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Exhibit 2.3
AGREEMENT AND PLAN OF MERGER
dated as of November 27, 1996
by and among
BRIM, INC.
and
BRIM SENIOR LIVING, INC.
and
ENCORE SENIOR LIVING, LLC
and
XXX XXXXXX,
as Agent
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AGREEMENT AND PLAN OF MERGER
This Agreement is made and entered into as of this 27th day of November,
1996 by and among Brim, Inc., an Oregon corporation (the "Company"), Brim Senior
Living, Inc., an Oregon corporation ("BSL"), Encore Senior Living, LLC, a
Delaware limited liability company ("Purchaser"), and, for limited purposes as
specified herein, Xxx Xxxxxx, as Agent ("Agent").
A. By Investment Agreement dated November 21, 1996 among the Company,
Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P. and Principal Hospital Company (the
"Investment Agreement"), the Company has agreed to cause a redemption of its
preferred stock and certain shares of its common stock (the "Healthcare
Transaction").
B. By Purchase and Sale Agreement dated November 25, 1996, the Company has
agreed to sell to Plaza Enterprises LLC, a newly formed limited liability
company comprised of certain officers and employees of the Company certain
assets and liabilities of the Company and certain of its subsidiaries, including
BSL, which are not directly related to its health care or its senior living
operations (the "Excluded Assets Transaction").
C. In conjunction with the consummation of the Healthcare Transaction, the
Company has agreed with the prospective purchaser that at the closing of said
transaction the assets and liabilities of the Company will exclude those related
to its senior living operations.
D. The Purchaser is interested in purchasing the BSL Senior Living
Business (as defined below) from the Company, through (i) a merger of BSL, the
Company's wholly owned subsidiary, into purchaser (the "Merger"), with Purchaser
as the surviving entity (the "Surviving Entity") and (ii) the purchase by
Purchaser of the Related Assets, subject to the Assumed Related Liabilities (the
"Related Assets and Liabilities Transaction").
E. By Stock Purchase and Sale Agreement of even date herewith, CC-Lantana,
Inc., a Delaware corporation, has agreed to purchase from the Company all of the
stock of Meridian Senior Living, Inc., the sole general partner of Meridian Park
Village Limited Partnership, and by a separate Purchase and Sale Agreement of
even date herewith, Xxxxx X. Xxxxxxxx and K. Xxxxx XxXxxxxxxx have agreed to
purchase from the Company its limited partnership interest in Meridian Park
Village Limited Partnership (collectively, the "Freedom Village Transaction").
F. The parties are desirous of documenting the terms and conditions upon
which the Merger and the Related Assets and Liabilities Transaction shall occur.
NOW, THEREFORE, in consideration of the foregoing premises and the
undertaking the parties set forth herein, IT IS HEREBY AGREED AS FOLLOWS:
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ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ADA"-- as defined in Section 4.23 hereof.
"Advance Reimbursement" -- the payment at Closing, in immediately available
funds, of an amount equal to the aggregate of all amounts expended by the
Company, or loaned by the Company to, and expended by, BSL, as the case may be,
for out-of-pocket, third party costs and expenses paid in respect of the
Development Projects, but only to the extent that any such amount is paid or
expended in accordance with (A)(i) an Approved Budget for a Development Project,
in the case of all of the Development Projects other than the DeAnza and Mesa
Development Projects, or (ii) in the case of the Mesa and DeAnza and Development
Projects, an amendment to the Approved Budget for a Development Project
increasing such costs, if approved in writing by Purchaser after the date hereof
(but only to the extent such costs and expenses are not otherwise financed
pursuant to leases covering an applicable Facility) and (B) all otherwise
applicable provisions hereof. All amounts included in an Advance Reimbursement
shall be itemized in the Advance Reimbursement Schedule. Advance Reimbursements
shall not include, and neither BSL nor the Purchaser (nor any of their
Affiliates) shall have any liability for, interest with respect to any advance
made by the Company.
"Advance Reimbursement Schedule" - as defined in Section 2.06(b) hereof.
"Agent" -- Xxx Xxxxxx, on behalf of the Former Holders.
"Agent/Legal Fees Expense Account" -- as defined in Section 2.07(c) hereof.
"Agreement" -- this Agreement.
"Approved Budget for a Development Project" -- with respect to each Development
Project, the budget and cost itemization therefor as included in Schedule 2
hereto and such additional or amended budgets and cost itemizations for such
Project as shall be approved by (and shall be effective upon) the execution of a
written acknowledgment thereof by both the Company and the Purchaser.
"Approved Business Plan" -- the Business Plan developed by the management of the
Purchaser prior to the date hereof and approved by Purchaser, a copy of which is
attached as an exhibit to the Operating Agreement.
"Assumed Related Liabilities" -- the liabilities of the Company relating to the
BSL Senior Living Business listed on Schedule 3 attached hereto.
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"Benefit Arrangement"-- any written or oral employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement,
program, agreement or commitment providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits (including, without limitation,
any "voluntary employees' beneficiary association" as defined in Section
5O1(c)(9) of the Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or benefits other than
salary, which:
(i) is not a Welfare Plan, Pension Plan or Multiemployer Plan,
(ii) is entered into, maintained, contributed to or required
to be contributed to by the Company or any of its Subsidiaries or under which
the Company or any of its Subsidiaries may incur any liability, and
(iii) covers any employee or former employee of the Company or
any of its Subsidiaries (with respect to their relationship with such entities).
"Brim/Senior Living Escrow Account"-- as defined in Section 2.07(b) hereof.
"BSL" -- as defined in the preamble hereof.
"BSL Assets" -- the interests of BSL in the BSL Facilities, the BSL Leases, the
BSL Management Contracts, BSL's partnership or member's interest in the BSL
Partnerships, the Development Projects, and all other assets of BSL, whether
tangible or intangible, including, without limitation, accounts receivable,
inventory and other working capital items, and all furniture, fixtures and
equipment. The BSL Assets are identified on Schedule 4 attached hereto.
"BSL Facility(ies)" -- the senior living facilities and other health care
facilities owned or leased by BSL, the Development Projects, and all components
of such Facilities and Development Projects. The BSL Facilities are listed on
Schedule 5 attached hereto.
"BSL Lease(s)" -- those leases to which BSL is a party with respect to senior
living and other health care facilities. The BSL Leases are described on
Schedule 6 attached hereto.
"BSL Managed Facility(ies)" -- the senior living facilities and other health
care facilities managed by BSL, which facilities are described on Schedule 7
attached hereto.
"BSL Management Contract(s)" -- the agreements to which BSL is (or after giving
effect to the Related Assets and Liabilities Transaction will be) a party
providing for management, administrative or other services to be rendered in
connection with the operation, administration, or supervision of any senior
living or other health care facility. The BSL Management Contracts
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are described in Schedule 8 attached hereto.
"BSL Partnership Agreement(s)"-- those partnership agreements and limited
liability company operating agreements listed in Schedule 9 attached hereto
under which BSL now holds or as of the Closing Date will hold a general and/or
limited partnership interest or member's interest.
"BSL Partnership(s)"-- each partnership and limited liability company that is
the subject of a BSL Partnership Agreement.
"BSL Permits" -- as defined in Section 4.11(a) hereof.
"BSL Senior Living Business"-- the business of owning, operating and managing
the BSL Facilities and the other BSL Assets, the BSL Managed Facilities, the
Related Assets and the Assumed Related Liabilities, and, to the extent
applicable, the assets of the BSL Partnerships.
"Closing" -- the consummation of (i) the Merger at the Effective Time and (ii)
the Related Assets and Liabilities Transaction contemplated by this Agreement to
occur at the time of the Merger.
"Closing Date" -- the date that the Closing occurs as determined in accordance
with Article 3.
"CMC"-- Care Management Corporation, a subsidiary of the Company which is
involved in the BSL Senior Living Business.
"Code"-- the Internal Revenue Code of 1986, as amended.
"Common Stock" - as defined in Section 4.02(a) hereof.
"Company Certificate"-- as defined in Section 2.04 hereof.
"Company Disclosure Letter"-- the letter of even date herewith delivered by the
Company to Purchaser and disclosing certain matters relating to the Company, BSL
and the BSL Senior Living Business, which letter is identified by the
Purchaser's acknowledgment thereof.
"Company Financial Statements" - as defined in Section 4.05 hereof.
"Confidentiality Agreement"-- as defined in Section 10.02 hereof.
"Debt"-- indebtedness or obligations for borrowed money, financing or
capitalized lease obligations, obligations in respect of letters of credit,
surety or other bonds, sale and leaseback transactions, all indebtedness secured
by a lien on any asset, and any other liabilities generally regarded as
indebtedness for borrowed money in accordance with GAAP, or any guarantees
thereof or similar undertakings regarding the indebtedness or obligations of
another.
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"Delaware Law" -- as defined in Section 2.01 hereof.
"Development Projects" -- the real property and improvements to be constructed,
furnished and equipped in accordance with the Approved Budgets for Development
Projects, as from time to time approved by the Purchaser, including, but not
limited to, all property (tangible and intangible) owned or to be acquired by
BSL or Purchaser in connection therewith. Each Development Project approved by
Purchaser (which approval is limited in each case solely to Phase I of such
Development Project, as described in Schedule I) is described in Schedule 1
attached hereto; with respect solely to Phase I of each Development Project
listed on Schedule 1 hereto, BSL is authorized to proceed prior to the Closing
Date in accordance with the terms of the Approved Budget for such Development
Project.
"Dispute Notice" -- as defined in Section 11.03 hereof.
"EBITDA" -- earnings before interest, taxes, depreciation and amortization.
"Effective Time" -- as defined in Section 2.02 hereof.
"Employee Plans" -- all Benefit Arrangements, Multiemployer Plans, Pension Plans
and Welfare Plans.
"Environmental Claims" -- all notices of violations, liens, claims, demands,
suits, or causes of action for any damage, including, without limitation,
personal injury, property damage (including, without limitation, any
depreciation or diminution of property values), lost use of property or
consequential damages, arising directly or indirectly out of Environmental
Conditions or Environmental Laws. By way of example only (and not by way of
limitation), Environmental Claims include:
(i) violations of or obligations under any contract related to
Environmental Laws or Environmental Conditions between the Company (or BSL, CMC
or a BSL Partnership) and any other person,
(ii) actual or threatened damages to natural resources,
(iii) claims for nuisance or its statutory equivalent,
(iv) claims for the recovery of response costs, or
administrative or judicial orders directing the performance of investigations,
responses or remedial actions under any Environmental Laws,
(v) requirements to implement "corrective action" pursuant to
any order or permit issued pursuant to the Resource Conservation and Recovery
Act, as amended, or similar provisions of applicable state law,
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(vi) claims related to Environmental Laws or Environmental
Conditions for restitution, contribution, or indemnity,
(vii) fines, penalties or liens of any kind against property
related to Environmental Laws or Environmental Conditions
(viii) claims related to Environmental Laws or Environmental
Conditions for injunctive relief or other orders or notices of violation from
federal, state or local agencies or courts, and
(ix) with regard to any present or former employees, claims
relating to exposure to or injury from Environmental Conditions.
"Environmental Conditions" -- the state of the environment, including natural
resources (e.g., flora and fauna), soil, surface water, ground water, any
present or potential drinking water supply, subsurface strata or ambient air,
relating to or arising out of the use, handling, storage, treatment, recycling,
generation, transportation, release, spilling, leaking, pumping, pouring,
emptying, discharging, injecting, escaping, leaching, disposal, dumping or
threatened release of Hazardous Substances, by the Company, BSL, CMC or a BSL
Partnership or its or their predecessors in interest, or by its or their agents,
representatives, employees or independent contractors when acting in such
capacity on behalf of any one or more of the Company, BSL, CMC or a BSL
Partnership. With respect to environmental Claims by third parties,
Environmental Conditions also include the exposure of persons to Hazardous
Substances at the work place or the exposure of persons or property to Hazardous
Substances migrating from or otherwise emanating from or located on any of the
BSL Facilities or BSL Managed Facilities.
"Environmental Laws" -- all applicable federal, state, district, local and
foreign laws, all rules or regulations promulgated thereunder, and all orders,
consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation,
(i) laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, industrial
materials, wastes or other substances into the environment and
(ii) laws relating to the identification, generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
recovery, transport or other handling of pollutants, contaminants, chemicals,
industrial materials, wastes or other substances.
Environmental Laws shall include, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Toxic
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Substances Control Act, as amended ("TSCA"), the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended ("RCRA"), the Clean Water Act, as amended, the Safe Drinking Water Act,
as amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, the Occupational Safety and Health Act, as amended ("OSHA"), the
Hazardous Substance Account Act, California Health and Safety Code ss. 25300, et
seq., the Hazardous Waste Control Law, California Heath and Safety Code ss.
25100, et seq., and the Xxxxxx-Cologne Water Quality Control Act, California
Water Code ss. 13000 et seq., and all analogous laws promulgated or issued by
any state or other governmental authority.
"Environmental Reports" -- any and all written analyses, summaries or
explanations, in the possession or control of the Company, BSL, CMC or a BSL
Partnership of (a) any Environmental Conditions in, on or about the BSL
Facilities or BSL Managed Facilities or (b) the compliance by the Company, BSL,
CMC or a BSL Partnership with Environmental Laws.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" -- any entity which is (or at any relevant time was) a member
of a "controlled group of corporations" with or under "common control," as
defined in Section 414(b), (c), (m), (n) or (o) of the Code, with the Company or
any of its Subsidiaries.
"Escrow Account" -- the Brim/Senior Living Escrow Account and the FV Escrow
Account, collectively.
"Escrow Agreement" -- an agreement in the form of Exhibit A hereto.
"Escrowee"-- Key Bank of Oregon.
"Excluded Assets Transaction"- as defined in Recital B hereof.
"Facilities" -- the BSL Facilities and the BSL Managed Facilities.
"Financial Statement Loss Threshold"-- as defined in Section 11.05(a) hereof.
"Former Holders"-- the Former Holders of the Redeemed Stock, GECC, and the
former holders of the Accelerated Options and/or the Purchased Options (as such
terms are defined in the investment Agreement).
"Former Holders of the Redeemed Stock"-- the shareholders of the Company whose
junior preferred stock is redeemed at the Closing of the Healthcare Transaction.
"Freedom Village Transaction"-- as defined in Recital E hereof.
"FV Escrow Account"-- the FV Escrow Account established with the Escrowee in
accordance
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with the Escrow Agreement and the documents relating to the Freedom Village
Transaction.
"GAAP" -- generally accepted accounting principles in effect as of the date
hereof or, in the case of any Company Financial Statement, in effect as of the
date thereof.
