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EXHIBIT 2.18
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into and is effective this 3rd
day of September, 1997, by and among Balanced Care Corporation, a Delaware
corporation (together with its permitted assigns, "Purchaser"), and Xxxxxxx
Xxxxxxx Xxxxx, a/k/a Xxxxxxx X. Xxxxx, with the joinder of Xxxxxx X. Xxxxx, her
husband; and Xxxxxxx X. Xxxxxxx, with the joinder of Xxxx X. Xxxxxxx, his wife,
individually and d/b/a Xxxxxxx Personal Care Home (collectively "Seller").
RECITALS:
Seller owns all of the real and personal assets used in connection
with the operation of Xxxxxxx Personal Care Home, a licensed personal care
facility (the "Facility"), located at 000 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000;
Purchaser desires to purchase substantially all of the assets of Seller and the
Business (as hereinafter defined) related thereto and Seller desires to sell
such assets to Purchaser.
This Agreement sets forth the terms and conditions upon which
Purchaser will purchase the assets (other than Excluded Assets, as hereinafter
defined) owned by Seller and used in the conduct of the Business, and Seller
will sell to Purchaser said assets (other than Excluded Assets).
In consideration of the mutual agreements, covenants, representations
and warranties contained herein, and in reliance thereon, Purchaser and Seller
hereby agree as follows:
ARTICLE I. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Accounts Receivable" shall mean as of any date any trade
accounts receivable (including, without limitation, any third party receivables
arising in connection with any Third Party Payor Programs), notes receivable,
including the Resident Notes as defined in Section 2.1.16 hereof, bid or
performance deposits, employee advances and other miscellaneous receivables
associated with the Business through and as of such date.
1.2 "Accreditation Body" shall mean CARF, JCAHO, the Department
of Public Welfare, the Division of Personal Care Homes and all other Persons
having jurisdiction over the accreditation, certification, evaluation or
operation of the Business.
1.3 "Accrued Expenses" shall mean as of any date accrued rents,
insurance premiums, payroll and benefits (including, without limitation,
vacation, sick pay, disability pay) and other accrued expenses as would appear
on a balance sheet of Seller as of such date, including those described in
Schedule 1.3.
1.4 "Affiliate" shall mean any company or other entity which
controls, is controlled by or is under common control with the designated
Party. For the purpose of the foregoing, ownership, directly or indirectly, of
20% or more of the voting stock or other equity interest shall be deemed to
constitute control.
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1.5 "Agreement" shall mean this Asset Purchase Agreement.
1.6 "Ancillary Agreements" shall mean the real property
conveyance described in Section 5.2.1 and the xxxx of sale, assignment and
assumption described in Section 5.2.2.
1.7 "Assumed Liabilities" shall have the meaning given to it in
Section 4.2.
1.8 "Books and Records" shall have the meaning given to it in
Section 6.16.
1.9 "Business" shall mean the current operation of the Facility
and any other ancillary health care services owned, operated, delivered,
managed, developed, constructed, maintained, used, occupied or possessed by
Seller in connection therewith (including, without limitation, any outpatient
and contract rehabilitation therapy services or any Alzheimer's units).
1.10 "CARF" shall mean the Commission on Accreditation of
Rehabilitation Facilities.
1.11 "Champus" shall mean the Civilian Health and Medical Program
of the Uniform Service, a program of medical benefits covering retirees and
dependents of members or former members of a uniformed service provided,
financed and supervised by the United States Department of Defense and
established by 10 U.S.C. Sections 1071 et seq.
1.12 "Closing" shall have the meaning given to it in Section 5.1.
1.13 "Closing Date" shall have the meaning given to it in Section
5.1.
1.14 "Closing Inventory" shall mean all Inventory relating to the
Business on the Closing Date.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time, and any successor thereto. Any reference
herein to a specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
1.16 "Contract" shall mean all alliance agreements, transfer
agreements, other agreements (including, without limitation, Resident's
Agreements described on Schedule 1.58, Management Agreements and Provider
Agreements), contracts, contract rights, commitments, customer accounts,
orders, leases, guarantees, warranties and representations, franchises and
books and records of account benefiting, relating to the Business or the
ownership, construction, development, maintenance, repair, management, use,
occupancy, possession or operation thereof, or the operation of any of the
programs or services in conjunction with the Business and all renewals,
replacements and substitutions therefor, issued by any Governmental Authority,
Accreditation Body or Third Party Payor or maintained or used by Seller with
any third Person.
1.17 "Current Liabilities" shall mean all liabilities classified
as current liabilities in accordance with GAAP.
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1.18 "Damages" shall have the meaning given to such term in
Section 14.4.
1.19 "Department of Public Welfare" shall mean the Commonwealth of
Pennsylvania, Department of Public Welfare.
1.20 "Division of Personal Care Homes" shall mean the Commonwealth
of Pennsylvania, Department of Public Welfare, Division of Personal Care Homes.
1.21 "Employee" shall mean any individual employed by Seller in
the conduct of the Business as listed on Schedule 1.21 (such Schedule being
subject to change between the date hereof and the Closing Date as a result of
employee changes in the ordinary course of business consistent with past
practices).
1.22 "Encumbrance" shall mean any right to, or interest in,
property, which subsists in a third-party and which constitutes a claim, lien,
charge or liability attached to and binding upon or an interest in the
Purchased Assets, including, but not limited to, a mortgage, judgment lien,
mechanic's lien, lease, security interest, easement and right-of-way.
1.23 "Environmental Law" shall mean any of the following which
relates to (i) the protection of the environment or the public welfare from
actual or potential exposure (or the effects of exposure) to any actual or
potential release, discharge, disposal or emission (whether past or present) of
any Regulated Substance or (ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Regulated Substance:
(a) any federal statute [including but not limited to the Federal Water
Pollution Control Act (33 U.S.C. Sections 1251 et seq.), the Toxic Substances
Control Act (15 U.S.C. Sections 2601 et seq.), the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Sections 9601 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Sections 6901 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Sections 1801 et seq.), and the Federal
Insecticide Fungicide and Rodenticide Act (7 U.S.C. Sections 136 et seq.)]; (b)
other Legal Requirements; (c) any common law doctrine; and (d) any provision or
condition of any permit, license or other operating authorization.
1.24 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.25 "ERISA Plans" shall mean defined benefit pension plans and
defined contribution pension plans qualified under Section 401(a) of the Code.
1.26 "Excluded Assets" shall mean those assets that are not
included in the sale contemplated hereby and as are further defined in Section
2.2.
1.27 "Facility" shall be as defined in the Recitals of this
Agreement.
1.28 "GAAP" shall mean generally accepted accounting principles in
the United States of America.
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1.29 "Governmental Authorities" shall mean all agencies,
authorities, bodies, boards, commissions, courts, instrumentalities,
legislatures and offices of any nature whatsoever of any government,
quasi-governmental unit or political subdivision, whether with a federal,
state, county, district, municipality, city or otherwise.
1.30 "Indemnifying Party" shall have the meaning given to such term
in Section 14.4.
1.31 "Indemnified Party" shall have the meaning given to such term
in Section 14.4.
1.32 "Inventory" shall mean the inventory of Seller used in the
operation of the Business, including, without limitation, dry storage
goods,janitorial supplies, food and beverage supplies, office supplies, medical
supplies and pharmaceutical supplies.
1.33 "JCAHO" shall mean the Joint Commission on Accreditation of
Healthcare Organizations.
1.34 "Knowledge" and words of similar import shall mean, with
respect to any Party, actual knowledge of a particular fact or other matter
being possessed by an individual, and the knowledge that reasonably could be
expected to be or should have been obtained in the course of the reasonable
conduct of such Party's business, but shall not be construed to require a
comprehensive investigation concerning any particular subject matter, if such
investigation would exceed the standard of "reasonable conduct."
1.35 "Legal Requirements" shall mean all statutes, ordinances,
by-laws, codes, rules, regulations, restrictions, orders, judgments, decrees
and injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision and other land use and health care licensing
statutes, ordinances, by-laws, codes, rules and regulations), promulgated or
issued by any Governmental Authority, Accreditation Body or Third Party Payor.
Without limiting the foregoing, the term Legal Requirements includes all
Environmental Laws and all Permits and Contracts issued or entered into by any
Governmental Authority, any Accreditation Body and/or any Third Party Payor and
all Permitted Encumbrances.
1.36 "Managed Care Plans" shall mean all health maintenance
organizations, preferred provider organizations, individual practice
associations, competitive medical plans and similar arrangements.
1.37 "Management Agreement" shall mean any agreement, whether
written or oral, between Seller and any other Person pursuant to which Seller
provides any payment, fee or other consideration to any other Person to operate
or manage the Business (except any employment agreements).
1.38 "Medicaid" shall mean the medical assistance program
established by Title XIX of the Social Security Act (42 U.S.C. Sections 1396 et
seq.) and any statute succeeding thereto.
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1.39 "Medicare" shall mean the health insurance program for the
aged and disabled established by Title XVIII of the Social Security Act (42
U.S.C. Sections 1395 et seq.) and any statute succeeding thereto.
1.40 "Party" shall mean either the Seller or Purchaser,
individually, as the context so requires, and the term "Parties" shall mean the
Seller and Purchaser together.
1.41 "Payables" as of any date shall mean any of the trade
accounts payable of Seller with respect to the Purchased Assets or the Business
as of such date in accordance with GAAP consistently applied.
1.42 "Payroll Practice/Employee Arrangement" shall have the
meaning given to such term in Section 6.19.
1.43 "Permits" shall mean all permits, licenses, approvals,
qualifications, rights, variances, permissive uses, accreditations,
certificates, certifications, consents, contracts, interim licenses, permits
and other authorizations of every nature whatsoever required by, or issued to
or on behalf of Seller under any Legal Requirements benefiting, relating or
effecting the Business or the construction, development, maintenance,
management, use or operation thereof, or the operation of any programs or
services in conjunction with the Business and all renewals, replacements and
substitutions therefor, now or hereafter required or issued by any
Governmental Authority, Accreditation Body or Third Party Payor.
1.44 "Permitted Encumbrances" shall mean those Encumbrances as
specifically set forth on Schedule 1.44 hereto.
1.45 "Person" shall mean any individual, corporation, company,
limited or general partnership, trust or estate, joint venture, association or
other entity.
1.46 "Prepaid Expenses" as of any date shall mean payments made by
Seller with respect to the Purchased Assets or the Business, which constitute
prepaid expenses in accordance with GAAP consistently applied.
1.47 "Provider Agreements" shall mean all participation, provider
and reimbursement agreements or arrangements for the benefit of Seller in
connection with the operation of the Business relating to any right to payment
or other claim arising out of or in connection with Seller's participation in
any Third Party Payor Program.
1.48 "Purchase Price" shall mean the cash price paid in accordance
with Section 3.1.1 plus the assumed liabilities, as provided in Section 3.1.2.
1.49 "Purchased Assets" shall have the meaning given to such term
in Section 2.1.
1.50 "Purchaser" shall have the meaning given to such term in the
preamble of this Agreement.
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1.51 "Purchaser Damages" shall have the meaning given to such term
in Section 14.2.
1.52 "Purchaser Indemnitees" shall have the meaning given to such
term in Section 14.2.
1.53 "Real Property" shall mean the real property owned by Seller,
and used in connection with the Facility and the Business as such Real Property
is more fully described in Schedule 1.53 hereto.
1.54 "Regulated Substance" shall mean petroleum, petroleum
hydrocarbons or petroleum products and any other chemical, material, substance
or waste that is identified as "hazardous" or "toxic" under, or the clean-up of
which can be required by, any Environmental Law, including but not limited to
Environmental Laws relating to clean air, clean water, hazardous and solid
waste disposal, safe drinking water, endangered species, occupational safety
and health, oil spill prevention, groundwater protection, and toxic substances
control.
1.55 "Related Party" means (i) Seller, (ii) any Affiliate of
Seller, (iii) any officer, director, shareholder or partner of any Person
identified in clauses (i) or (ii) preceding, and (iv) any spouse, sibling,
ancestor or lineal descendant of any natural Person identified in any one of
the preceding clauses.
1.56 "Resident's Agreements" shall mean copies of all contracts,
agreements and consents executed by or on behalf of any resident or other
Person seeking services at the Facility as more fully described in Schedule
1.56 hereto, including, without limitation, assignments of benefits and
guarantees, and such resident's related medical and/or other records.
1.57 "Retained Liabilities" has the meaning given that term in
Section 4.2.
1.58 "Security Right" means, with respect to any security, any
option, warrant, subscription right, preemptive right, other right, proxy, put,
call, demand, plan, commitment, agreement, understanding or arrangement of any
kind relating to such security, whether issued or unissued, or any other
security convertible into or exchangeable for any such security. "Security
Right" includes any right relating to issuance, sale, assignment, transfer,
purchase, redemption, conversion, exchange, registration or voting and includes
rights conferred by statute, by the issuer's governing documents or by
agreement.
1.59 "Seller" shall mean Xxxxxxx Xxxxxxx Xxxxx, a/k/a Xxxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxxxx, each individually and d/b/a Xxxxxxx Personal
Care Home.
1.60 "Seller Damages" shall have the meaning given to such term in
Section 14.3.
1.61 "Seller Indemnitees" shall have the meaning given to such
term in Section 14.3.
