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Exhibit 10.70
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of November 13, 1996, among SOFTEN REALTY, L.L.C., a Delaware limited
liability company ("Buyer") and SIERRA TUCSON, INC., a Delaware corporation
("Seller"). Capitalized terms used herein and not otherwise defined are defined
in Section 8 hereof.
W I T N E S S E T H:
WHEREAS, Seller is engaged in, among other things, the business of
operating a state licensed, special psychiatric hospital and behavioral health
center for the treatment of substance abuse and mental health disorders,
including, without limitation, eating disorders, dual diagnosis and on-site
workshops (the "Business");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, certain assets related to the Business; and
WHEREAS, the parties hereto desire to set forth herein their agreements
and understandings with respect to the subject matter hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants hereinafter set forth and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Purchaser and Seller hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
(a) Acquired Assets. On and subject to the terms and conditions of this
Agreement, at the Closing, Buyer shall purchase from Seller, and Seller shall
sell, transfer, convey and deliver to Buyer, all right, title and interest of
Seller, individually and collectively, in and to each of the following assets
(collectively, the "Acquired Assets"):
(i) all accounts, notes and other receivables relating to the
Business or the Acquired Assets (it being
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understood that in the event that Seller at any time collects any amounts
in respect of the Accounts Receivable included within the Acquired Assets
subsequent to Closing, Seller shall promptly remit to Buyer all amounts so
collected);
(ii) all raw materials and supplies, works-in-process, finished
goods and other items of inventory relating to the Business or the
Acquired Assets (collectively, the "Inventory");
(iii) all machinery, office and computer equipment, tools,
furniture, fixtures, leasehold improvements and other tangible personal
property and fixed assets relating to the Business or the Acquired Assets,
wherever located, including, without limitation (collectively, the "Fixed
Assets");
(iv) Seller's interest in all leases for real and personal
property relating to the Business (collectively, the "Leases");
(v) all Intellectual Property relating to the Business or the
Acquired Assets, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto and rights thereunder and all
remedies against infringements thereof and rights to protection of
interests therein under the laws of all jurisdictions;
(vi) all franchises, approvals, permits, licenses, orders,
registrations, qualifications, certificates, variances and similar rights
(collectively, "Permits") relating to the Business or the Acquired Assets
obtained from governmental agencies to the extent transferable to Buyer;
(vii) all rights to receive mail and other communications
addressed to Seller sent to the office of Seller (including, without
limitation, mail and communications from customers, suppliers,
distributors, agents and others and payments) relating to the Business or
the Acquired Assets;
(viii) all books, records (including maintenance records, product
tracing records, quality assurance/control records), ledgers, files,
photographs, archives, reference materials, documents, correspondence,
lists, drawings, specifications, advertising and promotional materials,
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studies, reports, research and other printed or written materials relating
to the Business or the Acquired Assets; and
(ix) all other property owned by Seller or in which Seller has an
interest that relates to the Business or the Acquired Assets, including,
without limitation, the names "Sierra Tucson Hospital" and any derivatives
thereof and the Business as a going concern and the goodwill thereof.
(b) Excluded Assets. Notwithstanding the foregoing, the following assets
are specifically excluded from the Acquired Assets and shall remain the property
of Seller (collectively, the "Excluded Assets"):
(i) all cash or cash equivalents of Seller;
(ii) the corporate seal, certificate of incorporation, minute
books, stock books, tax returns, books of account or other records having
to do with the corporate organization of Seller; and
(iii) all right, title and interest of Seller in, to and under
this Agreement.
(c) Assumed Liabilities. On and subject to the terms and conditions of
this Agreement, Buyer shall assume the following obligations and liabilities of
Seller (collectively, the "Assumed Liabilities"):
(i) all liabilities of Seller relating to the Business reflected
on the Financial Statements or incurred in the ordinary course subsequent
to the date of the Financial Statements; and
(ii) all liabilities of Seller relating to the Employee Benefit
Plans, as well as the Employee Benefit Plans.
(d) Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, Buyer shall not assume or be liable for any
liabilities or obligations (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) of Seller
other than the Assumed Liabilities (collectively, the "Excluded
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Liabilities). Seller hereby acknowledges that it is retaining the Excluded
Liabilities and Seller shall pay, discharge and perform all such liabilities and
obligations promptly when due, except to the extent contested by Seller in good
faith and by proper proceedings.
