ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF REDGATE, INC.,
as Buyer
and
GHENT ARMS LIMITED PARTNERSHIP
as Seller
and
XXXXXXX CORPORATION
as General Partner
Dated as of January 24, 1997
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF REDGATE, INC., a Delaware
corporation ("Buyer"), GHENT ARMS LIMITED PARTNERSHIP, a Virginia limited
partnership ("Seller") and XXXXXXX CORPORATION, a Virginia corporation ("General
Partner" or "Xxxxxxx Corporation" and, together with Seller, collectively, the
"Operators" and individually, an "Operator").
RECITALS
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility (as hereinafter defined), the Business (as hereinafter defined) and
substantially all of the other assets of Seller used in connection with the
Facility and the Business, upon the terms and conditions hereinafter set forth;
WHEREAS, General Partner is the sole general partner under the
Partnership Agreement (as hereinafter defined) of Seller and Manager manages the
Facility and the Business for Seller pursuant to the Existing Management
Agreement (as hereinafter defined); and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
Definitions . The following capitalized terms used
in this Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), used with respect to any
Person, shall mean the possession, directly or indirectly, whether by contract
or otherwise, of the power to direct or cause the direction of the management
and policies of such Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Xxxxxxx Development Corporation, a Virginia corporation.
Xxxx of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller, in
conjunction with the Manager, of owning, planning, developing, using for the
Intended Purpose, operating and maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner or the Manager for the
benefit of Seller pursuant to authority granted under the Partnership Agreement,
the Existing Management Agreement or otherwise or (iii) any of the Acquisition
Assets are bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
DEQ: As defined in Section 11.3.
DEQ Letter: As defined in Section 11.3.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner or the
Manager is a party thereto under a Contract for the benefit of Seller pursuant
to authority granted under the Partnership Agreement, the Existing Management
Agreement or otherwise, such other Operator Affiliate will assign to Buyer at
Closing and, upon such assignment, those Contracts under which Buyer will assume
the obligations arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition, equitable interest, option, pledge, voting trust,
right of first refusal, or restriction of any kind, including any restriction on
use, voting or dividends (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership) or other thing commonly
known as an encumbrance; and "Encumber" means the creation of any Encumbrance.
Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup"), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as the same may be amended from time to time, or any successor law and the
rules and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%) percent of the Purchase Price shall be held in escrow by the
Escrow Agent as security for Seller's indemnification obligations under this
Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
Existing Management Agreement: The Management Agreement dated December
30, 1987 between Seller and Manager pursuant to which Manager has been managing
the Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"Ghent Arms", and comprised of an assisted-living facility, containing 48
licensed beds and approximately 22,839 square feet and the related amenities.
Financing Source: Any Person which provides financing for the
transactions contemplated by this Agreement, including any Person which may
acquire the Facility (and/or any of the other Acquisition Assets) and
concurrently lease the same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Xxxxxxx Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Seller, Retirement Home of Virginia Beach Limited Partnership,
Xxxxxxx Corporation and its principal shareholder, the Manager and its principal
shareholder, Buyer and the other Affiliates of Integrated Living Communities,
Inc., which are "Buyers" under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "Ghent Arms" and all derivations and
variations thereof, and any other trade names, service xxxx, logo, symbol, trade
dress, design, or representation or expression of any thereof, or registration
or application for registration thereof, or any invention, trade secret,
technical information, know-how, proprietary right (including Resident/Patient
lists, supplier lists and operating manuals) or intellectual property used by an
Operator Affiliate in connection with the operation of, or otherwise pertaining
to, the Property or the Business but specifically excluding software and
computer programs licensed by a third party to an Operator Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
City of Norfolk, State of Virginia, consisting of approximately 0.5538 acres and
more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: American Retirement Homes, Inc., a Virginia corporation.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
Operator Affiliates: Collectively, Seller, General Partner, Manager and
each of the principal shareholders of each of General Partner and Manager,
respectively.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and Xxxxx Xxxxx, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
all equipment, machinery, furniture and
furnishings, Inventory, vehicles and other tangible personal property (including
all components thereof) (whether or not
set forth on Exhibit B), now or on the Closing Date located in, on or used in
connection with (A) the Facility (and whether or not affixed to the facility) or
(B) the Business, including all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air cooling and
air conditioning systems, apparatus, sprinkler systems, fire and theft
protection equipment, built-in oxygen and vacuum systems, tools, repair parts,
appliances and communications equipment, to the extent any of the foregoing
items are not Fixtures and are not conveyed to Buyer as part of the Facility
pursuant to the Deed, and those specific items of tangible personal property
(including any vehicles which are used for the Business) described on Exhibit B;
and
all Resident and/or Patient Agreements and
other Designated Contracts, telephone numbers and Resident/Patient records and
invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
Phase I Environmental Report: As defined in Section 11.3.
Phase II Lab Results: As defined in Section 11.3.
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property, inventory, occupancy, withholding, payroll, gift,
estate or inheritance tax), levy, assessment, tariff, impost, imposition, toll,
duty (including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or for any authority or payable (including pursuant to any tax-sharing
agreement or pursuant to any agreement, arrangement or understanding relating to
the sharing or payment of any such tax, levy, assessment, tariff, impost,
imposition, toll, duty, deficiency or fee).
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Xxxx of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Xxxxxxx Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Seller, Retirement Home of Virginia Beach Limited Partnership, and
Xxxxxxx Corporation, each as sellers of assisted living facilities and the
related business, Buyer and other Affiliates of Integrated Living Communities,
Inc. which are purchasing such facilities and businesses pursuant to this
Agreement and the other Acquisition Agreements, and the Manager.
UST: As defined in Section 11.3.
Year End Financial Statements: As defined in Section 6.3.
Construction of Certain Terms . For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, (i) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; (ii) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP, as at the time applicable; (iii) all references in this
Agreement to designated "Articles," "Sections", "Schedules", "Exhibits" and
other subdivisions are to the designated Articles, Sections, Schedules and
Exhibits and other subdivisions of this Agreement; (iv) the word "including"
shall have the same meaning as the phrase "including, without limitation," and
other phrases of similar import; (v) the words "herein, " "hereof " and
"hereunder' and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision; and (vi) all
references to this Agreement shall include all Schedules and Exhibits attached
hereto.
Disclosure Letter . The disclosures in the Disclosure Letter, and those
in any supplement thereto, relate only to the representations and warranties in
the Section of this Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty in a specific Section of this Agreement), the statements in the body
of this Agreement will control.
Parties' Intent . The parties intend that the assets to be conveyed to
Buyer pursuant to Section 2.1 include all of the assets employed in and
necessary to operate the Facility and the Business in substantially the manner
as the Business has heretofore been operated.
Knowledge . Wherever a representation is made in this Agreement based
upon the knowledge of an Operator (whether or not expressly after due inquiry),
it shall be deemed to have been made by such Operator after due inquiry of the
Manager of the Facility and each of the principal shareholders of the General
Partner and the Manager.
ARTICLE
TERMS OF THE SALE AND PURCHASE
Assets to Be Sold . Subject to the terms and conditions of this
Agreement, at Closing, Seller (and the other Operator Affiliates to the extent
such assets are owned by them) will sell, convey, assign, transfer and deliver
to Buyer and/or Buyer's designee or assignee as provided in Section 13.11, and
Buyer and/or Buyer's designee or assignee, will purchase and acquire, as a going
concern, the Facility and all of the assets, properties (real or personal,
tangible or intangible), rights, prepaid expense items and business goodwill
used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
Excluded Assets . Notwithstanding Section 2.1, the Acquisition Assets
do not include: (1) claims for refunds of Taxes and other governmental charges
of whatever nature for periods prior to the Closing Date; (2) Accounts
Receivable; (3) the minute books, stock records and corporate seal of Seller or,
subject to Buyer's right to review and obtain copies of same as provided in
Section 13.8, Seller's financial books and records (whether in paper or computer
format), provided, however, Resident/Patient records are Acquisition Assets; (4)
Contracts other than the Designated Contracts; (5) Seller's bank accounts, cash
and cash equivalents and securities (except that deposits and trust funds held
for Residents/Patients shall be transferred to Buyer (or trust accounts
designated by Buyer for such Residents/Patients); (6) the Purchase Price and
rights under this Agreement; (7) personal property located at the Facility which
is owned by the Residents/Patients; and (8) the assets, properties, and rights
listed in Schedule 2.2 (collectively, the "Excluded Assets").
Purchase Price . The purchase price for the Acquisition Assets will be
One Million Eight Hundred Eighty-Two Thousand Dollars ($1,882,000.00), subject
to upward or downward adjustment as hereinafter provided (as adjusted, the
"Purchase Price").
The Purchase Price (without giving effect to any post-Closing
adjustments) shall be paid by Buyer to Seller as follows:
(i) One Hundred Thirty-Eight Thousand Eight Hundred
Fifty-Five and 57/100 Dollars ($138,855.57) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
Prorations and Purchase Price Adjustments . (a) On the Closing Date,
the following shall be apportioned and prorated as of the Closing Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets (including
charges for sewer, water, drainage or other services) assessed
for the tax year in which the Closing Date occurs;
(ii) personal property taxes attributable to the
Personal Property for the tax year in which the Closing Date
occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final xxxx or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of current
utility and fuel bills. If the Closing shall occur before the tax rate is fixed,
the apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding tax year applied to the latest assessed valuation, and
shall be subject to adjustment upon receipt by Buyer of notice of the tax rate
for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
Allocation of Purchase Price . After the Closing, the parties agree to
make consistent use of the allocation, fair market value and useful life of the
Purchase Price in any and all filings, declarations and reports with the
Internal Revenue Service in respect thereof, including the reports required to
be filed under Section 1060 of the Code, if applicable. Buyer shall prepare and
deliver IRS Form 8594 to Seller within forty-five (45) days after the Closing
Date.
