ASSET PURCHASE AGREEMENT BY AND AMONG VILLA HOMES WEST, INC., D/B/A WOODSIDEMANAGEMENT GROUP, RIDGEWOOD MANOR, LLC, PARKVIEW REAL ESTATE, LTD., WOODSIDE PROPERTIES I, LTD., AND WOODSIDE PROPERTIES II, LTD., (COLLECTIVELY AS “SELLER”) AND OP MAUMEE,...
Exhibit 10.36
BY AND AMONG
VILLA HOMES WEST, INC., D/B/A WOODSIDEMANAGEMENT GROUP,
RIDGEWOOD MANOR, LLC,
PARKVIEW REAL ESTATE, LTD.,
WOODSIDE PROPERTIES I, LTD., AND
WOODSIDE PROPERTIES II, LTD.,
RIDGEWOOD MANOR, LLC,
PARKVIEW REAL ESTATE, LTD.,
WOODSIDE PROPERTIES I, LTD., AND
WOODSIDE PROPERTIES II, LTD.,
(COLLECTIVELY AS “SELLER”)
AND
OP MAUMEE, INC.,
RE MAUMEE, INC.,
OP XXXXX, INC.,
RE XXXXX, INC.,
OP1 FREMONT, INC.,
RE1 FREMONT, INC.,
OP2 FREMONT, INC.,
RE2 FREMONT, INC.,
OP KENTON, INC.
RE MAUMEE, INC.,
OP XXXXX, INC.,
RE XXXXX, INC.,
OP1 FREMONT, INC.,
RE1 FREMONT, INC.,
OP2 FREMONT, INC.,
RE2 FREMONT, INC.,
OP KENTON, INC.
(COLLECTIVELY AS “BUYER”)
Dated as of August 30, 2002
TABLE OF CONTENTS
1. | SALE OF ASSETS AND ASSUMPTION OF LIABILITIES | 1 | ||||||
1.1 | Assets | 1 | ||||||
1.2 | Excluded Assets | 2 | ||||||
1.3 | Assumed Liabilities | 3 | ||||||
1.4 | Excluded Liabilities | 3 | ||||||
1.5 | Payments to Employees | 3 | ||||||
2. | FINANCIAL ARRANGEMENTS | 3 | ||||||
2.1 | Purchase Price | 4 | ||||||
2.2 | Allocation of Purchase Price | 4 | ||||||
2.3 | Purchase Price Adjustments | 4 | ||||||
2.4 | [Intentionally Deleted] | 4 | ||||||
2.5 | Security | 4 | ||||||
3. | CLOSING | 5 | ||||||
3.1 | Closing | 5 | ||||||
3.2 | Actions of Seller at Closing | 5 | ||||||
3.3 | Actions of Buyer at Closing | 6 | ||||||
4. | REPRESENTATIONS AND WARRANTIES OF SELLER | 7 | ||||||
4.1 | Capacity | 7 | ||||||
4.2 | Corporate Powers; Consents; Absence of Conflicts With Other Agreements | 8 | ||||||
4.3 | No Affiliates | 8 | ||||||
4.4 | Binding Agreement | 8 | ||||||
4.5 | Financial Statements | 9 | ||||||
4.6 | Licenses | 9 | ||||||
4.7 | Patents; Trademarks, Etc | 9 | ||||||
4.8 | Medicare Participation/Accreditation | 10 | ||||||
4.9 | Legal and Regulatory Compliance | 10 | ||||||
4.10 | The Contracts | 10 | ||||||
4.11 | Excluded Contracts | 11 | ||||||
4.12 | Inventory and Supplies | 11 | ||||||
4.13 | Equipment | 12 | ||||||
4.14 | Real Property | 12 | ||||||
4.15 | Condition of Assets | 14 | ||||||
4.16 | Brokers and Finders | 14 | ||||||
4.17 | Insurance | 14 | ||||||
4.18 | Employee Benefit Plans | 14 | ||||||
4.19 | Employees and Employee Relations | 15 | ||||||
4.20 | Litigation or Proceeding | 15 | ||||||
i |
4.21 | Condemnation and Assessments | 16 | ||||||
4.22 | Taxes | 16 | ||||||
4.23 | Post-Balance Sheet Results | 16 | ||||||
4.24 | Payments | 17 | ||||||
4.25 | Certain Affiliate Transactions | 17 | ||||||
4.26 | Environmental Matters | 17 | ||||||
4.27 | Construction in Progress | 19 | ||||||
4.28 | Computer Software, Etc | 19 | ||||||
4.29 | Immigration Act | 19 | ||||||
4.30 | Reports, Statements and Copies | 20 | ||||||
4.31 | Chief Executive Office | 20 | ||||||
5. | REPRESENTATIONS AND WARRANTIES OF BUYER | 20 | ||||||
5.1 | Corporate Capacity | 20 | ||||||
5.2 | Corporate Powers; Consents; Absence of Conflicts With Other Agreements, Etc | 20 | ||||||
5.3 | Binding Effect | 21 | ||||||
5.4 | Brokers and Finders | 21 | ||||||
6. | COVENANTS OF SELLER | 21 | ||||||
6.1 | Access and Information | 21 | ||||||
6.2 | Operations | 22 | ||||||
6.3 | Negative Covenants | 22 | ||||||
6.4 | Governmental Approvals | 23 | ||||||
6.5 | Exclusive Agreement | 23 | ||||||
6.6 | Closing Conditions | 23 | ||||||
6.7 | Title and Survey Matters | 23 | ||||||
6.8 | Employees | 24 | ||||||
6.9 | Cooperation | 25 | ||||||
7. | COVENANTS OF BUYER | 25 | ||||||
7.1 | Governmental Approval | 25 | ||||||
7.2 | Survey | 25 | ||||||
7.3 | Closing Conditions | 25 | ||||||
7.4 | Cooperation | 26 | ||||||
8. | CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER | 26 | ||||||
8.1 | Representations/Warranties | 26 | ||||||
8.2 | Opinion of Seller’s Counsel | 26 | ||||||
8.3 | Pre-Closing Confirmations | 27 | ||||||
8.4 | Action/Proceeding | 27 | ||||||
8.5 | No Adverse Change | 27 | ||||||
8.6 | Vesting/Recordation | 27 | ||||||
8.7 | Title to Real Estate | 28 | ||||||
ii |
8.8 | Recent Agreements and Commitments | 28 | ||||||
8.9 | Closing Documents | 28 | ||||||
8.10 | Casualty | 28 | ||||||
8.11 | Consents to Assignments | 28 | ||||||
8.12 | Appraisal | 29 | ||||||
8.13 | Environmental Survey and Physical Plant Inspections | 29 | ||||||
8.14 | Reviewed Financial Statements | 29 | ||||||
8.15 | Due Diligence | 29 | ||||||
8.16 | Allocation of Purchase Price | 29 | ||||||
8.17 | Financing | 29 | ||||||
8.18 | Liability Insurance | 30 | ||||||
9. | CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER | 30 | ||||||
9.1 | Representations/Warranties | 30 | ||||||
9.2 | Opinion of Buyer’s Counsel | 30 | ||||||
9.3 | Action/Proceeding | 31 | ||||||
9.4 | Pre-Closing Confirmations | 31 | ||||||
9.5 | Extraordinary Liabilities/Obligation | 31 | ||||||
9.6 | Allocation of Purchase Price | 31 | ||||||
9.7 | Appraisal | 31 | ||||||
10. | NONCOMPETITION | 31 | ||||||
10.1 | Restrictions | 31 | ||||||
10.2 | Enforcement | 32 | ||||||
11. | ADDITIONAL AGREEMENTS | 32 | ||||||
11.1 | Termination Prior to Closing | 32 | ||||||
11.2 | Post-Closing Access to Information | 33 | ||||||
11.3 | Preservation and Access to Patient Records After the Closing | 33 | ||||||
11.4 | Tax, Medicare, and Medicaid Effect | 34 | ||||||
11.5 | Seller’s Cost Reports | 34 | ||||||
11.6 | Employee Matters | 34 | ||||||
11.7 | Press Releases | 35 | ||||||
12. | INDEMNIFICATION | 35 | ||||||
12.1 | Indemnification by Seller | 35 | ||||||
12.2 | Limitations/Seller | 36 | ||||||
12.3 | Indemnification by Buyer | 36 | ||||||
12.4 | Limitations/Buyer | 36 | ||||||
12.5 | Indemnification Set Off and Procedure | 36 | ||||||
12.6 | [Intentionally Deleted] | 37 | ||||||
12.7 | Survival of Representations | 37 | ||||||
12.8 | Other Indemnities Included Herein | 38 | ||||||
12.9 | Indemnity Notice | 38 | ||||||
iii |
12.10 | Indemnity Limit | 38 | ||||||
13. | GENERAL | 38 | ||||||
13.1 | Interpretation | 38 | ||||||
13.2 | Schedules | 39 | ||||||
13.3 | Consented Assignment | 40 | ||||||
13.4 | Consents, Approvals and Discretion | 40 | ||||||
13.5 | Expenses; Legal Fees and Costs | 40 | ||||||
13.6 | Choice of Law; Arbitration | 40 | ||||||
13.7 | Benefit Assignment | 41 | ||||||
13.8 | Accounting Date | 41 | ||||||
13.9 | No Third-Party Beneficiaries | 41 | ||||||
13.10 | Waiver of Breach | 41 | ||||||
13.11 | Notices | 41 | ||||||
13.12 | Severability | 42 | ||||||
13.13 | Gender and Number | 42 | ||||||
13.14 | Divisions and Headings | 43 | ||||||
13.15 | Time of Essence | 43 | ||||||
13.16 | Confidentiality | 43 | ||||||
13.17 | Entire Agreement/Amendment | 43 | ||||||
13.18 | Drafting | 44 | ||||||
13.19 | Transition Period | 44 | ||||||
13.20 | Incorporation by Reference | 44 | ||||||
13.21 | Signing Subject to Agreement Upon Schedules | 44 | ||||||
iv |
THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into as of August 30, 2002, by and
among VILLA HOMES WEST, INC., D/B/A WOODSIDE MANAGEMENT GROUP, RIDGEWOOD MANOR, LLC, PARKVIEW REAL
ESTATE, LTD., WOODSIDE PROPERTIES I, LTD., AND WOODSIDE PROPERTIES II, LTD. (collectively as
“Seller”) and OP MAUMEE, INC., RE MAUMEE, INC., OP XXXXX, INC., RE XXXXX, INC., OP1 FREMONT, INC.,
RE1 FREMONT, INC., OP2 FREMONT, INC., RE2 FREMONT, INC., OP KENTON, INC. (collectively as “Buyer”).
WITNESSETH:
WHEREAS, Seller owns and operates nursing homes located throughout Ohio, specifically
identified on Exhibit “A” attached hereto, (collectively referred to as the “Nursing Home”);
WHEREAS, the board of directors, members and the shareholders of Seller have determined that
it is in the best interest of Seller to sell substantially all assets, real, personal and mixed,
tangible and intangible, owned or leased by Seller and associated with or employed in the
operations of the Nursing Home, and substantially all other related operations owned, leased or
managed by Seller which are used in or utilized by the Nursing Home (other than the Excluded Assets
as hereinafter defined and provided) (such transferred assets being referred to as the “Assets” and
the Nursing Home and such other operations being referred to collectively as the “Business”) to
Buyer;
WHEREAS, subject to the terms and conditions hereof, Buyer desires to acquire the Assets under
the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the premises, and the agreements, covenants,
representations and warranties hereinafter set forth, and other good and valuable consideration,
the receipt and adequacy of all of which are forever acknowledged and confessed, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Assets.
Subject to the terms and conditions of this Agreement, Seller agrees to sell, convey, transfer
and deliver to Buyer and Buyer agrees to purchase as of Closing (as hereinafter defined) all
assets, real, personal and mixed, tangible and intangible owned or used by Seller and associated
with or employed in the operation of the Business, other than the Excluded Assets, which assets
shall include the following (collectively, the “Assets”): (i) fee or leasehold title to the real
property described in Schedule 4.14 hereto, together with all improvements, buildings and
fixtures located thereon or therein (collectively, the “Real Property”); (ii) all major, minor or
other equipment, furniture and furnishings, including those listed on Schedule 4.13 hereto
(“Equipment Depreciation Schedule”); (iii) all supplies and inventory used in the normal course of
business or required by regulation; (iv) all prepaid expenses to the extent useable by Buyer
which are not refundable to Seller; (v) claims of Seller for refunds against third parties and
Seller’s rights to offset amounts against claims made by third parties with respect to Assumed
Liabilities, all as of the Closing Date (as hereinafter defined); (vi) all current financial,
patient, medical staff and personnel records (including, without limitation, all equipment records,
medical/administrative libraries, medical records, documents, catalogs, books, records, files,
operating manuals and current personnel records); (vii) all of the interest of Seller in all
commitments, contracts, leases, and agreements outstanding in respect of the Assets which are
described in Schedule 4.10 (collectively, the “Contracts”); (viii) all licenses and permits
to the extent assignable, held by Seller relating to the ownership, development and operations of
the Assets and the Business (including any pending or approved governmental approvals regarding the
Business); (ix) all logos, names, trade names, trademarks and service marks (or variations thereof)
associated with the Assets and the Business, all of which are set forth on Schedule 4.7;
(“Intellectual Property”) (x) subject to the terms and conditions imposed by lessors and licensers,
all computer software, programs and similar systems owned by or licensed to Seller or used in the
conduct of the Business, all of which are set forth on Schedule 4.28 hereto (“Computer
Software”); (xi) Seller’s goodwill in the Business, including the fictitious names; (xii) all
telephone numbers associated with the Business; (xiii) all certificates of need and provider
agreements; and (xiv) Seller’s interest in all property, real, personal and mixed, tangible and
intangible, arising or acquired in the ordinary course of Seller’s Business between the date hereof
and Closing which are not otherwise Excluded Assets subject to Section 1.2 below. Seller shall
convey good title to the Assets and all parts thereof to Buyer free and clear of all liens,
pledges, rights of first refusal, options, restrictions, encumbrances, liabilities, claims,
assessments, security interests and defects in title, except as permitted or provided herein to the
contrary.