1.62 "Taxes" shall mean all taxes, duties, charges, fees, levies or
other assessments imposed by any Governmental Authority, including, without
limitation, income, gross receipts, value-added, excise, withholding, personal
property, real estate, sales, use, ad valorem, license,
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lease, service, severance, stamp, transfer, payroll, employment, customs,
duties, alternative, add-on minimum, estimated and franchise taxes (including
any interest, penalties or additions attributable to or imposed on or with
respect to day such assessment).
1.63 "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to any Tax, including any
schedule or attachment thereto, and including any amendment thereof.
1.64 "Third Party Payor Programs" shall mean all third party payor
programs in which Seller participates, including, without limitation, Medicare,
Medicaid, Champus, Blue Cross and/or Blue Shield, Managed Care Plans, other
private insurance plans and employee assistance programs.
1.65 "Third Party Payors" shall mean Medicare, Medicaid, Blue
Cross and/or Blue Shield, private insurers and any other Person which maintains
Third Party Payor Programs.
ARTICLE II. TRANSFER OF ASSETS AND PROPERTIES
2.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, Seller shall sell and convey to Purchaser, free and clear of all
Encumbrances whatsoever (other than Permitted Encumbrances and except as
otherwise expressly provided herein), and Purchaser shall purchase from Seller,
all of Seller's right, title and interest in and to the assets, properties and
rights of every kind and description, real, personal and mixed, tangible and
intangible, wherever situated owned by each Seller and actually, directly used
in connection with the Business (the "Purchased Assets") as the same shall
exist on the Closing Date (other than the Excluded Assets), as follows:
2.1.1 Real Property. The Real Property, together with the
buildings, structures, improvements and fixtures located thereon, and
all rights, privileges, easements, licenses, hereditaments and other
appurtenances relating thereto;
2.1.2 Equipment, Machinery and Other Tangible Personal
Property. All machinery, equipment, leasehold improvements,
automobiles, supplies, office furniture and office equipment,
computing and telecommunications equipment, which arc described in
Schedule 2.1.2 hereto;
2.1.3 Contracts Relating to the Business. All Contracts
relating to the acquisition or ownership of the Purchased Assets or
the operation of the Business which are the Contracts listed on
Schedule 2.1.3 and the Contracts which comprise the Resident's
Agreements listed on Schedule 1.56 hereto, to the extent such
Contracts are transferable to Purchaser;
2.1.4 Sales, Rental and Marketing Materials, Manuals. All
sales data, rental data, catalogs, brochures, reference sources,
suppliers' names, mailing lists, art work, photographs, public
relations and advertising material used in the Business, whether in
electronic form or otherwise;
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2.1.5 Permits, Licenses. All Permits relating to the
acquisition or ownership of the Purchased Assets or the operation of
the Business, including, without limitation, those permits listed in
Schedule 2.1.5 hereto, to the extent such Permits are transferable to
Purchaser;
2.1.6 Trade Secrets. All policies and procedures, methods
of delivery of services, trade secrets, designs, architectural plans,
drawings and specifications, market studies, consultants' reports,
prototypes, and all similar property of any nature, tangible or
intangible, used in connection with the Business;
2.1.7 Intellectual Property. All patents, trademarks,
trademark registrations, trade names, service marks, copyrights and
copyright registrations of used in connection with the Business which
are described in Schedule 2.1.7;
2.1.8 Goodwill. All goodwill incident to the Business,
including but not limited to the value of the names associated with
the Business and the value of good customer relations;
2.1.9 Accounts Receivable. Subject to the provisions of
Section 5.4 hereof, all Accounts Receivable existing on the Closing
Date, except the accounts receivable due from the residents and in the
amounts listed on Schedule 2.1.9;
2.1.10 Inventory. All Closing Inventory;
2.1.11 Resident Funds. Subject to the provisions of Section
5.4 hereof, all prepaid rents, deposits and escrow accounts of, or for
the benefit of, the Facility's residents at the Closing Date;
2.1.12 Computer Software. All computer applications
software, owned or licensed, whether for general business usage (e.g.,
accounting, word processing, graphics, spreadsheet analysis, etc.), or
specific, unique-to-the-business usage, and all computer operating,
security or programming software, owned or licensed and used in the
operation of the Business;
2.1.13 Records. With respect to all personnel, the
supporting records and documents for the information summarized in
Schedule 6.19 hereto, and all resident records; and
2.1.14 Name. All rights to the names "Xxxxxxx Personal Care
Home" and "Xxxxxxx'x Personal Care Home" and any other trade name
which was or is used by Seller with respect to the Facility or by
which the Facility was or is known by residents, suppliers, employees,
governmental entities or agencies, or the community.
2.1.15 Other Intangible Assets. All other intangible assets
(including all causes of action, rights of action, contract rights and
warranty and product liability claims against third parties) relating
to the Purchased Assets or the Business.
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2.2 Excluded Assets. Notwithstanding Section 2.1, the following
assets (collectively, the "Excluded Assets") shall be excluded from this
Agreement, and shall not be assigned or transferred to Purchaser:
2.2.1 Cash. All other cash, cash equivalents on hand or in
bank accounts, and short-term notes receivable as of the Closing Date;
2.2.2 Consideration. The consideration paid to Seller
pursuant to this Agreement;
2.2.3 Pensions. Assets constituting any pension or other
funds for the benefit of Employees existing on the Closing Date;
2.2.4 Third Party Claims. Any claims and rights against
third parties (including, without limitation, insurance carriers) to
the extent they relate to liabilities or obligations of such third
parties that are not assumed by Purchaser hereunder (except the amount
of reasonable costs and expenses Purchaser shall have incurred with
respect to such claims and rights);
2.2.5 Taxes. Claims for refunds and credits of Taxes and
other charges imposed by any Governmental Authority for a period prior
to Closing; and
2.2.6 Prepaid Expenses. All Prepaid Expenses of; or for the
benefit of, the Purchased Assets or the Business as of the Closing
Date, including those described in Schedule 2.26, for which Seller
will receive a credit as described in Section 5.4 hereof;
2.2.7 Other Excluded Assets. Assets of either Seller which
are not solely, actually and directly used in the operation of the
Business.
2.3 License to Use Certain Assets. To the extent that there are
any tangible or intangible assets used by Seller solely, actually and directly
in connection with the Purchased Assets or the Business that are not
specifically designated as Excluded Assets by Section 2.2 (without reference to
this Section), the Purchased Assets shall include an irrevocable, nonexclusive,
perpetual, paid-up, royalty-free, transferable license to utilize such assets
in connection with the operation of the Business after the Closing Date. To the
extent that any such assets may not be licensed, each Seller shall take all
steps required to assure that Purchaser obtains the benefit of such assets.
ARTICLE III. CONSIDERATION AND TERMS
3.1 Consideration for Purchased Assets.
3.1.1 Purchase Price. The purchase price for the Purchased
Assets and the Business shall be Five Million Seven Hundred Thousand
($5,700,000) Dollars. The consideration to be paid by Purchaser for
the Purchased Assets and the Business shall be paid by Purchaser as
follows: (i) a cash payment in the amount of $30,000 at the time of
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execution of this Agreement (the "Initial Payment"); (ii) $30,000
promptly upon satisfaction of the condition specified in Section 10.15
hereof, but in no event later than September 15, 1997 (the "Second
Payment") (the Initial Payment and the Second Payment, if any are
hereinafter collectively called the "Deposit"); and (iii) the balance
to be paid by wire transfer at the time of Closing (the "Final
Payment").
3.1.2 Other Consideration. As additional consideration, Purchaser
shall also assume the Assumed Liabilities, specified in Section 4.2 herein, at
the time of Closing.
3.2 Allocation. The Purchase Price shall be allocated among the
Purchased Assets and the Business in accordance with the allocation set forth
in Schedule 3.2, which the parties acknowledge is based on the fair market
value of the Purchased Assets and the Business, in conformance with the
requirements of Section 1060 of the Code. Purchaser and each Seller shall
report the federal, state and local income and other tax consequences of the
purchase and sale contemplated hereby in a manner consistent with such
allocation, and shall not take any position inconsistent therewith upon
examination of any tax return, in any refund claim, in any litigation or
otherwise. As required of Section 1060 of the Code and the regulations
thereunder, Purchaser and each Seller shall prepare and timely file Form 8594
with the Internal Revenue Service, which Form shall be consistent with the
allocation set forth in Schedule 3.2.
ARTICLE IV. ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS
4.1 General Limitation on Assumption of Liabilities. Except for
Permitted Encumbrances and as otherwise provided in Sections 4.2, 4.3 and 4.4
below, Seller shall transfer the Purchased Assets to Purchaser free and clear
of all Encumbrances, and without any assumption of liabilities and obligations,
and Purchaser shall not, by virtue of its purchase of the Purchased Assets,
assume or become responsible for any liabilities or obligations of Seller or
any other Person. For purposes of this Section 4.1 the phrase "liabilities and
obligations" shall include, without limitation, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted or unasserted, xxxxxx or inchoate, liquidated or unliquidated, secured
or unsecured.
4.2 Assumed Liabilities and Obligations of Seller. On the Closing
Date, Purchaser shall acquire the Purchased Assets subject only to, and shall
undertake, assume, perform and otherwise pay, satisfy and discharge, and hold
Seller harmless from the following liabilities and obligations, excluding any
liabilities and obligations to Affiliates of Seller (collectively, the "Assumed
Liabilities"):
(i) all obligations of Seller accruing on or after the Closing
Date under the Contracts contemplated by Section 2.1.3,
provided that the rights thereunder have been duly and
effectively assigned to Purchaser and/or that Purchaser has
received the benefits thereof; and
(ii) all obligations of Seller accruing on or after the Closing
Date under the Permits described in Section 2.1.5, provided
that the rights thereunder have been duly and
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effectively assigned to Purchaser and/or that Purchaser has
received the benefits thereof.
Except for the Assumed Liabilities, Purchaser does not and shall not
assume or in any way undertake to pay, perform, satisfy or discharge any other
liability of Seller existing prior to the Closing Date or arising out of any
transactions entered into, or any state of facts existing, prior to the Closing
Date (the "Retained Liabilities"), and Seller agrees to pay and satisfy when
due all of the Retained Liabilities. Except for the obligations and liabilities
included in the Assumed Liabilities, the term "Retained Liabilities" shall
include, without limitation, liabilities:
(i) for or in connection with any dividends, distributions,
redemptions, or Security Rights with respect to any security
of Seller;
(ii) arising out of any transaction affecting Seller or
obligations incurred by Seller after Closing;
(iii) for Seller's expenses or fees incident to or arising out of
the negotiation, preparation, approval or authorization of
this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, all legal
and accounting fees and all brokers or finders fees or
commissions payable by Seller,
(iv) of Seller under or arising out of this Agreement;
(v) against which Seller is insured or otherwise indemnified, but
only for the amount recovered by Seller, or which would have
been covered by insurance (or indemnification) but for a
claim by the insurer (or the indemnitor) that the insured (or
the indemnities) had breached its obligations under the
policy of insurance (or the contract of indemnity) or had
committed fraud in the insurance application, but only for
the amount that would have been recovered by Seller but for
such breach or fraud;
(vi) of Seller to any Related Party;
(vii) of Seller to indemnify Seller's Employees or agents;
(viii) federal, state or local tax liabilities or obligations of
Seller accrued or relating to a period prior to Closing, and
the transactions contemplated hereunder, including, without
limitation, income taxes payable under the Code, any income
tax, any franchise tax, any tax recapture, any FICA, workers'
compensation, vacation liability and other employee benefits,
any insurance premiums, rents, or other accruals and any and
all other taxes or amounts due or payable for a period prior
to Closing; notwithstanding the foregoing, all sales and use
taxes, transfer taxes, and all other impositions of tax
arising solely by reason of the transfers contemplated by
this Agreement (excluding all federal, state and local income
and gross receipt taxes on the earnings or gross receipts of
Seller prior to the Closing
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Date, which shall remain the sole responsibility of Seller)
shall be the responsibility of and shall be paid equally by
Seller and Purchaser (any real estate and personal property
taxes for the year in which Closing occurs, together with
FICA, workers' compensation, premiums, vacation liability and
other Employee benefits, insurance premiums, rents and other
accruals shall be pro-rated as of the Closing Date as
provided in Section 5.4 hereof.
(ix) for long term indebtedness and other obligations or
guarantees of Seller;
(x) for Current Liabilities of Seller at the Closing Date;
(xi) if applicable, for or in connection with any cost reports
required to be filed by Seller with respect to periods prior
to Closing; and
(xii) for Accrued Expenses and Payables of Seller prior to the
Closing Date.
The provisions of this Section 4.2 shall survive Closing.
4.3 Offer of Employment. Purchaser may offer employment on and as
of Closing, on an at-will basis, to Employees actively at work in substantially
similar jobs, at substantially the same base salaries or wages and
substantially the same benefits as were paid or provided by Seller immediately
prior to the Closing Date.
4.4 Vacation, Workers' Compensation and Disability Claims.
4.4.1 Seller's Liability. Seller shall remain solely
liable for all accrued vacation entitlements, workers' compensation,
disability and occupational diseases of or with respect to the
Employees attributable to entitlements, injuries, claims, conditions,
events and occurrences occurring before the Closing Date.
4.4.2 Purchaser's Liability. Purchaser shall be liable for
all vacation entitlements, workers' compensation, disability and
occupational diseases of or with respect to the Employees hired by
Purchaser attributable to entitlements, injuries, claims, conditions,
events and occurrences first occurring on or after the Closing Date.
