyer
and the other parties to the Employment Agreements.
(o) Extension of Circle Manor Facility. Circle Manor shall
have entered into a lease extension for the Circle Manor Facility with Xxxx X.
Xxxxxx, as lessor to provide for a lease term expiring in 2012 on substantially
the same terms (which may include reasonable rent increases) as the existing
Circle Manor Facility lease.
(p) June 30 Financials. Buyer shall have received the June 30
Financial Statements and the Accountant's Report, each in form and substance
reasonably satisfactory to Buyer, and the Accountant's Report shall not show
material discrepancies between the June 30 Financial Statements and generally
accepted accounting principals.
9.3 Conditions Applicable to Seller Parties. The obligations of the
Seller Parties under this Agreement to cause the transactions contemplated by
this Agreement to be consummated are, at their option, subject to the
satisfaction of the following conditions:
(a) Performance of this Agreement. All the terms, covenants
and conditions of this Agreement to be complied with and performed by Buyer and
Mariner on or before the Closing Date shall have been fully complied with and
performed in all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties of Buyer and Mariner set forth in Article IV
shall have been true and correct in all material respects on the date of this
Agreement and as of the Closing Date with the same force and effect as if such
representations and warranties were made anew at and as of the Closing Date,
except: (i) to the extent such representations and warranties are by their
express provisions made as of the date of this Agreement or another specified
date; and (ii) for the effect of any activities or transactions which may have
taken place after the date of this Agreement which are contemplated by this
Agreement.
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(c) Officers' Certificate Concerning This Agreement. Buyer
shall have furnished to Sellers a certificate dated the Closing Date, signed by
the president and the treasurer of Buyer and Mariner, to the effect that, the
conditions set forth in Sections 9.3(a) through 9.3(b) have been satisfied.
(d) Escrow Agreement. Buyer and the Escrow Agent shall have
executed and delivered to the Seller Parties the Escrow Agreement.
(e) Employment Agreements. Xxxx X. Xxxx, Xxxxxx X. Xxxxxxxx
and Xxxxxx X. Xxxxxxxx shall have entered into the Employment Agreements in a
form agreeable to Buyer and the other parties to the Employment Agreements.
(f) Release of Guarantees. Any guarantees of the Seller
Parties related to the Assumed Debt and Assumed Contracts shall be released.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned:
(a) by mutual consent of Buyer and Sellers at any time prior
to the Closing Date for any reason;
(b) by written notice from Buyer to the Seller Parties (i) if
a material breach by any of the Seller Parties of any of their representations,
warranties or agreements contained in this Agreement occurs which is not cured
within 30 days after written notice of such breach is given to the party
committing such breach, or (ii) if the Closing Date does not occur on or before
November 1, 1996; provided, however, that the right to terminate this Agreement
under this Section 10.1(b)(ii) shall not be available to Buyer if a breach by
Buyer of any of its representations, warranties or agreements contained in this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such date; or
(c) by written notice from Sellers to Buyer (i) if a material
breach by Buyer of any of its representations, warranties or agreements
contained in this Agreement occurs which is not cured within 30 days after
written notice of such breach is given to Buyer committing such breach, or (ii)
if the Closing Date does not occur on or before November 1, 1996; provided,
however, that the right to terminate this Agreement under this Section
10.1(c)(ii) shall not be available to Sellers if a breach by the Seller Parties
of any of their representations, warranties or agreements contained in this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such date.
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10.2 Survival Upon Termination. If this Agreement is terminated,
Sections 7.3 and 12.3 shall survive such termination.
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ARTICLE XI
INDEMNIFICATION
11.1 Survival of Representations. The representations, warranties,
covenants and agreements made by the Seller Parties in this Agreement or any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing for two years. All representations and warranties of
Buyer shall terminate upon the Closing. Any investigation or other examination
that may have been made at any time by or on behalf of the party to whom
representations and warranties are made shall not limit, diminish or in any way
affect the representations and warranties in this Agreement, and the parties may
rely on the representations and warranties in this Agreement irrespective of any
information obtained by them by any investigation, examination or otherwise.