"GECC" -- General Electric Capital Corporation.
"Governmental Authority" -- any court, tribunal, arbitrator, authority, agency,
department, commission, office, official or other federal, state, county, city
or other governmental instrumentality or any state, county, city or other
political subdivision.
"Hazardous Substance(s)" -- all pollutants, contaminants, chemicals, wastes, and
any other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise
hazardous substances or materials (whether solids, liquids or gases) subject to
regulation, control or remediation under Environmental Laws. By way of example
only, the term Hazardous Substances includes: petroleum; urea formaldehyde;
flammable, explosive and radioactive materials, as defined in any of the
Environmental Laws; PCBs; pesticides; herbicides; asbestos; and sludge, slag,
acids, metals, solvents and waste waters listed or otherwise defined as
hazardous under any of the Environmental Laws.
"Healthcare Transaction" -- as defined in Recital A hereof.
"Income Taxes" -- any and all foreign, federal, state and local taxes, levies,
duties and other assessments or charges of a similar nature (whether imposed
directly or through withholding), to the extent based upon or measured by
income, including any interest, penalties or other additions to tax applicable
thereto.
"Indemnified Party" -- as defined in Section 11.03 hereof.
"Independent Accountants" -- the Portland, Oregon, office of KPMG Peat Marwick
LLP.
"Interim Financial Statements" -- as defined in Section 4.05 hereof.
"Key Employees" -- all officers, managers and other employees of the Company or
any of its Subsidiaries (with respect to the BSL Senior Living Business) or BSL,
CMC or a BSL Partnership involved as of the date hereof and anticipated to be
involved from and after the Effective Time in the day to day operations of the
BSL Senior Living Business, whose current annual salary or rate of compensation
(including bonus and other incentive compensation) is $100,000 or more.
"Laws" -- any constitution statute, law, rule, regulation or ordinance.
"Liens" -- any liens, security interests, deeds of trust, pledges, charges,
conditional sales
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contracts, mortgages or encumbrances.
"Limitation Period"-- as defined in Section 11.05(a) hereof.
"Limited Partnership Transaction"-- as defined in the agreement relating to the
Freedom Village Transaction.
"Loss Notice"-- as defined in Section 11.03 hereof.
"Losses" -- any and all claims, damages, losses, expenses, deficiencies,
penalties, interest, fines, costs (including reasonable attorneys' fees and
court costs), obligations or liabilities of any kind suffered or incurred
because of a breach of one or more of the representations, warranties and
covenants set forth in this Agreement or because of one or more Third Party
Claims.
"Loss Threshold"-- as defined in Section 11.05(a) hereof.
"Material Adverse Effect"-- any event or events (A) adversely affecting (i) the
BSL Assets by $150,000 or more, or (ii) the business operations or affairs of
the BSL Senior Living Business, or the prospects of the BSL Senior Living
Business as reflected in the Approved Business Plan, in either case having an
adverse effect (after taking into account any events or series of events having
a positive effect) on EBITDA for any consecutive 12-month period covered by the
Approved Business Plan, in excess off $150,000, (B) materially adversely
affecting the ability of the Company or BSL to perform its obligations
hereunder, or (C) otherwise materially adversely affecting the BSL Senior Living
Business.
"Merger Consideration"-- the dollar amount determined by deducting the amount of
the Related Assets Consideration from Fifteen Million Dollars ($15,000,000).
"Merger" -- the Merger described in Section 2.2, as defined in Recital D hereof.
"Multiemployer Plan" -- any "multiemployer plan" as defined in Sections 3(37) or
400l(a)(3) of ERISA:
(i) which any of the Company and its Subsidiaries, or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the six years prior to the Closing Date maintained,
administered, contributed to or was required to contribute to, or under which
any of the company and its Subsidiaries or any ERISA Affiliate may incur any
liability; and
(ii) which covers any employee or former employee of any of
the Company and its Subsidiaries or any ERISA Affiliate (with respect to their
relationship with such entities).
"Operating Agreement" -- the limited liability company operating agreement of
Encore Senior
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Living LLC, of even date herewith by and among Rockwood Living Inc., CTK Capital
Corp., SSS Capital Corp., Xxxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxx X. XxXxxxxx,
Encore Investors LLC and X.X. Xxxx.
"Orders" -- any injunction, judgment, decree, order, or writ.
"Oregon Act" -- as defined in Section 2.02 hereof.
"Other Required Agreements"-- as defined in Section 7.01(k) hereof.
"Outside Closing Date"-- as defined in Section 3.01 hereof.
"Pension Plan" -- any "employee pension benefit plan" as defined in Section 3(2)
of ERISA (other than a Multiemployer Plan):
(i) which any of the Company and its Subsidiaries or any ERISA
Affiliate maintains, administers, contributes to or is required to contribute
to, or within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
any of the Company and its Subsidiaries or any ERISA Affiliate may incur any
liability; and
(ii) which covers any Employee or former employee of any of
the Company and its Subsidiaries or any ERISA Affiliate (with respect to their
relationship with such entities).
"Permitted Exceptions" --
(i) any liens for taxes and assessments not yet due and
payable;
(ii) liens in favor of vendors, carriers, warehousemen,
repairmen, mechanics, workmen, materialmen, construction or similar liens
arising by operation of law in respect of obligations that are not yet due or
that are being contested in good faith and for which adequate reserves have been
provided for on the Pro Forma Balance Sheet;
(iii) liens associated with purchase money security interests,
provided, in each case, that the associated liability has been provided for on
the Pro Forma Balance Sheet or has been established in relation to assets
purchased subsequent to the date of such Pro Forma Balance Sheet;
(iv) easements, reservations, rights-of-way, restrictions,
covenants, conditions and other similar encumbrances whether of record or
apparent on the premises, including, but not limited to road, highway, pipeline,
railroad and utility easements and defects in the title which individually or in
the aggregate do not materially and adversely affect the present use,
marketability or insurability (under the terms of an applicable title insurance
policy) of any
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Facility; and
(v) any Liens disclosed in the Title Reports.
"Personnel" -- as defined in Section 4.06(b).
"Pro Forma Balance Sheet" -- as defined in Section 4.05 hereof.
"Related Assets Consideration" -- an amount equal to the book value of the
Related Assets as of the Closing Date.
"Related Assets" -- the stock of CMC and the other assets described on Schedule
1O hereto.
"Related Assets and Liabilities Transaction"-- as defined in Recital D hereof.
"Rights" -- as defined in Section 4.02(a) hereof.
"Subsidiary" -- a corporation, partnership or other entity (excluding the BSL
Partnerships) 20% or more of the voting power or value of which is owned by the
referenced corporation, partnership or other entity,
"Surviving Entity" -- the Purchaser, as constituted following the Merger, as
defined in Recital D hereof.
"Taxes" -- any and all foreign, federal, state and local taxes, levies, duties
and other assessments or charges of a similar nature (whether imposed directly
or through withholding), including any interest, penalties or additions to tax
applicable thereto.
"Third Party Consents" -- as defined in Section 6.03(f) hereof.
"Third Party Claim" -- as defined in Section 11.03 hereof.
"Title Reports" -- the title reports and title insurance policies described in
Schedule 11 attached hereto.
"Welfare Plan" -- any "employee welfare benefit plan" as defined in Section 3(1)
of ERISA:
(i) which any of the Company and any of its Subsidiaries or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or under which any of the Company and any of its Subsidiaries or
any ERISA Affiliate may incur any liability; and
(ii) which covers any employee or former employee of any of
the Company and any of its Subsidiaries or any ERISA Affiliate (with respect to
their relationship with such
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entities).
Other References. References to articles, sections (or any subsections),
schedules or exhibits are to those of this Agreement unless otherwise indicated.
ARTICLE II
THE MERGER AND THE SALE TRANSACTIONS
The Merger. On the Closing Date, BSL shall be merged into Purchaser in
accordance with the terms hereof:
2.01 Effect of the Merger. In accordance with the provisions of this
Agreement and the Delaware Corporation Law (the "Delaware Law"), at the
Effective Time (as defined in Section 2.02 hereof), (i) BSL shall be merged with
and into Purchaser; (ii) the separate existence of BSL shall cease; and (iii)
the Surviving Entity shall continue its corporate existence under the laws of
the State of Delaware.
2.02 Effective Time of the Merger. Articles of Merger shall be filed
with the Offices of the Secretary of State of Delaware and Oregon in accordance
with the Delaware Act and the Oregon Business Corporation Act (the "Oregon Act")
on the Closing Date. The "Effective Time" shall occur at such time as the Merger
shall have become effective in Delaware and Oregon. Notwithstanding the
foregoing or anything herein to the contrary, prior to the Closing Date BSL may
be reincorporated in the State of Delaware in which event the Merger shall be in
accordance with Delaware law, provided that the Company and Purchaser, each
acting in its sole discretion, agrees to such reincorporation and to the
documents by which the same is to be accomplished.
2.03 Certificate of Formation and Operating Agreement. At the Effective
Time:
(i) the Certificate of Formation of Purchaser as in effect
immediately prior to the Effective Time shall be the Certificate of Formation of
the Surviving Entity; and
(ii) the Operating Agreement of the Purchaser in effect
immediately prior to the Effective Time shall be the Operating Agreement of the
Surviving Entity.
2.04. Conversion and Exchange of Stock at Closing. At or before the
Effective Time, the Company shall surrender to the Purchaser certificates
representing all of the issued and outstanding shares of capital stock of BSL
(collectively, the "Company Certificate"). At the Effective Time, by virtue of
the Merger and without any action on the part of the Company:
(a) all shares of BSL common stock which are held in treasury shall be
canceled;
(b) all issued and outstanding shares of capital stock of BSL (other
than shares canceled pursuant to subsection (a) above) shall be converted into
the right to receive the Merger
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Consideration as hereinafter provided.
2.05. Deposit of Consideration: Exchange of Certificates. At and after
the Effective Time, the Company shall cease to have any rights as a shareholder
of BSL, except for the right to surrender the Company Certificate and to receive
the Merger Consideration, in accordance with the terms hereof, and the stock
transfer books of BSL shall be closed, and there shall be no further transfer of
shares of BSL capital stock which were outstanding immediately before the
Effective Time.
2.06. Other Conveyances.
(a) At the Effective Time, the Company shall transfer and deliver to
Purchaser, pursuant to conveyancing documents in form and substance reasonably
satisfactory to Purchaser and executed by the Company and Purchaser, as
appropriate, all of the stock of CMC and all of the other Related Assets, and
the Purchaser shall assume all of the Assumed Related Liabilities. In exchange
therefor, the Company shall be entitled to receive from the Purchaser the
Related Assets Consideration, as hereinafter provided.
(b) At or before the Effective Time, the Company shall deliver to
Purchaser a schedule which itemizes all amounts to be included in the Advance
Reimbursement (the "Advance Reimbursement Schedule"), together with the lien
waivers, releases and subordinations required under Section 6.01(q) hereof.
2.07. Payment Procedures. At the Effective Time, upon compliance with
Sections 2.04, 2.05 and 2.06 hereof, Purchaser shall pay the Merger
Consideration, the Advance Reimbursement and the Related Assets Consideration by
delivering:
(a) Fourteen Million Two Hundred Thousand and no/100 Dollars
($14,200,000), plus the Advance Reimbursement, by wire transfer, in immediately
available funds, to a bank account designated by the Company;
(b) Seven Hundred Fifty Thousand and no/100 Dollars ($750,000), by wire
transfer, in immediately available funds, to an interest bearing escrow account
established with the Escrowee and designated as the "Brim/Senior Living Escrow
Account" to be held and applied by the Escrowee in accordance with the terms of
this Agreement and the Escrow Agreement; and
(c) Fifty Thousand and no/100 Dollars ($50,000), by wire transfer, in
immediately available funds, to an interest bearing escrow account established
with the Escrowee and designated as the "Agent/Legal Fees Expense Account" to be
held and applied by the Escrowee in accordance with the terms of the agreement
applicable to such account.
The Company acknowledges and agrees that the Purchaser's obligation to
pay the Merger Consideration, the Advance Reimbursement and the Related Assets
Consideration shall be fully
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satisfied upon completion of the above-described wire transfers.
ARTICLE III
CLOSING
3.01 Deliveries by the Company at Closing. In the event all of the
conditions to Closing set forth in Articles VII and VIII have been satisfied or
waived, the Company shall deliver all certificates, documents, exhibits,
schedules, and other instruments required to be delivered at Closing by the
Company or its counsel pursuant to this Agreement, each of which shall be fully
executed and completed, as appropriate.
3.02 Deliveries by Purchaser at Closing. In the event all of the
conditions to Closing set forth in Articles VII and VIII have been satisfied or
waived, Purchaser shall deliver and/or cause its designees to deliver all of the
certificates, documents, exhibits, schedules, and other instruments required to
be delivered at Closing by Purchaser and/or its designees or its or their
counsel, pursuant to this Agreement, each of which shall be fully executed and
completed, as appropriate and shall remit or cause to be remitted to the Company
the consideration described in Section 2.07.
3.03 Time and Place. The Closing shall occur at the Chicago offices of
Xxxxxx & Xxxxxxx at 10:00 am, local time, on December 13, 1996, provided that as
of said date all of the conditions to Closing set forth in Articles VII and VIII
have been satisfied by the responsible party or waived by the party entitled to
waive the same (the "Closing Date"), or at such other time or on such other date
or such other place as the Company and Purchaser may mutually agree, but in no
event later than December 17, 1996 (the "Outside Closing Date"). In the event
all of the conditions to Closing have not been satisfied or waived as of the
Outside Closing Date, either party shall thereafter have the right to terminate
this Agreement in accordance with the terms of Article X hereof.
ARTICLE IV
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company and BSL jointly and severally represent and warrant to
Purchaser as follows:
4.01. Organization and Qualification.
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of Oregon.
(b) Each of BSL and CMC is a corporation duly organized and validly
existing under the laws of the State of Oregon (provided that BSL may
reincorporate in the State of Delaware
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prior to the Closing if the parties agree to same as provided herein). Each of
BSL and CMC has all corporate power and authority necessary to conduct its
business as and to the extent now conducted and to own, use and lease its assets
and properties.
(c) Each of BSL and CMC is duly qualified, licensed or admitted to do
business and in good standing (to the extent "good standing" is applicable in
each jurisdiction) in each jurisdiction in which the ownership, use or leasing
of its assets and properties, or the conduct or nature of its business, makes
such qualification, licensing or admission necessary. Section 4.01(c) of the
Company Disclosure Letter sets forth the foreign jurisdictions in which BSL and
CMC are qualified to do business.
