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EXHIBIT 2.16
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into and is effective this
8th day of April, 1997, by and among Balanced Care Corporation, a Delaware
corporation (together with its permitted assigns, "Purchaser"), Xxxxx X. Xxxxx
and Xxxxx X. Xxxxx, husband and wife (the "Clarks") and Heavenly Health Care,
Inc. d/b/a Xxx Xxxxx Residential Care Homes, a Missouri corporation ("HHC")
(hereinafter, the Clarks and HHC may be individually and collectively referred
to as "Seller").
RECITALS:
HHC owns certain assets in connection with the operation of four
licensed residential care facilities located at the following addresses: (i)
0000 X. Xxxxxxx Xx., Xxxxxx, Xxxxxxxx (the "Nevada-I Facility"), (ii) 0000 X.
Xxxxxxx Xx., Xxxxxx, Xxxxxxxx (the "Nevada-II Facility"), (iii) 000 X. Xxxxxxxx
Xx., Xxxxxx, Xxxxxxxx (the "Butler Facility") and (iv) 0 Xxxxxxxxx Xxxxx Xxxx,
Xxxxx, Xxxxxxxx (the "Lamar Facility"). Purchaser desires to purchase
substantially all of the assets of HHC and the Business (as hereinafter
defined) related thereto and HHC desires to sell such assets to Purchaser.
The Clarks own certain assets in connection with the real property,
buildings, fixtures and other improvements comprising the four facilities
referenced above. Purchaser desires to purchase substantially all of the assets
of the Clarks and the Clarks desire to sell such assets to Purchaser.
This Agreement sets forth the terms and conditions upon which
Purchaser is purchasing the assets (other than Excluded Assets, as hereinafter
defined) owned by each Seller and used in the conduct of the Business, and each
Seller is selling to Purchaser such assets (other than Excluded Assets).
In consideration of the mutual agreements, covenants, representations
and warranties contained herein, and in reliance thereon, Purchaser and each
Seller hereby agree as follows:
ARTICLE I. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Accounts Receivable" shall mean as of any date any trade accounts
receivable (including, without limitation, any third party receivables arising
in connection with any Third Party Payor Programs), notes receivable, bid or
performance deposits, employee advances and other miscellaneous receivables
associated with the Business through and as of such date.
1.2 "Accreditation Body" shall mean the Department of Social Services,
the Division of Aging and all other Persons having jurisdiction over the
accreditation, certification, evaluation or operation of the Business.
1.3 "Accrued Expenses" shall mean as of any date accrued rents,
insurance premiums, payroll and benefits (including, without limitation,
vacation, sick pay, disability pay) and other
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accrued expenses as would appear on a balance sheet of either Seller as of such
date prepared in accordance with GAAP consistently applied, including those
described in Schedule 1.3.
1.4 "Affiliate" shall mean any company or other entity which controls,
is controlled by or is under common control with the designated Party. For the
purpose of the foregoing, ownership, directly or indirectly, of 20% or more of
the voting stock or other equity interest shall be deemed to constitute
control.
1.5 "Agreement" shall mean this Asset Purchase Agreement.
1.6 "Ancillary Agreements" shall mean the Escrow Agreement described
in Section 3.1.1, the real property conveyances described in Section 5.2.1 and
the xxxx of sale, assignment and assumption described in Section 5.2.2.
1.6A "Applicable Closing Date" shall mean the First Closing Date or
the Second Closing Date, as the case may be.
1.6B "Applications" shall have the meaning given to such term in
Section 8.1.14.
1.6C "Approved Plans and Specifications" shall have the meaning given
to such term in Section 8.1.16.
1.7 "Assumed Liabilities" shall have the meaning given to it in
Section 4.2.
1.8 "Books and Records" shall have the meaning given to it in Section
6.16.
1.9 "Business" shall mean the operation of a residential care facility
and, to the extent they exist, any other ancillary health care services owned,
operated, delivered, managed, developed, constructed, maintained, used,
occupied or possessed by HHC in connection therewith (including, without
limitation, any outpatient and contract rehab therapy services or any
Alzheimer's units).
1.10 "Clarks" shall have the meaning given to such term in the
preamble of this Agreement.
1.11 "Closings" shall have the meaning given to such term in Section
5.1.
1.12 "Closing Dates" shall have the meaning given to such term in
Section 5.1.
1.13 "Closing Inventory" shall mean all Inventory relating to the
Business on the Applicable Closing Date.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and any successor thereto. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.
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1.14A "Construction Permit" shall have the meaning given to such term
in Section 8.1.16.
1.15 "Contract" shall mean all alliance agreements, transfer
agreements, other agreements (including, without limitation, Resident's
Agreements described on Schedule 1.63, Management Agreements and Provider
Agreements), contracts, contract rights, commitments, customer accounts,
orders, leases, guarantees, warranties and representations, franchises and
books and records of account benefiting, relating to the Business or the
ownership, construction, development, maintenance, repair, management, use,
occupancy, possession or operation thereof, or the operation of any of the
programs or services in conjunction with the Business and all renewals,
replacements and substitutions therefor, issued by any Governmental Authority,
Accreditation Body or Third Party Payor or maintained or used by HHC with any
third Person.
1.16 "Current Liabilities" shall mean all liabilities classified as
current liabilities in accordance with GAAP.
1.17 "Damages" shall have the meaning given to such term in Section
14.4.
1.18 "Department of Social Services" shall mean the State of Missouri,
Department of Social Services.
1.19 "Deposit" shall have the meaning given to such term in Section
3.1.1.
1.20 "Division of Aging" shall mean the State of Missouri, Department
of Social Services, Division of Aging.
1.21 "Employee" shall mean any individual employed by HHC in the
conduct of the Business as listed on Schedule 1.21 (such Schedule being subject
to change between the date hereof and the Applicable Closing Date as a result
of employee changes in the ordinary course of business consistent with past
practices).
1.22 "Encumbrance" shall mean any right to, or interest in, property,
which subsists in a third-party and which constitutes a claim, lien, charge or
liability attached to and binding upon the property, including, but not limited
to, a mortgage, judgment lien, mechanic's lien, lease, security interest,
easement and right-of-way.
1.22A "Engineering Report" shall have the meaning given to such term
in Section 8.1.14.
1.23 "Environmental Law" shall mean any federal [including but not
limited to the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.), the Toxic Substances Control Act (15 U.S.C. Sections 2601 et seq.), the
Clean Air Act (42 U.S.C. Sections 7401 et seq.), the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Sections 9601
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Sections 1801
et seq.), and the Federal
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Insecticide Fungicide and Rodenticide Act (7 U.S.C. Sections 136 et seq.)],
other Legal Requirements, any common law doctrine and any provision or
condition of any permit, license or other operating authorization relating to
(i) the protection of the environment or the public welfare from actual or
potential exposure (or the effects of exposure) to any actual or potential
release, discharge, disposal or emission (whether past or present) of any
Regulated Substance or (ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Regulated Substance.
1.24 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.25 "ERISA Plans" shall mean defined benefit pension plans and
defined contribution pension plans qualified under Section 401(a) of the Code.
1.26 "Escrow Agent" shall mean Xxxxxx'x Xxxxxx County Title Company.
1.27 "Escrow Agreement" shall mean the escrow agreement entered into
between Escrow Agent, Seller and Purchaser referred to in Section 3.1.1 in
substantially the form of Exhibit 1.27.
1.28 "Excluded Assets" shall mean those assets that are not included
in the sale contemplated hereby and as are further defined in Section 2.2.
1.29 "Facility" shall mean any of the Nevada/Xxxxxx Facilities or the
Xxxxx Facility, individually, and the term "Facilities" shall mean each of the
Nevada/Xxxxxx Facilities and the Xxxxx Facility together.
1.30 First Closing" shall have the meaning given to such term in
Section 5.1.
1.31 "First Closing Date" shall have the meaning given to such term in
Section 5.1.
1.32 "GAAP" shall mean generally accepted accounting principles in the
United States of America.
1.33 "GAAS" shall mean generally accepted auditing standards in the
United States of America.
1.34 "Governmental Authorities" shall mean all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures and
offices of any nature whatsoever of any government, quasi-governmental unit or
political subdivision, whether with a federal, state, county, district,
municipality, city or otherwise, including, without limitation, MDNR.
1.35 "HHC" shall have the meaning given to such term in the preamble
of this Agreement.
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1.36 "Indemnifying Party" shall have the meaning given to such term in
Section 14.4.
1.37 "Indemnified Party" shall have the meaning given to such term in
Section 14.4.
1.38 "Inventory" shall mean the inventory of HHC, including, without
limitation, dry storage goods, janitorial supplies, food and beverage supplies,
office supplies, medical supplies and pharmaceutical supplies.
1.39 "Knowledge" and words of similar import shall mean, with respect
to any Party, actual knowledge of a particular fact or other matter being
possessed by an individual, and the knowledge that reasonably could be expected
to be obtained in the course of conducting a reasonably comprehensive
investigation concerning the subject matter.
1.39A "Lagoon" shall have the meaning given to such term in Section
4.2A(xiii).
1.39B "Lagoon Permits" shall have the meaning given to such term in
Section 8.1.17.
1.39C "Xxxxx Assets" shall have the meaning given to such term in
Section 2.1.
1.39D "Xxxxx Facility" shall mean have the meaning given to such term
in the Recitals of this Agreement.
1.40 "Legal Requirements" shall mean all statutes, ordinances,
by-laws, codes, rules, regulations, restrictions, orders, judgments, decrees
and injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision and other land use and health care licensing
statutes, ordinances, by-laws, codes, rules and regulations), promulgated or
issued by any Governmental Authority, Accreditation Body or Third Party Payor.
Without limiting the foregoing, the term Legal Requirements includes all
Environmental Laws and all Permits and Contracts issued or entered into by any
Governmental Authority, any Accreditation Body and/or any Third Party Payor and
all Permitted Encumbrances.
1.40A "MDNR" shall have the meaning given to such term in Section
4.2A.
1.40B "MDNR Notice" shall have the meaning given to such term in
Section 4.2A.
1.41 "Managed Care Plans" shall mean all health maintenance
organizations, preferred provider organizations, individual practice
associations, competitive medical plans and similar arrangements.
1.42 "Management Agreement" shall mean any agreement, whether written
or oral, between HHC and any other Person pursuant to which HHC provides any
payment, fee or other consideration to any other Person to operate or manage
the Business (except any employment agreements).
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1.43 "Medicaid" shall mean the medical assistance program established
by Title XIX of the Social Security Act (42 U.S.C. Sections 1396 et seq.) and
any statute succeeding thereto.
1.43A "NOI" shall mean net operating income, calculated in accordance
with GAAP, before amortization, depreciation, interest, rent expense and income
taxes.
1.43B "Nevada/Xxxxxx Assets" shall have the meaning given to such term
in Section 2.1.
1.43C "Nevada/Xxxxxx Facilities" shall mean the Nevada-I Facility, the
Nevada-II Facility and the Xxxxxx Facility, individually and collectively.
1.44 "Party" shall mean either the Clarks, HHC or Purchaser,
individually, as the context so requires, and the term "Parties" shall mean the
Clarks, HHC and Purchaser together.
1.45 "Payables" as of any date shall mean any of the trade accounts
payable of either Seller with respect to the Purchased Assets or the Business
as of such date in accordance with GAAP consistently applied.
1.46 "Payroll Practice / Employee Arrangement" shall have the meaning
given to such term in Section 6.19.
1.47 "Permits" shall mean all permits, licenses, approvals,
qualifications, rights, variances, permissive uses, accreditations,
certificates (including, without limitation, any certificates of need),
certifications, consents, contracts, interim licences, permits and other
authorizations of every nature whatsoever required by, or issued to or on
behalf of HHC under any Legal Requirements benefiting, relating or effecting
the Business or the construction, development, maintenance, management, use or
operation thereof, or the operation of any programs or services in conjunction
with the Business and all applications, renewals, replacements and
substitutions therefor, now or hereafter required or issued by any Governmental
Authority, Accreditation Body or Third Party Payor with respect to the
Business.
1.48 "Permitted Encumbrances" shall mean those Encumbrances as
specifically set forth on Schedule 1.48 hereto.
1.49 "Person" shall mean any individual, corporation, company, limited
or general partnership, trust or estate, joint venture, association or other
entity.
1.49A "Plans and Specifications" shall have the meaning given to such
term in Section 8.1.14.
1.50 "Prepaid Expenses" as of any date shall mean payments made by
either Seller with respect to the Purchased Assets or, with respect to HHC, the
Business, which constitute prepaid expenses in accordance with GAAP
consistently applied.
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1.51 "Proprietary Rights" shall have the meaning given to such term in
Section 6.10.
1.52 "Provider Agreements" shall mean all participation, provider and
reimbursement agreements or arrangements for the benefit of HHC in connection
with the operation of the Business relating to any right to payment or other
claim arising out of or in connection with HHC's participation in any Third
Party Payor Program.
1.53 "Purchase Price" shall have the meaning given to such term in
Section 3.1.1.
1.54 "Purchased Assets" shall have the meaning given to such term in
Section 2.1.
1.55 "Purchaser" shall have the meaning given to such term in the
preamble of this Agreement.
1.56 "Purchaser Damages" shall have the meaning given to such term in
Section 14.2.
1.57 "Purchaser Indemnitees" shall have the meaning given to such term
in Section 14.2.
1.58 "Real Property" shall mean the Real Property Leased and the Real
Property Owned, collectively.
1.59 "Real Property Leased" shall mean the real property leased by
either Seller in connection with each of the Facilities and the Business as
more fully described in Schedule 1.59 hereto.
1.60 "Real Property Owned" shall mean the real property owned by
either Seller, and used in connection with the Facilities and the Business as
more fully described in Schedule 1.60 hereto.