1.2 Excluded Assets.
Any provision hereof to the contrary notwithstanding, the following items which are related to
the Assets are not intended by the parties to be a part of the sale and purchase hereunder and are
excluded from the Assets (collectively, the “Excluded Assets”): (i) assets reflected on the
Financial Statements (as hereinafter defined) in the entries entitled: “Cash and cash equivalents,”
“Accounts Receivable(as of the Closing Date) and “Investments”; (ii) rights to settlements and
retroactive adjustments, if any, for cost reporting periods ending on or prior to the Closing Date
arising from or against the United States government under the terms of the Medicare program and
against the State of Ohio under the Medicaid program and against Blue Cross and Blue Shield and
other third-party payor programs; (iii) all equipment, inventory and prepaid expenses disposed of
or exhausted prior to Closing in the ordinary course of business; (iv) the Excluded Contracts (as
hereinafter defined); (v) all suits, claims, judgments, and choses in action by and in favor of
Seller; (vii) all refunds, rebates or other payments from the Bureau of Workers’ Compensation
attributable to periods prior to Closing; (viii) all prepaid expenses, taxes, or other refunds and
other claims or choses in action of the Seller, other than identified in Section 1.1(ii) above;
(ix) any other refunds due from any person or entity, including governmental entities not set forth
herein, the right to which arose prior to Closing; (x) all prepaid life insurance insuring the life
of Xxxxxxx X. Xxxxxx, and the policies evidencing such insurance; (xi) all prepayments of other
insurance on the Assets pro-rated to the date of the Closing; (xii) any records, including Seller’s
corporate minute books and any other records which Seller, by law, is required to retain in its
possession, provided, however, that reasonable access
2
will be granted to the Buyer; (xiii) all personal items belonging to residents in the Nursing
Home; and (xiv) such other assets, if any, as are set forth on Schedule 1.2 hereto,
including all of the tangible personal property, including, but not limited to, equipment and
fixtures, located at, and the leasehold interest for, Seller’s headquarters at 0000 Xxxxxx Xxxxx,
Xxxxxxx, Xxxx, 00000.
1.3 Assumed Liabilities.
As of the Closing Date, Buyer shall assume and agree to pay, perform and discharge the
obligations of Seller under the Contracts arising subsequent to the Closing Date, plus those other
liabilities disclosed on Schedule 1.3 (collectively, the “Assumed Liabilities”). Seller
and Buyer agree that Buyer shall assume and perform the obligations of Seller arising subsequent to
the Closing Date under each of the Contracts, regardless of whether consent to the assignment of
each such Contract is required but not obtained; provided, however, that Seller shall indemnify and
hold Buyer harmless from and against any claim related to failure to obtain consent made against
Buyer by any party to a Contract that consent to the assignment of such Contract by Seller to Buyer
is required but has not been obtained.
1.4 Excluded Liabilities.
Except for the Assumed Liabilities, Buyer shall not assume or be obligated to pay nor shall
the Assets be subject to or bound by any liability of Seller, whether fixed or contingent, recorded
or unrecorded, including the following (collectively, the “Excluded Liabilities”): (i) the
accounts payable of Seller; (ii) accrued expenses of Seller; (iii) prorated portions of capital
lease obligations of Seller attributable to periods before the Closing as set forth on Schedule
1.4; (iv) any gain on sale and any recapture that may be recognized under the Medicare,
Medicaid and other third-party payor programs based on the transactions herein contemplated; (v)
long-term debt of Seller (including the current portion thereof); (vi) liabilities associated with
any pension plan, welfare benefit plan, or any other benefit plan or arrangement sponsored by
Seller; (vii) third-party payor settlements and retroactive adjustments, if any, for cost reporting
periods ending on or prior to the Closing Date arising under the Medicare Program, the Medicaid
Program and other third-party payor programs; (viii) liabilities or obligations arising out of any
breach by Seller of any Contract; (ix) the Excluded Contracts; (x) professional liability claims or
other claims for acts or omissions of Seller occurring prior to Closing; and (xi) employee claims
made by employees of Seller for acts or omissions on or prior to the Closing.
1.5 Payments to Employees.
At the Closing, Seller shall, if required by contract or policy consistent with its past
practice, fund an amount to pay all of its employees all accrued salaries, wages, vacation, sick
leave and other paid time off which has been earned up to the Closing Date, for those employees
hired by Buyer pursuant to Section 6.8 herein. The funding of these payments, together with any
additional operational transition issues between the parties, shall be set forth in more detail in
an Operations Transfer Agreement in substantially the same form as attached as Exhibit 1.5 herein.
2. FINANCIAL ARRANGEMENTS
3
2.1 Purchase Price.
2.1.1. Subject to the terms and conditions hereof, Buyer agrees to assume at Closing the
Assumed Liabilities and tender to Seller Eleven Million Two Hundred Thousand Dollars
($11,200,000.00) (the “Purchase Price”). The Purchase Price will be paid at Closing as follows:
(i) $500,000 in the form of a Note, payable to Villa Homes West, Inc. by Buyer, to accrue
interest at 7% per annum, with interest payments only for a period of five years (“Note”). Said
Note shall be secured by a guaranty of Tandem Health Care, Inc. (“Guarantor”), and/or a second
mortgage, as those terms shall be acceptable to the first mortgage lender and accounts receivable
financing lender of the Buyer.
(ii) $10,700,000 payable in cash, certified funds, or wire transfer on the date of the
Closing.
2.2 Allocation of Purchase Price.
Seller and Buyer shall agree prior to Closing to an allocation (the “Allocation”) of the
Purchase Price among the various classes of Assets and the covenant not to compete set forth in
Section 10 in accordance with and as provided by Section 1060 of the Internal Revenue Code of 1986,
as amended and rules and regulations promulgated thereunder (collectively, the “Code”) and to be
set forth in Schedule 2.2 hereto. In this regard, the parties agree that, if required,
they will each properly prepare and timely file Form 8594 in accordance with Section 1060 of the
Code consistent with the Allocation. The parties agree that any tax returns or other tax
information they may file or cause to be filed with any governmental agency shall be prepared and
filed consistently with the Allocation.
2.3 Purchase Price Adjustments.
In accordance with the terms of this Agreement, the Purchase Price shall be adjusted on the
Closing Date for any amounts which are due and payable by either party to the other on the Closing
Date or which are to become due and payable after the Closing Date which are attributable to
services or goods received or taxes associated with the period prior to Closing, and any amounts
which are paid prior to the Closing Date which are attributable to services or goods to be received
or taxes associated with the period subsequent to Closing, with respect to (i) the Contracts; (ii)
ad valorem taxes, if any, on the Assets; (iii) property taxes on the Assets; and (iv) utilities
(the “Prorations”). Seller shall cancel all existing utility accounts and Buyer shall arrange for
new accounts for all utilities on the Closing Date.
2.4 [Intentionally Deleted]
2.5 Security.
Buyer’s obligations under the Note shall be secured by a guaranty of Tandem Health Care, Inc.
(“Guarantor”) and by a mortgage as approved by the Lender in the form of Exhibit 2.5 hereto
(the “Mortgage”) on all of the Real Property identified on Schedule 4.14 as
4
owned by Seller (the “Real Property”). Buyer will use its commercially reasonable efforts to
obtain financing and to negotiate with its Lender to provide Seller with a mortgage on such terms
and conditions as set forth herein. Buyer must not cause, permit, or suffer any act, omission,
fact, or circumstance which would result in the Mortgage being inferior to any liens or
encumbrances other than those in favor of the lender providing Buyer with financing for the
acquisition of the Assets and/or accounts receivable financing, and securing such acquisition
financing. At the Closing, Buyer must execute and deliver all documents and take such actions as
requested by Seller to perfect its Mortgage.
3. CLOSING
3.1 Closing.
Subject to the satisfaction or waiver by the appropriate party of all the conditions precedent
to Closing specified in Articles 8 and 9 hereof, the consummation of the transactions (the
“Closing”) shall take place at the offices of Xxxxxxxx Xxxxxxxxx Professional Corporation, One
Oxford Centre, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx, 00000, at 8:30 a.m. on or
before November 27, 2002 or at such later or earlier date and/or such other location as the parties
hereto may mutually agree in writing or as otherwise provided in this Agreement (the “Closing
Date”). The Closing shall be effective as of 12:01 a.m. then prevailing Eastern time on December
1, 2002 (the “Effective Time”).
3.2 Actions of Seller at Closing.
At the Closing and unless otherwise waived in writing by Buyer, Seller shall deliver to Buyer
the following:
3.2.1 Deeds containing special or limited warranty of title, duly executed by Seller in
recordable form, conveying to Buyer good and marketable fee title to the Real Property described in
Schedule 4.14, subject only to the liens and encumbrances permitted herein;
3.2.2 General Bills of Sale and Assignment duly executed by Seller, conveying to Buyer good
and valid title to all tangible and intangible assets which are a part of the Assets and owned by
Seller, which title shall be free and clear of all liens, security interests, pledges, rights of
first refusal, options, restrictions, encumbrances, and defects in title, except for current taxes
not yet due and payable and except as provided or permitted herein;
3.2.3 Assignments of Contracts, duly executed by Seller conveying to Buyer Seller’s interest
in the Contracts and in all Assets which are leased by Seller;
3.2.4 Copy of resolutions duly adopted by the board of directors, members and the shareholders
of Seller authorizing and approving the performance by Seller of the transactions set forth herein
and the execution and delivery of this Agreement and the documents described herein, certified as
true and of full force as of Closing by an appropriate officer of Seller;
5
3.2.5 Certificate of the President of Seller, or authorized member of the applicable limited
liability company, as the case may be, in his or her official capacity, certifying that (a) each
covenant and agreement of Seller to be performed prior to or as of Closing pursuant to this
Agreement has been performed in all material respects, and (b) as of Closing all of the respective
representations and warranties by or on behalf of Seller contained in this Agreement are true and
correct;
3.2.6 Certificates of incumbency for the respective officers of Seller executing this
Agreement or making certifications for Closing dated as of Closing;
3.2.7 Certificate of existence and active status of Seller from the Ohio Secretary of State,
dated no earlier than ten (10) business days prior to Closing;
3.2.8 The opinion of Seller’s counsel as described in and provided by Section 8.2 hereof;
3.2.9 Closing Statement that has been agreed to by each party;
3.2.10 A current list of all employees of Seller, which shall include names, titles, rates of
pay, vacation days, and any other compensation and benefits provided to such employees;
3.2.11 Assignment of the fictitious trade name(s) in a form acceptable to the Ohio Secretary
of State;
3.2.12 Seller will, on the Closing Date, transfer to Buyer all patient and/or resident funds
presently held by Seller. Buyer agrees to assume custody of, and total responsibility for such
accounts and deal with them in the fiduciary capacity required by law. Seller will indemnify and
hold Buyer harmless from all liabilities, claims and demands in the event that the amount of funds,
if any, transferred or assigned to Buyer does not represent the full amount of the funds then or
thereafter shown to have been delivered to Seller as custodian; and
3.2.13 Such other instruments and documents, including consents to assignments of Contracts,
as Buyer reasonably deems necessary to effect the transactions contemplated hereby.
3.3 Actions of Buyer at Closing.
At the Closing and unless otherwise waived in writing by Seller, Buyer shall deliver to Seller
the following:
3.3.1 The Purchase Price in same-day funds (which shall be delivered to Seller’s Agent);
3.3.2 An Assumption Agreement, duly executed by Buyer, assuming the future payment and
performance of the Assumed Liabilities;
6
3.2.3 One or more down-dated Title Commitments covering the Real Property as described in and
provided by Section 6.7 hereof;
3.3.4 Copies of resolutions duly adopted by the board of directors of Buyer authorizing and
approving Buyer’s performance of the transactions set forth herein and the execution and delivery
of this Agreement and the documents described herein, certified as true and of full force as of
Closing by an appropriate officer of Buyer;
3.3.5 Certificate of the Chairman of Buyer, in his official capacity, certifying that (a) each
covenant and agreement of Buyer to be performed prior to or as of Closing pursuant to this
Agreement has been performed in all material respects, and (b) as of Closing all of the respective
representations and warranties by or on behalf of Buyer contained in this Agreement are true and
correct in all material respects;
3.3.6 Certificates of incumbency for the respective officers of Buyer executing this Agreement
or making certifications for Closing dated as of Closing;
3.3.7 Certificate of existence and active status of Buyer from the Ohio Secretary of State,
dated no earlier than ten (10) days prior to Closing;
3.3.8 A certificate from the Secretary of State of Ohio, dated no earlier than 10 days prior
to Closing, showing that Guarantor is qualified to conduct business in Ohio.
3.3.9 Closing Statement that has been agreed to by each party;
3.3.10 The Note, as defined herein, and all security documents described in Section 2.5
herein; and
3.3.11 Buyer’s opinion letter as referenced in Section 9.2 herein.
3.3.12 Such other instruments and documents as are ordinarily required to effect the
transactions that are necessary and appropriate to consummate the transactions contemplated by this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof, Seller represents and warrants to Buyer that the following facts and
circumstances are and, at the Closing Date, will be true and correct:
4.1 Capacity.
Seller consists in part of several corporations and limited liability companies duly
organized, validly existing and of active status under the laws of the State of Ohio. Seller has
the requisite power and authority to execute, deliver, and perform its obligations under this
Agreement and all transactions contemplated hereby. Seller has taken all requisite action to
authorize the execution, delivery, and performance of Seller’s obligations hereunder. Seller has
the requisite power and authority to conduct its business as now being conducted. Seller is duly
7
authorized, qualified and licensed under all applicable laws, regulations, ordinances and
orders of governmental authorities having jurisdiction over the Assets and operations of the
Business to own its properties and conduct its business in the place and manner now conducted.
4.2 Corporate Powers; Consents; Absence of Conflicts With Other Agreements.
The execution, delivery and performance of this Agreement by Seller and all other agreements
referenced in or ancillary hereto to which Seller is a party or is to become a party at the Closing
and the consummation of the transactions set forth herein by Seller:
4.2.1 are within Seller’s powers, are not in contravention of law and have been duly
authorized by all necessary action of Seller;
4.2.2 do not and will not conflict with any provision of Seller’s articles of incorporation or
code of regulations, partnership agreements or operating agreements;
4.2.3 except as otherwise expressly herein provided, do not require any approval or consent
of, or filing with, any governmental agency or authority which is required by law or the
regulations of any such agency or authority;
4.2.4 except as otherwise expressly provided herein, including without limitation (and subject
to) other Contracts which require consents to assignment, will neither conflict with nor result in
any breach of or constitute a default (or an event which, with or without notice or lapse of time,
or both, would constitute a default) under or contravention of, nor cause the acceleration of the
maturity of the Contracts or the Assumed Liabilities, or the creation of any lien, charge or
encumbrance affecting any of the Assets;
4.2.5 will not violate any statute, law, rule or regulation of any governmental authority to
which Seller, the Business, or the Assets may be subject if such violation would have a material
adverse affect on the Business or the Assets; and
4.2.6 will not violate any order, writ, injunction, decree, or judgment of any court or
governmental authority to which Seller, the Business, or the Assets may be subject.