(e) Purchase Price. The purchase price for the Acquired Assets shall be an
amount equal to $8,000,000 (plus assumption of the Assumed Liabilities), payable
at the Closing, by Buyer's delivery to Seller of Buyer's secured promissory note
(the "Note") substantially in the form of attached Exhibit A. Buyer's
obligations under the Note shall be secured by Buyer's grant to Seller of a
security interest in and to certain of Buyer's assets pursuant to a Security
Agreement (the "Security Agreement") substantially in the form of attached
Exhibit B.
(f) Allocation of Purchase Price. It is the express intention of the
parties that the Purchase Price shall be allocated among the Acquired Assets in
accordance with and as provided by Section 1060 of the Code. The parties agree
that any tax returns or other information they may file or cause to be filed
with any government authority shall be prepared and filed consistently with the
allocations agreed upon hereunder. In this regard, the parties agree that, to
the extent required, they will each properly prepare and timely file Form 8594
in accordance with Section 1060 of the Code. Within 90 days after the Closing
Date, the parties shall jointly prepare an allocation of the Purchase Price
consistent with the requirements of Section 1060 of the Code.
SECTION 2. CLOSING.
(a) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Battle Xxxxxx LLP,
Park Avenue Tower, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m.,
local time, on November 13, 1996, or such other time and place as Buyer and
Seller shall mutually determine (the "Closing Date").
(b) Seller's Deliveries at the Closing. At the Closing, Seller (except as
otherwise noted below) shall deliver to Buyer the following:
(i) a xxxx of sale and assignment;
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(ii) transfer documents, including, without limitation, copyright
and trademark assignments, in form and substance reasonably acceptable to
Buyer, to effect the transfer of the Intellectual Property to Buyer;
(iii) releases of Liens affecting any of the Acquired Assets,
including, without limitation, termination statements on Form UCC-3 and a
payoff letter from each creditor of the Business indicating that upon
payment of a specified amount, such creditor shall release all Liens
relating to the Business or any of the Acquired Assets;
(iv) all third party consents required in connection with
consummation of the transactions contemplated by this Agreement;
(v) all state tax clearances required by the State of Arizona or
other appropriate documentation from such state certifying the payment by
Seller of all applicable sales taxes; and
(vi) such other instruments of sale, transfer, conveyance and
assignment as Buyer reasonably may request, in form reasonably
satisfactory to Buyer.
(c) Buyer's Deliveries at the Closing. At the Closing, Buyer (except as
otherwise noted below) shall deliver to Seller the following:
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(i) the Note;
(ii) the Security Agreement;
(iii) a xxxx of assumption; and
(iv) such other instruments of assumption as Seller may
reasonably request in form reasonably satisfactory to Buyer.
SECTION 3. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions as of the Closing:
(i) Buyer shall have received from Seller each of the documents
referred to in Section 2(b) hereof;
(ii) the representations and warranties of Seller set forth in
Section 4 hereof shall be true and correct in all material respects;
(iii) Seller shall have performed and complied in all material
respects with all of their respective covenants hereunder;
(iv) no action, suit or proceeding shall be pending or threatened
before any court, arbitrator or other body or administrative agency of any
federal, state or local jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would subject Buyer to damages
in respect of the consummation of the transaction contemplated hereby this
Agreement or prevent consummation of any of the transactions contemplated
by this Agreement (and no such injunction, judgment, order, decree, ruling
or charge shall be in effect);
(v) Seller shall have delivered to Buyer one or more
certificates to the effect that each of the conditions specified in
Section 3(a)(i) through (iv) hereof, inclusive, have been satisfied;
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(vi) Buyer shall be satisfied with its business, legal,
environmental and accounting due diligence investigation and review of the
Business, the Acquired Assets and the Seller;
(vii) Seller shall have provided Buyer with a certificate of
amendment to its articles of incorporation, in form acceptable for filing
with the Secretary of State of the State of Delaware, changing Seller's
corporate name to a name substantially dissimilar to its present name, to
be filed by Seller immediately following the Closing; and
(viii) all documents incident the transactions contemplated hereby
shall be satisfactory in form and substance to Buyer and its counsel.