(d) Each BSL Partnership is duly formed and validly existing in the
state of its formation and licensed or admitted to do business and is in good
standing (to the extent good standing is applicable in each jurisdiction) in
each jurisdiction in which the ownership, use, or leasing of its assets and
properties, or the conduct or nature of its business, makes such qualification,
licensing, or admission necessary.
(e) Neither BSL nor CMC has any direct or indirect Subsidiaries, and
neither of them owns, directly or indirectly, any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any partnership, limited liability company, joint
venture or other business association or entity. Neither BSL nor CMC will have
any Subsidiaries on the Closing Date.
4.02. Capital Stock.
(a) The authorized capital stock of BSL consists solely of 1,000 shares
of common stock, without par value, 100 of which are issued and outstanding. All
of such issued and outstanding shares of common stock are owned beneficially and
of record by the Company (the "Common Stock") free and clear of all Liens,
claims and encumbrances and with full right, power and authority to transfer
such shares to the Purchaser. There are no outstanding subscriptions, options,
warrants, rights (including "phantom" stock rights), preemptive rights or other
contracts, commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument or agreement
(together, "Rights"), obligating BSL, CMC or any BSL Partnership to issue or
sell any shares of its capital stock or to grant, extend or enter into any Right
with respect thereto nor any voting trusts, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person with respect
to the voting of or the right to participate in dividends or other earnings on
any capital stock or other equity security of or interest in BSL, CMC or any BSL
Partnerships.
(b) The outstanding shares of Common Stock have been duly authorized,
validly issued, fully paid and nonassessable.
(c) There are no outstanding obligations by BSL, CMC or any BSL
Partnership
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provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other person.
4.03. Authority Relative to this Agreement. Each of the Company and BSL
has full corporate power and authority to enter into this Agreement and each
other instrument, document and agreement necessary to consummate the
transactions contemplated hereby and perform its obligations hereunder. The
execution, delivery and performance of this Agreement by each of the Company and
BSL and the consummation by each of them of the transactions contemplated hereby
have been duly and validly approved by their respective Boards of Directors, and
no other corporate proceedings are necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, by either the Company or BSL, other than
securing the approval of the Company's shareholders. The Company shall use its
best efforts to secure required its shareholders' approval, including without
limitation its shareholders' approval of the execution and delivery of this
Agreement by the Agent and performance of the Agent's obligations hereunder, in
accordance with the provisions of Section 6.01(j) hereof. Subject to obtaining
such shareholder approval, this Agreement has been duly and validly executed and
delivered by each of the Company, BSL and the Agent and constitutes a legal,
valid and binding obligation of each of them and is enforceable against each of
them in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.04. Approvals and Consents. The execution and delivery of this
Agreement by the Company and BSL does not, and except as described in Section
4.04 of the Company Disclosure Letter and as described in Section 6.01(j)
hereof, the performance by the Company and BSL of its or their obligations
hereunder and the consummation of the transactions contemplated hereby will not:
(a) conflict with, result in a violation or breach of, constitute (with
or without notice or lapse of time or both) a default under, result in or give
to any person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or of notice under, any agreement, contract,
lease, license, permit, note, instrument or other document to which the Company,
any of its Subsidiaries, BSL, CMC or any BSL Partnership is a party or by which
any of them is bound or to which any asset or property of any of them is
subject, or
(b) violate any Laws or Orders of a Governmental Authority, applicable
to the Company, any of its Subsidiaries, BSL, CMC, any BSL Partnership or any of
its or their respective assets or properties, or the articles of incorporation
or bylaws (or other comparable charter or organizational documents, including
the BSL Partnership Agreements) of the Company, any of its subsidiaries, BSL,
CMC or any BSL Partnership, or
(c) require any consent, approval or action of, or permit from, or
filing, or registration
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with or notice to any Governmental Authority or other public or private third
party.
4.05. Financial Statements.
(a) On or before the date hereof, the Company has delivered to
Purchaser the following (collectively, the "Company Financial Statements"):
(i) a true and complete copy of the audited consolidated
balance sheet of the Company and its consolidated Subsidiaries, including BSL
and CMC, as of December 31, 1995 and the related statements of operations,
stockholders' equity, and cash flows and the report thereon by the Independent
Accountants;
(ii) a true and complete copy of the unaudited consolidated
balance sheet of the Company and its consolidated Subsidiaries, including BSL
and CMC, as of June 30, 1996 and the related statements of operations,
stockholders' equity and cash flow for the fiscal period ended on such date (the
"Interim Financial Statements"); and
(iii) an unaudited combined pro forma balance sheet of BSL and
CMC as of June 30, 1996, giving effect to the transfers contemplated in the
Related Assets and Liabilities Transaction and the Excluded Assets Transaction,
and reviewed by the Independent Accountants (the "Pro Forma Balance Sheet").
The parties have executed an acknowledgment identifying the Pro Forma
Balance Sheet and the Interim Financial Statements. The Company Financial
Statements were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto), are in conformity with the books and records of the Company, and
fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries, including BSL and CMC (or BSL and CMC and the other
Related Assets, in the case of the Pro Forma Balance Sheet), as at the
respective dates thereof and the consolidated or combined, as applicable,
results of their operations, stockholders' equity and cash flows for the
respective periods then ended.
(b) The amount of stockholders' equity, as shown in an unaudited
combined balance sheet of BSL and CMC to be prepared by Purchaser (as
contemplated by Section 11.05 hereof) as of the Closing on the Closing Date (on
the same basis as the Pro Forma Balance Sheet, i.e., by giving effect to the
transfers contemplated in the Related Assets and Liabilities Transaction and the
Excluded Assets Transaction and by excluding the effect of the merger of BSL
into the Purchaser), will not be less than the amount of stockholders' equity
shown in the Pro Forma Balance Sheet.
4.06. Absence of Certain Changes or Events. Except as set forth in
Section 4.06 of the Company Disclosure Letter, or as permitted by Article 6,
since June 30, 1996 there has not been any:
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(a) (i) change, event or development having, or that would be
reasonably expected to have an adverse effect on the Company with respect to the
BSL Senior Living Business and/or on BSL, CMC or any BSL Partnership except in
the ordinary course of business consistent with past practice and involving not
more than $100,000 in the aggregate. Nothing herein shall be construed as
requiring the Company to disclose to Purchaser generally known changes in the
senior living business which may, could or would have an effect on the Company,
BSL or Purchaser either prior to or after the Closing, it being understood and
agreed that Purchaser and its members are sophisticated investors in and
purchasers of companies in the senior living business and can and will keep
themselves advised as to any such general developments.
(b) (i) except for normal periodic increases in the ordinary course of
business consistent with past practice, increase in the compensation payable or
to become payable by the Company (with respect to the BSL Senior Living
Business), BSL, CMC or any BSL Partnership to any of its officers, employees or
former employees or individuals involved in the BSL Senior Living Business
(collectively, "Personnel").
(ii) grant, payment or accrual, contingent or otherwise, for
or to the credit of any of the Personnel with respect to any bonus, incentive
compensation, service award or other like benefit;
(iii) adoption, creation or amendment of any Employee Plan of
BSL or CMC;
(iv) employment agreement (written or verbal) made by the
Company (with respect to the BSL Senior Living Business), BSL, CMC or any BSL
Partnership or to which any of them is a party; or
(v) other change in employment terms for any of the Personnel;
(c) sale, lease, assignment or transfer of any of the Facilities, the
BSL Leases, the BSL Management Contracts, BSL's partnership or member interests
in the BSL Partnerships, the Development Projects or the Related Assets.
(d) cancellation, compromise, waiver or release of any right or claim
(or series of related rights or claims) of BSL, CMC or the BSL Senior Living
Business except with respect to the Excluded Assets, and except in the ordinary
course of business consistent with past practice and involving not more than
$100,000 in the aggregate.
(e) amendment, cancellation or termination of any agreement, contract,
permit, license, note, instrument or other document or arrangement of the
Company and its Subsidiaries (with respect to the BSL Senior Living Business),
BSL, CMC, any BSL Partnership or the BSL Senior Living Business, except in the
ordinary course of business consistent with past practice and involving not more
than $100,000 in the aggregate.
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(f) capital expenditure or the execution of any lease, contract,
license, sublease or sublicense (or series of related contracts, leases,
subleases, licenses and sublicenses) or any incurring of liability therefor by
the Company and its Subsidiaries (with respect to the BSL Senior Living
Business), BSL, CMC, or any BSL Partnership, except with respect to the Excluded
Assets and the Development Projects, and except in the ordinary course of
business consistent with past practice and involving not more than $100,000 in
the aggregate.
(g) failure to operate the BSL Senior Living Business in the ordinary
course consistent with past practice, which failure has resulted in an adverse
effect with respect to (i) the preservation of the BSL Senior Living Business,
(ii) the availability to the Purchaser of the services of the Personnel involved
in the BSL Senior Living Business or of BSL or CMC or (iii) the preservation for
Purchaser of the goodwill of suppliers, customers, distributors and others
having business relations with the Company with respect to the BSL Senior Living
Business or BSL or CMC;
(h) change in accounting methods or practices by the Company (with
respect to the BSL Senior Living Business), BSL or CMC;
(i) grant of a lien, mortgage, pledge or other encumbrance on any of
the Related Assets or the BSL Assets, or the assets of any BSL Partnership,
other than Permitted Exceptions;
(j) declaration, setting aside for payment or payment of any dividend
or distribution in respect of any capital stock of BSL or CMC or interest in any
BSL Partnership or any redemption, purchase, or other acquisition of any of
BSL's, CMC's or any BSL Partnership's equity securities or interests except
distributions made in accordance with the applicable provisions of the BSL
Partnership Agreements;
(k) Debt, or any commitment to incur Debt, or any loan or guarantee
incurred, entered into, made or agreed to be made by the Company and its
Subsidiaries (with respect to the BSL Senior Living Business) or by BSL, CMC or
any BSL Partnership, except for intercompany Debt with respect to the
Development Projects;
(l) liabilities incurred (other than for Debt) except as part of the
Development Projects and except in the ordinary course of business and
consistent with past practice and involving not more than $100,000 in the
aggregate;
(m) acceleration, termination, material modification, cancellation or
threatened acceleration, termination, material modification or cancellation of
any contract involving more than $100,000 in the aggregate to which the Company
(with respect to the BSL Senior Living Business), BSL, CMC or any BSL
Partnership is a party or by which any of them is bound or to which any of the
assets or properties of any of them is subject;
(n) grant of any license or sublicense of any rights under or with
respect to any
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intellectual property rights of the Company which relate to the BSL Senior
Living Business or of BSL or CMC;
(o) written agreement or, to the knowledge of the Company or BSL, oral
agreement by the Company or BSL or any Key Employee to do any of the foregoing;
or
(p) other event or condition of any character (other than events or
conditions affecting the economy generally or the senior living business
generally and other than events in the ordinary course of business) known to the
Company or BSL that individually or in the aggregate would reasonably be
expected to have an effect that is materially adverse on BSL, CMC, a BSL
Partnership or the BSL Senior Living Business.
4.07 Accounts Receivable. The accounts receivable of BSL reflected on
the Pro Forma Balance Sheet, and all accounts receivable arising since the date
of the Pro Forma Balance Sheet, represent bona fide claims against debtors for
sales made, services performed or other charges arising on or before the date
hereof, all the goods delivered and services performed that gave rise to said
accounts were delivered or performed in accordance with the applicable orders,
contracts or customer requirements in all material respects, and all of such
accounts are collectible in the ordinary course of business or adequate loss
reserves therefor have been established.
4.08 Inventories. The values at which inventories of BSL are shown on
the Pro Forma Balance Sheet have been determined in accordance with the normal
valuation policy of the Company as described in the Company Financial
Statements, consistently applied, and in accordance with GAAP. The inventories
(and items of inventory acquired subsequent to June 30, 1996) consist only of
items of quality and quantity commercially usable and salable in the ordinary
course of business except for any items of obsolete material or material below
standard quality, all of which have been written down to realizable market
value, or for which adequate reserves have been provided on the Pro Forma
Balance Sheet. All inventories not written off have been priced at cost on a
first in, first out basis. The inventory and consumable supplies located at and
used in connection with the operation of the BSL Facilities are in a good and
useable condition in all material respects and sufficient in quantity and
quality to operate those BSL Facilities which are currently operational in a
manner consistent with the past practices of the Company and BSL.
4.09. Legal Proceedings.
(a) Except as set forth in Section 4.09(a) of the Company Disclosure
Letter, there is no charge, complaint, action, order, writ, injunction, judgment
or decree outstanding or claim, suit, litigation, investigation, audit,
proceeding, labor dispute or arbitration proceeding (collectively, "Actions")
pending or, to the knowledge of the Company or BSL, threatened or anticipated
before any court, arbitrator or other public or private tribunal or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, relating to or
affecting:
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(i) BSL, CMC or a BSL Partnership, the BSL Assets or the
assets of CMC or a BSL Partnership, or the operation of the BSL Senior Living
Business as currently operated,
(ii) any Employee Plan of CMC or any trust or other funding
instrument, fiduciary or administrator thereof, or
(iii) the transactions contemplated by this Agreement,
(b) Neither the Company nor its Subsidiaries (with respect to the BSL
Senior Living Business) nor BSL nor CMC nor any BSL Partnership is in default
with respect to any Order of any Governmental Authority with respect to the BSL
Senior Living Business and there are no unsatisfied uninsured judgments against
the Company and its Subsidiaries, BSL, CMC or any BSL Partnership.
4.10. Information Supplied. Each document filed by the Company, any
Subsidiary of the Company, BSL, or CMC or by any of them on behalf of the BSL
Partnerships with any Governmental Authority in connection with this Agreement
and the other transactions contemplated hereby does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company or BSL with respect to information
supplied in writing by or on behalf of Rockwood Living, Inc. or the Rockwood
Living, Inc. Affiliates of Purchaser expressly for inclusion therein.
4.11. Compliance with Laws and Orders.
(a) BSL or the applicable BSL Partnership holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Authorities
necessary for the leasing, management or operation of the BSL Facilities (other
than the Development Projects) and the BSL Managed Facilities and for the lawful
conduct of the BSL Senior Living Business (the "BSL Permits").
(b) BSL or the applicable BSL Partnership is in compliance in all
material respects with the terms of the BSL Permits held by it, and is not in
violation of or default under any Law or Order of any Governmental Authority
applicable to it.
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4.12. Compliance with Agreements: Certain Agreements.
(a) Except as disclosed in Section 4.12(a) or 4.12(b) of the Company
Disclosure Letter, none of the Company or its Subsidiaries (with respect to
contracts that relate to the business, assets, prospects or operations of BSL,
CMC or the BSL Senior Living Business) or BSL, CMC or any BSL Partnership is a
party to, or bound by, any contract of any kind to be performed after the
Closing Date pursuant to which it is obligated to spend more than $50,000 in any
twelve month period and which is not subject to cancellation by it on thirty
(30) or fewer days' notice.
