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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), made and entered into
as of this 8th day of July, 1997 (herein called the "Effective Date"), by and
among Capital Senior Living Communities, L.P., a Delaware limited partnership
("Seller") and Capital Senior Living Corporation, a Delaware corporation, and
its assigns ("Purchaser").
WITNESSETH:
WHEREAS, Seller is the owner of certain lots and parcels of land
situated in the States of Arizona, Indiana and Ohio, and more fully described
in Schedule A attached hereto (collectively referred to herein as the "Land");
and
WHEREAS, Seller is the owner of four (4) retirement communities which
include two (2) nursing home facilities located on the Land and listed in
Schedule B attached hereto (such facilities are sometimes referred to herein
separately as a "Facility" and collectively as the "Facilities"); and
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
Land, the Facilities and certain other assets of Seller located on the Land or
used in or in connection with the operation of the Facilities all upon the
terms and conditions hereinafter set forth.
WHEREAS, In addition to the sale and purchase of the Facilities,
Seller desires to sell, assign and transfer and Purchaser desires to purchase
and assume all of Seller's right, title and interest in and to the limited
partnership units Seller owns in Healthcare Properties, L.P. ("HCP"), and the
pension notes and limited partnership units Seller owns in NHP Retirement
Housing Partners I, Limited Partnership ("NHP"), all upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the parties hereto do hereby covenant and agree as
follows:
1. ACQUISITION OF ASSETS. Seller shall sell and deliver to Purchaser and
Purchaser shall purchase and accept from Seller, all of Seller's right, title,
benefit, and interest in and to the Land, Facilities and the assets (excluding
those assets listed on Schedule 1.1 hereto) of Seller used in or in connection
with the operation of the Facilities as of the Effective Date, together with
replacements thereof and additions thereto made between the Effective Date and
the Closing Date, together with Seller's right, title and interest in and to
the HCP partnership units and the NHP pension notes and limited partnership
units as hereinafter described (collectively referred to herein as the
"Assets"), including, without limitation, all assets described in the following
categories:
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1.1. The fee interest in the Land and the buildings (including
without limitation the Facilities), structures, erections, appurtenances,
easements, and improvements now thereon (collectively referred to herein as the
"Premises") and the fixtures belonging to Seller and used in connection
therewith including, if any, all venetian blinds, window shades, screens,
screen doors, storm windows and doors, awnings, shutters, furnaces, heaters,
heating equipment, stoves, ranges, oil and gas burners and fixtures appurtenant
thereto, hot water heaters, plumbing and bathroom fixtures, electric and other
lighting fixtures, mantels, outside television antennas, satellite dishes,
fences, gates, trees, shrubs, plants, air conditioning equipment, ventilators,
garbage disposers, dishwashers, washing machines, and driers.
1.2. All of the nursing home beds for which the Facilities are
licensed.
1.3. All vehicles, machinery, equipment, furniture, furnishings
and accessories of all kinds, whether owned or leased by Seller, used in
connection with the Facilities.
1.4. Seller's entire inventory used or maintained in connection
with the Facilities, including, but not limited to, food, pharmaceuticals,
drugs, cleaning materials, linens and medical and office supplies (the
"Inventory").
1.5. To the extent transferable under federal or state law, all
of the patient, medical, clinical, historical, financial, and personnel records
of the Facilities, and all of the operating manuals, procedures manuals,
training manuals, and other books and records used by Seller in operating the
Facilities.
1.6. To the extent transferable under state law, all licenses,
permits, certificates (including Certificates of Need of Seller) and franchises
necessary to operate and conduct the business of the Facilities and all waivers
of any requirements pertaining to such licenses, permits, certificates, and
franchises.
1.7. All good will, registered or unregistered trademarks, trade
or brand names, service marks and similar intangible property pertaining to the
Facilities.
1.8. The exclusive right to use the trade names of each of the
Facilities as set forth on Schedule 1.8 hereto or any variation thereof, as
part of the name or in connection with the Facilities or any part thereof.
1.9. All surveys, environmental reports, plans, specifications,
and architectural renderings of the Facilities in the possession or control of
Seller.
1.10. All right, title, and interest of Seller in and to Encore
Limited Partnership ("Encore") free and clear of all Liens and encumbrances.
1.11. All right, title, and interest of Seller (approximately
54%) in and to HCP free and clear of all Liens and encumbrances.
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1.12. All right, title, and interest of Seller (approximately
31%) in and to certain Pension Notes outstanding (approximately $64,000,000.00
in principal and accrued interest) and limited partnership units (approximately
3%) in NHP free and clear of all Liens and encumbrances.
Attached hereto as Schedule 1.2 is a comprehensive list (excluding the
assets described in Schedule 1.1 hereof) of the vehicles, fixtures, machinery,
equipment, furniture, and furnishings owned by Seller and used in or in
connection with the operation of the Facilities.
Attached hereto as Schedule 1.3 is a comprehensive list of all
material assets related to the operation of the Facilities which are leased by
Seller.
2. CONSIDERATION. In consideration of the sale and transfer by Seller
hereunder of the Assets to Purchaser and of the agreement herein by Seller to
perform each of its other obligations hereunder, Purchaser shall pay to Seller
an amount and assume from Seller certain liabilities, in each case as set forth
below:
2.1. Purchase Price. The aggregate purchase price for the
Assets shall be Seventy Million and 00/100 Dollars ($70,000,000.00), subject to
adjustment as provided in Section 2.1.2. herein, and to such other adjustments
as expressly set forth in this Agreement (herein referred to as the "Purchase
Price").
2.1.1. Purchase Price Allocation. Attached hereto as
Schedule 2.1.1 is an allocation of the Purchase Price among the
Assets. The Purchase Price allocation set forth in Schedule 2.1.1 is
made with the knowledge and understanding that it will be used by the
parties for all purposes including tax, reimbursement, and other
purposes. Each party agrees that it will report the transaction in
accordance with such allocation and that it will not take a position
inconsistent with such allocation except with the written consent of
the other party to this Agreement. Each party shall make available to
the other party all filings and reports required under Section 1060 of
the Code.
2.1.2. Appraised Value of Assets; Adjustment to
Purchase Price. An appraisal of the Assets shall be obtained by the
parties within the Inspection Period, as hereinafter defined, the cost
of which shall be paid by Seller, with fifty percent (50%) of the cost
thereof reimbursed to Seller by Purchaser at Closing (the
"Appraisals"). The Purchase Price for the Assets shall be adjusted,
either upward or downward, depending upon the results of the
Appraisals, provided, however, should the total adjustment in the
Purchase Price exceed, either in net reduction or net addition to the
Purchase Price, Ten Million and 00/100 Dollars ($10,000,000.00),
either party may, upon written notice to the other delivered on or
before (i) ten (10) days after receipt of the Appraisals or (ii) prior
to the date of the expiration of the Inspection Period, whichever date
is later, elect to cancel the Agreement. In such case, the Xxxxxxx
Money deposit shall be promptly returned to Purchaser and the parties
shall have no further obligation hereunder, except for those which
expressly survive any such termination. The parties shall agree upon
the
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appraiser or appraisers to be used and jointly draft instructions to
such appraisers describing the criteria to be followed in performing
and preparing the Appraisals.
2.1.3. Assumption of Seller's Mortgage Loan
Obligations. In addition to the Assumed Liabilities described in
Section 2.2 herein, and unless otherwise agreed by Seller and
Purchaser, Purchaser shall assume at Closing, Seller's current
mortgage debt to Xxxxxx Brothers Holdings, Inc., d/b/a Xxxxxx Capital,
a division of Xxxxxx Brothers Holdings, Inc., in the principal sum of
$77,000,000.00 (the "Mortgage Debt") and take title to the Assets
subject to such debt, provided, however, that the outstanding
principal balance and accrued interest on such debt as of the Date of
Closing does not exceed the Purchase Price. To the extent that the
Debt as of the Date of Closing exceeds the Purchase Price, Seller
shall pay to Purchaser at Closing such excess amount of such Debt in
cash. Seller and Purchaser acknowledge and agree that the amount of
the Debt assumed by Purchaser at Closing shall be credited to
Purchaser against the Purchase Price.
2.2. Assumed Liabilities. Purchaser will assume from Seller at
Closing only the obligations and liabilities of Seller related to (i) the
ownership and operation of the Facilities which accrue or otherwise are to be
performed on or after Closing in respect of the contracts and agreements listed
in Schedule 2.2 attached hereto (collectively referred to herein as the
"Assumed Contracts"), in each case as in effect at Closing and solely to the
extent that the existence at or after Closing of such liabilities or
obligations does not constitute a breach of any representation or warranty made
by Seller herein or in connection herewith; (ii) proratable items which are not
yet due and payable by Seller prior to or at Closing and for which Purchaser
receives a credit at Closing; and (iii) obligations with respect to any
security deposits or patient trust funds held by Seller and transferred to
Purchaser on the Closing Date. Notwithstanding anything to the contrary
herein, or in any other writing delivered in connection herewith, nothing
herein or in any such other writing shall be construed to constitute the
assumption, express or implied, by Purchaser of any obligations or liability of
Seller or of any Affiliate thereof, except solely for the obligations and
liabilities expressly agreed to be assumed at Closing by Purchaser pursuant to
the first sentence of this Section 2.2. To the extent that any of the Assumed
Contracts are not assignable without the consent of a third party, this
Agreement shall not of itself constitute an assignment or an attempted
assignment of such Assumed Contracts if such assignment or attempted assignment
would constitute a breach thereof. Seller will use all reasonable efforts to
obtain the consent to the assignment to Purchaser of each such Assumed Contract
with respect to which such consent is required for such assignment.
3. DEPOSIT. Upon entering into this Agreement, Purchaser shall escrow
with Lawyers Title Insurance Company ("Escrow Agent") the sum of Ten Thousand
and 00/100 Dollars ($10,000.00), which sum (the "Deposit"), together with all
interest earned thereon, shall be held by Escrow Agent for Purchaser's benefit,
and either applied, returned or forfeited according to the terms of this
Agreement.