Buyer may waive any condition specified in this Section 3(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions as of the Closing:
(i) Seller shall have received from Buyer each of the documents
referred to in Section 2(c) hereof;
(ii) the representations and warranties of Buyer set forth in
Section 5 hereof shall be true and correct in all material respects;
(iii) Buyer shall have performed and complied in all material
respects with all of its covenants hereunder;
(iv) no action, suit or proceeding shall be pending or threatened
before any court, arbitrator or other body or administrative agency of any
federal, state or local jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would subject Seller to damages
in respect of the consummation of the transactions contemplated this
Agreement or prevent consummation of any of the transactions contemplated
by this Agreement (and no such injunction, judgment, order, decree, ruling
or charge shall be in effect);
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(v) Buyer shall have delivered to Seller a certificate to the
effect that each of the conditions specified in Section 3(b)(i) through
(iv), inclusive, have been satisfied; and
(vi) all documents incident the transactions contemplated by this
Agreement shall be satisfactory in form and substance to Seller and its
counsel.
Seller may waive any condition specified in this Section 3(b) if it executes a
writing so stating and signed by Seller at or prior to the Closing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer that the representations and warranties
set forth in this Section 4 are true and correct and will be so as of the
Closing Date, in each case regardless of any investigation or lack of
investigation by any party hereto:
(a) Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in every jurisdiction in which the
failure to so qualify would reasonably be expected to have a material adverse
effect on the financial condition, operating results, assets, operations or
business prospects of Seller.
(b) Authority of Seller; Validity. Seller has all requisite corporate
power and authority and all material licenses, permits and authorizations
necessary to own and operate its properties, to carry on its businesses as now
conducted and to execute and deliver this Agreement and to perform its
obligations hereunder. Seller has all requisite power, authority and capacity to
execute and deliver this Agreement and the relevant Exhibits hereto and to
perform his or her respective obligations hereunder and thereunder, as the case
may be. This Agreement and any applicable Exhibits hereto constitute the valid
and legally binding obligation of Seller, enforceable in accordance with their
respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, shall
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
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order, decree, ruling, charge or other restriction of any government,
governmental agency, or court to which Seller is subject or any provision of the
certificate of incorporation or bylaws of Seller or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under, any agreement, contract, lease, license, instrument or
other arrangement to which Seller is a party or by which it is bound or to which
any of the Acquired Assets is subject, or (iii) result in the imposition of any
Lien upon any of the Acquired Assets. Seller is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any governmental agency to consummate the transactions contemplated by this
Agreement.
(d) Financial Statements. The financial statements of Seller (consisting
of a balance sheet, a statement of operations and a statement of cash flow and
the related notes thereto) as at and for the two years ended December 31, 1995
and as at and for the nine months ended September 30, 1996) (the "Financial
Statements"), in the forms which have previously been provided to Purchaser (i)
are true and correct, have been prepared in accordance with generally accepted
accounting principles consistently applied, except as otherwise indicated in the
notes to such financial statements and subject in the case of interim financial
statements to the absence of footnotes and year-end adjustments consisting only
of normal recurring accruals, and (ii) present fairly the results of operations
of Seller for the periods covered thereby.
(e) Brokers' Fees. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(f) Legal Compliance. Seller has complied, and are in compliance, with all
applicable laws, rules and regulations of federal, state, local and foreign
governments (and all agencies thereof), including, without limitation, laws
relating to environmental protection, hazardous waste, health and safety, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure to so comply.
(g) Taxes. Seller has filed, on a timely basis, all required federal,
state and local income, sales, franchise and other tax
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returns or reports relating to Seller, the Business and the Acquired Assets,
accurately reflecting any and all income or other taxes owing to the United
States, or any subdivision thereof, or any taxing authority, and immediately
subsequent to the Closing, there will be no tax deficiencies (including
penalties and interest) of any kind assessed against Buyer with respect to
Seller, the Business or the Acquired Assets for any taxable periods ending on or
before the Closing Date.
(h) Title to Acquired Assets. Seller has good and marketable title to, or
a valid leasehold interest in, each of the Acquired Assets, free and clear of
any Lien or restriction on transfer, except for any required third party
consents necessary to assign the same to Buyers.