(b) Section 4.12(b) of the Company Disclosure Letter lists the
following contracts to which the Company (with respect to contracts that relate
to the BSL Senior Living Business) or BSL, CMC or a BSL Partnership is a party:
(i) each BSL Management Contract;
(ii) each BSL Lease;
(iii) each BSL Partnership Agreement;
(iv) each agreement, contract or arrangement with any
consultant, not terminable on 30 days' or less notice involving the payment of
more than $50,000 per annum except architect agreements and contractor
agreements for the Development Projects;
(v) each union or collective bargaining agreement;
(vi) each agreement contract, arrangement, commitment or
obligation with any employee the benefits of which are contingent or vest, or
the terms of which are materially altered, upon the occurrence any of the
transactions contemplated by this Agreement;
(vii) each agreement, contract, arrangement, commitment or
obligation with respect to any Key Employee involved in the BSL Senior Living
Business other than salaries and benefits paid in the ordinary course of
business;
(viii) each agreement or plan, including any bonus, incentive
compensation, stock option, stock appreciation right, restricted stock or stock
purchase agreement or plan, any of the benefits of which will be increased by,
vested on an accelerated basis as a result of, or calculated or valued based on
the occurrence of any of the transactions contemplated by this Agreement. It is
understood and agreed that all of the foregoing in this clause (viii) is the
responsibility of the Company;
(ix) each agreement, contract arrangement, commitment or
obligation to which it is a party limiting in any material respect its freedom
or the freedom of any Key
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Employee to compete in any line of business with any person;
(x) each agreement, contract, arrangement, commitment or
obligation evidencing any liability for Debt in excess of $100,000;
(xi) each agreement, contract, arrangement, commitment,
understanding or obligation relating to it, its present or prospective business,
operations, properties or assets in which any Key Employee has any interest,
direct or indirect, including a description of any transactions between it and
any Key Employee or any entity in which any Key Employee has any interest (other
than transactions between any corporation and a publicly held corporation in
which the Key Employee holds less than five percent (5%) of the issued and
outstanding shares of capital stock); and
(xii) each oral contract or agreement with respect to any of
the matters referred to in the foregoing clauses (i) through (xi) and any oral
or written proposal to enter into any contract, agreement or other arrangement
with respect to any of the matters referred to in the foregoing clauses (i)
through (xi).
(c) The Company has delivered or made available to Purchaser a correct
and complete copy of each contract or agreement listed in Section 4.12(b) of the
Company Disclosure Letter. With respect to each written agreement listed, to the
Company's knowledge (based on a review of the files related to the BSL Senior
Living Business maintained at the corporate offices of the Company, BSL and CMC,
inquiries of employees located at the corporate offices of the Company, BSL and
CMC and involved in the BSL Senior Living Business, and inquiries of the onsite
administrators at the facilities), (A) the written agreement is legal, valid,
binding, enforceable (except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally and (ii) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law) and in full
force and effect; (B) no party is in material breach or default, and no event
has occurred which with notice or lapse of time or both could constitute a
material breach or default or permit termination, modification or acceleration,
under the written agreement and (C) no party has repudiated any term of the
written agreement, and there are no pending renegotiations of or outstanding
rights to renegotiate any material amounts paid or payable by or to the Company
(with respect to the BSL Senior Living Business) or BSL, CMC or any BSL
Partnership thereunder and no such person has made written demand for such
renegotiation.
4.13 Employees and Employee Benefit Plans
(a) Employees. Section 4.13(a) of the Company Disclosure Letter
contains a complete and accurate list of the name, hire date, base compensation,
bonus and title of Key Employees employed in the operation of the BSL Senior
Living Business. Except as provided by applicable law, the employment of all
persons presently employed or retained by the Company, any Company Subsidiary or
BSL in the operation of the BSL Senior Living Business is
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terminable at will, at any time and without advance notice.
(b) Employee Plans. Section 4.13(b) of the Company Disclosure Letter
contains a complete list of all Employee Plans. True and complete copies of each
of the following documents for Employee Plans will be delivered to Purchaser by
the Company subsequent to the date of this agreement but prior to the Closing
Date:
(i) each Welfare Plan and Pension Plan (and, if applicable,
related trust agreements and summary plan descriptions, all amendments thereto,
and all annuity contracts or other funding instruments),
(ii) each Benefit Arrangement and a complete description of
any such Benefit Arrangement which is not in writing and,
(iii) for the three most recent plan years, Annual Reports on
Form 5500 Series required to be filed with any governmental agency for each
Welfare Plan and Pension Plan.
(c) Pension Plans. No Pension Plan is subject to the minimum funding
requirements of Title I of ERISA or Section 412 of the Code or Title IV of
ERISA. Except as disclosed in Section 4.13(c) of the Company Disclosure Letter,
each Pension Plan and each related trust agreement, annuity contract or other
funding instrument is qualified and tax-exempt under the provisions of Code
Section 401(a) and 501(a) and has been so qualified during the period from its
adoption to date.
(d) Multiemployer Plans. None of the Company, BSL, CMC nor any ERISA
Affiliate contributes to, or has been obligated to contribute to, any
Multiemployer Plan.
(e) Welfare Plans. None of the Company, BSL, CMC nor any ERISA
Affiliate has any present or future obligation to make any payment to or with
respect to any present or former employee of the Company involved in the BSL
Senior Living Business or of BSL or CMC pursuant to any retiree medical benefit
plan, other than as may be required by federal or state law. None of the
Company, BSL, CMC or any ERISA Affiliate has ever maintained, contributed to or
been required to contribute to any "welfare benefit fund" as defined in Section
419(e) of the Code in connection with the BSL Senior Living Business. Each
Welfare Plan employed in connection with the BSL Senior Living Business which is
a "group health plan" as defined in Section 607(a) of ERISA, has been operated
in compliance with provisions of Part 6 of Title I of ERISA and Sections 162(i)
and 4980B of the Code at all times.
(f) Compliance with Law. Each Welfare Plan, Pension Plan and Benefit
Arrangement which covers or has covered employees of the Company involved in the
BSL Senior Living Business or the employees of BSL, CMC or any ERISA Affiliate
involved in the BSL Senior Living Business has been maintained in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable
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to such Welfare Plan, Pension Plan or Benefit Arrangement, including but not
limited to, ERISA and the Code.
(g) Deductibility of Payments. There is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company involved in
the BSL Senior Living Business, BSL or CMC that, individually or collectively,
provides for the payment by the Company, BSL or CMC of any amount:
(i) that is not deductible under Section 162 or 404 of the
Code; or
(ii) that is an "excess parachute payment" under Section 280G
of the Code.
(h) No Amendments. Except as disclosed in Section 4.13(h) of the
Company Disclosure Letter, none of the Company, BSL, CMC nor any ERISA Affiliate
has any announced plan or legally binding commitment to create any additional
Employee Plans with respect to the BSL Senior Living Business or to amend or
modify any existing Employee Plan in effect with respect to the BSL Senior
Living Business.
(i) No Acceleration of Rights or Benefits. Except as disclosed in
Section 4.13(i) of the Company Disclosure Letter or as provided by applicable
law, neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will result in the acceleration of the
exercisability of any stock options, the acceleration of the vesting of any
restricted stock or any interest in any Pension Plan or Welfare Plan or the
creation of rights under any severance, parachute or change of control
agreement.
(j) No Other Material Liability. No event has occurred in connection
with any Employee Plan which would have a Material Adverse Effect on any of the
Company, BSL, CMC or any ERISA Affiliate or any such Employee Plan, directly or
indirectly under any statute, regulation or governmental order relating to any
such Employee Plans.
4.14 Taxes. The Company has filed all Tax returns which are required to
have been filed in any jurisdiction with respect to the Company and each of the
Subsidiaries, and has paid, before they have become delinquent, all Taxes shown
to be due and payable on such returns and, to the knowledge of the Company, all
other Taxes and assessments payable by the Company on behalf of itself or any of
the Subsidiaries, to the extent the same have become due and payable, except for
any Taxes and assessments the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company has set aside on its books reserves to the extent
required by, and segregated in accordance with, GAAP. Except as set forth in
Section 4.14 of the Company Disclosure Letter, (i) the Company has no knowledge
of any proposed material Tax assessment against the Company or any of the
Subsidiaries, (ii) to the knowledge of the Company all Tax liabilities of the
Company and the Subsidiaries are adequately provided for on the books of the
Company and (iii) to the knowledge of the Company all of the Tax returns
previously filed by the Company and which, as of the date
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hereof, have not been audited by the applicable Governmental Authority having
jurisdiction thereof, were true and correct in all material respects at the time
filed by the Company. The Company has not received any notice of any past due or
unpaid Tax or assessment which as of the date hereof has not been paid or is
being contested in good faith by appropriate proceedings and is evidenced by an
appropriate reserve on the Company's books.
4.15. Labor Matters. Except as set forth in Section 4.09(a) of the
Company Disclosure Letter, no complaint for sex, age, race or other
discrimination claim or any unfair labor practice claim has been brought against
the Company (with respect to the BSL Senior Living Business), BSL, CMC or any
BSL Partnership which is unresolved as of the date hereof. To the Company's and
BSL's knowledge, the Company (with respect to the BSL Senior Living Business),
BSL, CMC and each BSL Partnership have complied with all applicable state and
federal labor Laws and Orders. Neither the Company (with respect to the BSL
Senior Living Business), BSL, CMC or any BSL Partnership is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by any of them. There are and have been no strikes, slowdowns,
work stoppages, or lockouts at any of the BSL Facilities (or the BSL Managed
Facilities, during the term of the BSL Management Agreement applicable thereto).
4.16. Environmental Matters.
Except as disclosed in Section 4.16 of the Company Disclosure Letter or
in any of the reports referenced therein, (A) as applicable with respect to the
BSL Managed Facilities, to the knowledge of the Company based solely on
inquiries made to the applicable administrators, and (B) with respect to the BSL
Facilities:
(i) The Company (with respect to the BSL Senior Living
Business), BSL, CMC and each BSL Partnership are, and at all times during their
ownership or operation of the Facilities have been, in compliance in all
material respects with all Environmental Laws.
(ii) There are no existing Environmental Claims against the
Company (with respect to the BSL Senior Living Business), BSL, CMC or any BSL
Partnership nor has the Company (with respect to the BSL Senior Living
Business), BSL, CMC or any BSL Partnership received any notification of any
allegation of any actual, or potential responsibility for, or any inquiry or
investigation regarding, any disposal, release or threatened release at any
location of any Hazardous Substance generated or transported by any of them.
(iii) The Company is not aware of any underground tank or
other underground storage receptacle for Hazardous Substances currently located
on the BSL Facilities or the BSL Managed Facilities.
(iv) There have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping) of Hazardous Substances in
quantities exceeding the reportable quantities
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as defined under federal or applicable state law by the Company (with respect to
the BSL Senior Living Business), BSL, CMC or any BSL Partnership on, upon or
into the BSL Facilities or the BSL Managed Facilities except as allowed by
Environmental Laws. In addition, the Company and BSL are not aware (without
independent investigation) that there have been any such releases by the
Company's or BSL's corporate predecessors, and no releases in quantities
exceeding the reportable quantities as defined under federal or state law on,
upon, or into any real property in the vicinity of any of the BSL Facilities or
BSL Managed Facilities other than those authorized by Environmental Laws which,
through soil or ground water contamination, may have come to be located on the
BSL Facilities or the BSL Managed Facilities.
(v) The Company and BSL are not aware of any PCBs or asbestos
located at or on the BSL Facilities or the BSL Managed Facilities.
(vi) There are no consent decrees, consent orders, judgments,
judicial or administrative orders, agreements with (other than permits) or liens
by, any governmental authority or quasi governmental entity relating to any
Environmental Law which regulate, or bind the Company (with respect to the BSL
Senior Living Business), BSL, CMC or any BSL Partnership.
(vii) True and correct copies of all existing Environmental
Reports, as well as all other written environmental reports, audits or
assessments which have been conducted, either by the Company (with respect to
the BSL Senior Living Business), BSL, CMC or any BSL Partnership or any person
engaged by any of them for such purpose, at any BSL Facility or BSL Managed
Facility or any facility formerly owned, managed or leased by the Company and
its Subsidiaries (with respect to the BSL Senior Living Business) or BSL and
which are in the possession of the Company, BSL, CMC or any BSL Partnership have
been made available to the Purchaser.
4.17. Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, other than Xxxxx Xxxxxx, which
has acted as a financial advisor to the Company and which shall be compensated
by the Company for its services rendered in connection therewith.
4.18. Insurance. Section 4.18 of the Company Disclosure Letter sets
forth the insurance policies covering the operations of the BSL Senior Living
Business in effect as of the date hereof, including the policy numbers, terms,
identity of the insurers and amounts and nature of coverage. All of such
policies (or replacements thereof) are now and will be until Closing in full
force and effect, with no premium average. True and correct copies of all such
policies and any endorsements thereto have been or will be made available to
Purchaser for its review prior to Closing. Neither the Company nor BSL nor CMC
nor any BSL Partnership has received any written notice of any actual or
proposed cancellation or limitation of coverage or non-coverage under any such
policies and the Company (with respect to the BSL Senior Living Business),
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BSL, CMC and each BSL Partnership are in compliance (or are in the process of
complying) with all underwriter requirements and recommendations of which any of
them has been notified.
4.19. Intellectual Property.
(a) Neither the Company nor any of the Subsidiaries has received
protection under Federal or state law of any trademarks, trade names, logos,
service marks, patents, patent rights, assumed names, trade secrets or
copyrights used by them in their business.
(b) The Company has implemented, and is actively engaged in, a program
designed to monitor the compliance at the corporate office of the Company and
its Subsidiaries, including BSL and CMC, with applicable laws governing the
licensure of the computer hardware and software used by them in their business.
Such a compliance program has not yet been implemented at each of the BSL
Facilities and is not anticipated to be implemented at the BSL Managed
Facilities. Nothing herein shall be construed as a representation or warranty by
the Company that the use by the Company and the Subsidiaries is in full
compliance with all applicable hardware and software licensure laws and/or that
the trademarks, trade names, logos, service marks, patents, patent rights,
assumed names, trade secrets or copyrights used by the Company do not infringe
on or violate the rights of any third parties; provided, however, that except
with respect to certain copyright violations which have been corrected as of the
date hereof, none of the Company, BSL and CMC has received notice of, or has
knowledge of, any such infringement or claimed infringement.
