REAL ESTATE PURCHASE AND SALE AGREEMENT
MAGELLAN HEALTH
SERVICES, INC., a Delaware corporation,
Seller: and its wholly owned subsidiaries listed on
Exhibit A attached hereto
Purchaser: CRESCENT REAL ESTATE
EQUITIES LIMITED PARTNERSHIP, a
Delaware limited partnership
TABLE OF CONTENTS
Page
1. Purchase and Sale of the Facilities 2
2. Consideration 2
3. Documents to be Provided by the Seller 3
4. Access to Facilities, Records and Personnel 6
5. Title 7
6. Representations and Warranties 9
7. Covenants 16
8. Conditions 20
9. Damage, Destruction and Condemnation 24
10. Closing 24
11. Indemnifications 28
12. Remedies 29
13. Brokers 30
14. Changes in the Portfolio 31
15. Miscellaneous 33
Exhibits
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A -- List of Subsidiaries Selling Facilities
B -- Facility Descriptions and Names of Subsidiaries Owning Each Facility
C -- Form of Master Lease Agreement
D -- Schedule of Industrial Revenue Bonds and Encumbered Facilities
E -- List of Tenants under Leases at Each Facility
F -- Insurance Information
G -- Form of Subordination Agreement
H -- Form of Assignment of Leases
I -- Form of Blanket Xxxx of Sale
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Schedules
Schedule 1.1
Schedule 2.1 (to be attached after execution and not later than 30 days prior to
Closing)
Schedule 6.1(b)
Schedule 6.1(d)
Schedule 6.1(f)
Schedule 6.1(g)
Schedule 6.1(j)
Schedule 6.1(p)
Schedule 6.1(r)
Schedule 6.1(w)
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REAL ESTATE PURCHASE AND SALE AGREEMENT
This REAL ESTATE PURCHASE AND SALE AGREEMENT (this
"Agreement") is made and entered into as of January 29, 1997, by and between
MAGELLAN HEALTH SERVICES, INC., a Delaware corporation ("Magellan" or the
"Seller"), and CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a Delaware
limited partnership (the "Purchaser").
R E C I T A L S:
A. In connection with the transactions contemplated by this Agreement,
Magellan and the Purchaser have entered into (i) that certain Contribution
Agreement of even date herewith (the "OpCo Contribution Agreement") and (ii)
that certain Warrant Purchase Agreement of even date herewith (the "Warrant
Purchase Agreement"). Magellan and the Purchaser have also agreed that,
following the execution and pursuant to the terms of the foregoing agreements,
they will cause certain other agreements to be executed, including, without
limitation, that certain Operating Agreement of Charter Behavioral Health
Systems, LLC ("OpCo"), between Magellan and a designee of the Purchaser (the
"Operating Agreement"), that certain Master Franchise Agreement between Magellan
and OpCo (the "Master Franchise Agreement") and certain additional Franchise
Agreements between Magellan and certain subsidiaries of OpCo (the "Subsidiary
Franchise Agreements, and collectively with the Master Franchise Agreement, the
"Franchise Agreement"), that certain Master Lease Agreement between the
Purchaser and OpCo (the "Facilities Lease"), and that certain Subordination
Agreement by and among Magellan, the Purchaser and OpCo (the "Subordination
Agreement") (this Agreement, the OpCo Contribution Agreement, the Warrant
Purchase Agreement, the Operating Agreement, the Franchise Agreement, the
Facilities Lease and the Subordination Agreement are referred to collectively as
the "Transaction Documents," and all of the transactions contemplated thereby
are referred to collectively as the "Transactions").
B. The wholly owned (directly or indirectly) subsidiary corporations or
limited liability companies listed on Exhibit A attached hereto (each,
individually, a "Subco" and, collectively, the "Subcos") are the owners of the
real property and improvements thereon described on Exhibit B attached hereto
(each individually, a "Facility" and collectively, the "Facilities").
C. The Purchaser desires to acquire the Facilities, and Magellan, as
the sole shareholder of the sole shareholder of the Subcos, desires to cause the
Subcos to sell the Facilities to the Purchaser, all upon the terms and
conditions hereinafter set forth.
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D. Immediately after the Purchaser acquires the Facilities, and as one of
the Transactions, the Purchaser intends to lease the Facilities to OpCo pursuant
to the Facilities Lease, the form of which is attached hereto as Exhibit C.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the receipt
and sufficiency of which are hereby acknowledged, and in further consideration
of the mutual covenants and conditions set forth herein, the parties hereto
agree as follows:
1. Purchase and Sale of the Facilities.
1.1 Real and Personal Property Included. Upon the terms and conditions
hereinafter set forth, Magellan agrees to cause each Subco to sell and
convey to the Purchaser the Facility listed beside such Subco's name on
Exhibit B, and the Purchaser agrees to purchase or cause to be
purchased by a permitted designee or assignee of the Purchaser from the
Subcos, the Facilities. As used herein, the term "Facilities" shall
mean, collectively, the following: (a) (i) those certain parcels of
real property described in Exhibit B, and any and all improvements
thereon (whether now or hereafter constructed), and all fixtures
attached thereto, (ii) all right, title and interest of Magellan and
the Subcos to any mineral, oil and gas rights, water rights, sewer
rights and other utility rights allocated to said properties, (iii) all
appurtenances, and other property interests belonging or appurtenant to
said properties, and (iv) all right, title and interest of Magellan and
the Subcos in and to any streets and ways, public and private, serving
said properties (collectively, the "Real Property"); together with (b)
all furniture, fixtures and equipment owned by Magellan or the Subcos
and located at or used in connection with the operation of the Real
Property as acute care psychiatric hospitals, site plans, surveys,
plans and specifications, and floor plans which relate to the Real
Property, all right, title and interest of Magellan and the Subcos in
all transferable warranties, guaranties, bonds and development rights
related to any of the foregoing, and, subject to applicable law and
regulations, all transferable licenses, permits, authorizations,
approvals, certificates of occupancy and other consents and regulatory
approvals necessary for the current ownership, occupancy, construction
(if any is on-going) and leasing of the Real Property; and together
with (c) all furniture, fixtures and equipment and certain other assets
generally described on Schedule 1.1 attached hereto and owned by the
entities listed on Schedule 1.1 (collectively, the "Personal
Property").
2. Consideration.
2.1 Purchase Price. The total purchase price to be paid for the Facilities
and the warrants to be issued pursuant to the Warrant Purchase
Agreement (the "Warrants") shall be Three Hundred Ninety-Five Million
and No/100 Dollars ($395,000,000), which shall be payable in accordance
with this Section 2. Notwithstanding the foregoing, if the Purchaser
assumes at Closing any or all of the Industrial Revenue Bonds as
hereinafter described,
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the purchase price set forth in the first sentence of this Section 2.1
shall be reduced by the outstanding principal amount and any accrued
and unpaid interest and other accrued and outstanding costs and fees of
such assumed Industrial Revenue Bonds, excluding assumption fees and
other costs relating to the assumption of such assumed Industrial
Revenue Bonds that the Purchaser is required to pay pursuant to Section
10.4. The term "Purchase Price," as used in this Agreement, shall mean
the purchase price set forth in the first sentence of this Section 2.1,
as adjusted pursuant to the second sentence of this Section 2.1. The
Seller and the Purchaser agree that they shall use commercially
reasonable best efforts to agree, not later than thirty (30) days prior
to Closing, upon an allocation of the total purchase price set forth in
the first sentence of this Section 2.1 among (a) the Warrants and (b)
the Facilities, and the portion allocated to the Facilities shall be
further allocated among (i) the land comprising a part of the Real
Property, (ii) the land improvements (other than buildings) comprising
a part of the Real Property (such as tennis courts, parking lots and
swimming pools), (iii) the buildings comprising a part of the Real
Property, and (iv) the Personal Property. Such agreed upon allocations
shall be attached to this Agreement as Schedule 2.1. The Seller shall
initially propose an allocation to the Purchaser, and the portion of
the total purchase price allocated by the Seller to the Personal
Property shall be supported by an independent appraisal obtained by the
Seller and the Purchaser, the cost of which shall be shared equally.
2.2 Allocation Among Facilities. The portion of the purchase price
allocable to the Facilities set forth in the first sentence of Section
2.1 shall generally be allocated among the Facilities on a pro rata
basis based on the relative net cash flow from operations of each
Facility (excluding capital expenditures and proceeds from borrowings
and taking into account any other factors mutually agreed upon by the
parties) for the 1995 and 1996 full fiscal years, which allocations
shall be agreed upon by the parties not later than thirty (30) days
prior to Closing. The cash portion of such purchase price allocable to
any Facility encumbered by an Industrial Revenue Bond assumed by the
Purchaser shall be reduced by the outstanding principal amount and any
accrued and unpaid interest and other accrued and outstanding costs and
fees of such assumed Industrial Revenue Bond, excluding assumption fees
and other costs relating to the assumption of such assumed Industrial
Revenue Bond that the Purchaser is required to pay pursuant to Section
10.4.
2.3 Payment. At the Closing, the Purchaser shall pay or cause to be paid to
or at the direction of the Subcos, through a closing escrow established
with the Title Company (as defined in Section 8.1(b)), the Purchase
Price, as adjusted to reflect the closing adjustments and prorations
provided for in this Agreement, which adjusted balance shall be payable
by bank wire transfer pursuant to instructions given by the Seller to
the Title Company not later than two (2) business days prior to
Closing.
2.4 Independent Contract Consideration. Within three (3) business days
after the execution of this Agreement by both parties hereto, the
Purchaser will deliver to Magellan the amount of One Hundred and No/100
Dollars ($100.00) (the "Independent Contract
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Consideration") which amount has been bargained for and agreed to as
consideration for Magellan's execution and delivery of this Agreement.
The Independent Contract Consideration is in addition to and
independent of all other consideration provided in this Agreement, and
is nonrefundable in all events.
3. Documents to be Provided by the Seller. As soon as reasonably
practicable but in any event within thirty (30) days after the date
hereof (except as otherwise provided in this Section 3 to the
contrary, including Sections 3.12 and 3.17), Magellan shall deliver
to, cause to be delivered to, or make available for review and
inspection by the Purchaser at Magellan's offices in Atlanta, Georgia,
or Macon, Georgia, originals or true, complete and accurate copies of
all of the following items which affect or relate to any of the
Facilities ("Seller's Deliveries"), to the extent such items currently
exist and are in Magellan's or any of the Subco's possession or are
readily obtainable without material cost from third parties:
3.1 Tax Statements. The most recent real estate and personal property tax
bills for each of the Facilities, together with copies of all tax
assessment notices for the year immediately preceding the date hereof
and evidence of payment of all taxes currently due or past due.
3.2 Insurance Policies. All existing liability, property, rental value and
other insurance policies pertaining to the Facilities, and paid
receipts therefor.
3.3 Warranties. All material unexpired warranties and guaranties covering
the Personal Property and the roofs, elevators, heating and air
conditioning systems and any other components of the Real Property and
a list and description of any material third party bonds, warranties
and guaranties which will be in effect after Closing with respect to
the Facilities.
3.4 Leases. All leases or occupancy agreements of any portion of the
Facilities (collectively, the "Leases," and any such Lease with annual
rent payable thereunder in excess of $100,000 being hereinafter
referred to as a "Material Lease"), together with copies of all
occupancy inspection reports, rental deposit agreements, lease
guaranties, estoppels and subordination, nondisturbance and attornment
agreements relating to the Material Leases, and all amendments and
correspondence with respect to the Material Leases.
3.5 Rent Roll. A current "Rent Roll" (herein so called), certified by
Magellan and containing (i) a complete list and description of the
Material Leases at each Facility, (ii) rental rate and deposits paid by
each tenant under each Material Lease, (iii) the term of each Material
Lease, and (iv) notations indicating whether, to the Seller's
knowledge, the tenant under any such Material Lease is in default.
3.6 Industrial Revenue Bonds. All documents evidencing, securing or
otherwise relating to the Industrial Revenue Bonds.
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3.7 Plans, Specifications and Reports. The most recent plans,
specifications, drawings, surveys, title insurance policies or reports,
and engineering, inspection and structural reports relating to the
Facilities (including any current elevator inspections and any reports
or audits with respect to compliance of the Facilities with the
Americans with Disabilities Act (the "ADA")), and all soil reports and
environmental reports and audits relating to the Facilities prepared
within the last ten (10) years, that were prepared by or for the Seller
or are in the Seller's possession or are reasonably obtainable by the
Seller from third parties who prepared such reports, together with any
plan in existence for compliance with ADA and similar state or local
laws or any Environmental Laws (as defined below).