4.4.3 Workers' Compensation; Unemployment Compensation.
Schedule 4.4.3 attached hereto sets forth a true and correct summary
of the following with respect to Seller and the Employees:
(i) a listing of all workers' compensation contracts;
(ii) the workers' compensation loss experience for the
past three years; and
(iii) a summary report and experience rating for
unemployment compensation.
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ARTICLE V. CLOSING
5.1 Time; Location. Subject to the provisions of Section 13.1(ii),
the consummation of the purchase and sale of the Purchased Assets shall take
place on or before October 3, 1997 (the "Closing"). The date of the Closing
shall be referred to as the "Closing Date." The Closing shall take place at such
time, date and place as may be mutually agreed upon by the Parties.
5.2 Documents. At Closing, Seller shall execute and deliver the
following instruments of transfer and assignment:
5.2.1 Deed. Duly executed special warranty deed in favor
of Purchaser or Purchaser's assignee, in recordable form, transferring
good and marketable fee simple title to the Real Property, subject
only to Permitted Encumbrances, and such affidavits, releases,
satisfactions or other instruments as Purchaser's title insurance
company may reasonably request, with respect to, but not limited to,
(i) exceptions for (A) judgments, bankruptcies, taxes and municipal
claims, (B) parties in possession other than current occupants
pursuant to agreements with either Seller, (C) mechanics' or
materialmen's liens and (D) encroachments or survey discrepancies of
any nature; (ii) mortgages or security interests and (iii) gap
indemnities;
5.2.2 Xxxx of Sale. A general xxxx of sale, assignment and
assumption substantially in the form of Exhibit 5.2.2 hereto,
transferring to Purchaser good and indefeasible title to all of the
tangible personal property included in the Purchased Assets, subject
only to Permitted Encumbrances and the Assumed Liabilities and
assigning to Purchaser, to the extent assignable, Seller's right,
title and interest in each of the Contracts, Permits and other
agreements included in the Purchased Assets, together with all
consents of third parties that are required to make each such
assignment effective;
5.2.3 Title Certificates. Certificates of title to all
vehicles, if any, included in the Purchased Assets with assignments to
Purchaser;
5.2.4 Property Tax Statements. To the extent not delivered
prior to Closing, all real estate and personal property tax statements
or bills for or relating to the Real Property or any of the other
Purchased Assets for the applicable current tax year or years, and all
tax assessments or notices thereof upon which such taxes are based;
5.2.5 Plans and Specifications. To the extent not
delivered prior to Closing, all plans, specifications and other
drawings in Seller's possession used in the construction of the
Facility or any renovations thereof (including, without limitation,
the most current as-built plans and architectural specifications) and
all guarantees and warranties made by third parties with respect to
the improvements, buildings, personalty or any of the other Purchased
Assets;
5.2.6 Building Permits. To the extent not delivered prior
to Closing, all building permits, zoning permits, occupancy permits,
subdivision plans, surveys and hazardous
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waste studies and soil studies in Seller's possession prepared within
two years before the date hereof, for or relating to the Facility;
5.2.7 Contracts and Other Permits. To the extent not
delivered prior to Closing, all Contracts, Permits, or other
instruments or agreements, which are in effect and existence as of the
Closing Date, relating to the ownership, operation, use, occupancy,
licensure, accreditation or maintenance of the Business;
5.2.8 Rent Roll. The rent roll listing all residents of
the Facility and their respective rent payments current as of two days
prior to Closing;
5.2.9 Closing Documents. To the extent not delivered prior
to Closing, the documents referred to in Section 8.1.2 and Section
8.1.8; and
5.2.10 Other Documents. The Ancillary Agreements, and such
additional instruments of conveyance and transfer as Purchaser may
reasonably require in order to more effectively vest in it, and put it
in possession of, the Purchased Assets.
At Closing, Purchaser shall deliver to Seller the following:
(i) the Purchaser's Certificate described in Section 11.3 hereof, (ii)
the Secretary's Certificate described in Section 11.4 hereof, (iii) the
documents and instruments described in Section 11.6 hereof, and (iv)
the Final Payment, as provided in Section 3.1.1 hereof.
5.3 Reasonable Steps. Seller shall make such reasonable efforts
as may be appropriate so that on the Closing Date, Purchaser shall be placed in
actual possession and control of all of the Purchased Assets.
5.4 Closing Adjustments. The following apportionments shall be
made at the Closing as of the close of business on the day immediately preceding
the Closing Date (hereinafter called the "Adjustment Date"):
(a) Resident fees, rents and other charges for the month in which
occurs the Adjustment Date shall be apportioned between Seller and
Purchaser with Seller retaining or receiving, as the case may be, an
amount equal to the full amount of such resident fees, rents and other
charges times a fraction, the numerator of which is the number of days
in such month to and including the Adjustment Date and the denominator
of which is thirty (30). If at the Adjustment Date there are past due
amounts for the month in which occurs the Adjustment Date, then the
first monies received and applied from such resident or residents shall
be applied to such past due amounts and Seller's share thereof shall be
promptly remitted by Purchaser to Seller. If at the Adjustment Date
there are past due
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amounts owed by residents for any period prior to the Adjustment Date,
Seller shall be paid in the manner provided in Section 5.5 hereof.
(b) With respect to Contracts listed on Schedule 2.1.3, Purchaser
shall, by notice to Seller given within twenty days of Purchaser's
receipt thereof, specify which of said Contracts Purchaser will not
assume at the Closing. If Purchaser fails to give such notice, time
being of the essence, it shall assume all of such Contracts listed on
Schedule 2.1.3, but, in any event, shall not be deemed to have assumed
any contracts of Seller which are not listed on Schedule 2.1.3.
Amounts paid or payable in respect of Contracts assumed by Purchaser
will be prorated based upon the respective periods to which such
payments relate. The foregoing to the contrary notwithstanding, Seller
will obtain a meter reading for electric service not more than thirty
(30) days prior to the Adjustment Date and the unfixed meter charges
based thereon for the intervening period shall be apportioned on the
basis of such reading.
(c) With respect to insurance policies listed on Schedule 6.24,
Purchaser shall, by notice to Seller given within twenty days after
receipt thereof, specify which of said insurance policies Purchaser
will retain. If Purchaser fails to give such notice, time being of the
essence, it shall be deemed to have elected to retain none of such
insurance policies. Premiums paid or payable in respect of each
insurance policy retained by Purchaser will be apportioned based upon
the coverage period thereof.
(d) Real estate taxes shall be apportioned on the basis of the
fiscal year for which assessed. If the Closing shall occur before the
tax rate or assessment is fixed, the apportionment of such real estate
taxes at the Closing shall be based on the tax rate for the next
preceding year applied to the latest assessed valuation; provided,
however, that a final adjustment will be made upon the actual tax
amount, when determined.
(e) As provided in Section 8.1.10, Seller shall pay all wages and
salaries including overtime compensation, of Employees attributable to
time worked through the Adjustment Date; Purchaser shall pay all wages
and salaries including overtime compensation, of Employees
attributable to time work after the Adjustment Date.
(f) As indicated on Schedule 6.19, the Vacation Time (herein so
called) for each of Seller's Employees is accrued over consecutive
twelve month periods (each, a "Service Year"), with each Service Year
commencing on each Employee's initial date of service (or an
anniversary thereof) and ending on the day prior to the next
succeeding anniversary thereof. Employees are permitted to accept
payment in lieu of vacation time off for Vacation Time ("Vacation
Payments"). Purchaser shall receive a credit at Closing for all unused
Vacation Time accrued by Seller's Employees through the Adjustment
Date and for which no Vacation Payment has been made. Seller shall
receive a credit at Closing
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for all Vacation Time actually used by Seller's Employees through the
Adjustment Date and which has not yet accrued as of the Adjustment
Date in favor of said Employees.
The provisions of this Section 5.4 shall survive the Closing.
5.5 Post-Closing Adjustments. Upon Purchaser's receipt of any
payment out of the ordinary course from a resident listed on Schedule 2.1.9 or
their agents, for amounts past due under any Resident's Agreements, whether by
liquidation of assets or otherwise, then providing the amount of said payment
is sufficient to pay the full amount due to Seller from such resident as listed
on Schedule 2.1.9 ("Seller's Payment") and to pay all amounts due to Purchaser
from such resident as of the date of Purchaser's receipt of said payment
("Purchaser's Payment"), Purchaser shall promptly remit Seller's Payment to
Seller, and shall retain for its own account Purchaser's Payment. If said
payment is insufficient to pay Seller's Payment and Purchaser's Payment in
full, then upon receipt of said payment, Purchaser shall promptly remit to
Seller an amount equal to the amount so received, times a fraction, the
numerator of which is the amount of Sellers Payment and the denominator of
which is the sum of Seller's Payment and Purchaser's Payment.
The provisions of this Section 5.5 shall survive the Closing.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Purchaser, that each of the following representations and warranties is true
and correct as of the date hereof:
6.1 Power to Enter Agreement. Each Seller is an adult individual
and has all requisite power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party, to consummate the
transactions contemplated hereby and thereby and to perform all the terms and
conditions hereof and thereof and to be performed by it.
6.2 Authorization of Agreement. Seller has taken all necessary
action to authorize the execution and delivery of this Agreement and the
Ancillary Agreements to which it is a party, the performance by it of all terms
and conditions hereof and thereof to be performed by it and the consummation of
the transactions contemplated hereby and thereby.
6.3 Enforceability. This Agreement constitutes, and the Ancillary
Agreements to which Seller is party, upon its execution and delivery thereof,
will constitute the legal, valid and binding obligations of each Seller,
enforceable in accordance with their terms except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws
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presently or hereafter in effect relating to or affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
6.4 No Violation; Consents. The execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements to which
each Seller is a party, and the consummation of the transactions contemplated
hereby and thereby will not (with or without the giving of notice or the lapse
of time, or both) (i) to Seller's Knowledge, except with respect to notices and
consents (if any) required to be given by either Seller to any Accreditation
Body or Governmental Authority in connection with the sale and change of
ownership of the Purchased Assets and the Business, violate or require any
consent, authorization or approval of, or exemption by, or filing under any
provision of any law, statute, rule or regulation to which Seller, the Business
or the Purchased Assets are subject; (ii) violate any judgment, order, writ or
decree of any court applicable to Seller, the Business or the Purchased Assets;
(iii) except as identified on Schedule 2.1.3, conflict with, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under any contract or other instrument, document or undertaking to which Seller
is a
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party or any of the Purchased Assets is bound; or (iv) result in the creation
or imposition of any Encumbrances upon the Purchased Assets.
6.5 Financial Statements. Seller has delivered, or will have
delivered on or before August 25, 1997, to Purchaser true and complete copies
of the audited, or if unavailable, unaudited (i) balance sheets of the Business
at December 31, 1996, 1995 and 1994 and the related statements of income and
cash flows for the years then ended and (ii) monthly statements of profit and
loss and cash flows for the first six months of 1997 with respect to the
operation of the Facility, which were prepared in accordance with GAAP, as
certified by S. R. Xxxxxxxxx, X.X. In addition, Seller shall provide Purchaser,
as promptly as the same become available through the month prior to the month
in occurs the Closing Date, but no later than 15 days after the last day of
each month, monthly statements of profit and loss and cash flows of Seller for
the Facility. In the event that the Closing Date occurs within the first 15
days of a month, notwithstanding anything to the contrary herein, Seller shall
furnish Purchaser statements of profit and loss and cash flows for the then
immediately preceding month no later than two weeks after the Closing Date.
True and correct copies of such financial statements are attached hereto as
Schedule 6.5. The foregoing financial statements have been prepared from the
Books and Records of Seller on a consistent basis throughout the periods
involved except as may be noted therein. Such financial statements, including
the related notes, are true and correct and fairly present the financial
position of the Business at the dates indicated and the results of operations
and cash flow statements of the Business for the periods then ended.
6.6 Accounts Receivable. All Accounts Receivable (i) have or will
have arisen only in the ordinary course of business consistent with past
practice for goods actually sold and delivered or services actually performed;
and (ii) to the Knowledge of Seller, are or will be collectible in full at the
recorded amounts thereof (subject to no defenses, setoffs or counterclaims) in
the ordinary course of business (without resort to litigation or assignment to
a collection agency).
6.7 Inventory. The Inventory was or will be acquired and
maintained in accordance with the regular business practices of Seller,
consists or will consist of new and unused items of a quality and quantity
usable or salable in the ordinary course of business consistent with past
practice.
6.8 Absence of Certain Changes or Events.
6.8.1 Seller. Except as set forth in Schedule 6.8 hereto,
since June 30, 1997 in connection with the Purchased Assets or the Business,
Seller has not:
(i) amended in any material respect or terminated any
Contract or Permit other than in the ordinary course
of business consistent with past practice;
(ii) suffered the occurrence of any fire, storm or
similar casualty that, individually or in the
aggregate, have had, or could reasonably be expected
to have, a material adverse effect on the results of
operations of the Business or on the Purchased
Assets, including, without limitation, the Real
Property, whether or not covered by insurance;
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(iii) sold, transferred, replaced or leased any of the
Purchased Assets, except for transactions in the
ordinary course of business consistent with past
practice;
(iv) waived or released any material rights with respect
to the Purchased Assets or the Business;
(v) transferred or granted any rights to the Logo and
Name;
(vi) entered into any transaction or made any commitments
(for capital expenditures or otherwise) other than
in the ordinary course of business consistent with
past practice;
(vii) changed its methods of accounting;
(viii) increased the compensation of any of the Employees,
except following normal review procedures or as
reasonably deemed necessary in the ordinary course
of business consistent with past practice;
(ix) suffered any major or key personnel changes (other
than the resignation of each Seller at Closing);
(x) materially altered its conduct in its relations with
suppliers and residents;
(xi) materially altered its marketing efforts with
respect to the Business; or
(xii) received any notice nor has any Knowledge that its
license or permits to operate the Facility has been
or will be suspended, revoked, or restricted in any
manner.