11.2 Indemnification by the Seller Parties. (a) Subject to Section
11.2(b), the Seller Parties shall jointly and severally indemnify, defend and
hold harmless Buyer from and against any damages, losses, liabilities, costs and
expenses (including reasonable expenses of investigation and reasonable
attorney's fees in connection with any claim, action, suit or proceeding)
(collectively, "Losses") incurred or suffered by Buyer or any of its Affiliates
occasioned or caused by, resulting from or arising out of (i) any Excluded
Liability, (ii) any inaccuracy (or alleged inaccuracy) in or breach (or alleged
breach) of any representation or warranty of the Seller Parties set forth in
this Agreement or any certificate or other writing delivered pursuant hereto or
in connection herewith, (iii) any failure (or alleged failure) by the Seller
Parties to perform any of its obligations or covenants set forth in this
Agreement or any certificate or other writing delivered pursuant hereto or in
connection herewith, (iv) any and all actions, suits, litigations, arbitrations,
proceedings, investigations or claims arising out of any of the foregoing or out
of facts that have occurred on or prior to the Closing Date even though such
action, suit, litigation, arbitration, proceeding, investigation or claim may
not be filed or come to light until after the Closing Date and (v) any
Environmental Liabilities; provided that (i) the Seller Parties shall not be
liable under this Section 11.2 unless written notice is given within two years
of the Closing Date and the aggregate amount of Losses with respect to all
matters referred to in this Section 11.2 exceeds $100,000 and then only to the
extent of such excess; (ii) the Seller Parties' maximum liability under this
Section 11.2 shall not exceed $10,500,000; and (iii) the Seller Parties shall
not be liable under this Section 11.2 for any Losses with respect to which
Mariner or Buyer has actually received reimbursement from any other person
through rights of indemnity, contribution, insurance or otherwise.
(b) Notwithstanding Section 11.2(a), each of Technicare
Pharmacy, Inc. and Xxx Xxxxxxxx shall only be liable to the extent that a Loss
which is indemnifiable under Section 11.2(a) arose out of the Business of
Technicare (in the case of Technicare Pharmacy, Inc.) or Rehab Solutions (in the
case of Xxx Xxxxxxxx) or any representations or warranties set forth herein
which related to Technicare (in the case of Technicare Pharmacy, Inc.) or Rehab
Solutions (in the case of Xxx Xxxxxxxx) or their respective business or assets.
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11.3 Indemnification by Mariner and Buyer. Mariner and Buyer shall
indemnify, defend and hold harmless the Seller Parties from and against any
Losses incurred or suffered by the Seller Parties or any of their Affiliates
occasioned or caused by, resulting from or arising out of (i) any Assumed
Liability, (ii) any inaccuracy (or alleged inaccuracy) in or breach (or alleged
breach) of any representation or warranty of Mariner or Buyer set forth in this
Agreement or any certificate or other writing delivered pursuant hereto or in
connection herewith, (iii) any failure (or alleged failure) by Mariner or Buyer
to perform any of its obligations or covenants set forth in this Agreement or
any certificate or other writing delivered pursuant hereto or in connection
herewith and (iv) any and all actions, suits, litigations, arbitrations,
proceedings, investigations or claims arising out of any of the foregoing or out
of facts that have occurred on or prior to the Closing Date even though such
action, suit, litigation, arbitration, proceeding, investigation or claim may
not be filed or come to light until after the Closing Date; provided that (i)
Mariner and Buyer or Buyer shall not be liable under this Section 11.3 unless
the aggregate amount of Losses with respect to all matters referred to in this
Section 11.3 exceeds $100,000 and then only to the extent of such excess; (ii)
Mariner's and Buyer's aggregate maximum liability under this Section 11.3 shall
not exceed $10,500,000; and (iii) Mariner and Buyer shall not be liable under
this Section 11.3 for any Losses actually received from any other person through
rights of indemnity, contribution, insurance or otherwise.