3.8 Development Conditions. Copies of all unrecorded land use
restrictions, proffers and other conditions limiting development of
any of the Facilities, if any.
3.9 Permits. All licenses, permits, certificates of occupancy,
authorizations, consents, unrecorded easements and unrecorded rights of
way, and other approvals or instruments required in connection with any
current construction, occupancy, ownership or leasing of the Facilities
(the "Permits"), and all currently pending applications or requests
submitted in connection therewith.
3.10 JCAHO Accreditation. The most recent survey reports on each of the
Facilities by the Joint Commission on the Accreditation of Healthcare
Organizations (the "JCAHO").
3.11 Personal Property Inventory. A complete, itemized and detailed
inventory of the Personal Property.
3.12 Operating Reports. Monthly (from October 1996 until the latest
available month end prior to Closing) unaudited statements of operation
relating to the operations of the Facilities prepared in the ordinary
course of business (the "Operating Reports"), which shall be delivered
to the Purchaser as soon as practical after such reports are prepared,
and the Seller's 1997 budgets for each of the Facilities prepared in
the ordinary course of business.
3.13 Capital Expenditures Information. A detailed list of all material
capitalized expenditures made at each of the Facilities since October
1, 1993. For purposes hereof, a material capitalized expenditure shall
mean any single capitalized expenditure in excess of $100,000.
3.14 Financial Statements. Magellan's audited financial statements for the
fiscal year ended September 30, 1996 (the "1996 Financials").
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3.15 Disputes. Summaries of any and all material outstanding litigation and
material outstanding or asserted written claims by any third party
which concern or otherwise affect the Facilities or the business
operated therein received by the Seller during its ownership of the
Facilities, together with copies of any and all written notices of
potential material litigation, written notices from any governmental or
quasi-governmental body alleging a failure to comply with applicable
Laws (as hereinafter defined in Section 6.1(g)), audit response letters
prepared during the last five (5) years, and any internal lists of
claims or anticipated material litigation related to the Facilities
prepared by or on behalf of the Seller. For purposes of this Section,
"material" shall mean those claims and litigations involving amounts or
alleged liabilities in excess of $1,000,000.
3.16 Philadelphia Facility. All construction contracts, architects'
agreements, engineering reports, building permits, plans,
specifications, and other material agreements, information and
materials relating to the construction of the planned improvements
currently underway at the Facility located in Philadelphia,
Pennsylvania (the "Philadelphia Facility").
3.17 Other. Such other documents and materials as are reasonably requested
by the Purchaser (which documents and materials shall be delivered to
the Purchaser as soon as practical following such request), except for
(i) patient medical records, (ii) medical and professional staff
records that are either privileged or protected from discovery by a
state law relating to confidentiality of peer review activities, and
(iii) all other records relating to the provision of health care
services that are made privileged, confidential or protected from
discovery under applicable state law.
4. Access to Facilities, Records, and Personnel. The Purchaser shall have
the right, at its sole option, to undertake, at its cost and expense
except as otherwise provided in Section 10.4(a), a review and
examination of all aspects of the Facilities, including without
limitation: (a) the physical condition and state of repair of the
Facilities; (b) the existence, now or at any time in the past, of any
Hazardous Substances (as defined below) at or in the Facilities, and
the extent of compliance of the Facilities with all applicable
Environmental Laws (as defined below); (c) the terms and conditions of
all Contracts, agreements, warranties, Leases and other materials
relating to the condition, occupancy, operation, management or use of
the Facilities; (d) books and records relating to the operation of the
Facilities, and (e) such other matters relating to the Facilities as
the Purchaser deems appropriate. Upon reasonable advance notice from
the Purchaser, the Seller shall make all of its books and records
pertaining to the Facilities available during normal business hours
for review and/or audit by the Purchaser and its agents and
consultants, including, without limitation, correspondence and
communications with regulatory authorities, and shall promptly furnish
to the Purchaser all information pertaining to the Facilities
reasonably requested by the Purchaser or its representatives. In
addition, the Purchaser and its agents and consultants shall have the
right to enter upon
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the Facilities to conduct such review, inspections and tests as it
deems appropriate (including taking soil samples), provided that the
Purchaser (i) shall exercise reasonable efforts to coordinate such
review, inspections and tests with Magellan and to minimize disruption
to Magellan's operations, (ii) shall repair any damage that may be
caused by such inspections and tests, (iii) shall not interfere with
the delivery of patient care, and (iv) shall not review any documents
described in the exceptions clause of Section 3.17. Notwithstanding
anything in this Agreement to the contrary, (x) the Purchaser will not
do, cause or direct to be done any subsurface testing or boring, or any
testing of subsurface water, or any coring, boring or other intrusive
testing, or any other inspection of or entry upon any of the
Facilities, without giving Magellan at least two (2) business days'
prior notice thereof and an opportunity to have Magellan's
representative be present to accompany and observe all such inspections
and entries; (y) the Purchaser will not enter, or cause or direct any
entry, upon any premises which are leased to a tenant without giving
Magellan at least two (2) business days' prior notice thereof and an
opportunity to have Magellan's representative be present to accompany
and observe all such inspections and entries, and in carrying out any
such entry the Purchaser will use its commercially reasonable best
efforts to minimize interference with the business of any such tenant;
and (z) the Purchaser hereby indemnifies the Seller, and agrees to
defend and hold the Seller harmless, from and against any and all
claims, losses, damages and liabilities that may be asserted against or
incurred by the Seller for or in connection with any injuries or damage
to any persons or property which directly or indirectly are caused by
or result from any entry, inspection, testing or other action done or
caused or directed to be done by the Purchaser or its representatives
or contractors. The Purchaser agrees to cause all parties entering any
Facility at the Purchaser's instance to maintain customary and
appropriate insurance to cover all risks of the types described in
clause (z) above, and, upon the Seller's request, to deliver to the
Seller evidence establishing to the Seller's reasonable satisfaction
that adequate and appropriate insurance to cover risks of the types
described in the preceding clause (z) is being maintained.
Notwithstanding anything in this Agreement to the contrary, the
Purchaser's obligation to repair such damage and the Purchaser's
indemnity of the Seller in this Section 4 shall survive any termination
of this Agreement. The Purchaser also shall have the right to
communicate with governmental officials and other regulatory
authorities having jurisdiction over the Facilities with respect to
issues arising out of the ownership, use, leasing, and condition of the
Facilities, and with all architects and contractors who have provided
services for the benefit of the Facilities, provided, however, that the
Purchaser shall not have the right to communicate with governmental
officials and other regulatory authorities having jurisdiction over the
business operations at the Facilities with regard to regulatory issues
arising out of the operation of the Facilities as acute care
psychiatric hospitals (or such other business operations for which any
of the Facilities is currently used) without the prior written consent
of Magellan, which consent may be granted or withheld in Magellan's
sole and absolute discretion. Magellan agrees to provide the Purchaser
with access to its regulatory legal counsel and shall instruct such
counsel to cooperate with the Purchaser in answering the Purchaser's
questions regarding compliance of the Facilities and business
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operations conducted therein with applicable Laws, subject to
attorney-client privilege. Notwithstanding anything in this Agreement
to the contrary, (A) the Seller's representations and warranties made
in this Agreement shall not be limited or otherwise affected by any
review or investigation of the Facilities made by the Purchaser, and
(B) nothing herein contained shall be deemed to provide the Purchaser
with the right to terminate this Agreement as a result of any such
review, inspections or tests, and the Purchaser's satisfaction with the
results of such review, inspections and tests shall not be a condition
precedent to Closing.
5. Title.
5.1 Condition of Title. Purchaser shall determine that title to the
Facilities is good and marketable of record and in fact. Title shall be
conveyed in fee simple, by the form of Warranty Deed customary in each
of the jurisdictions in which the Facilities are located, as reasonably
determined by the Title Company (as defined in Section 8) or the mutual
agreement of the parties, with limited or special warranty of title
unless such form of warranty is not customary in the relevant
jurisdiction(s) or adversely affects the insurability of title
(collectively, the "Deeds"), with customary covenants, free and clear
of any and all liens, tenancies, restrictions, easements, options,
unrecorded agreements, encroachments, or other encumbrances of any kind
whatsoever, except for the following (the "Permitted Exceptions"): (i)
those matters approved or deemed approved by the Purchaser pursuant to
Section 5.2; (ii) liens securing the Industrial Revenue Bonds that the
Purchaser assumes at Closing, (iii) liens for ad valorem taxes and
general or special assessments not yet due and payable as of the
Closing Date (as defined below), (iv) building and zoning restrictions
applicable to the Facilities, and (v) other exceptions which in the
reasonable judgment of the Purchaser do not impair in any material
respect the use or enjoyment of the Facilities as currently operated or
as proposed to be operated under the Transaction Documents.
5.2 Title Objections. The Purchaser shall promptly after the date hereof
order a title commitment for and survey of each of the Facilities. The
Seller shall be obligated to pay the costs of title examinations, title
insurance and surveys, and, notwithstanding anything to the contrary in
this Agreement, such obligation shall survive any termination of this
Agreement. Within fifteen (15) business days after the Purchaser has
received all of the title commitments and surveys, the Purchaser shall
notify Magellan in writing of any matters listed in the title
commitments or depicted (or not depicted) on the surveys (including,
without limitation, flood plains) of which the Purchaser disapproves
except for the Permitted Exceptions (the "Objections"), provided,
however, that in no event shall the Purchaser have the right to
disapprove or object to any flood plain matter with respect to any
Facility unless (i) an ordinance, law, rule or regulation applicable to
said Facility provides that such Facility may not be rebuilt following
a casualty because such Facility is located in a flood plain, or (ii)
the Purchaser reasonably determines that the uninsured cost to rebuild
would be unduly burdensome or the flood risk cannot be insured
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at reasonable rates. If the Purchaser so notifies Magellan of any
Objections, then, within a reasonable period of time after such notice,
the Seller shall take all action necessary to eliminate or cure such
Objections or to make arrangements, satisfactory to the Purchaser, to
have such Objections eliminated or cured prior to the Closing. If the
Seller is unable or unwilling to eliminate or cure all such Objections,
or to make satisfactory arrangements to have same eliminated or cured
prior to the Closing to the Purchaser's satisfaction, and the Purchaser
does not waive the Seller's failure to eliminate or cure such
Objections as provided in Section 8.1, then the Purchaser shall have
the right, at its sole option, to terminate this Agreement by giving
written notice of such election to Magellan. Upon the giving of any
such termination notice, this Agreement shall terminate, and all
rights, obligations and liabilities of the parties hereunder shall be
released and discharged. If the Purchaser fails to object to any matter
within such fifteen (15) business day period or thereafter waives it
Objections, such matters shall be deemed approved and shall constitute
Permitted Exceptions hereunder. Without limiting the generality of the
foregoing, the Seller shall have the absolute obligation, whether or
not the Purchaser objects, to cure or remove of record or, with the
Purchaser's consent, obtain affirmative coverage over the following
matters at or before the Closing: (a) all mortgages or deeds of trust
affecting the Facilities, except those securing the Industrial Revenue
Bonds that the Purchaser assumes at Closing; (b) all past due ad
valorem taxes and assessments of any kind constituting a lien against
the Facilities; (c) all mechanic's, materialmen's and similar liens;
and (d) all judgments constituting a lien against the Facilities.
Notwithstanding the foregoing to the contrary, the Purchaser shall use
its commercially reasonable bests efforts to deliver Objections to the
Seller on a Facility by Facility basis within fifteen (15) business
days following the Purchaser's receipt of a title commitment and survey
for each Facility.
5.3 Option to Assume IRBs. The parties acknowledge that some of the
Facilities are encumbered by liens securing certain Industrial Revenue
Bonds (the "Industrial Revenue Bonds"). A schedule listing the
outstanding principal and accrued interest amounts of the Industrial
Revenue Bond or Bonds associated with each Facility is attached hereto
as Exhibit D. The Purchaser shall have the option to assume any or all
of such Industrial Revenue Bonds if such assumption is permissible
under the documents governing the terms of any such Industrial Revenue
Bond proposed to be assumed and such assumption can be made without
adversely affecting the tax-exempt status of the Industrial Revenue
Bond to be assumed, provided that the Seller is completely released
from all liability thereunder and any letters of credit posted by the
Seller as additional security for repayment thereof are released and
returned on behalf of Magellan. Any Industrial Revenue Bonds that the
Purchaser does not assume at Closing shall be paid off or defeased by
Magellan at Closing, the Facilities encumbered thereby shall be
conveyed free and clear of all liens securing same, and Magellan shall
be solely responsible for all prepayment penalties and other costs
associated with such repayment or defeasance. The Purchaser shall
notify Magellan in writing by March 5, 1997, as to which Industrial
Revenue Bonds, if any, it wishes to assume. Failure by the Purchaser to
so notify
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Magellan by such date shall be deemed to be an election by the
Purchaser not to assume any of the Industrial Revenue Bonds.