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4. TITLE REQUIREMENTS. Seller will deliver to Purchaser at Closing
(without exception) good and marketable title to all of the Assets (except
those Assets listed in Schedule 1.3 attached hereto to which Assets Seller
shall deliver a good and marketable leasehold interest therein) subject to the
following requirements:
At Closing, Seller shall convey the Premises (including without
limitation the Facilities) to Purchaser by special warranty deed, subject to no
Liens or encumbrances whatsoever, other than (i) real estate taxes and
assessments which are a lien but not yet due and payable at Closing, (ii)
zoning and building code ordinances and regulations which are applicable to the
Premises and have not been violated, (iii) encumbrances which are shown on the
surveys of the Premises prepared and/or updated as provided by this Agreement
which are acceptable to Purchaser, (iv) rights of tenants and patients
occupying beds in the Facilities on the Closing Date, and (v) those exceptions
to title referenced in the Title Commitments, as hereinafter defined, which are
accepted (or deemed accepted) by Purchaser (all of the foregoing collectively
referred to herein as the "Permitted Exceptions"). At Closing, Seller shall
convey to Purchaser the furniture, fixtures, machinery, equipment and Inventory
included in the Assets by xxxx of sale with warranty of title and shall assign
to Purchaser the leases of the Assets described in Schedule 1.3.
If, on or before the Closing Date, Seller shall fail for any reason to
remove or discharge any Lien or encumbrance on any Facility other than those
Liens or encumbrances included in Permitted Exceptions, Purchaser may elect, in
its sole discretion, to terminate this Agreement.
5. TITLE POLICY AND SURVEY. Within thirty (30) days after the Effective
Date, Seller, at its expense, shall furnish Purchaser with a preliminary binder
of title insurance ("Title Commitments") from Lawyers Title Insurance Company
and/or its authorized agents (the "Title Company") agreeing to insure title to
each Facility in the name of Purchaser in the full amount of the Purchase Price
allocated to the Land and Facilities as set forth in Schedule 2.1.1. Such
preliminary title insurance binders shall be issued in the most recently
approved ALTA form without exception, other than Permitted Exceptions.
The acceptability of title to each of the Premises shall be determined
by Purchaser, in its discretion, within the later to occur of: (i) twenty (20)
days after receipt of both the Title Commitment and the survey hereinafter
described, for such Premises or (ii) the expiration of the Inspection Period.
If any exceptions other than Permitted Exceptions are not cured by Seller
within twenty (20) days after receipt of notice thereof from Purchaser, or
thereafter waived by Purchaser, Purchaser may terminate this Agreement. In the
event Purchaser does not elect to terminate this Agreement, Purchaser and
Seller shall proceed with Closing, and the cost of curing title shall be offset
against the Purchase Price. The Title Commitments shall be attached hereto as
Schedule 5. At Closing, the Title Company shall issue Owner's Policies of
Title Insurance to Purchaser insuring Purchaser's fees simple title to the each
of the Premises free and clear of all matters other than the Permitted
Exceptions and deleting all standard exceptions. In connection therewith, on
or before Closing, Seller agrees to execute and deliver to the Title Company
all necessary certificates and affidavits to delete standard exceptions.
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Seller shall promptly deliver after the Effective Date to Purchaser
all survey, topographical and title information now in Seller's possession and
shall procure, at Seller's expense, within thirty (30) days after the Effective
Date, a current survey or recertification of the existing survey for each of
the Premises meeting the minimum standard and detail requirements for currently
approved ALTA Land Title Surveys and the requirements of the Title Company to
delete the standard "survey exceptions." Seller shall receive a credit or
otherwise be reimbursed at Closing by Purchaser for the costs paid by Seller to
obtain such current surveys and recertifications, as applicable.
6. SELLER'S COVENANTS, REPRESENTATIONS, AND WARRANTIES. As an inducement
to Purchaser entering into this Agreement, Seller makes the following
covenants, representations and warranties, in addition to those contained
elsewhere herein:
6.1. Corporate Matters.
6.1.1. Organization, Power, and Standing. Seller is a
limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is qualified to
do business in each state in which it is now doing business, and has
all requisite partnership power and authority to execute, deliver, and
perform this Agreement, to carry on the business of the respective
Facilities as now conducted, to own, lease, or otherwise use its
respective Assets, and to consummate the transactions contemplated
hereby.
6.1.2. Authorization and Enforceability. This
Agreement has been duly authorized, executed, and delivered by Seller,
constitutes the legal, valid, and binding obligation of Seller and is
enforceable against Seller in accordance with its terms, except to the
extent such enforceability may be limited by bankruptcy,
reorganization, insolvency, or similar laws of general applicability
governing the enforcement of the rights of creditors or by the general
principles of equity (regardless of whether considered in a proceeding
at law or in equity).
6.1.3. Compliance with Charter Documents. The
execution, delivery, and performance of this Agreement by Seller and
the consummation by Seller of the transactions contemplated hereby
will not violate or conflict with or constitute a default under any
term of the Limited Partnership Agreement of Seller. Attached hereto
as Schedule 6.1.3 is a true and complete copy of the Limited
Partnership Agreement of Seller in effect as of the Effective Date.
6.1.4. No Breach, Etc.. The execution, delivery, and
performance of this Agreement by Seller will not conflict with or
result in a breach of or default by Seller under any term, condition,
or provision of any order, writ, injunction, decree, contract,
agreement, or instrument to which Seller is a party or subject or by
which Seller or the Assets are or may be bound; will not result in the
creation or imposition of any lien,
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charge, or encumbrance of any nature upon any of the Assets; and will
not give to others any interest or rights in, or with respect to, any
of the Assets.
6.2. Seller's Financial Statements. Attached as Schedule 6.2.1
are the financial statements of Seller for the years ending December 31, 1994,
December 31, 1995, and December 31, 1996, all of which have been audited by
Ernst & Young, LLP (the "Seller's Annual Financial Statements"). The Seller's
Annual Financial Statements (including the notes thereto) are, to the best of
Seller's knowledge, prepared in conformity with generally accepted accounting
principles. Seller shall deliver to Purchaser, Seller's unaudited financial
statements for the period from January 1, 1997, to the end of the month
immediately prior to the Effective Date.
6.3. Character of Operations, Compliance with Laws.
6.3.1. Compliance Generally. To the best of Seller's
knowledge, neither the execution and delivery of this Agreement by
Seller nor the consummation by Seller of any transaction contemplated
hereby does or will violate or give rise to any violations or default
under any Legal Requirement assuming (i) Purchaser secures all
necessary approvals from federal, state, and local governmental and
administrative agencies having jurisdiction thereof required for the
acquisition of the Facilities by Purchaser, and (ii) Purchaser and
Seller make any applicable filing required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act, 15 USC Section 18a and the regulations
promulgated thereunder. The Seller does not have actual knowledge
that the operation of the Facilities as heretofore or currently
conducted was or is in violation of, or that Seller is in default
under any Legal Requirement. Seller has not received any notice of
any impending order or requirement which would cause additional
expenditures to be made to bring the Premises and the Assets into
compliance with Legal Requirement. The sale of the Assets to
Purchaser is not subject to any bulk sales act.
6.3.2. No Bribes, Illegal Payments. Seller nor any
general partner of Seller, or, to the best of Seller's knowledge,
employee or agent of Seller, has directly or indirectly given or
agreed to give any gift, contribution, payment, or similar benefit to
any supplier, customer, governmental employee or other Person who was,
is, or may be in a position to help or hinder Seller or any Facility
(i) which could subject Seller or Purchaser to any damage or penalty
in any civil, criminal, or governmental litigation or proceeding, or
(ii) the non-continuation of which in the future could reasonably be
expected to result in a material adverse effect on the business,
operations, assets, prospects, or condition, financial or otherwise,
of the Facilities.
6.3.3. Seller' Licenses. Schedule 6.3.3 attached
hereto contains a true and complete list of all currently effective
licenses, permits, approvals, certificates of need, qualifications,
Medicaid and Medicare certifications and the like, which have been
issued to Seller by any governmental agency (whether federal, state,
local, or other) in connection with the ownership of the Assets and
the operation of the Facilities
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(collectively, "Seller's Licenses"). Seller's Licenses are all of the
licenses, permits, approvals, certificates of need, qualifications,
Medicaid and Medicare certifications and the like which are necessary
for the ownership and operation by Seller of the Assets, including
without limitation each of the Facilities. Seller's Licenses are in
full force and effect and no such License is conditional or
restricted.
6.3.4. Compliance of Facility with State Licensure,
Medicare and Medicaid Certification Requirements. Each Facility
currently meets, and as of the Closing Date shall meet, in all
respects, all standards and conditions for the operation and licensure
of skilled and intermediate care nursing facilities to the extent such
standards and conditions are applicable to such Facility and, if
eligible, for participation in the Medicare and Medicaid programs
under federal, state, and local governmental laws, rules, regulations,
guidelines, standards, and conditions, and is not subject to any
variances or waivers with respect to licensure or operational
requirements.
6.3.5. Returns, Reports, Etc.. All Medicare and
Medicaid cost reports and all sales and use tax returns necessary to
be filed by Seller with any governmental authorities on or prior to
the Effective Date, as well as those to be filed on or prior to the
Closing Date, have been, or will be, accurately completed in all
material respects. Seller has no obligations to the States in which
the Facilities are located for reimbursement of Medicaid depreciation
recapture liabilities or to the United States Government for Medicare
overpayment liabilities.
6.3.6. Work Order; Statements of Deficiencies. There
are no pending work orders or statements of deficiencies relating to
the Premises or any Facility which have been required or issued by any
state department of health or Medicare or Medicaid certification
agency, or any insurance company, police or fire department,
sanitation, health or work authorities or any other federal, state, or
municipal authority. Seller shall provide to Purchaser a copy of any
such work order or statement of deficiencies received by Seller after
the Effective Date within five (5) days after receipt thereof.
6.3.7. Environmental Matters. Seller is not subject to
any type of enforcement actions or compliance order for any violation
or alleged violation of any environmental laws, rules, standards, or
regulations relating to the Premises or any Facility, including, but
not limited to, those related to waste- management, air pollution
control, waste-water treatment or noise abatement. Seller has not
received any notice or citation for noncompliance by it with respect
to any of the foregoing relating to the Premises or any Facility. To
the best of Seller's knowledge:
(i) Seller has not been notified that
any person's health has nor may have been impaired
(including any past or present employee) as the result of
the use, existence, or disposal of Hazardous Materials or
Infectious Wastes on the Premises.
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(ii) All Infectious Wastes have been
stored, transported, and disposed of in accordance with all
laws and licensure and certification standards applicable
to Seller and the respective Facilities.
(iii) There are no underground fuel
storage tanks located at the Premises.
(iv) The Premises are not contaminated
with any Hazardous Materials or Infectious Waste and
neither Seller nor any of Seller's employees, agents,
licensees, or invitees have placed or permitted the
placement of any Hazardous Materials or Infectious Waste
in, on, or over the Premises; the Premises do not appear on
any state or Federal Comprehensive Environmental
Responsibility, Compensation and Liability Act, or Super
Fund lists as being classified as a hazardous waste site;
and the Premises have not been used as a plant or site
where Hazardous Materials or Infectious Waste was subjected
to treatment, storage, disposal, or recovery.