11.4 Process of Indemnification. A party seeking indemnification under
this Article XI shall promptly notify the party against whom indemnification is
sought in writing of the assertion of any claim by a third party or the
discovery of any fact upon which the indemnified party intends to base a claim
hereunder within two years of the Closing Date. Such notice shall set forth the
amount of the claim and specify the alleged basis of the claim. The delay or
failure of any party to provide notice hereunder shall not in any way limit
indemnification rights hereunder except to the extent that the indemnifying
party shall have been materially adversely affected by such delay or failure or
if notice is not given within two years of the Closing Date. In the case of
third party claims or assertions, each indemnified party shall, at the expense
of the indemnifying party, cooperate with the indemnifying party in determining
the validity of any such claim or assertion. In connection with any third party
claim if the indemnifying party shall have acknowledged in writing its
obligation to indemnify in respect of such claim which might give rise to a
claim for indemnity hereunder, the indemnifying party may select counsel to
direct the defense of such third party claim, which counsel shall be reasonably
satisfactory to the indemnified party. The indemnifying party shall arrange for
such counsel to inform the indemnified party on a regular basis of the status of
such case. The indemnified party may, at its election and expense, participate
in the defense of such third party claim. The indemnifying party shall not
settle any such claim without the consent of the indemnified party if any
relief, other than the payment of money damages, would be granted by such
settlement or if the indemnified party would be liable to the third party for
the amount of such settlement.
11.5 Purchase Price Adjustment. All payments made under this Article XI
shall be treated as adjustments to the Purchase Price.
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11.6 Certain Remedies Available. Notwithstanding anything in this
Agreement to the contrary, the limitations set forth in this Article XI shall
apply only with respect to post-Closing indemnification obligations and shall
not limit the rights of Buyer under Article XI in the event the Closing does not
occur or in respect of any breach of any covenant set forth herein or in any
related agreement to be performed at or after the Closing.
ARTICLE XII
MISCELLANEOUS
12.1 Casualty, Risk of Loss. The Seller Parties shall bear the risk of
all loss or damage to the Purchased Assets from all causes and all loss or
damage arising out of or related to the operation of the Business until the
Closing. If at any time prior to the Closing any material portion of the
Purchased Assets is damaged or destroyed as a result of fire, other casualty or
for any reason whatsoever, or in the event condemnation or eminent domain
proceedings (or private purchase in lieu thereof) shall be commenced by any
public or quasi-public authority having jurisdiction against all or any part of
the Purchased Assets, Sellers shall immediately give notice thereof to Buyer.
Buyer shall have the right, in its sole and absolute discretion, within 10 days
of receipt of such notice, to elect (i) not to proceed with the Closing and
terminate this Agreement, or (ii) to proceed to Closing and consummate the
transactions contemplated hereby and receive any and all insurance proceeds
received together with all deductible amounts or receivable by Sellers on
account of any such casualty.
12.2 Specific Performance. Each of the parties to this Agreement hereby
acknowledges that the other parties will have no adequate remedy at law if it
fails to perform any of its obligations under this Agreement. In such event,
each of the parties agrees that the other parties shall have the right, in
addition to any other rights it may have (whether at law or in equity), to
specific performance of this Agreement.
12.3 Expenses. All fees and expenses incurred by Buyer in connection
with this Agreement and the transactions contemplated hereby will be borne by
Buyer. All fees and expenses incurred by the Seller Parties in connection with
this Agreement and the transactions contemplated hereby will be borne by the
Seller Parties.