6. Representations and Warranties.
6.1 Seller's Representations and Warranties. In order to induce the
Purchaser to execute this Agreement and the other Transaction Documents
and to proceed to Closing, Magellan hereby makes the following
representations and warranties to the Purchaser, all of which are true
as of the date hereof:
(a) Organization and Enforceability. Magellan is, and each Subco is, a
corporation or limited liability company, duly organized, validly
existing and in good standing under the laws of its state of
incorporation or formation and in any other jurisdiction where the
nature of its business or ownership of its properties would require
such qualification. Magellan and each Subco possess all requisite
power and authority to own and operate their respective properties and
to carry on their respective businesses as now conducted, to enter
into and perform this Agreement and the other Transaction Documents,
and to carry out the Transactions. This Agreement and the other
Transaction Documents, and all instruments (to the extent the same
constitute agreements), documents (to the extent the same constitute
agreements) and agreements to be executed by Magellan and/or any of
the Subcos in connection herewith or therewith, are, or when delivered
shall be, duly and validly executed and delivered by Magellan and/or
such Subco(s) to the Purchaser and are, or when delivered shall be,
legal, valid and binding obligations of Magellan and/or such Subco(s),
enforceable against Magellan and/or such Subco(s) in accordance with
their respective terms, except as such enforcement may be limited by
bankruptcy, conservatorship, receivership, insolvency, moratorium or
similar laws affecting creditors' rights generally or by general
principles of equity. The person or persons who have executed this
Agreement on behalf of Magellan and each Subco have full power and
authority to sign the Transaction Documents.
(b) Consents and Approvals. Except as described on Schedule 6.1(b)
attached hereto, there are no consents, approvals, or authorizations
that are material to the continued operation of the businesses
conducted at the Facilities required from any person, entity,
governmental or quasi-governmental authority, or required by law or
agreement, with respect to the Seller's execution, delivery or
performance of this Agreement and the other Transaction Documents and
the consummation of the Transactions by Seller. Notwithstanding the
foregoing, it is understood and agreed that it shall be the
Purchaser's responsibility to obtain, or to obtain the transfer of,
all Permits required for the Purchaser to own, hold and lease the
Facilities to OpCo, and it shall be Magellan's responsibility to
obtain, or to obtain the transfer of, for and on behalf of OpCo, all
Permits required for the continued operation by OpCo of the businesses
currently conducted at the Facilities.
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(c) Title to Real Property. Except for Real Property that will be conveyed
by the Seller to the Purchaser as part of the Facilities, neither
Magellan nor any of the Subcos or their affiliates owns any parcel of
land which is contiguous with any of the Real Property of the
Facilities.
(d) Title to Personal Property. None of the Personal Property is held by
Magellan or the Subcos under a lease or installment sale contract,
except for installment sales agreements entered into in the ordinary
course of business, and Magellan and/or the Subcos owns title to the
Personal Property reflected on the inventory to be delivered to the
Purchaser pursuant to Section 3 free and clear of any liens or claims,
except for liens and claims arising under or by virtue of the
above-referenced installment sales agreements and except as set forth
on Schedule 6.1(d).
(e) Litigation; Other Proceedings. No portion of the Real Property of any
Facility has been condemned or taken in any condemnation or similar
proceeding. No action, suit, other proceeding or investigation
(including, but not limited to, condemnation actions) is pending in
any court or before any federal, state, county or municipal
department, commission, board, bureau or agency or other governmental
or quasi-governmental instrumentality or accrediting authority or
before any arbitration tribunal or panel, or to the Seller's knowledge
has been threatened, that concerns or involves (i) title, right to
possession, or ownership of the Facilities, or (ii) the Seller's
ability to perform its obligations under this Agreement and the other
Transaction Documents. There are no proceedings pending, or to the
Seller's knowledge threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any
Permit. No bankruptcy, insolvency, reorganization or similar action
involving any Facility or any Subco or Magellan, whether voluntary or
involuntary, is pending or to the Seller's knowledge threatened, and
neither any Subco nor Magellan has any intention of filing any such
action or proceeding.
(f) Violations of Agreements. None of the execution and delivery of this
Agreement and the other Transaction Documents by Magellan or any
Subco, the consummation by Magellan or any Subco of the Transactions
or compliance by Magellan or any Subco with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of
any provisions of the formation documents of Magellan or such Subco;
(ii) except as set forth on Schedule 6.1(f), result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right to termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which
Magellan or any Subco is a party or by which any of them or any of the
Facilities may be bound; or (iii) except as set forth on Schedule
6.1(f), violate any order, writ, injunction, decree, statute, rule or
regulation applicable to any of them or any of the Facilities; except
in the case of clauses (ii) or (iii) above, for violations, breach or
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defaults (A) that would not in the aggregate have a material adverse
effect on the business or financial condition of the Seller and on the
effectiveness of the Transactions or (B) for which waivers or consents
have been or will be obtained on or prior to the Closing Date.
(g) Compliance with Laws. The Facilities and the current ownership, use,
occupancy, leasing and construction (if any) thereof comply in all
material respects with all federal, state, county or municipal laws,
ordinances, rules, orders, regulations and material requirements
("Laws") of all governmental and quasi-governmental authorities having
jurisdiction over the Facilities or affecting all or any part thereof
or bearing on their ownership, use, occupancy, leasing or construction
(including, without limitation, zoning, land use, building code, fire
code, Environmental Laws (as hereinafter defined), the Occupational
Safety and Health Act, and the Americans with Disabilities Act), and
in all material respects with all private covenants and restrictions.
The Seller has no knowledge of material violations of Laws relating to
the ownership, use, occupancy, leasing or construction (if any) of the
Facilities and no written notice of any such violation of any such
law, regulation or ordinance has been received by the Seller, except
for violations or alleged violations set forth on Schedule 6.1(g)
attached hereto, which are being corrected in the ordinary course of
business pursuant to an approved plan of correction. Without limiting
the generality of the foregoing, the Seller has not paid or delivered
or agreed to pay or deliver, directly or indirectly, any fee,
commission or other sum of money or item of property, however
characterized, to any person or entity pursuant to a transaction
believed by the Seller to be illegal under any federal, state or local
law.
(h) Permits. All Permits have been obtained from all governmental and
quasi-governmental authorities having jurisdiction over the Facilities
and the ownership thereof or from private parties for the normal use,
maintenance, and occupancy of the Facilities and to ensure unimpeded
access, ingress and egress to and from the Facilities as required to
permit normal usage thereof (including, without limitation, building
or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, and other governmental authorizations and
approvals). All fees payable in connection with such items have been
paid in full, and all such Permits are in full force and effect.
(i) Accreditation and Certification. The survey reports on each of the
Facilities by the Joint Commission on the Accreditation of Healthcare
Organizations (the "JCAHO") that have been provided to the Purchaser
pursuant to Section 3 are the most recent JCAHO survey reports
received by the Seller with respect to each of the Facilities other
than (i) the medical office buildings comprising a part of some of the
Facilities and (ii) the Facilities operated as corrections facilities.
The Seller has taken all actions required by such survey reports to be
taken on or before the date hereof, including, but not limited to, the
submission of written progress reports. The Seller has received no
notice of any material, adverse change in accreditation status of any
of the Facilities.
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(j) Medicare and Medicaid. Except as set forth on Schedule 6.1(j) attached
hereto, each Facility participates in the Medicare and Medicaid
programs, is eligible to receive payment under Title XVIII of the
Social Security Act, as amended (the "Social Security Act"), and is a
"provider" under a provider agreement with the Medicare program. With
respect to such provider agreements, neither Magellan nor any Subco has
received a notice of termination, is in default in any material
respect, or has any knowledge that any other party to such agreements
is in default thereunder.
(k) Zoning; Subdivision. The current use of each Facility is permitted
under the zoning classification applicable to the Facility. There are
no proceedings pending or to Seller's knowledge threatened to change
the existing zoning classification as to any portion of any Facility.
No portion of any subdivided lot or tax lot comprising the Real
Property of any Facility or any part thereof is owned by any person or
entity other than the Subco that owns such Facility. To the Seller's
knowledge, there are no unrecorded land use restrictions, unrecorded
proffers or other unrecorded conditions limiting development of any of
the Facilities. Except as may be disclosed in the title commitments
and surveys of each of the Facilities, no part of any Facility has
been designated as an historical landmark by any governmental
authority, or is subject to any overlay or similar zoning or other
restriction or limitation, nor, to the best of the Seller's knowledge,
is any of the foregoing under consideration by any governmental
authority.
(l) Structure; Systems. There are no material uncorrected structural,
physical, mechanical or other defects or faults in the design or
construction of the improvements included as part of any Facility,
including without limitation the roofs, parking areas, HVAC, plumbing,
electrical, life safety and other mechanical systems. All such systems
are in good operating condition and repair, normal wear and tear
excepted, and require no special maintenance, repair or replacement
(except due to normal wear and tear and obsolescence) and are in
compliance in all material respects with all applicable Laws.
(m) Material Changes. The Seller has not received written notice from any
governmental or quasi-governmental authority of any pending or
contemplated change in any regulation, code, ordinance or law, or
private restriction applicable to any of the Facilities which would
result in any material adverse effect on the condition of any of the
Facilities, or would in any material respect limit or impede the
operation of any of the Facilities.
(n) Parties in Possession. No portion of any Facility is occupied or used
in any manner by any person or entity other than the Seller, tenants
under the Leases, the patients of the Facilities, the employees of the
Seller, the medical staffs of the Facilities, other health care
professionals, members of the public participating in various programs
and events at the Facilities, volunteers, independent contractors
providing services pursuant to the Contracts, and other business
invitees.
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(o) Status of Leases. Exhibit E attached hereto contains a full and
complete listing of all tenants under all Leases. Magellan has
delivered to the Purchaser true and complete copies of each Material
Lease. With respect to each Material Lease, neither Magellan nor any
Subco has received a notice of termination, is in default, or has any
knowledge that any other party to such Material Lease is in default
thereunder. The Seller is the owner of the entire lessor's interest in
and to the Leases, and neither the lessor's interest in the Leases nor
the rents payable thereunder have been assigned, pledged or encumbered
in any manner other than under collateral assignments that will be
released in connection with the Closing. No tenant has any right or
option to purchase or otherwise acquire any Facility or any portion
thereof. Except as indicated on the Rent Roll delivered to the
Purchaser as a part of the Seller's Deliveries pursuant to Section 3,
(i) no rentals or other amounts due under the Material Leases have
been paid more than one (1) month in advance, (ii) all security and
other deposits of any type required under the Material Leases have
been paid in full and are being held by the Seller, (iii) there exists
no circumstance or state of facts that constitutes a default by the
Seller or to the Seller's knowledge any tenant under the Material
Leases, or that would, with the passage of time or the giving of
notice, or both, constitute a default on the part of the Seller or by
any tenant under any of the Material Leases, or that entitles any
tenant under the Material Leases to defenses against the prompt,
current payment and performance of rent and/or other payments and
obligations thereunder, and (iv) none of the tenants under the
Material Leases has asserted any defenses, set-offs or claims in
connection with any of the Material Leases, except in the case of
clauses (iii) or (iv) above, for violations, breaches or defaults
which do not have a material adverse effect on the Facilities. Seller
has no knowledge of any pending or threatened litigation by any tenant
against the Seller with regard to any Material Lease. There do not
exist any unpaid leasing commissions due with regard to any of the
Material Leases. The Seller has performed in all material respects all
of the duties, liabilities and obligations imposed upon Seller by the
terms, provisions and conditions contained in the Material Leases and
accruing on or prior to the date hereof. The total amount of annual
rent payable under all Leases as of the date hereof is not greater
than $3,000,000.