4.20. Certain Assets.
(a) The Company (with respect to the Related Assets), BSL, CMC and/or
the BSL Partnerships have good and marketable title to, or valid fee simple
title or leasehold interests in, as applicable, or valid rights under contract
to use, all tangible property and assets owned and/or used in the conduct of the
BSL Senior Living Business (including all BSL Assets and Related Assets
reflected on the Pro Forma Balance Sheet), other than property or assets
disposed of since June 30, 1996 in the ordinary course of business. The BSL
Assets and Related Assets include all the tangible assets reasonably necessary
to the BSL Senior Living Business as is currently conducted.
(b) The title of the Company (with respect to the Related Assets), and
BSL, CMC and each BSL Partnership with respect to the assets described in clause
(a) is free and clear of all Liens other than (i) the Permitted Exceptions and
(ii) any Lien which shall be satisfied and released of record as of the Closing
Date. All such property and assets are in good working order, condition and
repair (ordinary wear and tear excepted) and, adequate and suitable for the
purposes for which they are presently being used.
(c) Neither the Company nor BSL nor CMC nor any BSL Partnership has
received notice of any pending or threatened condemnation or taking by power of
eminent domain or
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otherwise of any of the assets described in clause (a) or any notice of any tax
or special lien or assessment which would not be paid in full by the Closing
Date and for which BSL, CMC or any BSL Partnership would be liable.
(d) Except as set forth in Section 4.20(d) of the Company Disclosure
Letter, none of the Company, BSL, CMC or the BSL Partnerships has received
notice of noncompliance of any of the assets described in clause (a) with
applicable building or zoning codes and ordinances.
4.21. No Other Agreements to Sell the Assets or Capital Stock of BSL.
Neither the Company nor BSL has any legal obligation, absolute or contingent, to
any other person or firm to sell or effect a sale of the Related Assets, the BSL
Assets or to sell or effect a sale of the capital stock of BSL or, except as
contemplated herein, to effect any merger, consolidation or other reorganization
of the Company, BSL, CMC or any BSL Partnership or to enter into any agreement
or cause the entering into of an agreement with respect thereto.
4.22. Books and Records. BSL and the Company have made and kept (and
given the Purchaser access to) books and records and accounts, which, in
reasonable detail, accurately and fairly reflect the activities of the Company
and its Subsidiaries (including BSL and CMC) and the BSL Partnerships with
respect to the BSL Senior Living Business. Neither the Company (with respect to
the BSL Senior Living Business) nor BSL nor CMC nor any BSL Partnership has
engaged in any material transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of the Company
and its Subsidiaries.
4.23. Americans With Disabilities Act Compliance. The BSL Facilities
listed in Section 4.23 of the Company Disclosure Letter are being constructed by
or on behalf of BSL and all such construction has been in full compliance with
the Americans with Disabilities Act (the "ADA"). None of the Company, BSL, CMC
or any BSL Partnership has received any notice to the effect that, or has
otherwise been advised that, any of the BSL Facilities or the BSL Managed
Facilities is not in compliance with the ADA.
4.24. Undisclosed Liabilities. The Company has not failed to disclose
to the Purchaser any liabilities--whether fixed or contingent--actually known to
it as of the date hereof and not otherwise disclosed or taken into account in
the Company Financial Statements or in the schedules or exhibits hereto or the
Company Disclosure Letter.
4.25. Material Misstatements Or Omissions. No representations or
warranties by the Company or BSL in this Agreement nor any document, exhibit,
statement, certificate, schedule or other information furnished or to be
furnished to Purchaser (or its members) pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
necessary to make the statements or facts contained therein not misleading.
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4.26 Development Projects. In connection with the Development Projects,
the Company and BSL represent and warrant as follows:
(a) A true and correct copy of each construction contract for the
Development Projects (including all change orders thereto) has been delivered to
Purchaser for its approval and acceptance as to form and content. Neither the
Company nor BSL has received or anticipates receiving, from any contractor, any
notice of default or notice of intention to suspend or not to commence any work.
(b) The Approved Budgets for Development Projects have been prepared by
BSL and reflect BSL's estimation of the total costs and expenses to be incurred
in connection with the Development Projects after taking into account the
requirements of this Agreement. The construction schedule for the Development
Projects is realistic and feasible.
(c) Neither the Company nor BSL has directly or indirectly conveyed,
assigned or otherwise disposed of or transferred (or agreed to do so) any
development rights, entitlements, permits or other similar development rights
with respect to the Development Projects, including those rights, entitlements,
permits, privileges or attributes arising under any zoning or land use ordinance
or other Governmental authorization or requirement, except assignments required
for the existing financing of the Development Projects, including without
limitation sale/leaseback financing.
ARTICLE V
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser does hereby represent and warrant to the Company and to BSL
as follows:
5.01. Organization and Qualification.
(a) Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. Purchaser
has, or as of Closing will have, full power and authority under the Delaware
Limited Liability Company Act to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, including the
assets and properties to be acquired by it pursuant to the terms of this
Agreement
(b) Purchaser is or prior to the Closing Date will be duly qualified to
do business in, and validly existing and/or in good standing under the laws of,
Oregon and each of the states listed in Section 4.01(c) of the Company
Disclosure Letter.
(c) Purchaser does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, limited
liability company, joint venture or other business association or entity.
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5.02. Authority Relative to this Agreement. Purchaser has full power
and authority as a Delaware limited liability company to enter into this
Agreement and each other instrument, document and agreement necessary to
consummate the transactions contemplated hereby, and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby have been duly and validly approved by the Executive Committee of
Purchaser and no other proceedings on the part of Purchaser as a Delaware
limited liability company or its members are necessary to authorize the
execution, delivery and performance of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes a legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.03. Approvals and Consents. Subject to obtaining such consents or
making such filings as are referred to in Section 4.04 hereof or in Section 4.04
of the Company Disclosure Letter, the execution and delivery of this Agreement
by Purchaser does not, and the performance by Purchaser of its obligations
hereunder and the consummation of the transactions contemplated hereby will not:
(a) conflict with, result in a violation or breach of, constitute (with
or without notice or lapse of time or both) a default under, result in or give
to any person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or of notice under, any agreement, contract,
lease, license, permit, note, instrument or other document to which Purchaser is
a party or by which it is bound or to which any of the assets or properties of
Purchaser are subject; or
(b) violate any Laws or Orders of any Governmental Authority applicable
to Purchaser or any of its assets or properties, or the Operating Agreement; or
(c) require any consent, approval or action of, or permit from, or
filing or registration with or notice to any Governmental Authority or other
public or private third party.
5.04. Legal Proceedings. There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Purchaser, threatened against,
relating to or affecting, nor to the knowledge of Purchaser are there any
investigations or audits by Governmental Authorities pending or threatened
against, relating to or affecting Purchaser or any of its assets and properties.
5.05. Information Supplied. Each document filed by Purchaser with any
Governmental Authority in connection with this Agreement and the other
transactions contemplated hereby,
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solely to the extent based on information provided by Rockwood Living, Inc.,
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
5.06. Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or person has been engaged by it and is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee from it in connection with any of the transactions contemplated by this
Agreement.
ARTICLE VI
PRE-CLOSING COVENANTS
6.01. Company. The Company covenants, between the date hereof and the
Closing, that:
(a) BSL, CMC and the Company shall conduct the BSL Senior Living
Business and pursue the Development Projects in the ordinary course consistent
with past practices and preserve intact their business organization, keep
available the services of their officers and employees in the ordinary course of
business and use their commercially reasonable best efforts to maintain
satisfactory relationships with suppliers, distributors, customers and others
having business relationships with them.
(b) None of the Company and its Subsidiaries (with respect to the BSL
Senior Living Business), BSL, CMC or any BSL Partnership shall commit or omit to
do any act that would cause a breach of any agreement, commitment or covenant of
any of them contained in this Agreement or cause the representations and
warranties as set forth in this Agreement to become untrue in any material
respect as of the Closing Date.
(c) Except with respect to the assets which are the subject of the
Excluded Assets Transaction, none of the Company, its Subsidiaries, BSL, CMC or
any BSL Partnership shall make any material change in the operation of the BSL
Senior Living Business or sell or agree to sell all or any portion of the BSL
Senior Living Business or the assets thereof (other than sales of machinery,
equipment and inventory in the ordinary course of business) or otherwise enter
into, terminate, modify or amend any agreements materially affecting any of the
Facilities or the operation thereof, without the prior written consent of
Purchaser which consent, in the case of terminations, modifications to or
amendments of any such agreements shall not be unreasonably withheld.
(d) Except with respect to the assets which are the subject of the
Excluded Assets Transaction, each of BSL, CMC and the BSL Partnerships shall
maintain its assets, and the Company shall maintain the Related Assets, in the
same condition as they are in at the date hereof, ordinary wear and tear,
insured casualty loss and taking by eminent domain excepted.
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(e) Except in connection with the Development Projects, none of BSL,
CMC or any BSL Partnership shall purchase an equity interest in, or the assets
of, any corporation, partnership or other entity, or create or permit any Lien
on any asset, except for Permitted Exceptions, or create, assume, incur or
guarantee any Debt.
(f) Except in the ordinary course of business and consistent with past
practice, there shall be no increase in the compensation of any of the Personnel
or any consultant, nor shall there be any new employment, severance or other
agreement with any of the Personnel or any consultant (other than any such
agreements executed by the Purchaser).
(g) During normal business hours, the Company and BSL will provide
Purchaser, its agents and employees (or cause them to be provided) with access
on twenty-four (24) hours notice to the books and records of the Company and its
Subsidiaries, BSL, CMC and the BSL Partnerships to the extent related to the BSL
Senior Living Business, provided they do not unreasonably interfere with the
operations of the Company or its Subsidiaries or BSL.
(h) None of the Company or its Subsidiaries or BSL, and none of the
officers, directors, advisors or others authorized to act on behalf of any of
them shall directly initiate or solicit discussions relating to any alternative
acquisition proposal or similar transaction including, without limitation, a
merger or other business combination involving, to any extent, BSL, CMC or any
BSL Partnership or offer to acquire or convey in any manner, directly or
indirectly, all or substantially all of the equity interest in, or the voting
securities of, the Company, BSL, CMC or any BSL Partnership or the assets of any
them (limited in the Company's case to the stock of BSL and the Related Assets),
provided, however, that public announcements of the transaction contemplated by
this Agreement and responses to inquiries received thereafter shall not be
prohibited hereby and that the Company shall not be deemed to be in breach of
its obligations hereunder in the event the Board of Directors determines, prior
to the approval of the transactions provided for herein and of the Excluded
Assets Transaction, the Freedom Village Transaction and the Healthcare
Transaction by the shareholders of the Company, in the exercise of its fiduciary
duties, that the Company is required to provide information in response to any
acquisition or merger proposals or discussions which are initiated by a third
party; and provided, further, that nothing herein shall be construed as
prohibiting the Company from pursuing the pending negotiations with respect to
the Healthcare Transaction or the Excluded Assets Transaction.
(i) Except as required for the reincorporation of BSL in the State of
Delaware, if the parties agree to do so before Closing as provided herein,
neither the Articles of Incorporation nor the Bylaws of any of BSL or CMC nor
the BSL Partnership Agreements shall be amended without the prior consent of the
Purchaser, which consent shall not be unreasonably withheld.
(j) The Company shall promptly submit this Agreement and the
transactions contemplated herein, including the Healthcare Transaction and the
Excluded Assets Transaction, for approval by, at a meeting of, its shareholders.
Subject to its fiduciary duties under applicable
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law, the Board of Directors of the Company has agreed to recommend to its
shareholders approval of the Merger and the Related Assets and Liabilities
Transaction, the Freedom Village Transaction, the Healthcare Transaction and
Excluded Assets Transaction. Subject to the fiduciary duties of the Board of
Directors of the Company under applicable law, the Company shall use its
reasonable efforts to obtain its shareholders' approval and adoption of this
Agreement and the transactions contemplated hereby. Subject to the notice
requirements of the Oregon Act, such meeting shall be held as soon as
practicable following the execution of this Agreement.
(k) None of BSL, CMC and the BSL Partnerships shall declare or pay any
dividend or other distribution to the Company or any other person, except in the
case of a BSL Partnership, in accordance with the applicable BSL Partnership
Agreement.
(l) During construction of the Development Projects, the Company and
BSL shall maintain or cause to be maintained the following insurance coverages
relating to the Development Projects, which will be effective no later than the
date of commencement of construction:
(1) builder's risk (or equivalent coverage) insurance upon any
work done or materials furnished under the construction contracts except
excavations, foundations and any other structures not customarily covered by
such insurance, such policies to be written in completed value form for 100% of
the insurable value of the improvements therefor;
(2) workers' compensation and employer's liability insurance
covering all Personnel and employees of contractors and subcontractors in
amounts required by law;
(3) automobile liability insurance covering owned, nonowned
and hired automobiles of contractors and subcontractors in an amount not less
than $1,000,000 combined single limit; and
(4) commercial general liability insurance, including umbrella
coverage, with combined coverage in amounts not less than $1,000,000 liability
for personal injury for each occurrence and $2,000,000 in the aggregate and
$1,000,000 for property damages for each occurrence and $2,000,000 in the
aggregate.
(m) The Company and BSL shall provide and continuously maintain
insurance coverages for the BSL Senior Living Business in such amounts and types
as are currently maintained by them.
(n) The Company and BSL shall promptly pay all costs, expenses and
obligations as and when due in respect of the Development Projects. Further, the
Company and BSL shall not amend or modify the Approved Budgets for Development
Projects without approval of Purchaser.
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(o) No construction of the Development Projects shall be undertaken
except as shown in and in accordance with the construction plans and
specifications approved by the Purchaser.
(p) The Company shall deliver to Purchaser promptly upon request the
names of all persons with whom the Company has contracted or intends to contract
for any material work on the Development Projects. No change orders for any of
the Development Projects shall be effective without the prior written approval
of Purchaser, except any change order that does not (i) extend the completion
date, (ii) involve an increase in the approved construction cost of more than
$5,000 for any one item or $10,000 in the aggregate, or (iii) adversely affect
the exterior of the improvements or otherwise adversely affect any aspect of the
aesthetics of the improvements. Notwithstanding the foregoing, all change orders
with respect to the DeAnza and Mesa Development Projects shall require
Purchaser's approval if the Company wishes to seek reimbursement therefor under
the Advance Reimbursement provisions hereof. The Company shall not suffer or
permit any breach or default to occur in any of the obligations of the Company
or BSL under any construction contract or contracts with the architects or the
engineers or any other contract necessary for the continued full ownership,
construction, operations, maintenance and enjoyment of the Development Projects,
nor shall the Company suffer or permit the same to terminate by reason of any
failure of the Company or BSL to meet any requirements thereof whatsoever.