12.4 Further Assurances. If at any time after the Closing, Buyer shall
consider it advisable that any further conveyance, agreements, documents,
instruments and assurances of law or any other things are necessary or desirable
to vest, perfect, confirm or record in Buyer the title to any of the Purchased
Assets, the Seller Parties shall execute and deliver, upon Buyer's request, any
and all proper conveyances, agreements, documents, instruments and assurances of
law prepared by Buyer, and to assist Buyer do all things reasonably necessary or
proper to vest, perfect, confirm or record title to the Purchased Assets in
Buyer and otherwise to carry out the provisions of this Agreement. When
requested by Buyer, the Seller Parties shall deliver to Buyer (a) standard
affidavits and indemnities regarding mechanics' liens and parties in possession
in favor of Buyer's title insurance company and Buyer to the effect that no work
has been performed
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or materials provided to Technicare, Rehab Solutions or any Facility for the
account of the Seller Parties for which payment has not been made in full and
that there are no Persons in possession of the Facilities, Technicare or Rehab
Solutions other than patients, (b) such other instruments as Buyer's title
insurance company may reasonably require to issue an owner's title insurance
policy to Buyer without exceptions other than for Permitted Liens, (c) an
affidavit or certification in compliance with Section 1445(b)(2) of the Internal
Revenue Code and the applicable regulations thereunder, (d) Internal Revenue
Service Form 1099S, (e) executed assignments of any warranties furnished to the
Seller Parties by applicable suppliers or contractors, (f) all copies of plans
and specifications owned by or in possession of the Seller Parties with respect
to the Facilities, Technicare or Rehab Solutions including any and all plans and
specifications showing as-built conditions and/or alterations, additions and
utility connections on or off site, (g) any surveys of the Facilities,
Technicare or Rehab Solutions, and (h) if available, a copy of the original, of
the certificate of occupancy with respect to the Facilities, Technicare or Rehab
Solutions. Sellers shall convey the Real Property to Buyer by executing and
delivering a special warranty deed with covenants of further assurances.
12.5 Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and permitted assigns of the parties
hereto. Nothing expressed or implied in this Agreement is intended or shall be
construed to confer upon or give any Person other than the parties hereto and
their permitted successors or assigns any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
12.6 Entire Agreement. This Agreement, together with the Schedules and
Exhibits hereto, supersede any other agreement, whether written or oral, that
may have been made or entered into by the parties or any of their Affiliates
relating to the matters contemplated hereby. This Agreement, together with the
Schedules and Exhibits hereto, constitute the entire agreement by the parties,
and there are no agreements or commitments except as set forth herein and
therein.
12.7 Amendment or Modification. This Agreement may be amended only with
the written consent of Buyer and the Seller Parties.
12.8 Waiver. Any party to this Agreement may, by written notice to the
other parties to this Agreement, (a) extend the time for the performance of any
of the obligations or other actions of the other parties under this Agreement;
(b) waive any inaccuracies in the representations or warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement; (c) waive compliance with any of the conditions or covenants of
the other parties contained in this Agreement; or (d) waive or modify
performance of any of the obligations of the other parties under this Agreement.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including without limitation any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, conditions or
agreements contained in this Agreement. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way
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to affect the validity of this Agreement or any part hereof or the right of such
party thereafter to enforce each and every such provision. No waiver of any
breach of or non-compliance with this Agreement shall be held to be a waiver of
any other or subsequent breach or non-compliance.
12.9 Assignability. Neither this Agreement nor any rights or
obligations hereunder may be assigned or delegated by any party without the
prior written consent of the other parties; provided, however, that Buyer may
assign this Agreement and any of its rights hereunder to any Affiliate of Buyer
without the prior written consent of any other party so long as Mariner remains
responsible for the obligations of Buyer (including such assignee).
12.10 Headings and Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein," "hereof" and
"hereinafter" refer to this Agreement as a whole and not to the particular
sentence or paragraph where they appear, unless the context otherwise requires.
References in this Agreement to Articles, Sections, Exhibits or Schedules shall
be to Articles, Sections, Exhibits or Schedules to this Agreement, unless
otherwise indicated. Unless the context otherwise requires, (i) terms used in
the plural include the singular, and vice versa, and (ii) words in the masculine
gender include the feminine, and vice versa.
12.11 Notices. All notices and other communications under this
Agreement shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telex, graphic scanning or other telegraphic
communications equipment of the sending party, as follows:
If to Mariner or Buyer:
Mariner Health Group, Inc.
000 Xxxxxx X'Xxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to:
Mariner Health Group, Inc.
000 Xxxxxx X'Xxxxx Xxxxx
Xxx Xxxxxx, XX 00000
Attn.: General Counsel
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.
If to any of the Seller Parties:
Xxxx X. Xxxx
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x/x Xxxxxx X. Xxxxx, Xxx.
Xxxxxxxxx, Xxxxxxx & Xxxxx
Xxxx Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxxxxx, Xxxxxxx & Xxxxx
Xxxx Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by telex, graphic scanning or other
telegraphic communications equipment of the sender, or on the date five business
days after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 12.11.