4.3 No Affiliates.
Seller does not own or control, is not owned or controlled by and is not under common
ownership or control with any other Person and does not have any investments in any other entity.
4.4 Binding Agreement.
This Agreement and all agreements to which Seller is or will become a party hereunder or
pursuant hereto are and will constitute the valid and legally binding obligation of Seller and are
and will be enforceable against Seller, in accordance with the respective terms hereof or thereof,
except as enforceability may be restricted, limited or delayed by applicable
8
bankruptcy or other laws affecting creditors’ rights generally and except as enforceability
may be subject to general principles of equity (the “Enforceability Exceptions”).
4.5 Financial Statements.
Seller has delivered to Buyer copies of the following financial statements of Seller
(collectively with the Interim Financial Statements, “Financial Statements”):
(i) Financial Statements as of December 31, 2001, and additional Financial Statements as of
June 30, 2002.
The Financial Statements are true, complete and accurate and fairly present the financial
condition and results of operations of Seller as at the respective dates thereof and for the
periods therein referenced, have been prepared in accordance with GAAP; to Seller’s best knowledge
and belief having made reasonable inquire, the unreviewed Financial Statements are true, complete
and accurate and fairly present the financial condition and results of operations of Seller as at
the respective dates thereof and for the periods therein referenced, have been prepared in
accordance with GAAP, except as set forth on Schedule 4.5; and the Financial Statements reflect the
consistent application of such accounting principles throughout the periods involved.
Since the furnishing of the Financial Statements, no material adverse change has occurred.
The Financial Statements do not contain any untrue statement or omission of a material fact and are
not misleading in any regard. Seller is solvent and no bankruptcy, insolvency or similarly
proceeding is pending against Seller.
4.6 Licenses.
Seller has all licenses and permits relating to the ownership of the Assets and the operation
of the Business as are currently necessary and required for such ownership and operation, as
currently conducted. Attached hereto is an accurate list and summary description of and copy
(Schedule 4.6) of all licenses and permits, owned or held by Seller relating to the
ownership or operations of the Nursing Home, the Business, or the Assets, including the number of
beds currently licensed at each Nursing Home all of which are now and as of Closing shall be in
good standing and not subject to meritorious challenge, i.e., a challenge that has merit. There
are no provisions in, or agreements relating to, any such licenses or permits which would preclude
or limit Buyer from operating the Nursing Home and using all the beds of the Nursing Home as they
are currently classified. As of the Closing Date, there shall be no change in the number of beds
listed on Schedule 4.6 with respect to any of the Nursing Homes.
4.7 Patents; Trademarks, Etc.
Seller does not own, or have any interest whatsoever, in patents, patent applications, trade
names, trademarks, trademark registrations, applications therefor, licenses (other than normal
governmental licenses for operation of the Business), franchises or other assets of like kind,
other than those listed on Schedule 4.7 (“Intellectual Property”). Seller has the right to
use, free and clear of any royalty or payment obligations, claims of infringement of other liens of
all such items.
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4.8 Medicare Participation/Accreditation.
Seller is eligible to receive payment under Titles XVIII and XIX of the Social Security Act
and is a “provider” under existing provider agreements with the Medicare and Medicaid Programs (the
“Programs”) through the applicable intermediaries and the Ohio Department of Job and Family
Services (“ODJFS”). The Nursing Home is in substantial compliance with the conditions of
participation in the Programs. There is not pending, nor to the best knowledge of Seller
threatened, any proceeding or investigation under the Programs involving the Nursing Home or any of
the Assets. The cost reports of the Nursing Home for the Programs for the fiscal years through
2001, have been filed. The cost reports of the Nursing Home for the Programs for the fiscal year
ending 2002 will be filed on or before their due dates, and Seller shall promptly provide Buyer
with copies thereof. The cost reports of the Nursing Home were filed when due. Seller hereby
agrees to indemnify and hold Buyer harmless for any Losses (as hereinafter defined) that result
from the filing of any such cost reports. True and correct copies of all such reports for the
three (3) most recent fiscal years of the Nursing Home have been furnished to Buyer. There are no
claims, actions or appeals pending before ODJFS, any intermediary or carrier, the Provider
Reimbursement Review Board or the Administrator of the Centers for Medicaid and Medicare Services,
with respect to any federal or state Medicare or Medicaid cost reports or claims filed by Seller on
or before the date hereof, or any disallowances in connection with any audit of such cost reports.
Buyer shall have the right to review all cost reports that Seller is required to file after the
date of this Agreement prior to Seller’s filing the same. All cost reports have been and shall be
prepared in all material respect and shall be timely filed in accordance with and in compliance
with all applicable government rules and regulations. Furthermore, Seller shall indemnify and hold
Buyer harmless for all costs and damages incurred by Buyer with respect to the recoupment project
currently being conducted by the ODJFS relating to periods on or before the Closing Date. The
Nursing Home is in substantial compliance in all material respects with all rules, regulations and
requirements of all governmental agencies having jurisdiction over the programs in which the
Nursing Home participates.
4.9 Legal and Regulatory Compliance.
Seller is in substantial compliance with all applicable laws of federal, state and local
authorities and all applicable rules, regulations and requirements of all federal, state and local
commissions, boards, bureaus and agencies having jurisdiction over the Assets and of the operations
of the Business; and Seller has timely filed all reports, data and other information required to be
filed with such commissions, boards, bureaus and agencies except where a failure to file timely
would not have a material adverse effect on the Assets or the Business operations of Seller.
4.10 The Contracts.
Attached hereto is a true and complete list (Schedule 4.10) of all Contracts.
Notwithstanding the foregoing, all contracts between Seller and any nursing home resident are on
one of the contracts that are attached hereto as a part of Schedule 4.10 and the name of
each resident and the type of standard form contract in effect for such resident are listed on
Schedule
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4.10. Other than the contracts between Seller and nursing home residents, Seller has
delivered true and correct copies of all Contracts listed on Schedule 4.10 to Buyer.
Except as disclosed in Schedule 4.10:
4.10.1 The Contracts constitute valid and legally binding obligations of Seller and, to
Seller’s knowledge, are enforceable in accordance with their terms, subject to the Enforceability
Exceptions;
4.10.2 The copy of each of the Contracts delivered by Seller to Buyer constitutes the entire
agreement by and between the respective parties thereto with respect to the subject matter thereof;
4.10.3 All material obligations required to have been performed by Seller under the terms of
the Contracts have been performed, and no act or omission has occurred or failed to occur which,
with the giving of notice, the lapse of time, or both, would constitute a default or breach of any
Contract by Seller, upon which a cause of action may be maintained in a court of competent
jurisdiction;
4.10.4 No other party or parties to any Contract is in material default thereunder, nor has
any event occurred which with the giving of notice or the lapse of time, or both, would constitute
a material default by any other party, with respect to any term or condition of any of the
Contracts;
4.10.5 Seller has not received notice to the effect that, nor has Seller any knowledge that,
any party to any of the Contracts intends to cancel, terminate or amend any of the Contracts; and
4.10.6 Schedule 4.10 accurately identifies all parties to the Contracts and, where
applicable, specifies the relationship of each such party to Seller or any of Seller’s
shareholders, board of directors, officers, or other affiliates.
4.11 Excluded Contracts.
Attached hereto is a true and complete list (Schedule 4.11) of all commitments,
contracts, leases and agreements which Seller shall not assign to Buyer and Buyer shall not assume
as of Closing (the “Excluded Contracts”). True and complete copies of the Excluded Contracts have
been furnished to Buyer. The Contracts listed on Schedule 4.10 and the Excluded Contracts
collectively constitute all commitments, contracts, leases and agreements to which Seller is a
party relating to the Assets and the Business.
4.12 Inventory and Supplies.
All items of supplies on hand on the date of this Agreement and to be on hand on the Closing
Date consist and will consist of items of a quality usable or saleable in the ordinary course of
the Business. The quantities of all supplies are, in Seller’s experience, reasonable and justified
under the normal operations of the Nursing Home.
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4.13 Equipment.
Attached hereto is a depreciation schedule as of July 31, 2002 (Schedule 4.13) by
Nursing Home which lists all the equipment owned or leased by Seller constituting any part of the
Assets. Since the above-referenced date, Seller has not sold or otherwise disposed of any item of
equipment constituting any part of the Assets except in the ordinary course of business and, in the
case of any item of equipment having a value in excess of $5,000 per Nursing Home, without
comparable replacement therefor. All of the Assets consisting of equipment are adequately
maintained and in functional condition, except for reasonable wear and tear. Seller has good and
valid title to such equipment (except for equipment leased to Seller as to which Seller has good
and valid leasehold interest). Seller will convey to Buyer at Closing all of Seller’s interest in
all equipment owned or leased by Seller free and clear of any lien or security interest or other
encumbrance. No person other than Seller owns any equipment situated on the Real Property, except
for items leased to Seller and disclosed in Schedule 4.10.
4.14 Real Property.
Seller owns fee title to the real property described in Schedule 4.14 hereto, together
with all buildings, improvements and fixtures thereon and all appurtenances and rights thereto
(collectively, the “Real Property”). The Real Property will be conveyed to Buyer at Closing by
special or limited warranty deed subject only to the following (collectively, the “Permitted
Encumbrances”): (i) current taxes, that are a lien not yet due and payable on the Closing Date;
(ii) rights of tenants in possession under leases or contracts described in Schedule 4.10;
(iii) easements, conditions, or restrictions of record provided that none of the foregoing are
violated by any existing improvements or the present use thereof; (iv) dedicated streets, roads,
and rights of way; (v) all applicable zoning and other laws which do not interfere with existing
use; (vi) matters disclosed on the Survey (as defined in Section 7.2) and (vii) other matters on
the Title Commitment (as hereinafter defined) to which Buyer does not object. The Real Property
comprises all of the real property in the Business.
4.14.1 Seller has good, indefeasible and insurable fee simple title to each parcel of Real
Property, free and clear of any and all mortgages, liens, charges, claims, collateral assignments,
leases, attachments, levies, encroachments, rights-of-way, equities, restrictions, assessments, and
all other title matters whatsoever, except those to be paid at the Closing and the Permitted
Encumbrances, and will defend the same against the claims of all persons wrongfully claiming by,
through or under Seller;
4.14.2 Seller has not received notice of a violation of any applicable ordinance or other law,
order, regulation or requirement (which violation has not been cured) relating to any part of the
Real Property, including building, zoning, environmental laws and the Americans With Disabilities
Act of 1990, as amended;
4.14.3 There is not existing, and to the best knowledge of Seller, there is not presently
contemplated or proposed, any eminent domain, condemnation or similar action, or zoning action or
proceeding, with respect to any portion of the Real Property;
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4.14.4 Seller has no knowledge nor has received a notice of any contemplated or proposed
moratorium or similar impediment to land development, building construction, or hook-up to usage of
water or sewer or other utility services that could materially adversely affect the use of the Real
Property as it is currently being utilized;
4.14.5 The Real Property and its operation are in compliance with all applicable zoning
ordinances, local building codes and ordinances or are operating under a valid zoning variance; the
use and operation of the Nursing Home as a nursing home is a permitted use under the applicable
zoning code(s); Seller has received no notice that the Nursing Home is in violation, which
violation has not been cured, of local building codes, ordinances or zoning laws; and the
consummation of the transactions set forth herein will not result in a violation of any applicable
zoning ordinance or the termination of any applicable zoning variance now existing;
4.14.6 Seller has not received any notice which currently remains uncured that indicates that
Seller has failed to obtain any license, permit, approval, certificate or other authorizations
required by applicable statutes, laws, ordinances or regulations for the use and occupancy of the
Real Property;
4.14.7 No part of the Real Property contains or is located within any tideland, wetland, or
marshland;
4.14.8 There are no parties in possession of the Real Property or any portion thereof as
managers, lessees, tenants, or trespassers;.
4.14.9 There is access to the Real Property from a dedicated public right-of-way. No fact or
condition exists which would result in the termination or reduction of the current access to or
from the Real Property to such right-of-way;
4.14.10 There is available to the Real Property propane gas, water, sanitary sewer lines,
storm sewers, electrical, and telephone services in operating condition which are adequate for use
of the Real Property for the operation of the Nursing Home. The Real Property has access to
utility lines located in a dedicated public right-of-way. There is no, and on the Closing Date,
there will be no, pending or threatened governmental or third party proceeding which would impair
or result in the termination of such utility availability;
4.14.11 Seller has not received and has no actual knowledge of any notice or request, formal
or informal, from any insurance company or board of fire underwriters (i) identifying any defects
in the Nursing Home which would adversely affect the insurability of the Nursing Home, or (ii)
requesting the performance of any work or alteration with respect to the Nursing Home; and
4.14.12 Seller has no knowledge nor has received a notice of any public improvements which
have been ordered to be made and/or which have not hereto fore been assessed, and there are no
special, general or other assessments pending, threatened against, affecting or to affect the
Nursing Home.
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4.15 Condition of Assets.
All of the mechanical and electrical systems, heating and air conditioning systems, plumbing,
water and sewer systems, and all other items of mechanical equipment or appliances and tangible
personal property will be in good working order, condition, and repair, normal wear and tear
excepted, of sufficient size and capacity to service the Nursing Home and to comply with all
applicable ordinances and regulations, and with all building, zoning, fire, safety, and other
codes, laws and orders. All buildings and improvements, including the roof and the foundation, as
of the Closing Date, will be structurally sound and free from leaks and other defects, normal wear
and tear excepted.
4.16 Brokers and Finders.
Seller has not and will not engage any broker or finder in connection with this Agreement and
the transactions contemplated hereunder unless Seller notifies Buyer of such engagement, in which
event Seller agrees to be solely responsible for all fees, charges, costs and expenses of any such
broker or finder.