(p) Other Agreements Affecting Facilities. There are no contracts or other
material obligations (including, without limitation, options and
rights of first refusal under Leases) outstanding for the sale,
exchange or transfer of any of the Facilities or the business operated
therein by the Seller. Except as described on Schedule 6.1(p) and
except for this Agreement, the Material Leases, the management,
maintenance, service, supply, commission, parking, construction,
architectural and other agreements entered into by the Seller or any
Subco with respect to the Facilities, the agreements included among
the Permitted Exceptions, and the other Transaction Documents, the
Seller has no knowledge of any contracts creating or imposing any
liens, encumbrances, material burdens, obligations or material
restrictions on the use or operation of any of the Facilities or the
business conducted therein, other than (i) the matters of title listed
on the title insurance
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commitments for the Facilities and (ii) security interests in the
Personal Property that will be released as of the Closing (or as to
which the Purchaser agrees to take title subject).
(q) Special Assessments. There are no unpaid assessments for public
improvements against any of the Facilities, and Seller has no knowledge
of any pending or proposed assessments against any of the Facilities.
All sewer, water, gas, electric, telephone and drainage lines and
facilities required by law and for the normal operation and use of the
Facilities are fully installed, currently function, and service the
Facilities adequately for their current use, and there are no unpaid
assessments, tap or connection fees or charges for the installation of
such utilities or for making connection thereto.
(r) Taxes. To the Seller's knowledge, except as described on Schedule
6.1(r), (i) the Seller has received no written notice of any public
plans or proposals for changes in road grade, access or other municipal
improvements which would affect any of the Facilities or result in any
assessment and that could have a material adverse effect on the
Facilities or the businesses conducted therein, and (ii) no tax
proceeding is pending for the reduction or increase of the assessed
real estate tax evaluation of any of the Facilities.
(s) FIRPTA. Neither Magellan nor any Subco is a "foreign person," "foreign
trust" or "foreign corporation" within the meaning of the United States
Foreign Investment and Real Property Tax Act of 1980 and the Internal
Revenue Code of 1986, as subsequently amended.
(t) Environmental. As used herein, the term "Environmental Law" means any
law, statute, ordinance, rule, regulation, order or material
determination of any governmental authority or agency affecting any of
the Facilities and pertaining to health or the environment, including,
but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1982 and the Resource Conservation
and Recovery Act of 1986. Except as (i) disclosed in any of the
environmental reports comprising a part of the Seller's Deliveries or
otherwise obtained by the Purchaser, or as otherwise disclosed by
Magellan to the Purchaser in writing, or (ii) would not have a
material adverse effect on the Facilities or the business of the
Seller operated thereon, to the Seller's knowledge (a) neither the
Facilities nor the Seller's operation thereof is in violation of any
Environmental Law or is subject to any pending or threatened
litigation or inquiry by any governmental authority or to any remedial
action or obligations under any Environmental Law; (b) no underground
storage tanks have been or are now located at any Facility; (c) none
of the Facilities is now or ever has been used for industrial purposes
or for the storage, treatment or disposal of hazardous or toxic wastes
or materials, chemical wastes, or other toxic substances, except for
the storage and disposal of such wastes and materials in the ordinary
course of the business of the Facilities in accordance with applicable
Environmental Laws, nor has any Facility ever been listed by any
federal, state or county agency or governmental official as containing
any oil, hazardous or toxic wastes or materials, chemical wastes, or
other toxic substances, and (d) no hazardous substances or
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toxic wastes have been handled, packaged, generated, manufactured,
released, removed, stored, used, discharged, disposed of , treated,
installed, transported or deposited over, beneath, in or on any
Facility or any portion thereof, from any source whatsoever, or are now
located at any Facility, in violation of applicable Environmental Laws
(including, without limitation, asbestos, radon, oil or other petroleum
products, PCBs and urea formaldehyde). Prior to Closing, Magellan
agrees to notify the Purchaser promptly of any fact of which the Seller
acquires actual knowledge which would cause this representation to
become false and of any written notice that the Seller receives
regarding the matters set forth in this subsection (t).
(u) Soils; Flood Plain. There are no material defects, faults or other
problems in connection with the soils, subsoils, grading or compaction
of the Real Property, other than as set forth in any soil reports to be
delivered to the Purchaser. Except as noted on the surveys of the
Facilities, no portion of the Real Property is located inside a one
hundred (100) year flood plain, as such plain is determined by the
Federal Emergency Management Agency and published in a Flood Insurance
Rate Map for the area including the Real Property.
(v) Ownership of Subcos. Magellan holds, beneficially, directly or
indirectly, all voting and equity ownership of each Subco.
(w) No Other Owned Facilities. Except as described on Schedule 6.1(w), no
Subco owns or operates any facility other than the one(s) being sold
hereunder.
(x) Insurance. There is currently in full force and effect public
liability, property and casualty insurance in the amounts and issued
by the companies specified in Exhibit F (the "Insurance"). Each of
such policies is in full force and effect, and all premiums due and
payable thereunder have been, and on the Closing Date will be, fully
paid when due. No notice of cancellation has been received or
threatened with respect thereto. No insurance company insuring either
the Facilities or the Personal Property, nor the Board of Fire
Underwriters, has delivered to the Seller oral or written notice (i)
that any insurance policy now in effect would not be renewed or (ii)
that the Seller or any tenant under the Leases has failed to comply
with insurance requirements or (iii) that defects or inadequacies
exist in any of the Facilities, or in any part thereof, which could
adversely affect the insurability thereof or the cost of such
insurance.
(y) Philadelphia Facility. To Magellan's knowledge, the total costs and
expenses required for completion of the construction of the
improvements currently underway to the Philadelphia Facility will not
exceed $11,000,000, and upon completion of such improvements, the
Philadelphia Facility will be ready for occupancy and suitably equipped
for the operation of a behavioral healthcare facility similar to the
other Facilities.
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(z) Accuracy of Documents. All documents and records delivered pursuant to
Section 3 will be true, correct and complete copies of the documents
and records required to be delivered.
(aa) No Material Adverse Change. Since the date of the 1996 Financials,
there has been no material adverse change in the business or financial
condition of (i) the Seller and the Subcos taken as a whole or (ii) the
Subcos taken as a whole.
6.2 Purchaser's Representations and Warranties. In order to induce the
Seller to execute this Agreement and the other Transaction Documents
and to proceed to Closing, the Purchaser hereby makes the following
representations and warranties to the Seller, all of which are true as
of the date hereof and all of which shall be true as of the Closing
Date:
(a) Organization and Enforceability. The Purchaser is duly organized,
validly existing and in good standing under the laws of its state of
organization and in any other jurisdiction where the nature of its
business or ownership of its properties would require such
qualification, and is or will be by the Closing Date duly qualified to
transact business in the states in which the Facilities are situated.
The Purchaser possesses all requisite power and authority to own and
operate its properties and to carry on its business as now conducted,
to enter into and perform this Agreement and the other Transaction
Documents, and to carry out the Transactions. This Agreement and the
other Transaction Documents, and all instruments (to the extent the
same constitute agreements), documents (to the extent the same
constitute agreements) and agreements to be executed by the Purchaser
and/or its designees in connection herewith or therewith, are, or when
delivered shall be, duly and validly executed and delivered by the
Purchaser and/or its designees and are, or when delivered shall be,
legal, valid and binding obligations of the Purchaser and/or such
designees, enforceable against the Purchaser and/or such designees in
accordance with their respective terms, except as such enforcement may
be limited by bankruptcy, conservatorship, receivership, insolvency,
moratorium or similar laws affecting creditors' rights generally or by
general principles of equity. The person or persons who have executed
this Agreement on behalf of the Purchaser have full power and
authority to sign the Transaction Documents.
(b) Consents and Approvals. Except for approval by the Board of Directors
of the Purchaser's general partner, there are no consents, approvals,
and authorizations required from any person, entity, governmental or
quasi-governmental authority, or required by law or agreement, with
respect to the Purchaser's execution, delivery or performance of this
Agreement and the other Transaction Documents and the consummation of
the Transactions by the Purchaser, including, without limitation,
shareholder approval. Notwithstanding the foregoing, it is understood
and agreed that it shall be the Purchaser's responsibility to obtain,
or to obtain the transfer of, all Permits required for the Purchaser
to own, hold and lease the Facilities to OpCo, and it shall be
Magellan's responsibility to
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obtain, or to obtain the transfer of, for and on behalf of OpCo, all
Permits required for the continued operation by OpCo of the businesses
currently conducted at the Facilities.
(c) Violations of Agreements. None of the execution and delivery of this
Agreement and the other Transaction Documents by the Purchaser, the
consummation by the Purchaser of the Transactions or compliance by the
Purchaser with any of the provisions hereof or thereof will (i)
conflict with or result in any breach of any provisions of the
formation documents of the Purchaser; (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right to termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the
Purchaser is a party or by which it may be bound; or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to it; except in the case of clauses (ii) or (iii) above,
for violations, breach or defaults (A) that would not in the aggregate
have a material adverse effect on the business or financial condition
of the Purchaser and on the effectiveness of the Transactions or (B)
for which waivers or consents have been or will be obtained prior to
the Closing Date.
6.3 Best Knowledge. For purposes of this Agreement, the phrase "to the
Seller's knowledge" or "to Magellan's knowledge" means the actual
knowledge of any executive officer (as defined in Rule 3b-7 of the
Securities Exchange Act of 1934) of a Subco, or actual knowledge of any
officer of Magellan, based upon the Seller's reasonable inquiry and
investigation.
6.4 Survival. The representations and warranties set forth in this Section
6 will survive the Closing for the period of the statute of limitations
applicable to breaches of contracts in Delaware, except for the
representations and warranties relating to claims against the Seller by
Medicare and Medicaid, which shall survive until the expiration of the
applicable statutes of limitations on the "Cost Reports" filed by the
Seller prior to the Closing Date.
7. Covenants.
7.1 Seller's Covenants. Magellan hereby covenants and agrees as follows:
(a) Operation. From the date hereof until the Closing Date, the Seller
will (i) continue to operate the Facilities in the ordinary course,
consistent with past practice, (ii) continue to offer services at the
Facilities in accordance with past practices, except for changes in
services deemed reasonably appropriate by management based upon
changes in the market, (iii) permit no material change in presently
existing policies (excluding on-going enhancements), except as
required by applicable law and except for changes in policies deemed
reasonably appropriate by management based upon changes in the market,
without, in each instance, the prior written approval of the
Purchaser, and (iv) use
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commercially reasonable best efforts to maintain the Facilities in as
good a condition and substantially the same state of repair as that
existing on the date hereof.
(b) Leases. The Seller will not, without the prior written consent of the
Purchaser, (i) enter into any contract that will or could be binding
upon the Purchaser or other entity taking title to any of the
Facilities and that is not terminable upon at most thirty (30) days'
notice, unless such contract will be fully performed by the Seller on
or before the Closing Date, (ii) amend, modify or supplement any
existing Permit in any material respect, (iii) enter into any new
lease for any of the Facilities or any portion thereof, other than in
the ordinary course of business, and in any event, enter into any new
lease that would constitute a Material Lease, or (iv) amend, modify,
supplement or terminate any of the Leases, other than in the ordinary
course of business, and in any event, amend, modify, supplement or
terminate any of the Leases in any manner that would convert any Lease
into a Material Lease. Any consent requested by Seller pursuant to
this Section 7.1(b) will be deemed approved if the Purchaser does not
respond by written notice to Magellan within ten (10) business days
after Magellan's written notice to the Purchaser requesting such
consent.
(c) Litigation. Magellan shall advise the Purchaser promptly of any
litigation, arbitration, investigation or other proceeding or
administrative hearing (including condemnation) before any governmental
or quasi-governmental agency, licensing or accrediting authority, or
other authority which concerns or affects any of the Facilities or the
operation thereof in any manner and which is instituted after the date
hereof and which involves a claim or alleged liability in excess of
$1,000,000.
(d) Compliance with Laws. The Seller shall comply in all material respects
with all Laws, including without limitation all Environmental Laws,
applicable to the Facilities, and the Seller shall not install in or
remove from the Facilities any storage tanks except in compliance with
all applicable Laws. Magellan shall advise the Purchaser promptly in
writing of any notice or other communication, written or oral (and as
to oral notices or communications, only those of which the officers
described in Section 6.3 have knowledge), to the Seller from any
federal, state or local governmental authority with respect to (i) any
alleged material violation of any Law, including without limitation
any Environmental Law, at or affecting any Facility, or (ii) the
handling, packaging, generating, transportation, release, use,
discharge, treatment, removal, storage, or disposal of Hazardous
Substances or storage tanks which is or may be in violation of
applicable Laws.