(i) Leased Property. The Leases constitute all of the leases relating to
the Business. Each of such leases is in full force and effect. With respect to
the Leases: (i) such Leases are legal, valid and binding obligations of, and
enforceable against, the parties thereto in accordance with their terms, and
(ii) except for the failure to make monthly payments on certain personal
property leases, neither Seller and, to the best of Seller's knowledge, no third
party, is in breach or default, and no event has occurred (including the
consummation of the transactions contemplated hereby) which, with or without the
lapse of time or the giving of notice, would constitute such a breach or default
or permit termination, modification, or acceleration under any Lease.
(j) Intellectual Property. Seller is, and upon consummation of the
transactions contemplated hereby Buyer will be vested with, good, sole and
marketable right, title and interest in and to the Intellectual Property
(including, without limitation, the exclusive right to, or to permit or cause
others to, see, display, distribute, reproduce, create, develop, sell, license
and otherwise exploit the Intellectual Property and all derivative works
thereof). To the best of Seller's knowledge, Seller, with respect to the
operation of the Business, has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of any third party. Seller has never received any charge, complaint,
claim, demand or notice alleging any interference, infringement,
misappropriation or violation referred to in the preceding sentence. To the best
of Seller's knowledge, except as disclosed to Buyer in writing prior to the
Closing Date, no third party has interfered with, infringed
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upon, misappropriated, or otherwise come into conflict with any of the
Intellectual Property.
(k) Sufficiency and Condition of Assets. The Acquired Assets include all
of the assets, both tangible and intangible, used by Seller in the conduct of
the Business or necessary to operate the Business as presently conducted. Each
of the Fixed Assets has been maintained in good operating condition and its
capabilities have been maintained (subject to normal wear and tear) in
accordance with industry practice.
(l) Accounts Receivable. Each of the Accounts Receivable arose in the
ordinary course of the Business. There exists no condition or circumstance that
would threaten or impair the collection of any of the Accounts Receivable.
Seller's accounts receivable ledger has been maintained in accordance with
generally acceptable accounting principles consistently applied.
(m) Inventory. The Inventory consists of items actually on hand which are
usable in the normal course of the Business as heretofore operated, and the
dollar amounts at which the Inventory is carried on Seller's books and records
reflect the normal inventory valuation policy of the Seller. The Inventory is
maintained at normal levels consistent with past practice and business needs.
(n) Contracts. Seller has delivered to Buyer a correct and complete copy
of each written agreement included in the Acquired Assets or Assumed
Liabilities. Seller has also delivered to Buyer a brief description of all oral
contracts, agreements and other arrangements to which Seller is a party and
which relate to the Acquired Assets or the Assumed Liabilities. With respect to
Seller's contracts, agreements and other arrangements: (i) to the best of
Seller's knowledge, such contract, agreement or arrangement is legal, valid,
binding, enforceable in accordance with its terms and in full force and effect,
(ii) Seller is not in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default by Seller or permit
any third party to terminate, modify, or accelerate, such agreement,
(iii) Seller has not repudiated any provision of such agreement, contract or
arrangement, (iv) to the best of Seller's knowledge, no third party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default by such third party or permit Seller to
terminate, modify,
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or accelerate, such agreement, contract or arrangement, (v) Seller does not have
any present expectation or intention of not fully performing any obligation on
its part to be performed pursuant to any contract, and (vi) Seller does not have
any knowledge of any breach or anticipated breach by any other party to any
contract to which it is a party.
(o) Litigation. No Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or charge of any judicial or administrative body
or agency or (ii) is a party or, to the best of Seller's knowledge, is
threatened to be made a party to, any action, suit, proceeding, hearing or
investigation of, in, or before any court, arbitrator or other body or
administrative agency of any federal, state, local, or foreign jurisdiction.
(p) Employees. To the best of Seller's knowledge, no executive, employee,
or group of employees of Seller has any plans to terminate such individual's
employment by Seller. Seller has complied with all laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes, and, to the best of Seller' knowledge, Seller does not have any
material labor relations problems (including any union organization activities,
threatened or actual strikes or work stoppages or material grievances).