12.12 Law Governing. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Maryland, without
giving effect to the principles of conflicts of law thereof.
12.13 Invalidity of Provisions. Each of the provisions contained in
this Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court of competent
jurisdiction shall not affect the validity or enforceability of any other
provision hereof.
12.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
12.15 Bulk Sales. Buyer and the Seller Parties waive compliance by the
Seller Parties with the provisions of the so-called bulk sales law of any state
including the provisions of Article 6 of the Uniform Commercial Code as enacted
in Maryland. The Seller Parties shall indemnify and hold Buyer harmless from and
against any and all claims, losses, damages, liabilities, costs and expenses
incurred by Buyer or any of its Affiliates as a result of any failure by the
Seller Parties to comply with any such "bulk sales", "bulk transfer" or similar
laws.
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12.16 Mariner Guarantee. Mariner hereby guarantees all of the
obligations of Buyer hereunder to the same extent as if Mariner were Buyer.
[The remainder of this page is left blank intentionally.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties on the date first above written.
MARINER:
MARINER HEALTH GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
----------------------------
Title: Vice President
---------------------------
BUYER:
MARINER HEALTH OF
MARYLAND, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
----------------------------
Title: Vice President
---------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Alllegis Health Services, Inc.
------------------------------
Sign here: /s/ Xxxx X. Xxxx
------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
------------------------------
Chief Executive Officer
------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
------------------------------
Suite 410
------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Circle Manor Nursing Home,Inc.
------------------------------
Sign here: /s/ Xxxx X. Xxxx
------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
------------------------------
Chief Executive Officer
------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
------------------------------
Suite 410
------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
------------------------------
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Asset Purchase Agreement -- Page 65
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Arcola Nursing and Rehabilitation
---------------------------------
Center, Inc.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Executive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Asset Purchase Agreement -- Page 66
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Technicare, L.L.C.
---------------------------------
Sign here: /s/ Xxxx Xxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx Xxxxx
---------------------------------
President/CEO
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Asset Purchase Agreement -- Page 67
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Rehab Solutions, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Asset Purchase Agreement -- Page 68
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Bay Meadow Nursing and
---------------------------------
Rehabilitation Center, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Asset Purchase Agreement -- Page 69
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Camden Yards Nursing and
---------------------------------
Rehabilitation Center, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Asset Purchase Agreement -- Page 70
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Global Healthcare Center -
---------------------------------
Bethesda, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Kensington Gardens Nursing and
---------------------------------
Rehabilitation Center, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Global Healthcare Center -
---------------------------------
Overlea, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Asset Purchase Agreement -- Page 73
SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Allegis Health and Rehabilitation
---------------------------------
Center Southern Maryland, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Technicare Pharmacy, Inc.
---------------------------------
Sign here: /s/ Xxxx X. Xxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxxx
---------------------------------
President
---------------------------------
Address of Seller Party: 0000 Xxxxxxxx Xxxxx
---------------------------------
Xxxxxx, XX 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Global Health Investment
---------------------------------
Associates, L.L.C.
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Chief Exeuctive Officer
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Xxxx X. Xxxx
---------------------------------
Sign here: /s/ Xxxx X. Xxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxx
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Xxxxxx X. Xxxxxxxx
---------------------------------
Sign here: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxxxx X. Xxxxxxxx
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Xxxxxx X. Xxxxxxxx
---------------------------------
Sign here: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxxxx X. Xxxxxxxx
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Xxxxx X. Xxxxxx
---------------------------------
Sign here: /s/ Xxxxx X. Xxxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxxx X. Xxxxxx
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Xxxx X. Xxxxxxxxx
---------------------------------
Sign here: /s/ Xxxx X. Xxxxxxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxxx X. Xxxxxxxxx
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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SELLER PARTY SIGNATURE PAGE
The undersigned Seller Party hereby executes the Asset Purchase
Agreement among the other Selling Parties, Mariner and Buyer, authorizes this
signature page to be attached to a counterpart of said Agreement and agrees to
be bound by said Agreement.