(e) Notification of Subsequent Events. Prior to Closing, Magellan shall
notify the Purchaser of any notice received by the Seller of any
material adverse change in or to the Facilities, as well as of any
material adverse changes in the business operated therein, operations
and assets related thereto, or financial condition of the Seller.
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(f) Alterations; Encumbrances; Commitments. From the date hereof until the
Closing Date, the Seller shall not take any of the following actions
without the prior written consent of the Purchaser, which may be
granted or withheld in the Purchaser's sole discretion: (i) except as
hereinafter expressly provided with respect to the Philadelphia
Facility, make or permit to be made any material alterations to or
upon the Facilities; (ii) encumber or permit encumbrance of any of the
Facilities in any manner; or (iii) make any commitments or
representations to any applicable governmental authorities, any
adjoining or surrounding property owners, any utility, or any other
person or entity that would in any manner be binding upon the
Purchaser or other entity taking title to the Facilities, or upon the
Facilities, other than in the ordinary course of business.
(g) Sale of Personal Property. The Seller will not transfer or dispose of,
or permit to be sold, transferred or otherwise disposed of, any item or
group of items constituting Personal Property, except for the use and
consumption of inventory and other supplies and spare parts, and the
replacement of worn out, obsolete and defective tools, equipment and
appliances, in the ordinary course of business.
(h) Insurance; Permits. Magellan will maintain in full force and effect
(i) the Seller's existing insurance coverage with respect to the
Facilities and the business operated therein and (ii) all Permits
relating to the Facilities or any part thereof.
(i) Taxes. Magellan shall (a) subject to Magellan's right under applicable
Laws to contest such taxes and other public charges, pay or cause to be
paid, in a timely fashion, all taxes and other public charges against
the Facilities for the period through Closing, and (b) provide the
Purchaser, within ten (10) days of receipt, with copies of any notices
the Seller receives with respect to any special assessments or proposed
increases in the valuation of the Facilities.
(j) Performance Under Leases. The Seller will perform all material
obligations of landlord or lessor under the Leases, including any
condition for a tenant's or lessee's occupancy of any Facility.
(k) Cooperation. Magellan will assist and cooperate with the Purchaser (i)
prior to Closing in obtaining all Permits which are required by
applicable Laws to be obtained or transferred, or which by custom are
obtained or transferred, prior to closing, (ii) after Closing, in
obtaining all Permits which by custom are obtained or transferred after
closing (which covenant shall survive Closing), and (iii) prior to
Closing with any evaluation, inspection, audit or study of the
Facilities and the books and records relating to the operation thereof
conducted or prepared by, for, or at the request of the Purchaser.
(l) Consents. Except for the consents and approvals which the Purchaser is
required to obtain pursuant to Section 6.2(b), Magellan will use its
commercially reasonable best
- xxiv -
efforts to file or submit in a timely manner and diligently prosecute
any and all applications or notices with federal, state and local
authorities and all other requests with any private persons or entities
for consents, approvals, authorizations and permissions which are
reasonably considered necessary or appropriate (i) for consummation by
the Seller of the Transactions and (ii) to effect the transfer of, or
prevent the termination of, any Permit, Lease, or contract with respect
to the Facilities, including, without limitation, obtaining, or
obtaining the transfer of, for and on behalf of OpCo, all permits
required for the continued operation by OpCo of the business currently
conducted at the Facilities.
(m) Financial Statements. Magellan will provide, upon request by the
Purchaser, (i) to the extent required by applicable federal securities
laws, audited financial statements in such form and for the periods
necessary to permit the Purchaser to satisfy applicable federal
securities law requirements, and (ii) such other unaudited financial
statements relating to the Facilities as may be prepared by Magellan
through the date of Closing. The Purchaser shall bear the costs of
preparation of such audited financial statements to the extent that
(i) the costs of preparation of such financial statements exceed the
costs of preparation of the financial statements that Magellan is
required to prepare in order to satisfy its obligations under
applicable federal securities laws or (ii) Magellan incurs additional
costs, at the Purchaser's request, attributable to the preparation of
such financial statements prior to the date on which such financial
statements are required to be filed with the Securities and Exchange
Commission.
(n) Xxxx-Xxxxx-Xxxxxx. Magellan will file, and will cooperate with the
Purchaser in the filing (if required by applicable Laws) of, any
documents required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act.
(o) Magellan Stockholder Approval. On or prior to May 31, 1997, Magellan
shall use commercially reasonable best efforts to obtain the approval
of its stockholders relating to the Transactions and to any changes in
its Certificate of Incorporation required in connection therewith,
including without limitation, (a) scheduling and holding a meeting of
stockholders at which such matters will be on the agenda, (b)
recommending the approval of such matters in any proxy or related
materials for such meeting, subject, however, to the fiduciary
obligations of Magellan's Board of Directors to the stockholders under
Delaware Corporation Law, and (c) recommending the approval of such
matters at such meeting, subject, however, to the fiduciary
obligations of Magellan's Board of Directors to the stockholders under
Delaware Corporation Law.
(p) Satisfaction of Conditions. Magellan shall exercise its commercially
reasonable best efforts to satisfy all conditions precedent to Closing,
as set forth in Section 8, that are the Seller's responsibility to
satisfy.
(q) Completion of Philadelphia Facility. Magellan shall continue the
construction of the planned improvements currently underway at the
Philadelphia Facility and shall complete
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such construction in a timely manner at Magellan's sole cost and
expense, lien free, provided, however, that Magellan's total liability
for such costs and expenses shall not exceed $11,000,000.
Notwithstanding anything set forth in this Agreement to the contrary,
this covenant shall survive Closing for the period of the statute of
limitations applicable to breaches of contracts in Delaware.
(r) New Senior Credit Facility. Magellan shall use commercially reasonable
best efforts to close, prior to or simultaneously with Closing
hereunder, any new credit facility required to satisfy Magellan's
obligations under its existing financing arrangements and arising out
of the Transactions, or to obtain a loan commitment reasonably
satisfactory to the Purchaser for such new credit facility.
7.2 Purchaser's Covenants. The Purchaser hereby covenants and agrees as
follows:
(a) Satisfaction of Conditions. The Purchaser shall exercise its
commercially reasonable best efforts to satisfy all conditions
precedent to Closing, as set forth in Section 8, that are the
Purchaser's responsibility to satisfy.
(b) Xxxx-Xxxxx-Xxxxxx. The Purchaser will file (if required by applicable
Laws), and will cooperate with Magellan in the filing of, any documents
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act.
(c) The Purchaser will assist and cooperate with Magellan (i) prior to
Closing in obtaining all Permits which are required by applicable Laws
to be obtained or transferred, or which by custom are obtained or
transferred, prior to Closing, (ii) after Closing, in obtaining all
Permits which by custom are obtained or transferred after closing
(which covenant shall survive Closing).
8. Conditions.
8.1 Purchaser's Conditions Precedent to Closing. The obligations of the
Purchaser under this Agreement are subject to the satisfaction on or
before the Closing Date of all conditions contained in this Agreement,
including each of the following (any of which may be waived by the
Purchaser, in the Purchaser's sole and absolute discretion, but only in
writing):
(a) The Seller shall have performed in all material respects all of its
covenants and other obligations contained in this Agreement, and all of
the Seller's representations and warranties contained in this Agreement
shall be true in all material respects on and as of the Closing Date.
(b) The title insurance company(ies) conducting the title examination,
which shall be selected by the Purchaser and shall be reasonably
acceptable to Magellan (collectively, the "Title
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Company"), shall be prepared to issue to the Purchaser or the
Purchaser's designee(s), at standard rates, a Title Policy (as defined
in Section 10.2) with respect to each Facility or a marked title
commitment unconditionally committing to issue a Title Policy with
respect to each Facility within a reasonable time thereafter.
(c) From the date hereof until the Closing Date, there shall not have
occurred any material adverse change to, or deterioration of, the
physical condition of the Facilities taken as a whole, ordinary wear
and tear excepted.
(d) From the date hereof until the Closing Date, there shall not have
occurred any material adverse change in the business or financial
condition of the Seller from that disclosed in the Operating Reports
and 1996 Financials furnished by Magellan to the Purchaser as a part of
the Seller's Deliveries.
(e) The Purchaser or Magellan, as appropriate, shall have obtained, or
obtained the transfer of, all permits, licenses and approvals
necessary to allow the ownership of the Facilities by the Purchaser
and the continued lawful operation by OpCo of the business conducted
therein, except for those permits, licenses and approvals which by
custom are not transferred or obtained until after a conveyance of
property, and except for such consents, regulatory and other
approvals, licenses, permits and other required documentation the
failure to obtain which would not, individually or in the aggregate,
have a material adverse effect on the operation of such business.
(f) The Facilities Lease in the form of Exhibit C attached hereto shall
have been executed by the Purchaser, as lessor, and OpCo, as tenant.
(g) The Subordination Agreement in the form of Exhibit G attached hereto
shall have been executed by the Purchaser, Magellan and OpCo.
(h) There shall exist no material regulatory or contractual impediment to,
nor any litigation, governmental proceeding or investigation seeking to
enjoin, challenging or seeking damages in connection with, the
operation of the Facilities or the Transactions that, in Magellan's or
the Purchaser's reasonable judgment, would make it inadvisable to
proceed with the consummation of the Transactions.
(i) The Purchaser shall have received all necessary shareholder approvals
(if any) required by its governing documents.
(j) The waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act after any necessary filing by the Purchaser shall have expired.
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(k) The Purchaser shall have received opinions of counsel to Magellan
regarding Magellan's authority to enter into the transactions, due
authorization, good standing, no conflicts with or defaults under other
material agreements, and other customary opinions.
(l) The allocations referenced in Sections 2.1 and 2.2 hereof shall have
been agreed upon by the parties and Schedule 2.1 shall have been
attached hereto.
(m) Receipt of all consents, regulatory and other approvals, licenses,
permits and other documentation required by state and federal laws and
regulations or any agreements to which the Purchaser is subject
necessary to consummate the Transactions and permit the Purchaser to
own the Facilities and OpCo to conduct the businesses operated at the
Facilities, except for such consents, regulatory and other approvals,
licenses, permits and other required documentation the failure to
obtain which would not, individually or in the aggregate, have a
material adverse effect on the operation of such businesses.
(n) The "fairness" opinion obtained by the Purchaser from Xxxxxxx Xxxxx &
Co. shall not have been withdrawn or revoked.
(o) All of the conditions of the other Transaction Documents shall have
been satisfied or waived by the party(ies) entitled to insist upon
satisfaction of same, and the closing of all of the Transactions shall
have occurred or shall occur simultaneously with the Closing hereunder.
8.2 Seller's Conditions Precedent to Closing. The obligations of the Seller
under this Agreement are subject to the satisfaction on or before the
Closing Date of the following conditions (any of which may be waived by
Magellan, in Magellan's sole and absolute discretion, but only in
writing):
(a) Magellan shall have consummated a new credit facility in the amount
contemplated by Section 7.1 (r).
(b) Receipt of all consents, regulatory and other approvals, licenses,
permits and other documentation required by state and federal laws and
regulations or any agreements to which the Seller is subject necessary
to consummate the Transactions and permit the Purchaser to own the
Facilities and OpCo to conduct the businesses operated at the
Facilities, except for such consents, regulatory and other approvals,
licenses, permits and other required documentation the failure to
obtain which would not, individually or in the aggregate, have a
material adverse effect on the operation of such businesses.
(c) Magellan shall have received stockholder approval relating to the
Transactions pursuant to the proxy materials for Magellan's 1997 annual
meeting.
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(d) The waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act after any necessary filing by the Seller shall have expired.
(e) Magellan shall have complied with all federal and state laws, rules and
regulations applicable to the execution and delivery of the Franchise
Agreement.
(f) Magellan shall have received opinions of counsel to the Purchaser
regarding the Purchaser's authority to enter into the transactions, due
authorization, good standing, no conflicts with or defaults under other
material agreements, and other customary opinions.
(g) The Master Facilities Lease in the form of Exhibit C attached hereto
shall have been executed by the Purchaser, as lessor, and OpCo, as
tenant.
(h) The Subordination Agreement in the form of Exhibit G attached hereto
shall have been executed by the Purchaser, Magellan and OpCo.
(i) The Purchaser shall have performed in all material respects all of its
covenants and other material obligations contained in this Agreement,
and all of the Purchaser's representations and warranties contained in
this Agreement shall be true in all material respects on and as of the
Closing Date.