1.61 "Regulated Substance" shall mean petroleum, petroleum
hydrocarbons or petroleum products and any other chemical, material, substance
or waste that is identified (by listing or characteristic) and regulated (or
the clean-up of which can be required) by any Legal Requirement intended to
protect the environment or the public health or welfare, including but not
limited to Legal Requirements relating to clean air, clean water, hazardous and
solid waste disposal, safe drinking water, endangered species, occupational
safety and health, oil spill prevention, groundwater protection, and toxic
substances control.
1.62 "Related Party" means (i) either Seller, (ii) any Affiliate of
either Seller, (iii) any officer, director, shareholder or partner of any
Person identified in clauses (i) or (ii) preceding, and (iv) any spouse,
sibling, ancestor or lineal descendant of any natural Person identified in any
one of the preceding clauses.
1.63 "Resident's Agreements" shall mean copies of all contracts,
agreements and consents executed by or on behalf of any resident or other
Person seeking services at any of the Facilities as
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more fully described in Schedule 1.63 hereto, including, without limitation,
assignments of benefits and guarantees, and such resident's related medical
and/or other records.
1.64 "Retained Liabilities" has the meaning given that term in Section
4.2.
1.64A "Second Closing" shall have the meaning given to such term in
Section 5.1.
1.64B "Second Closing Date" shall have the meaning given to such term
in Section 5.1.
1.65 "Security Right" means, with respect to any security, any option,
warrant, subscription right, preemptive right, other right, proxy, put, call,
demand, plan, commitment, agreement, understanding or arrangement of any kind
relating to such security, whether issued or unissued, or any other security
convertible into or exchangeable for any such security. "Security Right"
includes any right relating to issuance, sale, assignment, transfer, purchase,
redemption, conversion, exchange, registration or voting and includes rights
conferred by statute, by the issuer's governing documents or by agreement.
1.66 "Seller" shall have the meaning given to such term in the
preamble of this Agreement, individually or collectively, as the context may
require.
1.67 "Seller Damages" shall have the meaning given to such term in
Section 14.3.
1.68 "Seller Indemnitees" shall have the meaning given to such term in
Section 14.3.
1.69 "Taxes" shall mean all taxes, duties, charges, fees, levies or
other assessments imposed by any Governmental Authority, including, without
limitation, income, gross receipts, value-added, excise, withholding, personal
property, real estate, sales, use, ad valorem, license, lease, service,
severance, stamp, transfer, payroll, employment, customs, duties, alternative,
add-on minimum, estimated and franchise taxes (including any interest,
penalties or additions attributable to or imposed on or with respect to day
such assessment).
1.70 "Third Party Payor Programs" shall mean all third party payor
programs which HHC participates, including, without limitation, Medicaid,
Managed Care Plans, other private insurance plans and employee assistance
programs.
1.71 "Third Party Payors" shall mean Medicaid, private insurers and
any other Person which maintains Third Party Payor Programs.
ARTICLE II. TRANSFER OF ASSETS AND PROPERTIES
2.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Applicable Closing Date as set forth in Section 5.1, each
Seller shall sell and convey to Purchaser, free and clear of all Encumbrances
whatsoever (other than Permitted Encumbrances and except as
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expressly provided herein), and Purchaser shall purchase from each Seller, all
of each Seller's respective right, title and interest in and to the assets and
properties, real, personal and mixed, tangible and intangible, to the extent
they exist and are used or useful in connection with the Business associated
with respect to (i) the Nevada/Xxxxxx Facilities (the "Nevada/Xxxxxx Assets")
and (ii) the Xxxxx Facility (the "Xxxxx Assets") (hereinafter, the
Nevada/Xxxxxx Assets and the Xxxxx Assets may be collectively referred to as
the "Purchased Assets") (other than the Excluded Assets), including, without
limitation, the following:
2.1.1 Real Property Owned. The Real Property Owned, together
with the buildings, structures, improvements and fixtures located
thereon, and all rights, privileges, easements, licenses,
hereditaments and other appurtenances relating thereto;
2.1.2 Equipment, Machinery and Other Tangible Personal
Property. All machinery, equipment, leasehold improvements,
automobiles, supplies, office furniture and office equipment,
computing and telecommunications equipment and other items of personal
property, including those described in Schedule 2.1.2 hereto;
2.1.3 Contracts Relating to the Business. All contracts
relating to the acquisition or ownership of the Purchased Assets or
the operation of the Business, including, without limitation, the
Contracts listed on Schedule 2.1.3 and the Resident's Agreements
listed on Schedule 1.63 hereto (provided each resident has consented
thereto), to the extent such Contracts and Resident's Agreements are
transferrable to Purchaser;
2.1.4 Sales, Rental and Marketing Materials, Manuals. All
sales data, rental data, catalogs, brochures, reference sources,
suppliers' names, mailing lists, art work, photographs, public
relations and advertising material used in the Business, whether in
electronic form or otherwise, as they exist on the Applicable Closing
Date;
2.1.5 Permits, Licenses. All Permits relating to the
acquisition or ownership of the Purchased Assets or the operation of
the Business, including, without limitation, those permits listed in
Schedule 2.1.5 hereto, to the extent such Permits are transferrable to
Purchaser;
2.1.6 Facility Plans and Specifications. All plans and
specifications relating to each of the Facilities; provided, however,
Purchaser shall not have the right to use the plans and specifications
for any construction other than with respect to the expansion of any
of the Facilities at the existing property sites without HHC's prior
written consent, which consent shall not be unreasonably withheld;
2.1.7 Goodwill. All goodwill incident to the Business,
including but not limited to the value of good customer relations;
2.1.8 Accounts Receivable. All Accounts Receivable existing
on the Applicable Closing Date;
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2.1.9 Inventory. All Closing Inventory;
2.1.10 Resident Records; Resident Funds. Copies of all
resident records maintained by each of the Facilities, and all prepaid
rents, deposits and escrow accounts maintained by, or for the benefit
of, each of the Facility's residents at the Applicable Closing Date;
2.1.11 Prepaid Expenses. All Prepaid Expenses of, or for the
benefit of, the Purchased Assets or the Business at the Applicable
Closing Date (prorated between Purchaser and Seller as of the
Applicable Closing Date), including those described in Schedule
2.1.11, except for any unearned insurance premiums and workers'
compensation deposits if Purchaser elects not to assume Seller's
insurance; and
2.1.12 Name. All of Seller's interest in the value of the
name "Xxx Xxxxx Residential Care Homes;" provided, however, Seller
shall retain the right to use such name with respect to the Lamar
Facility until the Second Closing Date and the right to use such name
outside of the State of Missouri. Furthermore, if Purchaser files a
fictitious name or other applicable name registration changing the
name of the Facilities from "Xxx Xxxxx Residential Care Homes" after
the date of this Agreement, Seller shall have the right to use such
name in the State of Missouri as of the date of the
filing/registration.
2.2 Excluded Assets. Notwithstanding Section 2.1, the following assets
(collectively, the "Excluded Assets") shall be excluded from this Agreement,
and shall not be assigned or transferred to Purchaser:
2.2.1 Cash. All other cash, cash equivalents on hand or in
bank accounts, short-term notes receivable and unbilled costs and fees
up through and including the Applicable Closing Date;
2.2.2 Consideration. The consideration paid to each Seller
pursuant to this Agreement;
2.2.3 Pensions. Assets constituting any pension or other
funds for the benefit of Employees existing on the Applicable Closing
Date;
2.2.4 Corporate Books. Corporate minute book, capital stock
and stock book of HHC;
2.2.5 Third Party Claims. Any claims and rights against third
parties (including, without limitation, insurance carriers) to the
extent they relate to liabilities or obligations that are not assumed
by Purchaser hereunder (except the amount of costs and expenses
Purchaser shall have incurred with respect to such claims and rights);
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2.2.6 Taxes. Claims for refunds of taxes and other charges
imposed by any Governmental Authority;
2.2.7 Name. The right to use the name "Xxx Xxxxx Residential
Care Homes" with respect to the Lamar Facility until the Second
Closing Date and the right to use such name outside the State of
Missouri.
2.2.8 Insurance Premiums and Workers' Compensation Deposits.
Provided Purchaser elects not to assume Seller's insurance, unearned
insurance premiums and workers' compensation deposits (in the event
Purchaser elects to assume such insurance, the foregoing amounts shall
be prorated between Seller and Purchaser as of the Applicable Closing
Date); and
2.2.9 Other Assets. Assets listed on Schedule 2.2.9.
2.3 License to Use Computer Program. Seller has developed a computer
program used in connection with the Business known as "Easy Claims." Seller
hereby grants an irrevocable, nonexclusive, perpetual, paid-up, royalty-free,
non-transferrable license to Purchaser to utilize the "Easy Claims" program
after the First Closing Date in connection with the Business; provided,
however, Seller makes no representation or warranty regarding the soundness or
suitability of the program for use by Purchaser or any other third party.
Purchaser shall not be permitted to grant a license or to otherwise sell any
rights with respect to the "Easy Claims" software to any third party without
the prior written consent of Seller, which consent shall not unreasonably be
withheld.
ARTICLE III. CONSIDERATION AND TERMS
3.1 Consideration for Purchased Assets.
3.1.1 Purchase Price. The aggregate consideration to be paid
by Purchaser for the Purchased Assets and the Business (the "Purchase
Price") shall consist of a cash payment in the amount of $5,000,000,
to be paid by certified or cashier's check drawn on a national bank or
by wire transfer as follows:
(i) $30,000 to Escrow Agent upon execution and delivery
of this Agreement (the "Deposit"), as xxxxxxx money
for the Purchased Assets to be held in escrow
pursuant to the Escrow Agreement;
(ii) At the First Closing, with respect to the
Nevada/Xxxxxx Assets, (A) $3,645,000 to the Clarks
and (B)$75,000 to HHC; and
(iii) At the Second Closing, with respect to the Xxxxx
Assets, (A) $1,225,000 to the Clarks and (B) $25,000
to HHC.
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3.1.2 Other Consideration. As additional consideration,
Purchaser shall also assume the Assumed Liabilities (i) with respect
to the Nevada/Xxxxxx Assets, at the First Closing and (ii) with
respect to the Xxxxx Assets, at the Second Closing.
3.2 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets and the Business in accordance with the
allocation set forth in Schedule 3.2. Purchaser and each Seller shall report
the federal, state and local income and other tax consequences of the purchase
and sale contemplated hereby in a manner consistent with such allocation, and
shall not take any position inconsistent therewith upon examination of any tax
return, in any refund claim, in any litigation or otherwise.
ARTICLE IV. ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS
4.1 General Limitation on Assumption of Liabilities. Except for
Permitted Encumbrances and as otherwise provided in Sections 4.2, 4.2A, 4.3 and
4.4 below, each Seller shall transfer the Purchased Assets to Purchaser free
and clear of all Encumbrances, and without any assumption of liabilities and
obligations, and Purchaser shall not, by virtue of its purchase of the
Purchased Assets, assume or become responsible for any liabilities or
obligations of either Seller or any other Person. For purposes of this Article
IV, the phrase "liabilities and obligations" shall include, without limitation,
any direct or indirect indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured.
4.2 Assumed Liabilities and Obligations of HHC. On the Applicable
Closing Date, Purchaser shall acquire the Purchased Assets subject only to, and
shall undertake, assume, perform and otherwise pay, satisfy and discharge, and
hold HHC harmless from the following liabilities and obligations, excluding any
liabilities and obligations to Affiliates of HHC (collectively, the "Assumed
Liabilities"):
(i) all obligations of HHC under the Contracts contemplated by
Section 2.1.3 (A) with respect to the Nevada/Xxxxxx Assets,
accruing subsequent to the First Closing Date and (B) with
respect to the Xxxxx Assets, accruing subsequent to the
Second Closing Date, provided that the rights thereunder have
been duly and effectively assigned to Purchaser and
(ii) all obligations of HHC under the Permits described in Section
2.1.5, (A) with respect to the Nevada/Xxxxxx Assets, accruing
subsequent to the First Closing Date and (B) with respect to
the Xxxxx Assets, accruing subsequent to the Second Closing
Date, provided that the rights thereunder have been duly and
effectively assigned to Purchaser and provided further,
notwithstanding anything contained herein to the contrary,
Purchaser shall not assume any of the liabilities and
obligations arising in connection with the matters set forth
in Section 4.2A(xiii) or Section 4.2A(xiv).