6.9 Real Property.
6.9.1 Title to Properties; Absence of Liens and
Encumbrances. Xxxxxxx Xxxxxxx Xxxxx and Xxxxxxx X. Xxxxxxx own equally
and will transfer to Purchaser at Closing good, marketable and
indefeasible title to all of the Purchased Assets, including, without
limitation, the Real Property, free and clear of all Encumbrances,
other than Permitted Encumbrances. Copies of all title insurance
policies and surveys written in favor of Seller relating to the Real
Property have been delivered to Purchaser.
6.9.2 Structures and Improvements. To Seller's Knowledge,
Seller represents and warrants that all structures and other
improvements on the Real Property are in functional order and repair
and free from any structural defects.
6.9.3 Boundaries; Location. Seller represents and warrants
that the Real Property is considered a separate parcel of land for
taxing and conveyancing purposes and, to Seller's Knowledge, the Real
Property (i) is not located in a flood plain, flood
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hazard area or designated wetlands area and (ii) has no subsidence
problems due to natural or manmade sub-surface conditions.
6.9.4 Use and Operation. Seller represents and warrants
that, to Seller's Knowledge, the use and operation of the Real
Property conforms to all applicable building, zoning, safety and
subdivision laws, Environmental Laws and other Legal Requirements, and
all restrictive covenants and restrictions and conditions affecting
title.
6.9.5 Utilities. Seller represents and warrants that all
utilities (including water, electric, storm and sanitary sewage and
telephone utilities) required to operate the Facility are available to
the Facility and such utilities enter the boundaries of such Facility
through adjoining public streets, permanent easements or rights-of-way
of record in favor of Seller. To Seller's Knowledge, such utilities
are all connected pursuant to valid permits, are all in functional
working order and are adequate to service the operations of the
Facility as currently conducted and permit full compliance with all
Legal Requirements. Seller has not received any written notice of any
proposed, planned or actual curtailment of service of any utility
supplied to the Facility.
6.9.6 Assessments; Notices. Seller has not received any
written or oral notice of assessments for public improvements against
the Real Property or any written or oral notice or order by any
Governmental Authority, any insurance company that has issued a policy
with respect to any of such properties or any board of fire
underwriters or other body exercising similar functions that relates
to violations of building, safety or fire ordinances or regulations,
that claims any defect or deficiency with respect to any of such
properties or requests the performance of any repairs, alterations or
other work to or in any of such properties or in the streets bounding
the same.
6.9.7 Condemnation. Seller represents and warrants that
there is no pending condemnation, expropriation, eminent domain or
similar proceeding affecting all or any portion of the Real Property.
6.9.8 Access. Seller represents and warrants that all
present driveways and other access routes to the Real Property are
from public streets and no other Person has any right to use any such
driveways or other access routes.
6.10 Proprietary Rights.
6.10.1 Logos and Tradenames. Schedule 2.1.7 hereto includes
a copy of the logo which Seller has used in connection with Business
(the "Logo"). Moreover, Seller has used the name "Xxxxxxx'x Personal
Care Home" continuously since the inception of the Business (the
"Name"). Seller makes no representation or warranty whatsoever that it
has any right, title or interest in and to the Logo and/or the Name.
Seller does represent and warrant that the validity of the Logo and
Name and the rights therein of Seller, if any,
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have not been questioned in any litigation to which Seller is a party,
nor, to Seller's Knowledge, is any such litigation threatened; and
that to Seller's Knowledge, the conduct of the Business does not
conflict with patent rights, licenses, trademark rights, trade name
rights, copyrights or other intellectual property rights of others.
6.10.2 Infringement. Except as disclosed in Schedule 2.1.8
hereto, Seller does not have Knowledge that any material use of the
Logo and Name has heretofore been, or is now being, made by any Person
other than Seller. No present or former Employee or consultant of
Seller has any interest in any of the Logo or Name.
6.11 Contracts and Commitments. Except as listed and described on
Schedule 1.56, Schedule 2.1.3, and Schedule 6.24, with respect to the Purchased
Assets or the Business, Seller is not a party to any written or oral:
(i) Contract limiting or restraining Seller or any
successor or assign from engaging or competing in
any likeness of business with any Person;
(ii) license, franchise, distributorship or other
agreement, including those that relate in whole or
in part to any patent, trademark, trade name,
service xxxx or copyright or to any ideas, technical
assistance or other know-how of or used by the
Business;
(iii) Contract or commitment to assign, option, sell,
transfer or otherwise convey to any person other
than Purchaser any right, title or interest of
Seller in and to all or any portion of the Business;
or
(iv) any other material Contract not made in the ordinary
course of business consistent with past practice and
by which Purchaser would be bound upon the
occurrence of the Closing (other than by virtue of
Purchaser's election to assume and/or accept an
assignment of, such Contract.
To Seller's Knowledge, each of the Contracts and other instruments,
documents and undertakings listed on Schedule 1.56, Schedule 2.1.3, and
Schedule 6.24 is valid and enforceable in accordance with its terms, the
parties thereto are in compliance with the provisions thereof, neither party is
in default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein, and no event has occurred
that with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder and (ii) except as set forth on Schedule 2.1.3
and Schedule 1.56, and except for the Resident's Agreements, no advance
payments have been received by Seller by or on behalf of any party to any of
the Contracts and other instruments, documents and undertakings listed thereon
for services to be rendered or products to be delivered to such party after the
Closing Date. Any Contracts that cannot be transferred or require consent or
approval for the transfer thereof are specifically identified on Schedule 2.1.3
and Schedule 1.56 hereto as nontransferable or requiring such consent or
approval.
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6.12 Permits. Schedule 2.1.5 hereto sets forth a correct and
complete list of all current Permits. Each of said permits, including but not
limited to the Certificate of Compliance issued by the Pennsylvania Department
of Public Welfare on February 17, 1997 to No.440950, is in full force and
effect. To Seller's Knowledge, no suspension or cancellation of any of the
Permits is threatened and no cause exists for such suspension, revocation,
restriction or cancellation. Any Permits that cannot be transferred or require
consent or approval for the transfer thereof are specifically identified on
Schedule 2.1.5 hereto as nontransferable or requiring such consent or approval.
6.13 Compliance with Laws. Except as described in Schedule 6.13
hereto, Seller has at all times conducted, and is presently conducting, the
Business so as to comply in all material respects with all Legal Requirements
applicable to the conduct of operation of the Business or the ownership or use
of the Purchased Assets.
6.14 Legal Proceedings. Except as described in Schedule 6.14
hereto, there is no claim, action, suit, proceeding, investigation or inquiry
pending before any Governmental Authority or, to Seller's Knowledge, threatened
against Seller with respect to the Business or any of the Purchased Assets
owned or used by it in connection therewith, or relating to the transactions
contemplated by this Agreement, nor to Seller's Knowledge is there any basis
for any such claim, action, suit, proceeding, investigation, or inquiry. Except
as set forth on Schedule 6.14 hereto, Seller is not a party to or subject to
the provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental, regulatory or administrative official, body
or authority that relates to the Business or the Purchased Assets owned or used
by Seller in connection therewith that might affect the transactions
contemplated by this Agreement.
6.15 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 6.15, Seller has no liabilities or obligations (as defined in Section
4.1) relating to the Business except (i) those liabilities and obligations set
forth on the financial statements of Seller previously provided to Purchaser
and not heretofore paid or discharged; (ii) those liabilities and obligations
arising in the ordinary course of business consistent with past practice under
any Contract or commitment specifically disclosed on Schedule 2.1.3 hereto or
not required to be disclosed because of the term or amount involved; and (iii)
those liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the financial statements dated March 31,
1997 provided to Purchaser; and (iv) those liabilities and obligations by which
Purchaser will not be bound.
6.16 Books and Records. All books of account and other financial
records of Seller directly relating to the Business (the "Books and Records")
are materially complete and correct and have been made available to Purchaser.
All of the Books and Records have been prepared and maintained in accordance
with good business practices and in compliance in all material respects with
all Legal Requirements.
6.17 Employees. Schedule 1.21 sets forth a true and correct list
of the following for the Facility: (i) all individuals employed by Seller in
the conduct of the Business; (ii) total wage costs; (iii) wage/salary grade
structure and (iv) each Employee's (A) present position and
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department, (B) job description, (C) rate of compensation and (D) service
credited for purposes of vesting and eligibility under each Payroll
Practice/Employee Arrangement.
6.18 Labor Disputes. Except as described in Schedule 6.18 hereto,
there are no material discrimination complaints nor any other kind of
employment or labor related disputes against Seller in connection with the
Business pending before or, to Seller's Knowledge, threatened before any
federal, state or local court or agency, and to Seller's Knowledge, no material
dispute respecting minimum wage or overtime claims or other conditions or terms
of employment exists. The Business has not experienced any material labor
disputes or any material work stoppage due to labor disagreements within the
past three years. With respect to the Business and except to the extent set
forth in Schedule 6.18: (i) there is no unfair labor practice charge or
complaint against Seller pending or, to Seller's Knowledge, threatened, before
the National Labor Relations Board; (ii) there is no labor strike, slowdown or
stoppage pending or, to Seller's Knowledge, threatened against or affecting
Seller; and (iii) no question concerning representation has been raised within
the past three years, or to Seller's Knowledge, is threatened respecting the
Employees.
6.19 Payroll Practice/Employee Arrangement.
6.19.1 Benefit Plans. Schedule 6.19 contains a complete
list of each employee benefit plan subject to ERISA, and/or holiday,
vacation or other bonus practice or any other employee pay practice,
arrangement, agreement or commitment (the "Payroll Practice/Employee
Arrangement") and maintained by or with respect to which Seller has
any liability or obligation, whether actual or contingent, with
respect to the Employees or their respective beneficiaries.
6.19.2 Plan Liability. Seller has not taken any action that
may result in Purchaser being a party to, or bound by, an ERISA Plan,
and Purchaser shall have no liability under, or be subject to any
liability on account of, any ERISA Plan or Payroll Practice/Employee
Arrangement following the consummation of the transaction contemplated
hereby.
6.19.3 Retirement Benefits. No ERISA Plan or other employee
arrangement has provided for the payment of retiree benefits by
Purchaser.
6.20 Finder's Fee. Seller warrants that the only commission or
finder's fee that will be due and owing upon settlement of this transaction as
a result of any actions taken by Seller will be to 2BeMA Network, Inc. and
shall be payable in full by Seller.
6.21 Condition of Equipment. Except as set forth on Schedule 6.21,
all equipment that is part of the Purchased Assets is operational (subject only
to routine maintenance and repair) and usable in the conduct of the Business
consistent with past practice.
6.22 Affiliate Transactions. Except as set forth in Schedule 6.22
hereto, Seller and its Affiliates provide no services or products to the
Business.
6.23 Environmental Matters. Except as disclosed in Schedule 6.23:
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6.23.1 Compliance; No Liability. Seller has operated the
Business and the Real Property in material compliance with all
applicable Environmental Laws. To Seller's Knowledge, Seller is not
subject to any liability, penalty or expense (including legal fees),
and Purchaser will not suffer or incur any loss, liability, penalty or
expense (including legal fees) by virtue of any violation by Seller of
any Environmental Law prior to the Closing, any environmental activity
conducted on or with respect to any property by such Seller at or
prior to the Closing or any environmental condition existing on or
with respect to any property at or prior to the Closing which arose
during either Seller's ownership of the Real Property, in each case
whether or not such Seller permitted or participated in such act or
omission.
6.23.2 Treatment; CERCLA. During either Seller's ownership
of the Real Property (i) Seller has not treated, stored, recycled or
disposed of any hazardous material, and to Seller's Knowledge, no
other Person has treated, stored, recycled or disposed of any
hazardous material on any part of the Real Property; (ii) there has
been no release of any hazardous material at, on or under any Real
Property; and (iii) to Seller's Knowledge, Seller has not transported
any hazardous material or arranged for the transportation of any
hazardous material to any location that is listed or proposed for
listing on the national Priorities List pursuant to Superfund or
CERCLA, or any other location that is the subject of federal, state or
local enforcement action or other investigation that may lead to
claims against Seller for cleanup costs, remedial action, damages to
natural resources, to other property or for personal injury including
claims under Superfund; and (iv) the Real Property is not listed or,
to Seller's Knowledge, proposed for listing on the National Priorities
List pursuant to Superfund, CERCLA or any state or local list of sites
requiring investigation or cleanup.
6.23.3 Notices; Existing Claims; Certain Hazardous
Materials; Storage Tanks. Seller has not received any request for
information, notice of claim, demand or other notification that it is
or may be potentially responsible with respect to any investigation,
abatement or cleanup of any threatened or actual release of any
hazardous material, nor is it required to place any notice or
restriction relating to the presence of any hazardous material on the
Real Property or in any deed relating to the Real Property. There has
been no past, and there is no pending or contemplated, claim by Seller
under any Environmental Law or Legal Requirement based on actions
of others that may have impacted on the Real Property, and Seller has
not entered into any agreement with any Person regarding any
Environmental Law, remedial action or other environmental liability or
expense. All storage tanks located on the Real Property, whether
underground or aboveground, are disclosed on Schedule 6.23, and, to
Seller's Knowledge, all such tanks and associated piping are in sound
condition and are not leaking and have not leaked.