6.3.8. Litigation. Except as set forth on Schedule
6.3.8 attached hereto, there is no litigation, at law or in equity, or
any proceeding before or investigation by any federal, state, or
municipal court, board, or other governmental or administrative agency
or any arbitrator, against Seller in connection with the operation of
the Facilities or otherwise affecting the Assets, or questioning or
challenging the validity of this Agreement or actions to be taken
hereunder, pending or, to the best of Seller's knowledge, threatened,
involving a claim of $10,000 or more ($40,000 in the aggregate), nor
has Seller given notice to any insurers (for notice or adjustment
purposes) of any claim against Seller. No credit will be given Seller
at Closing for any litigation claims pending or threatened. No
judgment, decree, or order of any federal, state, or municipal court,
board, or other governmental or administrative agency or any
arbitrator (i) has been issued, to the best of Seller's knowledge,
against any Person other than Seller which could have any material
adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of Seller or the operation of any
Facility, or (ii) has been issued against Seller.
6.4. ASSETS AND LIABILITIES.
6.4.1. Condition of Certain Assets. To the best
knowledge of Seller, all machinery and equipment included in the
Assets, including without limitation, all heating, air conditioning,
electrical and life safety equipment/systems installed on the
Premises, are in good working order, ordinary wear and tear excepted,
and the roofs of each Facility are in good repair, ordinary wear and
tear excepted.
6.4.2. Warranties and Guarantees. To the best
knowledge of Seller, Schedule 6.4.2 attached hereto contains true and
complete list of all written warranties and guarantees currently in
effect in connection with the buildings and other
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improvements on the Premises including by way of illustration, and not
by way of limitation, any warranties on the roofs of the buildings and
any warranties and guarantees in connection with any heating, air
conditioning, or other equipment in, or about said buildings or
improvements and any rights Seller may have against their general
contractors or their subcontractors (collectively, the "Warranties and
Guarantees"). Seller shall assign the Warranties and Guaranties to
Purchaser, at Closing, to the extent such Warranties and Guaranties
are transferable or assignable and Seller shall assist Purchaser is
enforcing such Warranties and Guarantees.
6.4.3. Inventory. All items of Inventory included in
the Assets consist and will consist of, as of Closing, items of a
quality customarily used by Seller in the ordinary course of the
business of its Facilities.
6.4.4. Trade Names. Seller has the right to use the
respective names of its Facilities as set forth in Schedule B attached
hereto in the market area of the respective Facilities, and Seller has
not licensed or entered into any agreement to permit any person or
entity to use such Facility name or any variation thereof. To
Seller's knowledge, the use of such Facility names by Seller does not,
and the use of such Facility names by Purchaser in the respective
market areas of each Facility in a manner consistent with Seller's
past practices will not, as of the Closing Date, conflict with any
rights to any similar name owned by any other person or entity known
to Seller.
6.4.5. Liabilities. Except as set forth in the
Schedules attached hereto, to the best knowledge of Seller, there are
no liabilities of Seller affecting the Assets, whether absolute,
contingent, or fixed, liquidated or unliquidated, matured or not yet
due, of any nature, including tax liabilities, other than (i)
liabilities expressly accounted for and disclosed in Seller's Annual
Financial Statements or Seller's unaudited financial statements, or
(ii) liquidated, non-contingent liabilities incurred by Seller in the
ordinary course of business since December 31, 1996.
6.4.6. Liens and Encumbrances. As of the Effective
Date, to the best knowledge of Seller, the Assets are not subject to
any Liens or encumbrances other than those Liens and encumbrances
included in the Permitted Exceptions, the personal property Permitted
Exceptions and such other Liens or encumbrances which shall be paid
and released at Closing. After giving effect to the transfer to
Purchaser at Closing, the Assets will not be subject to any Lien
except (i) any Lien included in the Permitted Exceptions and the
personal property Permitted Exceptions (ii) any Lien created by
Purchaser, if any, and (iii) any Lien insured against by title
insurance. If, subsequent to the Closing, any mechanics or other
lien, charge or order for the payment of money shall be filed against
the Assets or against Purchaser or its assigns, based upon any act or
omission of Seller, its agents, servants, or employees, or any
contractor or subcontractor connected with construction on the
Premises prior to Closing (whether or not such lien, charge, or order
shall be valid or enforceable as such), within thirty (30) days after
notice to Seller of the filing thereof, Seller shall take such action,
by bonding,
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deposit, payment or otherwise, as will remove and satisfy such lien of
record as against the Premises.
6.4.7. Taxes. To the best knowledge of Seller, all
taxes, excises and assessments against the Assets due and payable on
or before the Effective Date have been paid. As of Closing, there
will be no unpaid or outstanding taxes or assessments against the
Assets or any part thereof (except only taxes and assessments not yet
due and payable to be adjusted as of the Closing Date). To the best
knowledge of Seller, there are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment of any type of tax or deficiency against Seller with
respect to the Assets owned by Seller, nor are there any actions,
suits, proceedings, investigations, or claims for additional taxes and
assessments asserted by any taxing authority with respect to the
Assets owned by Seller of which Seller has notice.
6.4.8. Certain Real Estate Matters. There are no
pending real estate tax abatement actions or proceedings, there is no
unrepaired casualty damage to the Premises and there are no pending
or, to the best of Seller's knowledge, threatened eminent domain or
condemnation proceedings, with respect to the Premises. The Premises
are each located on various, separate, and independent tax parcels.
6.4.9. Trade Payables. Except as specifically provide
otherwise in this Agreement, Seller shall pay all of its trade
payables when and as due before and after the Closing.
6.4.10. Tenant and Patient Accounts. Except as set
forth in Schedule 6.4.10 attached hereto, as of the Effective Date, no
tenants or patients at any Facility (nor third-party payors
responsible for such patients) are delinquent in the payment of their
bills owed to Seller. At Closing, Seller shall provide Purchaser with
a update to Schedule 6.4.10 certified as of the Closing Date.
6.4.11. Encore. Seller owns a three percent (3%)
limited partnership interest in Encore.
6.4.12. HCP. Seller owns at least a fifty-four percent
(54%) limited partnership interest in HCP.
6.4.13. NHP. Seller owns at least thirty-one percent
(31%) interest in the outstanding Pension Notes and at least three
percent (3%) limited partner interest of NHP.
6.5. Contractual Matters.
6.5.1. Contracts. Schedule 6.5.1.1 attached hereto
contains a true and complete list of all material written contracts,
agreements, and leases (other than (i)
11 July 2, 1997
12
material agreements described in Section 6.6.1 hereto (the "Labor
Contracts"); and (ii) occupancy agreements of each Facility (the
"Occupancy Agreements")), between Seller and any other person or
entity currently in effect in connection with the Premises or the
operation of the Facilities (together with the Labor Contracts and
Occupancy Agreements, collectively referred to herein as the
"Contracts"). Seller has heretofore delivered to Purchaser a true and
complete copy of each such Contract listed in Schedule 6.5.1.1. Each
Assumed Contract is in full force and effect, and, to the best of
Seller's knowledge, neither Seller nor any other party to any Assumed
Contract is in default of its respective obligations thereunder, and
to the best of Seller's knowledge, no event exists which, with notice
or passage of time, would become an event or default by Seller
thereunder.
6.5.2. Transactions with Affiliates. Except as set
forth in Schedule 6.5.2 attached hereto, no Affiliate of Seller is an
officer, director, employee, consultant, competitor, customer, or
supplier of, or is a party to any Contract with, Seller in connection
with any of the Facilities (collectively, "Affiliate Arrangements").
Unless Purchaser otherwise agrees in writing, Seller shall terminate
or cause to be terminated each such Affiliate Arrangement described in
Schedule 6.5.2 hereto on or before the Closing Date, provided,
however, that Purchaser hereby approves and consents to the continued
management and administration of the Facilities by Capital Senior
Living, Inc., an Affiliate of Seller. There are no trade names,
proprietary knowledge or licenses that any such Affiliate owns or is
licensed or otherwise has the right to use and which is necessary to
the operation of any Facility.
6.5.3. Occupancy Agreements. Attached as Schedule
6.5.3.1 hereto are true and complete copies of the current standard
forms of occupancy agreements entered into between Seller and tenants
or patients at each Facility (the "Occupancy Agreement Forms"). There
are no agreements under which tenants or patients entering any
Facility subsequent to the adoption by Seller of the applicable
Occupancy Agreement Form currently occupy all or any part of any
Facility which materially deviate from the Occupancy Agreement Forms.
There are no undisclosed amendments or agreements to such residency
agreements, nor any special rates, services, or concessions promised
by Seller to any residents or patients of any Facility except as
disclosed in Schedule 6.5.3.2 attached hereto.
6.5.4. Insurance. Attached as Schedule 6.5.4 hereto is
a list of all insurance coverage maintained by Seller as of the
Effective Date in connection with the Premises and the operation of
each Facility. All such insurance coverage is in full force and
effect (with no overdue premium) in the amounts set forth on Schedule
6.5.4. Seller agrees to maintain the insurance coverage listed in
Schedule 6.5.4 without material change thereto through the Closing
Date. Certificates evidencing such insurance coverage will be
supplied by Seller to Purchaser at Purchaser's request. Seller shall
promptly inform Purchaser of any non-renewal, material change,
cancellation, or replacement of any such insurance coverage prior to
Closing. In the event of any non-renewal, material change,
12 July 2, 1997
13
or cancellation of the insurance coverage currently maintained by
Seller hereunder, Purchaser shall have the right during the period
prior to Closing to provide replacement insurance generally comparable
to the insurance coverage currently maintained by Seller, at the
Seller's expense, and to deduct the cost thereof from the Purchase
Price. All prepaid insurance policies shall be assigned to Purchaser
at Closing.
6.6. Labor Matters.
6.6.1. Employment Related Contracts. Seller has
provided to Purchaser all written employment agreements relating to
any employees of Seller and all written compensation, pension,
retirement, welfare, profit sharing, incentive, or other similar
written plans relating to any employee of Seller. Seller has also
advised Purchaser of all plans, agreements, arrangements, or practices
which constitute "fringe benefits" to any of the employees of Seller,
including, without limitation, group medical insurance, group life
insurance, disability insurance, and related benefits. A complete
list of all of the foregoing is attached hereto as Schedule 6.6.1.
6.6.2. Employee Compensation and Benefits. To the best
knowledge of Seller, attached hereto as Schedule 6.6.2 is a true and
complete list of all current employees of Seller, and their current
level of compensation, which list shall be true and correct as of the
Closing Date in all material respects except for those changes
specifically authorized by Section 8.1 hereof and except for the
addition or removal of employees in the ordinary course.