Type or Print Name: Xxx Xxxxxxxx
---------------------------------
Sign here: /s/ Xxx Xxxxxxxx
---------------------------------
Type or Print Title (if Party is an entity): Xxx Xxxxxxxx
---------------------------------
Address of Seller Party: 0000 Xxxxxx Xxxx Xxxx
---------------------------------
Suite 410
---------------------------------
Xxxxxxxxx, Xxxxxxxx 00000
---------------------------------
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Exhibit A
---------
Sellers
-------
Allegis Health Services, Inc. ("Allegis")
Circle Manor Nursing Home, Inc. ("Circle Manor")
Arcola Nursing and Rehabilitation Center, Inc. ("Arcola")
Technicare, L.L.C. ("Technicare")
Rehab Solutions, L.L.C.
Bay Meadow Nursing and Rehabilitation Center, L.L.C.
Camden Yards Nursing and Rehabilitation Center, L.L.C.
Global Healthcare Center-Bethesda, L.L.C. ("Bethesda L.L.C.")
Kensington Gardens Nursing and Rehabilitation Center, L.L.C.
Global Healthcare Center-Overlea, L.L.C.
Allegis Health and Rehabilitation Center - Southern Maryland, L.L.C.
Exhibit A (Continued)
---------------------
Principals
----------
Allegis
Global Health Investment Associates, L.L.C. ("GHIA")
Technicare Pharmacy, Inc.
Xxxx X. Xxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxxxx
Xxx Xxxxxxxx
Execution Copy
--------------
Asset Purchase Agreement dated July 31, 1996 between and among Mariner Health
Group, Inc.; Mariner Health of Maryland, Inc.; Allegis Health Services, Inc.;
Technicare, L.L.C.; Rehab Solutions, L.L.C.; Bay Meadow Nursing and
Rehabilitation Center, L.L.C.; Camden Yards Nursing and Rehabilitation Center,
L.L.C.; Kensington Gardens Nursing and Rehabilitation Center, L.L.C.; Global
Healthcare Center-Overlea, L.L.C.; Allegis Health and Rehabilitation Center -
Southern Maryland, L.L.C.; Global Healthcare Center - Bethesda, L.L.C.; Circle
Manor Nursing Home, Inc.; Arcola Nursing and Rehabilitation Center, Inc.;
Technicare Pharmacy, Inc.; Global Health Investment Associates, L.L.C.; Xxxx X.
Xxxx; Xxxxxx X. Xxxxxxxx; Xxxxxx X. Xxxxxxxx; Xxxxx X. Xxxxxx; Xxxx X. Xxxxxxxxx
and Xxx Xxxxxxxx.
--------------------------------------------------------------------------------
Schedules and Exhibits Omitted in Accordance With
Item 601(b)(2) of Regulation S-K
--------------------------------
Schedules
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2.1(a) Real Property
2.1(b) Personal Property
2.1(c) Permitted Liens
2.1(d) Assumed Contracts
2.1(j) Licenses, Permits and Facility Accreditation
2.3(d) Assumed Debt
2.11 Patient Trust Funds
2.11A Patient Trust Funds as of Closing Date
3.5 Subsidiaries
3.6 Required Consents
3.7 Accounting Practices
3.9 Material Adverse Changes
3.10(d) Lease Defaults
3.10(e) Material Defects
3.10(h) Regulatory Compliance
3.11 Litigation
3.12 Material Contracts
3.14 Insurance Policies & Bonds
-85-
3.15 Compliance with Laws
3.17 Intellectual Property
3.18 Employee List
3.20 Environmental Compliance
3.21 Patient List
3.21A Patient List as of Closing Date
3.24 Zoning Notices
6.10 Escrow Estimate
7.5 Pre-Apportionment Date Accounts Receivable
7.5A Accounts Receivable
8.2 Benefits
Exhibits
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B. Form of Escrow Agreement
C. Form of Opinion
D. 1996 Projections
E. August 31, 1996 Annualized Calculation
F. Allocation Among Facilities
G. Floor and Ceiling Allocation
H. Example of Final Calculation
Mariner Health Group, Inc. will furnish supplementally a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request,
provided however that Mariner Health Group, Inc. may request confidential
treatment pursuant to Rule 24-2 of the Exchange Act for any schedule or exhibit
so furnished.