With respect to any matters in this Section 6.23, Purchaser shall bear
the burden of proving that any particular contamination originated during
Seller's ownership of the Property.
6.24 Insurance. Schedule 6.24 sets forth a complete list of all
insurance policies maintained with respect to the Business for the past three
years and all insurance policies known
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by Seller to have been maintained by any other Person which may provide any
coverage for liabilities relating in any manner to any Environmental Law.
Schedule 6.24 also sets forth a true and correct summary of the loss
experiences for the past three years under each such policy. Except as set
forth on Schedule 6.24, no insurance has ever been canceled or denied. Following
the Closing, Seller shall, to the extent that Purchaser elects to retain
Seller's insurance policies (i) take no action to eliminate or reduce such
coverage, other than normal elimination or reduction of coverage as they occur
by virtue of the filing of claims in the ordinary course under such insurance
policies, (ii) pay when due any premiums under such policies for periods prior
to Closing, including retrospective or retroactive premium adjustments and
(iii) use its best efforts to assist in filing and processing claims under and
otherwise cooperate with Purchaser to allow Purchaser, in its own name, or on
behalf of Seller, to obtain all coverage benefits applicable to the Business
under such insurance policies, including the execution of assignments or powers
of attorney for the benefit of Purchaser. Seller shall promptly pay to
Purchaser any proceeds of insurance paid by an insurer to Seller for claims
attributable to a period on or after Closing.
6.25 No Significant Items Excluded. There are no assets,
properties, contracts, permits or other items of Seller or any Related Party
that are of material importance to the ongoing operation of the Business by
Purchaser in substantially the same manner in which the Business has been
conducted by Seller prior to the date of this Agreement which are not included
in the Purchased Assets.
6.26. Surveys. Seller has provided Purchaser with copies of
Seller's federal and/or state surveys or inspections and any plans of
correction for the current year and the two immediately preceding years for the
Facility. Each such survey or inspection was prepared in material compliance
with all applicable Legal Requirements.
6.27. Occupancy Reports. Seller has provided Purchaser with copies
of Seller's occupancy reports for the Facility for the last year.
6.28 Discounted Rates; Rate limitations; Free Care. Attached
hereto is Schedule 6.28 that sets forth a true and complete list of the
following for the Facility: (i) any services that are provided based on a
discount factor from the rates regularly charged at the Facility; (ii) any
restrictions or limitations on rates which may be charged to private pay
residents for services provided at the Facility; (iii) any percentage of beds
or slots in any program at the Facility that must be reserved for Medicare or
Medicaid eligible residents and (iv) any amount of welfare, free or charity
care or discounted government assisted resident care provided at the Facility.
6.29 Operational Performance. Seller represents and warrants that,
for the calendar year ending December 31, 1996 (i) the gross operating revenues
of the Facility, were $1,938,460; and (ii) the operational income of the
Facility after adjustments for amortization, depreciation, interest, and other
non-recurring expenses as mutually agreed upon by Buyer and Seller was
$805,413. As used herein operational income shall mean the net result of
revenues generated and expenses incurred in connection with the Business.
6.30 Completeness and Accuracy. To Seller's Knowledge: (i) all
information set forth on any Schedule hereto is true, correct and complete;
(ii) no representation or warranty of either
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Seller contained in this Agreement contains or will contain any untrue
statement of material fact, or omits or will omit to state any material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not materially misleading; and (iii) all Contracts,
Permits and other documents and instruments furnished or made available to
Purchaser by Seller are or will be true, complete and accurate originals or
copies of originals and include all amendments, supplements, waivers and
modifications thereto.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to each Seller, that each of the following representations and
warranties is true and correct as of the date of Closing:
7.1 Organization, Good Standing, Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation and has, or will have on or before September
15, 1997, all requisite corporate power and authority to purchase the Purchased
Assets, to carry on the Business and to execute and deliver this Agreement and
the Ancillary Agreements to which Purchaser is a party, to consummate the
transactions contemplated hereby and thereby and to perform all the terms and
conditions hereof and thereof to be performed by it.
7.2 Authorization of Agreement and Enforceability. Purchaser has
or will have taken all necessary corporate action to authorize the execution
and delivery of this Agreement and the Ancillary Agreements to which Purchaser
is a party, the performance by it of all terms and conditions hereof and
thereof to be performed by it and the consummation of the transactions
contemplated hereby and thereby, on or before September 15, 1997. This
Agreement constitutes, and the Ancillary Agreements, upon Purchaser's execution
and delivery thereof, will constitute, the legal, valid and binding obligations
of Purchaser, enforceable in accordance with their terms except to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws presently or hereafter in effect relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
7.3 No Violations; Consents. The execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements to
which Purchaser is a party and the consummation of the transactions
contemplated hereby and thereby will not (with or without the giving of notice
or the lapse of time, or both) (i) violate any provision of the charter or
bylaws of Purchaser, (ii) to Purchaser's Knowledge, except with respect to
notices and consents required to be given by Purchaser to any Accreditation
Body or Governmental Authority in connection with the sale and change of
ownership of the Purchased Assets and the Business, violate, or require any
consent, authorization or approval of, or exemption by, or filing under any
provision of any contract, law, statute, rule or regulation to which Purchaser
is subject, (iii) violate any judgment, order, writ or decree of any court
applicable to Purchaser, (iv) conflict with, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under any
agreement, contract,
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commitment, lease or other instrument, document or undertaking to which
Purchaser is a party; or (v) result in the creation or imposition of any
Encumbrance upon its assets.
7.4 Legal Proceedings. There is no claim, action, suit,
proceeding, investigation or inquiry pending before any Governmental Authority
or, to Purchaser's Knowledge, threatened against Purchaser or any of
Purchaser's properties, assets, operations or businesses that might prevent or
delay the consummation of the transactions contemplated hereby.
7.5 Broker. No finder's fees, broker's fees or commissions will
be due and payable upon Closing of this transaction as a result of actions by
Purchaser. Seller will pay any fee due to 2BeMA Network, Inc., as provided in
Section 6.20.
ARTICLE VIII. COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1 Required Actions. Between the date of this Agreement and the
Closing Date, Seller covenants that it will:
8.1.1 Access to Information. Give to Purchaser and its
counsel, accountants, consultants and other representatives, for the
purpose of audit, review and copying, reasonable access to such of the
properties, books, accounts and records of such Seller as are relevant
to the Purchased Assets and the Business, and furnish or otherwise
make available to Purchaser all such information concerning the
Purchased Assets and the Business as Purchaser may reasonably request.
8.1.2 Surveys; Occupancy; Operations. With respect to
Seller, provide Purchaser with the following:
(i) occupancy reports for the Facility, as soon as the
same become available through the Closing Date, but
no later than 5 days after the last day of any given
month, such reports to in the form previously
provided to Purchaser as indicated in Section 6.27
hereof;
(ii) federal and/or state surveys or inspections and any
plans of correction for the Facility, as soon as the
same become available through the Closing Date, but
no later than 5 days after received by Seller;
(iii) if applicable, Seller's cost reports for the current
year and the two immediately preceding years for the
Facility, together with the current rate schedule
for the Facility; and
(iv) monthly statements of profit and loss of Seller for
the Facility, as soon as the same become available
through the month prior to the month in which occurs
the Closing Date, but no later than 15 days after
the last day of each month;
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8.1.3 Conduct of Business. With respect to Seller, operate
the Business in the usual, regular and ordinary manner as such
Business was conducted prior to the date hereof and use reasonable
efforts until the Closing Date to (i) preserve and keep intact the
Business; (ii) keep available the services of the Employees; (iii)
preserve its relationships with residents, suppliers and others having
business dealings with Seller in connection with the Business and (iv)
maintain current marketing activities;
8.1.4 Maintenance of Properties. Maintain the Purchased
Assets, whether owned or leased, in operational repair, order and
condition, reasonable wear and tear excepted;
8.1.5 Maintenance of Books and Records. With respect to
Seller, maintain the Books and Records in the usual, regular and
ordinary manner, on a basis consistent with past practice;
8.1.6 Compliance with Applicable Law. Comply in all
material respects with all Legal Requirements applicable to the
Purchased Assets and, with respect to Seller, to the conduct of the
Business, provided however, that Seller shall have the full right and
power to contest the applicability and or the scope of such Legal
Requirements;
8.1.7 Performance of Obligations. Perform all the material
obligations of Seller relating to the Purchased Assets and the
Business in accordance with the past practices, provided however that
Seller shall have the full right and power to contest the
applicability and or the scope of said material obligations;
8.1.8 Approvals, Consents. Use its best efforts to obtain
in writing as promptly as possible any approvals and consents as
required to be obtained by Seller in order to effectuate the
transactions contemplated hereby and deliver to Purchaser copies of
such approvals and consents. Accordingly, Seller shall cooperate with
Purchaser's efforts to obtain the necessary licenses to operate the
Facility from the appropriate Accreditation Bodies, including, without
limitation, the Department of Public Welfare, Division of Personal
Care Homes. Upon execution and delivery of this Agreement, Seller
shall:
(i) promptly provide Purchaser with copies of all
current Permits;
(ii) assist Purchaser in notifying each applicable
Accreditation Body and Third Party Payor as required
by any Legal Requirement of the pending change of
ownership of the Facility; and
(iii) provide to Purchaser all information necessary for
Purchaser to prepare such other notices as required
by all Legal Requirements including, required, (i)
notices to the Facility's residents and (ii) notices
to referral or human service agencies. Seller shall
sign said notices and cooperate with Purchaser to
comply with all Legal Requirements.
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8.1.9 Notice of Material Damage. Give to Purchaser prompt
notice in writing of any fact that, if known on the date hereof, would
have been required to be set forth or disclosed in or pursuant to this
Agreement, or which would result in the breach in any material respect
by Seller of any of its representations, warranties, covenants or
agreements hereunder;
8.1.10 Pay Employees to Closing Date. Subject to the
provisions of Section 5.4 hereof, pay all wages, salaries and other
sums due Employees through the close of business on the day prior to
the Closing Date;
8.1.11 Cost Reports. If applicable, file, or cause to be
filed, all Medicare and Medicaid cost reports that are required to be
filed after the Closing Date, without regard to any extensions,
pursuant to all applicable Legal Requirements. Any liability of Seller
required to be paid as a result of any such cost report for any period
prior to the Closing Date shall be paid by Seller. Purchaser shall
cause any refund which may be received after the Closing Date as a
result of any such cost report to be paid to Seller;
8.1.12 Transfer of Employees. Cooperate with Purchaser in
Purchaser's effectuation of the employment of all Employees electing
to continue their employ with Purchaser as of the Closing Date;
8.1.13 Compliance with Agreement. Not undertake any course
of action inconsistent with satisfaction of the conditions applicable
to it set forth in this Agreement, and use all reasonable efforts to do
all such acts and take all such measures as may be reasonably necessary
to comply with the representations, agreements, conditions and other
provisions of this Agreement; and
8.1.14 Update Schedule. Promptly disclose to Purchaser any
information contained in the representations and warranties of each
Seller contained in Article VI or in the Schedules to this Agreement
which is no longer complete or correct (including furnishing updated
financial statements); provided that no such disclosure shall be
deemed to modify, amend or supplement such Seller's representations
and warranties.
8.1.15 Compliance with Bulk Sales Laws. Seller shall
(i) provide notice to the Pennsylvania Department of Revenue
("Revenue") and the Department of Labor and Industry ("L&I"), at least
ten days prior to Closing, of the sale of the Business and the
Purchased Assets contemplated hereunder, in accordance with 72 P.S.
Section 1403 and 43 P.S. 788.3, and shall provide Purchaser with a
copy of said notice; and (ii) file all State tax reports with Revenue
and L&I to and including the Closing Date and pay all taxes due to the
Commonwealth in accordance therewith and provide Purchaser with
evidence of such payment on or before the Closing Date.
8.1.16 Removal of Underground Storage Tank. Seller shall
remove or cause to be removed from the Real Property the underground
storage tank which is currently located above-ground, east of the
Facility, as identified in that certain Phase I Environmental Site
Assessment and Limited Subsurface Investigation dated August 8,
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1997 and prepared by ATC Associates, Inc. On or before September 26,
1997, Seller shall provide Purchaser with either Seller's certificate
or the certificate of a company qualified in the removal and disposal
of environmental containment devices, in a form satisfactory to
Purchaser and its lender for this transaction, in their reasonable
discretion and exercised in good faith, certifying that said
underground storage tank has been removed from the Real Property,
transported and disposed of, in compliance with all federal, state and
local environmental laws. A copy of said report has been provided to
Seller.