4.17 Insurance.
Schedule 4.17 sets forth a true and complete list of all insurance policies or
self-insurance funds of any nature whatsoever maintained by Seller as of the date hereof covering
the ownership and operation of the Assets, which Schedule reflects the policies’ numbers, terms,
identity of insurers, amounts and coverages. Seller has not as of the date hereof (i) received any
written notice from any such insurance company canceling or materially amending any of said
insurance policies, or (ii) failed to give any required notice or present any claim which is still
outstanding under any of said policies. Seller hereby represents and warrants that for the last
five (5) years, Seller has had an occurrence-based professional liability insurance policy in place
with coverage of at least $1,000,000.00 per occurrence.
4.18 Employee Benefit Plans.
Except as set forth on Schedule 4.18, Seller does not currently, nor for the last five
(5) years did Seller sponsor, maintain, or contribute to any “employee benefit plans” as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder (“ERISA”) (other than Seller’s paid time-off policy)
including, without limitation, any “multi-employer plan” as defined in Section 3(37) of ERISA.
Neither Seller nor, to the best knowledge of Seller, any other person has engaged in a transaction
with respect to any employee benefit plan listed or required to be listed on Schedule 4.18
which could subject any such plan or Buyer to a penalty for engaging in a prohibited transaction
under ERISA or an excise tax under subtitle D, Chapter 43 of the Code. Each of the employee
benefit plans listed or required to be listed on Schedule 4.18 has been operated and
administered in compliance with applicable law, except for any such failure which would not
subject Buyer to any penalty or other liability and except for any such failure which would not
have an adverse effect upon the applicable plan or any participant therein. Seller has not
incurred nor presently expects to incur any liability under Title IV of ERISA that could result in
liability to Buyer. Each
14
employee benefit plan listed or required to be listed on Schedule 4.18 that is a group
health plan within the meaning of Section 5000(b)(1) of the Code is in compliance with the
provisions of Section 4980B(f) of the Code, except for any such noncompliance which would not
subject Buyer to any penalty or liability and except for any such failure which would not have a
material adverse effect upon the applicable plan or any participant therein. Except as disclosed
on Schedule 4.18, there is not any pending or, to the best knowledge of Seller, threatened
claim by or on behalf of any employee benefit plan, by any employee covered under any such plan, or
otherwise involving any employee benefit plan (other than routine noncontested claims for
benefits).
4.19 Employees and Employee Relations.
Schedule 4.19 attached hereto sets forth a complete list (as of the date set forth
therein) of names and positions, of all full-time and part-time employees of Seller employed in the
Business and indicating whether such employee is a part-time or full-time employee. There is no
pending or, to the best knowledge of Seller, threatened employee strike, work stoppage or labor
dispute. Except as otherwise disclosed in Schedule 4.19, no union representation question
exists respecting any employees of Seller, no collective bargaining agreement exists or is
currently being negotiated by Seller, no demand has been made for recognition by a labor
organization by or with respect to any employees of Seller, to the best knowledge of Seller, no
union organizing activities by or with respect to any employees of Seller are taking place, and
none of the employees of Seller are represented by any labor union or organization. There is no
unfair labor practice claim against Seller before the National Labor Relations Board, or any
strike, dispute, slowdown, or stoppage pending or threatened against or involving the Business.
Seller is in compliance with all federal and state laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours. Seller is not engaged in any
unfair labor practices. Except as set forth on Schedule 4.20, there are no claims or
charges pending with any Federal, State, or local agency, or, to the best knowledge of Seller,
threatened claims or charges which relate to Equal Employment Opportunities, wage and hour claims,
unemployment compensation claims, workers’ compensation claims or the like against Seller.
4.20 Litigation or Proceeding.
Attached hereto is an accurate list and summary description (Schedule 4.20) of all
litigation or proceedings with respect to the Business or the Assets to which Seller is a party,
including charges of discrimination and administrative agency complaints. Except to the extent set
forth on Schedule 4.20; (i) there are no claims, actions, suits, proceedings or
investigations by any governmental agency or regulatory body pending or, to the best knowledge of
Seller, threatened against or affecting Seller; (ii) Seller has not received notice of any
threatened actions, suits, proceedings or investigations against Seller, the Business, or the
Assets, at law or in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality wherever located; (iii) there are
no outstanding judgments against Seller, the Business or the Assets; (iv) there is no labor dispute
affecting the Business; and (v) Seller has no knowledge of any facts or circumstances which might
reasonably form the basis for any such action, suit or proceeding.
15
4.21 Condemnation and Assessments.
Seller has not received notice of, and there are no pending or, to the best knowledge of
Seller, threatened, condemnation, assessment, or similar proceeding affecting or relating to the
Real Property, or any portion thereof, any utilities, sewers, roadways or other public
improvements.
4.22 Taxes.
Seller has, within the time and in the manner prescribed by law, filed or properly requested
extensions for all federal, state and local tax and other information return and reports (“Tax
Returns”) required to be filed by it and has collected and remitted all payroll taxes required by
federal and state law, and, if required, has paid in full or made adequate provisions for the
payment of all known taxes (including income, franchise, sales and use, excise, severance,
property, gross receipts and payroll taxes, together with any interest, penalties, assessments or
deficiencies, hereinafter referred to collectively as “Taxes” or singularly as a “Tax”), for all
periods ending on or before the date hereof and on or before the Closing Date. All such Tax
Returns are and will be true, correct and complete in all material respects and in compliance in
all material respects with the laws, rules and regulations applicable to such Tax Returns. Seller
is not a party to any action or proceeding by a government authority for the assessment or
collection of Taxes which may adversely affect Seller, the Business, or the Assets or affect future
rights in or use of the Assets, and no such claim against Seller for additional Taxes, penalties or
interest is pending or, to the best of Seller’s knowledge, threatened.
4.23 Post-Balance Sheet Results.
Except as otherwise disclosed herein (including the Schedules hereto) or as disclosed on
Schedule 4.23 hereto, since December 31, 2001 to the date of this Agreement, there has not
been:
4.23.1 any material adverse change in the financial condition, assets, liabilities (contingent
or otherwise), working capital reserves, income or business of Seller or the Business;
4.23.2 any material damage, destruction or loss (whether or not covered by insurance)
affecting the Assets;
4.23.3 any increase in the compensation payable or to become payable by Seller to any of its
employees, or any bonus payment or arrangement made to or with any employees, except in the
ordinary course of business in accordance with existing personnel policies, and Seller has not
employed any additional senior management personnel;
4.23.4 any labor dispute, law or regulation or any event or condition of any character
materially and adversely affecting the Business;
4.23.5 any sale, assignment, transfer or disposition of any item of plant, property or
equipment having a value in excess of Five Thousand Dollars ($5,000) (other than supplies), except
in the ordinary course of business or with comparable replacement thereof;
16
4.23.6 the occurrence of any material liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) except in the ordinary and regular course of the Business;
4.23.7 the payment, discharge or satisfaction of any liability or obligation (whether
absolute, accrued, contingent or otherwise) other than by payment, discharge or satisfaction in the
ordinary and regular course of the Business;
4.23.8 any change in any method of accounting or accounting practice;
4.23.9 any incurring or assumption of indebtedness by Seller for borrowed money, any guarantee
of Seller, directly or indirectly, of indebtedness or others, except in the ordinary course of the
Business; or
4.23.10 the payment of any amount to any federal, state or local government or authority or
any other third-party for any claim, obligation, liability, loss, damage or expenses, of whatever
kind or nature, incurred or imposed or based upon any provision of federal, state or local law or
regulations or common law pertaining to environmental protection.
4.24 Payments.
Neither Seller nor anyone acting on behalf of Seller has, directly or indirectly, paid or
delivered or agreed to pay or deliver any fee, commission or other sum of money or item of
property, however characterized, to any Person who is in any manner related to the Business that is
illegal under any federal, state or local law.
4.25 Certain Affiliate Transactions.
No officer or member of the board of directors of Seller (“Interested Person”) and no member
of the immediate family of an Interested Person of Seller (“Family Member”), directly or
indirectly, (i) owns any interest in any corporation, partnership, proprietorship or other entity
which sells to or purchases from Seller products or services; (ii) has any cause of action or claim
whatsoever against Seller, the Assets, or the Business; or (iii) holds a beneficial interest in any
contract or agreement relating to the Business to which Seller is a party or by which Seller may be
bound.
4.26 Environmental Matters.
4.26.1(1) For purposes of this Agreement, the term “Environmental Laws” shall mean any and all
bylaws, statutes, ordinances, rules, regulations, orders or determinations of any Government
Authority pertaining to health or the environment, whether now in existence or hereafter enacted
and in effect at the time of closing, in any and all jurisdictions in which the Real Property is
located.
(2) For purposes of this Agreement, the terms “Hazardous Substances” and “release” (or
“threatened release”) have the meanings specified in the federal Comprehensive Environmental
Response, Compensation, and Liability Act (“CERCLA”); and the terms “solid
17
waste” and “disposal” (or “disposed”) have the meanings specified in the federal Resource
Conservation Recovery Act (“RCRA”); provided, however, that to the extent the applicable laws,
ordinances, rules, regulations or common law of the state in which the Real Property is located
establish a meaning for “hazardous substance,” “release,” “solid waste,” or “disposal” that is
broader than that specified in either CERCLA or RCRA, such broader meaning shall apply.
(3) For purposes of this Agreement, the term “Governmental Authority” includes the United
States, the state, county, city, and political subdivisions in which the Real Property is located
or that exercise jurisdiction over the Real Property, and any agency, court, department,
commission, board, bureau or instrumentality or any of them that exercises jurisdiction over the
Real Property.
(4) For purposes of this Agreement, the term “Environmental Condition” shall mean (a) any
release or threatened release of a hazardous substance from, in, on, under, or onto the Real
Property in violation of any Environmental Law; (b) any releases or threatened release of a
hazardous substance from the Real Property in, on, under, or onto any other property that results
in damages, loss, cost, expenses, or other liability; (c) any violation of any Environmental Law
relating to the manufacture, processing, distribution, transportation, storage, use, discharge,
handling, emission, or disposal of hazardous substances by or in connection with the Business; or
(d) any release or threatened release of a hazardous substance from, in, on, under, or onto the
Real Property resulting in liability to non-governmental third parties in tort.
4.26.2 During Seller’s ownership of the Real Property:
(1) The Real Property is in substantial compliance with all applicable Environmental Laws,
there are not any Environmental Conditions existing on or resulting from Seller’s operation of the
Real Property that may give rise to any on-site or off-site remedial obligations.
(2) The Real Property is not subject to any existing, pending or, to the best knowledge of
Seller, threatened action, suit, investigation, inquiry or proceeding by or before any Governmental
Authority under any Environmental Law.
(3) All notices, permits, licenses or similar authorizations, if any, required to be obtained
or filed by Seller under any Environmental Law in connection with the Real Property, including
those relating to the treatment, storage, disposal or release of a hazardous substance or solid
waste into the environment, have been duly obtained or filed and Seller is in compliance with the
terms and conditions of all such notices, permits, licenses and similar authorizations.
(4) There is no pending claim of any nongovernmental third-party in tort in connection with
any release or threatened release of any hazardous substances, solid wastes, petroleum, petroleum
products, asbestos, or poly-chlorinated biphenyls (“PCBs”) into the environment as a result of or
with respect to the Real Property.
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(5) Seller has not: (a) entered into or been subject to any consent decree, compliance order,
or administrative order with respect to the Real Property or any facilities or operations thereon;
(b) received notice under the citizen suit provision of any Environmental Law in connection with
the Real Property or any facilities or operations thereon; (c) received any request for
information, notice, demand letter, administrative inquiry, or formal or informal complaint or
claim or suit with respect to any Environmental Condition relating to the Real Property or any
facilities or operations thereon; or (d) been subject to or threatened with any governmental or
citizen action with respect to the Real Property or any facilities or operations thereon; and
Seller has no reason to believe that any of the above will be asserted.
4.27 Construction in Progress.
Schedule 4.27 contains a list of all material construction in progress on the Real
Property and any contracts related thereto (the “Projects”), indicating the status of payment for
and completion of each of the Projects as of the date hereof. All material approvals, consents,
permits and licenses from all applicable local, state and federal authorities for the Projects have
been obtained and are in full force and effect. Since the commencement date for each Project there
have been no material change orders not disclosed in Schedule 4.27.
4.28 Computer Software, Etc.
Seller has the right to use, free and clear of any royalty or other payment obligations or
claims of infringement, all computer software, programs and similar systems owned by or licensed to
Seller or used in the conduct of the Business; except for shrink wrap licensed or similar store
bought software, listed in Schedule 4.28 are all computer software programs and similar
systems which are used by or utilized in connection with the Business, along with the name of the
owner or licensor thereof where known by Seller; and Seller is not in conflict with or in violation
or infringement of, nor has Seller received any notice of any conflict with or violation or
infringement of or any claims conflict with, any asserted rights of any other Person with respect
to any intellectual property or any computer software, programs or similar systems, and to the best
knowledge of Seller, no other Person is in conflict with or in violation or infringement of any
such items of intellectual property or computer software, programs or similar systems.
4.29 Immigration Act.
Seller is in compliance with the terms and provisions of the Immigration Reform and Control
Act of 1986, as amended (“IRCA”). For each employee (as defined in 8 C.F.R. 274a.l(f)) of Seller
for whom compliance with the IRCA by Seller is required, Seller has obtained and retained a
complete and true copy of each such employee’s Form I-9 (Employment Eligibility Verification Form)
and all other records or documents prepared, procured or retained by Seller pursuant to the
Immigration Act. Seller has not been cited, fined, served with a Notice of Intent to Fine or with
a Cease and Desist Order, nor has any action or administrative proceeding been initiated or, to the
best knowledge of Seller, threatened against Seller, by reasons of any actual or alleged failure to
comply with the IRCA.
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4.30 Reports, Statements and Copies.
All representations and warranties made herein or in any certificate or other document
delivered in connection herein, are true and correct in all material respects and do not omit to
state any material fact or circumstance necessary to make the statements contained therein, in
light of the circumstances, under which they are made, not misleading. All other reports,
statements, certificates and other data furnished by or on behalf of Seller to Buyer in connection
with this Agreement or the transactions contemplated hereunder are true and correct in all material
respects, and the copies of all agreements, instruments, and other documents provided to Buyer are
true, correct, and complete copies and include all amendments and modifications thereof.