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4.2A. Retained Liabilities. Except for the Assumed Liabilities,
Purchaser does not and shall not assume or in any way undertake to pay,
perform, satisfy or discharge any other liability of either Seller existing on
the Applicable Closing Date or arising out of any transactions entered into, or
any state of facts existing, prior to the Applicable Closing Date (or other
applicable date as may be specified below) (the "Retained Liabilities"), and
each Seller agrees to pay and satisfy when due all of such Seller's respective
Retained Liabilities. Except for the obligations and liabilities included in
the Assumed Liabilities, the term "Retained Liabilities" shall include, without
limitation, liabilities:
(i) for or in connection with any dividends, distributions,
redemptions, or Security Rights with respect to any security
of HHC;
(ii) arising out of any transaction affecting either Seller or
obligations incurred by either Seller after either Closing;
(iii) for expenses or fees incident to or arising out of the
negotiation, preparation, approval or authorization of this
Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, all legal
and accounting fees and all brokers or finders fees or
commissions payable by either Seller;
(iv) under or arising out of this Agreement;
(v) against which either Seller is insured or otherwise
indemnified or which would have been covered by insurance (or
indemnification) but for a claim by the insurer (or the
indemnitor) that the insured (or the indemnities) had
breached its obligations under the policy of insurance (or
the contract of indemnity) or had committed fraud in the
insurance application;
(vi) to any Related Party;
(viii) to indemnify HHC's officers, directors, shareholders,
Employees or agents;
(ix) federal, state or local tax liabilities or obligations of
either Seller in respect to periods (A) prior to the First
Closing, with respect to the Nevada/Xxxxxx Assets and (B)
prior to the Second Closing, with respect to the Xxxxx
Assets, and the transactions contemplated hereunder,
including, without limitation, income taxes payable under the
Code, any income tax, any franchise tax, any tax recapture,
any FICA, workers' compensation, vacation liability and other
employee benefits, any insurance premiums, rents, or other
accruals and any and all other taxes or amounts due or
payable for a period prior to the Applicable Closing Date;
notwithstanding the foregoing, all sales and use taxes,
transfer taxes, and all other impositions of tax arising
solely by reason of the transfers contemplated by this
Agreement (excluding all federal, state and local income and
gross receipt taxes on the earnings or gross receipts of
either Seller prior to the Applicable Closing Date, which
shall remain the sole responsibility of such
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Seller) shall be the responsibility of and shall be borne
equally by each Seller and Purchaser (any real estate and
personal property taxes for the year in which a Closing
occurs shall be pro-rated to the Applicable Closing Date
[based on a calendar year or fiscal year for which such taxes
are levied basis], if the tax rates for the year in which a
Closing occurs shall not be fixed prior to the Applicable
Closing Date for a particular item of the Purchased Assets,
the pro-ration of taxes thereon shall be based upon the tax
rate for the year prior to the Applicable Closing Date
applied to the latest assessment valuation;
(x) for long term indebtedness and other obligations or
guarantees of either Seller;
(xi) for Current Liabilities of either Seller (A) at the First
Closing Date, with respect to the Nevada/Xxxxxx Assets and
(B) at the Second Closing Date, with respect to the Xxxxx
Assets;
(xii) for Accrued Expenses and Payables of either Seller (A) at the
First Closing Date, with respect to the Nevada/Xxxxxx Assets
and (B) at the Second Closing Date, with respect to the Xxxxx
Assets;
(xiii) for any fines, penalties, damages, costs, expenses or other
liabilities or obligations arising before, on or after either
Closing Date, in connection with either Seller's operation of
the wastewater treatment lagoon at the Xxxxx Facility (the
"Lagoon"), including, without limitation, any fines,
penalties, damages, costs, expenses or other liabilities or
obligations with respect to that certain Notice of Violation
(No. 16237SW) dated April 7, 1997 issued by the Missouri
Department of Natural Resources (the "MDNR") with respect to
the Xxxxx Facility and the Lagoon (the "MDNR Notice")
attached hereto and incorporated herein as Exhibit 4.2; and
(xiv) for any fines, penalties, damages, costs, expenses or other
liabilities or obligations arising before, on or after either
Closing Date, in connection with either Seller's failure to
(i) submit the Engineering Report or the Applications in
connection with the Lagoon, (ii) construct and/or remediate
the Lagoon in compliance with the Approved Plans and
Specifications, (iii) obtain the Lagoon Permits, (iv) cease
using the Lagoon until all of the Lagoon Permits are issued
and (v) dispose of any of the waste or effluents from the
Xxxxx Facility's septic tanks or the Lagoon in compliance
with all Applicable Legal Requirements.
4.3 Offer of Employment. Purchaser shall offer employment, on an
at-will basis, to (i) all of the Employees actively at work at the
Nevada/Xxxxxx Facilities on and as of 12:01 a.m. following the First Closing
Date and (ii) all of the Employees actively at work at the Xxxxx Facility on
and as of 12:01 a.m. following the Second Closing Date, in similar jobs, at
the same base salaries or wages and the same benefits as were paid or provided
by HHC immediately prior to the Applicable Closing
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Date; provided, however, Purchaser shall have the right, at any time following
the Applicable Closing Date, to change any of the foregoing.
4.4 Vacation, Workers' Compensation and Disability Claims.
4.4.1 HHC's Liability. HHC shall remain liable for all
liability for all accrued vacation entitlements, workers'
compensation, disability and occupational diseases of or with respect
to the Employees attributable to entitlements, injuries, claims,
conditions, events and occurrences occurring on or before (i) the
First Closing Date, with respect to the Nevada/Xxxxxx Facility
Employees and (ii) the Second Closing Date, with respect to the Xxxxx
Facility Employees.
4.4.2 Purchaser's Liability. Purchaser shall be liable for
all liability for all vacation entitlements, workers' compensation,
disability and occupational diseases of or with respect to the
Employees hired by Purchaser attributable to entitlements, injuries,
claims, conditions, events and occurrences first occurring after (i)
the First Closing Date, with respect to the Nevada/Xxxxxx Facility
Employees and (ii) the Second Closing Date, with respect to the Xxxxx
Facility Employees.
4.4.3 Workers' Compensation; Unemployment Compensation.
Schedule 4.4.3 attached hereto sets forth a true and correct summary
of the following with respect to HHC and the Employees:
(i) a listing of all workers' compensation contracts;
(ii) the workers' compensation loss experience for the past
three years;
(iii) a summary report and experience rating for unemployment
compensation; and
(iv) the turnover rates for each of the Facilities.
ARTICLE V. CLOSINGS
5.1 Time; Location. The consummation of the purchase and sale of the
Purchased Assets shall take place at two closings (each a "Closing" and,
collectively, the "Closings"). The first such Closing (the "First Closing")
shall take place solely with respect to the Nevada/Xxxxxx Assets and shall
occur on or before 12:00 p.m. DST on May 15, 1997 (the "First Closing Date").
The second such Closing (the "Second Closing") shall take place solely with
respect to the Xxxxx Assets and shall occur on or before 12:00 p.m. DST on the
10th business day following HHC's receipt from the applicable Governmental
Authorities of all of the Lagoon Permits (the "Second Closing Date"). The date
of each Closing shall be referred to as the "Closing Date." The Closings shall
take place at the
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offices of Russell, Brown, Xxxxxx & Breckenridge or such other place as may be
mutually agreed upon by the Parties.
5.2 Documents. Each Seller shall, as the case may be, execute and
deliver the following instruments of transfer and assignment (i) with respect
to the Nevada/Xxxxxx Assets, at the First Closing and (ii) with respect to the
Xxxxx Assets, at the Second Closing:
5.2.1 Deeds. Duly executed special warranty deeds in favor of
Purchaser or Purchaser's designee, in recordable form, transferring
good and marketable fee simple title to the applicable Real Property
Owned, subject only to Permitted Encumbrances, and such affidavits or
other instruments as Purchaser's title insurance company may
reasonably request, including, but not limited to, (i) exceptions for
(A) judgments, bankruptcies, taxes and municipal claims, (B) parties
in possession other than current occupants pursuant to agreements with
either Seller, (C) mechanics' or materialmens' liens and (D)
encroachments or survey discrepancies of any nature; (ii) payoff
letters, lien releases and satisfaction pieces and (iii) gap
indemnities;
5.2.2 Xxxx of Sale. A general xxxx of sale, assignment and
assumption substantially in the form of Exhibit 5.2.2 hereto,
transferring to Purchaser good and indefeasible title to all of the
tangible personal property included in the applicable Purchased
Assets, subject only to Permitted Encumbrances and the applicable
Assumed Liabilities and assigning to Purchaser, to the extent
assignable, each Seller's right, title and interest in each of the
contracts, permits and other agreements included in the applicable
Purchased Assets, together with all consents of third parties that are
required to make each such assignment effective to such third parties;
5.2.3 Title Certificates. Certificates of title to all
vehicles included in the applicable Purchased Assets with assignments
to Purchaser;
5.2.4 Property Tax Statements. To the extent not delivered
prior to the Applicable Closing Date, all real estate and personal
property tax statements or bills for or relating to the applicable
Real Property or any of the other applicable Purchased Assets for the
current tax year or years, and all tax assessments or notices thereof
upon which such taxes are based;
5.2.5 Plans and Specifications. To the extent not delivered
prior to the Applicable Closing Date, all plans, specifications and
other drawings used in the construction of each of the applicable
Facilities and the Lagoon, or any renovations thereof (including,
without limitation, any as-built plans and architectural
specifications) and all guarantees and warranties made by third
parties with respect to the improvements, buildings, personalty or any
of the other applicable Purchased Assets;
5.2.6 Building Permits. To the extent not delivered prior to
the Applicable Closing Date, to the extent any exist, all building
permits, zoning permits, occupancy permits,
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subdivision plans, surveys and hazardous waste studies prepared within
two years before the date hereof, for or relating to each of the
applicable Facilities;
5.2.7 Contracts and Other Permits. To the extent not
delivered prior to the Applicable Closing Date, all Contracts,
Permits, or other instruments or agreements relating to the ownership,
operation, use, occupancy, licensure, accreditation or maintenance of
the Business in connection with the applicable Purchased Assets;
5.2.8 Rent Roll. The rent roll of HHC listing all residents
of each of the applicable Facilities and their respective rent
payments current as of two days prior to the Applicable Closing Date;
5.2.9 Closing Documents. To the extent not delivered prior to
the Applicable Closing Date, the documents referred to in Section
8.1.2, Section 8.1.8, Section 8.1.14, Section 8.1.16 and Section
8.1.17; and
5.2.10 Other Documents. The Ancillary Agreements, and such
additional instruments of conveyance and transfer as Purchaser may
reasonably require in order to more effectively vest in it, and put it
in possession of, the applicable Purchased Assets.
5.3 Reasonable Steps. Each Seller shall make such reasonable efforts
as may be appropriate so that on the Applicable Closing Date, Purchaser shall
be placed in actual possession and control of all of the applicable Purchased
Assets.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, the Clarks and/or HHC, as the
case may be, represent and warrant to Purchaser, that each of the following
representations and warranties is true and correct as of the date hereof:
6.1 Organization, Good Standing and Power. HHC is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all requisite corporate power and authority to execute
and deliver this Agreement and the Ancillary Agreements to which it is a party,
to consummate the transactions contemplated hereby and thereby and to perform
all the terms and conditions hereof and thereof and to be performed by it.
6.2 Authorization of Agreement. HHC has taken all necessary corporate
action to authorize the execution and delivery of this Agreement and the
Ancillary Agreements to which it is a party, the performance by it of all terms
and conditions hereof and thereof to be performed by it and the consummation of
the transactions contemplated hereby and thereby.
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6.3 Enforceability. This Agreement constitutes, and the Ancillary
Agreements to which each Seller is party, upon such Seller's execution and
delivery thereof, will constitute the legal, valid and binding obligations of
such Seller, enforceable in accordance with their terms except to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws presently or hereafter in effect relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
6.4 No Violation; Consents. The execution, delivery and performance by
each Seller of this Agreement and the Ancillary Agreements to which each Seller
is a party, and the consummation of the transactions contemplated hereby and
thereby will not (with or without the giving of notice or the lapse of time, or
both) (i) with respect to HHC, violate any provision of the charter or bylaws
of HHC; (ii) except with respect to notices and consents (if any) required to
be given by either Seller to any Accreditation Body or Governmental Authority
in connection with the sale and change of ownership of the Purchased Assets and
the Business, violate or require any consent, authorization or approval of, or
exemption by, or filing under any provision of any law, statute, rule or
regulation to which either Seller, the Business or the Purchased Assets are
subject; (iii) violate any judgment, order, writ or decree of any court
applicable to either Seller, the Business or the Purchased Assets; (iv) except
as identified on Schedule 2.1.3, conflict with, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under any contract or other instrument, document or undertaking to which either
Seller is a party or any of the Purchased Assets is bound or (v) result in the
creation or imposition of any Encumbrances upon the Purchased Assets.
6.5 Financial Statements. HHC has delivered to Purchaser true and
complete copies of the unaudited (i) balance sheets of the Business at December
31, 1996, 1995 and 1994 and the related statements of income and cash flows for
the years then ended and (ii) monthly statements of profit and loss for the
first 3 months of 1997 with respect to the operation of each of the Facilities
and, in addition, HHC shall provide Purchaser, as promptly as the same become
available through the Applicable Closing Date, but no later than 15 days after
the last day of each month, monthly statements of profit and loss of HHC for
each of the applicable Facilities. True and correct copies of such financial
statements are attached hereto as Schedule 6.5. The foregoing financial
statements have been prepared from the Books and Records of HHC in accordance
with GAAP consistently applied throughout the periods involved except as may be
noted therein. Such financial statements, including the related notes, are true
and correct and fairly present the financial position of the Business at the
dates indicated and the results of operations and cash flows of the Business
for the periods then ended in accordance with GAAP.
6.6 Accounts Receivable. All Accounts Receivable (i) have or will have
arisen only in the ordinary course of business consistent with past practice
for goods actually sold and delivered or services actually performed and (ii)
are or will be collectible in full at the recorded amounts thereof (subject to
no defenses, setoffs or counterclaims) in the ordinary course of business
(without resort to litigation or assignment to a collection agency) no later
than 90 days after the Applicable Closing
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Date, net of any allowance for bad debts calculated in accordance with GAAP
reflected on the Books and Records of HHC.
6.7 Inventory. The Inventory was or will be acquired and maintained in
accordance with the regular business practices of HHC, consists or will consist
of new and unused items of a quality and quantity usable or salable in the
ordinary course of business consistent with past practice, and is or will be
valued in accordance with GAAP consistently applied.
6.8 Absence of Certain Changes or Events.
6.8.1 HHC. Except as set forth in Schedule 6.8 hereto, since
March 31, 1997, in connection with the Business, HHC has not:
(i) amended in any material respect or terminated any
Contract or Permit other than in the ordinary course
of business consistent with past practice;
(ii) suffered the occurrence of any events that,
individually or in the aggregate, have had, or could
reasonably be expected to have, a material adverse
effect on results of operations of the Business,
including any damage or destruction by fire, storm or
similar casualty, whether or not covered by
insurance;
(iii) sold, transferred, replaced or leased any of the
Purchased Assets, except for transactions in the
ordinary course of business consistent with past
practice;
(iv) waived or released any material rights with respect
to the Purchased Assets or the Business;
(v) transferred or granted any rights to any Proprietary
Rights;
(vi) entered into any transaction or made any commitments
(for capital expenditures or otherwise) other than in
the ordinary course of business consistent with past
practice;
(vii) changed its methods of accounting;
(viii) increased the compensation of any of the Employees,
except following normal review procedures or as
reasonably deemed necessary in the ordinary course of
business consistent with past practice;
(ix) suffered any major or key personnel changes;
(x) materially altered its conduct in its relations with
suppliers and residents; or
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(xi) materially altered its marketing efforts with respect
to the Business.