(q) Employee Benefits. With respect to all employees and former employees
of Seller, Seller does not maintain, contribute to or have any liability under
(or with respect to) any (i) Employee Pension Benefit Plan, whether or not
terminated, (ii) Employee Welfare Benefit Plan, whether or not terminated, which
provides medical, health, life insurance or other welfare-type benefits for
current or future retirees or current or future former employees or their
spouses or dependents (other than in accordance with Sec. 4980B(f) of the Code),
(iii) (A) Multiemployer Plan or (B) any plan of the type described in Section
4063 and 4064 of ERISA or Section 413(c) of the Code, and Seller has not
incurred any current or potential withdrawal liability as a result of a complete
or partial withdrawal (or potential partial withdrawal) from any Multiemployer
Plan or (iv) deferred compensation or retirement plans or arrangements, employee
welfare, fringe benefit or bonus plan, program, policy or other arrangement for
employees or any other arrangement for employees or former employees of Seller,
their spouses or dependents, whether or not terminated.
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(r) Permits, Etc. All or the Permits necessary for the conduct of the
Business are assignable to Buyer. No event has occurred and continuing which
would allow any such Permit to be revoked or terminated.
(s) Customers and Suppliers. None of the ten largest customers of and the
ten largest suppliers of Seller has terminated or materially reduced its
business with Seller within the last 12 months. No Seller has received any
notice that any such customer or supplier intends to terminate or materially
reduce its business with Seller and to the best knowledge of Seller, none of
such customers or suppliers has such intention.
(t) Full Disclosure. To the best of Seller's knowledge, as of the date of
this Agreement (and as of the Closing), neither this Agreement nor any of the
schedules, exhibits, attachments, written statements, documents, certificates or
other items prepared and/or supplied to Buyer by or on behalf of Seller with
respect to the transactions contemplated hereby contain (or as of the Closing
shall contain) any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 4 not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants that the representations and warranties set forth in this Section 5 are
true and correct and will be so as of the Closing Date, in each case regardless
of any investigation or lack of investigation by any party hereto:
(a) Organization of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Authority of Buyer; Validity. Buyer has full corporate power and
authority to execute and deliver this Agreement and the Exhibits hereto and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Buyer, enforceable in accordance with its terms
and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement and the Exhibits hereto, nor the consummation of the transactions
contemplated hereby, shall (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any
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government, governmental agency, or court to which Buyer is subject or any
provision of its certificate of incorporation or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Buyer is a party or by which it is bound or to
which any of its assets is subject. Buyer is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller could become liable or
obligated.
SECTION 6. ADDITIONAL AGREEMENTS.
(a) Survival. Subject to Section 6(b) hereof, the representations,
warranties, covenants and agreements set forth in this Agreement or in any
certificate or other writing delivered in connection with this Agreement shall
survive the Closing and the consummation of the transactions contemplated hereby
notwithstanding any examination made for or on behalf of Buyer or Seller.
(b) Indemnification.
(i) Indemnification of Buyer. From and after the date hereof,
Seller shall indemnify and hold harmless Buyer from and against any loss,
damage or expense, including, without limitation, reasonable attorneys'
and consultants' fees, suffered by Buyer arising or resulting from (a) any
inaccuracy in or breach of any of the representations, warranties,
covenants or agreements made by Seller in this Agreement or any other
agreement, document or instrument delivered in connection herewith; (b)
the operation of the Business prior to the Closing Date; (c) any act or
omission of Seller, or their employees or agents, occurring prior to the
Closing Date; (d) any claim against Buyer for any taxes relating to the
Business in respect of any period ending prior
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to the Closing Date; or (e) any liability or obligation of Seller which
are not Assumed Liabilities.
(ii) Indemnification of Seller. From and after the date hereof,
Buyer shall indemnify and hold harmless Seller from and against any loss,
damage or expense, including, without limitation, reasonable attorneys'
and consultants' fees, suffered by Seller arising or resulting from: (a)
any inaccuracy in or breach of any of the representations, warranties,
covenants or agreements made by Buyer in this Agreement or any other
agreement, document or instrument delivered in connection herewith; (b)
the operation of the Business after the Closing Date; (c) any act or
omission of Buyer, or its employees and agents, occurring after the
Closing Date; (d) any claim against Seller for any taxes relating to the
Business in respect of any period beginning after the Closing Date; or (e)
any liability or obligation which is an Assumed Liability.