8.2 Prohibited Actions. Between the date of this Agreement and
the Closing Date, Seller shall not, except as otherwise agreed by Purchaser in
writing:
8.2.1 Sale of Purchased Assets. Sell, transfer, assign,
lease, encumber or otherwise dispose of any of the Purchased Assets
other than in the ordinary course of business consistent with past
practices;
8.2.2 Business Changes. Change in any material respect the
character of the Business;
8.2.3 Incurrence of Material Obligations. Incur any
material fixed or contingent obligation or enter into any material
agreement, commitment or other transaction or arrangement, commitment
or other transaction or arrangement that is not in the ordinary course
of business consistent with past practices and with respect to which
Purchaser will be bound subsequent to Closing;
8.2.4 Incurrence of Liens. Subject to lien, security
interest or any other Encumbrance, other than Permitted Encumbrances,
any of the Purchased Assets;
8.2.5 Change in Employee Compensation and Benefits.
Increase the rate of compensation paid, or pay any bonus, to anyone
connected with the Business, except for the bonus of $50,000 payable
to Xxxxxxx Xxxxx and such other increases or bonuses planned, in the
ordinary course of business consistent with past practices, or
establish or adopt any new pension or profit-sharing plan, deferred
compensation agreement or employee benefit arrangement of any kind
whatsoever covering or affecting Employees;
8.2.6 Publicity; Advertisement. Except as required by law,
publicize, advertise or announce to any third-party, except as
required pursuant to this Agreement to obtain the consent of such
third-party, the entering into of this Agreement, the terms of this
Agreement or the transactions contemplated hereby;
8.2.7 No Release. Except in the ordinary course of
business consistent with past practices, (i) cancel, release or
relinquish any material debts of or claims against others held by
Seller with respect to the Business or (ii) waive any material rights
relating to the Business; and
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8.2.8 No Termination or Modification. Except in the
ordinary course of business consistent with past practices, terminate
or materially modify any material contract or permit (including,
without limitation, those items listed on Schedule 1.56 and Schedule
2.1.3) or other authorization or agreement affecting, after the
Closing, the Purchased Assets or the Business or the operation
thereof.
ARTICLE IX. COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
9.1 Required Actions. Between the date of this Agreement and the
Closing Date, Purchaser shall, except as otherwise agreed by Seller in writing:
9.1.1 Advise of Changes. Advise Seller promptly in writing
of any fact that, if known at the Closing Date, would have been
required to be set forth or disclosed in or pursuant to this
Agreement, or which would result in the breach by Purchaser or Seller
of any of its representations, warranties, covenants or agreements
hereunder;
9.1.2 Compliance with Agreement. Not undertake any course
of action inconsistent with satisfaction of the conditions applicable
to it set forth in this Agreement, and Purchaser shall use its best
efforts to do all such acts and take all such measures as may be
reasonably necessary to comply with the representations, agreements,
conditions and other provisions of this Agreement;
9.1.3 Examinations. Promptly undertake all examinations,
inspections, surveys and audits, including, without limitation, title
searches and surveys of the Real Property, environmental assessments
and audits and engineering surveys, as Purchaser deems necessary in
connection with the acquisition of the Purchased Assets or the
Business; and
9.1.4 Seller's Employees. Take all reasonable steps to
ensure the transfer of employment of the Employees listed on Schedule
1.21 and who are offered employment and who elect to continue their
employ with Purchaser as are able to be accomplished prior to or on
the Closing Date.
9.2 Investigation. Purchaser shall use reasonable efforts to
conduct an investigation of the Business of Seller in such a manner as to
prevent disruption of relations with the Employees, residents and suppliers of
Seller, which investigation shall include such due diligence as is customary
for transactions of the type contemplated herein. Such investigation shall be
(i) conducted by Purchaser and its representatives (including Purchaser's
lender) in Seller's presence; and (ii) scheduled with Seller's prior approval.
9.3 Approvals, Consents. Purchaser shall use its best efforts to
obtain in writing as promptly as possible any approvals and consents as
required to be obtained by Purchaser in order to effectuate the transactions
contemplated hereby and deliver to Seller copies of such approvals and
consents. Accordingly, Purchaser use best efforts to obtain the necessary
licenses to operate
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each of the Facilities from the Department of Public Welfare, Division of
Personal Care Homes, including:
(i) providing notice to each applicable Accreditation
Body and Third Party Payor as required by any Legal
Requirement of the pending change of ownership of
each of the Facilities; and
(ii) providing such other notices as required by all
Legal Requirements including, if required, (a)
notices to the Facilities' residents and (b) notices
to referral and human service agencies. Prior to
sending the notices referred in clauses (i) and (ii)
of this Section 9.3, Purchaser shall provide copies
to Seller for review and approval, which approval
shall not be unreasonably withheld.
9.4 Publicity; Advertisement. Except as required by law, Purchaser
shall not publicize, advertise or announce to any third-party, except as
required pursuant to this Agreement to obtain the consent of such third-party,
the entering into of this Agreement, the terms of this Agreement or the
transactions contemplated hereby; provided, however, the foregoing shall not be
applicable to disclosures made by Purchaser to Purchaser's lender in response
to such lender's requests.
ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to proceed with Closing under this
Agreement is subject to the fulfillment prior to the specified date or, if no
date is specified, at the time of Closing of the following conditions with
respect to Seller, any one or more of which may be waived in whole or in part
by Purchaser:
10.1 Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this Agreement and the
Ancillary Agreements to which Seller is to become a party shall have been true
in all material respects on the date hereof and shall be true in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
10.2 Performance of Agreement. Seller shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement and the
Ancillary Agreements to be performed or complied with by it at or prior to the
Closing Date or by such other date specifically set forth herein.
10.3 Seller's Certificate. Purchaser shall have received a
certificate from Seller, dated as of the Closing Date, reasonably satisfactory
in form and substance to Purchaser and its lender, certifying as to the matters
specified in Section 10.1 and Section 10.2 hereof. The matters set forth in
such certificate shall constitute representations and warranties of Seller
hereunder.
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10.4 Injunction. On the Closing Date, there shall be no
injunction, writ, preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided and no suit, action, investigation, inquiry or other legal or
administrative proceeding by any Governmental Authority or other Person shall
have been instituted or threatened which questions the validity or legality of
the transactions contemplated hereby or which if successfully asserted would
have a material adverse effect on the conduct of the Business or impose any
additional material financial obligation on, or require the surrender of any
material right by, Purchaser.
10.5 Actions and Proceedings. With respect to Seller, all actions,
proceedings, instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental hereto and all other related legal
matters shall be reasonably satisfactory to counsel for Purchaser, and such
counsel shall have been furnished with such certified copies of such actions
and proceedings and such other instruments and documents as it shall have
reasonably requested.
10.6 Consents. Any third-party consents, approvals, authorizations
or Permits (including, without limitation, those required by any Governmental
Authorities) necessary for the conveyance of the Purchased Assets or valid
consummation of the transactions contemplated hereby shall have been obtained.
10.7 Business Investigation. At its sole cost and expense,
Purchaser shall have completed its investigation, as contemplated in Section
9.2, the results of which shall be satisfactory to Purchaser in its sole
discretion, on or before September 15, 1997.
10.8 Physical Inspection. At its own cost and expense, Purchaser
shall have inspected and approved on or before August 8, 1997, the physical
condition of the Real Property including the improvements and the HVAC,
electrical, plumbing and other systems, and shall receive the written report in
form and substance satisfactory to Purchaser from a qualified engineering firm
approved by Purchaser or any engineer employed by Purchaser to the effect that
the improvements on the Real Property have been constructed in compliance with,
and currently are in compliance with, all governmental requirements, including
without limitation the Americans With Disabilities Act, and with all
restrictions of record applicable thereto which materially affect the
Purchaser's intended use of the Real Property. Purchaser acknowledges that the
condition in this Section 10.8 has been satisfied.
10.9 Environmental Report. At its own cost and expense, Purchaser
shall have obtained, on or before September 15, 1997 a written report from a
qualified geotechnical or engineering firm or other environmental consultant,
in a form and substance, satisfactory to Purchaser, concerning the presence,
handling, treatment and disposal of Regulated Substances on in or under the
Real Property and the presence of asbestos on, in or under any of the
improvements thereon and disclosing (i) the results of a review of prior uses
of the Real Property and the Facility disclosed by local public records,
including the chain of title; (ii) contacts with local officials to determine
whether any records exist with respect to the disposal of Regulated Substances
on the Real Property or the use of asbestos in the construction of the
improvements
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thereon; and (iii) if recommended to or required by Purchaser, soil samples and
groundwater samples consistent with good engineering practice.
10.10 Title Insurance. Purchaser shall have obtained for all Real
Property final marked commitments to issue to Purchaser, at Purchaser's sole
cost and expense, ALTA (1990-Form B with appropriate state endorsements) owner's
and/or leasehold policies of title insurance in coverage amounts equal to the
fair market values of such Real Property, insuring good and marketable title to
such Real Property with mechanic's liens coverage and such other endorsements as
Purchaser or its lender may reasonably request and with exceptions only for ALTA
standard printed exceptions (other than mechanic's and materialmen's liens and
rights of possession) and Permitted Encumbrances.
10.11 Purchaser shall have received on or before September 26, 1997
the certificate required under Section 8.1.16 hereof.
10.12 Closing Documents. Purchaser shall have received the other
documents referred to in Section 5.2 which shall be in form and substance
satisfactory to Purchaser in its reasonable discretion.
10.13 Other Deliveries. At its own cost and expense, Purchaser shall
have received with respect to the Real Property:
10.13.1 Surveys. On or before September 15, 1997, surveys of
such property which conform to the standards set forth in the
ALTA/American Congress on Surveying and Mapping Minimum Standard
Detail Requirements for Land Title Surveys and which disclose no state
of facts inconsistent with the representations and warranties of
Seller set forth in Section 6.9 hereof and are otherwise acceptable to
Purchaser;
10.13.2 Affidavits. ALTA extended coverage
statements/affidavits in form and substance satisfactory to
Purchaser's title insurer regarding title, mechanic's liens and such
other customary matters as may be reasonably requested by Purchaser or
Purchaser's title insurer; and
10.13.3 FIRPTA Certificates. A certificate, duly executed
and acknowledged by Seller under penalties of perjury, in the form
prescribed by Treasury Regulation Section 1.1445-2(b)(2)(iii), stating
Seller's name, address and Federal tax identification number, and that
Seller is not a "foreign person" within the meaning of Section 1445 of
the Code.
10.13.4 Zoning. Purchaser shall have received by September
15, 1997 confirmation from the necessary governmental authorities or
otherwise satisfied itself and its lender that the applicable zoning
ordinances and other applicable land use regulations, if any, permit
the use of the Real Property as a personal care home as licensed by
the Pennsylvania Department of Public Welfare.
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10.14 Financing. Purchaser shall have received on or before
September 15, 1997, on terms that shall be satisfactory to Purchaser in its
sole discretion, a written binding commitment from a real estate investment
trust or other financing source in an amount sufficient to enable Purchaser to
pay the Purchase Price in full.
10.15 Authorization. On or before September 15, 1997, Purchaser
shall have obtained approval of the transactions contemplated herein by its
board of directors and shareholders (if necessary).
ARTICLE XI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligation of Seller to proceed with the Closing under this
Agreement is subject to the fulfillment prior to the specified date or, if no
date is specified, at the time of Closing of the following conditions with
respect to Purchaser, any one or more of which may be waived in whole or in
part by Seller:
11.1 Accuracy of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement shall
have been true in all material respects on the date hereof and shall be true in
all material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
11.2 Performance of Agreement. Purchaser shall have performed in
all material respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in this Agreement
to be performed or complied with by it at or prior to the Closing Date.
11.3 Purchaser's Certificate. Seller shall have received a
certificate from Purchaser, dated as of the Closing Date, reasonably
satisfactory in form and substance to Seller and its counsel, certifying as to
the fulfillment of all matters specified in Section 11.1 and Section 11.2
hereof. The matters set forth in such certificate shall constitute
representations and warranties of Purchaser hereunder.
11.4 Secretary's Certificate. Seller shall have received a
certificate, dated as of the Closing Date, of the Secretary or any Assistant
Secretary of Purchaser, certifying:
(i) That the execution and delivery of this Agreement
and the Ancillary Agreements and the performance by
Purchaser of the transactions contemplated hereby
and thereby have been duly authorized by corporate
resolution and all other necessary corporate action
of Purchaser, and no further action or approval is
required in order that this Agreement be binding
upon or enforceable against Purchaser;
(ii) The name and office held by each officer or
representative of Purchaser executing this
Agreement, the certificate referred to in Section
11.3 and the Ancillary Agreements to which Purchaser
is a party, and that each such officer is duly and
currently elected by Purchaser and authorized to
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execute the Agreement, said certificate, and the
Ancillary Agreements on its behalf; and
(iii) That the governing documents of Purchaser delivered
pursuant to Section 11.6 were in effect on the date
of said resolution, the date of execution of this
Agreement and the Closing Date.
11.5 Injunction. On the Closing Date, there shall be no
injunction, writ, preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided and no suit, action, investigation, inquiry or other legal or
administrative proceeding by any Governmental Authority or other Person shall
have been instituted, threatened or anticipated which questions the validity or
legality of the transactions contemplated hereby or which, if successfully
asserted, would have a material adverse affect on Seller, or either of them, by
the imposition of any additional material financial obligation on, or
requirement of the surrender of any material right by, either Seller.
11.6 Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated
by this Agreement or incidental hereto and all other related legal matters
shall be reasonably satisfactory to counsel for Seller, and such counsel shall
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall have
reasonably requested, including, without limitation:
(i) certificates of the appropriate public officials to
the effect that Purchaser is a validly existing
corporation in good standing in its state of
incorporation as of a date not more than 10 days
prior to the Closing Date;
(ii) incumbency and specimen signature certificates dated
the Closing Date, signed by the officers of
Purchaser and certified by its Secretary; and
(iii) true and correct copies of (A) the charter documents
of Purchaser as of a date not more than 10 days
prior to the Closing Date, certified by the
Secretary of State of its state of incorporation and
(B) the bylaws of Purchaser as of the Closing Date,
certified by the Secretary of Purchaser.