6.8.2 The Clarks. Except as set forth in Schedule 6.8 hereto,
in connection with the Purchased Assets owned by them, the Clarks have
not:
(i) suffered the occurrence of any events that,
individually or in the aggregate, have had, or could
reasonably be expected to have, a material adverse
effect on such Purchased Assets, including, without
limitation, the Real Property, including any damage
or destruction by fire, storm or similar casualty,
whether or not covered by insurance; or
(ii) waived or released any material rights with respect
to such Purchased Assets, including, without
limitation, the Real Property.
6.9 Real Property.
6.9.1 Title to Properties; Absence of Liens and Encumbrances.
Each Seller owns and will transfer to Purchaser on the Applicable
Closing Date, good, marketable and indefeasible title to all of the
applicable Purchased Assets owned by such Seller, including, without
limitation, the applicable Real Property, free and clear of all
Encumbrances, other than Permitted Encumbrances. Each Seller has the
right to quiet enjoyment of all Real Property Leased in which such
Seller holds a leasehold interest for the full term, including all
renewal rights, of the lease or similar agreement relating thereto.
Copies of all title insurance policies and surveys written in favor of
each Seller relating to the Real Property have been delivered to
Purchaser.
6.9.2 Structures and Improvements. All structures and other
improvements on the Real Property are being purchased by Purchaser on
an "as is, where is" basis.
6.9.3 Boundaries; Location. The Clarks represent and warrant
that the structures and other improvements on the Real Property are
within the lot lines and do not encroach on the properties of any
other Person. The Clarks further represent and warrant that each
parcel of Real Property is considered a separate parcel of land for
taxing and conveyancing purposes and that no portion of the Real
Property is located in a flood plain, flood hazard area or designated
wetlands area.
6.9.4 Use and Operation. Except for the matters contained in
the MDNR Notice with respect to the Lagoon, HHC represents and
warrants that the use and operation of the Real Property conforms to
all applicable building, zoning, safety and subdivision laws,
Environmental Laws and other Legal Requirements, and all restrictive
covenants and restrictions and conditions affecting title.
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6.9.5 Utilities. HHC represents and warrants that all public
utilities (including water, gas, electric, storm and sanitary sewage
and telephone utilities) required to operate each of the Facilities
are available to each Facility and such utilities enter the boundaries
of such Facility through adjoining public streets, permanent easements
or rights-of-way of record in favor of HHC or the Clarks. Except for
the matters contained in the MDNR Notice with respect to the Lagoon,
such public utilities are all connected pursuant to valid permits, are
all in good working order and are adequate to service the operations
of each of the Facilities as currently conducted and permit full
compliance with all Legal Requirements. HHC has not received any
written notice of any proposed, planned or actual curtailment of
service of any utility supplied to any of the Facilities.
6.9.6 Assessments; Notices. Neither Seller has received any
written or oral notice of assessments for public improvements against
the Real Property or any written or oral notice or order by any
Governmental Authority, any insurance company that has issued a policy
with respect to any of such properties or any board of fire
underwriters or other body exercising similar functions that relates
to violations of building, safety or fire ordinances or regulations,
that claims any defect or deficiency with respect to any of such
properties or requests the performance of any repairs, alterations or
other work to or in any of such properties or in the streets bounding
the same.
6.9.7 Condemnation. The Clarks represent and warrant that
there is no pending condemnation, expropriation, eminent domain or
similar proceeding affecting all or any portion of the Real Property.
6.9.8 Access. HHC represents and warrants that all present
driveways and other access routes to the Real Property are from public
streets and no other Person has any right to use any such driveways or
other access routes.
6.10 Proprietary Rights. Neither Seller has any right, title or
interest in any patents, logos, trademarks, trade names, service marks,
copyrights and applications or registrations therefor used in and material to
the Business (collectively, the "Proprietary Rights").
6.11 Contracts and Commitments.
6.11.1 HHC. Except as listed and described on Schedule 1.63
and Schedule 2.1.3, HHC is not with respect to the Business a party to
any written or oral:
(i) Contract for the future purchase of, or payment for,
supplies or products, or for the performance of
services by another party, involving in any one case
$10,000 or more;
(ii) Contract to sell or supply products or to perform
services, involving in any one case $10,000 or more
(except for any Resident's Agreement);
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(iii) Contract continuing over a period of more than six
months from the date hereof or exceeding $10,000 in
value (except for any Resident's Agreement);
(iv) representative, sales agency, dealer or distributor
Contract;
(v) lease under which HHC is either lessor or lessee
other than with respect to the Real Property Leased;
(vi) note, debenture, bond, conditional sale agreement,
equipment trust agreement, letter of credit
agreement, loan agreement or other Contract or for
the borrowing or lending of money (including without
limitation loans to or from Employees) or guarantee,
pledge or undertaking of the indebtedness of any
other Person;
(vii) Contract for any charitable or political
contribution;
(viii) Contract limiting or restraining HHC or any successor
or assign from engaging or competing in any likeness
of business with any Person;
(ix) license, franchise, distributorship or other
agreement, including those that relate in whole or in
part to any patent, trademark, trade name, service
xxxx or copyright or to any ideas, technical
assistance or other know-how of or used by the
Business;
(x) Contract or commitment to assign, option, sell,
transfer or otherwise convey any right, title or
interest of HHC in and to all or any portion of the
Business; or
(xi) any other material Contract not made in the ordinary
course of business consistent with past practice.
6.11.2 The Clarks. Except as listed and described on Schedule
1.59 and Schedule 1.60, the Clarks are not with respect to the
Purchased Assets owned by them a party to any written or oral:
(i) contract or commitment to assign, option, sell,
transfer or otherwise convey any right, title or
interest of the Clarks in and to all or any portion
of such Purchased Assets, including, without
limitation, the Real Property Owned;
(ii) lease under which the Clarks are either lessor or
lessee other than with respect to the Real Property
Leased; or
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(iii) note, debenture, bond, conditional sale agreement,
equipment trust agreement, letter of credit
agreement, loan agreement or other contract for the
borrowing or lending of money or guarantee, pledge or
undertaking of the indebtedness of any other Person.
Each of the contracts and other instruments, documents and
undertakings listed on Schedule 1.63, Schedule 2.1.3, Schedule 1.59 and
Schedule 1.60 is valid and enforceable in accordance with its terms, the
parties thereto are in compliance with the provisions thereof, neither party is
in default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein, and no event has occurred
that with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder and (ii) except as set forth on Schedule 1.63,
Schedule 2.1.3, Schedule 1.59 and Schedule 1.60, no advance payments have been
received by either Seller by or on behalf of any party to any of the contracts
and other instruments, documents and undertakings listed thereon for services
to be rendered or products to be delivered by such party after the Applicable
Closing Date. Any contracts that cannot be transferred or require consent or
approval for the transfer thereof are specifically identified on Schedule 1.63,
Schedule 2.1.3, Schedule 1.59 and Schedule 1.60 hereto as nontransferable or
requiring such consent or approval.
6.12 Permits, Licenses. Except with respect to the construction and
operating permit referred to in the MDNR Notice, HHC has all Permits that are
required to operate the Facilities as "Residential Care II" facilities as that
term is defined by the Department of Social Services, Division of Aging and the
Business (including without limitation those required under any Environmental
Law) and HHC is in substantial compliance with the terms and conditions of the
Permits. Schedule 2.1.5 hereto sets forth a correct and complete list of all
Permits, each one of which is in full force and effect. To HHC's Knowledge, no
suspension or cancellation of any of the Permits is threatened and no cause
exists for such suspension or cancellation. Any Permits that cannot be
transferred or require consent or approval for the transfer thereof are
specifically identified on Schedule 2.1.5 hereto as nontransferable or
requiring such consent or approval. HHC will cooperate with Purchaser in
accordance with the provisions of Section 8.1.8 with respect to obtaining
and/or transferring the Permits.
6.13 Compliance with Laws. Except as described in Schedule 6.13
hereto, HHC has at all times conducted, and is presently conducting, the
Business so as to comply in all material respects with all Legal Requirements
applicable to the conduct of operation of the Business or the ownership or use
of the Purchased Assets.
6.14 Legal Proceedings.
6.14.1 HHC. Except as described in Schedule 6.14 hereto,
there is no claim, action, suit, proceeding, investigation or inquiry
pending before any Governmental Authority or, to HHC's Knowledge,
threatened against HHC with respect to the Business or any of the
Purchased Assets owned or used by it in connection therewith, or
relating to the transactions contemplated by this Agreement, nor to
HHC's Knowledge is there any basis for any such
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claim, action, suit, proceeding, investigation, or inquiry. Except as
set forth on Schedule 6.14 hereto, HHC is not a party to or subject to
the provisions of any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental, regulatory or
administrative official, body or authority that relates to the
Business or the Purchased Assets owned or used by HHC in connection
therewith that might affect the transactions contemplated by this
Agreement.
6.14.2 The Clarks. Except as described in Schedule 6.14
hereto, there is no claim, action, suit, proceeding, investigation or
inquiry pending before any Governmental Authority or, to the Xxxxx'x
Knowledge, threatened against the Clarks with respect to the Purchased
Assets owned by them, or relating to the transactions contemplated by
this Agreement, nor to the Xxxxx'x Knowledge is there any basis for
any such claim, action, suit, proceeding, investigation, or inquiry.
Except as set forth on Schedule 6.14 hereto, the Clarks are not a
party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental,
regulatory or administrative official, body or authority that relates
to the Purchased Assets owned by the Clarks that might affect the
transactions contemplated by this Agreement.
6.15 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 6.15, HHC has no liabilities or obligations (as defined in Section
4.1) relating to the Business except (i) those liabilities and obligations set
forth on the financial statements of HHC previously provided to Purchaser and
not heretofore paid or discharged; (ii) those liabilities and obligations
arising in the ordinary course of business consistent with past practice under
any Contract or commitment specifically disclosed on Schedule 2.1.3 hereto or
not required to be disclosed because of the term or amount involved; and (iii)
those liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the financial statements dated March 31,
1997 provided to Purchaser.
6.16 Books and Records. All books of account and other financial
records of HHC directly relating to the Business (the "Books and Records") are
materially complete and correct and have been made available to Purchaser. All
of the Books and Records have been prepared and maintained in accordance with
good business practices and, where applicable, in conformity with GAAP (except
as otherwise stated therein) and in compliance in all material respects with
all Legal Requirements.
6.17 Employees. Schedule 1.21 sets forth a true and correct list of
the following for each of the Facilities: (i) all individuals employed by HHC
in the conduct of the Business; (ii) total wage costs; (iii) wage/salary grade
structure and (iv) each Employee's (A) present position and department, (B) job
description, (C) rate of compensation, (D) amount of vacation credit and (E)
service credited for purposes of vesting and eligibility under each Payroll
Practice/Employee Arrangement.
6.18 Labor Disputes. Except as described in Schedule 6.18 hereto,
there are no material discrimination complaints nor any other kind of
employment or labor related disputes against HHC in connection with the
Business pending before or, to HHC's Knowledge, threatened before any
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federal, state or local court or agency, and to HHC's Knowledge, no material
dispute respecting minimum wage or overtime claims or other conditions or terms
of employment exists. The Business has not experienced any material labor
disputes or any material work stoppage due to labor disagreements within the
past three years. With respect to the Business and except to the extent set
forth in Schedule 6.18: (i) there is no unfair labor practice charge or
complaint against HHC pending or, to HHC's Knowledge, threatened, before the
National Labor Relations Board; (ii) there is no labor strike, slowdown or
stoppage pending or, to HHC's Knowledge, threatened against or affecting HHC;
and (iii) no question concerning representation has been raised within the past
three years, or to HHC's Knowledge, is threatened respecting the Employees.
6.19 Payroll Practice/Employee Arrangement.
6.19.1 Benefit Plans. Schedule 6.19 contains a complete list
of each employee benefit plan subject to ERISA, and/or holiday,
vacation or other bonus practice or any other employee pay practice,
arrangement, agreement or commitment (the "Payroll Practice/Employee
Arrangement") and maintained by or with respect to which HHC has any
liability or obligation, whether actual or contingent, with respect to
the Employees or their respective beneficiaries.
6.19.2 Plan Liability. HHC has not taken any action that may
result in Purchaser being a party to, or bound by, an ERISA Plan, and
Purchaser shall have no liability under, or be subject to any
liability on account of, any ERISA Plan or Payroll Practice/Employee
Arrangement following the consummation of the transaction contemplated
hereby.
6.19.3 Retirement Benefits. No ERISA Plan or other employee
arrangement has provided for the payment of retiree benefits by
Purchaser.
6.20 No Finder. Neither Seller has taken any action that would give to
any Person a right to a finder's fee or any type of brokerage commission in
relation to, or in connection with, the transactions contemplated by this
Agreement.
6.21 Condition of Equipment. Except as set forth on Schedule 6.21, all
equipment that is part of the Purchased Assets is in good operating condition
and repair (subject only to routine maintenance and repair) and usable in the
conduct of the Business consistent with past practice.
6.22 Affiliate Transactions. Except as set forth in Schedule 6.22
hereto, each Seller and its Affiliates provide no services or products to the
Business.
6.23 Environmental Matters.
6.23.1 Compliance; No Liability. Except with respect to the
matters disclosed in the MDNR Notice, to the best of each Seller's
Knowledge, HHC has operated the Business and each parcel of Real
Property in material compliance with all applicable Environmental
Laws.