4.31 Chief Executive Office.
Seller maintains its chief executive office and its books and records at 0000 Xxxxxx Xxxxx,
Xxxxxxx, Xxxx, 00000 (“Chief Executive Office”). Seller does not conduct any of its business or
operations other than at the Nursing Home and its Chief Executive Office.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and as of the Closing Date, Buyer represents and warrants to Seller that
the following facts and circumstances are and, except as contemplated hereby, at the Closing Date
will be true and correct:
5.1 Corporate Capacity.
Buyer is a corporation duly organized and validly existing, of active status under the laws of
the State of Ohio. Guarantor is a corporation duly organized and validly existing, of active
status under the laws of the Commonwealth of Pennsylvania and qualified to do business in Ohio.
Buyer has the requisite power and authority to enter into this Agreement, perform its obligations
hereunder and to conduct its businesses as now being conducted. Buyer has taken all requisite
action to authorize the execution, delivery, and performance of Buyer’s obligations hereunder.
Buyer has all requisite power and authority to conduct its business as now being conducted and as
to be conducted after the Closing.
5.2 Corporate Powers; Consents; Absence of Conflicts With Other Agreements, Etc.
The execution, delivery and performance of this Agreement by Buyer and all other agreements
referenced herein to which Buyer is to become a party at the Closing and the consummation of the
transactions set forth herein by Buyer:
5.2.1 are within Buyer’s powers, are not in contravention of the law, and have been duly
authorized by all necessary action of Buyer;
5.2.2 do not and will not conflict with any provision of Buyer’s articles of incorporation or
bylaws;
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5.2.3 to the best knowledge of Buyer and except as otherwise expressly herein provided, do not
require any approval or consent of, or filing with, any governmental agency or authority bearing on
the validity of this Agreement which is required by law or the regulations of any such agency or
authority;
5.2.4 will neither conflict with nor result in any breach of, or constitute a default under
(or an event which, with or without notice of lapse of time, or both would constitute a default) or
contravention of, nor cause the creation of any lien under, any indenture, agreement, lease,
instrument or understanding to which Buyer is a party or by which Buyer is bound;
5.2.5 will not violate any statute, law, rule, regulation, order or judgment of any
governmental authority to which Buyer may be subject; or
5.2.6 will not violate any order, writ, injunction, decree or judgment of any court or
governmental authority to which Buyer may be subject.
5.3 Binding Effect.
This Agreement and all other agreements to which Buyer is or will become a party hereunder or
pursuant hereto are and will constitute the valid and legally binding obligation of Buyer and are
and will be enforceable against Buyer in accordance with the respective terms hereof and thereof,
subject to the Enforceability Exceptions.
5.4 Brokers and Finders.
Buyer has engaged, and will be solely responsible for all fees, charges, costs and expenses
of, any broker or finder which has been used or engaged by Buyer, including, but not limited to,
those listed on Schedule 5.4 hereof.
6. COVENANTS OF SELLER
6.1 Access and Information.
Between the date of this Agreement and the Closing Date, Seller shall afford to the officers
and authorized representatives and agents of Buyer reasonable access to Seller’s directors,
officers, employees (in the case of employees, with the approval of Seller, which will not be
unreasonably withheld), residents, contractors, agents, payors and intermediaries and the right to
inspect the plants, properties, books, records, and documents of Seller (and to make copies
thereof), and will furnish for inspection and copying by Buyer such additional financial and
operating data and other information in Seller’s possession regarding the Business and the Assets
as Buyer may from time to time request.
Seller shall permit Buyer access to Seller’s accountants, auditors, and suppliers for
consultation or verification of any information obtained by Buyer and shall use its best efforts to
cause such persons or entities to cooperate with Buyer in such consultation and verification. In
case of contact between Buyer and Seller’s accountants or auditors, Buyer shall be responsible for
all professional fees incurred in connection therewith. In the exercise of its rights under this
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section, Buyer shall not unreasonably interfere with the operations of Seller, the conduct of
the Business, or the relationships with Seller’s residents or suppliers.
6.2 Operations.
From the date hereof until the Closing Date, Seller will:
6.2.1 carry on the Business in substantially the same manner as Seller has heretofore and not
make any material change in operations, finance, accounting policies, or real or personal property
of the Business;
6.2.2 maintain the Assets, and keep all Real Property and equipment in as good working order
and condition as at present, ordinary wear and tear excepted;
6.2.3 perform all of Seller’s obligations under the Contracts and all agreements relating to
or affecting the Assets or the Business;
6.2.4 take all actions necessary and appropriate to render title to the Assets free and clear
of all liens, security agreements, claims, charges and encumbrances (except for the Assumed
Liabilities and Permitted Encumbrances);
6.2.5 keep in full force and effect present insurance policies or other comparable insurance;
6.2.6 maintain and preserve Seller’s business organization intact and maintain Seller’s
relationships with physicians, employees, patients, payors, suppliers, customers and others having
business relations with Seller and take such actions as are necessary to cause the smooth,
efficient and successful transition of the Business and the Assets to Buyer as of Closing;
6.2.7 permit, and allow reasonable access by, Buyer to make offers of post-Closing employment
to all of Seller’s personnel, which personnel shall be allowed to accept such offers without
penalty, competing offer or interference;
6.2.8 keep in full force and effect all certificates of need, licenses, provider numbers,
permits, certificates, qualifications, authorizations, and registrations that are required for
Seller to carry on its business in accordance with this section; and
6.2.9 consistent with past practices, Seller will make all normal and customary repairs to the
Assets or the facilities comprising the Business.
6.3 Negative Covenants.
From the date hereof to the Closing Date, with respect to the Business and the Assets Seller
will not, without the prior written consent of Buyer:
6.3.1 amend or terminate any of the Contracts, enter into any contract or commitment, or incur
or agree to incur any liability, except in the ordinary course of the Business
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and in no event greater than Five Thousand Dollars ($5,000) per item per Nursing Home or which
is not terminable without cause or penalty within sixty (60) days following Closing;
6.3.2 increase compensation payable or to become payable or make a bonus payment to or
otherwise enter into one or more bonus agreements with any employee, except in the ordinary course
of the Business in accordance with existing personnel policies and employment contracts;
6.3.3 create or assume any new mortgage, security interest or other lien or encumbrance upon
any of the Assets, whether now owned or hereafter acquired;
6.3.4 sell, assign or otherwise transfer or dispose of any property, plant or equipment (other
than supplies), except in the normal course of business, and if valued in excess of Five Thousand
Dollars ($5,000), without comparable replacement thereof; or
6.3.5 take any action outside the ordinary course of business.
6.4 Governmental Approvals.
Between the date of this Agreement and the Closing Date, Seller (a) will use its best efforts
to obtain, as promptly as reasonably practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Seller to consummate the transactions set forth
herein, (b) will provide information and communications in Seller’s possession to governmental and
regulatory authorities as Buyer or such authorities may reasonably request, and (c) will cooperate
with Buyer in obtaining, as soon as practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Seller or Buyer to consummate the transactions
set forth herein.
6.5 Exclusive Agreement.
Seller is not party to any agreement to sell any or all of the Assets, Business or Nursing
Home to any party other than Buyer. In the event any such agreement is entered into after the date
hereof, Seller shall ensure that such agreement is expressly subject to Buyer’s rights under this
Agreement.
6.6 Closing Conditions.
Between the date of this Agreement and the Closing Date, Seller will use its best efforts to
cause the conditions specified in Articles 8 and 9 hereof over which Seller has control to be
satisfied as soon as reasonably practicable, but in all events before the Closing Date.
6.7 Title and Survey Matters.
6.7.1 Title Commitment. Buyer, at its cost and expense, shall obtain and cause a copy
to be furnished to Seller of a current title commitment (the “Title Commitment”) issued by a title
insurance company selected by Buyer and reasonably acceptable to Seller (the “Title Company”),
together with legible copies of all exceptions to title referenced therein. The Title
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Commitment shall set forth the state of title to the Real Property, together with all
exceptions or conditions to such title, including all easements, restrictions, rights-of-way,
covenants, reservations, and all other encumbrances affecting the Real Property which would appear
in an owner’s or leasehold title policy, if issued. The Title Commitment shall contain the express
commitment of the Title Company to issue one or more owners’ or leasehold title policies
(collectively, the “Title Policy”) to Buyer in an amount equal to the amount of purchase price as
allocated per Section 2.3 of the Real Property insuring such title to the Real Property as is
specified in the Title Commitment. Buyer will have twenty (20) days from the date Buyer receives
the Title Commitment and Survey (as defined below) within which to cause the Title Commitment and
the Survey to be examined and to notify Seller in writing of any material objections to Seller’s
title reflected by the Title Commitment and the Survey (“Buyer’s Objection”). Seller shall have
twenty (20) days from receipt of Buyer’s written objections to cure the material defects set forth
therein, and to provide Buyer with written notice of Seller’s action to remedy such objection.
(“Seller’s Response”). If Seller does not timely cure and provide such notice, Buyer may, within
three days thereafter either (a) accept title to the Real Estate as provided, or (b) terminate the
Agreement in written notice to Seller. If Buyer does not deliver to Seller written notice of
termination within such day three day period, Buyer will be deemed to have accepted title to the
Real Estate as shown in the Title Commitment without reduction of Purchase Price. At Closing, an
authorized agent of the Title Company shall down-date and initial the Title Commitment to reflect
the condition of title of the Real Property must be consistent with the Title Commitment as
modified to delete Buyer’s objections therefrom.
6.7.2 Title Policy. Within thirty (30) days after Closing, Buyer, at its cost and
expense, shall cause the Title Policy to be furnished to Buyer. The Title Policy shall be issued
in the amount of amount of purchase price as allocated per Section 2.3 of the Real Property and
shall insure good and marketable fee simple title to the fee simple Real Property. The Title
Policy may contain the Permitted Encumbrances, but shall contain no additional exceptions to title
to the Real Property other than the standard exceptions contained in ALTA owners policy prescribed
for use in the State of Ohio, with: (a) the Standard Exception as to taxes limited to taxes for the
current and subsequent years “not yet due and payable,” (b) the Standard Exception as to unrecorded
easements, visible and apparent easements, or other matters which would be disclosed by an
inspection of the Real Property deleted; (c) the Standard Exception as to mechanics’,
materialmen’s, or similar liens or other matters relating to the completion of construction and
payment of bills with respect thereto deleted; (d) the Standard Exception as to areas, boundaries,
discrepancies, encroachments, and other matters which would be disclosed by a survey of the Real
Property deleted (subject to Buyer timely obtaining a survey); (e) zoning endorsement; (f)
comprehensive endorsement (ALTA); (g) contiguity endorsements; (h) access endorsement; and (i)
Environmental Protection Agency endorsements.
6.8 Employees.
Except for those individuals listed on Schedule 6.8 hereof (which Buyer does not
intend to hire after the Closing Date) (“Non-Hired Employees”), Seller shall use its reasonable
best efforts to cause its employees and agents to make available their employment services to
Buyer, and Buyer shall hire and continue to employee such employees of Seller as shall be necessary
to relieve Buyer of any liability or responsibility (including, but not limited to the
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responsibility to provide notice of the contemplated transactions) under the WARN Act or any
similar federal, state or local law. However, nothing contained in this Agreement shall constitute
a guaranty of continued employment of any kind for any current or former employee of Seller,
whether or not such employee is ultimately hired by Buyer.
6.9 Cooperation.
Prior to the Closing Date, Seller will not take any action that would cause the conditions
upon the obligation of the parties to effect the transactions contemplated hereby not to be
fulfilled, including taking or causing to be taken any action that would cause the representations
and warranties made by Seller herein not to be true, correct, and complete as of the Closing Date.
7. COVENANTS OF BUYER
7.1 Governmental Approval.
Between the date of this Agreement and the Closing Date, Buyer will (a) use its reasonable
best efforts to obtain, as promptly as practicable, all approvals, authorizations and clearances of
governmental and regulatory authorities required of Buyer to consummate the transactions
contemplated hereby, (b) use its commercially reasonable efforts to cooperate with Seller for
Seller to obtain full and complete releases of Seller from all the Contracts, and Assumed
Liabilities provide such other information and communications to governmental and regulatory
authorities as Seller or such authorities may reasonably request, and (c) cooperate with Seller in
obtaining, as soon as practicable, all approvals, authorizations and clearances of governmental and
regulatory authorities required of Seller to consummate the transactions contemplated hereby.
7.2 Survey.
Buyer, at the sole cost and expense of Buyer, shall obtain an as-built survey (the “Survey”)
of the Real Property acceptable to the Title Company for purposes of deleting standard survey
exceptions as provided above and reflecting all improvements visible on the grounds and all
easements, rights of way, means of ingress or egress, encroachments and drainage ditches, whether
abutting or interior, of record or on the grounds. The Survey shall reflect whether and to the
extent any portion of the Real Property lies within the 100-year flood hazardous area as defined by
applicable state or federal guidelines and shall be approved by Buyer, which approval shall not be
unreasonably withheld. The Survey shall be certified to the Title Company, Buyer’s lender and
Buyer in a form reasonably satisfactory to each.
7.3 Closing Conditions.
Between the date of this Agreement and the Closing Date, Buyer will use its reasonable best
efforts to cause the conditions specified in Articles 8 and 9 hereof over which Buyer has control
to be satisfied as soon as reasonably practicable, but in all events before the Closing Date.
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7.4 Cooperation.
Prior to the Closing Date, Buyer will not take any action that would cause the conditions upon
the obligation of the parties to effect the transactions contemplated hereby not to be fulfilled,
including taking or causing to be taken any action that would cause the representations and
warranties made by Buyer herein not to be true, correct, and complete as of the Closing Date.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions unless waived in writing by Buyer. The failure of any of the
following conditions to be met (through no fault of the Buyer) shall cause this Agreement to be
terminated with no further obligation of the parties one to the other except for Section 13.16
herein:
8.1 Representations/Warranties.
The representations and warranties of Seller contained in this Agreement shall be true when
made and on and as of the Closing Date as though such representations and warranties had been made
on and as of such Closing Date; each and all of the terms, covenants and conditions of this
Agreement to be complied with or performed by Seller on or before the Closing Date pursuant to the
terms hereof shall have been duly complied with and performed; and Buyer shall have received a
certificate to the foregoing effect from both the President of Seller, in his or her official
capacity.