Assumption of Liabilities . (a) Subject to the terms and conditions of
this Agreement, at Closing, Buyer shall assume and thereafter in due course
fully satisfy those obligations arising under the Designated Contracts which are
assignable and are assigned by Seller to Buyer, with respect to, and only with
respect to, performance of obligations (including payments to be made on account
of services) to be rendered thereunder after the Closing Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
Consents to Assignments . (a) The Operators will use their best efforts
and shall diligently proceed to obtain all Consents of all Persons necessary to
permit the assignment of the Designated Contracts or to assign or transfer any
of the other Acquisition Assets. In the event that any of the Acquisition Assets
are not assignable, or the Person(s) from whom a Consent to any such assignment
or transfer, fail(s) or refuse(s) to Consent thereto before the Closing Date,
Buyer shall have no obligation to assume and will not assume any such Designated
Contract and shall have no obligation to purchase any such Acquisition Asset. In
addition, this Agreement shall not constitute an agreement to assign or transfer
any such Acquisition Asset or part thereof or any right or benefit arising
thereunder or resulting therefrom if an attempted assignment or transfer
thereof, without the Consent of such Person, would constitute a breach thereof
or in any way affect the rights of Buyer or Seller thereunder. Notwithstanding
the foregoing, all references in this Agreement or any other Transaction
Document (other than the Deed, any Xxxx of Sale and Assignment and any other
instrument or document conveying title to any Acquisition Assets) to
"Acquisition Asset" or "Acquisition Assets" shall continue to have the meaning
set forth in Section 2.1 without giving effect to this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
ARTICLE
CLOSING
Closing . The purchase and sale of the Acquisition Assets provided for
in this Agreement (the "Closing") shall take place on January 27, 1997 (the
"Originally Scheduled Closing Date") at the offices of Buyer's financing source
(or counsel therefor), or at such other place, time or date as Seller and Buyer
may mutually agree to. The Originally Scheduled Closing Date, any other such
date as Seller and Buyer may mutually agree to as the date on which the Closing
shall occur, and any other date to which the same may be extended by Seller or
Buyer as hereinafter provided, are each herein referred to as a "Scheduled
Closing Date" and the latest of such Scheduled Closing Dates is herein referred
to as the "Closing Date".
If, prior to or by the Originally Scheduled Closing Date, any
Governmental Authority with jurisdiction over the licensing of the Facility has
not issued to Buyer a license to operate the Facility immediately upon Buyer's
acquisition of the Acquisition Assets, then, in such event, provided (i) Buyer
shall have furnished to such Governmental Authority all information requested by
such Governmental Authority as of such date in connection with its application
for the issuance of such license, (ii) this Agreement, the other Acquisition
Agreements and the Unification Agreement shall have been executed by all of the
parties thereto and (iii) First American Title Insurance Company of New York, as
escrow agent under the Deposit Escrow Agreement shall have been authorized by
the parties thereto to release the Escrow Deposit to the General Partner, then
Buyer shall be entitled to extend the Closing Date for a period of up to ninety
(90) days (the "Extension Period").
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of this Agreement by Buyer pursuant to
this Section 3.1(c), however, shall release or relieve any Operator or other
Operator Affiliate of any liability that they may have for any breach of any
representation, warranty, covenant or obligation of an Operator in this
Agreement or of any Operator Affiliate in any Transaction Document.
In the event that the Closing is to take place through an escrow or
sub-escrow, the Operator Affiliates and Buyer shall mutually execute and deliver
to Title Insurer, as escrow holder, joint escrow and/or recording instructions
consistent with this Agreement on or prior to the Closing Date. In the event of
any conflict between the provisions of this Agreement and any such escrow and/or
recording instructions and/or any general instructions required by Title Insurer
to be executed by Buyer and Seller, or any other Operator Affiliate in
connection therewith, the provisions of this Agreement and the Unification
Agreement shall control.
Items to Be Delivered by Seller at Closing . At the Closing, subject to
the terms and conditions of this Agreement, Seller shall deliver, or cause to be
delivered to Buyer or, if the Closing is to take place in escrow, to Title
Insurer in escrow, such instruments as shall be necessary to convey to Buyer or
its designee or assignee good and marketable title to the Acquisition Assets,
free and clear of all Encumbrances (except for Permitted Encumbrances). Among
other things, Seller will deliver to Buyer or, if applicable, Title Insurer in
escrow:
A full warranty deed (the "Deed") in the form of Exhibit C, which Deed
shall be duly executed, acknowledged and in recordable form. The Deed shall
include (if applicable) the appropriate state, county and local real estate
transfer tax declaration of real estate value or other affidavit as to the tax
due upon the sale.
One or more Bills of Sale and Assignments in the form of Exhibit B,
duly executed and acknowledged by each of the Operators.
"FIRPTA" affidavit or certificate in form and substance satisfactory to
Buyer and in conformance with Section 1445(b)(2) of the Code, to the effect that
Seller is not a foreign person and such other affidavits or certificates as may
be reasonably required by Buyer to the effect that Buyer is not required to
withhold taxes from the payment of sale proceeds to Seller under any other
applicable Law.
Uniform Commercial Code Form 3s in favor of Seller, for filing with the
appropriate state and local authorities, for the release of any Encumbrance
(other than a Permitted Encumbrance) covering any of the Acquisition Assets as
to which Uniform Commercial Code Form 1s have been filed.
If the Closing shall not occur on the date hereof, a certificate
executed by each Operator wherein the Operators represent and warrant to Buyer
that, except as otherwise stated in such certificate, each of the Operators'
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date (giving full effect to any supplements to
the Disclosure Letter that were delivered by Seller to Buyer prior to the
Closing Date).
A certificate of the General Partner certifying true and correct copies
of Seller's Partnership Agreement and other Organizational Documents, if any,
which certificate and Organizational Documents shall be in form and substance
reasonably satisfactory to Buyer.
A certificate of the Secretary of General Partner certifying true and
correct copies of General Partner's Organizational Documents, which certificate
and the accompanying Organizational Documents shall be in form and substance
reasonably satisfactory to Buyer.
Opinion of Seller's and General Partner's Counsel opining as to the
matters set forth on Exhibit E and otherwise in form and substance satisfactory
to Buyer.
The Escrow Agreement duly executed and acknowledged by Seller, General
Partner and each other Operator Affiliate and Escrow Agent.
The originals of all Designated Contracts, title instruments in the
Operators' or the Manager's possession pertaining to the Acquisition Assets and
the original Governmental Authorizations.
All other Transaction Documents to which Seller or any other Operator
Affiliate is a party duly executed and delivered by each such party.
All other proper instruments required for the conveyance of good and
marketable title to the Acquisition Assets or required by Title Insurer for the
issuance of the Title Policy.
In addition, at the Closing, Seller shall deliver or cause to be
delivered possession of the Facility and other Acquisition Assets (including
keys and combinations for obtaining entry or access thereto).
Items to Be Delivered by Buyer at Closing . Among other things, Buyer
will deliver to the Escrow Agent:
The Assumption of Designated Contracts Agreement, executed by Buyer.
A certificate executed by Buyer representing and warranting to Seller
that, except as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date.
A certificate of the Secretary of Buyer certifying true and correct
copies of resolutions adopted by Buyer's Board of Directors authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents to be executed by Buyer and the incumbency of the officers of Buyer
authorized by such resolutions to execute this Agreement and take other actions
in furtherance of this Agreement.
The Escrow Agreement duly executed and acknowledged by Buyer and the
Escrow Agent.
All other Transaction Documents to which Buyer is a party duly executed
and delivered by Buyer.
Other Closing Documents . Each party shall execute and deliver such
other instruments and take such other actions as either party or the Title
Insurer or Buyer's Financing Source may reasonably request in order to
effectuate the purposes of this Agreement.
ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
Performance . Each of the Operators shall have performed each and all
of the covenants and obligations required to be performed by it under this
Agreement on or prior to the Closing.
Representations and Warranties . Each and all of the representations
and warranties of the Operators hereunder shall be true and correct on and as of
the Closing Date, as if made as of the Closing Date.
Closing Documents . Seller shall have delivered (or caused to have been
delivered) to Buyer each of the items to be delivered by Seller or an Operator
Affiliate at Closing pursuant to Sections 3.2 and 3.4. Seller shall have paid or
shall have made arrangements for the payment of those costs and expenses
required to be paid by Seller pursuant to Section 13.2.
Title Insurance . Buyer shall have received, at Buyer's expense, a
commitment from Title Insurer satisfactory to Buyer for the issuance, at
standard rates, of an ALTA extended coverage (but without exception for
creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
Survey. Buyer shall have received, at Buyer's expense, and approved
either (a) a final "as-built" ALTA survey of the Facility completed in
accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, with additional Title A survey requirements, jointly established
and adopted by ALTA and ACSM in 1992 that meets the requirements of a Class A
Survey as defined therein, certified within thirty (30) days of the Closing Date
or (b) such other form of property survey which is in form, substance and all
other respects satisfactory to Buyer and its Financing Source in their sole
discretion. Such survey shall (i) be certified to Buyer, Title Insurer, and
Buyer's Financing Source, if any, as being true and accurate, and such
certification shall include the acreage of the Land and a statement that the
Land is not located in a Flood Hazard Area; (ii) identify thereon all telephone,
water, sewage, electricity, gas and other utility facilities to the points of
connection; and (iii) show no encroachments onto or conflicts with any adjacent
property other than pursuant to easements appurtenant to the Facility or such
other agreements with the affected landowner approved by Buyer and which are, in
turn, insured under the Title Policy.