11.7 Copies of Reports. Seller shall have received, on or before
August 15, 1997, copies of all reports, certificates, instruments and other
information obtained by or on behalf of Purchaser under Sections 10.8, 10.9,
10.10 and 10.13 hereof.
ARTICLE XII. OBLIGATIONS AFTER THE CLOSING DATE
12.1 Covenant Not to Interfere. Seller covenants and agrees that
for a period of three years after the Closing Date, Seller will not solicit for
employment by such Seller or any Affiliates any Person who is an Employee of
the Business as of the Closing Date.
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12.2 Noncompetition. For a period of three years following the
Closing Date, Seller will not, directly or indirectly, unless acting in
accordance with Purchaser's written consent, own, manage, operate, finance or
participate in the ownership, management, operation or financing of or permit
its name to be used by or in connection with any business or enterprise engaged
in the Business acquired by Purchaser hereunder and located within a 25-mile
radius of the Facility. Seller acknowledges that the provisions of this
Section are reasonable and necessary to protect the interests of Purchaser,
that any violation of this Section will result in an irreparable injury to
Purchaser and that damages at law would not be reasonable or adequate
compensation to Purchaser for violation of this Section and that, in addition
to any other available remedies, Purchaser shall be entitled to have the
provisions of this Section specifically enforced by preliminary and permanent
injunctive relief without the necessity of proving actual damages or posting a
bond or other security to an equitable accounting of all earnings, profits and
other benefits arising out of any violation of this Section. In the event that
the provision of this Section shall ever be deemed to exceed the time,
geographic scope or other limitations permitted by applicable law, then the
provisions shall be deemed reformed to the maximum extent permitted by
applicable law. Notwithstanding the foregoing, either Seller may own up to 5%
of the outstanding stock of a publicly traded company engaged in the Business
acquired by Purchaser hereunder and located within a 25-mile radius of the
Facility.
12.3 Transition of Employees. From and after the Closing Date,
Purchaser and Seller shall cooperate in an effort to effect an orderly
transition of the Employees who accept employment with Purchaser.
12.4 Certain Transitional Matters.
12.4.1 Transfer of Assets. Seller agrees that Purchaser,
from and after the Closing Date, shall have the right and authority to
collect for Purchaser's own account all items which shall be
transferred to Purchaser as provided herein.
12.4.2 Endorsement of Checks. From and after the Closing
Date, Purchaser shall have the right and authority to retain and
endorse without recourse the name of Seller on any check or any other
evidence of indebtedness received by Purchaser on account of any of
the Purchased Assets.
12.4.3 Seller's Remittance of Funds. After the Closing
Date, Seller shall promptly transfer and deliver to Purchaser any cash
or other property, if any, that Seller may receive related to the
Purchased Assets other than the Excluded Assets.
12.4.4 Purchaser's Remittance of Funds. After the Closing
Date, Purchaser shall promptly transfer and deliver to Seller any cash
or other property, if any, that Purchaser may receive related to the
Excluded Assets.
12.4.5 Assumed Liabilities Controlled by Purchaser. From
and after the Closing, Purchaser shall have complete control over the
payment, settlement or other disposition of, or any dispute involving
any Assumed Liability for which Purchaser is fully liable under the
provisions of this Agreement, and Purchaser shall have the right to
conduct and
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control all negotiations and proceedings with respect thereto. Seller
shall notify Purchaser promptly of any claim made with respect to any
such Assumed Liability and shall not, except with the prior written
consent of Purchaser, voluntarily make any payment of, or settle or
offer to settle, or consent to any compromise with respect to, any
such Assumed Liability. Seller shall cooperate with Purchaser in
connection with any negotiations or proceedings involving any such
Assumed Liability. With respect to any dispute involving any Assumed
Liability for which both Parties are liable for a portion thereof, the
Parties shall cooperate with each other in good faith with respect to
the defense, payment, settlement, compromise or other disposition
thereof; provided, however, that if the Parties are unable to agree,
the Party with the largest potential liability shall control such
matter.
12.5 Audits. To the extent reasonably requested by Purchaser,
prior to the Closing Date, at Purchaser's cost and expense, Seller shall
cooperate and request Seller's accountants to cooperate, with Purchaser and its
auditors in the preparation of audited financial statements for the Facility
for the years ended December 31, 1996, 1995 and 1994 and for the period from
January 1, 1997 through the date of Closing, prepared in accordance with GAAP,
to the extent required, in connection with any registration statement or other
form filed by Purchaser with the Securities and Exchange Commission under the
Securities Act of 1933 for a public offering and sale of securities of
Purchaser.
12.6 Further Assurances of Seller. From and after the Closing
Date, Seller shall, at the request of Purchaser, execute, acknowledge and
deliver to Purchaser, without further consideration, all such further
assignments, conveyances, endorsements, deeds, special powers of attorney,
consents and other documents, and take such other action, as Purchaser may
reasonably request (i) to transfer to and vest in Purchaser, and protect its
rights, title and interest in, all the Purchased Assets and (ii) otherwise to
consummate the transactions contemplated by this Agreement. In addition, from
and after the Closing Date, Seller shall afford Purchaser and its attorneys,
accountants and other representatives access, during normal business hours, to
any Books and Records and other information relating to the Business that
Seller may retain, as may reasonably be required in connection with the
preparation of financial information or tax returns of Purchaser.
12.7 Further Assurances of Purchaser. From and after the Closing
Date, Purchaser shall afford to Seller and its attorneys, accountants and other
representatives access, during normal business hours, to such Books and Records
and other information relating to the Business as may reasonably be required in
connection with the preparation of financial information or Tax Returns for
periods concluding on or prior to the Closing Date and/or in connection with
any other matter pertaining to the Business or the Purchased Assets which
relates, in whole or in part, to a period of time prior to the Closing Date.
Purchaser shall cooperate in all reasonable respects with Seller with respect
to its former interest in the Business and in connection with financial account
closing and reporting and claims and litigation asserted by or against third
parties, including, but not limited to, making Purchaser's employees available
at reasonable times to assist with, or provide information in connection with
financial account closing and reporting and claims and litigation, provided
that Seller reimburses Purchaser for its reasonable out-of-pocket expenses
(including costs of employees so assisting) in connection therewith.
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ARTICLE XIII. TERMINATION
13.1 Termination of Agreement. This Agreement may be terminated:
(i) By the mutual consent of Seller and Purchaser, in
which case the Deposit shall be returned by Seller
to Purchaser;
(ii) By Purchaser or Seller if Closing has not taken
place on or before October 3, 1997; provided,
however, if the Closing has not occurred by October
3, 1997, either Party shall have the right from and
after that date to declare time to be of the essence
by notice to the other Party; such notice to state
the time, date and location of Closing, which date
shall be no less than ten (10) nor more than twenty
(20) days from the date of such notice; and provided
further that no Party then in material breach of any
of its obligations hereunder shall have the right to
terminate. Except as provided in Section 3.1.1
hereof, upon termination under this Section
13.1(ii), the Deposit shall be returned by Seller to
Purchaser on or before October 23, 1997 or within
five days after the date Closing was to occur, as
specified in the notice provided in accordance with
this Section 13.1(ii), if Purchaser is the
non-breaching party, or shall be retained by Seller,
if Seller is the non-breaching party, as the case
may be;
(iii) By Purchaser upon notice to Seller if any of the
conditions set forth in Sections 10.1, 10.2, 10.3,
10.4, 10.5, 10.6, 10.11, 10.12, 10.13.2, 10.13.3 or
10.13.4 hereof have not been materially satisfied or
become impossible to satisfy by the specified date
or the Closing Date, as the case may be (other than
by reason of the material failure of Purchaser to
fulfill its obligations under this Agreement).
Except as provided in Section 3.1.1 hereof; upon
termination under this Section 13.1(iii), the
Deposit shall be returned to Purchaser by Seller
within five days of said notice by Purchaser;
(iv) By Purchaser upon notice to Seller given on or
before September 18, 1997, time being of the
essence, that any of the conditions specified in
Sections 10.9, 10.10, 10.13.1, 10.14, or 10.15 have
not been materially satisfied or become impossible
to satisfy by the specified date or by October 3,
1997, as the case may be (other than by reason of
the material failure of Purchaser to fulfill its
obligations under this Agreement). Upon termination
under this Section 13.1(iv), the Deposit shall be
retained by Seller.
(v) By Seller upon notice to Purchaser if any of the
conditions set forth in Article XI hereof have not
been satisfied or become impossible to satisfy by
October 3, 1997 (other than by reason of the
material
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failure of such Seller to fulfill its obligations
under this Agreement). Except as provided in Section
3.1.1 hereof, upon termination under this Section
13.1(v), the Deposit shall be retained by Seller;
(vi) By Seller if Purchaser materially breaches or fails
to fulfill its obligations under this Agreement,
which failure continues and remains uncured for 30
consecutive calendar days after such Seller gives
written notice of such failure to Purchaser. Except
as provided in Section 3.1.1 hereof, upon
termination under this Section 13.1(vi), the Deposit
shall be retained by Seller; and
(vii) By Purchaser if either Seller materially breaches or
fails to fulfill its obligations under this
Agreement, which failure continues and remains
uncured for 30 consecutive calendar days after
Purchaser gives written notice of such failure to
such Seller. Except as provided in Section 3.1.1
hereof, upon termination under this Section
13.1(vii), the Deposit shall be returned to
Purchaser by Seller within five days after said 30th
calendar day.
The provisions of clauses (vi) and (vii) to the contrary
notwithstanding, if the cure period specified in those clauses would extend
beyond the Closing Date specified in a "time of the essence" notice given under
clause (ii) of this Section 13.1, such cure period shall terminate on the
Closing Date so specified.
13.2 Return of Documents. If this Agreement is terminated for any
reason pursuant to this Article XIII, each Party shall return to the other
Party or, with the agreement of the other Party, shall destroy all documents
and copies thereof which shall have been furnished to it by such other Party,
if any, or, as to documents pertaining to Seller, which were otherwise obtained
by Purchaser in the course of its due diligence.
13.3 Remedies. If Seller or Purchaser defaults hereunder, the
non-breaching Party shall be entitled to (a) retention or return, as the case
may be, of the Deposit, in accordance with the provisions of Section 13.1
hereunder; and (b) reimbursement from breaching Party for all out-of-pocket
expenses and reasonable attorneys' fees, but in no event more than $20,000. It
is understood and agreed that the non-breaching Party's actual damages in such
event will be difficult to ascertain and that the foregoing represents a
reasonable liquidation thereof. Upon payment of the above sums and the return
of the documents under Section 13.2, this Agreement shall terminate and neither
Party shall have any further liability to the other hereunder. The foregoing to
the contrary notwithstanding, if Seller shall willfully and materially default
hereunder, Purchase shall, in lieu of its remedies above stated, have the right
to seek specific performance.
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ARTICLE XIV. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
14.1 Survival of Representations and Warranties. All
representations and warranties of the Parties shall survive for two (2) years
after the Closing Date (the "Survival Period"); provided that there shall be no
termination of any specific representation or warranty as to which a claim has
been asserted prior to the termination of such Survival Period until the
ultimate disposition of such claim. Except as otherwise expressly provided in
this Agreement, all covenants, agreements, undertakings and indemnities set
forth in this Agreement shall survive indefinitely.
14.2 Indemnification by Seller. Seller shall respectively
indemnify, defend, save and hold Purchaser, its successors and assigns, and
their officers, directors, employees, agents and Affiliates (collectively,
"Purchaser Indemnitees") harmless from and against all demands, claims,
allegations, assertions, actions or causes of action, assessments, losses,
damages, deficiencies, liabilities, costs and expenses (including reasonable
attorneys' fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing and whether or not
any such demands, claims, allegations, etc., of third parties are meritorious;
collectively, "Purchaser Damages") asserted against, imposed upon, resulting
to, required to be paid by, or incurred by any Purchaser Indemnitees, directly
or indirectly:
(i) in connection with, arising out of, or which would not have
occurred but for (A) a material breach of any representation or
warranty made by Seller in this Agreement, any certificate or document
furnished pursuant hereto or any Ancillary Agreement to which Seller is
or is to become a party; (B) a material breach or nonfulfillment of any
covenant or agreement made by Seller in or pursuant to this Agreement
and in any Ancillary Agreement to which Seller is or is to become a
party; or (C) Seller's failure to pay any Retained Liability;
(ii) that arise as a result of the presence in, on or under the
Real Property, or in, on or under the buildings, structures,
improvements or fixtures located thereon, of any toxic or Hazardous
Substances, including but not limited to asbestos: (a) not known to
Purchaser, including by virtue of the report referred to in Section
10.9 hereof; (b) placed during Seller's ownership of the Real Property;
and (c) the presence of which Seller is notified by Purchaser in
writing within two years from the Closing Date. Without limiting the
generality of the foregoing, Seller's indemnity obligation shall
include costs incurred in connection with any site investigation or any
remedial, removal, or restoration work, required by any local, state,
or federal agency because of the presence of Hazardous Substances in,
on or under the said Real Property, or in on or under the said
building, structure, improvements or fixtures located thereon, whether
in the soil, groundwater, air, or any other receptor: (a) not known to
Purchaser, including by virtue of the report referred to in Section
10.9 hereof; (b) placed during Seller's ownership; and (c) of which
Seller is notified in writing by Purchaser within two years from the
Closing Date, but
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shall not include incidental or consequential damages. Notwithstanding
the foregoing, toxic or Hazardous Substances emitted, released or
placed on the Real Property as a result of Seller's removal, pursuant
to Section 8.1.16 hereof; of that certain underground storage tank
identified in said report and referred to in Section 8.1.16, do not and
would not constitute a toxic or Hazardous Substance known to Purchaser
by virtue of said report. With respect to any matters in this Section
14.2(ii), Purchaser shall bear the burden of proving that the presence
of any such toxic or Hazardous Substances originated or was placed in,
on or under the Real Property or in, on or under the buildings,
structures, improvements or fixtures located thereon during Seller's
ownership of the Property; and
(iii) that arise as a result of Seller's failure to pay any federal,
state or local tax attributable to a period prior to Closing, whether
or not then assessed, including but not limited to income tax,
corporate tax, employee withholding or other tax or any other fee,
assessment, or liability, which failure results in or could result in
the imposition of a lien on the Real Property or on any of the
Purchased Assets.