(q) All monies sought to be reimbursed to the Company in respect of the
Advance Reimbursement shall have been used (to the extent provided in the
definition of Advance Reimbursement) to acquire, construct, or develop the
Development Projects in accordance with the Approved Budgets for Development
Projects, and on Closing Purchaser shall receive lien waivers, releases or
subordinations in form and substance reasonably satisfactory to Purchaser in
respect of all expenditures included in the Advance Reimbursement for which such
lien waivers, releases or subordinations are appropriate.
(r) The Company and BSL shall promptly notify Purchaser of the
occurrence or existence of any event or circumstance which is or could
reasonably be expected to be a breach of the representations, warranties and
covenants of the Company and BSL relating to the Development Projects.
(t) The Company shall prepare and file all returns for Taxes of the
Company and its Subsidiaries for all taxable years and other periods ending on
or prior to or including the Closing Date.
6.02. Purchaser. Purchaser covenants that, without the prior written
consent of the Company, between the date hereof and the Closing:
(a) It shall not commit or omit to do any act that would cause a breach
of any agreement, commitment or covenant contained in this Agreement or cause
the Purchaser's representations and warranties as set forth in this Agreement to
become untrue in any material
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respect as of the Closing Date; and
(b) Purchaser shall cause replacement letters of credit to be issued
with respect to the letters of credit listed in Paragraph 10 of Schedule 4.12 of
the Company Disclosure Letter, on or before the Closing Date.
6.03. Mutual Covenants. Following the execution of this Agreement and
until the Closing Date:
(a) The Company and Purchaser shall cooperate with each other and use
their commercially reasonable efforts to procure all necessary and appropriate
consents and approvals, complete and file all necessary and appropriate
applications, notifications, filings and certifications, satisfy all
requirements prescribed by law for, and all conditions set forth in this
Agreement to, the consummation of the transactions contemplated hereby (without
conditions adverse to any of the Purchaser, the Company or any of its
Subsidiaries, BSL, CMC, the BSL Partnerships and the Surviving Entity).
(b) At least 5 days prior to the Closing Date, the Independent
Accountants shall review and comment upon a schedule which will be prepared by
BSL allocating the Merger Consideration and the Related Assets Consideration
among the BSL Assets and the Related Assets, which schedule when completed will
be attached to this Agreement as Schedule 12. The Independent Accountants' fees
and expenses in connection with preparing such allocation schedule will be paid
by the Company pursuant to Section 12.7 hereof.
(c) The Company and Purchaser shall deliver such other instruments of
title, certificates, consents, endorsements, assignments, assumptions and other
documents or instruments, in form reasonably acceptable to the party requesting
the same and its counsel, as may be reasonably necessary to carry out and/or to
comply with the terms of this Agreement and the transactions contemplated
herein;
(d) The Company and Purchaser shall confer with each other on a regular
basis, report on material operational matters and promptly advise the other
orally and in writing of any change or event having, or which, insofar as can
reasonably be foreseen would have, a material adverse effect on such party or on
BSL, CMC, a BSL Partnership or the Surviving Entity, or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of such party contained herein;
(e) The Company and Purchaser shall promptly provide each other (or its
counsel) with copies of all filings made by such party with any state or federal
governmental entity in connection with this Agreement or the transactions
contemplated hereby.
(f) Each of the Company, BSL and Purchaser will use its commercially
reasonable efforts to obtain prior to the Closing Date all permits, consents,
approvals, authorizations,
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licenses and other orders (and make such filings with any third party or
Governmental Authority) (the "Third Party Consents") that each such party is
required to obtain (or make) in order to permit (without conditions adverse to
any of them or to CMC, any BSL Partnership or the Surviving Entity) the
consummation of the Merger and other transactions contemplated by this Agreement
(including, but not limited to, such licensure and certification approval in
each of the states in which the Facilities are located as may be necessary to
enable Purchaser to consummate the Merger) and the consent of lenders, lessors
and other third parties (without conditions adverse to any of them or to CMC,
any BSL Partnership or the Surviving Entity) to the extent required under any
loan documents, lease agreements, management agreements, partnership agreements
or other instruments or documents to which the Company or its Subsidiaries (with
respect to the BSL Senior Living Business), BSL, CMC or any BSL Partnership is a
party. Each of the Company, BSL and Purchaser shall reasonably cooperate with
each other (not including incurring any substantial additional liabilities or
obligations, other than costs and expenses which another party has agreed to
reimburse) in connection with a party's efforts to obtain Third Party Consents
which it is required to obtain; provided, however, nothing herein shall be
construed as requiring Purchaser or any member thereof to provide a guaranty or
other security in order to obtain said Third Party Consents.
(h) The parties shall consult with each other prior to the issuance by
either party of any press release or any written statement with respect to this
Agreement or the transaction contemplated hereby.
ARTICLE VII
PURCHASER CONDITIONS
7.01. The obligation of Purchaser to consummate the Merger and the
Related Assets and Liabilities Transaction is subject to the fulfillment, or to
the Purchaser's written waiver thereof, prior to or at the Effective Time, of
each of the following conditions:
(a) The representations and warranties of the Company and BSL contained
in this Agreement or in any certificate or document delivered in connection with
this Agreement or the transactions contemplated herein shall be true and correct
at and as of the Closing Date as though such representations and warranties were
then again made, except for any breaches thereof or inaccuracies therein as
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) The Company shall have performed and complied in all material
respects with all covenants, conditions and agreements contained herein required
to be performed or complied with by the Company prior to or at the Closing.
(c) Except for such licenses to be issued or transferred by
Governmental Authorities as may be required in connection with the operation of
the Facilities but which cannot be obtained until after Closing occurs as a
result of the applicable rules, procedures and practices
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governing the transfer of facilities such as the Facilities and the re-licensure
thereof in the name of the new owner or operator thereof, either (i) no permits,
consents, approvals, authorizations, licenses or other orders or filings with
any third party or any Governmental Authority shall be necessary in connection
with the authorization, execution, delivery and performance by the Company or
BSL of all documents in connection with the Merger and the Related Assets and
Liabilities Transaction, or (ii) the Company or BSL shall have obtained all such
permits, consents, approvals, authorizations, licenses or other orders (without
conditions which would materially adversely affect the Purchaser, BSL, CMC, any
BSL Partnership or Surviving Entity) or made such filings with such third
parties or Governmental Authorities as are necessary to obtain all such permits,
consent approvals, authorizations or other orders (without conditions which
would materially adversely affect the Purchaser, BSL, CMC, any BSL Partnership
or Surviving Entity).
(d) The Company shall have delivered (i) a certificate of legal
existence, as of a date within ten (10) days of the Closing Date, of each of BSL
and CMC by the Secretary of State of Oregon, (ii) a certificate of legal
existence or good standing issued by the Secretary of State in the state of
formation for each BSL Partnership, and (iii) a certificate of legal existence
or good standing for each of BSL and CMC issued by the Secretary of State (or
applicable Governmental Authority) in every other state in which either of them
is doing business.
(e) The Company shall have delivered to Purchaser fully executed (i) in
the case of GECC, General Electric Real Estate Credit Corporation ("GERECC") and
Claremont Management Company, a document in the form attached as Exhibit C-1
hereto, (ii) in the case of GECC, a document in the form attached as Exhibit
C-2, (iii) in the case of Health Care Properties Investors, Inc. documents
substantially in the form attached as Exhibit C-3, C-4, and C-5 hereto, (iv) in
the case of Nationwide Health Properties, Inc., documents in the form attached
as Exhibits C-6, C-7 and C-8 hereto, (v) in the case of the limited partners of
Calaroga Terrace Limited Partnership and Carpenters Creek Limited Partnership,
ballots in the form attached as Exhibit C-9 and C-10 hereto, respectively,
evidencing the affirmative vote and consent of the requisite number of limited
partners (as required by the applicable partnership agreement) to the
transactions contemplated hereby, (vi) in the case of the members (other than
BSL) of the DeAnza Alzheimer's Care Facility, LLC, a document in the form
attached as Exhibit C-11 hereto, (vii) in the case of each BSL Partnership
which is a landlord under a BSL Lease, documents in the form attached as
Exhibits C-12 and C-13 hereto, and (viii) in the case of each owner under a BSL
Management Contract, a document substantially in the form attached as Exhibit
C-14 hereto provided, however, that if any such owner which is not controlled
by one or more Key Employees or affiliates thereof, fails or refuses to execute
such a document, the Company, in substitution therefor, shall execute and
deliver to Purchaser a statement in form and substance reasonably acceptable to
Purchaser with respect to the matters set forth in the form, of such document),
and (ix) in the case of GERECC, a document in the form attached as Exhibit C-16
hereto.
(f) The Company shall have delivered to Purchaser evidence that the
intercompany
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liability of the Company owing to BSL has been paid in full. The Company and BSL
represent that the amount of such a liability was $2,198,785.00 as of June 30,
1996.
(g) The Company shall have delivered to Purchaser an opinion of counsel
to the Company, dated as of the Closing Date, in form and substance satisfactory
to the Purchaser, as to customary matters. In rendering such opinion, counsel
may rely as they deem advisable as to factual matters, upon certificates and
assurances of public officials and officers of the Company and BSL.
(h) The Company shall furnish the Purchaser with certificates
evidencing compliance with the conditions set forth in this Article 7 as may be
reasonably requested by Purchaser.
(i) Each of the Company and BSL shall have delivered to the Purchaser a
secretary's certificate certifying the truth and completeness of (i) director
and stockholder corporate resolutions, fully and properly executed, evidencing
authorization of the Company or BSL, and the Agent, as the case may be, to
execute, deliver and perform under the terms of this Agreement, including the
Other Required Agreements and the exhibits hereto, which resolutions shall be
attached to said certificate, and (ii) BSL's articles of incorporation and
bylaws, copies of which shall also be attached to said certificate.
(j) No order shall be in effect restraining, enjoining or otherwise
preventing the Closing.
(k) The following agreements shall be executed and delivered to
Purchaser by the other parties thereto prior to or at the Closing (collectively,
the "Other Required Agreements"):
(i) a Lease Agreement in form attached hereto as Exhibit D
duly executed by an individual authorized to act on behalf of the Company
effective immediately after the closing of the Healthcare Transaction;
(ii) a Shared Services Agreement in the form attached hereto
as Exhibit E duly executed by an individual authorized to act on behalf of the
Company effective immediately after the closing of the Healthcare Transaction;
(iii) the Company shall have delivered or caused to be
delivered Non-Competition Agreements in the form attached hereto as Exhibit F
duly executed by Messrs. X. X. Xxxx, Xxxx Xxxxxx and Xxxxxx Xxxxxx; and
(iv) the Escrow Agreement.
(l) General Electric Credit Equities, Inc. shall have released its
security interest in BSL's special limited partnership interest in the
Xxxxxxxxx'x Creek Partnership, by the execution of the release and related
documents in the forms attached hereto as Exhibit X-00 xxxxxx.
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(x) The Freedom Village Transaction and the Excluded Assets Transaction
shall be consummated or all of the documents and consideration necessary for the
consummation thereof shall have been executed and delivered into escrow and the
only condition for the release of said documents and consideration from escrow
shall be the confirmation that the Merger and Related Assets and Liabilities
Transaction have been consummated or the parties hereto are prepared to
consummate the same, there being no other terms or conditions to which
consummation of the same are subject.
(n) Intentionally Omitted.
(o) The Operating Agreement shall not have terminated due to any action
taken by any of the Members thereof other than Rockwood Living, Inc.
(p) There shall not have occurred any event or events constituting or
having after June 30, 1996, either individually or in the aggregate, a Material
Adverse Effect.
(r) Each of X. X. Xxxx, Xxxxx X. Xxxxxxxx and K. Xxxxx XxXxxxxxxx shall
have executed and delivered to the Purchaser a Section 7.O1(r) Agreement in the
form attached hereto as Exhibit G.
ARTICLE VIII
COMPANY CONDITIONS
8.01. The obligation of the Company to consummate the Merger and the
Related Assets and Liabilities Transaction is subject to the fulfillment, or to
the Company's written waiver thereof, prior to or at the Effective Time, of each
of the following conditions:
(a) The representations and warranties of the Purchaser contained in
this Agreement or in any certificate or document delivered in connection with
this Agreement or the transactions contemplated herein shall be true in all
material respects at and as of the Closing Date as though such representations
and warranties were then again made.
(b) The Purchaser shall have performed and complied in all material
respects with all covenants, conditions and agreements contained herein required
to be performed or complied with by the Purchaser prior to or at the Closing.
(c) Purchaser shall have caused replacement letters of credit to be
issued with respect to the letters of credit listed in Paragraph 10 of Schedule
4.12 of the Company Disclosure Letter.
(d) Except for such licenses to be issued or transferred by
Governmental Authorities as may be required in connection with the operation of
the Facilities but which cannot be obtained until after Closing occurs as a
result of the applicable rules, procedures and practices governing the transfer
of facilities such as the Facilities and the re-licensure thereof in the name
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of the new owner or operator thereof, either no permits, consents, approvals,
authorizations, licenses or other orders or filings with any third party or any
governmental authority shall be necessary in connection with the authorization,
execution, delivery and performance by the Company or BSL of all documents in
connection with the Merger and the Related Assets and Liabilities Transaction,
or, except to the extent failure to do so would not have a Material Adverse
Effect, the Company or BSL shall have obtained all such permits, consents,
approvals, authorizations, licenses and other orders (without conditions which
would be materially adverse to the Surviving Entity) or made such filings with
such third parties or Governmental Authorities as are necessary to obtain all
such permits, consents, approvals, authorizations or other orders (without
conditions which would be materially adverse to the Surviving Entity) provided,
however, that the foregoing shall not be a condition to the Company's obligation
to close in the event the Purchaser waives the Company's inability to secure the
same and from and after the Closing indemnifies, defends and holds harmless the
Company from and against any Losses which it may incur as a result thereof.
(e) Purchaser shall have delivered a certificate of legal existence
and/or of good standing as of a date within ten (10) days of the Closing Date
issued by the Secretary of State of Delaware and of every other state in which
BSL was doing business immediately prior to the Closing.
(f) The Operating Agreement shall not have terminated due to any action
taken by Rockwood Living, Inc. or its failure to take any action it is obligated
to take.
(g) Purchaser shall have delivered to the Company an opinion of counsel
to Purchaser, dated as of the Closing Date, in form and substance satisfactory
to the Company, as to customary matters. In rendering such opinion, counsel may
rely as they deem advisable as to factual matters, upon certificates, and
assurances of the Purchaser and public officials, and as to matters governed by
Oregon law Purchaser's counsel may assume that Oregon law is the same as
Illinois law.