Entitlements. Buyer shall have received and approved with respect to
the Facility copies of (a) the applicable zoning ordinances and map marked to
show the location of such Facility and certified by an appropriate Governmental
Authority to be complete and accurate; (b) evidence that such zoning ordinances
and the general plans/specific plans and all other land use regulations of the
applicable municipal jurisdictions and all Encumbrances, if any, affecting the
Facility permit the transfer of the Facility and use thereof for its Intended
Use (and reconstruction and resumption of use in the event of damage,
destruction, or cessation of use) as a matter of right for an unlimited time
period and not merely as a legal nonconforming use; (c) all licenses,
certificates, approvals and authorizations, including plot plan and subdivision
approvals, zoning variances, sewer, building, foundation, grading and other
permits and all other authorizations required by Governmental Authorities or by
any applicable covenants, conditions and restrictions for the use and operation
of the Facility for its Intended Use, in each instance in accordance with all
applicable Legal Requirements; and (d) evidence satisfactory to it that (i) the
Facility holds all Governmental Authorizations required for the operation
thereof for its Intended Use, including from the Virginia Department of Social
Services; and (ii) the Facility is not subject to, or threatened with, any hold
on admissions or other sanction and there are no outstanding, or threatened,
notices of deficiency resulting from any survey of the Facility which have not
been fully responded to with an acceptable plan of correction with which the
Facility is being operated in compliance.
No Material Adverse Change . Since the date of the Interim Financial
Statements, there has not been any material adverse change in the business,
results of operations, assets, liabilities, condition (financial or otherwise),
operations or prospects of Seller, or the Business or the Facility, and no event
has occurred or circumstance exists that may result in such a material adverse
change, and Buyer shall have received evidence satisfactory to it to that
effect.
Consents . The Consents of all Persons necessary for the consummation
of the transactions contemplated hereby and for Buyer to conduct the Business
shall have been obtained, including Consents required, if any, under the
Designated Contracts, all Governmental Authorizations, any tax clearance or
similar Consent, the Consent of Buyer's (or its parent company's) lenders to the
extent required, if any. None of the Consents (i) shall have been conditioned
upon the modification, cancellation or termination of any Designated Contract,
easement, right or other Consent with respect to the Facility, or (ii) shall
impose on the Buyer any material condition or provision or requirement with
respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
Completion of Other Transactions . Each of the transactions
contemplated by this Agreement, the other Acquisition Agreements and the
Unification Agreement shall have been consummated contemporaneously.
ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
Performance . Buyer shall have performed each and all of the covenants
and obligations required to be performed by it on or prior to the Closing;
Representations and Warranties . Each and all of the representations
and warranties of Buyer hereunder shall be true and correct on and as of the
Closing Date, as if made as of the Closing Date; and
Consents . Seller shall have received a certificate of the Secretary or
other officer of Buyer certifying a copy of the resolutions of the Board of
Directors of Buyer authorizing Buyer's execution, delivery and performance of
this Agreement and the other Transaction Documents to be executed by Buyer and
the incumbency of the officers of Buyer authorized by such resolutions to
execute this Agreement and take other actions in furtherance of this Agreement.
Closing Documents . Buyer shall have delivered (or caused to have been
delivered) to Seller each of the items to be delivered by Buyer at Closing
pursuant to Sections 3.3 and 3.4.
Completion of Other Transactions and Entering Into of Other Agreements
. Each of the transactions contemplated by the Unification Agreement shall have
been consummated contemporaneously with the consummation of the transactions
contemplated by this Agreement and Buyer shall have entered into each of the
other agreements contemplated to be entered into by Buyer pursuant to the
Unification Agreement.
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
Organization and Good Standing .
(i) Seller (A) is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia as a limited partnership and (B)
has full power, authority and legal right to execute and deliver and to perform
and observe the provisions of this Agreement and the other Transaction Documents
to which it is or is to become a party, and otherwise carry out the transactions
contemplated hereunder and thereunder. Seller conducts no activities and neither
owns nor uses properties in any other jurisdiction which requires it, under the
laws of such jurisdiction, to qualify to do business as a foreign corporation in
such jurisdiction.
(ii) Seller has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect.
(iii) General Partner is the sole General Partner of Seller.
(i) General Partner (A) is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia and
(B) has full power, authority and legal right to execute and deliver and to
perform and observe the provisions of this Agreement and the other Transaction
Documents to which it is or is to become a party, and otherwise carry out the
transactions contemplated hereunder and thereunder. General Partner conducts no
activities and neither owns nor uses properties in any other jurisdiction which
requires it, under the laws of such jurisdiction, to qualify to do business as a
foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true and complete copies of
its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement) is the sole
shareholder of General Partner.
(i) Manager (A) is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia and (B) has full
power, authority and legal right to execute and deliver and to perform and
observe the provisions of this Agreement and the other Transaction Documents to
which it is or is to become a party, and otherwise carry out the transactions
contemplated hereunder and thereunder. Manager conducts no activities and
neither owns nor uses properties in any other jurisdiction which requires it,
under the laws of such jurisdiction, to qualify to do business as a foreign
corporation in such jurisdiction.
(ii) Manager has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect.
(iii) B (as defined in the Indemnification Agreement) is the sole
shareholder of Manager.
Authority; No Conflict; Consents .
This Agreement constitutes and, when executed and delivered, the other
Transaction Documents to which an Operator is or is to become a party will
constitute, legal, valid and binding obligations of each of Seller and General
Partner, respectively, enforceable against such Person in accordance with their
respective terms. Each of the Operators have the absolute and unrestricted
right, power, authority and legal capacity to execute and deliver this Agreement
and such other Transaction Documents to which such Person is or is to become a
party is and to perform their respective obligations hereunder and thereunder.
Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated by this
Agreement by Seller, General Partner, Manager or the Bullocks will, directly or
indirectly (with or without notice or lapse of time):
contravene, conflict with or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any of the Organizational Documents of such party or any
Contract or any agreement to which such party (whether or not Seller is a party
thereto) or any Acquisition Assets may be subject;
contravene, conflict with, or result in a violation of any applicable
Law to which such party or any Acquisition Assets may be subject or give any
Governmental Authority or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under any Law to which such party or any of the Acquisition Assets
may be subject;
contravene, conflict with, or result in a violation of any of the terms
or requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Seller or that otherwise relates to the Business, the Facility
or any other the Acquisition Assets;
cause Buyer to become subject to, or to become liable for the payment
of, any Tax for the Business's operations prior to the Closing;
cause any of the Acquisition Assets to be reassessed or revalued by any
Governmental Authority (except to the extent that any of the same would
customarily be reassessed or revalued by such Governmental Authority upon a sale
of such asset); or
result in the imposition or creation of any Encumbrance (except a
Permitted Encumbrance) upon or with respect to any Acquisition Assets.
Except for those Governmental Authorizations and Consents under
Designated Contracts indicated, respectively, in Section 6.17 and Section
6.11(c) of the Disclosure Letter, no notices to, or Consents from, any Person
are required in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Operators' obligations under this
Agreement, including the transfer and assignment of any Governmental
Authorization or other Acquisition Asset necessary or desirable for Buyer to
conduct the Business.
Financial and Operating Statements .
Seller has delivered to Buyer: (a) unaudited balance sheets and related
statements of profits and losses for the Facility and the Business as at and for
each of the calendar years ended December 31, 1994 and 1995, together with the
review reports thereon of Xxxxxxx & Company, LLC, independent public accountants
(the "Year End Financial Statements"), (b) an unaudited balance sheet and the
related statement of profits and losses for the Facility and the Business as at
and for the ten (10) months ended October 31, 1996 (the "Interim Financial
Statement"), including, in each case, with the notes thereto. All such financial
statements and notes fairly present the financial condition and the results of
operations for the Facility and the Business as at the respective dates of and
for the periods referred to in such financial statements, all in accordance with
GAAP subject to normal, immaterial changes resulting from year-end adjustments.
The financial statements referred to in this Section 6.3 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than Seller would be required by GAAP to be
included in the consolidated financial statements of Seller. Seller has also
delivered to Buyer a report of net operating income adjustments detailing all
adjustments to revenue and expenses at the Facility level that represent
obligations that will not be assumed by Buyer hereunder for the calendar years
ended December 31, 1994 and December 31, 1995 and for the ten (10) months ended
October 31, 1996. Such report is true, correct and complete and is based on
assumptions that were true, correct and reasonable when made but was not
prepared in accordance with GAAP. All such financial statements and reports have
been prepared from and in accordance with the books and records of Seller.
Books and Records . The books of account and other records of Seller
(including any such books and records kept by the General Partner or the Manager
on behalf of Seller) pertaining to the Facility or other Acquisition Assets, all
of which have been made available to Buyer, are complete and correct in all
material respects, reflect in all material respects all transactions affecting
the Business, the Facility and the other Acquisition Assets and have been kept
and maintained in accordance with sound business practices.
No Undisclosed Liabilities or Material Adverse Change .
Except as set forth in Section 6.5(a) of the Disclosure Letter, Seller
has no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Interim Financial Statement and
current liabilities incurred in the ordinary course of business of Seller since
the respective dates thereof.