8.2 Opinion of Seller’s Counsel.
Buyer shall have received an opinion from counsel to Seller dated as of the Closing Date and
addressed to Buyer, in form and substance reasonably satisfactory to Buyer to the effect that: (i)
Seller is a corporation, limited liability company, partnership, duly organized, validly existing
and of active status under the laws of the State of Ohio; (ii) Seller has full power and authority
to make, execute, deliver and perform this Agreement and each of the agreements contemplated
hereby, and all corporate or other proceedings required to be taken by Seller to authorize the
execution, delivery and performance of this Agreement and each of the agreements contemplated
hereby by Seller and to sell, convey, assign, transfer and deliver the Assets to Buyer as herein
contemplated have all been duly and properly taken; (iii) this Agreement and all other agreements,
deeds, assignments, other instruments and other agreements of conveyance and transfer to be
executed and delivered hereunder by Seller constitute the valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms, except for the Enforceability
Exceptions; and (iv) no ungiven notice to, or unobtained consent, authorization, approval or order
of any court or governmental agency or body required to be obtained by Seller is required for the
consummation of the transactions set forth herein. Such opinion shall include any other matters
incident to the matters herein contemplated as Buyer or Buyer’s counsel may reasonably request. In
rendering such opinion, such counsel may rely upon certificates of governmental officials, may
place reasonable reliance upon certificates of officers
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of Seller, and may rely on the opinions or advice of other professionals and advisors employed
by Seller.
8.3 Pre-Closing Confirmations.
Buyer shall have obtained documentation or other evidence reasonably satisfactory to Buyer
confirming the following:
(a) Seller hereby covenants to provide the Ohio Department of Health (“ODH”), the ODJFS, and
the Centers for Medicaid and Medicare Services with written notice of the Seller’s intent to
transfer ownership and operation of the Nursing Home to Buyer no less than 45 days prior to
Closing. Seller also hereby covenants to authorize Buyer to use Seller’s nursing home license with
respect to the Nursing Home pursuant to the letter of consent to be provided to the ODH until Buyer
receives a nursing home license from ODH with respect to Buyer’s operating of the Nursing Home, at
which time such authority shall lapse. Furthermore, on or before the Closing Date, Buyer shall
have obtained documentation or other evidence reasonably satisfactory from the ODH to the effect
that Buyer’s applications for a nursing home license has been tentatively approved for the Nursing
Home, and that the licenses will be issued to the Buyer in the due course of business after
notification that the closing has occurred. Buyer also shall have received no indication that any
licenses, permits, accreditation, certifications, consents and other authorizations necessary for
the continued operation of the Nursing Facility as now operated, including the continuation of
presently existing reimbursement arranges with Medicaid and Medicare, will not be issued.
(b) Expiration of all waiting periods under the HSR Act if applicable; and
(c) Ability of Seller to transfer title to the Assets as required hereby.
8.4 Action/Proceeding.
No action or proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit or obtain damages or other relief with
respect to this Agreement or the consummation of the transactions set forth herein, and no
governmental agency or body shall have taken any other action or made any request of Seller or
Buyer as a result of which Buyer reasonably and in good xxxxx xxxxx it inadvisable to proceed with
the transactions hereunder, and there shall not be in effect any order restraining, enjoining, or
otherwise preventing consummation of the transactions set forth herein.
8.5 No Adverse Change.
No material adverse change in the results of operations, financial condition or businesses of
the Business (or prospects for the continuation thereof) shall have occurred subsequent to the date
hereof, and Seller shall not have suffered any material change, loss or damage to the Assets,
whether or not covered by insurance.
8.6 Vesting/Recordation.
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Seller shall have furnished to Buyer, in form and substance reasonably acceptable to Buyer and
approved by Buyer’s counsel, deeds, bills of sale, assignments or other instruments of transfer and
consents and waivers by others, necessary or appropriate to transfer to and effectively vest in
Buyer all of Seller’s right, title and interest in and to the Assets, in proper statutory form for
recording if such recording is necessary or appropriate.
8.7 Title to Real Estate.
Buyer shall have received the Title Commitment and any objections by Buyer to exceptions
contained therein (other than Permitted Encumbrances) shall have been cured or waived as provided
herein.
8.8 Recent Agreements and Commitments.
Seller shall have delivered to Buyer an accurate list and substantially complete description
(Schedule 8.8) of all agreements relating to the Business or the Assets entered into by
Seller between the date hereof and the Closing Date, which agreements shall be included in the term
“Contracts” for the purposes of this Agreement and shall be assumed by Buyer at Closing, except for
such agreements that Buyer believes to be illegal or commercially unreasonable or outside the
ordinary course of the Business. Furthermore, Seller shall have updated all Schedules and
delivered the same to Buyer at least ten (10) days before the Closing Date.
8.9 Closing Documents.
Seller shall have executed and delivered to Buyer all of the Closing Documents required to be
executed by Seller pursuant to any term or provision of this Agreement, each of which shall be in
form and substance reasonably acceptable to Buyer.
8.10 Casualty.
If before the Closing any material part of the Assets is damaged, lost, or destroyed (whether
by fire, theft, vandalism, or other cause or casualty other than the act or omission of Buyer, its
agents, or representatives) and the same can be replaced, repaired or restored within 90 days,
Seller must promptly replace, repair, and/or restore the same to substantially the same condition
as before the damage. If in Seller’s determination, the same cannot be replaced, repaired, or
restored within 90 days, Seller must so notify Buyer within 30 days of the occurrence of the damage
or destruction. Buyer will thereupon have 10 days to notify Seller in writing of its election
either to (a) terminate this Agreement in its entirety in which event it will receive back the
Deposits; or (b) proceed to Closing and either (i) receive an assignment of insurance proceeds
payable to Seller as a result of the damage or destruction, but the Purchase Price will not be
reduced, or (ii) reduce the Purchase Price by the amount of insurance proceeds payable to Seller as
a result of the damage or destruction, but Seller will retain all such proceeds.
8.11 Consents to Assignments.
All consents, waivers and estoppels of third parties, including governmental agencies,
required to be obtained by Seller in connection with the transactions contemplated
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hereby are set forth on Schedule 8.11 hereof. All such consents shall have been
obtained by Seller in form and substance reasonably acceptable to Buyer. Seller shall use its best
efforts to obtain all other consents of third parties which are necessary or desirable to
consummate the transactions contemplated herein.
8.12 Appraisal.
Buyer shall have received an appraisal of the Assets and Business reasonably satisfactory by
Buyer indicating that the allocation of the Purchase Price contemplated by Section 2.2 is
appropriate.
8.13 Environmental Survey and Physical Plant Inspections.
Buyer, at its sole cost and expense, shall have received a Phase I Environmental Site
Assessment from an environmental engineering firm (and, if recommended by such firm, additional
surveys and reports) and such structural engineering inspections and reports, mechanical systems
inspections and reports, and life safety code inspections and report, all as Buyer may deem
advisable or desirable with respect to the Real Property, the scope, findings and conclusions of
which shall be in accordance with the representations and warranties set forth in Sections 4.14 and
4.15 hereof.
8.14 Reviewed Financial Statements.
Seller has delivered to Buyer Financial Statements for the fiscal year ending December 31,
2001, and will provide Buyer with the most recent Financial Statement as they become available
during the normal course of business, up to within 30 days of the Closing Date.
8.15 Due Diligence.
Seller shall have granted Buyer complete access to conduct its due diligence related to the
Assets, Business and the Nursing Home, and Buyer shall have completed its due diligence reviews,
the results of which shall be reasonably satisfactory to Buyer and Buyer’s Lenders. .
8.16 Allocation of Purchase Price.
Seller and Buyer shall have agreed to an allocation of the Purchase Price, as contemplated by
Section 2.2 hereof.
8.17 Financing.
Buyer shall have obtained one or more debt and/or equity financing commitments from a
lender(s) of its choice (“Lender”) on or before September 30, 2002, on terms and conditions
reasonably acceptable to Buyer, and Buyer shall have received the proceeds of said financing in an
amount sufficient to enable Buyer to pay the Purchase Price as of the Closing Date.
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8.18 Liability Insurance.
Not less than thirty (30) days prior to the Closing Date, Buyer shall have arranged for
professional and general liability insurance for the Buyer’s operation of the Nursing Home, to be
effective as of the Closing, on terms, and amounts, and from insurers reasonably acceptable to
Buyer.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the satisfaction, on or prior to the
Closing Date, of the following conditions unless waived in writing by Seller. The failure of any
of the following conditions to be met (through no fault of the Seller) shall cause this Agreement
to be terminated with no further obligation of the parties one to the other except for Section
13.16 herein:
9.1 Representations/Warranties.
The representations and warranties of Buyer contained in this Agreement shall be true when
made and as of the Closing Date as though such representations and warranties had been made on and
as of such Closing Date; each and all of the terms, covenants and conditions of this Agreement to
be complied with or performed by Buyer on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with and performed; and Seller have received a certificate to the
foregoing effect from both the President or any Vice President and the Chief Financial Officer of
Buyer.
9.2 Opinion of Buyer’s Counsel.
Seller shall have received from counsel to Buyer an opinion dated as of the Closing Date and
addressed to Seller, in form and substance reasonably satisfactory to Seller, to the effect that:
(i) Buyer is a corporation, duly organized, validly existing and of active status under the laws of
the State of Ohio; Guarantor is a corporation, duly organized, and validly subsisting under the
laws of the Commonwealth of Pennsylvania; (ii) Buyer and Guarantor have full power and authority to
make, execute, deliver and perform this Agreement and each of the agreements contemplated hereby,
and all corporate or other proceedings required to be taken by Buyer to authorize the execution,
delivery, and performance of this Agreement and each of the agreements contemplated hereby by
Buyer, and to purchase and receive the Assets as herein contemplated, have all been duly and
properly taken; (iii) this Agreement and the other agreements and instruments delivered hereunder
by Buyer constitute the valid and binding obligation of Buyer enforceable against Buyer in
accordance with their respective terms, except for the Enforceability Exceptions; and (iv) no
ungiven notice to or obtained consent, authorization, approval or order of any court or
governmental agency or body required to be obtained by Buyer is required for the consummation of
the transactions set forth herein. Such opinion shall include any other matters incident to the
matters herein contemplated as Seller or Seller’s counsel may reasonably request. In rendering
such opinion, such counsel may rely upon certificates of governmental officials and may place
reasonable reliance upon certificates of officers of Buyer.
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9.3 Action/Proceeding.
No action or proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit or obtain damages or other relief with
respect to this Agreement or the consummation of the transactions set forth herein, and no
governmental agency or body shall have taken any other action or made any request of Seller or
Buyer as a result of which Seller reasonably and in good xxxxx xxxxx it inadvisable to proceed with
the transactions hereunder; and there shall not be in effect any order restraining, enjoining, or
otherwise preventing consummation of the transactions set forth herein.
9.4 Pre-Closing Confirmations.
Seller shall have obtained documentation or other evidence reasonably satisfactory to Seller
confirming the following:
9.4.1 Such other consents and approvals from third parties as may be legally or contractually
required for Seller’s consummation of the transactions described herein without breach or default
of any material agreement to which Seller is a party;
9.4.2 Expiration of all waiting periods under the HSR Act, if any; and
9.4.3 The release of Seller under all Contracts and Assumed Liabilities.
9.5 Extraordinary Liabilities/Obligation.
Neither Buyer nor Guarantor shall (a) be in receivership or dissolution, (b) have made any
assignment for the benefit of creditors, (c) admitted in writing its inability to pay its debts as
they mature, (d) have been adjudicated a bankrupt, or (e) have filed a petition in voluntary
bankruptcy, a petition or answer seeking reorganization, or an arrangement with creditors under the
federal bankruptcy law or any other similar law or statute of the United States or any state, nor
shall any such petition have been filed against Buyer or Guarantor.
9.6 Allocation of Purchase Price.
Buyer and Seller shall have agreed to an allocation of the Purchase Price, as contemplated in
Section 2.2.
9.7 Appraisal.
Seller shall have received the appraisal of the Assets and Business required pursuant to
Section 8.11, indicating that the allocation of the Purchase Price contemplated by Section 2.2 is
appropriate.
10. NONCOMPETITION
10.1 Restrictions.
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Seller and Buyer recognize that Seller’s covenant not to compete is necessary to ensure the
continuation of the Business as owned and operated by Buyer subsequent to Closing, and irreparable
harm and damage will be done to Buyer in the event that Seller competes with Buyer within the area
specified in this Article. Therefore, in consideration of the premises and as a necessary
inducement for Buyer to enter into this Agreement and consummate the transactions set forth herein,
Seller and each of its members, partners and/or shareholders, as set forth on Schedule 10.1
hereto, agree that for a period of five (5) years (the “Restricted Period”) from and after the
Closing Date, neither Seller nor any shareholder, member, and/or partner shall directly or
indirectly, on its own behalf or on behalf of any competitor of Buyer in any capacity: (a)
construct, own, manage, operate, control, participate in the management or control of, or maintain
or continue any interest whatsoever in any skilled nursing care facility within a ten (10) mile
radius of the Nursing Home (the “Market”); (b) influence or attempt to influence any client or
potential client of Buyer in the Market to acquire or contract for nursing home services other than
from Buyer or its affiliates; or (c) interfere with Buyer’s relationships with any payors, vendors,
clients, or any other person who does business with Buyer.
10.2 Enforcement.
Buyer, Seller and Seller’s shareholders, partners, and/or members acknowledge and agree that
any remedy at law for any breach of the provisions of this Article 10 would be inadequate. Buyer,
Seller, and Seller’s shareholders, partners and/or members further agree that if Buyer files suit
for injunctive relief hereunder, Buyer shall not be required to prove actual monetary loss or to
establish the inadequacy of any remedy at law, and further agree that the breach or threatened
breach of such provisions may be effectively restrained. To the extent that a court of competent
jurisdiction determines that this Article is illegal, invalid or unenforceable, the illegal,
invalid or unenforceable provision shall be reformed in accordance with Section 13.12 hereof.
11. ADDITIONAL AGREEMENTS
11.1 Termination Prior to Closing.
Notwithstanding anything herein to the contrary, this Agreement may be terminated at any time:
(i) on or prior to the Closing Date by mutual consent of Buyer and Seller; (ii) on or prior to the
Closing Date by Buyer if there has been a material adverse change in the financial condition or
results of operations of the Assets since the date hereof; (iii) on or prior to closing by Buyer
if any of the conditions specified in Article 8 of this Agreement have not been substantially
satisfied and satisfaction of such condition shall not have been waived; (iv) on or prior to
Closing by Seller if any of the conditions specified in Article 9 of this Agreement have not been
satisfied and satisfaction of such condition shall not have been waived; (v) by Buyer in accordance
with the provisions of Sections 6.7 or 8.10; (vi) by Buyer or Seller if the Closing shall not have
taken place on or before 11:59 p.m. (Eastern time) on November 30, 2002 (which date may be extended
by mutual agreement of Buyer and Seller); and (vii) by Buyer or Seller if the Federal Trade
Commission or the United States Justice Department request additional documentation under the HSR
Act regarding the transactions contemplated herein.