(j) The allocations referenced in Sections 2.1 and 2.2 hereof shall have
been agreed upon by the parties.
(k) There shall exist no material regulatory or contractual impediment to,
nor any litigation, governmental proceeding or investigation seeking to
enjoin, challenging or seeking damages in connection with, the
operation of the Facilities or the Transactions that, in Magellan's or
the Purchaser's reasonable judgment, would make it inadvisable to
proceed with the consummation of the Transactions.
(l) The "fairness" opinion obtained by Magellan from Xxxx Xxxxxx Xxxxxxxx
Inc. shall not have been withdrawn or revoked.
(m) All of the conditions of the other Transaction Documents shall have
been satisfied or waived by the party(ies) entitled to insist upon
satisfaction of same, and the closing of all of the Transactions shall
have occurred or shall occur simultaneously with the Closing hereunder.
8.3 Failure of Conditions. If any condition described in Section 8.1 is not
satisfied by the Closing Date, as such date may be extended pursuant to
Section 10.1, the Purchaser shall have the right to terminate this
Agreement by giving written notice of such action to Magellan. If any
condition referenced in Section 8.2 is not satisfied by the Closing
Date,
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as such date may be extended pursuant to Section 10.1, the Seller shall
have the right to terminate this Agreement by giving written notice of
such action to the Purchaser. Upon delivery of any such termination
notice, this Agreement shall terminate, and all rights and obligations
of the parties hereunder shall be released and discharged, except that
Magellan and the Purchaser shall each remain liable to the other for
all damages suffered by the other if the unsatisfied condition was due
to a breach by one party of any of the covenants, obligations,
representations or warranties of such party in this Agreement or any
other failure by such party to use commercially reasonable best efforts
to satisfy conditions precedent to Closing that are within the control
of such party to satisfy.
9. Damage, Destruction and Condemnation.
9.1 Damage; Destruction. In the event of any loss, damage or destruction to
any Facility prior to Closing, Magellan shall immediately notify the
Purchaser thereof and shall promptly commence and diligently prosecute
to completion the repair and restoration thereof to substantially its
condition prior to such casualty. If the damaged Facility is not fully
restored prior to Closing such that the Seller's representations and
warranties in Section 7 with respect thereto are not true at Closing,
then the parties shall nevertheless proceed to Closing hereunder
without reduction of the Purchase Price, the Seller shall assign all of
its right, title and interest in and to any remaining claims the Seller
may have under the insurance policies covering the damaged
Facility(ies), as well as any remaining unused and unpaid insurance
proceeds, to OpCo at Closing, and the parties shall cause OpCo to
complete such restoration and repair work after Closing at Seller's
sole cost and expense. The Seller covenants to pay all such costs and
expenses of completion to OpCo, or to reimburse OpCo therefor, within
five (5) business days after OpCo's written request therefor, which
covenant shall survive Closing. In addition, the Seller shall pay OpCo
after Closing any lost income from the damaged Facility(ies) during the
period from Closing through the date that business interruption
insurance proceeds under policies of insurance required to be carried
by OpCo pursuant to the Facilities Lease would have been payable had
such insurance been in effect at the time of the casualty. The Seller
shall not agree to or accept any settlement of its insurance claim(s)
without obtaining the Purchaser's prior written approval thereof..
9.2 Condemnation. If any condemnation proceedings are instituted, or notice
of intent to condemn is given, with respect to all or any material
portion of the Facilities, Magellan shall promptly notify the Purchaser
thereof, in which event the Purchaser shall have the option either (i)
to terminate this Agreement with respect to the Facility(ies) affected
by written notice to Magellan, in which event the Purchase Price shall
be reduced by the amount allocated to such Facility(ies) pursuant to
Section 2.2, or (ii) to consummate the purchase of the Facilities
without reduction of the Purchase Price, and the right to collect any
condemnation award or compensation for such condemnation shall be
assigned by the Seller to the Purchaser or the Purchaser's designee at
Closing. The Seller shall not agree to or accept any compromise or
condemnation award without obtaining the
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Purchaser's prior written approval thereof. For purposes of this
Agreement, (i) a condemnation shall be deemed to include any
governmental action which could limit or render inconvenient the
current access to any Facility, and (ii) a "material portion" of a
Facility shall be any portion the taking of which would have a material
adverse effect on the operation of the business conducted at such
Facility.
10. Closing.
10.1 Closing Date. The consummation of the transactions contemplated hereby
(the "Closing") shall occur at the offices of King & Spalding, 000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or at such other
location upon which Magellan and the Purchaser agree, at 10:00 a.m. on
May 31, 1997, or such earlier or later date upon which Magellan and
the Purchaser agree (the "Closing Date"); provided, however, that in
the event that the Closing has not occurred by June 30, 1997, either
party shall have the right to terminate this Agreement by written
notice to the other. Upon delivery of such notice, this Agreement
shall terminate, and all rights and obligations of the parties
hereunder shall be released and discharged, except that Magellan and
the Purchaser shall each remain liable to the other for all damages
suffered by the other if the failure to close was due to a breach by
one party of any of the covenants, obligations, representations or
warranties of such party in this Agreement or any other failure by
such party to use commercially reasonable best efforts to satisfy
conditions precedent to Closing that are within the control of such
party to satisfy.
10.2 Seller's Obligations at Closing. At the Closing, the Seller will do,
or cause to be done, the following:
(a) Documents. The Seller will, and will cause the Subcos (as appropriate)
to, execute, acknowledge (if necessary), and deliver the following
documents:
(i) the Deeds, subject only to the Permitted Exceptions;
(ii) an Assignment of Leases in the form and substance of Exhibit H;
(iii) a Xxxx of Sale in the form and substance of Exhibit I;
(iv) an updated certificate executed by the Seller remaking and reaffirming
all representations and warranties made by the Seller to the Purchaser
in accordance with the provisions of Section 6; and
(v) an opinion of the Seller's attorney to be dated as of the Closing Date
stating (i) that Magellan and each Subco are authorized to convey its
respective Facility(ies) in accordance with this Agreement, and (ii)
that the Deeds and other documents,
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instruments, and agreements executed by the Seller in connection with
Closing have been duly authorized and executed.
(b) Title Policies. For purposes of this Section 10.2(b), a "Typical
Owner's Policy" shall mean a standard Extended Coverage A.L.T.A. Form
B Policy of Owner's Title Insurance (10-17-70 revision with '84
amendments), or other form of owner's title insurance policy
reasonably acceptable to the Purchaser available in a state where such
A.L.T.A. Form B is not available and most closely resembling such
A.L.T.A. Form B. Magellan will cause the Title Company to issue to the
Purchaser a Typical Owner's Policy with respect to each Facility, in
the amount of the Purchase Price allocated to each such Facility in
accordance with Section 2.2, and insuring that the Purchaser has fee
simple title to each Facility, subject only to the Permitted
Exceptions (a "Title Policy"). In addition, each Title Policy shall
contain affirmative coverage with respect to mechanics' liens (or any
reference to such liens in the general provisions or elsewhere shall
be deleted), and each Title Policy shall include the following
endorsements to coverage to the extent available and commonly used for
title insurance covering real property in the state where the
applicable Facility is located: access, survey, contiguity, zoning
(ALTA 3.1), subdivision, an endorsement deleting creditor's rights
exceptions to coverage, and such other endorsements as may be
reasonably requested by Purchaser (the "Endorsements"). The Seller
shall execute and deliver to the Title Company a customary form of
affidavit and other documents and agreements (to the extent required
by the Title Company in order for the Title Company to issue the Title
Policies) certifying (a) the absence of claims which would give rise
to mechanic's and materialmen's liens, (b) that the Seller and the
tenants under the Leases are the only parties in possession of the
Facilities, and (c) that there are no pending or outstanding suits or
judgments against either the Seller or the Facilities, except as
disclosed to the Title Company and for which the Title Company has not
taken exception. The Seller shall also deliver to the Title Company
such evidence as may be required with respect to the authority of the
person executing the deeds of conveyance and other items necessary to
issue title insurance to the Purchaser or the Purchaser's designee(s).
In addition, Magellan and each Subco shall furnish to the Purchaser
and the Title Company a certificate to the effect that none of them is
a foreign person, corporation, partnership, trust or estate under
Section 1445 of the Internal Revenue Code. If Magellan or any Subco
fails or refuses to provide such certificate, the Title Company or
Escrow Agent shall have the right to make such deductions from the
Seller's proceeds at Closing and to remit such amounts to the Internal
Revenue Service as are required by the Federal Foreign Investment in
Real Property Tax Act and the regulations promulgated thereunder.
(c) Original Documents. Seller will deliver at the corporate headquarters
of OpCo or the Facilities, as appropriate, to Purchaser or OpCo, as
appropriate, originals within Seller's possession of all items
enumerated in Section 3 of this Agreement.
(d) Possession. Seller will deliver possession of the Facilities, subject
to the Leases.
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(e) Keys. Seller shall furnish to OpCo duplicate keys and master keys to
all locks located on the Facilities, properly tagged for
identification, as well as combinations, card keys and cards for the
security systems, if any.
(f) Costs. The Seller will pay all costs allocated to the Seller pursuant
to Section 10.4.
10.3 Purchaser's Obligations at Closing. At the Closing, the Purchaser will
do, or cause to be done, the following:
(a) Payment of Consideration. The Purchaser will pay to Magellan the
Purchase Price, as adjusted in accordance with the provisions of this
Agreement.
(b) Documents. The Purchaser will execute, acknowledge (if necessary), and
deliver an Assignment of Leases in the form and substance of Exhibit H
and an updated certificate executed by the Purchaser remaking and
reaffirming all representations and warranties made by the Purchaser to
the Seller in accordance with the provisions of Section 6.
(c) Additional Documents. The Purchaser will execute and deliver or obtain
for delivery to the Title Company any instruments reasonably necessary
to consummate this Agreement, including by way of example, evidence of
the authority of the party executing instruments on behalf of the
Purchaser.
(d) Costs. The Purchaser will pay all costs allocated to the Purchaser
pursuant to Section 10.4.
10.4 Costs and Adjustments at Closing. If the prorations and adjustments
provided for in this Section 10.4 impose post-Closing obligations or
liabilities on OpCo, Magellan covenants to use commercially reasonable
best efforts to cause OpCo to perform such obligations and satisfy such
liabilities in a timely manner, which covenant shall survive Closing.
(a) Expenses. The Purchaser shall pay or cause to be paid all fees of
consultants, appraisers, and engineers rendering reports or opinions
to the Purchaser, and all other costs incurred by the Purchaser, in
connection with the Purchaser's due diligence investigation of the
Facilities, except that the Seller shall pay the costs and fees of
environmental consultants and engineers retained to perform Phase I
environmental audits and, if necessary or advisable in the reasonable
opinion of the Purchaser, Phase II environmental audits and prepare
environmental reports on the Facilities. The Purchaser shall also pay
all costs and fees associated with the assumption of any Industrial
Revenue Bonds that Purchaser assumes at Closing, including, without
limitation, assumption fees, mortgage fees, mortgage recordation fees,
and mortgagees' title insurance costs. The Seller shall pay the cost
of preparing the Deeds and other conveyancing documents, the costs
associated with releasing any encumbrances of record, all grantor's
taxes, transfer taxes, county taxes,
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clerks' fees, documentary stamps, release fees, recordation taxes
associated with the Deeds and other conveyancing documents, escrow fees
charged by the Escrow Agent or Title Company, and the costs and fees
for the title examinations, title insurance (including any affirmative
coverages and endorsements required by the Purchaser), and surveys.
Each party shall pay its own attorneys' fees, including local counsel
fees.
(b) Real Estate Taxes. Real estate taxes on the Real Property for the
calendar year of the Closing will be prorated between Magellan and
OpCo as of the Closing Date. If the amount of such taxes is not known
at Closing, the proration of such real estate taxes will be based on
the amount of such taxes for the previous real estate tax fiscal
period. As soon as the actual amount of real estate taxes on the
Facilities for the year of Closing is known, the Seller and OpCo will
readjust the amount of such taxes to be paid by each party with the
result that the Seller will pay for those taxes applicable to the Real
Property up to and including the date of Closing and OpCo will pay for
those taxes and assessments applicable to the Real Property after the
date of Closing. The provisions of this Section 10.4(b) will survive
the Closing.