(h) The Purchaser shall furnish the Company with certificates
evidencing compliance with the conditions set forth in this Article 8 as may be
reasonably requested by the Company.
(i) The Purchaser shall have delivered to the Company a Member's
certificate certifying the truth and completeness of (i) resolutions, fully and
properly executed, evidencing authorization of the Purchaser to execute, deliver
and perform under the terms of this Agreement, including the Other Required
Agreements and the exhibits hereto, which resolutions shall be attached to said
certificate; and (ii) Purchaser's Certificate of Formation, a copy of which
shall also be attached to said certificate.
(j) No order shall be in effect restraining, enjoining or otherwise
preventing the Closing.
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(k) The Purchaser shall have executed and delivered to the Company the
Other Required Agreements.
(l) The Freedom Village Transaction shall be consummated or all of the
documents and consideration necessary for the consummation thereof shall have
been executed and delivered into escrow and the only condition for the release
of said documents and consideration from escrow shall be the confirmation that
the Merger and Related Assets and Liabilities Transaction have been consummated
or the parties hereto are prepared to consummate the same, there being no other
terms or conditions to which consummation of the same are subject (provided that
the Company's or BSL's failure to execute and deliver any documents that they
are required to execute and deliver pursuant to the agreements relating to the
Freedom Village Transaction shall not excuse the Company's or BSL's performance
hereunder).
(m) The Healthcare Transaction shall be consummated or all of the
documents and consideration necessary for the consummation thereof shall have
been executed and delivered into escrow and the only condition for the release
of said documents and consideration from escrow shall be the confirmation that
the Merger and Related Assets and Liabilities Transaction have been consummated
or the parties hereto are prepared to consummate the same, there being no other
terms or conditions to which consummation of the same are subject (provided that
the Company's or BSL's failure to execute and deliver any documents that they
are required to execute and deliver pursuant to the agreements relating to the
Healthcare Transaction shall not excuse the Company's or BSL's performance
hereunder).
ARTICLE IX
POST-CLOSING COVENANTS
9.01. Certain Gain Recognition. The Company and BSL will recognize, on
the Company's consolidated federal income tax return for taxable year 1996, a
gain equal to the amount of the goodwill and going concern value of the Company
and BSL transferred to the Purchaser as a result of the Merger and the Related
Assets and Liabilities Transaction (and each of the Company and BSL shall make
the election required by Section 197(f) of the Code). The amount of such
goodwill and going concern value will be determined in accordance with the
allocation of the purchase price contemplated by Section 6.03(b) hereof. The
Company agrees to recognize and pay federal income tax at a 35% rate on the
amount of gain specified in this paragraph, notwithstanding any loss, deduction,
credit or other allowance or offset to which it may otherwise be entitled under
any provision of the Code or the regulations promulgated thereunder.
ARTICLE X
TERMINATION
10.01. Termination. This Agreement may be terminated by the parties
hereto upon the
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following conditions:
(a) By mutual consent of the parties;
(b) By Purchaser, if the conditions to Closing set forth in Section
7.01 have not been satisfied or waived by the Outside Closing Date.
(c) By the Company if the conditions to Closing set forth in Section
8.01 have not been satisfied or waived by the Outside Closing Date.
10.02. Rights on Termination. Each party's right of termination under
Section 10.01 of this Agreement is in addition to any other rights it may have
under this Agreement or otherwise and the exercise of a right of termination
will not be an election of remedies. If this Agreement is terminated pursuant to
Section 10.01, all further obligations of the parties under this Agreement will
terminate, except that the obligations under Section 12.07 of this Agreement and
under the Confidentiality Agreement dated May 8, 1996 (the "Confidentiality
Agreement") will survive; provided, however, that if this Agreement is
terminated by a party because of a breach of this Agreement by the other party
then except as provided in Section 10.03 hereof the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
10.03. Default Fee. As security for the obligations of Purchaser
hereunder, Rockwood Living, Inc. has deposited with Key Bank of Oregon
concurrently with the execution of this Agreement cash or its irrevocable letter
of credit in the face amount of $250,000 issued by Bank of America (Illinois),
N.A. In the event this Agreement is terminated by the Company as a result of a
breach by Purchaser of its obligations under this Agreement or the obligations
of the purchaser in the Freedom Village Transaction, the Company's sole remedy
in the event of such breach shall be to draw against the Letter of Credit and
the amount drawn shall constitute liquidated damages. Purchaser and the Company
acknowledge and agree that this Section 10.03 shall be the Company's exclusive
remedy with respect to the Merger, the Related Assets and Liability Transaction
and all other transactions contemplated by this Agreement in the event such
transactions are not consummated.
ARTICLE XI
INDEMNIFICATION
11.01. By Purchaser. In the event the Closing occurs, then from and
after the Closing Purchaser shall defend, indemnify and hold harmless the
Company from any Losses arising from or attributable to (i) claims made by third
parties against the Company for payment or satisfaction of liabilities or
obligations related to the assets, liabilities, operations and business of the
BSL Senior Living Business (except to the extent such liabilities or obligations
are by the express provisions of Sections 11.02(a)(i), (b) or (c) of this
Agreement or provisions of the agreements relating to the Freedom Village
Transaction the liability or responsibility of Company), and (ii) the operations
of the Surviving Entity after the Closing Date.
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11.02. By Company. In the event the Closing occurs, then from and after
the Closing:
(a) The Company shall indemnify and hold harmless the Purchaser, CMC
and the Surviving Entity against all Losses incurred by any or all of them
arising from:
(i) liabilities and obligations of the Company and its
Subsidiaries, including liabilities and obligations related to the assets,
operations, liabilities and business that are retained by, or the liability or
responsibility of the Company pursuant to the Healthcare Transaction but
specifically excluding liabilities, obligations and Losses (x) which are the
responsibility of the Purchaser under Section 11.01 hereof; or (y) which relate
to the assets or liabilities which are the subject of the Excluded Assets
Transaction (except to the extent such liabilities and obligations are by the
express terms of the agreement relating to the Excluded Asset Transaction the
liability or responsibility of the Company), and
(ii) a breach by the Company or BSL of its representations and
warranties, or a breach by the Company of its covenants, set forth in this
Agreement.
(b) Without limiting in any way the obligations of the Company under
Section 11.02(a) hereof, and notwithstanding any limitation contained in any
provision of this Agreement (including, without limitation, Section 11.05
hereof), the Company shall indemnify and hold harmless the Purchaser, CMC and
the Surviving Entity against:
(i) all Income Taxes of the Company and its Subsidiaries,
including BSL and CMC, for each taxable year or other period ending on or
before or including (for the portion of the taxable year through the close of
business on) the Closing Date, including, without limitation, all Taxes that
may be or become payable in respect of the matters described in Section 4.14 of
the Company's Disclosure Letter; and
(ii) all Taxes of the Company and its Subsidiaries, including
BSL and CMC, attributable to the transactions contemplated by this Agreement,
including the Merger, the Related Assets and Liabilities Transaction, the
Healthcare Transaction, the Excluded Assets Transaction, the Freedom Village
Transaction and the Limited Partnership Transaction, and also including the
federal Income Taxes the Company has agreed to pay as provided in Section 9.01
hereof; and
(iii) any breach by the Company of its obligations under
Section 6.01(k), Section 9.01 or Section 12.07 hereof; and
(iv) any dissenters' rights or other claims by former
shareholders of the Company exercising dissenter's rights in connection with
the fairness of the consideration paid in the transactions contemplated by this
Agreement.
(c) Without limiting in any way the obligations of the Company under
Section
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11.02(a) hereof, and notwithstanding any limitation contained in any provision
of this Agreement, including, without limitation, Section 11.05 hereof, the
Company shall pay to the Purchaser any amount previously paid by the Purchaser
to the Company as an Advance Reimbursement, which did not qualify or should not
have been treated as an Advance Reimbursement and which Purchaser sets forth in
a notice of claim relating thereto delivered to the Company within 120 days
after the Closing Date.
11.03. Procedures.
(a) Third Party Claims--in General. A person seeking indemnification
under this Article 11 (the "Indemnified Party") shall give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any third party claim or the commencement of any third party suit,
action or proceeding in respect of which indemnity may be sought under this
Article 11 (collectively, a "Third Party Claim"), provided, however that delay
in giving any such notice shall relieve the Indemnifying Party of its
obligations in respect of the Third Party Claim only to the extent the delay
results in actual prejudice to the Indemnifying Party. If a Third Party Claim is
covered by the indemnity under Section 11.02 above, other than items referred to
in Section 11.02(a)(i), (b) or (c) hereof references herein to the Indemnifying
Party shall be deemed to refer to the Agent, and Purchaser will give a Loss
Notice (as defined below) to the Escrowee and to the Agent in respect of such
claim. If a Third Party Claim is covered by the indemnity in Section
11.02(a)(i), (b) or (c) hereof, references to the Indemnifying Party shall be
deemed to refer to the Company, and Purchaser will give a Loss Notice (as
defined below) to the Company in respect of such claim. The Indemnifying Party
shall have the right to participate in and control the defense of any such Third
Party Claim, including any suit, action or proceeding relating thereto, at its
own expense. If requested by the Indemnifying Party, the Indemnified Party shall
reasonably and in good faith cooperate with the Indemnifying Party and its
counsel in contesting any claim which the Indemnifying Party elects to contest,
including, without limitation, the making of any related counterclaim against
the person asserting the Third Party Claim or any cross complaint against any
person or providing related statements or testimony. If the Indemnifying Party
does not notify the Indemnified Party in writing within twenty (20) business
days of the Indemnifying Party's receipt of such Loss Notice of its intent to
assume the defense of the Third Party Claim, the Indemnified Party shall be
entitled to take control of such Third Party Claim and the defense thereof at
the Indemnifying Party's cost and expense (provided that the Indemnifying Party
was obligated to indemnify the Indemnified Party hereunder, and further provided
that if such Third Party Claim is subject to the limitations described in
Paragraph 11.05 hereof, then only to the extent of any funds on deposit in the
Escrow Account as provided in Paragraph 11.05), which Third Party Claim shall be
diligently prosecuted to a final conclusion or settlement provided, however,
that the Indemnified Party may settle such Third Party Claim as it may deem
appropriate, in its discretion. The Indemnifying Party shall not be liable under
this Article 11 for any settlement effected without its consent of any Third
Party Claim or any litigation or proceeding in respect thereof, for which
indemnity may be sought hereunder, except for any settlement as to which the
Indemnifying Party did not assume the defense and for which the Indemnifying
Party was obligated to indemnify hereunder.
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(b) Additional Provisions Applicable to Third Party Claims and Breaches
of Representations. Warranties or Covenants subject to Section 11.02(a)(ii). In
the event that any circumstances exist or any claim is made or threatened
against Purchaser after the Closing Date which the Purchaser believes has
resulted or will result in the Purchaser incurring a Loss that is subject to the
Company's indemnification obligation in Section 11.02(a)(ii) hereof:
(i) Purchaser will promptly deliver to the Escrowee and to the
Agent written notice (the "Loss Notice") setting forth a reasonable summary of
the nature of the Loss and the facts giving rise thereto and specifying the
section of this Agreement to which such Loss relates and the amount thereof and,
if the Loss Notice involves a Third Party Claim, a copy of such claim and the
Purchaser's reasonable estimate of the amount sought by the third party.
(ii) The Agent shall have the right to dispute the Company's
responsibility for the Loss on behalf of the Former Holders by the delivery of
written notice (the "Dispute Notice") to the Escrowee within twenty (20)
business days after Purchaser's delivery of the Loss Notice to the Agent and the
Escrowee. If the Agent fails to deliver a Dispute Notice within such twenty (20)
business day period, or if the Agent timely delivers a Dispute Notice but does
not contest therein all the items included in the Loss Notice, the Escrowee
shall be authorized without further action by or approval of any party hereto to
disburse from the Escrow Account the amount which is the subject of the Loss
Notice (or the portion thereof that is not disputed in the Dispute Notice) to,
or as directed by, the Purchaser, except that in the case of a Loss Notice which
relates to a Third Party Claim, sufficient funds to cover the Losses which are
the subject thereof shall be retained by Escrowee in the Escrow Account until
the final resolution thereof however effected, including by the decision of a
court of competent jurisdiction (or by decision made upon arbitration or other
nonjudicial or quasi-judicial dispute resolution) or by a duly executed
settlement agreement, at which time the funds which are the subject of any such
Loss Notice(s) shall be disbursed in accordance with the terms of any such
order, decision or settlement, as applicable.
(iii) In the event the Agent submits a Dispute Notice within
the twenty (20) business day period provided for herein and the Agent and
Purchaser are unable to resolve their differences within twenty (20) business
days after the submission of a Dispute Notice, either the Agent or the Purchaser
may submit the matters which are the subject of the Loss Notice to arbitration
in accordance with the provisions of Section 11.04 hereof and the Escrowee, the
Agent and the Purchaser shall be bound by and shall act in accordance with the
determination of the arbitrator.
(iv) In the event of a Loss Notice which relates to a Third
Party Claim, the matter submitted to arbitration shall be limited to whether the
Third Party Claim involves the breach of a representation, warranty or covenant
by the Company or BSL hereunder, and the Dispute Notice shall state whether the
Agent intends to assume the defense of such Third Party Claim and/or whether the
Agent will permit the Purchaser and the Indemnified Parties to retain primary
responsibility for the settlement or the defense thereof, subject to the Agent's
right, at its
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expense, to retain counsel to monitor, but not to approve, any such defense or
settlement negotiations.
(v) The submission of a Dispute Notice to arbitration shall
not relieve the Agent of its obligation, at its expense, to defend any Third
Party Claim in the event it gives notice of its election to do so, unless and
until it is determined in such arbitration that the Third Party Claim does not
involve a breach of representation, warranty or covenant by the Company
hereunder.
(vi) In the event the arbitrator determines that a Loss Notice
which relates to a Third Party Claim is not the subject of an indemnifiable loss
under the terms of this Article 11, the Indemnified Party shall be required to
reimburse the Agent for any and all costs and expenses incurred in defending
such Third Party Claim until the Indemnified Party assumes the defense thereof,
which shall in no event occur later than ten (10) days after such determination
is made. In the event the arbitrator determines that a Loss Notice which relates
to a Third Party Claim is the subject of an indemnifiable loss under the terms
of this Article 11, the Arbitrator shall retain jurisdiction until a final
determination of said Third Party Claim by order of a court of competent
jurisdiction, by arbitration or other nonjudicial or quasi-judicial proceeding
or by a duly executed settlement agreement, at which time the arbitrator shall
order disbursement of the funds from the Escrow Account in accordance with such
order or settlement.