Since the date of the Interim Financial Statements, there has not been
any material adverse change in the business, results of operations, assets,
liabilities or the condition (financial or otherwise), or prospects of the
Business or the Facility, or any damage or destruction of the Facility by fire
or other casualty, whether or not covered by Insurance, and the Operators and
the Manager have, and until the Closing, will have, operated the Facility only
in the normal course. The Operator Affiliates have identified and communicated
to Buyer all material information with respect to any fact or condition that
might adversely affect the future prospects (financial, licensure status or
otherwise) of the Business or the Facility.
Taxes; FIRPTA .
Seller has filed all Tax Returns that are required to have been filed
in any jurisdiction, has paid all Taxes shown to be due and payable on such Tax
Returns and, before they have become delinquent, has paid all other Taxes levied
upon Seller or its properties, assets (including the Acquisition Assets), income
or franchises, to the extent such Taxes have become due and payable, except for
any Taxes (i) as set forth in Section 6.6 of the Disclosure Letter or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which Seller has
established adequate reserves in accordance with GAAP in the Interim Financial
Statements. The Operator Affiliates know of no basis for any other Tax or
assessment that could be assessed against Seller. The charges, accruals and
reserves on the Interim Financial Statements in respect of Taxes for all fiscal
periods are adequate. Seller's income tax returns have never been audited.
Buyer is not required to withhold taxes from the payment of sale
proceeds to Seller under the Code or any applicable state, commonwealth or local
tax Laws. Seller is not a foreign person for purposes of Section 1445 of the
Code.
Title, Condition and Sufficiency of the Facility.
Seller has delivered or made available to Buyer copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of Seller
and relating to the Facility. Seller owns good indefeasible and marketable fee
simple title to the Facility, free and clear of all Encumbrances other than the
Permitted Encumbrances. All of the Improvements located on the Land are situated
solely within the boundaries of the Land and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other Person.
No exception to title to or other Encumbrance and no interest in the
Facility will interfere with the use of the Facility for its Intended Use or
cause the value of the Facility to be materially less than the portion of the
Purchase Price allocated thereto.
There are no leases or other agreements granting any Person (other than
Seller) the right to use or occupy any part of the Facility other than the
Resident and/or Patient Agreements set forth in Section 6.7(c) of the Disclosure
Letter, and no Person has any ownership interest (other than Seller) or option
or right of first refusal to acquire any ownership interest in the Facility or
any part thereof.
The Facility is structurally sound, is in good operating condition and
repair (normal wear and tear excepted) and is not in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The Improvements (including the heating, ventilating
and air conditioning, plumbing, electrical, mechanical and drainage systems, and
roof) are in good operating condition, repair and working order, and have passed
all previous safety and/or licensing inspections, the last such inspection being
on the date set forth in the Disclosure Letter, and such systems are adequate
for the use of the Facility for its Intended Use.
Except as set forth in Section 6.7(e) of the Disclosure Letter, the
Improvements (including all roads, parking areas, curbs, sidewalks, sewers and
other utilities) have been completed and installed in accordance the Plans and
Specifications which were approved by the appropriate Governmental Authorities.
Permanent certificates of occupancy and all other Governmental Authorizations
which were required to be issued for the Improvements have been issued and are
in full force and effect; and the requisite annual fire safety and life safety
inspections as were required to be conducted for the Improvements, have been
conducted.
The maintenance, operations and use of the Improvements comply with (i)
all Legal Requirements, (ii) any certificate of occupancy or other Governmental
Authorizations issued for the Facility and (iii) all restrictive covenants and
other Permitted Encumbrances. No Operator Affiliate has received or is aware of
the issuance of any notice of noncompliance or violation from any Governmental
Authority regarding the Facility or any part thereof or the use thereof.
Current local zoning ordinances, general plans and other applicable
land use regulations and all private covenants, conditions and restrictions, if
any, affecting the Property, permit the transfer of the Facility and the use of
the Facility for its Intended Use (and reconstruction and resumption of such use
in the event of damage, destruction or cessation of use) as a matter of right
for an unlimited time period and not merely as a legal non-conforming use.
To the best knowledge of the Operators, (i) there is no plan, study or
effort by any Governmental Authority which in any way affects or would affect
the present use or zoning of the Facility or any part thereof; (ii) there is no
existing, proposed or contemplated plan to widen, modify or realign any street
or highway or existing, proposed or contemplated Condemnation proceedings that
would affect the Facility in any way whatsoever; and (iii) no subdivision plan
or plans (preliminary or otherwise) have been filed with respect to the Land.
The Land is adjacent to and has direct access to each abutting street.
All streets adjoining or traversing the Land have been dedicated to and accepted
by the local municipal authorities and the means of ingress and egress, parking,
access to public streets and drainage facilities are adequate for the use of the
Facility for its Intended Use. There are no easements traversing or contiguous
to the Land which are not disclosed in Section 6.7(i) of the Disclosure Letter
or which interfere with the use and operation of the Facility for its Intended
Use.
All public utilities, including telephone, gas, electric power,
sanitary and storm sewer and water, required for the operation of the Facility
either enter the Facility through adjoining public streets, or if they pass
through adjoining private land, do so in accordance with valid recorded
easements held by Seller. Such utilities are adequate for use of the Facility
for its Intended Use.
The Facility is not located within an area of special risk with respect
to natural or man-made disasters or hazards, including any Flood Hazard Area.
There are no adverse geological or soil conditions affecting the
Facility.
The Facility is a legal lot or parcel which for all purposes may be
mortgaged, conveyed and otherwise dealt with as separate parcels and is not
taxed together with any other property.
There is no proceeding pending to which a Operator Affiliate is a party
relating to the assessed valuation of the Facility and no assessment for public
improvements have been made against the Facility that remain unpaid. All public
improvements ordered, commenced or completed prior to the date of this Agreement
or prior to the Closing Date shall be paid for in full by the Seller prior to
the Closing.
Except as set forth in Section 6.7(o) of the Disclosure Letter: (i)
Seller and the Facility are, and at all times prior to the date hereof have
been, in full compliance with, and have not been and are not in violation of or
liable under, any Environmental Law, (ii) there are no underground storage tanks
or Hazardous Materials currently located in or on the Facility, and to the best
of the Operators' knowledge (after due inquiry) no such tanks have ever been
located on the Facility and no such Hazardous Materials have ever been present,
used, stored, generated, treated or Released from or on or disposed of or on or
transported to or from the Facility; (iii) no Environmental Claims have been
made or, to the best of the Operators' knowledge (after due inquiry), threatened
by any Person against Seller or the Facility; and (iv) to the best of the
Operators' knowledge (after due inquiry), there are no current, and have been
no, businesses engaged in the storage, treatment or disposal of Hazardous
Materials on any property adjacent to the Land.
Section 6.7(p) of the Disclosure Letter lists all reports received
during the last five (5) years from any Governmental Authority with respect to
the Facility, true and complete copies of such reports to Buyer.
Title, Condition And Sufficiency of the Personal Property .
Except for the security interest(s) listed and described in Section
6.8(a) of the Disclosure Letter, Seller has good and marketable title to the
Personal Property, including, but not limited to, the motor vehicle set forth on
Schedule 2.1 hereto, subject to no Encumbrance or restraint on transfer
whatsoever. No other person has any right to the use or possession of any of the
Personal Property and, except as set forth in Section 6.8(a) of the Disclosure
Letter, no currently effective financing statement with respect to the Personal
Property has been filed in any jurisdiction, and Seller has not signed any such
financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement. Except as set forth in Section
6.8(a) of the Disclosure Letter, none of the Personal Property is subject to a
conditional sale, lease, security interest or similar arrangement. During last
five (5) years, Seller has conducted its business activities only under its
partnership name of Ghent Arms Limited Partnership and/or trade name "Ghent
Arms."
All of the tangible Personal Property is in good operating condition
and repair, is not in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in nature or cost and is
functioning in the manner and for the purpose for which it was intended. All of
the Personal Property is in material compliance with all Legal Requirements, and
is sufficient and suitable to enable the Buyer to operate the Facility and the
Business in a normal and efficient manner.
Inventory .
All food, beverages, pharmaceuticals and medical supplies comprising
Inventory on supply at the Facility are fit for the purposes for which they are
intended, meet all governmental standards therefor and are of merchantable
quality. All linens, clothing and similar items comprising the Inventory located
at the Facility are in good condition, reasonable wear and tear excepted.
On the Closing Date, there will be in supply at the Facility Inventory
(to be included as part of the Acquisition Assets) which are in a quantity and
condition customary and sufficient to meet Buyer's needs in operating the
Business and the Facility in a manner similar to that in which the Business and
the Facility have been operated by Seller prior to the Closing Date.
Section 6.9(c) of the Disclosure Letter contains a list of all
suppliers of Inventory to Seller. No Operator and, to the best of such
Operator's knowledge (after due inquiry), no other Operator Affiliate has
received any notice, or has any reason to believe, that any significant supplier
will cease selling Inventory to Seller or to Buyer at any time after the Closing
Date on terms and conditions not substantially similar to the terms and
conditions on which such Inventory are currently being sold to Seller.
Intellectual Property .
Section 6.10(a) of the Disclosure Letter sets forth a complete and
accurate list of all Intellectual Property owned by, or (even if not included in
the Acquisition Assets) licensed to, Seller or (even though not an Acquisition
Asset) General Partner or the Manager, and sets forth separately which are owned
by, and which are licensed to, Seller, General Partner and the Manager. Such
Intellectual Property is sufficient to conduct the Business being conducted at
the Facility.