6.6.3. Labor Relations. To the best of Seller's
knowledge, no employee of Seller is currently part of any collective
bargaining unit or represented by any collective bargaining
representative, and no petition has been filed or proceeding
instituted by any such employee or group of employees with any labor
relations board seeking recognition of a bargaining representative.
There are no strikes, grievances, disputes, or controversies with
individual employees, except for disputes and controversies with
individual employees arising in the ordinary course of business
consistent with past experience which do not and will not,
individually or in the aggregate, have an adverse effect on the
business, operations, assets, prospects, or conditions, financial or
otherwise, of Seller, Purchaser, or the operation of the Facilities.
The Facility located in Merrillville, Indiana and commonly known as
"Towne Centre" has a union contract.
6.7. Other Representations.
6.7.1. Completeness and Accuracy of Contracts and
Documents. To the best of Seller's knowledge, all copies of contracts
and documents delivered by Seller to Purchaser in connection with the
transactions contemplated hereby are complete and accurate in all
respects, and no such contract or agreement has been amended or
modified in any respect.
13 July 2, 1997
14
6.7.2. No Misrepresentations. To the best of Seller's
knowledge, Seller has not made an untrue statement of material fact in
any instrument, certification, or statement furnished to Purchaser,
nor has Seller omitted to state a material fact necessary to make the
statements contained herein or therein not misleading.
6.8. Seller's Covenants Regarding Transfer of Ownership
Approvals and Notice. Purchaser shall file all notices and other documents
with applicable federal, state, and local governmental authorities as required
under law to effect the transfer of ownership of the Facilities to Purchaser
and, to the extent applicable, the assignment to Purchaser of each currently
effective Medicare and Medicaid provider agreement and Seller's Licenses,
including without limitation, at least thirty (30) days prior to the Closing
Date, file with the Federal Trade Commission, to the extent required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act, 15 USC Section 18a and the
regulations promulgated thereunder, a "Notification and Report Form for Certain
Mergers and Acquisitions." Seller shall assist and cooperate with Purchaser
with all such filings and other action required to be taken by Purchaser to
accomplish the foregoing.
6.9. Finder's or Broker's Fee. Except for compensation payable
to the general partner (or affiliate) of Seller under its Limited Partnership
Agreement, Seller has not engaged in any conduct that has given or will give
rise to any liability for any fee, compensation, or reimbursement for expenses
to any agent, finder, or broker, either in the nature of a finder's fee or
otherwise, in connection with the transactions contemplated hereby.
6.10. Seller's Knowledge Defined. The representations and
warranties made to Purchaser by Seller in this Section 6 and elsewhere in this
Agreement are limited to the current actual knowledge of the executive
officers of the corporation which is the general partner of the partnership
which is the general partner of Seller, and the recertification required of
Seller at Closing shall likewise be qualified to the then current actual
knowledge of said officers.
7. PURCHASER'S COVENANTS, REPRESENTATIONS, AND WARRANTIES. As an
inducement to Seller entering into this Agreement, Purchaser makes only the
following covenants, representations, and warranties:
7.1. Organization, Power, and Standing. Purchaser is a
corporation duly organized and validly existing under the laws of the State of
Delaware, and has all requisite power to execute, deliver, and perform this
Agreement and to consummate the transactions contemplated hereby.
7.2. Authorization and Enforceability. This Agreement has been
duly authorized, executed, and delivered by Purchaser, constitutes the legal,
valid, and binding obligation of Purchaser, and is enforceable against
Purchaser in accordance with its terms, except to the extent such
enforceability may be limited by bankruptcy, reorganization, insolvency, or
similar laws of general applicability governing the enforcement of the rights
of creditors or by the general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
14 July 2, 1997
15
7.3. Compliance with Charter Documents. The execution,
delivery, and performance of this Agreement by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby will not violate or
conflict with or constitute a default under any term of the Charter or By-laws
of Purchaser.
7.4. No Breach, Etc.. The execution, delivery, and performance
of this Agreement will not conflict with or result in a breach of or default by
Purchaser under any material terms, condition, or provision of any order, writ,
injunction, decree, contract, agreement, or instrument to which Purchaser is a
party or subject or by which it is bound.
7.5. Litigation. There is no litigation, at law or in equity,
or any proceeding before or investigation by any federal, state, or municipal
court, board of arbitrator, against Purchaser, pending or, to the best of
Purchaser's knowledge, threatened, which, if adversely determined, would have a
material effect on Purchaser.
7.6. Covenants Regarding Transfer of Ownership Approvals and
Notices. Purchaser shall file all applications and other documents with
applicable federal, state, and local governmental authorities as required under
law to effect the transfer of ownership of the Assets to Purchaser and the
assignment to Purchaser of each currently effective Medicare and Medicaid
provider agreement and Seller's Licenses. In addition, Purchaser, at least
thirty (30) days prior to the Closing Date, shall file with the Federal Trade
Commission, to the extent required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act, 15 USC Section 18a and the regulations promulgated
thereunder, a "Notification and Report Form for Certain Mergers and
Acquisitions."
7.7. Finder's or Broker's Fee. Purchaser has not engaged in any
conduct that has given or will give rise to any liability for any fee,
compensation, or reimbursement of expenses to any agent, finder, or broker,
either in the nature of a finder's fee or otherwise, in connection with the
transactions contemplated hereby.
7.8. Purchaser's Knowledge Defined. The representations and
warranties made to Seller by Purchaser in this Section 7 and elsewhere in this
Agreement are limited to the current actual knowledge of the chief executive
officers of Purchaser, and the recertification required of Purchaser at Closing
shall likewise be qualified to the then current actual knowledge of said
officers.
8. CERTAIN AGREEMENTS OF THE PARTIES.
8.1. Conduct of Seller Prior to Closing. Seller covenants and
agrees that, through the period prior to Closing: (i) the Assets, including
without limitation each Facility, shall be operated in the ordinary course of
business and in a manner consistent with Seller's past practice, and Seller
will use its best efforts to maintain existing levels of occupancy and payor
mix at each Facility; (ii) no sale, disposition, removal, or encumbrance of any
furniture, fixtures, or equipment located at the Premises, outside of the
ordinary course of business, shall
15 July 2, 1997
16
be made without the written approval of Purchaser; (iii) except in accordance
with established practice and rates of increase, Seller shall not pay or
obligate itself to pay any bonus, pension, retirement, insurance, death, or
other form of incentive or special compensation to any employee, agent,
partner, or shareholder, or make any increase in rates of pay of any employees,
agents, partners, or shareholders without the written approval of Purchaser;
(iv) except for closing expenses contemplated by this Agreement as Seller's
obligation and the contemplated modification and/or refinancing of Seller's
current indebtedness, which indebtedness will be paid-off by Seller at closing,
no contract, agreement, lease, or other obligation providing for the payment of
consideration or the occurrence of indebtedness of more than Five Thousand
Dollars ($5,000) in any one instance, Ten Thousand Dollars ($10,000) in the
aggregate, shall be executed, entered into, or made by Seller in connection
with the operation of the Assets, without the written approval of Purchaser;
(v) no increase shall be made in the usual rates charged to tenants or patients
at the Facility without the written approval or Purchaser; (vi) Seller will
replace the Inventory used in the operation of the Facility as and when
required in the ordinary course of business and the quantity and quality of the
Inventory at Closing shall be substantially the same as exists on the Effective
Date; (vii) no order for equipment, machinery, furniture, furnishings, or
accessories which was placed by Seller prior to the Effective Date shall be
cancelled by Seller after the Effective Date without the written approval of
Purchaser; (viii) as soon as possible, but not less than twenty-four (24)
hours, prior to the submission of any plan of correction to any state licensure
or Medicaid or Medicare correction authorities, Seller shall submit a copy
thereof to Purchaser; (ix) Seller shall use its best efforts to preserve the
business operation of each Facility and to preserve for Purchaser the good will
of Seller's suppliers, the patients and tenants in each Facility, and others
having business relations with each Facility; (x) except as otherwise directed
by Purchaser, Seller shall use its best efforts to retain the services of each
Facility's current management-level and professional employees and to maintain
existing staffing patterns; and (xi) Seller shall not pay any sums to any
partner of Seller or any Affiliate of Seller except in the ordinary and
necessary course of the operations of the Facilities, provided, however, that
such payments are comparable to that which would be charged and received by a
non-affiliated business for the same or similar goods or services.
8.2. Preparation for Closing. Each party hereto shall use their
best efforts to assist the other to apply for and obtain any such permits,
licenses, authorization, and approvals required by the other party under
applicable federal, state, and local law in order to sell/purchase the Assets
and operate the Facilities as contemplated hereby, and complete this
transaction. Seller and Purchaser shall use their best efforts to bring about
the fulfillment of each of the conditions precedent to the obligations of the
other party set forth in this Agreement.
8.3. Prohibited Act. Seller will not merge or consolidate with
or into any other corporation, partnership, or trust, sell, lease, or otherwise
dispose of any of the assets (except in accordance with Section 8.1 hereof),
sell any additional partnership interests, liquidate, or dissolve, nor agree to
do any of the foregoing.
16 July 2, 1997
17
8.4. Access to Premises and Information. On and prior to the
Closing Date, Seller shall permit Purchaser and the Purchaser's counsel,
accountants, engineers, consultants, and other authorized representatives
thereof to have full and complete access to the Premises and its documents,
books, and records to the extent the same are related to the transactions
contemplated hereunder and to make copies during normal business hours of such
financial and operating data and other information with respect to respective
businesses and properties as Purchaser or any of its authorized representations
shall reasonably request to the extent such data and information are related to
the transactions contemplated hereunder. Seller shall deliver such additional
information and copies of documents, books, and records relating to the
businesses and properties of Seller as may be reasonably requested by Purchaser
or any of its authorized representations. Except as expressly provided
otherwise in this Agreement, any investigation undertaken by Purchaser
hereunder shall not diminish Purchaser's right to rely on Seller's
representations and warranties.
8.5. Environmental Testing. Seller hereby grants to Purchaser
and its agents the right to enter upon the Premises at any reasonable time or
times after the Effective Date to conduct, at Purchaser's sole cost and
expense, such preliminary inspections, investigations, and tests as are
necessary to complete a Preliminary Environmental Site Assessment ("PESA") at
each Facility. If any such PESA shall indicate that any Hazardous Material may
be located at the Premises, Seller hereby grants to Purchaser and its agents
the right to conduct such additional inspections, investigations, and tests of
the Premises, including, without limitation, test borings, to determine
whether, in fact, any Hazardous Material is located at the Premises. In
connection with the conduct of such PESA's and any further testing warranted
thereby (collectively, the "Environmental Testing"), Purchaser agrees, at
Purchaser's sole cost and expense, to repair any damage to the Premises
resulting from such Environmental Testing. Purchaser shall hold confidential
the results of the Environmental Testing in the event Purchaser does not close
the transaction contemplated by this Agreement; provided, however, that in the
event any Hazardous Material is discovered at the Premises and Purchaser is
required by law to disclose such finding to governmental authorities, Purchaser
shall have the right to disclose such finding to such authorities without
liability to Purchaser; provided, further, that Purchaser shall disclose such
findings to Seller prior to their disclosure of such findings to any
governmental authorities.