(c) Other Claims. Promptly upon learning of the grounds of a claim for
indemnification that is subject to Section 11.02(a)(i), (b) or (c) hereof, the
Purchaser shall deliver to the Company a Loss Notice specifying in reasonable
detail the grounds and amount of such claim. If such claim is not resolved in
sixty (60) days after such delivery, the Purchaser may exercise any rights and
pursue any remedies it may have hereunder, at law or otherwise in respect of
such claim directly against the Company.
11.04. Arbitration.
(a) Any matters which are the subject of the indemnity provisions of
this Article 11, other than a Loss Notice and Dispute Notice submitted with
respect to the representation set forth in Section 4.O5(b), shall be submitted
for resolution to arbitration in Portland, Oregon, or such other location as the
Purchaser and the Agent may agree to, under the Commercial Arbitration Rules of
the American Arbitration Association to which shall be added the provisions of
the Federal Rules of Civil Procedure relating to the Production of Evidence.
Such arbitration shall be presided over by a single arbitrator. If the Purchaser
and the Agent do not agree on the arbitrator within twenty (20) business days
after the delivery by Agent of a Dispute Notice, the arbitrator shall be
selected by them from a list of five potential arbitrators provided by the
American Arbitration Association. Such list shall be provided within 10 days of
the expiration of said twenty (20) business day period (or as soon thereafter as
the American Arbitration Association is able to do so), provided that if the
American Arbitration Association shall not have provided such list within twenty
(20) days after the expiration of said twenty (20) business day period, then
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the arbitrator shall be designated by the presiding judge of the county in which
such arbitration is held. The Agent shall delete one name from the list. The
Purchaser shall delete one name from the list. This process shall then be
repeated in the same order and the last remaining person on the list shall be
the arbitrator. This selection process shall take place within the two business
days following both parties' receipt of the list of five potential arbitrators.
Hearings in such arbitration proceeding shall commence within 20 days of the
selection of the arbitrator or as soon thereafter as the arbitrator is
available. The arbitrator shall deliver his or her opinion within 20 days after
the completion of the arbitration hearings. The arbitrator's decision shall be
final and binding upon the parties, and may be entered and enforced in any court
of competent jurisdiction by either of the parties.
(b) Any Loss Notice and Dispute Notice submitted with respect to the
representation set forth in Section 4.O5(b) as to which the parties fail to
reach agreement within ten (1O) business days from the date of delivery of the
Dispute Notice, will be submitted to the Independent Accountants for
determination. The Independent Accountants shall deliver to the Purchaser and
the Agent, as promptly as practicable, a written report setting forth their
determination of the disputed items, which determination shall be final,
conclusive and binding upon the parties, and shall not be subject to appeal to
any court or tribunal.
(c) Unless otherwise ordered by the arbitrator or the Independent
Accountants, the arbitrator's or the independent Accountants' expenses, as
applicable, shall be shared equally by the parties.
11.05 Limitation on Claims.
(a) Purchaser shall have no right to recover with respect to any Losses
until the amount of all such Losses is equal to or greater than $150,000
individually or in the aggregate (the "Loss Threshold"), except in the case of a
breach of the representation or warranty set forth in Section 4.05(b), as to
which the Purchaser shall be required to suffer or incur a loss in the amount of
$150,000 before any such claim can be made (the "Financial Statement Loss
Threshold"); provided, however, that to the extent that any Loss subject to the
Financial Statement Loss Threshold involves a breach of a representation or
warranty contained herein, other than in Section 4.05(b) hereof, such Loss shall
be applied in reduction of the Loss Threshold. The Purchaser shall only be
entitled to recover Losses suffered or incurred by it in excess of the Loss
Threshold or the Financial Statement Loss Threshold, as applicable, and in
addition the Purchaser shall not be entitled to be indemnified against any Loss
item under Section 11(a)(ii) hereof to the extent that it has previously
received payments on account of the identical loss item in respect of any breach
of the representation or warranty set forth in Section 4.05(b). Any and all
claims for the recovery of losses (other than claims against the Company under
Sections 11.02(a)(i), (b)(except as relates to Section 6.01(k) hereof) or (c)
hereof) must be brought by Purchaser within one year after the Closing Date, and
any claim for recovery of any Loss under Section 11.02(b)(iii) as relates to
Section 6.01(k) must be brought by Purchaser within eighteen months after the
Closing Date (in each case, the "Limitation Period"), except in
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the case of a breach of the representation and warranty set forth in Section
4.05(b), as to which any claims must be brought within sixty (60) days after the
Closing Date and shall be based solely upon an unaudited combined balance sheet
of BSL and CMC (giving effect to the transfers contemplated in the Related
Assets and Liabilities Transaction and the Excluded Assets Transaction but not
taking into account the effect of the Merger of BSL into the Purchaser), dated
as of the Closing on the Closing Date, prepared by or at the direction of
Purchaser in accordance with GAAP and otherwise on a basis consistent with the
Pro Forma Balance Sheet. Any claim against the Company under Section
11.02(a)(i), (b)(except as relates to Section 6.01(k) hereof) or (c) hereof
shall not be subject to any limitation set forth in this Section 11.05 and may
be brought (except as provided in Section 11.02(c) hereof) at any time prior to
the expiration of the statute of limitations applicable with respect to such
claim.
(b) Except for items referred to in Sections 11.02(a)(i), (b) or (c)
hereof, the Purchaser's recourse for any and all Losses pursuant to Section
11.02 shall be limited to the funds on deposit in the Escrow Account, as the
Escrow Account may be reduced by payments therefrom pursuant to the provisions
of this Agreement (or the agreement relating to the Freedom Village
Transaction). It understood and agreed that the Loss Threshold shall not apply
to the items referred to in Sections 11.02(a)(i), (b) or (c).
(c) Any and all funds remaining in the Escrow Account at the end of the
Limitation Period (the "Remaining Escrowed Funds"), including any remaining
interest income, shall be released in accordance with the Escrow Agreement;
provided, however, that as to any Loss Notices submitted prior to the expiration
of the Limitation Period in excess of the Loss Threshold or the Financial
Statement Loss Threshold, as applicable, which remain unresolved at the end of
the Limitation Period, sufficient funds to cover the Losses which are the
subject thereof shall be retained by Escrowee in the Escrow Account until the
final resolution thereof however effected, including in accordance with the
arbitration procedures set forth in Section 11.04, or, in the case of a Third
Party Claim by the decision of a court of competent jurisdiction (or upon
arbitration or other nonjudicial or quasi-judicial decision made) or by a duly
executed settlement agreement, at which time the funds which are the subject of
any such Loss Notice(s) shall be disbursed in accordance with the terms of any
such order, decision or settlement, as applicable.
11.06. Further Assurances. The parties agree to execute and deliver any
and all documents as may be reasonably requested by the Escrowee to evidence its
assumption of the duties and obligations provided for herein.
11.07. Mitigation. Each Indemnified Party will use reasonable efforts
to mitigate any Losses for which it may claim indemnification under this Article
11. Further, the indemnities provided by this Article 11 shall apply only to
Losses for which the Indemnified Party is not, or is not entitled to be,
reimbursed through third party insurance.
11.08. Adjustment of Merger Consideration. Amounts paid for
indemnification under this Article 11 shall be deemed to be an adjustment to the
Merger Consideration.
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11.09. Income Taxes. The Company acknowledges and agrees that the funds
in the Escrow Account shall be deemed for purposes of the tax laws to be the
property of the Purchaser and accordingly that Purchaser shall be required to
pay Income Taxes on any interest earned thereon. The Company further
acknowledges and agrees that the Purchaser shall have the right to withdraw from
interest earned on the Escrow Account sufficient funds to pay said Income Taxes
and that any interest on the Escrow Account available for disbursement pursuant
to the terms hereof shall be reduced by such amount.
11.10. Access to Books and Records. From the Closing Date until the
final determination of any matters which are the subject of a Loss Notice and a
Dispute Notice, the Agent and his representatives will have such access to the
books, records and accounts of the Purchaser and its employees as is relevant to
the resolution of such matters.
ARTICLE XII
MISCELLANEOUS
12.01. Notices. Any notice, request or other communication to be given
by any party hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, by overnight delivery, hand delivery or
facsimile transmission to the following address:
To the Company: Brim, Inc.
000 XX 000xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: X. X. Xxxx
Phone: 000-000-0000
Fax: 000-000-0000
To BSL: Brim Senior Living, Inc.
000 XX 000xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Xxx Xxxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With copy of anything Xxxxx X. Xxxxxxxxx, Esq.
addressed to the Company The Xxxxxxxxx Group
or to BSL to: 0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
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To Purchaser: Encore Senior Living, LLC
000 XX 000xx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With copy to: Rockwood Living, Inc.
000 Xxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With further Xxxxxx & Xxxxxxx
copy to: 0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
To Agent: Xxx Xxxxxx
000 XX Xxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Notices shall be effective upon actual receipt or refusal of receipt whether
sent by mail, overnight delivery, facsimile transmission or hand delivery.
12.02. Assignment. No party may assign, directly or indirectly, its
rights or obligations hereunder without the prior written consent of the other
parties. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns,
including successors by operation of law pursuant to any merger, consolidation
or sale of assets involving either party.
12.03. Sole Agreement. This Agreement may not be amended or modified in
any respect whatsoever except by an instrument in writing signed by the parties
hereto. This Agreement, the Schedules and Exhibits hereto, the Company
Disclosure Letter and the Confidentiality Agreements, constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior negotiations, discussions, writings and agreements
between them.
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12.04. Captions. The captions of this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
12.05. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
12.06. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. The parties
agree and acknowledge that delivery of a signature by facsimile shall constitute
execution by such signatory.
12.07. Transactional Expenses. Except as otherwise provided herein,
whether or not the transactions contemplated by this Agreement or the Other
Required Agreements are consummated, each party (which shall mean the Company in
the case of BSL) shall pay its own fees and expenses incident to the
negotiation. preparation, execution, delivery and performance hereof and thereof
including, without limitation, the fees and expenses of its counsel, accountants
and other experts. The Company shall pay all fees and expenses associated with
(i) obtaining estoppel certificates, releases, lien waivers and subordinations
in connection with the transactions contemplated by this Agreement, (ii)
obtaining all permits, consents (including, without limitation, all consents and
all other documents described in Section 7.01(e) hereof), approvals,
assignments, licenses and orders and other authorizations of any kind, and
making such filings with respect to the foregoing with such third parties or
Governmental Authorities, as are required in connection with the transactions
contemplated hereby, (iii) the investment banking services provided by Xxxxx
Xxxxxx, (iv) the provision of services to the Company, BSL, CMC or any BSL
Partnership by all other persons or entities in connection with the preparation
and negotiation of this Agreement and the consummation of the transactions
contemplated hereby, and (v) the performance by the Company and BSL of their
obligations hereunder.
12.08. Knowledge Defined. To the extent that any of the representations
and warranties contained in this Agreement are limited by the phrases "to the
knowledge of" or "the Company has no knowledge of" or "Purchaser has no
knowledge of" or words or phrases of similar import, the same shall mean, in the
case of the Company and BSL, to the actual knowledge of Messrs. X. X. Xxxx, K.
Xxxxx XxXxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxxx X. Xxxx or Xxxx X.
XxXxxxxx after due and diligent inquiry with respect thereto, which inquiry
shall include inquiry of the on site administrators of each of the Facilities,
and, in the case of Purchaser, to the actual knowledge of Xxxxx Xxxxxxxx or Xxxx
Xxxxx Xxxxxxx, after due and diligent inquiry with respect thereto.
12.09. Severability. If any provision of this Agreement shall for any
reason be held to be unlawfully broad as to any application, activity or
subject, it shall be construed, by limiting and reducing it, to be enforceable
to the extent compatible with applicable law. If, notwithstanding the preceding
sentence, any provision contained in this Agreement shall, for any reason, be
held to be illegal or unenforceable in any respect, such illegality or
unenforceability shall not affect
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any other provision of this Agreement, but this Agreement shall be reasonably
construed as if the illegal or unenforceable provision had never been contained
herein.
12.10. Further Assurances. The parties hereto shall use their
commercially reasonable efforts to do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other party
may reasonably request in order to carry out the intent and purposes of this
Agreement and the consummation of the transactions contemplated hereby.
12.11. Third Party Beneficiary. Nothing in this Agreement express or
implied is intended to and shall not be construed to confer upon or create in
any person not a party to this Agreement, any rights, remedies or obligations
under or by reason of this Agreement, including without limitation, any right to
enforce this Agreement.
12.12. Attorneys' Fees. In the event of a dispute between the parties
hereto with respect to the interpretation or enforcement of the terms hereof,
the prevailing party in any action resulting therefrom shall be entitled to
collect from the other its reasonable costs and attorneys' fees, including its
costs and fees on appeal.
12.13. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean "including without limitation."
12.14. Disclosure. Anything disclosed in this Agreement or in any of
the Exhibits or Schedules attached to this Agreement or the Company Disclosure
Letter or any other document delivered pursuant to this Agreement or in the
Company Financial Statements shall be deemed to have been disclosed for any and
all purposes to which said information relates, and to the extent that such
information constitutes an exception to any of covenants, representations or
warranties herein such covenants, representations or warranties shall not be
deemed to have been breached if such information as and where disclosed is
reasonably adequate to give the non-disclosing party fair notice of the
exception to the applicable covenants, representations or warranties; provided,
however, that nothing set forth in the Approved Business Plan shall be deemed to
be an exception to any of the covenants, representations or warranties of the
Company or BSL set forth herein.
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12.15. Purchaser Executive Committee Action or Approval Required. All
actions required or permitted to be taken by Purchaser under this Agreement
shall be valid and effective only if taken or approved by the Executive
Committee of Purchaser pursuant to the Operating Agreement.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of
the day and year first set forth therein.
BRIM, INC.
By:
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Its:
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BRIM SENIOR LIVING, INC.
By:
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Its:
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ENCORE SENIOR LIVING, LLC
By:
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Its:
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The Agent hereby executes this Agreement subject to the approval of the
shareholders of the Company and, in the event such approval is given, solely for
the purpose of agreeing to act as the agent of such shareholders for the limited
purposes set forth herein. Subject to obtaining such shareholder approval, Agent
hereby represents and warrants that this Agreement has been duly and validly
executed and delivered by the Agent and constitutes a legal, valid and binding
obligation of the Agent and is enforceable against the Agent in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
Agent is not making and shall not be responsible for any other representations,
warranties or covenants made in this Agreement. Agent acknowledges and agrees to
the rights of the Purchaser with respect to the interest earned on the Escrow
Account as provided in Section 11.09 hereof.
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Xxx Xxxxxx
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