No proceeding is pending (or, to the best of the Operators' knowledge,
after due inquiry, threatened) against any Operator that alleges that any
Operator or other Operator Affiliate is infringing upon any intellectual
property asset (including the name Ghent Arms) of any Person or that challenges,
or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any Operator Affiliate's (or Buyer's, to the extent
an Acquisition Asset, upon consummation of the transactions contemplated by this
Agreement) use of the Intellectual Property. No event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such proceeding.
No Person has been granted the right, or been permitted, to use any
Intellectual Property owned by, or licensed to, Seller. To the best knowledge
(after due inquiry) of each Operator, no Person is believed to be infringing
upon the Intellectual Property.
Contracts .
Section 6.11(a) of the Disclosure Letter contains a complete and
accurate list, including its term and summary of financial terms, of each
Contract, other than the Resident and/or Patient Agreements set forth in Section
6.11(b) of the Disclosure Letter, to which Seller is subject or bound that is in
existence and which pertains to the Business of the Facility or to which any of
the Acquisition Assets are subject. Seller has delivered to Buyer true and
complete copies of each such Contract.
Section 6.11(b) of the Disclosure Letter sets forth a listing, as of
the date of this Agreement, of the names of all Residents/Patients at the
Facility, the date of admission of each such Resident/Patient and the rental
amounts payable and the term of each related Resident and/or Patient Agreement
and a material variation in such Resident and/or Patient Agreement from the
Seller's standard form thereof (in addition to the rental amount and term
indicated in Section 6.11(b) of the Disclosure Letter).
Each Designated Contract is in full force and effect, is valid and
enforceable in accordance with its terms and is (except as noted in Section
6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost or
modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
Seller has not given to or received from any other Person, at any time
since January 1, 1996, any notice or other communication (whether oral or
written) regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Designated Contract, which individually or in
the aggregate would constitute a material violation or breach of or default
under any such Designated Contract. Section 6.11(d) of the Disclosure Letter
sets forth the names of Residents/Patients from or to whom Seller has received
or given (whether or not written) any such notice or communication (whether or
not of a material nature) on a chronic or repeat basis. The parties to the
Designated Contracts (other than the Seller) are not, to the best of the
Operators' knowledge, in default of their respective obligations under any of
such Designated Contracts, and there has not occurred any event which, with the
passage of time or giving of notice (or both), would constitute such a default
or breach under any of such Designated Contracts.
There are no renegotiations of, attempts to renegotiate, or outstanding
rights to renegotiate any material amounts paid or payable by or to Seller
under, any Designated Contracts.
Except as described in Section 6.11(f) of the Disclosure Letter, each
Designated Contract has been entered into in the ordinary course of business on
an arm's-length basis with an unaffiliated third party and has been entered into
without the commission of any act, alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in violation
of any applicable Law.
Insurance . Section 6.12 of the Disclosure Letter contains a complete
and correct list of all forms of Insurance held or owned by Seller or (even
though not an Acquisition Asset) the General Partner or the Manager pertaining
in any way to the Facility or other Acquisition Assets, or to the Operators or
the Manager which, although not specifically covering the Facility or other
Acquisition Assets would cover activities conducted at or in connection with the
Facility or other Acquisition Assets or liability arising therefrom, including a
description of the name of the insurer and the insured, the amount of coverage,
the type of insurance included under each such policy and a brief description of
any claims made thereunder during the past five (5) years and in the case of any
bond or agreement, a description thereof and the name of the surety or
indemnifying party. All such Insurance is in full force and effect, all premiums
due on such policies have been paid, and no Operator nor, to the best of its
knowledge (after due inquiry), any other Operator Affiliate has been advised by
any Insurance carriers of an intention to terminate or modify any such
Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
Employees .
Section 6.13(a) of the Disclosure Letter contains a complete and
accurate list of the following information for each employee (separately
indicating any who are not Business Employees, as defined in Section 9.1),
director, independent contractor, consultant and agent of Seller, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable regularly scheduled hours of employment; and all
payroll-related liabilities or obligations of Seller.
To the best knowledge (after due inquiry) of the Operators, no current
employee of Seller is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, non-competition, or proprietary
rights agreement that (i) was breached or violated by employment with, or
services performed for, Seller or (ii) will adversely affect the ability of such
employee to perform his or her duties with Buyer.
Labor Matters .
Except as disclosed in Section 6.14(a) of the Disclosure Letter, Seller
has not been, and is not now, a party to nor bound by or subject to any
collective bargaining agreement or other labor Contract. During the last five
(5) years, there has not been or, to the Operators' knowledge, threatened
strike, slowdown, picketing, lockout or work stoppage, or any labor arbitration
or proceeding in respect of the grievance of any employee, application or
complaint filed by an employee, employee group or union with the National Labor
Relation Board or any other Governmental Authority, organizational activity, or
other labor dispute against or affecting the Business or the Facility. No
application for certification of a collective bargaining unit is pending or, to
the Operators' knowledge, is threatened against Seller or the Facility. To the
best of the Operators' knowledge, after due inquiry, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. Seller and the Manager have complied in all respects with all
applicable Legal Requirements (including, if applicable, the Worker Adjustment
and Retraining Notification Act) relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, social security and similar Taxes, occupational safety and health,
and plant closing (including, if applicable, with respect to the transactions
contemplated by this Agreement) of employees at the Facility. Seller is not
liable for the payment of any taxes, fines, penalties, or other amounts
(including sums related to EEOC or employment discrimination charges, complaints
or settlements), however designated, for failure to comply with any of the
foregoing Legal Requirements.
Section 6.14(b) of the Disclosure Letter sets forth a complete and
accurate list of all judicial or agency determinations, settlements or
conciliations of complaints, claims, charges or citations against Seller or the
Manager since January 1, 1991, arising under the National Labor Relations Act,
the Fair Labor Standards Act, the Immigration Reform and Control Act, the
Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Americans with Disability
Act of 1990, 42 U.S.C. ss. 1981, and any other Law, relating to employment
discrimination, occupational safety and health, employee benefits, or wages and
hours of employees.
Benefit Plans .
Seller has not established, maintained, sponsored, contributed to
(including any Multiemployer Plan as defined in Section 4001(a)(3) of ERISA),
been required to contribute to, or otherwise participated in any employee
benefit plan, program, agreement or arrangement under which any present or past
employee of Seller or any ERISA Affiliate of Seller may be entitled to any
benefits (including death, health, medical, deferred compensation, bonus or
other arrangements), whether written or oral, whether formal or informal,
whether or not insured, and whether legally binding or not, other than Seller's
sick and vacation pay policies, neither of which is subject to ERISA and true
and correct copies of which have heretofore been delivered by Seller to Buyer.
Except as set forth in Section 6.15(b) of the Disclosure Letter, all
payments required to have been made by Seller or Manager under such sick pay and
vacation pay policies have been made.
Compliance with Laws; Deficiencies . Except as set forth in Section
6.16 of the Disclosure Letter:
Except as described in Section 11.3, no Operator nor, to the best of
its knowledge (after due inquiry), no other Operator Affiliate has received, at
any time since January 1, 1991, any notice or other communication (whether oral
or written) from any Governmental Authority or any other Person regarding (A)
any actual, alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement pertaining to the Facility, the use thereof or the
Business conducted thereat, or (B) any actual, alleged, possible, or potential
obligation on the part of Seller to undertake, or to bear all or any portion of
the cost of, any Cleanup or other corrective, remedial, mitigation, response or
other action of any nature (including any investigation, study, sampling,
monitoring or testing) with respect to the Facility;
Except as described in Section 6.16(b) of the Disclosure Letter, there
is no pending nor, to the best knowledge of the Operators (after due inquiry) is
there any threatened or contemplated, investigation or inquiry, proceeding,
suit, claim (including any Environmental Claim), action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry against Seller or any of the Acquisition Assets. The Operators have
delivered to Buyer copies of all pleadings, correspondence and other documents
relating to each matter listed in Section 6.16(b) of the Disclosure Letter. The
matters listed in Section 16(b) of the Disclosure Letter (either individually or
in the aggregate) will not have a Material Adverse Effect on the business,
operations, assets (including the Acquisition Assets) or prospects of Seller,
the Facility or the Business. There is no pending, nor, to the best knowledge of
the Operators (after due inquiry) threatened, proceeding against the Operators
or any other Operator Affiliate that challenges or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement.
There has occurred no event nor does any circumstance exist that (with
or without notice or lapse of time) may constitute or result in a violation or a
failure on the part of the Operators or, to the best of knowledge of the
Operators (after due inquiry), on the part of any other Operator Affiliate to
comply with, any Legal Requirement pertaining to the Facility, the use thereof
or the Business.
Except as set forth in Section 6.16(d) of the Disclosure Letter, no
Operator nor any of the assets (including the Acquisition Assets) owned or used
by Seller in connection with the Business or the Facility nor, to the best of
its knowledge (after due inquiry), any other Operator Affiliate, is, or during
the past five years was, subject to any judgment, decree, injunction or order of
any Governmental Authority.
Section 6.16(e) of the Disclosure Letter sets forth a true and complete
list of all violations and deficiencies found or alleged by any Governmental
Authority with respect to the Facility or Seller within the past three (3)
years. All such violations and deficiencies have been fully withdrawn by the
applicable Governmental Authority or remedied. No violations or deficiencies
found or alleged by any Governmental Authority with respect to the Facility or
Seller (whether or not listed in said Section 6.16(e) of the Disclosure Letter)
will result in any adverse effect upon Buyer in its operation of the Facility or
conduct of the Business or upon any of the transactions contemplated herein
(including any adverse effect upon any application by Buyer for any Governmental
Authorization required for Buyer's operation of the Facility) or otherwise have
any Material Adverse Effect.