8.6. Expenses of Transaction. Seller and Purchaser each agree
to be responsible for all fees of their respective attorneys for services
rendered in connection with this transaction and the same shall be paid outside
of Closing. Seller shall pay for all transfer taxes, revenue, excise, and
surtax charges, survey costs, conveyance, and recording fees, title examination
costs and owner's title insurance policy premiums in connection with the
transactions contemplated by this Agreement, provided however, that any
endorsements to the title insurance policy provided by Seller or additional
coverage beyond the Purchase Price shall be at the cost and sole expense of
Purchaser.
8.7. Further Assurances. Each of the parties hereto, both
before and after the Closing, upon the request from time to time of any other
party hereto and without further
17 July 2, 1997
18
consideration, will do each and every act and thing as may be necessary or
reasonably requested to consummate the transactions contemplated hereby and to
effect an orderly transfer to Purchaser of the Assets and assumption by
Purchaser of the Assumed Contracts and the other assumed liabilities under
Section 2.2 hereof, including without limitation executing, acknowledging, and
delivering assurances, assignments, powers of attorney, and other documents and
instruments; furnishing information and copies of documents, books, and records
(including, without limitation, tax records); filing reports, returns,
applications, filings, and other documents and instruments with governmental
authorities; and cooperating with the other party hereto in exercising any
right or pursuing any claim, whether by litigation or otherwise, other than
rights and claims running against the party from whom or which such cooperation
is requested.
8.8. Use of Certain Brochures and Other Materials. Seller
hereby agrees that for a period of two (2) years after the Closing Date,
Purchaser shall be entitled to use any existing brochures and other printed
materials used in connection with the marketing and operation of the
Facilities.
8.9. Appraisals. Seller hereby grants to Purchaser and its
agents the right to enter upon the Premises at any reasonable time or times to
make, at Purchaser's sole cost and expense, to conduct and obtain the
Appraisals required in Section 2.1.2. herein.
8.10. Bankruptcy. If, prior to Closing, Seller or Purchaser
shall file a voluntary petition in bankruptcy or shall be adjudicated as
bankrupt or insolvent, or shall file any petition or answer so seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief for itself under any present or
future federal, state, or other statute, law, or regulation relating to
bankruptcy, insolvency, or other relief for debtors; or shall seek or consent
to or acquiesce in the appointment of any trustee, receiver, or liquidator of
Seller or Purchaser or of all or any part of the Assets, or of any or all of
the royalties, revenues, rents, issues, or profits thereof, or shall make any
general assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due ("Bankrupt"), then the
non-Bankrupt party may terminate this Agreement. If Purchaser consents in
writing to any of the foregoing actions taken by or against Seller, then
Purchaser shall waive the right to terminate the Agreement on account of this
Section 8.10.
8.11. Encore. Within fifteen (15) days after the Effective Date,
Seller shall deliver to Purchaser the Charter of Encore and its most recent
Form 10-K and 10Q; and on or before the Closing, Seller shall deliver to
Purchaser the consent of Encore to the transfer of Seller's interest in Encore
to Purchaser.
8.12 HCP. Within fifteen (15) days after the Effective Date,
Seller shall deliver to Purchaser the Charter of HCP and its most recent Form
10-K and 10Q; and on or before the Closing, Seller shall deliver to Purchaser
the consent of HCP to the transfer of Seller's interest in HCP to Purchaser.
18 July 2, 1997
19
8.13 NHP. Within fifteen (15) days after the Effective Date,
Seller shall deliver to Purchaser the Charter and Trust Indenture of NHP and
its most recent Form 10-K and 10Q; and on or before the Closing, Seller shall
deliver to Purchaser the consent of NHP to the transfer of Seller's interest in
NHP to Purchaser.
9. INSPECTION PERIOD AND CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.
Purchaser's obligation to purchase the Assets shall be subject to the
following:
9.1. Purchaser's Inspection Period. Subject to Section 9.2 below and
except has may be expressly provided to the contrary herein, Purchaser shall
have until August 31, 1997 (the "Inspection Period"), in which to conduct its
due diligence review and make its investigations and studies with respect to
the Assets as Purchaser deems appropriate, including, but not limited to,
Purchaser's review of the Seller's financial information, tenant and patient
information, Title Commitments, Surveys and environmental condition of the
Facilities, and to terminate this Agreement, by written notice to Seller, to be
received on or before the expiration of the Inspection Period, if Purchaser is
not, for any reason, satisfied with the Assets. If Purchaser fails to give
notice of such termination to be received by Seller on or before the expiration
of the Inspection Period, then Purchaser's rights under this Section 9.1 shall
be deemed to have been waived by Purchaser and this Agreement shall remain in
full force and effect without any longer being subject to this Section 9.1. If
Purchaser does give notice of termination, $100.00 of the Xxxxxxx Money shall
be paid to Seller solely for the rights granted Purchaser hereunder and the
balance of the Xxxxxxx Money shall be refunded to Purchaser by Title Company,
and the parties shall have no further rights or obligations hereunder, except
for those which expressly survive any such termination. Promptly after such
termination Purchaser shall provide to Seller, without charge, copies of any
reports, surveys, drawings or tests obtained by Purchaser with respect to the
Assets.
9.2. Conditions to Purchaser's Obligation to Close.
Notwithstanding anything to the contrary contained in Section 9.1, the
obligations of Purchaser at Closing to purchase the Assets and to assume the
Assumed Contracts and the other assumed liabilities under Section 2.2 hereof
are subject to the satisfaction, at or prior to Closing, of all of the
following conditions, compliance with which, or the occurrence of which, may be
waived in whole or in part by Purchaser:
9.2.1. Funding of Purchaser's Initial Public Offering.
The funding of Purchaser's Initial Public Offering ("IPO") of the
shares of stock of Purchaser. It being understood and agreed by
Seller that the completion and funding of the IPO is a condition
precedent to Purchaser's obligation to purchase the Assets as provided
in this Agreement.
9.2.2. Continued Accuracy of Representations and
Warranties. All representations and warranties of Seller contained in
this Agreement shall be true and correct in all respects as of Closing
with the same force and effect as if made at and as of Closing.
19 July 2, 1997
20
9.2.3. Performance of Agreements. Seller shall have
performed and satisfied all covenants, agreements, and conditions
required by this Agreement to be performed or satisfied by it or prior
to Closing.
9.2.4. Closing Certificate. At Closing, Seller shall
furnish to Purchaser a certificate signed by a general partner of
Seller dated the Closing Date, to the effect that the conditions
specified in Section 9.2.2 and 9.2.3 hereof have been satisfied.
9.2.5. Licenses and Approvals. On or before Closing,
Purchaser shall have secured all approvals available to it prior to
Closing from the appropriate federal, state, and local governmental or
administrative agencies having jurisdiction thereof required to
conclude the proposed transfer of the Assets to Purchaser pursuant to
the terms of this Agreement, and providing, to the extent applicable,
for the continued operation by Purchaser of the Facilities on
substantially the same basis as Seller is currently operating the
same.
9.2.6. Legality; Material Adverse Change; No Change in
Law. Purchaser's purchase of and payment for the Assets and
assumption of the Assumed Contracts and other assumed liabilities
under Section 2.2 shall not be prohibited by any Legal Requirement.
No Legal Requirement shall have been enacted, nor shall any
legislation have been introduced in either house of the United States
Congress or of the legislature of those states in which the Facilities
are located, or favorably reported for passage to either house of the
United States Congress or of the legislature of such states or by any
committee thereof, nor shall have any investigation by any
governmental authority or administrative agency been commenced, nor
shall any decision of any court of competent jurisdiction have been
rendered, nor shall any order by any governmental authority or
administrative agency have been issued, nor shall any event have
occurred at any Facility, which materially and adversely affects,
restrains, prevents, or changes the transactions contemplated by this
Agreement, or has a material adverse effect on the business,
operations, assets, prospects, or condition, financial or otherwise,
of any Facility or of Seller.
9.2.7. Litigation. No action or proceeding shall have
been instituted at or prior to Closing before any court, arbitrator or
other governmental body, or instituted or threatened by any public
authority, pertaining to any Facility or the transfer of the Assets
and the assumption of the Assumed Contracts and the other assumed
liabilities under Section 2.2 hereof by Purchaser or any of the other
transactions contemplated hereby, the results of which action or
proceeding could prevent or make illegal the consummation of such
transactions, or which could otherwise have a material adverse effect
on the business, operations, assets, prospects, or condition,
financial or otherwise, of any Facility or of Seller.
20 July 2, 1997
21
9.2.8. Opinion of Seller's Counsel. Purchaser shall
have received an opinion of Seller's independent legal counsel, dated
as of the Closing Date, addressed to Purchaser, in form and substance
reasonably satisfactory to Purchaser, to the effect that:
(1) Seller is a limited partnership
which is duly organized and validly existing under the laws
of the State of Delaware and has all the requisite
partnership power to own all of its assets and properties
and to carry on the business of the Facility owned by
Seller as presently conducted.
(2) The execution, delivery, and
performance by Seller of this Agreement and each of the
documents transferring or assigning title to the Assets to
be delivered by Seller to Purchaser at Closing have been
duly authorized by all requisite corporate or partnership
action of Seller. This Agreement and each of the documents
transferring or assigning title to the Assets to be
delivered by Seller to Purchaser at Closing constitute the
valid and binding obligation of Seller enforceable in
accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws in effect
from time to time affecting the rights of creditors
generally and by the application of equitable principles.
(3) The execution, delivery, and
performance by Seller of this Agreement and the documents
transferring or assigning title of the Assets to be
delivered by Seller to Purchaser at Closing will not (i)
violate any provision of the Limited Partnership Agreement
of Seller, (ii) conflict with or result in any breach of or
default under any order, writ, injunction, decree,
agreement, or instrument of which counsel has knowledge by
which any of the Assets are bound, (iii) to counsel's
knowledge, result in the creation or imposition of any
lien, charge, or encumbrance of any nature upon any of the
Assets, (iv) give to others of whom counsel has knowledge
any property, contractual or security interest or rights
in, or with respect to any of the Assets, and, (v) give
others any right to terminate any agreement to which Seller
is a party or by which the Assets are benefitted, of which
counsel has knowledge.