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Notwithstanding the foregoing, a party shall not be allowed to exercise any right of
termination if the event giving rise to the termination right shall be due to the willful breach of
this Agreement by such party seeking to terminate this Agreement to perform or observe in any
material respect any of the covenants or agreements set forth herein to be performed or observed by
such party.
11.2 Post-Closing Access to Information.
Seller and Buyer acknowledge that subsequent to Closing each party may need access to
information or documents in the control or possession of the other party (or their affiliates) for
the purposes of concluding the transactions set forth herein, audits, compliance with governmental
requirements and regulations, and the prosecution or defense of third-party claims. Accordingly,
Seller and Buyer agree that for a period of seven (7) years after Closing each will, at the expense
of the requesting party and upon written request, make available to the other’s agents, independent
auditors and/or governmental agencies such documents and information as may be available relating
to the Assets for periods prior and subsequent to Closing to the extent necessary to facilitate
concluding the transactions set forth herein, audits, compliance with governmental requirements and
regulations and the prosecution or defense of claims.
11.3 Preservation and Access to Patient Records After the Closing.
After the Closing, Buyer shall, in the ordinary course of business and as required by law,
keep and preserve all medical records and other records of the Nursing Home existing as of the
Closing and which constitute a part of the Assets delivered to Buyer at Closing. Buyer
acknowledges that as a result of entering into this Agreement and its ownership of the Nursing
Home, it will gain access to patient and other information which is subject to rules and
regulations concerning confidentiality. Buyer agrees to abide by any such rules and regulations
relating to the confidential information it acquires. Buyer agrees to maintain the patient records
delivered to Buyer at Closing at the Nursing Home after Closing in accordance with applicable law
(including, if applicable, Section 1861 (v)(i)(1) of the Social Security Act (42 U.S.C. §
1395(v)(1)(1)), and requirements of relevant insurance carriers, all in a manner consistent with
the maintenance of patient records generated at the Nursing Home after Closing. Upon reasonable
notice during normal business hours at the sole cost and expense of Seller and upon Buyer’s receipt
of appropriate consents and authorizations, Buyer shall afford to the representatives of Seller,
including its counsel and accountants, reasonable access to, and copies of, the records transferred
to Buyer at the Closing for the purposes of audits, required governmental filings and defense of
third party claims. In addition, Seller shall be entitled, at Seller’s sole risk, to remove from
the Nursing Home any such patient records, but only for purposes of pending litigation involving a
patient to whom such records refer, as certified in writing prior to removal by counsel retained by
Seller in connection with such litigation and only upon Buyer’s receipt of appropriate consents and
authorizations. Any patient records so removed from the Nursing Home shall be promptly returned to
Buyer following its use by Seller. Any access to the Nursing Home, its records or Buyer’s
personnel granted to Seller in this Agreement shall be upon the condition that any such access not
interfere with the business and operations of the Nursing Home.
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11.4 Tax, Medicare, and Medicaid Effect.
None of the parties (nor such parties’ counsel or accountants) has made or is making any
representations to any other party (nor such party’s counsel or accountant) concerning any of the
tax, Medicare or Medicaid effects of the transactions provided for in this Agreement as each party
hereto represents that each has obtained, or may obtain, independent tax, Medicaid, or Medicare
advice with respect thereto and upon which it, if so obtained, has solely relied.
11.5 Seller’s Cost Reports.
Seller will prepare and timely file all required reports relating to Seller for periods ending
on or prior to the Closing Date or required as a result of the consummation of the transactions set
forth herein, including terminating cost reports for the Medicare program (the “Seller Cost
Reports”) and financial reports to the ODJFS (the “Ohio Reports”). Seller shall indemnify and hold
Buyer harmless from and against any liability from Seller’s failure to timely file the Seller Cost
Reports and/or the Ohio Reports. Buyer shall use its reasonable efforts to forward to Seller any
and all correspondence relating to the Seller’s business activities within fifteen (15) business
days after receipt by Buyer. Buyer will remit any receipts relating to Seller business activities
after receipt by Buyer and will use its reasonable efforts to forward any demand for payments
within five (5) business days after receipt by Buyer. Seller shall retain all rights and
liabilities relating to Seller Cost Reports and the Ohio Reports. Such rights shall include the
right to appeal any Medicare or Medicaid determinations relating to the Seller Cost Reports or
other matters. Seller shall retain the originals of Seller Cost Reports, Ohio Reports,
correspondence, work papers and other documents relating to Seller Cost Reports and Ohio Reports.
11.6 Employee Matters.
11.6.1 Workers’ Compensation.
Seller shall maintain worker’s compensation coverage for its employees in accordance with Ohio
law (Ohio Revised Code Chapters 4121 and 4123) and shall be liable for any and all covered claims
for workers’ compensation benefits by employees to the extent such claims are for injuries or
diseases occurring prior to the Closing Date. Buyer shall obtain workers’ compensation coverage
for its employees in accordance with Ohio law (Ohio Revised Code Chapters 4121 and 4123) and shall
be liable for any and all covered claims for workers’ compensation benefits by employees to the
extent such claims are for injuries or diseases occurring on or after the Effective Date.
11.6.2 COBRA.
Seller hereby represents that it will offer to provide its covered employees and their
qualified beneficiaries, as defined in Sections 4980B(f)(7) and (g)(1) of the Code, with
continuation coverage if the covered employee is not employed by Buyer. Any continuation coverage
provided by Seller will be maintained pursuant to Section 4980B of the Code, Section
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601 through 608 of ERISA and the relevant continuation of health coverage requirement of
applicable state law.
11.6.3 WARN Act.
Seller acknowledges that the transfer of Assets to Buyer constitutes the sale of one or more
businesses within the meaning of the Workers Adjustment and Retraining and Notification Act (the
“WARN Act”) and the rules and regulations promulgated thereunder. Notwithstanding the foregoing,
Buyer intends to and must offer employment at the Closing to substantially all of the employees of
Seller, to perform comparable services, in such position as is comparable to the position such
employee held with Seller as of the Closing. Subject to the provisions of this Section 11.6.3 and
Section 6.8 herein, Seller shall indemnify and hold Buyer harmless for any violations of the WARN
Act which occur prior to the Closing Date.
11.7 Press Releases.
At all times at or before the Closing, Seller, on the one hand, and Buyer, on the other hand,
will consult with the other before issuing or making any reports, statements or releases to the
public with respect to this Agreement or the transactions contemplated hereby and will use good
faith efforts to obtain the other party’s approval of the text of any public report, statement or
release to be made on behalf of such party. If either party is unable to obtain the approval of
its public report, statement, or release from the other party and such report, statement, or
release is, in the opinion of legal counsel to such party, required by law in order to discharge
such party’s disclosure obligations, then the party may make or issue the legally required report,
statement, or release and promptly furnish the other party with a copy thereof.
12. INDEMNIFICATION
12.1 Indemnification by Seller.
Subject to and to the extent provided in this Article 12, Seller shall defend, indemnify and
hold harmless Buyer, its successors and permitted assigns (Buyer, its successors and permitted
assigns are collectively referred to as “Buyer’s Indemnified Persons”) from and after the Closing
from and against any claims, actions, losses, payments (whether made in settlement or otherwise),
damages, costs, or expenses (including interest, penalties, costs of preparation and investigation,
reasonable attorneys’, accountants’, and other professional advisors’ fees directly accruing from
such damages) (“Losses”), which arise from or relate to Sellers operation of the Business or
ownership of the Assets prior to the Closing, or which are incurred or suffered by Buyer’s
Indemnified Persons, from:
12.1.1 any material inaccuracy in any representation or warranty of Seller or the
nonfulfillment of any covenant, agreement or other obligation of Seller set forth in this Agreement
so long as the Losses aggregate at least $25,000;
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12.1.2 any income or other tax assessed against Buyer from the operations of Seller prior to
the Closing Date, or any transaction or activity of Seller prior to the Closing Date, or any income
derived by Seller prior to the Closing Date;
12.1.3 the Excluded Liabilities;
12.1.4 any lawsuit, claim, or proceeding against Buyer or the Assets based upon any act or
omission by Seller which occurred prior to the Closing Date; or
12.1.5 any wages, salaries, bonuses, commissions, rebates, expenses, benefits, and other
compensation or fees of any nature payable prior to the Closing Date to any director, officer,
employee, contractor, agent or representative of Seller.
12.2 Limitations/Seller.
Seller shall have no liability under this Article 12 and no claim under Section 12.1 of this
Agreement shall be made if no notice thereof shall have been given by or on behalf of any of
Buyer’s Indemnified Persons to Seller in the manner provided in Section 12.8.
12.3 Indemnification by Buyer.
Subject to and to the extent provided in this Article 12, Buyer shall indemnify, defend, and
hold harmless Seller, its successors and permitted assigns (Seller, its successors and permitted
assigns are hereinafter collectively referred to as “Seller’s Indemnified Persons”) from and after
the Closing from and against any Losses that in any way arise from or relate to Buyer’s operation
of the Business or ownership of the Assets after the Closing, or which are incurred or suffered by
Seller’s Indemnified Persons from:
12.3.1 any material inaccuracy in any representation or warranty of Buyer or the
nonfulfillment of any covenant, agreement or other obligation of Buyer set forth in this Agreement
so long as the Losses aggregate at least $25,000;
12.3.2 any Assumed Liabilities and Contracts from and after the Closing Date; or
12.3.3 Any cause, event, fact, or circumstance whatsoever arising on or in connection with the
Real Property after the Closing.
12.4 Limitations/Buyer.
Buyer shall have no liability under this Article 12 and no claim under Section 12.3 of this
Agreement shall be made if no notice thereof shall have been given by or on behalf of any of
Seller’s Indemnified Persons to Buyer in the manner provided in Section 12.5.
12.5 Indemnification Set Off and Procedure.
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Buyer shall have the right to offset a loss from amounts it owes Seller under the Note
referred to in Section 2.11(a) and 2.5 herein, and all other claims for indemnity herein shall be
made in accordance with the following procedure:
(a) A claim for indemnification for any matter may be asserted by notice to the party from
whom indemnification is sought, “Indemnified Party.” Such claimant shall notify the other party,
“Indemnifying Party,” in writing as soon as practicable after it has knowledge of an
indemnification claim. Subject to the rights of or duties to any insurer or other third person
having liability therefor, the Indemnifying Party shall have the right promptly after receipt of
such notice to assume the control of the defense, compromise or settlement of any such action,
suit, proceeding, claim, liability, demand or assessment, including, at their own expense,
employment of counsel satisfactory to an Indemnified Party. The Indemnifying Party shall have
thirty (30) days in which to pay the indemnification claim in full. In the event that the
Indemnifying Party disputes such claim for indemnification, the Indemnified Party must object to
the indemnification claim within fifteen (15) days of its receipt of the written claim. If the
parties are unable to resolve the dispute in an amicable manner within thirty (30) days of the
purported dispute, the parties agree to submit the issue to mediation under the Commercial
Mediation Rules of the American Arbitration Association. The mediator shall not have authority to
impose a settlement upon the parties, but will attempt to help them reach a satisfactory resolution
of the disagreement. The mediator shall end the mediation whenever, in his judgment, further
efforts at mediation would not contribute to a resolution of the submitted disagreement.
(b) If the issue is not resolved pursuant to the mediation process set forth above, the
parties agree to submit the issue to binding arbitration administered in Wadsworth, Ohio by the
American Arbitration Association under its Commercial Arbitration Rules (or by such other
commercial arbitration service and its rules as may be agreed to by the parties at that time) in
effect at the time the controversial claim is submitted to binding arbitration, and judgment on the
award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
(c) The arbitration shall be conducted by a panel of three arbitrators. Each party shall
select one arbitrator and agree upon a third within fifteen (15) days of the date of the demand for
arbitration. In the event that the parties are unable to timely agree on the third arbitrator, the
two selected arbitrators shall select a third arbitrator within fifteen (15) days of the parties’
impasse. The arbitrator shall be neutral and have no past or present governance or financial
relationship with any of the parties to this Agreement. Reasonable discovery shall be allowed in
arbitration. The arbitration shall commence within five (5) days after the selection of the
arbitration panel. Each party shall attend the arbitration through at least two individuals having
the authority to negotiate on behalf of that party. The arbitration shall be completed within
forty-five (45) days of commencement. Unless otherwise agreed to by the parties, it shall be
conducted pursuant to the rules of the American Arbitration Association. The arbitration panel
shall issue a binding written decision within ten (10) working days of final adjournment of the
arbitration.
12.6 [Intentionally Deleted]
12.7 Survival of Representations.
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Notwithstanding any right of Buyer (whether or not exercised) to investigate the affairs of
Seller or any right of any party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement, Seller has, on the
one hand, and Buyer has, on the other hand, the right to rely fully upon the representations and
warranties of the other contained in this Agreement. The representations, warranties, covenants
and agreements respectively made by Seller, on the one hand, and Buyer, on the other hand, in this
Agreement or in any certificate respectively delivered by any of Seller or Buyer pursuant to this
Agreement will survive the Closing for a period of two years. As to claims arising out of Sections
4.8, 4.18, 4.22, and 4.26, said representations and warranties shall survive the Closing for the
applicable statute of limitations periods. Provided, however, any claim, cause of action, or other
Loss, as defined herein, that would otherwise be time barred or otherwise precluded from being
asserted for any reason, shall not, by virtue of the provisions contained in this Agreement, be
deemed to be contractually extended in any fashion by virtue of the specific time limitations set
forth in this section.
12.8 Other Indemnities Included Herein.
Buyer and Seller acknowledge and agree that Seller has throughout this Agreement agreed to
indemnify Buyer from certain losses as, for example, in Section 1.3, (the “Miscellaneous
Indemnities”) Buyer and Seller acknowledge and agree that the Miscellaneous Indemnities are subject
to all of the terms and conditions set forth in this Article 12 (as if such Miscellaneous
Indemnities were contained in Article 12), including, but not limited to, Sections 12.2, 12.3, and
12.7.
12.9 Indemnity Notice.
Buyer and Seller each agree to give the other party prompt notice of any circumstance under
which such other party would have a claim for indemnity pursuant to this Article 12.