No Operator, nor to the best knowledge of the Operators, any other
Person associated with or acting for or on behalf of an Operator, has directly
or indirectly in connection with the conduct of the Business (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, or (iii) to obtain
special concessions or for special concessions already obtained or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Seller.
Governmental Authorizations . Seller has (in good standing) all
requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization. Affiliated
Relationships . Except as disclosed in Section 6.18 of the Disclosure Letter,
neither Seller, General Partner or the Manager, nor any partner, shareholder,
director or officer thereof , or any member of such Person's immediate family,
has, or at any time within the last two (2) years has had, a material ownership
interest in any business that is or was a party to any business relationships or
arrangement of any kind relating to the operation of the Facility or the
Business.
Residents/Patients; Licensed Beds And Fees .
Seller has cared for the Residents/Patients located at any time at the
Facility in accordance with recognized standards pertaining to assisted living
facilities. Seller does not have any agreement with any of its
Residents/Patients which have been prepaid for more than one month.
Section 6.19(b) of the Disclosure Letter sets forth a true and correct
list of: (i) the maximum number of permitted licensed assisted living care beds
at the Facility; (ii) the number of beds or units presently occupied at the
Facility; (iii) the current standard rates and other fees and amounts charged by
Seller to Residents/Patients at the Facility; (iv) any Residents/Patients having
special rates or fee arrangements, together with a list of such special rates or
description of such special arrangements.
Brokers or Finders . No Operator Affiliate has dealt with any broker or
agent in connection with the sale of the Acquisition Assets and no Operator has
any knowledge of any Person who would be entitled to a brokerage or finder's fee
or agent's commission or other similar payment in connection with the sale of
the Acquisition Assets or the transactions contemplated hereby as a result of
Seller's dealings.
Disclosure .
No representation or warranty or other statement made by any Operator
or any other Operator Affiliate in this Agreement, in the Disclosure Letter or
in any document, certificate or instrument furnished or to be furnished by any
Operator Affiliate to Buyer and no financial or operating statement furnished or
to be furnished by any Operator Affiliate to Buyer is or will be false or
misleading as to any material fact, or omits or will omit to state a material
fact necessary to make the statements contained therein or, in light of the
circumstances in which they were made, not misleading. The Operator Affiliates
have provided to Buyer all material information related to the Acquisition
Assets and the Business.
The Operators have no knowledge of any fact (other than general
economic or industry conditions) that would have, or as far as the Operators can
reasonably foresee could have, a Material Adverse Effect.
Bankruptcy . No insolvency proceeding of any character, including
bankruptcy, receivership, reorganization, composition or arrangement with
creditors (including any assignment for the benefit of creditors), voluntary or
involuntary, affecting Seller, General Partner or any other Operator Affiliate
(other than as a creditor) or the Acquisition Assets, is pending or is being
contemplated, or to the Operators' best knowledge (after due inquiry) is being
threatened, against Seller, General Partner or any other Operator Affiliate by
any other Person, and neither Seller nor any other Operator Affiliate has made
any assignment for the benefit of creditors or taken any action in contemplation
of, or which would constitute the basis for, the institution of any such
insolvency proceedings.
Third Party Provider Liabilities .
Except as set forth in Section 6.23 of the Disclosure Letter, no
services provided by Seller at the Facility have ever been reimbursed by
Medicaid or Medicare or, since January 1, 1995, any other third party provider
(including any managed care organization). Since January 1, 1995, Seller has not
received any notice of recoupment from and has no liability for reimbursements
of any third party reimbursement source (inclusive of managed care
organizations) and Seller is not aware of any basis for the assertion of any
such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
Due Diligence Information . Seller has delivered or caused to be
delivered or furnished to Buyer for its review true and complete copies of all
of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Organization and Good Standing . Buyer is a corporation duly organized,
validly existing and, to the extent applicable, in good standing under the laws
of the State of Delaware; is, or will be on the Closing Date, duly qualified and
authorized to do business in the Commonwealth of Virginia; and has full power,
authority and legal right to execute and deliver and (subject to obtaining
requisite Governmental Authorizations) to acquire and operate the Facility and
the Business and to perform and observe the provisions of this Agreement, and
all other Transaction Documents to which it is or is to become a party and
otherwise to carry out the transactions contemplated hereunder.
Authority . This Agreement constitutes and, when executed and
delivered, all the other Transaction Documents to which Buyer is or is to become
a party will constitute, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms. Buyer has
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and such other Transaction Documents to which it is or is to
become a party and to perform its obligations hereunder and thereunder.
Certain Proceedings . There is no pending proceeding that has been
commenced, nor, to the knowledge of Buyer, threatened against Buyer that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated by this
Agreement.
Brokers or Finders . Buyer has not dealt with any broker or agent in
connection with the purchase of the Acquisition Assets or the transactions
contemplated hereby as a result of Buyer's dealings and Buyer knows of no Person
who would be entitled to a brokerage or finder's fees or agent's commissions or
other similar payment.
Due Diligence Review . Buyer acknowledges that Seller has delivered or
furnished to Buyer information, documents, reports and records which Buyer
requested in connection with its due diligence review of the Facility and other
Acquisition Assets and that Buyer has been afforded the opportunity to inspect
the Facility. The foregoing notwithstanding, such review and/or inspection is
not intended to diminish or impair the representations and warranties made by
Seller, General Partner or any other Operator Affiliate hereunder or under any
other Transaction Document.
ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
Access and Investigation . Between the date of this Agreement and the
Closing Date, Seller will (and the General Partner will cause Seller to): (a)
afford Buyer and its representatives and prospective Financing Sources and their
representatives (collectively, "Buyer's Advisors") full and free access to
Seller's personnel, properties, Contracts, books and records, financial and
operating data and other information and documents pertaining to the Acquisition
Assets and the Business, (b) furnish Buyer and Buyer's Advisors with copies of
all such Contracts, books and records, and other existing documents and data as
Buyer may reasonably request, (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating and other relevant data and information as Buyer
may reasonably request, and (d) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the properties,
assets and financial condition of Seller, the Acquisition Assets and the
Business. Seller shall cause its accountants to cooperate with Buyer and to
disclose the results of audits and financial statement reviews relating to
Seller and/or to the Facility and to produce the work papers relating thereto.
No such investigation by Buyer or its representatives shall affect any of the
Seller's representations and warranties in this Agreement or Buyer's right to
rely thereon. Buyer shall conduct its investigation hereunder in such manner as
will not cause any unreasonable disruption to the business of the Facility.
Maps, Plans, Surveys, Etc. Seller shall deliver, or cause to be
delivered, to the Buyer all existing plans, maps, surveys, descriptions, and
title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
Operation of Seller's Business . Between the date of this Agreement and
the Closing Date, Seller will (and the General Partner will cause Seller to):
(a) conduct the Business of Seller only in the ordinary course of
business;
(b) use their best efforts to preserve intact Seller's current business
organization, keep available the services of the current officers, employees and
agents of Seller, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with Seller;
(c) confer with Buyer concerning operational matters of a material
nature;
(d) otherwise report periodically to Buyer concerning the status of the
Business, including its operations and financial condition, including delivering
to Buyer monthly operating statements for the Facility and the Business within
thirty (30) days after the end of each calendar month between the date of this
Agreement and the Closing;;
(e) make no material changes in management personnel without prior
notice to Buyer;
(f) maintain the Acquisition Assets in a state of repair and condition
consistent with the requirements of this Agreement and normal conduct of the
Business, not dispose of or Encumber or permit the disposition or Encumbrance of
the Acquisition Assets;
(g) use their best efforts to keep in full force and effect and not
amend, or waive or permit to be amended or waived, Insurance covering Seller,
the Facility or the other Acquisition Assets or any other material rights
relating primarily or exclusively to the Business or the Acquisition Assets;
(h) maintain all books and records relating to the Business in the
usual, regular and ordinary manner;
(i) maintain Inventory at least at current levels and in any event at
levels that are customary and sufficient to operate the Facility for its
Intended Use;
(j) not amend or permit to be amended any Contract related to the
Acquisition Assets or the Business except in the ordinary and usual practice of
the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances upon the
Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or assumed
any Contract related to the Acquisition Assets or the Business except in the
ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach of any
Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to the
Facility without the written approval of Buyer, other than (i) renovations and
repairs to the Facility which have been disclosed to Buyer and which are to be
completed prior to the Closing Date and (ii) those required by or in order to
retain or maintain in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by Law for
the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly with any and
all Legal Requirements affecting the Acquisition Assets and all orders of any
board of fire underwriters or other similar bodies, and promptly, and in no
event later than twenty-four (24) hours from the time of its receipt of any
notice of non-compliance, notify Buyer of any failure of Seller to comply with
the same; and
(q) not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their control, which would
cause any of Seller's and the General Partner's' representations and warranties
contained in this Agreement to be untrue.
Required Consents . As promptly as practicable after the date of this
Agreement, Seller will make all filings required to be made by it in order to
consummate the transactions contemplated by this Agreement. Between the date of
this Agreement and the Closing Date, Seller and the General Partner will: (a)
cooperate with Buyer with respect to all filings and provide all information
that Buyer elects to make or provide or is required to make or provide in order
to consummate the transactions contemplated by this Agreement (including, with
potential Financing Sources), and (b) cooperate with Buyer in obtaining all
Consents which Buyer considers necessary or appropriate in order to consummate
the transactions contemplated hereby.