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Neither Seller is subject to any liability, penalty or expense
(including legal fees), and Purchaser will not suffer or incur any
loss, liability, penalty or expense (including legal fees) by virtue
of any violation of any Environmental Law occurring prior to the
Applicable Closing Date, any environmental activity conducted on or
with respect to any property by such Seller at or prior to the
Applicable Closing Date or any environmental condition existing on or
with respect to any property at or prior to the Applicable Closing
Date, in each case whether or not such Seller permitted or
participated in such act or omission.
6.23.2 Treatment; CERCLIS. Neither Seller has treated,
stored, recycled or disposed of any hazardous material, and to each
Seller's Knowledge, no other Person has treated, stored, recycled or
disposed of any hazardous material on any part of the Real Property.
There has been no release of any hazardous material at, on or under
any Real Property. Neither Seller has transported any hazardous
material or arranged for the transportation of any hazardous material
to any location that is listed or proposed for listing on the National
Priorities List pursuant to Superfund, on CERCLIS or any other
location that is the subject of federal, state or local enforcement
action or other investigation that may lead to claims against either
Seller for cleanup costs, remedial action, damages to natural
resources, to other property or for personal injury including claims
under Superfund. None of the Real Property is listed or, to each
Seller's Knowledge, proposed for listing on the National Priorities
List pursuant to Superfund, CERCLIS or any state or local list of
sites requiring investigation or cleanup.
6.23.3 Notices; Existing Claims; Certain Hazardous Materials;
Storage Tanks. Neither Seller has received any request for
information, notice of claim, demand or other notification that it is
or may be potentially responsible with respect to any investigation,
abatement or cleanup of any threatened or actual release of any
hazardous material. Neither Seller is required to place any notice or
restriction relating to the presence of any hazardous material at any
Real Property or in any deed to any Real Property. Each Seller has
provided to Purchaser a list of all sites to which such Seller has
transported any hazardous material for recycling, treatment, disposal,
other handling or otherwise. There has been no past, and there is no
pending or contemplated, claim by either Seller under any
Environmental Law or Legal Requirement based on actions of others that
may have impacted on the Real Property, and neither Seller has entered
into any agreement with any Person regarding any Environmental Law,
remedial action or other environmental liability or expense. All
storage tanks located on the Real Property, whether underground or
aboveground, are disclosed on Schedule 6.23, and, to each Seller's
Knowledge, all such tanks and associated piping are in sound condition
and are not leaking and have not leaked.
6.24 Insurance. Schedule 6.24 sets forth a complete list of all
insurance policies maintained with respect to the Business for the past three
years and all insurance policies known by HHC to have been maintained by any
other Person which may provide any coverage for liabilities relating in any
manner to any Environmental Law. Schedule 6.24 also sets forth a true and
correct summary of the loss experiences for the past three years under each
such policy. Except as set forth on Schedule
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6.24, no insurance has ever been canceled or denied. Following the Applicable
Closing Date, HHC shall, to the extent that coverage under its insurance
policies extends to include the Business, (i) take no action to eliminate or
reduce such coverage, other than normal elimination or reduction of coverage as
they occur by virtue of the filing of claims in the ordinary course under such
insurance policies, (ii) pay when due any premiums under such policies for
periods, including retrospective or retroactive premium adjustments and (iii)
use its best efforts to assist in filing and processing claims under and
otherwise cooperate with Purchaser to allow Purchaser, in its own name, or on
behalf of HHC, to obtain all coverage benefits applicable to the Business under
such insurance policies, including the execution of assignments or powers of
attorney for the benefit of Purchaser. Any proceeds of insurance paid by an
insurer to HHC for claims of Purchaser made in accordance with this Section
shall be promptly paid to Purchaser.
6.25 No Significant Items Excluded. Except for Excluded Assets, there
are no assets, properties, contracts, permits or other items of either Seller
or any Related Party that are of material importance to the ongoing operation
of the Business by Purchaser in substantially the same manner in which the
Business has been conducted by HHC prior to the date of this Agreement.
6.26. Surveys. HHC has provided Purchaser with copies of HHC's federal
and/or state surveys or inspections and any plans of correction for the current
year and the two immediately preceding years for each of the Facilities. Each
such survey or inspection was prepared in material compliance with all
applicable Legal Requirements.
6.27. Occupancy Reports. HHC has provided Purchaser with copies of
Seller's occupancy reports for each of the Facilities for the last year. Each
such occupancy report was prepared based on the number of operational beds
(i.e., double occupancy rooms were only counted as such when both beds were
occupied).
6.28 Discounted Rates; Rate limitations; Free Care. Attached hereto is
Schedule 6.28 that sets forth a true and complete list of the following for
each of the Facilities: (i) any services that are provided based on a discount
factor from the rates regularly charged at the Facility; (ii) any restrictions
or limitations on rates which may be charged to private pay residents for
services provided at the Facility; (iii) any percentage of beds or slots in any
program at the Facility that must be reserved for Medicaid eligible residents
and (iv) any amount of welfare, free or charity care or discounted government
assisted resident care provided at the Facility.
6.29. Tax Returns. Each Seller has filed or caused to be filed, or
will file or cause to be filed, all tax returns that are required to be filed
by it prior to or on the Applicable Closing Date, pursuant to all Legal
Requirements of each Governmental Authority with taxing power over it. All such
tax returns were or will be, as the case may be, correct and complete in all
material respects. Each Seller has paid or will pay all taxes that have or will
become due as shown on such tax returns or pursuant to any assessment received
as an adjustment to such tax returns, except (i) such taxes, if any, as are
being contested in good faith and disclosed on Schedule 6.29, (ii) in the case
of HHC, such taxes that are fully reserved against on the financial statements
of HHC previously provided to
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Purchaser and (iii) taxes accruing that are not yet due. Except as set forth on
Schedule 6.29, neither Seller is currently the beneficiary of any extension of
time within which to file any tax return. No claim has been made by any taxing
authority of a jurisdiction other than one in which each Facility is located.
HHC has paid, or will withhold and pay, all taxes required to have been
withheld in connection with amounts paid or owing to any Employee, independent
contractor, creditor, stockholder or other third party.
6.30 Real Property Leased. Neither Seller has any leasehold interest
(as lessee) in any Real Property Leased.
6.31 Trade Secrets. Neither Seller has any policies or procedures,
methods of delivery of services, trade secrets, designs, market studies,
consultants' reports, prototypes, or similar property of any nature, tangible
or intangible, that are protected by law and used in connection with the
Business.
6.32 Other Intangible Assets. Neither Seller has any other intangible
assets (including any causes of action, rights of action, contract rights or
warranty and product liability claims against third parties) relating to the
Purchased Assets or the Business.
6.33 Plans and Specifications. The Approved Plans and Specifications
for the construction and remediation of the Lagoon are, or shall be, prepared
in order that the Lagoon shall accommodate a 57-bed facility.
6.34 Completeness and Accuracy. All information set forth on any
Schedule hereto is true, correct and complete. No representation or warranty of
either Seller contained in this Agreement contains or will contain any untrue
statement of material fact, or omits or will omit to state any material fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. All Contracts, Permits and other
documents and instruments furnished or made available to Purchaser by either
Seller are or will be true, complete and accurate originals or copies of
originals and include all amendments, supplements, waivers and modifications
thereto.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to each Seller to enter into this Agreement
and to consummate the transactions contemplated hereby, Purchaser represents
and warrants to each Seller, that each of the following representations and
warranties is true and correct as of the date hereof:
7.1 Organization, Good Standing, Power. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation and has all requisite
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corporate power and authority to own and lease the Purchased Assets, to carry
on the Business and to execute and deliver this Agreement and the Ancillary
Agreements to which Purchaser is a party, to consummate the transactions
contemplated hereby and thereby and to perform all the terms and conditions
hereof and thereof to be performed by it.
7.2 Authorization of Agreement and Enforceability. Purchaser has taken
all necessary corporate action to authorize the execution and delivery of this
Agreement and the Ancillary Agreements to which Purchaser is a party, the
performance by it of all terms and conditions hereof and thereof to be
performed by it and the consummation of the transactions contemplated hereby
and thereby. This Agreement constitutes, and the Ancillary Agreements, upon
Purchaser's execution and delivery thereof, will constitute, the legal, valid
and binding obligations of Purchaser, enforceable in accordance with their
terms except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws presently or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law).
7.3 No Violations; Consents. Except as set forth on Schedule 7.3, the
execution, delivery and performance by Purchaser of this Agreement and the
Ancillary Agreements to which Purchaser is a party and the consummation of the
transactions contemplated hereby and thereby will not (with or without the
giving of notice or the lapse of time, or both) (i) violate any provision of
the charter or bylaws of Purchaser, (ii) except with respect to notices and
consents required to be given by Purchaser to any Accreditation Body or
Governmental Authority in connection with the sale and change of ownership of
the Purchased Assets and the Business, violate, or require any consent,
authorization or approval of, or exemption by, or filing under any provision of
any contract, law, statute, rule or regulation to which Purchaser is subject,
(iii) violate any judgment, order, writ or decree of any court applicable to
Purchaser, (vi) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the performance required by,
or require any consent, authorization or approval under any agreement,
contract, commitment, lease or other instrument, document or undertaking to
which Purchaser is a party or (v) result in the creation or imposition of any
Encumbrance upon its assets.
7.4. Legal Proceedings. There is no claim, action, suit, proceeding,
investigation or inquiry pending before any Governmental Authority or, to
Purchaser's Knowledge, threatened against Purchaser or any of Purchaser's
properties, assets, operations or businesses that might prevent or delay the
consummation of the transactions contemplated hereby.
7.5 No Finder. Purchaser has not taken any action which would give to
any Person a right to a finder's fee or any type of brokerage commission in
relation to, or in connection with, the transactions contemplated by this
Agreement.
7.6 Vacation Credit. Purchaser acknowledges and agrees to honor the
vacation credits set forth on Schedule 1.21 which the Employees are entitled to
receive.
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7.7 Discounted Rates. Purchaser acknowledges and agrees to honor the
lifetime rental rate of $1,300 per month for the following Residents: (i) Xxxx
Xxxx, (ii) Xxxxxx Xxxxxx, (iii) Xxxxx Xxxx and (iv) Dot Xxxxxxxx.
ARTICLE VIII. COVENANTS OF SELLER PRIOR TO CLOSING
8.1 Required Actions. Unless otherwise specified herein, between the
date of this Agreement and (i) the First Closing Date, with respect to the all
of the Facilities and the Purchased Assets and (ii) the Second Closing Date,
with respect to the Xxxxx Facility and the Xxxxx Assets, each Seller covenants
that it will, as the case may be:
8.1.1 Access to Information. Give to Purchaser and its
counsel, accountants, consultants and other representatives, for the
purpose of audit, review and copying, reasonable access, during normal
business hours, to such of the properties, books, accounts and records
of such Seller as are relevant to the applicable Purchased Assets and
the Business, and furnish or otherwise make available to Purchaser all
such information concerning the applicable Purchased Assets and the
Business as Purchaser may reasonably request.
8.1.2 Surveys; Occupancy; Operations. With respect to HHC,
provide Purchaser with the following:
(i) occupancy reports for each of the applicable
Facilities, as soon as the same become available
through the Applicable Closing Date, but no later
than 5 days after the last day of any given week
(which reports shall be prepared based on the number
of operational beds);
(ii) federal and/or state surveys or inspections and any
plans of correction for each of the applicable
Facilities, as soon as the same become available
through the Applicable Closing Date, but no later
than 15 days after received by HHC; and
(iii) monthly statements of profit and loss of HHC for each
of the applicable Facilities, as soon as the same
become available through the Applicable Closing Date,
but no later than 15 days after the last day of each
month;
8.1.3 Conduct of Business. With respect to HHC, operate the
Business in the usual, regular and ordinary manner as such Business
was conducted prior to the date hereof and, to the extent consistent
with such operation, use its best efforts until the Applicable Closing
Date to (i) preserve and keep intact the Business; (ii) keep available
the services of the applicable Employees; (iii) preserve its
relationships with residents, suppliers and others having business
dealings with HHC in connection with the Business and (iv) maintain
current marketing activities;
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8.1.4 Maintenance of Properties. Maintain the applicable
Purchased Assets, whether owned or leased, in their good repair, order
and condition, in accordance with each Seller's past practices,
reasonable wear and tear excepted;
8.1.5 Maintenance of Books and Records. With respect to HHC,
maintain the Books and Records in the usual, regular and ordinary
manner, on a basis consistent with past practice;
8.1.6 Compliance with Applicable Law. Comply in all material
respects with all Legal Requirements applicable to the Purchased
Assets and, with respect to HHC, to the conduct of the Business;
8.1.7 Performance of Obligations. Perform all the material
obligations of each Seller relating to the applicable Purchased Assets
and, with respect to HHC, the Business in accordance with the past
practices;
8.1.8 Approvals, Consents. Unless needed sooner pursuant to
any Legal Requirement, to obtain in writing as promptly as possible
any approvals and consents as required to be obtained by each Seller
in order to effectuate the transactions contemplated hereby and
deliver to Purchaser copies of such approvals and consents.