Counsel may specify the state or states in which they are admitted to
practice, and that they are not admitted to the Bar in any other state
or experts in the law of any other state, provided, however, that if
such counsel shall not express any opinion as to the laws of the
states in which the Facilities are located, then Seller shall provide
an opinion of counsel located in such states.
9.2.9. Presence of Hazardous Material at the Premises.
The Environmental Testing, if undertaken by Purchaser, shall not have
revealed the presence of a material amount of any Hazardous Material
at the Premises. For purposes of this Section 9.2.9., the amount of
any Hazardous Material present at the Premises shall be
21 July 2, 1997
22
deemed material if the reasonable estimated cost of removal and
disposal thereof, in accordance with all applicable laws and statutes,
as determined by a qualified environmental consultant reasonably
acceptable to Purchaser, exceeds Twenty Thousand Dollars ($20,000) in
the aggregate for all Facilities.
9.2.10. Schedules. As of the Effective Date, the
Schedules to be attached to and made a part of this Agreement have not
been prepared by Seller or reviewed by Purchaser. Seller shall
furnish all Schedules at least ten (10) days prior to the expiration
of the Inspection Period. If Purchaser is not satisfied with any
Schedule and if Seller is not willing to amend the Schedules to
satisfy Purchaser, then Purchaser may terminate this Agreement, and
the parties shall have no further rights or obligations hereunder,
except for those which expressly survive any such termination.
9.2.11. Title Policies. Pursuant to the Title
Commitments, the Title Company will have delivered to Purchaser as of
the Closing Date title policies in favor of Purchaser, as owner of the
Premises, insuring Purchaser's fee simple title to the Premises free
and clear of all matters other than the Permitted Exceptions and
deleting the standard exceptions.
10. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligations of Seller
at Closing to sell the Assets and to assign the Assumed Contracts and the other
liabilities to be assumed by Purchaser pursuant to Section 2.2 hereof are
subject to the satisfaction at or prior to Closing, of all of the following
conditions, compliance with which, or the occurrence of which, may be waived in
whole or in part by Seller:
10.1. Representations, Warranties, and Covenants.
10.1.1. Continued Accuracy of Representations and
Warranties. All representations and warranties of Purchaser contained
in Section 7 of this Agreement shall be true and correct in all
material respects as of the Closing with the same force and effect as
if made at and as of the Closing.
10.1.2. Closing Certificate. At Closing, Purchaser
shall furnish to Seller a certificate signed by a duly authorized
corporate officer of Purchaser dated the Closing Date, to the effect
that the conditions specified in Section 10.1.1 hereof has been
satisfied.
10.2. Litigation. No action or proceeding shall have been
instituted at or prior to Closing before any court, arbitrator or other
governmental body, or instituted or threatened by any public authority,
pertaining to the transfer of the Assets and the assumption by Purchaser of the
Assumed Contracts and other liabilities to be assumed by Purchaser pursuant to
Section 2.2 hereof or any of the other transactions contemplated hereby, the
results of which action or proceeding would prohibit or make illegal the
consummation of such transactions.
22 July 2, 1997
23
10.3. Licenses and Approvals. On or before Closing, Seller shall
have secured all approvals available to it prior to Closing from the
appropriate federal, state, and local governmental or administrative agencies
having jurisdiction thereof required to conclude the proposed transfer of the
Assets to Purchaser pursuant to the terms of this Agreement, and providing, to
the extent applicable, for the continued operation by Purchaser of the
Facilities on substantially the same basis as Seller is currently operating the
same.
10.4. Legality; Material Adverse Change; No Change in Law.
Seller's sale of the Assets and assignment of the Assumed Contracts and other
assumed liabilities under Section 2.2 to Purchaser shall not be prohibited by
any Legal Requirement. No Legal Requirement shall have been enacted, nor shall
any legislation have been introduced in either house of the United States
Congress or of the legislature of those states in which the Facilities are
located, or favorably reported for passage to either house of the United States
Congress or of the legislature of such states or by any committee thereof, nor
shall have any investigation by any governmental authority or administrative
agency been commenced, nor shall any decision of any court of competent
jurisdiction have been rendered, nor shall any order by any governmental
authority or administrative agency have been issued, nor shall any event have
occurred at any Facility, which materially and adversely affects, restrains,
prevents, or changes the transactions contemplated by this Agreement, or has a
material adverse effect on the business, operations, assets, prospects, or
condition, financial or otherwise, of any Facility or of Seller.
11. CLOSING.
11.1. Closing Date. The closing of the transaction contemplated
herein (the "Closing") shall be conducted at the offices of Seller in Dallas,
Texas, on or before the earlier to occur of November 30, 1997, or the date of
the funding of Purchaser's IPO (the "Closing Date").
11.2. Seller's Deliveries at Closing. At the Closing, Seller
shall execute (if applicable) and deliver to Purchaser:
(1) The Certificate described in Section
9.2.4 hereof.
(2) A Special Warranty Deed, a Xxxx of
Sale, an Assignment of Certain Tangible and Intangible
Assets, and Assignment and Assumption of Services
Agreement, an Assignment of Occupancy Agreements, an
Assignment of Leases, and an Assignment of Patient Trust
Accounts for each Facility, each in form agreeable to the
Purchaser, and any appropriate motor vehicle transfer
documents.
(3) The right to immediate possession of
the real property and all tangible personal property
included in the Assets.
(4) The opinion of counsel required
under Section 9.2.8 hereof.
23 July 2, 1997
24
(5) A Certificate of Existence (or other
similar good standing certification) for Seller issued by
the Secretary of State of the state Seller's organization
and in each states in which Seller's Facilities are located
(dated within thirty (30) days of the Closing).
(6) A settlement statement for each
Facility as approved by the parties hereto.
(7) Partnership resolutions of Seller
authorizing it to undertake the transactions contemplated
by this Agreement and authorizing its signatories to
execute this Agreement and all other documents required to
effect the Closing, certified as of the Closing Date by an
officer or general partner of Seller as having been duly
adopted and being in full force and effect on the Closing
Date.
(8) IRS Form 8594 Asset Acquisition
Statement.
(9) The agreement regarding real estate
tax proration as provided in Section 11.4 hereof.
(10) FIRPTA (nonforeign) Certificate.
(11) An assignment of Seller's interest
in Encore and the consent thereto by Encore.
(12) An assignment of Seller's interest
in HCP and the consent thereto by HCP.
(13) An assignment of Seller's interest
in the NHP pension notes, limited partnership units and the
consent thereto by NHP.
(14) Such other documents as may be
required to fully perform the terms of this Agreement or
as may be required by any Legal Requirement.
11.3. Purchaser's Deliveries at Closing. At the Closing,
Purchaser shall execute (if applicable) and deliver:
(1) The Certificate described in Section
10.1.2 hereof.
(2) An Assignment and Assumption
Agreement for each Facility.
(3) A partnership or corporate
resolution from Purchaser authorizing the transactions
contemplated by this Agreement and authorizing its
signatories to execute this Agreement and all other
documents required to effect
24 July 2, 1997
25
the Closing, certified as of the Closing Date by a general
partner or corporate officer of Purchaser as having been
duly adopted and being in full force and effect on the
Closing Date.
11.4. Real Estate and Personal Property Tax Prorations. Real
estate taxes and assessments and personal property taxes ("Taxes") shall be
prorated at the Closing based upon the last available tax duplicate, which
prorations shall thereafter be adjusted directly between Seller and Purchaser
based upon the actual amount of taxes for the year in which the Closing occurs,
promptly following receipt of the official statement therefor and notice
thereof by Purchaser to Seller. The proration agreement set forth herein shall
be incorporated into an agreement in form reasonably satisfactory to Purchaser
and Seller to be executed and delivered by each at Closing. All Taxes shall be
prorated on the accrual basis, Seller being responsible for all Taxes
applicable to the Closing Date regardless of whether such Taxes are then due
and payable.
11.5. Other Adjustment to Purchase Price and Prorations. All
expenses attributable to the operation of each Facility (measured on an accrual
basis) through 11:59 p.m. on the day before the Closing shall be paid for by
Seller. Thereafter, such expenses shall be paid for by Purchaser. All income
not received by Seller as of the Closing, including, but not limited to, all
payments under Occupancy Agreements, including Medicare and Medicaid
reimbursement and other insurance payments or advances shall be for Seller's
account and any amount collected from tenants or patients and third party
payors with accounts owing to Seller shall, if collected by Purchaser, be paid
over to Seller. Except as otherwise expressly provided in this Agreement,
Seller shall remain responsible for all accounts payable through 11:59 p.m. on
the day before the closing. As of the Closing, Seller shall calculate and pay
wages, payroll taxes, and any employee bonuses based upon attendance record or
other criteria accrued through 11:59 p.m. on the day before the Closing. In
effecting the proration, Seller shall be credited for items of expense paid for
as of the Closing Date. In addition, on or about the Closing, Seller shall
cause final utility meter readings to be made for all utilities serving the
Premises and Seller shall pay or cause to be paid all final bills rendered form
such meter readings. To the extent that all items of income and expenses to be
transferred, prorated, or assumed cannot be determined at the Closing, then
Seller and Purchaser shall cooperate with each other to revise the settlement
statements within thirty (30) days after Closing.
All prepaid rental and security deposits and other tenant or patient
funds held in trust by Seller shall be accounted for (including any interest
required on such funds) and transferred to Purchaser at Closing. Seller shall
furnish to Purchaser on or before the Closing a list, by Facility, of all
security and rent deposits and other patient and tenant funds held by Seller,
which list shall also indicate the rent status of each patient or tenant,
certified to by an officer of Seller, which list Seller warrants will be true
and correct. Upon transfer thereof at Closing, Purchaser agrees to maintain,
repay and/or return such security and rent deposits in accordance with the
terms and subject to the conditions and requirements under which they are now
being held by Seller and as imposed by applicable law or regulation.