Notification ; Supplements to Disclosure Letter. Prior to the Closing,
the Operators will promptly notify Buyer in writing of (i) all events,
circumstances, facts, conditions or occurrences arising subsequent to the date
of this Agreement which could result in any of Seller's or General Partner's
representations becoming untrue or incorrect in any respect and (ii) all other
material developments affecting the Acquisition Assets or the Business or the
prospects thereof. Should any such event, circumstance, fact, condition or
occurrence require any change in the Disclosure Letter (if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
No Negotiation . Until such time, if any, as this Agreement is
terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the Business or the Acquisition Assets
or the partnership interests in Seller or merger of Seller or a similar
transaction involving Seller.
Best Efforts . Between the date of this Agreement and the Closing Date,
the Operators will use their best efforts to cause the conditions in Section 4
to be satisfied.
ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
Information on Business Employees . On and prior to the Closing Date,
Buyer will be given reasonable access to the personnel records (including
performance appraisals, disciplinary actions, grievances) of all Business
Employees.
Employment of Business Employees by Buyer .
Effective as of 11:00 pm on the date of the Closing, Seller will
terminate the employment of all Business Employees and Buyer shall offer
employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
No Operator Affiliate, directly or indirectly, shall solicit the
employment of any Business Employee.
It is understood and agreed that accepted employment with Buyer will be
on an "at will" basis and may be terminated by Buyer or by an employee at any
time for any reason and with or without notice (subject to any written
agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her accrued and unpaid vacation and sick employer paid
leave as of the Closing. In the event that any such Rehired Employee uses any of
such vacation or sick leave during said 180-day period while it is an employee
of Buyer or otherwise becomes entitled to be paid for the same during said
period, Seller agrees to pay to Buyer promptly after demand setting forth
reasonable detail therefor the amount of accrued vacation or sick leave pay paid
to such Rehired Employees during said period.
Seller shall be responsible for the payment of all wages and other
remuneration due to employees of Seller with respect to their services prior to
11:00 pm on the date of the Closing and, if and to the extent applicable, the
payment of any termination or severance payments due to, and will comply with
all Legal Requirements relating to, any employee who did not accept Buyer's
offer of employment.
Seller shall provide Buyer with completed I-9 forms and attachments
with respect to all Rehired Employees, except for such employees as Seller shall
warrant are exempt from such requirement.
Buyer shall not have any responsibility, liability or obligation,
whether to Business Employees, former employees, their beneficiaries or to any
other Person with respect to, and the Operators shall, jointly and severally,
indemnify and hold Buyer harmless with respect to, any unlawful employment,
labor or immigration practice arising from, or as a consequence of, the
Operators' or the Manager's conduct of the Business prior to the Closing, or any
employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
Notwithstanding anything contained in this Section, the provisions of
this Section are not intended to, and shall not in any way be construed to,
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
Damage and Destruction . Seller shall have the risk of loss or damage
to the Property and liability arising out of the Business or the Acquisition
Assets from any cause whatsoever prior to the Closing Date. In the event of any
loss or damage to the Property, the following procedure shall be used, Buyer
may: (a) elect to extend the Closing Date for a period up to one hundred eighty
(180) days and require Seller to repair or replace such damaged or destroyed
Property, and, in which event Seller shall be entitled to retain the Insurance
proceeds and shall promptly proceed, at Seller's expense, to repair or replace
such damaged or destroyed Property; the Purchase Price shall not be affected or
adjusted in any way provided such damage or destruction is fully repaired or
replaced; (b) elect to proceed with the transaction contemplated herein, and
have the Insurance proceeds concerning the loss assigned at Closing to Buyer,
and if all or part of the loss is not covered by Insurance, reduce the Purchase
Price payable at the Closing by an amount equal to the uninsured loss in which
event Seller shall not be obligated to repair or replace such damaged or
destroyed Property; or (c) if the aggregate loss or damage to the Property (from
one or more events) at or prior to the Closing exceeds ten (10%) percent of the
Purchase Price, or would take longer than thirty (30) days to repair or replace,
elect to terminate this Agreement, in which event neither Seller nor Buyer shall
have any further rights or obligations to the other hereunder.
Condemnation . In the event that prior to the Closing all or any
portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
ARTICLE
INDEMNIFICATION
Indemnification Agreement . The Operators indemnification and
reimbursement obligations arising from or in connection with any breach of any
representation, warranty or covenant made by them or another Operator Affiliate
in this Agreement and the Buyer's indemnification and reimbursement obligations
arising from or in connection with any breach of any representation, warranty or
covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
Independent Investigation . The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
Underground Storage Tank . Notwithstanding Section 11.2, the Operators
and Buyer acknowledge that each has received and reviewed a copy of the Phase I
Environmental Site Assessment Report for the Facility, prepared by Law
Engineering and Environmental Services, Inc., dated January 15, 1997 (the "Phase
I Environmental Report") and that said Report disclosed that there is an
underground storage tank system located at the Facility (the "UST"), which
contains heating oil for the Facility. A Phase II soil and groundwater sampling
analysis in the area of the UST (the "Phase II Lab Results") revealed total
petroleum hydrocarbon levels in the soil at 251 parts per million ("ppm") and in
groundwater at 16 ppm. Xxxxx Xxxxxxx, the principal shareholder of General
Partner, has received a letter dated January 21, 1997 from a representative of
the Virginia Department of Environmental Quality (the "DEQ"), which indicates
that, based on the environmental site assessment information submitted to him,
the DEQ will not require any further assessment or cleanup at the Facility in
connection with the UST (the "DEQ Letter"). Based on the foregoing, the parties
agree as follows:
(a) The Operators represent and warrant to Buyer that General Partner
submitted to DEQ the Phase II Lab Results on or about January 15, 1997 (but in
any event prior to and as part of its request for the DEQ Letter), and that
attached hereto as Schedule 11.3 is a true copy of the DEQ Letter;
(b) The Operators hereby agree to pay to or reimburse Buyer for
one-half of the costs, expenses and fees (but in no event shall the aggregate
amount to be paid or reimbursed by the Operators exceed $7,500.00) associated
with the Buyer's conducting or, as appropriate, retaining a qualified
professional to conduct, the following activities:
obtain any Governmental Authorizations necessary to conduct
each of the activities set forth in this Paragraph 11.3(b);
remove existing pavement, as appropriate, in order to conduct
such activities; disconnect and cap all existing lines
associated with the UST; remove any existing product or water
from the UST; excavate and remove the UST from the Facility
(including making the tank interior inert prior to removal and
degassing/cleaning the UST after removal); properly dispose of
the UST and any and all related soils; backfill the excavated
area with suitable and appropriate fill material; and perform
appropriate site restoration work, including pouring a
suitable concrete pad over the excavation area.
(c) Seller agrees to promptly provide Buyer with copies of all written
communications, reports and other documents which Seller receives or issues
relating in any way to the UST.
(d) Seller will cooperate in good faith regarding all activities to be
conducted with regard to the UST pursuant to this Section 11.3.
ARTICLE
MISCELLANEOUS COVENANTS
Confidentiality . Between the date of this Agreement and the Closing
Date, the parties to this Agreement will maintain in confidence, and will cause
their respective directors, officers, partners, employees, agents and advisors
to maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is in the "public domain" or already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication.
If the transactions contemplated by this Agreement are not consummated,
each party will return or destroy (as determined in writing by the other party)
as much of such written information as the other party may reasonably request.
Whether or not the Closing takes place, the Operators waive any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information
(including forms, manuals, policies and other Intellectual Property).
Public Announcements . Any general public announcements or similar
media publicity with respect to this Agreement or the transactions contemplated
herein shall be at such time and in such manner as Buyer shall determine;
provided that nothing herein shall prevent either party, upon notice to the
other, from making such written notices as such party's counsel may consider
advisable in order to satisfy the party's legal and contractual obligations in
such regard.
Non-Competition . (a) Seller shall not engage or participate in any
effort or act to induce any of the suppliers, associates, employees, independent
contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no Operator
Affiliate shall, directly or indirectly, for or on behalf of itself or any other
person, firm, entity or other enterprises, have a proprietary interest in, be
employed by, be a director or manager of, act as a consultant for, be a partner
in, give advice to, loan money to or otherwise associate with, any person,
enterprise, partnership, association, corporation, joint venture or other entity
which directly or indirectly engages in the business of owning, operating or
managing any facility of any type, licensed or unlicensed, which is engaged in
or provides assisted living care, nursing home care, senior housing, adult day
care, retirement housing, Alzheimer care living facility or adult congregate
living care anywhere within a twenty (20) mile radius of the Facility, except
that (i) any Operator Affiliate may operate any of the above types of facilities
for low income residents (defined as a facility with a base rate of less than
$1,250 per month, to be adjusted annually for changes in the Consumer Price
Index from January 1, 1997 using as the Consumer Price Index for all Urban Wage
Earners and Clerical Workers, 1982 -84 = 100, All Items for Washington, D.C.,
Maryland and Virginia as published by the United States Bureau of Labor
Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained in this
Article 12 are reasonable and necessary to protect the legitimate business
interests of Buyer and that any violation thereof would result in irreparable
harm to Buyer for which the remedy at law would be inadequate. Accordingly, the
Operators agree that upon the violation by them of any of the restrictions
contained in this Article 12, Buyer shall be entitled to obtain from any court
of competent jurisdiction a preliminary and permanent injunction, as well as any
other relief provided at law or equity, under this Agreement or otherwise. In
the event any of the foregoing restrictions are adjudged unreasonable in any
proceeding, then the parties agree that the period of time or the scope of such
restrictions (or both) shall be adjusted in such a manner or for such a time (or
both) as is adjudged to be reasonable.