12.10 Indemnity Limit.
Notwithstanding anything contained herein to the contrary, Seller’s liabilities and
obligations hereunder shall in no event exceed, in the aggregate $11,200,000.
13. GENERAL
13.1 Interpretation.
In this Agreement, unless the context otherwise requires:
13.1.1 references to this Agreement are references to this Agreement and to the Schedules and
Exhibits hereto;
13.1.2 references to Articles and Sections are references to articles and sections of this
Agreement;
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13.1.3 references to any party to this Agreement shall include references to its respective
successors and permitted assigns;
13.1.4 references to a judgment shall include references to any order, writ, injunction,
decree, determination or award of any court or tribunal;
13.1.5 references to a “Person” shall mean any individual, company, body corporate or politic,
association, partnership, limited liability company, firm, joint venture, trust and governmental
agency or authority;
13.1.6 the terms “hereof,” “herein,” “hereby,” “hereunder” and derivative or similar words
will refer to this entire Agreement;
13.1.7 references to the “Code” shall mean the Internal Revenue Code of 1986, as amended, and
regulations thereunder and any future corresponding laws and regulations;
13.1.8 references to any document (including this Agreement) are references to that document
as amended, consolidated, supplemented, novated or replaced by the parties from time to time;
13.1.9 references to any law are references to that law as amended, consolidated,
supplemented or replaced from time to time and shall also refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise;
13.1.10 the word “including” shall mean including without limitation;
13.1.11 references to the “best knowledge” of a party means the actual or constructive
knowledge of any director, or officer, of such party after due inquiry;
13.1.12 references to “reasonable best efforts” exclude the payment of monies to third
parties who are not employees or agents of such party required to make reasonable best efforts,
other than for incidental costs and expenses;
13.1.13 references to time are references to Eastern Standard or Daylight time (as in effect
on the applicable day) unless otherwise specified herein.
13.2 Schedules.
The Schedules and all Exhibits and documents referred to in or attached to this Agreement are
integral parts of this Agreement as if fully set forth herein. Seller shall, at least ten (10)
days prior to the Closing Date, supplement or amend the Schedules prepared pursuant to this
Agreement with respect to any matter hereafter arising which, if existing or occurring at the date
of this Agreement, would have been required to be set forth or described in the Schedules or which
is necessary to correct or complete (with respect to any Schedule that is incomplete as of the date
of this Agreement) any information in the Schedules and deliver the same to Buyer. Notwithstanding
the foregoing, Buyer’s obligations or liabilities shall not be increased by means of a Schedule or
Exhibit revision or update.
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13.3 Consented Assignment.
Anything contained herein to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any claim, right, contract, license, lease, commitment, sales order or
purchase order if an attempted assignment thereof without the consent of another party thereto
would constitute a breach thereof or in any material way affect the rights of Seller thereunder, an
attempted assignment would be ineffective or would materially affect Seller’s rights thereunder so
that Buyer would not in fact receive all such rights. Seller shall cooperate in any reasonable
arrangement designed to provide for Buyer the benefits under any such claim, right, contract,
license, lease, commitment, sales order or purchase order, including enforcement of any and all
rights of Seller against the other party or parties thereto arising out of the breach or
cancellation by such other party or otherwise.
13.4 Consents, Approvals and Discretion.
Except as herein expressly provided to the contrary, whenever this Agreement requires any
consent or approval to be given by either party or either party must or may exercise discretion,
the parties agree that such consent or approval shall not be unreasonably withheld or delayed and
such discretion shall be reasonably exercised.
13.5 Expenses; Legal Fees and Costs.
13.5.1 Except as otherwise expressly set forth in this Agreement, all expenses of the
preparation of this Agreement and of the consummation of the transactions set forth herein,
including counsel fees, accounting fees, investment advisor’s fees and disbursements, shall be
borne by the respective parties incurring such expense, whether or not such transactions are
consummated.
13.5.2 Except as otherwise expressly set forth herein, Buyer shall pay all of the costs for
the Title Policy and all transfer stamp taxes arising out of the transfer of the Assets to Buyer
and the recording of the warranty deed. All other costs and expenses arising out of the transfer
of Assets to Buyer and the obtaining by Buyer of all appraisals needed to effect the transactions
herein shall be paid by Buyer, including the Survey and such other inspections and reports as Buyer
may deem advisable or desirable. Buyer shall pay HSR Premerger Notification and Report filing fees
and costs of the appraisal.
13.5.3 In the event either party elects to incur legal expenses to enforce or interpret any
provision of this Agreement by judicial means, the prevailing party will be entitled to recover
such legal expenses, including, attorney’s fees, costs and necessary disbursements, through appeal
or in bankruptcy proceedings in addition to any other relief to which such party shall be entitled.
13.6 Choice of Law; Arbitration.
13.6.1 The parties agree that this Agreement shall be governed by and construed in accordance
with the internal laws of the State of Ohio without regard to such state’s conflicts of laws or
choice of law rules.
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13.6.2 In the event that any dispute arises concerning this Agreement, the parties expressly
agree to enter into binding arbitration. Any dispute, controversy or claim arising out of this
letter shall be settled by arbitration in accordance with this section. Any arbitration under this
section shall be conducted in accordance with the Rules for Non-Administered Arbitration of the CPR
Institute for Dispute Resolution, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The place of arbitration shall be Wadsworth,
Ohio. The arbitrators shall decide legal issues pertaining to the dispute, controversy or claim
pursuant to the laws of the State of Ohio. The parties shall have the right to conduct reasonable
discovery pursuant to the Federal Rules of Civil Procedure. The arbitrators shall not have the
authority to award punitive damages, but shall have the authority to enter equitable relief. THE
PARTIES UNDERSTAND THAT THEY ARE KNOWINGLY AND WILLINGLY EXPRESSLY WAIVING A RIGHT TO JURY TRIAL
CONCERNING ANY MATTERS RELATING TO THIS AGREEMENT.
13.7 Benefit Assignment.
Subject to provisions herein to the contrary, this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective legal representatives, successors and
permitted assigns; provided, however, that no party may assign this Agreement without the prior
written consent of the other party. No assignment shall relieve the assignor of its liabilities
and obligations hereunder, and the assignor will remain jointly and severally liable with the
assignee for all of its liabilities and obligations hereunder, except that Buyer may, without the
prior written consent of Seller, assign its rights and delegate its duties hereunder to one or more
entities which controls, is controlled by, or is under common control with Buyer, which shall have
the effect of thereby releasing Buyer hereunder.
13.8 Accounting Date.
The transactions contemplated hereby shall be effective for accounting purposes as of 12:01
a.m. (Eastern time) on December 1, 2002, unless otherwise agreed in writing by Seller and Buyer.
13.9 No Third-Party Beneficiaries.
The terms and provisions of this Agreement are intended solely for the benefit of Buyer and
Seller and their respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person.
13.10 Waiver of Breach.
The waiver by either party of a breach or violation of any provision of this Agreement shall
not operate as, or be construed to constitute, a waiver of any subsequent breach of the same or
other provision hereof. All remedies, either under this Agreement, or by law or otherwise
afforded, will be cumulative and not alternative.
13.11 Notices.
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Any notice, demand or communication required, permitted, or desired to be given hereunder
shall be deemed effectively given when personally delivered, or when delivered by overnight
courier, or five (5) days after being deposited in the United States mail, with postage prepaid
thereon, certified or registered mail, return receipt requested, addressed as follows:
Buyer:
|
Tandem Health Care, Inc. Xxxxxxxxxxx Corporate Center 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxx Xxxxxxxx, XX 00000 Attn.: Xx. Xxxxxxxx X. Xxxxxxx |
|
copy to:
|
Xxxxxxxx X. Xxxxxxxx, Esquire Tandem Health Care, Inc. Xxxxxxxxxxx Corporate Center 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxx Xxxxxxxx, XX 00000 |
|
Seller:
|
Xxxxxxx X. Xxxxxx 0000 Xxxxx Xxxxx Xxxxxxxx, Xxxx 00000 |
|
copy to:
|
Xxxxx Xxxx Xxxx, Esquire Xxxxxxx & Xxxxx LTD. One Seagate, 24th Floor X.X. Xxx 00000 Xxxxxx, XX 00000-0000 |
or to such other address or number, and to the attention of such other person or officer, as any
party may designate, at any time, in writing in conformity with these notice provisions.
13.12 Severability.
If any provision of this Agreement is held to be illegal, invalid or unenforceable under any
present or future law, and if the rights or obligations of Buyer or Seller under this Agreement
will not be materially and adversely affected thereby, (a) such provision will be fully severable;
(b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the legal, invalid or unenforceable
provision or by its severance herefrom; and (d) in lieu of such illegal, invalid or unenforceable
provision, a court of competent jurisdiction may reform such provision to make it lawful and in the
spirit of the intent of the parties, as evidenced by this Agreement and as so reformed shall be a
part of this Agreement.
13.13 Gender and Number.
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Whenever the context of this Agreement requires, the gender of all words herein shall include
the masculine, feminine and neuter, and the number of all words herein shall include the singular
and plural.
13.14 Divisions and Headings.
The table of contents, the divisions of this Agreement into articles, sections, and
subsections and the use of captions and headings in connection therewith are solely for convenience
and shall have no legal effect in construing the provisions of this Agreement.
13.15 Time of Essence.
Time is of the essence in the performance of this Agreement.
13.16 Confidentiality.
It is understood by the parties hereto that the information, documents and instruments
delivered to Buyer by Seller or Seller’s agents and the information, documents and instruments
delivered to Seller by Buyer or Buyer’s agents are of a confidential and proprietary nature. Each
of the parties hereto agrees that prior to Closing they will maintain the confidentiality of all
such confidential information, documents or instruments delivered to them by each of the other
parties hereto or their agents in connection with the negotiation of this Agreement or in
compliance with the terms, conditions and covenants hereof and only disclose such information,
documents and instruments to their duly authorized officers, directors, representatives and agents.
Upon the Closing, Buyer’s confidentiality covenants shall be terminated but Seller’s
confidentiality covenants shall survive the Closing. Each of the parties hereto further agrees
that if the transactions contemplated hereby are not consummated, they will return all such
documents and instruments and all copies thereof in their possession to the other party to this
Agreement. Each of the parties hereto recognizes that any breach of this Section would result in
irreparable harm to the other party to this Agreement and their affiliates and that therefore
either Seller or Buyer shall be entitled to an injunction to prohibit any such breach or
anticipated breach, without the necessity of proving actual damages or posting a bond, cash or
otherwise, in addition to all of their other legal and equitable remedies. Nothing in this
Section, however, shall prohibit the use or disclosure of such confidential information, documents
or information as are required by law or governmental regulations or to defend itself in a legal
proceeding.
13.17 Entire Agreement/Amendment.
This Agreement (and its exhibits, schedules and all other documents referenced and
incorporated herein) supersedes all previous contracts, and constitutes the entire agreement of
every kind or nature existing between or among the parties representing the within subject matter
and no party shall be entitled to benefits other than those specified herein. This Agreement may
be executed in two or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. No terms, conditions, warranties, or
representations, other than those contained herein and no amendments
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or modifications hereto shall be binding unless made in writing and signed by the party to be
charged.
13.18 Drafting.
No provision of this Agreement shall be interpreted for or against either party hereto on the
basis that such party was the draftsman of such provision, each party having participated equally
in the drafting and negotiating hereof, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
13.19 Transition Period.
Seller will use its reasonable best efforts to cooperate with Buyer in negotiating agreements
for all operation and maintenance services for management information systems, data support and
administrative support, from any person currently supplying the same to Seller relating to the
Business.
13.20 Incorporation by Reference.
All exhibits and schedules referenced herein are hereby incorporated herein by reference.
13.21 Signing Subject to Agreement Upon Schedules.
The parties hereto are signing this Agreement subject to the mutual agreement of Buyer and
Seller upon the content of the Schedules and Exhibits, no later than October 15, 2002, or such
later date as the parties mutually agree upon.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in multiple
originals by their duly authorized officers, all as of the date and year first above written. This
Agreement may be executed and delivered in multiple counterparts and each such counterpart shall be
deemed an original, but all such counterparts shall together constitute one and the same Agreement.
BUYER:
|
OP MAUMEE, INC. | |
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer | ||
RE MAUMEE, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer |
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OP XXXXX, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer | ||
RE XXXXX, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer |
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OP1 FREMONT, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer | ||
RE1 FREMONT, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer | ||
OP2 FREMONT, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer | ||
RE2 FREMONT, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer | ||
OP KENTON, INC. | ||
By: /s/ Xxxxxxxx X. Xxxxxxx | ||
Name: Xxxxxxxx X. Xxxxxxx | ||
Title: Chairman and Chief Executive Officer |
SELLER: | VILLA HOMES WEST, INC., D/B/A | |||
WOODSIDEMANAGEMENT GROUP | ||||
By: | /s/ Xxxxxxx Xxxxxx | |||
Name: | ||||
Title: | ||||
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RIDGEWOOD MANOR, LLC | ||||
By: | /s/ Xxxxxxx Xxxxxx | |||
Name: | ||||
Title: | ||||
PARKVIEW REAL ESTATE, LTD. | ||||
By: | /s/ Xxxxxxx Xxxxxx | |||
Name: | ||||
Title: | ||||
WOODSIDE PROPERTIES I, LTD. | ||||
By: | /s/ Xxxxxxx Xxxxxx | |||
Name: | ||||
Title: | ||||
WOODSIDE PROPERTIES II, LTD. | ||||
By: | /s/ Xxxxxxx Xxxxxx | |||
Name: | ||||
Title: | ||||
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JOINDER AND CONSENT
The undersigned individual, as the shareholder, and member of Seller, hereby agrees to be bound by
the provisions of Article 10 hereof, entitled “Noncompetition,” and hereby represent and warrant
that the second and third sentences of Section 4.1 are true and correct as of the date hereof and
will be true and correct on the Closing Date.
/s/ Xxxxxxx X. Xxxxxx | ||||
XXXXXXX X. XXXXXX | ||||
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JOINDER AND CONSENT
Tandem Health Care, Inc. hereby agrees to be bound by the provisions of Section 2.5 to this
Agreement as it relates to it providing a guaranty, and further agrees that the statements in
Section 5.1 as it relates to the Guarantor are true and correct as of the date hereof, and will be
true and correct on the Closing Date.
/s/ Xxxxxxxx X. Xxxxxxx | ||||
Name: | Xxxxxxxx X. Xxxxxxx | |||
Title: | Chairman and CEO |
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