25 July 2, 1997
26
12. CASUALTY.
12.1. Major Damage. If the Premises, or a portion thereof, shall
be damaged or destroyed by reason of any casualty or other cause prior to the
Closing, Seller shall give Purchaser written notice of such damage or
destruction within ten (10) days of the occurrence thereof and in all events
prior to the Closing Date. Within twenty (20) days of the occurrence of such
damage or destruction, Seller shall submit to Purchaser Seller's reasonable
estimate of the cost to repair such damage or destruction and its estimate of
the loss of operating revenues due to such damage (collectively, "Seller's
Expense Estimate") and the basis for such estimate. If Seller's Expense
Estimate is equal to or in excess of Twenty Thousand Dollars ($20,000) ("Major
Damage") with respect to any Facility, then Purchaser, at Purchaser's option,
may either: (A) elect, within twenty (20) days after the determination of the
repair cost in accordance with Section 12.3 hereof, to terminate this
Agreement, and the parties shall have no further rights or obligations
hereunder, except for those which expressly survive any such termination; or
(B) proceed to complete the transactions contemplated under this Agreement and
be entitled to the insurance proceeds payable in the event of such damage or
destruction plus any deductible. If Purchaser does not make the election set
forth in subparagraph (A) above within the applicable twenty (20) day period,
then Purchaser shall be deemed to have elected option (B) set forth above.
12.2. Other Damage. If Seller's Expense Estimate is less than
Twenty Thousand Dollars ($20,000.00) for each Facility and such damage or
destruction is covered by Seller's insurance coverage, Seller shall pay such
applicable insurance proceeds, plus the amount of any applicable deductible, to
Purchaser at closing. If (i) such damage or destruction is not covered by
Seller's insurance coverage, or (ii) such insurance proceeds are insufficient
to cover the cost of repairing such damage or destruction and Seller does not
pay such deficiency to Purchaser at Closing, then the Purchase Price shall be
reduced by an amount equal to (A) the cost of restoring the Premises in the
case of subparagraph (i), or (B) the amount of such deficiency in the case of
subparagraph (ii).
12.3. Determination of Repair Cost. If Purchaser disagrees with
Seller's Expense Estimate, Purchaser shall give written notice of such dispute
to Seller within then (10) days after Seller submits Seller's Expense Estimate
to Purchaser. Upon receipt of such notice, Seller and Purchaser shall promptly
retain an appraiser acceptable to both Seller and Purchaser, the cost of such
appraisal being borne equally by Seller and Purchaser, and such appraiser shall
determine the cost of repairing such damage or destruction and the lost
operating revenues as a result thereof, which cost shall include all
professional fees incurred in connection therewith. Seller and Purchaser agree
that the determination by such appraiser of such costs shall be conclusive as
to both Seller and Purchaser.
13. CONDEMNATION. If, prior to the Closing Date, all or any portion of
the Premises shall be taken by any governmental authority under its power of
eminent domain, Purchaser shall have the option (to be exercised by written
notice given to Seller not later than twenty (20) business days following
Purchaser's receipt of notice of such taking) to:
(1) Accept the Assets on the Closing date without
any abatement or adjustment in the Purchase Price, in which event
Purchaser shall have the right to
26 July 2, 1997
27
participate in any settlement or compromise with such taking authority
and Seller shall assign its rights in the condemnation award to the
Purchaser (or Purchaser shall receive the condemnation award from
Seller if it has already been paid before the Closing date); or
(2) If, and only if, in Purchaser's reasonable
opinion, any Facility subject to such taking cannot be operated in
substantially the same manner operated by Seller prior to such taking,
Purchaser may elect to terminate this Agreement, and the parties shall
have no further rights or obligations hereunder, except for those
which expressly survive any such termination.
If the Purchaser does not make the election set forth in subparagraph (2) above
within the applicable twenty (20) day period, then Purchaser shall be deemed to
have elected option (1) set forth above.
14. DEFAULT. In the event of a material misrepresentation by Seller in
this Agreement, or a material breach of any warranty or covenant in this
Agreement, or other default under this Agreement by Seller prior to Closing,
and Seller's failure to rectify such misrepresentation, breach or default
within ten (10) days after receipt of notice thereof from Purchaser, then
Purchaser shall have the right, upon written notice to Seller, to rescind this
Agreement and be entitled to such remedies as shall be provided by law,
including the recovery of attorneys' fees.
Seller acknowledges and agrees that the Assets are unique and not
available on the open market and that Purchaser will be seriously and
irreparably injured in the event this Agreement is not specifically performed
by Seller and the transactions contemplated hereby are not consummated. Both
parties further agree that it may be difficult and impractical to measure in
money the damages which will accrue by reason of a refusal by Seller to perform
their obligations under this Agreement. Therefore, Seller acknowledges and
agrees that, in lieu of rescission and recourse to such remedies as shall be
provided by law, Purchaser shall be entitled to specific performance of this
Agreement by Seller, and Seller hereby consents thereto. In the event that
Purchaser shall institute any actions specifically to enforce Seller's
performance under this Agreement, Seller hereby agrees to waive the defense
that Purchaser has an adequate remedy at law.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements of fact
contained in this Agreement, or in any certificate or other document delivered
by or on behalf of one party to this Agreement to the other pursuant to this
Agreement or in connection with the transaction contemplated hereby, shall be
deemed representations and warranties by such party making such statement of
fact. Each party understands that the other party has relied on each of said
representations and warranties in entering into this Agreement.
Notwithstanding any investigations made by or on behalf of Seller or Purchaser
or any distribution in liquidation, dissolution, or other voluntary or
involuntary act of Seller or Purchaser, the representations and warranties
contained in this Agreement shall survive the Closing for a period of 12 months
(except Section 6.3.5 which shall survive for 36 months) following the Closing
notwithstanding the execution and delivery of the documents transferring title
to the Assets to Purchaser or the consummation of the other transactions
contemplated herein, whereupon such representations and warranties shall become
unenforceable except to the extent that notice of a claim relating to such
27 July 2, 1997
28
representations and warranties has been given pursuant to Section 16.3 hereof
prior to the expiration of such 12-month period.
16. INDEMNIFICATION PROVISIONS.
16.1. Indemnification of Purchaser. If the Closing occurs,
Seller shall defend, indemnify, and hold harmless Purchaser and any Affiliate
of Purchaser against all damages, punitive damages, civil and criminal monetary
penalties, losses and reasonable expenses, including any reasonable attorneys'
and other professional fees (hereinafter referred to collectively as
"Liabilities") in connection with any of the following matters:
16.1.1. Misrepresentation, Etc.. Any and all
Liabilities arising out of or related to any breach of the agreements,
representations, warranties, or covenants by Seller in this Agreement,
provided, however, that Purchaser's right to indemnification hereunder
for Liabilities arising out of or related to any breach of such
Seller's representations and warranties shall be limited to claims
asserted by Purchaser in accordance with Section 16.3 hereof during
the period during which said representations and warranties survive
the Closing provided under Section 15 hereof.
16.1.2. Audits, Investigations, Refund Obligations, and
Other Pre-Closing Liabilities. Any and all Liabilities arising out of
or related to any of the following: (i) any audit or investigation by
any governmental authority or administrative agency concerning the
operation of any Facility and other Assets owned by Seller prior to
the Closing or any amounts paid to Seller prior to the Closing; (ii)
any assessments, adjustments or offsets made against Purchaser or any
Facility and other Assets owned by Seller as a result of such an audit
or investigation or in connection with the recovery by such
governmental authority or administrative agency of any overpayments
made to Seller for services performed prior to Closing or any
depreciation recapture applicable to the period prior to Closing;
(iii) any reasonable costs of defense of, and any judgment against
Purchaser with respect to, any litigation relating to the operation of
the Assets owned by Seller prior to the Closing; (iv) any suit, claim,
or proceeding brought by any Person (including, without limitation,
any employee or former employee of Seller) of any nature seeking to
recover damages for personal injury, death, or property damage due or
alleged to be due to occurrences in connection with the operation of
the Assets owned by Seller prior to the Closing; and (v) any other
liability, damage, cost, claim, expense, or assessment asserted
against Purchaser or the Assets owned by Seller (other than those
liabilities specifically assumed by Purchaser pursuant to Section 2.2
hereof) as a result of, or with respect to Seller's ownership or
operation of the Assets prior to the Closing.
16.1.3. Indemnification Limitation. Anything contained
in this Section 16.1 to the contrary notwithstanding, the obligation
of Seller to indemnify Purchaser hereunder shall arise only at such
time as Purchaser shall have paid the cumulative sum of $10,000 as the
result of any matter or matters occurring under Sections 16.1.1 and
16.1.2 hereof, in which event the indemnity obligations of Seller
hereunder shall exist only to the extent that such payments, in the
aggregate, exceed the sum of $10,000. Seller shall have no obligation
to indemnify the Purchaser for any specific item which is covered by
the title insurance delivered to Purchaser at Closing.
28 July 2, 1997
29
16.2. Indemnification of Seller. If the Closing occurs,
Purchaser shall defend, indemnify and hold harmless Seller and any Affiliate of
Seller against all Liabilities (as defined in Section 16.1 hereof) in
connection with any of the following matters:
16.2.1. Misrepresentations, Etc.. Any and all
Liabilities arising out of or related to any breach of the agreement,
representations, warranties or covenants of Purchaser in this
Agreement, provided, however, that Seller's right to indemnification
hereunder for Liabilities arising out of or related to any breach of
Purchaser's representations and warranties shall be limited to claims
asserted by Seller in accordance with Section 16.3 hereof during the
period during which said representations and warranties survive the
Closing as provided in Section 15 hereof.
16.2.2. Audits, Investigations and Other Post-Closing
Liabilities. Any and all Liabilities arising out of or related to any
of the following: (i) any audit or investigation by any governmental
authority or administrative agency concerning the operation of any
Facility and other Assets by Purchaser subsequent to the Closing or
any amounts paid to Purchaser subsequent thereto; (ii) any
assessments, adjustments or offsets made against Seller as a result of
any such audit or investigation; (iii) any reasonable costs of defense
of, and any judgment against Seller with respect to, any litigation
relating to the operation of the Assets by Purchaser subsequent to the
Closing; (iv) any suit, claim or proceeding brought by any Person of
any nature seeking to recover damages, for personal injury, death or
property damage due or alleged to be due to occurrences in connection
with the operation of the Assets subsequent to the Closing; and (v)
any other liability, damage, cost, claim, expense or assessment
asserted against Seller as a result of, or with respect to,
Purchaser's operation of the Assets subsequent to the Closing.
16.3. Notice and Defense of Claims. A party claiming
indemnification under this Agreement (the "Asserting Party") must promptly
notify in writing the party from which indemnification is sought (the
"Defending Party") of the nature and basis of such claim for indemnification.
If such claim relates to a claim, litigation or other action by a third party
against the Asserting Party, or any fixed or contingent liability to a third
party (a "Third Party Claim"), the Defending Party may elect to assume the
defense of the Third Party Claim within a reasonable time after receipt of the
notice referred to above at its own expense with counsel selected by the
Defending Party and approved by the Asserting Party, which approval shall not
be unreasonably withheld or delayed; provided, however, that if any claim for
indemnification under this Agreement is covered by the Defending Party's
applicable insurance coverage, then the assumption of such defense and the
selection of counsel shall be governed by the applicable insurance coverage.