Accordingly, HHC shall cooperate with Purchaser's efforts to obtain
the necessary licenses to operate each of the applicable Facilities
from the appropriate Accreditation Bodies, including, without
limitation, MDNR and the Department of Social Services, Division of
Aging. Upon execution and delivery of this Agreement, HHC shall
promptly:
(i) provide Purchaser with copies of all Permits;
(ii) notify each Accreditation Body and Third Party Payor
as required by any Legal Requirement of the pending
change of ownership of each of the Facilities as of
the Applicable Closing Date; and
(iii) provide such other notices as required by all Legal
Requirements including, if required, (i) notices to
the Facilities' residents and (ii) notices to
referral or human service agencies. Prior to sending
the notices, HHC shall provide copies to Purchaser
for review and approval, which approval shall not be
unreasonably withheld;
8.1.9 Notice of Material Damage. Give to Purchaser prompt
notice in writing of any fact that, if known on the date hereof, would
have been required to be set forth or disclosed in or pursuant to this
Agreement, or which would result in the breach in any material respect
by either Seller of any of its respective representations, warranties,
covenants or agreements hereunder;
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8.1.10 Pay Employees to Applicable Closing Date. With respect
to HHC, pay all wages, salaries and other sums due Employees through
the close of business on the day prior to (i) the First Closing Date,
with respect to the Nevada/Xxxxxx Facility Employees and (ii) the
Second Closing Date, with respect to the Xxxxx Facility Employees;
8.1.11 Transfer of Employees. With respect to HHC, take all
reasonably necessary steps to transfer to Purchaser the employment of
all Employees electing to continue their employ with Purchaser (i) as
of the First Closing Date, with respect to the Nevada/Xxxxxx Facility
Employees and (ii) as of the Second Closing Date, with respect to the
Xxxxx Facility Employees;
8.1.12 Compliance with Agreement. Not undertake any course of
action inconsistent with satisfaction of the conditions applicable to
it set forth in this Agreement, and do all such acts and take all such
measures as may be reasonably necessary to comply with the
representations, agreements, conditions and other provisions of this
Agreement;
8.1.13 Update Schedule. Promptly disclose to Purchaser any
information contained in the representations and warranties of each
Seller contained in Article VI or in the Schedules to this Agreement
which is no longer complete or correct (including furnishing updated
financial statements); provided that no such disclosure shall be
deemed to modify, amend or supplement such Seller's representations
and warranties;
8.1.14 Applications. As soon as is reasonably practicable or
as otherwise specified herein, HHC shall prepare and submit, or cause
to be prepared and submitted, to the appropriate Governmental
Authorities, all applications necessary to construct and operate the
Lagoon to accommodate a 57-bed facility in compliance with all
applicable Legal Requirements, including, without limitation,
applications for the Construction Permit and the Operating Permit (the
"Applications"), together with all plans and specifications regarding
construction and/or remediation of the Lagoon as may be required in
connection with the foregoing (collectively, the "Plans and
Specifications"). On or before April 14, 1997, HHC shall prepare and
submit, or cause to be prepared and submitted, to MDNR an engineering
report containing as-built conditions of the Xxxxx Facility and
provisions for the removal by HHC of the waste and effluents from the
Lagoon (the "Engineering Report"). Concurrently therewith, HHC shall
provide copies of each of the foregoing to Purchaser.
8.1.15 Sewage Disposal. Commencing immediately and continuing
thereafter until such time as all of the Lagoon Permits are obtained,
at its own cost and expense, HHC shall cease operating the Lagoon and
shall take all necessary action to (i) cap-off or otherwise prevent
the discharge of any and all sewage and effluents from the Xxxxx
Facility's septic tanks into the Lagoon and (ii) dispose of such
sewage and effluents from the Xxxxx Facility's septic tanks to an
authorized waste disposal facility by an approved method, all in
compliance with all applicable Legal Requirements.
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8.1.16 Lagoon Construction. As soon as is reasonably
practicable upon issuance of a valid construction permit by MDNR to
construct the Lagoon (the "Construction Permit"), at its own cost and
expense, HHC shall construct and complete, or cause to be constructed
and completed, the Lagoon to accommodate a 57-bed facility in
accordance with the Plans and Specifications, as approved by the
applicable Governmental Authorities (the "Approved Plans and
Specifications"). Concurrently therewith, HHC shall provide copies of
each of the foregoing to Purchaser.
8.1.17 Lagoon Permits. As soon as is reasonably practicable,
at its own cost and expense, HHC shall obtain, or cause to be
obtained, from the applicable Governmental Authorities all Permits and
other approvals that are required in order for HHC to operate the
Lagoon to accommodate a 57-bed facility in compliance with all
applicable Legal Requirements (the "Lagoon Permits"), including,
without limitation, the Construction Permit and a valid operating
permit issued by MDNR (the "Operating Permit"). Concurrently
therewith, HHC shall provide copies of each of the foregoing to
Purchaser.
8.2 Prohibited Actions. Between the date of this Agreement and (i) the
First Closing Date, with respect to all of the Facilities and the Purchased
Assets and (ii) the Second Closing Date, with respect to the Xxxxx Facility and
the Xxxxx Assets, neither Seller shall, except as otherwise agreed by Purchaser
in writing:
8.2.1 Sale of Purchased Assets. Sell, transfer, assign,
lease, encumber or otherwise dispose of any of the applicable
Purchased Assets other than in the ordinary course of business
consistent with past practices;
8.2.2 Business Changes. With respect to HHC, change in any
material respect the character of the Business;
8.2.3 Incurrence of Material Obligations. Incur any material
fixed or contingent obligation or enter into any material agreement,
commitment or other transaction or arrangement, commitment or other
transaction or arrangement that is not the ordinary course of business
consistent with past practices and with respect to which Purchaser
will be bound subsequent to the Applicable Closing Date;
8.2.4 Incurrence of Liens. Subject to lien, security interest
or any other Encumbrance, other than Permitted Encumbrances, any of
the applicable Purchased Assets;
8.2.5 Change in Employee Compensation and Benefits. With
respect to HHC, increase the rate of compensation paid, or pay any
bonus, to anyone connected with the Business, except for those
increases or bonuses planned, in the ordinary course of business
consistent with past practices, or establish or adopt any new pension
or profit-sharing plan, deferred compensation agreement or employee
benefit arrangement of any kind whatsoever covering or affecting the
applicable Employees;
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8.2.6 Publicity; Advertisement. Except as required by law,
publicize, advertise or announce to any third-party, except as
required pursuant to this Agreement to obtain the consent of such
third-party, the entering into of this Agreement, the terms of this
Agreement or the transactions contemplated hereby;
8.2.7 No Release. With respect to HHC, except in the ordinary
course of business consistent with past practices, cancel, release or
relinquish any material debts of or claims against others held by HHC
with respect to the Business or waive any material rights relating to
the Business; and
8.2.8 No Termination or Modification. Terminate or materially
modify any material contract or permit (including, without limitation,
those items listed on Schedule 1.63, Schedule 2.1.3, Schedule 1.59 and
Schedule 1.60) or other authorization or agreement affecting the
applicable Purchased Assets or, with respect to HHC, the Business or
the operation thereof.
ARTICLE IX. COVENANTS OF PURCHASER PRIOR TO CLOSING
9.1 Required Actions. Unless otherwise specified herein, between the
date of this Agreement and (i) the First Closing Date, with respect to all of
the Facilities and the Purchased Assets and (ii) the Second Closing Date, with
respect to the Xxxxx Facility and the Xxxxx Assets, Purchaser shall, except as
otherwise agreed by each Seller in writing:
9.1.1 Compliance with Agreement. Not undertake any course of
action inconsistent with satisfaction of the conditions applicable to
it set forth in this Agreement, and Purchaser shall do all such acts
and take all such measures as may be reasonably necessary to comply
with the representations, agreements, conditions and other provisions
of this Agreement;
9.1.2 Examinations. Promptly undertake all examinations,
inspections, surveys and audits, including, without limitation, title
searches and surveys of the Real Property, environmental assessments
and audits and engineering surveys, as Purchaser deems necessary in
connection with the acquisition of the Purchased Assets or the
Business which examinations shall be conducted in such a manner as to
prevent disruption of relations with the Employees, residents and
suppliers of HHC; and
9.1.3 HHC's Employees. Take all reasonable steps to ensure
that the transfer of employment of (i) all of the Nevada/Xxxxxx
Facility Employees to be accomplished prior to or on the First Closing
Date and (i) all of the Xxxxx Facility Employees to be accomplished
prior to or on the Second Closing Date.
9.2 Investigation. Purchaser shall use all reasonable efforts to
conduct any follow-up investigation of the Business or the Purchased Assets of
either Seller as may be reasonably required by Purchaser's lender, which
investigation shall be conducted in such a manner as to prevent
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disruption of relations with the Employees, residents and suppliers of HHC. Any
investigation shall be (i) conducted by Purchaser and in HHC's presence and
(ii) scheduled with HHC's prior approval.
9.3 Approvals, Consents. Unless needed sooner pursuant to any Legal
Requirement, Purchaser shall use its best efforts to obtain in writing as
promptly as possible any approvals and consents as required to be obtained by
Purchaser in order to effectuate the transactions contemplated hereby and
deliver to each Seller copies of such approvals and consents. Accordingly,
Purchaser take all reasonable action to obtain the necessary licenses to
operate each of the applicable Facilities from the MDNR and the Department of
Social Services, Division of Aging, including:
(i) providing notice to each Accreditation Body and Third
Party Payor as required by any Legal Requirement of
the pending change of ownership of each of the
Facilities as of the Applicable Closing Date; and
(ii) providing such other notices as required by all Legal
Requirements including, if required, (i) notices to
the Facilities' residents and (ii) notices to
referral and human service agencies. Prior to sending
the notices, Purchaser shall provide copies to HHC
for review and approval, which approval shall not be
unreasonably withheld.
9.4 Publicity; Advertisement. Except as required by law, Purchaser
shall not publicize, advertise or announce to any third-party, except as
required pursuant to this Agreement to obtain the consent of such third-party,
the entering into of this Agreement, the terms of this Agreement or the
transactions contemplated hereby; provided, however, the foregoing shall not be
applicable to disclosures made by Purchaser to Purchaser's lender in response
to such lender's reasonable requests.
ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER WITH RESPECT TO
EACH CLOSING
The obligation of Purchaser to proceed with each Closing under this
Agreement is subject to the fulfillment prior to the specified date or at the
time of (i) the First Closing, with respect to all of the Facilities and the
Purchased Assets and (ii) the Second Closing, with respect to the Xxxxx
Facility and the Xxxxx Assets, of the following conditions with respect to each
Seller, any one or more of which may be waived in whole or in part by
Purchaser:
10.1 Accuracy of Representations and Warranties. The representations
and warranties of each Seller contained in this Agreement and the Ancillary
Agreement to which each Seller is a party shall have been true in all material
respects on the date hereof and shall be true in all material respects on and
as of the Applicable Closing Date with the same force and effect as though made
on and as of the Applicable Closing Date.
10.2 Performance of Agreement. Each Seller shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions
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contained in this Agreement and the Ancillary Agreements to which such Seller
is a party to be performed or complied with by it at or prior to the Applicable
Closing Date.
10.3 Seller's Certificate. Purchaser shall have received a certificate
from each Seller, dated as of the Applicable Closing Date, reasonably
satisfactory in form and substance to Purchaser and its counsel, certifying as
to the matters specified in Section 10.1 and Section 10.2 hereof. The matters
set forth in such certificate shall constitute representations and warranties
of each Seller hereunder.
10.4 Secretary's Certificate. Purchaser shall have received a
certificate, dated as of the Applicable Closing Date, of the Secretary or any
Assistant Secretary of HHC with respect to:
(i) the resolutions of the board of directors of HHC and,
if necessary, the stockholders of HHC, authorizing
the execution and delivery of this Agreement and the
Ancillary Agreements to which HHC is a party and the
performance by HHC of the transactions contemplated
hereby and thereby;
(ii) the incumbency and specimen signature of each officer
or representative of HHC executing this Agreement,
the certificate referred to in Section 10.3 and the
Ancillary Agreements to which HHC is a party; and
(iii) the effect that the governing documents of HHC
delivered pursuant to Section 10.6 were in effect at
the date of adoption of such resolutions, the date of
execution of this Agreement and the Applicable
Closing Date.
10.5 Injunction. On the Applicable Closing Date, there shall be no
injunction, writ, preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided and no suit, action, investigation, inquiry or other legal or
administrative proceeding by any Governmental Authority or other Person shall
have been instituted or threatened which questions the validity or legality of
the transactions contemplated hereby or which if successfully asserted might
otherwise have a material adverse effect on the conduct of the Business or
impose any additional material financial obligation on, or require the
surrender of any material right by, Purchaser.
10.6 Actions and Proceedings. With respect to HHC, all corporate
actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental hereto and all other
related legal matters shall be reasonably satisfactory to counsel for
Purchaser, and such counsel shall have been furnished with such certified
copies of such corporate actions and proceedings and such other instruments and
documents as it shall have reasonably requested, including, without limitation:
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(i) certificates of the appropriate public officials to
the effect that HHC is a validly existing corporation
in good standing in its state of incorporation as of
a date not more than 10 days prior to the Applicable
Closing Date;
(ii) incumbency and specimen signature certificates dated
the Applicable Closing Date, signed by the officers
of HHC and certified by its Secretary; and
(iii) true and correct copies of (A) the charter documents
of HHC as of a date not more than 10 days prior to
the Applicable Closing Date, certified by the
Secretary of State of its state of incorporation and
(B) the bylaws of HHC as of the Applicable Closing
Date, certified by the Secretary of HHC.
10.7 Consents. Any third-party consents, approvals, authorizations or
Permits (including, without limitation, those required by any Governmental
Authorities) necessary for the conveyance of the Purchased Assets or valid
consummation of the transactions contemplated hereby shall have been obtained.
10.8 Arrangements with Employees. Substantially all of HHC's Employees
shall have accepted employment with Purchaser effective (i) as of the First
Closing Date, with respect to the Nevada/Xxxxxx Facilities and (ii) as of the
Second Closing Date, with respect to the Xxxxx Facility, and Purchaser shall
have entered into arrangements with applicable key Employees of HHC
satisfactory to Purchaser in its sole discretion.
10.9 Reserved.
10.10 Reserved.
10.11 Environmental Report. At its own cost and expense, Purchaser
shall have obtained a written report from a qualified geotechnical or
engineering firm, in a form and substance, satisfactory to Purchaser,
concerning the presence, handling, treatment and disposal of Regulated
Substances on, in or under the Real Property and disclosing (i) the results of
a review of prior uses of the Real Property disclosed by local public records,
including the chain of title; (ii) contacts with local officials to determine
whether any records exist with respect to the disposal of Regulated Substances
on the Real Property; and (iii) if recommended to or required by Purchaser,
soil samples and groundwater samples consistent with good engineering practice.