(c) Rents. All rents, additional rents and other sums actually paid under
the Leases for the month of Closing will be prorated between Magellan
and OpCo as of the Closing Date, provided that delinquent amounts will
not be considered in such calculation. All rents, percentage rents,
real estate taxes and other costs or charges paid by tenants under the
Leases after the Closing will first be applied to such charges as are
then due and then applied in their reverse order of accrual until
applied in full. Any amounts that are to be applied to periods prior
to Closing will be delivered by OpCo to the Seller within thirty (30)
days after receipt, net of any costs incurred by OpCo in collecting
such amounts (including, without limitation, attorneys' fees). OpCo
will have no obligation to incur any cost or expense or institute any
litigation to collect delinquent rents, percentage rents, or other
costs or charges owed to the Seller, and the Seller will not exercise
any right to collect such amounts unless OpCo fails to use reasonable
efforts to collect same. In any event, the Seller will not institute
suit against any tenant under the Leases. The provisions of this
Section 10.4(c) will survive the Closing.
(d) Security Deposits. The Seller will pay to OpCo, in cash at Closing or
as a credit against the Purchase Price, the amount of any security
deposits paid pursuant to the Leases.
(e) Other Expenses. All other ordinary operating expenses for or
pertaining to the Facilities, including, but not limited to, public
utility charges, maintenance, service charges, and lease commissions,
will be prorated as of the Closing Date between the Seller and OpCo,
it being understood and agreed that revenues resulting from operation
of the Facilities prior to Closing will belong to Magellan and
revenues resulting from operation of the Facilities from and after
Closing will belong to the Purchaser; provided, however, that the
Seller shall pay in full any and all special assessments which have
either been levied or are pending against the Facilities or any part
thereof as of the Closing Date, except if such
- xxxi -
assessments are due in installments, in which event the Seller shall
only be responsible for paying such installments due prior to the
Closing. OpCo shall be responsible for the installments due after
Closing. The Seller shall pay in full any and all leasing commissions
or other compensation with respect to all Leases and other tenancies in
effect as of the Closing Date, including commissions which are or may
become due on account of options, renewals or extensions.
(f) Adjustment. To the extent that errors are discovered in, or additional
information becomes available with respect to, the prorations and
allocations made at Closing, the Seller and OpCo shall make such
post-Closing adjustments as may be necessary to correct any
inaccuracy; however, all prorations (except for ad valorem taxes) will
be final within ninety (90) days after Closing. Magellan agrees to
deliver to OpCo all invoices and payments related to the Facilities
received by the Seller after Closing and relating to periods after the
Closing. In addition, Magellan shall give the Purchaser written notice
of any payments received by the Seller (other than from OpCo) after
Closing relating to periods prior to the Closing in order to
facilitate OpCo's collection of and accounting for Magellan's
receivables after Closing in accordance with the OpCo Contribution
Agreement.
10.5 Settlement Statement. At the Closing, the Purchaser and the Seller
shall execute and deliver duplicate originals of a settlement statement
(the "Settlement Statement") showing all of the payments, adjustments
and prorations provided herein and otherwise agreed upon by them.
11. Indemnifications.
11.1 Purchaser's Indemnity. The Purchaser hereby agrees to indemnify the
Seller against, and to hold the Seller harmless from, all claims,
demands, causes of action, losses, damages, obligations, debts,
liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements actually incurred)
(collectively, "Claims") asserted against or incurred by the Seller in
connection with or arising out of (a) the ownership, maintenance or
operation of the Facilities and attributable to events occurring on or
after the Closing, during the Purchaser's ownership of the Facilities,
and at any time after the Purchaser or any of its affiliates (other
than OpCo) takes over the operation of the Facilities following an
Event of Default under the Facilities Lease, or (b) a breach of any
representation, warranty or covenant of the Purchaser contained in this
Agreement not disclosed to or actually known by the Seller at or before
Closing. The Purchaser's obligations under this Section 11.1 shall
survive the Closing until the expiration of any applicable statute of
limitations for making or bringing such claims, demands, or causes of
action. Notwithstanding anything to the contrary contained herein, the
Purchaser's indemnity obligations hereunder (i) will not extend to
Claims arising out of the negligence, willful misconduct or fraud of
the Seller, and (ii) with respect to indemnification claims under
clause (b) of this Section 11.1, (x) for a period of two (2)
- xxxv -
years following the Closing Date, shall not arise until the aggregate
Claims arising during such period and resulting from the breach exceed
$1,000,000, at which time such indemnity obligations shall cover all
Claims, and (y) after two (2) years following the Closing Date, shall
not arise until the aggregate Claims arising during such period and
resulting from the breach exceed $10,000,000, at which time such
indemnity obligations shall cover all Claims.
11.2 Seller's Indemnity. The Seller hereby agrees to indemnify the Purchaser
against, and to hold the Purchaser harmless from all Claims asserted
against or incurred by the Purchaser in connection with or arising out
of (a) the ownership, maintenance or operation of the Facilities and
attributable to events occurring prior to the Closing and during the
Seller's ownership of the Facilities, or (b) a breach of any
representation, warranty or covenant of the Seller contained in this
Agreement not disclosed to or actually known by the Purchaser at or
before Closing. Notwithstanding the foregoing, the Seller shall not
indemnify the Purchaser for any debts, liabilities or obligations of
the Seller expressly assumed by the Purchaser at Closing pursuant to
this Agreement or any of the other Transaction Documents. The Seller's
obligations under this Section 11.2 shall survive the Closing until the
expiration of any applicable statute of limitations for making or
bringing such claims, demands, or causes of action. Notwithstanding
anything to the contrary contained herein, the Seller's indemnity
obligations hereunder (i) will not extend to Claims arising out of the
negligence, willful misconduct or fraud of the Purchaser, and (ii) with
respect to indemnification claims under clause (b) of this Section
11.2, (x) for a period of two (2) years following the Closing Date,
shall not arise until the aggregate Claims arising during such period
and resulting from the breach exceed $1,000,000, at which time such
indemnity obligations shall cover all Claims, and (y) after two (2)
years following the Closing Date, shall not arise until the aggregate
Claims arising during such period and resulting from the breach exceed
$10,000,000, at which time such indemnity obligations shall cover all
Claims.
12. Remedies.
12.1 Default by Seller. If the Closing fails to occur as a result of the
Seller's material breach of this Agreement, then the Purchaser may (i)
enforce specific performance of the Seller's duties and obligations
under this Agreement, or (ii) terminate this Agreement by giving
written notice thereof to the Seller prior to or at the Closing, in
which event the Purchaser shall also be entitled to seek its direct,
actual damages against the Seller for such default as well as such
other relief as may be available at law or in equity. If prior to
Closing the Seller defaults in any of its obligations, representations
or warranties hereunder, whether or not such obligation, representation
or warranty survives Closing, and such default is not disclosed to or
actually known by the Purchaser at or prior to Closing, then the
Purchaser may seek recovery of all of its direct, actual damages
incurred as a result of the Seller's default (subject to any applicable
limitations set forth in Section 11.2) as well as such other relief as
may be available at law or in equity, and the Purchaser will not be
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deemed to have waived its right to xxx for damages by having closed
this transaction even though the accuracy of representations and
warranties was a condition precedent to the Purchaser's obligation to
close.
12.2 Default by Purchaser. If the Closing fails to occur as a result of the
Purchaser's material breach of this Agreement, then the Seller may (i)
enforce specific performance of the Purchaser's obligation to close
under this Agreement, or (ii) terminate this Agreement by giving
written notice thereof to the Purchaser prior to or at the Closing, in
which event the Seller shall also be entitled to seek its direct,
actual damages against the Purchaser for such default as well as such
other relief as may be available at law or in equity. If prior to
Closing the Purchaser defaults in any of its obligations,
representations or warranties hereunder, whether or not such
obligation, representation or warranty survives Closing, and such
default is not disclosed to or actually known by the Seller at or prior
to Closing, then the Seller may seek recovery of all of its direct,
actual damages incurred as a result of the Purchaser's default (subject
to any applicable limitations set forth in Section 11.2) as well as
such other relief as may be available at law or in equity, and the
Seller will not be deemed to have waived its right to xxx for damages
by having closed this transaction even though the accuracy of
representations and warranties was a condition precedent to the
Seller's obligation to close.
12.3 Arbitration. Notwithstanding anything set forth herein to the contrary,
all claims and disputes between the parties arising after the Closing
hereunder shall be subject to resolution by binding arbitration in
Delaware before the American Arbitration Association and governed by
the Commercial Arbitration Rules then in effect.
12.4 Legal Fees. In the event either party to this Agreement commences legal
action of any kind or any arbitration proceeding to enforce the terms
and conditions of this Agreement, the prevailing party in such
litigation or arbitration will be entitled to collect from the other
party all costs, expenses and attorneys' fees incurred in connection
with such action or proceeding.
13. Brokers. Each party hereby represents and warrants to the other that it
has not engaged, dealt with or otherwise discussed this transaction
with any broker, agent or finder. Each party agrees to indemnify and
hold the other harmless from and against any claim arising out of a
breach of the foregoing agreement and representation and warranty.
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14. Changes in the Portfolio.
14.1 Pre-Closing.
(a) Addition of New Facilities. Except as set forth below, in the event
Magellan, any Subco, or any other subsidiary of Magellan at any time
after December 26, 1996, and prior to Closing desires to acquire any
additional behavioral healthcare in-patient facilities (the "New
Facilities"), which Magellan or such subsidiary intends to own and/or
operate in a manner substantially similar to the Facilities, the
Purchaser shall have the right to require Magellan or such subsidiary
to add such New Facility to the Facilities being acquired hereunder,
in which event the Purchase Price shall be increased by the amount
actually paid or required to be paid by Magellan or such subsidiary
for such New Facility. The foregoing sentence shall not apply to (i)
the purchase by Magellan or any subsidiary of Magellan of Parkwood
Hospital in Olive Branch, Mississippi, (ii) acquisitions by Green
Spring Health Services, Inc., or (iii) acquisitions by Magellan or any
subsidiary of Magellan of facilities the primary purpose of which is
to provide services pursuant to contracts with federal, state and
local governments and governmental agencies, providing health and
human services, including behavioral healthcare services, to the
mentally retarded, the developmentally disabled, the elderly, persons
under the control or supervision of criminal/juvenile justice systems
and other designated populations. If the Purchaser does not want to
add the New Facility to the Facilities being acquired hereunder, then,
subject to compliance with the provisions of other Transaction
Documents, Magellan shall be entitled to acquire such New Facility. If
Magellan acquires such New Facility, then simultaneously with Closing
Magellan shall enter into a management agreement with OpCo covering
such New Facility, pursuant to which OpCo shall manage and operate
such New Facility in exchange for payment by Magellan to OpCo of
OpCo's costs plus a fair market value management fee. Magellan shall
negotiate such management fee with OpCo in good faith. If Magellan and
OpCo are unable to agree upon a fair market value management fee, then
such dispute shall be resolved by appraisal in the manner provided for
determining the Fair Market Value of the Franchise (as such terms are
defined in the Franchise Agreement), as set forth in Section 4.4 of
the Franchise Agreement, except that the term "Qualified Appraiser"
used therein, for purposes of determining a fair market value
management fee pursuant to this Section 14.1(a), shall mean an
appraiser who is not in control of, controlled by or under common
control with either the Seller or OpCo and has not been an employee of
the Seller or OpCo or any Affiliate (as defined in the Franchise
Agreement) of the Seller or OpCo at any time, who is qualified to
appraise the fair market value of the management fee and has been
actively engaged in the appraisal of assets, rights and businesses,
and, to the extent it is reasonably practicable to locate such an
appraiser, an appraiser who has been actively engaged in the appraisal
of management fee arrangements for healthcare operations, in the state
in which the New Facility is located and who has held his or her
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five (5) years immediately preceding his or her appointment hereunder.
(b) Substitution of Facilities. Magellan shall have the right at any time
not later than thirty (30) days prior to Closing to substitute a
Comparable Facility (as hereinafter defined) for any Facility it
designates (a "Designated Facility"), provided that such substitution
will satisfy the Purchaser's requirements related to taxation as a
real estate investment trust. The Purchaser may demand, at Magellan's
expense, a reasonably acceptable opinion of counsel or private letter
ruling from the Internal Revenue Service indicating that the
substitution will have no material adverse tax consequences to the
Purchaser. As used herein, the term "Comparable Facility" shall mean a
facility reasonably acceptable to the Purchaser, operated as the same
type of business as the Facilities, with an expected future
profitability substantially equivalent to or greater than that of the
Designated Facility both immediately prior to such substitution and as
reasonably projected over the term of the Facilities Lease, taking
into account any relevant factors. Magellan shall pay all costs and
expenses incurred in connection with any substitution of facilities,
including reasonable attorneys' fees and expenses. After the
substitution, a Comparable Facility shall be treated as if it were a
Facility under this Agreement.