14.3 Indemnification by Purchaser. Purchaser shall indemnify,
defend, save and hold each Seller and their respective heirs, executors and
administrators, as the case may be (collectively, "Seller Indemnitees")
harmless from and against all demands, claims, allegations, assertions, actions
or causes of action, assessments, losses, damages, deficiencies, liabilities,
costs and expenses (including reasonable attorneys' fees, interest, penalties,
and all reasonable amounts paid in investigation, defense or settlement of any
of the foregoing and whether or not any such demands, claims, allegations,
etc., of third parties are meritorious; collectively, "Seller Damages")
asserted against, imposed upon, resulting to, required to be paid by, or
incurred by any Seller Indemnitees, directly or indirectly, in connection with,
arising out of, or which would not have occurred but for (i) a breach of any
material representation or warranty made by Purchaser in this Agreement, any
certificate or document furnished hereunder, or any Ancillary Agreement to
which Purchaser is a party; (ii) a material breach or nonfulfillment of any
covenant or agreement made by Purchaser in or pursuant to this Agreement and in
any Ancillary Agreement to which Purchaser is a party; and (iii) Purchaser's
failure to pay any Assumed Liability.
14.4 Notice of Claims. If any Purchaser Indemnitee or Seller
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred
or will suffer or incur any Purchaser Damages or Seller Damages, as the case
may be ("Damages") for which it is entitled to indemnification under this
Article XIV, such Indemnified Party shall so notify the party or parties from
whom indemnification is being claimed (the "Indemnifying Party") with
reasonable promptness and particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit.
Upon receipt of such notice from the Indemnified Party, the
Indemnifying Party shall be
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obligated promptly to litigate, defend, contest or otherwise protect against
any such action or suit at the expense of the Indemnifying Party. In any such
case, the Indemnifying Party shall have the right to control the conduct of
defense of the matter for which indemnification has been claimed and shall be
entitled to the cooperation of the Indemnified Party, provided however, that if
Seller is the Indemnifying Party, Seller shall not permit to exist and shall
promptly discharge any Encumbrance against any asset of the Purchaser, arising
out of any Purchaser Damages for which Seller is liable to indemnify Purchaser
under Section 14.2, upon notice of such Encumbrance.
[The remainder of this page intentionally left blank]
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Further, the Indemnifying Party shall not consent to any settlement that does
not include as an unconditional term thereof the complete release from
liability with respect to such action or suit to the Indemnified Party. If the
Indemnifying Party fails to timely respond or take such action as may be
otherwise suitable to protect against any such action or suit, the Indemnified
Party shall have the right, but not the obligation, to litigate, defend, contest
or otherwise protect against the same, and recover the entire cost thereof from
the Indemnifying Party, including the reasonable attorneys' fees, and all
amounts whatsoever paid as a result of such action or suit.
Any provision hereof to the contrary notwithstanding (a) if Damages
are validly asserted by the Indemnified Party because of any material
inaccuracy in any representation or warranty made by the Indemnifying Party, or
breach of any material obligation hereunder or under any Ancillary Agreement by
the Indemnifying Party, but which do not involve any third party action or
suit, the Indemnifying Party shall have the obligation to pay only such amount,
or take such action, as is necessary to make such representation or warranty
materially accurate, or to materially cure such breach, together with
reimbursement to the Indemnified Party for any reasonable incidental and
consequential damages suffered as result; (b) in all instances where the
Indemnified Party shall claim Damages, or having the potential to cause Damages
it shall have the obligation to mitigate such Damages; (c) the indemnification
obligations of the Parties shall apply only to the occurrence of any event
giving rise to Damages to the other party for which a claim is asserted before
termination of the Survival Period; and (d) any inaccuracy of any
representation or warranty made by either Party, or any breach of any provision
of this Agreement or any Ancillary Agreement by either Party, shall be deemed
to be waived by the other Party if such other Party has actual knowledge of
such inaccuracy or breach, as the case may be, but nonetheless proceeds to the
Closing of the transactions contemplated hereby.
14.5 Other Remedies. The indemnification rights of any Indemnified
Party under this Article XIV are independent of and in addition to such rights
and remedies as such Indemnified Party may have at law, in equity or otherwise
for any misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement under or in connection with this Agreement on the part of
any Party, none of which rights or remedies shall be affected or diminished
hereby.
ARTICLE XV. GENERAL
15.1 Expenses. Except as otherwise provided in this Agreement, and
whether or not the transactions herein contemplated shall be consummated,
Purchaser and Seller shall pay their own fees, expenses and disbursements,
including the fees and expenses of their respective counsel, accountants and
other experts in connection with the subject matter of this Agreement and all
other costs and expenses incurred in performing and complying with all
conditions to be performed under this Agreement.
15.2 Publicity. All notices to third-parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and coordinated by and among Purchaser and Seller. Except as
may be required by law, no Party shall act unilaterally in this regard without
prior written approval of every other Party, such approval not be unreasonably
withheld.
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15.3 Waivers. The waiver by any Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
15.4 Binding Effect; Benefits. This Agreement shall inure to the
benefit of the Parties hereto, and shall be binding upon the Parties hereto and
their respective successors, assigns, heirs, executors, administrators and
legal representatives. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the Parties hereto, or their
respective successors, assigns, heirs, executors, administrators and legal
representatives any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
15.5 Notices. All notices, requests, demands, elections and other
communications which any Party to this Agreement may be required to give
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, by a reputable courier service which requires a signature
upon delivery, by mailing the same by registered or certified first class mail,
postage prepaid, return receipt requested, or by telecopying with receipt
confirmation (followed by a first class mailing of the same) to the Party to
whom the same is so given or made. Such notice, request, demand, waiver,
election or other communication will be deemed to have been given as of the
date so delivered or electronically transmitted or two days after mailing
thereof.
15.5.1 Notice to Seller.
Xxxxxxx X. Xxxxxxx
000 XxXxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
FAX: N/A
Phone: (000) 000-0000
Xxxxxxx X. Xxxxx
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
With a required copy to:
Xxx Xxxxxx
2BeMA Network, Inc.
00 Xxxxxxx Xxxxxx Xxxx
Xxx Xxxxxxxxx, XX 00000
FAX: ___________________
Phone: ___________________
Xxxxx X. Xxxxxxxx, Esq.
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Suite 3601 Grant Building
000 Xxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
15.5.2 Notice to Purchaser.
Balanced Care Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esquire
With a required copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esquire
Or to such other addresses as such Party shall have specified by notice to
every other Party hereto.
15.6 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the Ancillary Agreements and documents delivered at
Closing pursuant hereto and thereto constitute the entire agreement and
understanding between the Parties hereto as to the matters set forth herein and
therein and supersede and revoke all prior agreements and understandings, oral
and written, between the Parties hereto or thereto or otherwise with respect to
the subject matter hereof or thereof. No change, amendment, termination or
attempted waiver of any of the provisions hereof or thereof shall be binding
upon any Party unless set forth in an instrument in writing signed by the Party
to be bound or their respective successors in interest.
15.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument.
15.8 Headings. The article, section and other headings contained
in this Agreement are for reference purposes only and shall not be deemed to be
a part of this Agreement or to affect the meaning or interpretation of this
Agreement.
15.9 Construction. Within this Agreement, the singular shall
include the plural and the plural shall include the singular, and any gender
shall include all other genders, all as the meaning and the context of this
Agreement shall require.
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15.10 Governing Law and Choice of Forum. The validity and
interpretation of this Agreement shall be construed in accordance with, and
governed by the internal laws of the Commonwealth of Pennsylvania. All claims,
disputes or causes of action relating to or arising out of this Agreement shall
be brought, heard and resolved solely and exclusively by and in state court
situated in Beaver County, Pennsylvania. The Parties hereto agree to submit to
the jurisdiction of such courts and agree that such jurisdiction shall be
proper for all purposes of this Agreement.
15.11 Cooperation. The Parties hereto shall cooperate fully at their
own expense, except as otherwise provided in this Agreement, with each other
and their respective counsel and accountants in connection with all steps to be
taken as part of their obligations under this Agreement.
15.12 Severability. If any term, covenant, condition or provision of
this Agreement or the application thereof to any circumstance shall be invalid
or unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Agreement shall not be affected thereby and each remaining
term, covenant, condition and provision of this Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
15.13 Successors and Assigns. The covenants, agreements, and
conditions contained herein or granted hereby shall be binding upon and shall
inure to the benefit of Purchaser and Seller, and each of their respective
permitted successors, assigns, heirs, executors, administrators and legal
representatives. Seller shall not assign, or otherwise transfer any interest in
this Agreement to any other Person without the prior written consent of
Purchaser, which consent shall not unreasonably be withheld. Purchaser may
assign and transfer its interest in this Agreement without Seller's consent to
any of Purchaser's Affiliates or to any lender providing financing for the
transactions contemplated hereby. In addition, Purchaser anticipates financing
the transactions contemplated hereby through sale-leaseback(s). Purchaser shall
have the right to assign this Agreement, in whole or in part, in such manner as
Purchaser may desire in order to facilitate such sale-leasebacks. Purchaser
will promptly provide Seller with a copy of any such assignment, and Seller
agrees to execute and deliver any consents reasonably required by Purchaser's
lender in connection therewith, provided such assignment does not expand either
of Seller's respective obligations. and liabilities. hereunder. Notwithstanding
any permitted assignment of this Agreement by Purchaser, Purchaser shall remain
liable to Seller for all obligations and liabilities to be performed by or on
behalf of Purchaser hereunder with respect to such Seller.
15.14 Fire or Other Damage. If, prior to the Closing, all or any
part of the Real Property is damaged by fire or other casualty, Seller shall
promptly notify Purchaser of such event. Purchaser shall then have the right
to terminate this Agreement by notice to Seller given within twenty (20) days.
of Seller's notice to Purchaser, time being of the essence. If Purchaser elects
to so terminate this Agreement, the Deposit shall be returned to Purchaser and
both Parties shall be relieved and released of and from any further liability
hereunder. If Purchaser shall elect not to terminate this Agreement, or shall
be deemed to have elected to not terminate this Agreement by
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failure to give timely notice as provided above, the Closing shall occur in
accordance with the Agreement, without abatement of the Purchase Price or any
liability or obligation on the part of Seller by reason of such casualty, and
Seller shall assign to Purchaser the insurance proceeds, if any, to which
Seller would otherwise be entitled.
15.15 Condemnation. If prior to the Closing all or any of the Real
Property is taken by eminent domain, Seller shall promptly give Purchaser
notice thereof and the following shall apply:
(a) If a material part thereof is taken, either party may, by
notice to the other, elect to cancel this Agreement prior to the
Closing Date. If either Party shall so elect, both Parties shall be
relieved and released of and from any further liability hereunder, and
the Deposit shall be returned to Purchaser. If neither party shall so
elect, the Closing shall occur in accordance with this Agreement,
without abatement of the Purchase Price or any liability or obligation
on the part of Seller by reason of such taking; provided, however,
that Seller shall, at the Closing deliver to Purchaser any net
proceeds of such taking which may have been collected by Seller as a
result of such taking, or if no award or other proceeds shall have
been collected, Purchaser shall have the sole right to receive any
such award or other proceeds which are payable as a result of such
taking.
(b) If a minor or immaterial part thereof is taken, neither Party
shall have the right to terminate this Agreement and the Closing shall
nonetheless occur in accordance with this Agreement; however, the
provisions of the last sentence of clause (a), above shall apply.
IN WITNESS WHEREOF, intending to be legally bound hereby, the Parties
have caused this Agreement to be signed in their respective names by an officer
thereof duly authorized as of the date first above written.
PURCHASER:
BALANCED CARE CORPORATION
By: /s/ XXXXX X. XXXXX
------------------
Xxxxx X. Xxxxx
Vice President
SELLER:
/s/ XXXXXXX XXXXXXX XXXXX
-------------------------
Xxxxxxx Xxxxxxx Xxxxx,
a/k/a Xxxxxxx X. Xxxxx, individually
and d/b/a/ Xxxxxxx Personal Care Home
/s/ XXXXXX X. XXXXX
-------------------
Xxxxxx X. Xxxxx
/s/ XXXXXXX X. XXXXXXX
----------------------
Xxxxxxx X. Xxxxxxx, individually
and d/b/a/ Xxxxxxx Personal Care Home
/s/ XXXX X. XXXXXXX
-------------------
Xxxx X. Xxxxxxx
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