10.12 Title Insurance. Purchaser shall have obtained for all Real
Property final marked commitments to issue to Purchaser ALTA (1992-Form B with
appropriate state endorsements) owner's or leasehold policies of title
insurance in coverage amounts equal to the fair market values of such Real
Property, insuring good and marketable title to such Real Property with
mechanic's liens coverage and such endorsements as Purchaser may reasonably
request and with exceptions only for ALTA standard printed exceptions (other
than mechanic's and materialmen's liens and rights of possession) and Permitted
Encumbrances.
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10.13 Estoppel Certificates. Purchaser shall have received estoppel
certificates from the Clarks and any other lessor of the Real Property Leased,
in form and substance satisfactory to Purchaser.
10.14 Closing Documents. Purchaser shall have received the other
documents referred to in Section 5.2 which shall be in form and substance
satisfactory to Purchaser in its reasonable discretion.
10.15 Other Deliveries. At its own cost and expense, Purchaser shall
have received with respect to the Real Property:
10.15.1 Surveys. Surveys of such property which conform to
the standards set forth in the ALTA/American Congress on Surveying and
Mapping Minimum Standard Detail Requirements for Land Title Surveys
and which disclose no state of facts inconsistent with the
representations and warranties of each Seller set forth in Section 6.9
hereof and are otherwise acceptable to Purchaser;
10.15.2 Affidavits. ALTA extended coverage
statements/affidavits in form and substance satisfactory to
Purchaser's title insurer regarding title, mechanic's liens and such
other customary matters as may be reasonably requested by Purchaser or
Purchaser's title insurer; and
10.15.3 FIRPTA Certificates. A certificate, duly executed and
acknowledged by each Seller under penalties of perjury, in the form
prescribed by Treasury Regulation Section 1.1445-2(b)(2)(iii), stating
each Seller's name, address and Federal tax identification number, and
that each Seller is not a "foreign person" within the meaning of
Section 1445 of the Code.
10.16 Reserved.
10.17 Opinion of Counsel. Purchaser shall have received the favorable
opinion of Russell, Brown, Xxxxxx & Xxxxxxxxxxxx, counsel for each Seller,
addressed to Purchaser and Purchaser's lender, reasonably satisfactory to
Purchaser and its counsel as to the matters set forth in Sections 6.1, 6.2 and
6.3 hereof.
10.18 Reserved.
10.19 Engineering Report. On or before April 14, 1997, at its own cost
and expense, HHC shall have prepared and submitted, or caused to be prepared
and submitted, the Engineering Report.
ARTICLE XA. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER WITH
RESPECT TO SECOND CLOSING.
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In addition to the conditions precedent set forth in Article X, the
obligation of Purchaser to proceed with the Second Closing under this Agreement
is subject to the fulfillment prior to the Second Closing Date, with respect to
the Xxxxx Facility and the Xxxxx Assets, of the following conditions with
respect to each Seller, any one or more of which may be waived in whole or in
part by Purchaser:
10A.1 Closure Letter. At its own cost and expense, within six months
from the date of this Agreement, HHC shall have obtained, or caused to be
obtained, from MDNR, a closure letter, in form and substance reasonably
acceptable to Purchaser and Purchaser's lender, with respect to the matters set
forth in the MDNR Notice, including, without limitation, that, on the Second
Closing Date, (i) the Lagoon has been constructed and/or remediated by Seller
to accommodate a 57-bed facility in accordance with the Approved Plans and
Specifications and in compliance with all applicable Legal Requirements, (ii)
the Operating Permit will be issued to Seller and (iii) no further enforcement
action, including, without limitation, the imposition of any fines or
penalties, will be taken by MDNR with respect to Seller or the Lagoon.
10A.2 Lagoon Permits. At its own cost and expense, within six months
from the date of this Agreement, HHC shall have obtained, or caused to be
obtained, from the applicable Governmental Authorities all of the Lagoon
Permits.
10A.3 Financial Condition of Xxxxx Facility. On the Second Closing
Date, the annualized year-to-date NOI of the Xxxxx Facility shall not be less
than $152,000.
ARTICLE XI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER WITH RESPECT TO
EACH CLOSING
The obligation of each Seller to proceed with each Closing under this
Agreement is subject to the fulfillment prior to the specified date or at the
time of (i) the First Closing, with respect to all of the Facilities and the
Purchased Assets and (ii) the Second Closing, with respect to the Xxxxx
Facility and the Xxxxx Assets, of the following conditions with respect to
Purchaser, any one or more of which may be waived in whole or in part by each
Seller:
11.1 Accuracy of Representations and Warranties. The representations
and warranties of Purchaser contained in this Agreement shall have been true in
all material respects on the date hereof and shall be true in all material
respects on and as of the Applicable Closing Date with the same force and
effect as though made on and as of the Applicable Closing Date.
11.2 Performance of Agreement. Purchaser shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Applicable Closing Date.
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11.3 Purchaser's Certificate. Each Seller shall have received a
certificate from Purchaser, dated as of the Applicable Closing Date, reasonably
satisfactory in form and substance to each Seller and their counsel, certifying
as to the fulfillment of all matters specified in Section 11.1 and Section 11.2
hereof. The matters set forth in such certificate shall constitute
representations and warranties of Purchaser hereunder.
11.4 Secretary's Certificate. Each Seller shall have received a
certificate, dated as of the Applicable Closing Date, of the Secretary or any
Assistant Secretary of Purchaser with respect to:
(i) the resolutions of the board of directors of
Purchaser and, if necessary, the stockholders of
Purchaser, authorizing the execution and delivery of
this Agreement and the Ancillary Agreements to which
Purchaser is a party and the performance by Purchaser
of the transactions contemplated hereby and thereby;
(ii) the incumbency and specimen signature of each officer
or representative of Purchaser executing this
Agreement, the certificate referred to in Section
11.3 and the Ancillary Agreements to which Purchaser
is a party; and
(iii) the effect that the governing documents of Purchaser
delivered pursuant to Section 11.6 were in effect at
the date of adoption of such resolutions, the date of
execution of this Agreement and the Applicable
Closing Date.
11.5 Injunction. On the Applicable Closing Date, there shall be no
injunction, writ, preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided and no suit, action, investigation, inquiry or other legal or
administrative proceeding by any Governmental Authority or other Person shall
have been instituted, threatened or anticipated which questions the validity or
legality of the transactions contemplated hereby.
11.6 Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions contemplated
by this Agreement or incidental hereto and all other related legal matters
shall be reasonably satisfactory to counsel for each Seller, and such counsel
shall have been furnished with such certified copies of such corporate actions
and proceedings and such other instruments and documents as it shall have
reasonably requested, including, without limitation:
(i) certificates of the appropriate public officials to
the effect that Purchaser is a validly existing
corporation in good standing in its state of
incorporation as of a date not more than 10 days
prior to the Applicable Closing Date;
(ii) incumbency and specimen signature certificates dated
the Applicable Closing Date, signed by the officers
of Purchaser and certified by its Secretary; and
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(iii) true and correct copies of (A) the charter documents
of Purchaser as of a date not more than 10 days prior
to the Applicable Closing Date, certified by the
Secretary of State of its state of incorporation and
(B) the bylaws of Purchaser as of the Applicable
Closing Date, certified by the Secretary of
Purchaser.
ARTICLE XII. OBLIGATIONS AFTER EACH CLOSING
12.1 Covenant Not to Interfere. Each Seller covenants and agrees that
for a period of three years after the Second Closing Date, each Seller will not
solicit for employment by such Seller or any Affiliates any Person who is an
Employee of the Business as of either Closing Date.
12.2 Noncompetition. For a period of three years following the Second
Closing Date, each Seller will not, directly or indirectly, unless acting in
accordance with Purchaser's written consent, own, manage, operate, finance or
participate in the ownership, management, operation or financing of or permit
its name to be used by or in connection with any business or enterprise engaged
in the Business acquired by Purchaser hereunder and located within a 25-mile
radius of each of the Facilities. Each Seller acknowledges that the provisions
of this Section are reasonable and necessary to protect the interests of
Purchaser, that any violation of this Section will result in an irreparable
injury to Purchaser and that damages at law would not be reasonable or adequate
compensation to Purchaser for violation of this Section and that, in addition
to any other available remedies, Purchaser shall be entitled to have the
provisions of this Section specifically enforced by preliminary and permanent
injunctive relief without the necessity of proving actual damages or posting a
bond or other security to an equitable accounting of all earnings, profits and
other benefits arising out of any violation of this Section. In the event that
the provision of this Section shall ever be deemed to exceed the time,
geographic scope or other limitations permitted by applicable law, then the
provisions shall be deemed reformed to the maximum extent permitted by
applicable law.
12.3 Transition of Employees. From and after the (i) the First Closing
Date, with respect to the Nevada/Xxxxxx Facility Employees and (ii) the Second
Closing Date, with respect to the Xxxxx Facility Employees, Purchaser and HHC
shall cooperate to ensure an orderly transition of the Employees who accept
employment with Purchaser.
12.4 Certain Transitional Matters.
12.4.1 Transfer of Assets. Each Seller agrees that, from and
after (i) the First Closing Date, with respect to the Nevada/Xxxxxx
Facilities and Nevada/Xxxxxx Assets and (ii) the Second Closing Date,
with respect to the Xxxxx Facility and the Xxxxx Assets, Purchaser
shall have the right and authority to collect for Purchaser's own
account all items which shall be transferred to Purchaser with respect
to the Applicable Closing Date as provided herein.
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12.4.2 Endorsement of Checks. From and after (i) the First
Closing Date, with respect to the Nevada/Xxxxxx Facilities and
Nevada/Xxxxxx Assets and (ii) the Second Closing Date, with respect to
the Xxxxx Facility and the Xxxxx Assets, Purchaser shall have the
right and authority to retain and endorse without recourse the name of
each Seller on any check evidencing rent or other revenues received by
Purchaser on account of any of the applicable Purchased Assets and,
with respect to HHC, the Business transferred to Purchaser hereunder.
12.4.3 Seller's Remittance of Funds. After the (i) the First
Closing Date, with respect to the Nevada/Xxxxxx Facilities and
Nevada/Xxxxxx Assets and (ii) the Second Closing Date, with respect to
the Xxxxx Facility and the Xxxxx Assets, each Seller shall promptly
transfer and deliver to Purchaser any cash or other property, if any,
that each Seller may receive related to the applicable Purchased
Assets other than the Excluded Assets and, with respect to HHC, the
Business.
12.4.4 Purchaser's Remittance of Funds. After the Applicable
Closing Date, Purchaser shall promptly transfer and deliver to the
appropriate Seller any cash or other property, if any, that Purchaser
may receive related to the Excluded Assets.
12.4.5 Assumed Liabilities Controlled by Purchaser. From and
after the Applicable Closing Date, Purchaser shall have complete
control over the payment, settlement or other disposition of, or any
dispute involving the applicable Assumed Liabilities, and Purchaser
shall have the right to conduct and control all negotiations and
proceedings with respect thereto. HHC shall notify Purchaser promptly
of any claim made with respect to any of the applicable Assumed
Liabilities and shall not, except with the prior written consent of
Purchaser, voluntarily make any payment of, or settle or offer to
settle, or consent to any compromise with respect to, any such Assumed
Liability. HHC shall cooperate with Purchaser in connection with any
negotiations or proceedings involving any Assumed Liability.
12.5 Audits. To the extent reasonably requested by Purchaser,
following the Applicable Closing Date, at Purchaser's cost and expense, HHC
shall cooperate and request HHC's accountants to cooperate, with Purchaser and
its auditors in the preparation of audited financial statements of each of the
Facilities for the years ended December 31, 1996, 1995 and 1994 prepared in
accordance with GAAP or, to the extent required, in connection with any
registration statement or other form filed by Purchaser with the Securities and
Exchange Commission under the Securities Act of 1933 for a public offering and
sale of securities of Purchaser. Any audit shall be performed in accordance
with GAAS.
12.6 Further Assurances of Seller. From and after the Applicable
Closing Date, each Seller shall, at the request of Purchaser, execute,
acknowledge and deliver to Purchaser, without further consideration, all such
further assignments, conveyances, endorsements, deeds, special powers of
attorney, consents and other documents, and take such other action, as
Purchaser may reasonably request (i) to transfer to and vest in Purchaser, and
protect its rights, title and interest in, all the Purchased Assets and (ii)
otherwise to consummate the transactions contemplated by this Agreement.
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In addition, from and after the Applicable Closing Date, HHC shall afford
Purchaser and its attorneys, accountants and other representatives access,
during normal business hours, to any Books and Records relating to the Business
that HHC may retain as may reasonably be required in connection with the
preparation of financial information or tax returns of Purchaser. Purchaser
shall be responsible for any costs and expenses related to the foregoing,
including any costs and expenses of any employees or professionals providing
assistance requested by Purchaser.
12.7 Further Assurances of Purchaser. From and after the Applicable
Closing Date, Purchaser shall afford to HHC and its attorneys, accountants and
other representatives access, during normal business hours, to such Books and
Records relating to the Business as may reasonably be required in connection
with the preparation of financial information or tax returns for periods
concluding on or prior to the Applicable Closing Date. Purchaser shall
cooperate in all reasonable respects with HHC with respect to its former
interest in the Business and in connection with financial account closing and
reporting and claims and litigation asserted by or against third parties,
including, but not limited to, making Purchaser's employees available at
reasonable times to assist with, or provide information in connection with
financial account closing and reporting and claims and litigation, provided
that HHC reimburses Purchaser for its reasonable out-of-pocket expenses
(including costs of employees so assisting) in connection therewith.
12.8 Operation of the Lagoon. On and as of the Second Closing Date,
Purchaser shall obtain all necessary Permits from the applicable Governmental
Authorities to operate the Lagoon and shall commence operation of the Lagoon.