(c) Closed Facilities. If the Seller elects to close and cease its business
operations in one or more Facilities prior to Closing, such closed
Facility(ies) shall nevertheless be included in the Facilities to be
acquired hereunder, without adjustment in the Purchase Price, and at
Closing shall be included among the Collective Leased Properties (as
defined in the Facilities Lease) covered by the Facilities Lease,
without adjustment to the Rent (as defined in the Facilities Lease)
payable thereunder.
14.2 Post-Closing. In the event Magellan, any Subco, or any other subsidiary
of Magellan other than Green Spring at any time or from time to time
from and after Closing desires to acquire any New Facilities, which
Magellan or such subsidiary intends to own and/or operate in a manner
substantially similar to the Facilities, the Purchaser shall have a
right of first refusal to acquire such New Facility upon the terms and
conditions hereinafter set forth. The Purchaser shall have thirty (30)
days after receipt from Magellan of a copy of an executed letter of
intent with a seller of any such New Facility to notify Magellan of its
election to exercise such right of first refusal. The Purchaser's
failure so to notify Magellan shall be deemed to be a waiver of the
Purchaser's right to exercise its right of first refusal with respect
to the New Facility that was the subject of Magellan's notice; however,
the Purchaser's failure so to notify Magellan shall not be deemed to be
a waiver of any of the Purchaser's rights or remedies under the
noncompetition or other provisions of the Transaction Documents or a
waiver of its rights with respect to any future New Facility. If the
Purchaser elects not to exercise such right of first refusal, Magellan
may close and consummate such transaction on substantially the terms as
set forth in the letter of intent, subject to compliance with the
applicable provisions of the other Transaction Documents. If Magellan
acquires any such New Facility, then simultaneously with
- xxxi -
closing of such acquisition Magellan shall enter into a management
agreement with OpCo covering such New Facility, pursuant to which OpCo
shall manage and operate such New Facility in exchange for payment by
Magellan to OpCo of OpCo's costs plus a fair market value management
fee. Magellan shall negotiate such management fee with OpCo in good
faith. If Magellan and OpCo are unable to agree upon a fair market
value management fee, then such dispute shall be resolved by appraisal
in the manner provided for determining the Fair Market Value of the
Franchise (as such terms are defined in the Franchise Agreement), as
set forth in Section 4.4 of the Franchise Agreement, except that the
term "Qualified Appraiser" used therein, for purposes of determining a
fair market value management fee pursuant to this Section 14.2, shall
have the meaning given such term in Section 14.1(a) hereof. If the
Purchaser exercises its right of first refusal, the Purchaser shall be
obligated to acquire the New Facility on the terms set forth in the
letter of intent; provided, however, that the Purchaser's exercise of
such right shall be conditioned upon (1) the Purchaser's and OpCo's
execution at or as of the closing of the acquisition of such New
Facility of an amendment to the Master Facilities Lease adding such New
Facility to the leased premises thereunder and adjusting the rent
payable thereunder appropriately (with the rent payable for such New
Facility to be determined on the same basis as the rent payable for the
Facilities during the initial Lease Year, as defined in the Facilities
Lease, escalating on the same basis as the rent payable for the
Facilities), and (2) Magellan's and OpCo's execution at or as of the
closing of the acquisition of such New Facility of (A) an amendment to
the Master Franchise Agreement adding such New Facility to the
facilities covered thereby and adjusting the franchise fee payable
thereunder appropriately (with the franchise fee payable for such New
Facility to be determined on the same basis as the franchise fee
payable for the Facilities during the first and second Contract Years
(as defined in the Franchise Agreement), escalating on the same basis
as the franchise fee payable for the Facilities), and (B) a Subsidiary
Franchise Agreement covering such New Facility, upon substantially the
same terms and conditions as the Subsidiary Franchise Agreement
covering each of the other Facilities. Notwithstanding anything set
forth in this Agreement to the contrary, the provisions of this Section
14.2 shall survive Closing for a period equal to the term of the
Facilities Lease, including all extensions and renewals thereof.
15. Miscellaneous.
15.1 Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors by operation of law and
permitted assigns; provided that neither party may assign, delegate or
otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party hereto,
which consent may be granted or withheld in such party's sole and
absolute discretion. Notwithstanding the foregoing, the Purchaser may
assign its rights and obligations hereunder to a wholly owned
subsidiary of the
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Purchaser or the Purchaser's general partner, provided that in no event
shall the Purchaser be released from liability for performance of all
of its obligations hereunder.
15.2 Notices. Whenever any notice is required or permitted hereunder, such
notice shall be in writing and (a) sent by certified mail, postage
prepaid, return receipt requested, (b) given by established overnight
commercial courier for delivery on the next business day with delivery
charges prepaid or duly charged, (c) personally hand-delivered or (d)
sent by facsimile transmission with confirmation of receipt received,
to the applicable address or facsimile number set forth below:
As to the Purchaser: Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Crescent Real Estate Equities, Ltd.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
with copies to: Xxxxx X. Xxxx, Esq.
Senior Vice President, Law
Crescent Real Estate Equities, Ltd.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
As to Magellan: Xxxxx X. Xxxxx, Esq.
Executive Vice President,
Administrative Services and General Counsel
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with copies to: Xxxxxx X. Xxxxxx, Esq.
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
- xli -
Notices which are mailed shall be deemed effective upon receipt. Notices which
are hand-delivered shall be deemed effective upon tender to a natural person at
the address shown. Notices which are delivered by overnight courier shall be
deemed given on the next business day after delivery to such courier. Notices
which are delivered by facsimile transmission shall be deemed received upon
electronic confirmation of delivery.
15.3 Further Assurances. The Seller and the Purchaser agree to execute,
acknowledge and deliver any further agreements, documents, certificates
or instruments that are reasonably necessary or desirable to carry out
the transactions contemplated by this Agreement.
15.4 Amendments; Waiver. No amendment or waiver of any provision of this
Agreement shall be effective unless in writing and signed by the party
or parties against whom enforcement is sought. No failure or delay by
any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
15.5 Governing Law; No Rule of Construction. This Agreement and all
transactions hereunder shall be governed by the laws of the State of
Delaware, without regard to the application of choice of law
principles. The rule that an Agreement should be construed against the
party drafting it shall not apply to this Agreement because all parties
have played a significant role in negotiating and drafting this
Agreement.
15.6 Captions. The captions used in connection with the Articles, Sections
and Subsections of this Agreement are for convenience only and will not
be deemed to expand or limit the meaning of the language of this
Agreement.
15.7 Exhibits. All exhibits, attachments, annexed instruments and addenda
referred to herein will be considered a part hereof for all purposes
with the same force and effect as if copied verbatim herein.
15.8 Entire Agreement. This Agreement, including all Exhibits and Schedules
hereto, together with all of the other Transaction Documents and their
respective exhibits and schedules, supersedes all prior agreements and
understandings, both oral and written, between the parties with respect
to the subject matter hereof, all of which are null, void and of no
further force or effect.
15.9 Time of Essence. Time is of the essence of each and every provision of
this Agreement. However, if the final date of any period which is set
out in any provision of this Agreement falls on a Saturday, Sunday or
legal holiday under the laws of the United States, the State of Texas
or the State of Georgia then, and in such event, such period shall be
extended to the next day that is not a Saturday, Sunday or legal
holiday.
- xlii -
15.10 Severability. If any term, covenant or condition of this Agreement is
held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid or unenforceable
provision had never been contained herein.
15.11 Risk of Loss. All risk of loss to the Facilities occurring prior to
the Closing will be on the Seller.
15.12 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original document, and all of which together
shall constitute one and the same instrument. Signatures may be
transmitted by facsimile and will be accepted and considered effective
as long as such signatures are followed up with signature pages with
original signature within two (2) business days thereafter.
15.13 WAIVER OF JURY TRIAL; SERVICE OF PROCESS. EACH PARTY HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY EITHER PARTY IN CONNECTION WITH ANY
MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT OR THE RELATIONSHIP OF THE PARTIES HEREUNDER. EACH
PARTY HEREBY CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING
RELATING TO ANY SUCH ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM AT THE ADDRESS SET FORTH FOR SUCH PARTY IN
SECTION 15.2 HEREOF; PROVIDED, HOWEVER, THAT NOTHING HEREIN
SHALL BE CONSTRUED AS REQUIRING SUCH SERVICE AT SUCH ADDRESS.
15.14 Non-Solicitation. During the Exclusive Period (as hereinafter defined),
Magellan shall not, and shall not permit any of its representatives, to
offer, negotiate, consummate or solicit (including furnishing any
information concerning Magellan's business, properties or other assets)
any offer or proposal for a sale and lease-back of any or all of the
Facilities, a sale and/or lease of any or all of the Contributed
Assets, Purchased Assets, Working Capital Assets or Excluded Assets (to
the extent such Excluded Assets are necessary to provide the services
to be provided under the Franchise Agreement) except, in the case of
the Contributed Assets, Purchased Assets, Working Capital Assets or
Excluded Assets (to the extent such Excluded Assets are necessary to
provide the services to be provided under the Franchise Agreement), in
the ordinary course of business or as otherwise permitted under the
OpCo Contribution Agreement, or any other transaction covering any or
all of the Facilities, Magellan's acute care psychiatric hospitals,
Contributed Assets, Purchased Assets, Working Capital Assets or
Excluded Assets (to the extent such Excluded Assets are necessary to
provide the services to be provided under the Franchise Agreement) that
is proposed to be accomplished in a manner similar to that for the
Transactions, unless Magellan shall have received an unsolicited
written offer relating to such transaction, from a reputable buyer,
which offer, in the written opinion of
- xliii -
Xxxx Xxxxxx Xxxxxxxx Inc., Magellan's financial advisors, appears to be
on terms financially superior to those offered by the Transactions and
which, in the written opinion of legal counsel to Magellan reasonably
acceptable to the Purchaser (which would include King & Spalding,
current legal counsel to Magellan), Magellan's Board of Directors is
legally obligated to consider by principles of fiduciary duty to
stockholders under Delaware Corporation Law. Magellan shall promptly
notify the Purchaser in the event it receives any unsolicited offers or
proposals. In addition, Magellan agrees to notify all other parties who
have expressed an interest in acquiring all of any of the Facilities
and/or Operational Assets that Magellan has entered into exclusive
negotiations with one party (without identifying the Purchaser) and
that such other parties' offers have therefore been rejected, except
for any proposals or other expressions of interest which the Board of
Directors of Magellan is required to consider by principles of
fiduciary duty to stockholders under Delaware Corporation Law. For
purposes of this Agreement, the "Exclusive Period" began on December
26, 1996, and shall continue in effect until the earlier of Closing or
termination of this Agreement and the other Transaction Documents.
15.15 Confidentiality; Public Announcement. The parties shall maintain in
strict confidence all discussions regarding the Transactions, as well
as the fact that such discussions have taken and are taking place;
provided, however, that each party may disclose such information to its
attorneys, consultants, affiliates, directors, officers, employees and
representatives, governmental authorities, lenders and any other
parties assisting a party to the Transaction Documents in conducting
its due diligence investigations. The provisions of this Section will
not be applicable to disclosures of information required by applicable
law, rule or regulation and will not survive the Closing. Neither of
the parties hereto shall issue any press release or make any public
announcement of or relating to the Transactions without the prior
consent of the other party, except where a public announcement is
required by law. Where such announcement is required by law, in the
reasonable opinion of counsel to Magellan or the Purchaser, the other
party shall be given opportunity to review and comment upon the
proposed announcement. It is the intent of the parties to publicly
announce the Transactions upon execution of this Agreement and the
other Transaction Documents.
- xliv -
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the dates set forth beneath their respective signatures below.
PURCHASER:
ATTEST: CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: Crescent Real Estate Equities, Ltd.
a Delaware corporation
By: _____________________________ By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Name: ____________________________ Xxxxxx Xxxxxxx, President and
Chief Executive Officer
Title: ___________________________
SELLER:
MAGELLAN HEALTH SERVICES, INC.
By: ____________________________ By: /s/ X. X. Xxxxxxxx
-----------------------------------
Name: __________________________ Name: E. Xxx Xxxxxxxx
Title: ___________________________ Title: Chairman and Chief Executive
Officer
- xlv -