Subject to the foregoing sentence, the Defending Party may not assume the
defense if the named parties to the Third Party Claim (including any impleaded
parties) include both the Defending Party and the Asserting Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, in which case the
Asserting Party shall have the right to employ counsel approved by the
Defending Party at the expense of the Defending Party. If the Defending Party,
or the Defending Party's applicable insurer, assumes the defense of the Third
Party Claim, the Defending Party shall not be liable for any fees and expenses
of counsel for the Asserting Party incurred thereafter in connection with the
Third Party Claim.
29 July 2, 1997
30
17. DEFINITIONS. For purposes of this Agreement:
17.1. Cross Reference Table. The following terms defined
elsewhere in this Agreement in the Sections set forth below shall have the
respective meanings therein defined:
Term Definition
---- ----------
"Affiliate Arrangements" Section 6.5.2
"Agreement" Preamble
"Asserting Party" Section 16.3
"Assets" Section 1
"Assumed Contracts" Section 2.2
"Closing" Section 11.1
"Closing Date" Section 11.1
"Contracts" Section 6.5.1
"Defending Party" Section 16.3
"Deposit" Section 3
"Deposit Escrow Agreement" Section 3
"Effective Date" Preamble
"Environmental Testing" Section 8.5
"Facility"; "Facilities" Preamble
"Inspection Period" Section 9.1
"Inventory" Section 1.4
"Labor Contracts" Section 6.5.1
"Liabilities" Section 16.1
"Land" Preamble
"Major Damage" Section 12.1
"Multiple Facilities Agreement" Section 9.10
"Occupancy Agreement" Section 6.5.1
"Occupancy Agreement Form" Section 6.5.3
"Permitted Exceptions" Section 4
"PESA" Section 8.5
"Premises" Section 1.1
"Purchase Price" Section 2.1
"Seller" Preamble
"Seller's Annual Financial Statements" Section 6.2.1
"Seller's Interim Financial Statements" Section 6.2.1
"Seller's Licenses" Section 6.3.3
"Title Commitment" Section 5
"Title Company" Section 16.3
"Third Party Claim" Section 16.3
"Warranties & Guarantees" Section 6.4.2
17.2. Affiliate. The term "Affiliate" shall mean (i) any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with Seller (or other specified Person), (ii) any Person who is
or has been within five years of the time in question an officer, director or
direct or indirect beneficial holder of at least 5% of any class of the
30 July 2, 1997
31
outstanding capital stock or partnership interest of Seller (or other specified
Person), (iii) any Person of which Seller (or other specified Person) or an
Affiliate (as defined in clause (ii) above) thereof shall, directly or
indirectly, beneficially own at least 5% of any class of outstanding capital
stock or other evidence of beneficial interest, and (iv) Members of the
Immediate family of any of the foregoing.
17.3. By-laws. The term "By-laws" shall mean all written rules,
regulations and by-laws, and all other documents (other than the Charter),
relating to the management, governance or internal regulation of a Person
(other than an individual) or interpretative of the Charter of such Person,
each as from time to time in effect.
17.4. Charter. The term "Charter" shall mean the certificate or
articles of incorporation or organization, statute, constitution, joint venture
or partnership agreement or articles or other charter documents of any Person
(other than an individual), each as from time to time in effect.
17.5. Code. The term "Code" shall mean the Federal Internal
Revenue Code of 1986 or any successor statute, and the rules and regulations
thereunder, and in the case of any referenced section of any such statute, rule
or regulation, any successor section thereto, collectively and as from time to
time amended and in effect.
17.6. Generally Accepted Accounting Principles. The term
"generally accepted accounting principles" shall mean generally accepted
accounting principles, as defined by the Financial Accounting Standards Board
and as applied by Seller in preparing the Financial Statements and consistently
followed.
17.7. Hazardous Materials. The term "Hazardous Materials" shall
mean (i) any pollutant, contaminant or hazardous substance (within the meaning
of such terms under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and any implementing
regulations) but excepting Infectious Wastes or (ii) any hazardous or toxic
substance or material within the meaning of any federal, state or local law
applicable to Seller or the Premises, but excepting Infectious Wastes.
17.8. Infectious Wastes. For purposes of each Facility, the term
"Infectious Wastes" shall mean such term as it is defined in the Legal
Requirements of the state in which the Facility is located.
17.9. Legal Requirement. The term "Legal Requirement" shall mean
any federal, state, local law, statute, standard, ordinance, code, order, rule,
regulation, resolution, promulgation, or any order, judgment or decree of any
court, arbitrator, tribunal or governmental authority, or any license,
franchise, permit or similar right granted under any of the foregoing, or any
similar provision having the force and effect of law.
17.10. Lien. The term "Lien" shall mean (i) any encumbrance,
mortgage, pledge, lien, charge or other security interest of any kind upon any
property or assets of any character, or upon the income or profits therefrom;
or (ii) any arrangement or agreement which prohibits the creation of such
encumbrances, mortgages, pledges, liens, charges or other security interests or
31 July 2, 1997
32
which restricts transfer of capital stock (other than restrictions on transfer
imposed by applicable securities laws) or other property or assets.
17.11. Person. The term "Person" shall mean any individual,
partnership, corporation, association, trust, joint venture, unincorporated
organization, or entity, and any government, governmental department or agency
or political subdivision thereof.
18. MISCELLANEOUS
18.1. Headings. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof.
18.2. Schedules; Exhibits; Contemplated Transactions. Schedules,
exhibits, agreements and documents referred to in this Agreement are an
integral part of this Agreement. For all purposes of this Agreement, the
transactions contemplated hereby shall be deemed to include, without
limitation, all transactions contemplated by any agreement entered into by
Seller and Purchaser at the Closing.
18.3. Severability. The provisions of this Agreement are
severable, and in the event that any provision hereof should, for any reason,
be held invalid or unenforceable in any respect, it shall not invalidate,
render unenforceable or otherwise affect any other provision hereof, and such
invalid or unenforceable provision shall be construed by limiting it so as to
be valid and enforceable to the maximum extent compatible with, and possible
under, applicable law.
18.4. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
18.5. Knowledge of a Party. Whenever reference is made herein to
the knowledge or best knowledge of a party hereto, it is understood that the
party has made, or caused to be made by personnel or representatives reasonably
competent to determine the accuracy thereof (and the results thereof reported
to such party), an inquiry which is reasonably appropriate to determine the
accuracy of the statement in question. Whenever reference is made herein to a
person's "actual knowledge," it is understood that such Party shall be in
possession of information sufficient to form a belief as to the truth or
accuracy of the statement in question.
18.6. Entire Agreement. This Agreement, the Schedules and
Exhibits hereto, the agreements expressly referred to herein and any agreement
making specific reference to this Agreement embody the entire agreement and
understanding of the parties hereto with respect to the subject matter herein
contained, supersede all prior agreements and understandings relative to the
subject matter hereof. This Agreement may not be changed, modified, terminated
or discharged, in whole or in part (other than in accordance with the
respective terms hereof), except by writing executed by the parties hereto. No
waiver of any of the provisions or conditions of this Agreement or any of the
rights of a party hereto shall be effective or binding
32 July 2, 1997
33
unless such waiver shall be in writing and signed by the party claimed to have
given or consented to such waiver.
18.7. Governing Law. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the state of Indiana.
19. ASSIGNMENT. Neither Seller's nor Purchaser's rights and obligations
hereunder shall be assignable without the express written consent of the other
party, except that Purchaser shall have the right to assign its interests
herein to an Affiliate of Purchaser.
20. NOTICES. All notices required to be given hereunder shall be given in
writing to the appropriate party or parties at the following addresses:
To Seller: Capital Senior Living Communities, L.P.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
33 July 2, 1997
34
With a copy to: Xxxxxxx X. Xxxx
Capital Senior Living Communities, L.P.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
and Xxxxx X. Xxxxxxx, Esq.
Xxxx Xxxx Xxxxxx and Darko
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000-0000
To Purchaser: Capital Senior Living Corporation
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Vice President
With a copy to: Xxxxxxx X. Xxxx XX, Esq.
Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
or at such other place as such party may designate in writing to the other
party. All notices shall be delivered either in person or by registered mail,
return receipt requested, and shall be deemed to have been delivered, if in
person upon delivery thereof, or if by registered mail on the date shown on the
return receipt.
21. SUCCESSORS AND ASSIGNS. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, delegatees, heirs, devisees,
successors and permitted assigns.
22. PUBLIC ANNOUNCEMENT. Press releases and other public announcements of
the transactions contemplated herein to be made by either party hereto shall be
subject to the prior review and approval of the other party hereto.
[Remainder of Page Intentionally Left Blank]
34 July 2, 1997
35
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
SELLER:
CAPITAL SENIOR LIVING COMMUNITIES, L.P., a
Delaware limited partnership
By: Retirement Living Communities, L.P., its
general Partner
By: Capital Retirement Group, Inc.,
its general Partner
By:
---------------------------------
Xxxxxxx X. Xxxx, Chief Executive
Officer
By:
---------------------------------
Xxxxx X. Xxxxxx, Chief Operating
Officer
PURCHASER:
CAPITAL SENIOR LIVING CORPORATION, a Delaware
corporation
By:
-------------------------------------------
Xxxxx X. Xxxxxxxx, Vice President
35 July 2, 1997
36
Schedule A
Legal Description
(The Land)
37
Schedule B
List of Facilities
(The Facilities)
38
Schedule 1.1
Excluded Assets
39
Schedule 1.2
List of Owned Assets
(Excluding the "Excluded Assets")
40
Schedule 1.3
List of Leased Assets
41
Schedule 1.8
List of Trade Names
42
Schedule 2.1.1
Purchase Price Allocation
43
Schedule 2.2
Assumed Contracts
44
Schedule 5
Title Commitments
45
Schedule 6.2.1
Seller's Financial Statements
46
Schedule 6.3.3
Seller's Licenses
47
Schedule 6.3.8
Litigation
48
Schedule 6.4.2
Warranties and Guaranties
49
Schedule 6.4.10
Delinquent Accounts
50
Schedule 6.5.1.1
Material Contracts, Agreements and Leases
51
Schedule 6.5.2
Affiliate Arrangements
52
Schedule 6.5.3.1
Occupancy Agreement Forms
53
Schedule 6.5.3.2
Special Occupancy Arrangements
54
Schedule 6.5.4
List of all Insurance Coverage
55
Schedule 6.6.1
Employment Contracts, Benefits and other Arrangements
56
Schedule 6.6.2
List of Current Employees