ARTICLE XIII. TERMINATION
13.1 Termination of Agreement. This Agreement may be terminated:
(i) by the mutual consent of each Seller and Purchaser;
(ii) by Purchaser upon notice to each Seller if any of the
conditions set forth in Article X or Article XA
hereof have not been satisfied or become impossible
to satisfy by the specified date or the Applicable
Closing Date, as the case may be (other than by
reason of the material failure of Purchaser to
fulfill its obligations under this Agreement);
(iii) by either Seller upon notice to Purchaser if any of
the conditions set forth in Article XI hereof have
not been satisfied or become impossible to satisfy by
the Applicable Closing Date (other than by reason of
the material failure of such Seller to fulfill its
obligations under this Agreement);
(iv) by either Seller if Purchaser materially breaches or
fails to fulfill its obligations under this
Agreement, which failure continues and remains
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uncured for 30 consecutive calendar days after such
Seller gives written notice of such failure to
Purchaser; and
(v) by Purchaser if either Seller materially breaches or
fails to fulfill its obligations under this
Agreement, which failure continues and remains
uncured for 30 consecutive calendar days after
Purchaser gives written notice of such failure to
such Seller.
13.2 Return of Documents. If this Agreement is terminated for any
reason pursuant to this Article XIII, each Party shall return to the other
Party all documents and copies thereof which shall have been furnished to it by
such other Party.
13.3 Deposit. Upon termination of this Agreement, the Deposit shall be
disbursed as follows and in accordance with the terms and conditions of the
Escrow Agreement:
(i) if this Agreement is terminated pursuant to (A)
Section 13.1(i), (B) Section 13.1(ii), but only if
such termination results because the conditions set
forth in Sections 10.1, 10.2, 10.3, 10.4, 10.5, 10.6,
10.7, 10.8, 10.11, 10.13, 10.14, 10.15, 10.17, 10.19
or Article XA have not been satisfied or become
impossible to satisfy by the specified date or the
Applicable Closing Date, as the case may be, or (C)
Section 13.1(v), the Parties agree to instruct Escrow
Agent to release the Deposit to Purchaser; and
(iii) if this Agreement is terminated pursuant to (A)
Section 13.1(iii), (B) Section 13.1(ii), but only if
such termination results because the conditions set
forth in Section 10.12 have not been satisfied or
become impossible to satisfy by the specified date or
the Applicable Closing Date, as the case may be, or
(C) Section 13.1(iv), the Parties agree to instruct
Escrow Agent to release the Deposit to Seller.
13.4 Remedies. If this Agreement is terminated by Purchaser or either
Seller as permitted under Section 13.1 and not as a result of a breach of a
representation or warranty or the failure of any Party to perform its
obligations hereunder, except for the return of the Deposit pursuant to Section
13.3, such termination shall be without liability of any Party. If a Party
terminates this Agreement as a result of a breach of a representation or
warranty by the other Party or the failure of the other Party to perform its
obligations hereunder, the nonbreaching Party, in addition to any other legal
remedies that may be available, shall be entitled to a return of the Deposit
pursuant to Section 13.3 and reimbursement from the breaching Party for all
expenses incurred by the nonbreaching Party in connection with this Agreement
and the transactions contemplated hereby.
ARTICLE XIV. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
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14.1 Survival of Representations and Warranties. All representations
and warranties of the Parties shall survive for two (2) years after the Second
Closing Date; provided that there shall be no termination of any such
representation or warranty as to which a claim has been asserted prior to the
termination of such survival period. Any Party's right to the indemnification
or other remedies based upon the representations and warranties, covenants,
agreements and undertakings of any other Party will not be affected by any
investigation, knowledge or waiver of any condition by such Party. Any
investigation by such Party shall be for its own protection only and shall not
affect or impair any right or remedy hereunder.
14.2 Indemnification by Seller. Each Seller shall respectively
indemnify, defend, save and hold Purchaser and its officers, directors,
employees, agents and Affiliates (collectively, "Purchaser Indemnitees")
harmless from and against all demands, claims, allegations, assertions, actions
or causes of action, assessments, losses, damages, deficiencies, liabilities,
costs and expenses (including reasonable legal fees, interest, penalties, and
all reasonable amounts paid in investigation, defense or settlement of any of
the foregoing and whether or not any such demands, claims, allegations, etc., of
third parties are meritorious; collectively, "Purchaser Damages") asserted
against, imposed upon, resulting to, required to be paid by, or incurred by any
Purchaser Indemnitees, directly or indirectly, in connection with, arising out
of, which could result in, or which would not have occurred but for, a breach of
any representation or warranty made by such Seller in this Agreement, in any
certificate or document furnished pursuant hereto by such Seller or any
Ancillary Agreement to which such Seller is or is to become a party, a breach or
nonfulfillment of any covenant or agreement made by such Seller in or pursuant
to this Agreement and in any Ancillary Agreement to which such Seller is or is
to become a party, and any Retained Liability, including, without limitation,
the Retained Liabilities set forth in Section 4.2A(xiii) and Section 4.2A(xiv).
Notwithstanding anything to the contrary herein, the obligations and liabilities
of each Seller hereunder shall be joint and several.
14.3 Indemnification by Purchaser. Purchaser shall indemnify, defend,
save and hold each Seller and its officers, directors, Employees, Affiliates
and agents, as the case may be (collectively, "Seller Indemnitees") harmless
from and against any and all demands, claims, actions or causes of action,
assessments, losses, damages, deficiencies, liabilities, costs and expenses
(including reasonable legal fees, interest, penalties, and all reasonable
amounts paid in investigation, defense or settlement of any of the foregoing
and whether or not any such demands, claims, allegations, etc., of third
parties are meritorious; collectively, "Seller Damages") asserted against,
imposed upon, resulting to, required to be paid by, or incurred by any Seller
Indemnitees, directly or indirectly, in connection with, arising out of, which
could result in, or which would not have occurred but for, a breach of any
representation or warranty made by Purchaser in this Agreement or in any
certificate or document furnished pursuant hereto by Purchaser or any Ancillary
Agreement to which Purchaser is a party, a breach or nonfulfillment of any
covenant or agreement made by Purchaser in or pursuant to this Agreement and in
any Ancillary Agreement to which Purchaser is a party, and, with respect to
HHC, any Assumed Liability.
14.4 Notice of Claims. If any Purchaser Indemnitee or Seller
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred
or will suffer or incur any Purchaser Damages or
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Seller Damages, as the case may be ("Damages") for which it is entitled to
indemnification under this Article XIV, such Indemnified Party shall so notify
the party or parties from whom indemnification is being claimed (the
"Indemnifying Party") with reasonable promptness and reasonable particularity
in light of the circumstances then existing. If any action at law or suit in
equity is instituted by or against a third party with respect to which any
Indemnified Party intends to claim any Damages, such Indemnified Party shall
promptly notify the Indemnifying Party of such action or suit.
14.5 Third Party Claims. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, the Indemnifying
Party shall not thereby permit to exist any Encumbrance upon any asset of the
Indemnified Party; the Indemnifying Party shall not consent to any settlement
that does not include as an unconditional term thereof the giving of a complete
release from liability with respect to such action or suit to the Indemnified
Party; the Indemnifying Party shall permit the Indemnified Party to participate
in such conduct or settlement through counsel chosen by the Indemnified Party
(at its own cost and expense); and the Indemnifying Party shall agree promptly
to reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving
the foregoing notice to the Indemnifying Party and prior to the assumption of
the conduct and control of such action or suit by the Indemnifying Party.
14.6 Other Remedies. The indemnification rights of any Indemnified
Party under this Article XIV are independent of and in addition to such rights
and remedies as such Indemnified Party may have at law, in equity or otherwise
for any misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement under or in connection with this Agreement on the part of
any Party, none of which rights or remedies shall be affected or diminished
hereby.
ARTICLE XV. GENERAL
15.1 Expenses. Except as otherwise provided in this Agreement, and
whether or not the transactions herein contemplated shall be consummated,
Purchaser and each Seller shall pay their own fees, expenses and disbursements,
including the fees and expenses of their respective counsel, accountants and
other experts in connection with the subject matter of this Agreement and all
other costs and expenses incurred in performing and complying with all
conditions to be performed under this Agreement.
15.2 Publicity. All notices to third-parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by and among Purchaser and each Seller. Except as may
be required by law, no Party shall act unilaterally in this
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regard without prior written approval of every other Party, such approval not
be unreasonably withheld.
15.3 Waivers. The waiver by any Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
15.4 Binding Effect; Benefits. This Agreement shall inure to the
benefit of the Parties hereto, and shall be binding upon the Parties hereto and
their respective successors, assigns, heirs, executors, administrators and
legal representatives. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the Parties hereto, or their
respective successors, assigns, heirs, executors, administrators and legal
representatives any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
15.5 Notices. All notices, requests, demands, elections and other
communications which any Party to this Agreement may be required to give
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, by Federal Express or United Parcel Service, or by
telecopying with receipt confirmation (followed by Federal Express or United
Parcel Service of the same) to the Party to whom the same is so given or made.
Such notice, request, demand, waiver, election or other communication will be
deemed to have been given as of the date so delivered.
15.5.1 Notice to Seller.
If to the Clarks, to:
Xxxxx X. Xxxxx and Xxxxx X. Xxxxx
X.X. Xxx X
Xxxxxx, Xxxxxxxx 00000
If to HHC, to:
Xxxxx X. Xxxxx, President
X.X. Xxx X
Xxxxxx, Xxxxxxxx 00000
With a required copy to:
Xxxxx X. Xxxxxxxxxxxx, Esquire
Russell, Brown, Xxxxxx & Breckenridge
000 Xxxx Xxxxxx
X.X. Xxxxxx X
Xxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
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15.5.2 Notice to Purchaser.
If to Purchaser, to:
Balanced Care Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Director, Legal Services
With a required copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esquire
Or to such other addresses as such Party shall have specified by notice to
every other Party hereto.
15.6 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the Ancillary Agreements and documents delivered at each
Closing pursuant hereto and thereto constitute the entire agreement and
understanding between the Parties hereto as to the matters set forth herein and
therein and supersede and revoke all prior agreements and understandings, oral
and written, between the Parties hereto or thereto or otherwise with respect to
the subject matter hereof or thereof. No change, amendment, termination or
attempted waiver of any of the provisions hereof or thereof shall be binding
upon any Party unless set forth in an instrument in writing signed by the Party
to be bound or their respective successors in interest.
15.7 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
15.8 Headings. The article, section and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
15.9 Construction. Within this Agreement, the singular shall include
the plural and the plural shall include the singular, and any gender shall
include all other genders, all as the meaning and the context of this Agreement
shall require.
15.10 Governing Law and Choice of Forum. The validity and
interpretation of this Agreement shall be construed in accordance with, and
governed by the internal laws of the State of
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Missouri. All claims, disputes or causes of action relating to or arising out
of this Agreement shall be brought, heard and resolved solely and exclusively
by and in federal or state court situated in Xxxxxx County, Missouri. The
Parties hereto agree to submit to the jurisdiction of such courts and agree
that such jurisdiction shall be proper for all purposes of this Agreement.
15.11 Cooperation. The Parties hereto shall cooperate fully at their
own expense, except as otherwise provided in this Agreement, with each other
and their respective counsel and accountants in connection with all steps to be
taken as part of their obligations under this Agreement.
15.12 Severability. If any term, covenant, condition or provision of
this Agreement or the application thereof to any circumstance shall be invalid
or unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Agreement shall not be affected thereby and each remaining
term, covenant, condition and provision of this Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
15.13 Attorneys' Fees. If a dispute arises among the Parties as a
result of which an action is commenced to interpret or enforce any of the terms
of this Agreement, the non-prevailing Parties shall pay the prevailing Party's
reasonable out-of-pocket attorneys' fees, costs and expenses incurred in
connection with the prosecution or defense of such action.
15.14 Successors and Assigns. The covenants, agreements, and
conditions contained herein or granted hereby shall be binding upon and shall
inure to the benefit of Purchaser and each Seller, and each of their respective
permitted successors, assigns, heirs, executors, administrators and legal
representatives. Neither Seller shall assign, or otherwise transfer any
interest in this Agreement to any other Person without the prior written
consent of Purchaser, which consent shall not unreasonably be withheld.
Purchaser may assign and transfer its interest in this Agreement without either
Seller's consent to any of Purchaser's Affiliates or to any lender providing
financing for the transactions contemplated hereby. In addition, Purchaser
anticipates financing the transactions contemplated hereby through
sale-leaseback(s). Purchaser shall have the right to assign this Agreement, in
whole or in part, in such manner as Purchaser may desire in order to facilitate
such sale-leasebacks. Purchaser will promptly provide each Seller with a copy
of any such assignment, and each Seller agrees to execute and deliver any
consents reasonably required by Purchaser's lender in connection therewith,
provided such assignment does not expand either of Seller's respective
obligations and liabilities hereunder. Notwithstanding any permitted assignment
of this Agreement by Purchaser, Purchaser shall remain liable to each Seller
for all obligations and liabilities to be performed by or on behalf of
Purchaser hereunder with respect to such Seller.
[NEXT FOLLOWING PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, intending to be legally bound hereby, the Parties
have caused this Agreement to be signed in their respective names by an officer
thereof duly authorized as of the date first above written.
PURCHASER:
BALANCED CARE CORPORATION
By: /s/ Xxxxx X. Xxxxx
----------------------------
XXXXX X. XXXXX
Vice President
SELLER(S):
/s/ Xxxxx X. Xxxxx
-------------------------------
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
-------------------------------
XXXXX X. XXXXX
HEAVENLY HEALTH CARE, INC. D/B/A
XXX XXXXX RESIDENTIAL CARE HOMES
By: /s/ Xxxxx X. Xxxxx
-----------------------------
XXXXX X. XXXXX
President/Treasurer
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