ARTICLE
GENERAL PROVISIONS
Survival . All covenants, representations and warranties made by Seller
and Buyer hereunder or in any certificates or other instruments delivered
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and Closing.
Expenses . Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of agents, representatives, counsel, and accountants. In addition, the
following expenses will be paid by the following respective parties:
Seller will pay:
any and all state, municipal or other documentary, transfer, stamp,
sales, use or similar taxes payable in connection with the delivery of any
instrument or document provided in or contemplated by this Agreement, or the
transactions contemplated hereby, together with interest and penalties, if any,
thereon;
any and all broker's fees or similar fees claimed by any Person acting
by or on behalf of Seller in connection with the transactions contemplated
hereby; and
one-half of the UST cleanup costs pursuant to Section 11.3.
Buyer will pay
all expenses of or related to the issuance of the title insurance
commitment and policy (including the costs of any survey required by Buyer and
the Title Insurer), chain of title reports, and all closer escrow fees and
charges;
the cost of any environmental report, market and feasibility study and
appraisal prepared for Buyer at Buyer's request, and the expenses of or related
to Buyer's Due Diligence Review;
the charges for or in connection with the recording and/or filing of
any instrument or document provided for herein or contemplated by this Agreement
or any agreement or document described or referred to herein; and
any and all broker's fees or similar fees claimed by any Person acting
by or on behalf of Buyer in connection with the transactions contemplated
hereby.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
Arbitration . The parties hereto shall submit to arbitration any
dispute, controversy or claim arising out of or relating to this Agreement or
any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
Notices . Any notice, consent, approval, demand or other communication
required or permitted to be given under this Agreement or any other Transaction
Document (a "notice") shall be in writing, shall be delivered to the addressee
at the address set forth below (or at such other address as shall be designated
hereunder by notice to the other parties) personally, by FedEx (or other
equivalent national overnight courier) for next Business Day delivery or by
registered or certified United States mail, return receipt requested, in each
case with the cost of delivery prepaid or for the account of the sender and
shall be deemed to have been given (a) when delivered, if delivered in person,
(b) on the next Business Day, if sent by FedEx (or other equivalent national
overnight courier) or (c) five (5) Business Days after mailing, if mailed by
registered or certified United States mail. The respective addresses of the
parties for notice are as follows:
If to Buyer: Integrated Living Communities of
Redgate, Inc.
Bernwood Centre
00000 Xxx 00 Xxxx, Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Paretts Xxxxxx, Esq.
If to Operator
Affiliates: Xxxxxxx Corporation
000 Xxxxxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxxxx
with a copy to: Xxxxxx, Hamlett, Lowry, Xxxxxxxxx & Tweel, P.C.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx Xxxxxxxx, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
Further Assurances . The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
Financial Statement Audits . The Operators shall use their best efforts
to cause Seller's Auditors to deliver to Buyer at Buyer's expense, within sixty
(60) days following the Closing Date, such audited financial statements of
Seller necessary to comply with Rule 3-05 of Regulation S-X promulgated by the
Securities and Exchange Commission for filing by Integrated Living Communities,
Inc. with a Current Report on Form 8-K regarding the transactions contemplated
herein, and to cause Seller's Auditors to cooperate with Buyer's Auditors in
preparing the required pro forma financial statements for filing therewith.
Notwithstanding the level of review of the Facility's financial statements by
Buyer pursuant to Section 8.1 above, Seller shall cooperate with Buyer and its
independent certified public accountants, if Buyer deems it necessary or
desirable, to audit the balance sheets, statements of operations and statements
of cash flow of Seller for up to three (3) calendar years ended prior to
Closing. Without limiting the foregoing, the Operators shall make available all
information requested by Buyer or its auditors, and the Operators (and their
chief executive and chief financial officers) shall execute and deliver to the
auditors all representation letters requested by Buyer's auditors. Such audits
shall be conducted at Buyer's expense.
Intentionally omitted .
Copies of Books and Records . The Operators shall, for a period of five
(5) years after the Closing Date, provide to Buyer copies, whether in paper or
computer format, as may be reasonably requested from time to time by Buyer, of
Seller's financial and tax books and records and Manager's financial records
insofar as they relate to the operation of the Facility and the Business prior
to the Closing.
Waiver . The rights and remedies of the parties to this Agreement are
cumulative and not alternative. No delay in exercising any right or remedy shall
constitute a waiver thereof, and no waiver by Buyer or any Operator of any
covenant of this Agreement shall be construed as a waiver of any preceding or
succeeding breach of the same or any other covenant or condition of this
Agreement.
Entire Agreement and Modification . This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including the
Letter of Intent) and constitutes (along with the Transaction Documents,
including the Unification Agreement, referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by each of the parties.
Assignments, Successors and Third Party Beneficiaries .
No party may assign any of its rights under this Agreement without the
prior consent of the other party which will not be unreasonably withheld, except
that Buyer may assign all or certain of its rights, duties and obligations
hereunder to one or more Affiliates of Buyer, or, in connection with the
financing or refinancing of Buyer's purchase of the Acquisitions Assets, to a
real estate investment trust or other Financing Source or its Affiliate, without
the prior written consent of Seller, provided that in the instance of any such
assignment Buyer shall not be released from any of, and remain responsible for
its obligations under, this Agreement.
This Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Except as otherwise expressly provided in this Section, this Agreement
and all of its provisions and conditions are for the sole and exclusive benefit
of the parties to this Agreement and their successors and permitted assigns and
nothing in this Agreement will be construed to give any Person other than the
parties to this Agreement or their respective successors and assigns any legal
or equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement.
Severability . If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section Headings . The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect the construction
or interpretation of this Agreement. Governing Law . This Agreement will be
governed by and construed under the laws of the Commonwealth of Virginia without
regard to conflicts of laws principles.
Counterparts . This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF REDGATE, INC.
By: ______________________________________
Xxxx Xxxxx, Chief Financial Officer
GHENT ARMS LIMITED PARTNERSHIP
By: XXXXXXX CORPORATION,
General Partner
By: __________________________________
Xxxxx X. Xxxxxxx, President
XXXXXXX CORPORATION
By: ______________________________________
Xxxxx X. Xxxxxxx, President
TABLE OF CONTENTS
Page
ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 11
TERMS OF THE SALE AND PURCHASE 11
2.1 Assets to Be Sold 11
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 12
2.5 Allocation of Purchase Price 13
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 13
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 15
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 17
ARTICLE 4 18
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 18
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 19
4.7 No Material Adverse Change19
4.8 Consents 19
4.9 Completion of Other Transactions 19
ARTICLE 5 20
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 20
5.1 Performance 20
5.2 Representations and Warranties 20
5.3 Consents 20
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into of Other Agreements 20
ARTICLE 6 20
REPRESENTATIONS AND WARRANTIESOF OPERATORS 20
6.1 Organization and Good Standing 21
6.2 Authority; No Conflict; Consents 22
6.3 Financial and Operating Statements 23
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 23
6.6 Taxes; FIRPTA 24
6.7 Title, Condition and Sufficiency of the Facility. 24
6.8 Title, Condition And Sufficiency of the Personal Property 26
6.9 Inventory 27
6.10 Intellectual Property 27
6.11 Contracts 28
6.12 Insurance 29
6.13 Employees 29
6.14 Labor Matters 30
6.15 Benefit Plans 30
6.16 Compliance with Laws; Deficiencies 31
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 33
6.19 Residents/Patients; Licensed Beds And Fees 33
6.20 Brokers or Finders 33
6.21 Disclosure 33
6.22 Bankruptcy 33
6.23 Third Party Provider Liabilities 34
6.24 Due Diligence Information 34
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 34
7.2 Authority 34
7.3 Certain Proceedings 35
7.4 Brokers or Finders 35
7.5 Due Diligence Review 35
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc. 36
8.3 Operation of Seller's Business 36
8.4 Required Consents 37
8.5 Notification 37
8.6 No Negotiation 38
8.7 Best Efforts 38
ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 38
ARTICLE 10 39
DAMAGE, DESTRUCTION OR CONDEMNATION 39
10.1 Damage and Destruction 39
10.2 Condemnation 40
ARTICLE 11 40
INDEMNIFICATION 40
11.1 Indemnification Agreement 40
11.2 Independent Investigation 40
11.3 Underground Storage Tank 40
ARTICLE 12 42
MISCELLANEOUS COVENANTS 42
12.1 Confidentiality 42
12.2 Public Announcements 42
12.3 Non-Competition 42
ARTICLE 13 43
GENERAL PROVISIONS 43
13.1 Survival 43
13.2 Expenses 43
13.3 Arbitration 44
13.4 Notices 45
13.5 Further Assurances 46
13.6 Financial Statement Audits 46
13.7 Intentionally omitted 46
13.8 Copies of Books and Records 46
13.9 Waiver 47
13.10 Entire Agreement and Modification 47
13.11 Assignments, Successors and Third Party Beneficiaries 47
13.12 Severability 47
13.13 Section Headings 47
13.14 Governing Law 48
13.15 Counterparts 48
EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Xxxx of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's and General Partner's Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
Schedule 11.3: DEQ Letter