(iii) Third Party Claims. If any third party shall notify any
party to this Agreement (the "Indemnified Party") with respect to any
matter which may give rise to a claim for indemnification against any
other party to this Agreement (the "Indemnifying Party") under this
Section 6(b), then the Indemnified Party shall notify each Indemnifying
Party thereof. Within 30 days after receipt of notice of a particular
matter, the Indemnifying Party may assume the defense of such matter if
the Indemnifying Party admits responsibility and reaffirms its obligation
for indemnification with respect to such matter; provided, however, that
(A) the Indemnifying Party shall retain counsel reasonably acceptable to
the Indemnified Party, (B) the Indemnified Party, at its sole cost and
expense which shall not be included as part of the loss, damage or
expense, including, without limitation, reasonable attorneys' and
consultants' fees, suffered by it, may participate in the defense of such
claim with co-counsel of its choice to the extent that the Indemnified
Party believes in its sole discretion that such matter shall affect its
ongoing business and (C) the Indemnifying Party shall not consent to the
entry of any judgment with respect to the matter or enter into any
settlement with respect to the matter which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified
Party from all liability with respect
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thereto. If, within such 30-day period, the Indemnifying Party does not
assume the defense of such matter, the Indemnified Party may defend
against the matter in any manner that it reasonably may deem appropriate
and may consent to the entry of any judgment with respect to the
matter or enter into any settlement with respect to the matter without the
consent of the Indemnifying Party, subject to the right of the
Indemnifying Party to contest its obligation to indemnify and hold
harmless the Indemnified Party.
(iv) Amount of Indemnification. The amount to which an
Indemnified Party shall be entitled under this Section 6(b) shall be
determined: (a) by the written agreement between the Indemnified Party and
the Indemnifying Party; (b) by a final judgment or decree of any court of
competent jurisdiction or (c) by any other means to which the Indemnified
Party and the Indemnifying Party shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have
expired and no appeal shall have been taken or when all appeals taken have
been finally determined.
(c) Transaction Expenses. Except as otherwise provided herein, each of
Buyer and Seller shall bear his, her or its own costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby (whether
or not consummated).
(d) Further Assurances. Seller shall execute and deliver such further
instruments of conveyance and transfer and take such additional action as Buyer
may reasonably request (including assisting Buyer in the collection of
receivables) to effect, consummate, confirm or evidence the transfer to Buyer of
the Acquired Assets, and Seller shall execute such documents as may be necessary
to assist Buyer in preserving or perfecting its rights in the Acquired Assets.
(e) Confidentiality. Whether or not the transactions contemplated hereby
are consummated, Buyer and Seller shall keep confidential all information and
materials regarding the other party(ies) reasonably designated by such
party(ies) as confidential at the time of disclosure thereof. If the
transactions contemplated hereby are consummated, Seller shall maintain
confidential and shall not use or disclose, directly or indirectly (except as
required by law or as authorized in writing by Buyer
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prior to such disclosure), any confidential or proprietary information or
materials regarding the other party.
(f) Seller' Noncompete and Nonsolicitation.
(i) In consideration of the Closing Date Payment, Seller hereby
agrees that during the period beginning on the Closing Date and ending on
the fifth anniversary of the Closing Date (the "Noncompete Period"), it
shall not, directly or indirectly, either for itself or for any other
Person, permit its name to be used by or Participate (as hereinafter
defined) in any business located anywhere in the continent of North
America or enterprise identical or similar to or competitive with the
Business or Buyer's business. For purposes of this Section 6(f), the term
"Participate" includes any direct or indirect interest in any enterprise,
whether as an officer, director, stockholder, employee, partner, sole
proprietor, agent, representative, independent contractor, consultant,
franchisor, franchisee, creditor, owner or otherwise. Seller agrees that
this covenant is reasonable with respect to its duration, geographical
area and scope.
(ii) During the Noncompete Period Seller shall not (A) induce or
attempt to induce any employee of Buyer or its Affiliates to leave his or
her employ or in any way interfere with the relationship between Buyer or
its Affiliates and any of their respective employees or (B) induce or
attempt to induce any supplier, licensee, licensor, franchisee, or other
business relation of Buyer or its Affiliates to cease doing business with
them or in any way interfere with the relationship between Buyer or its
Affiliates and any customer or business relation.
(iii) The parties hereto agree that Buyer may suffer irreparable
harm from a breach by Seller of any of the covenants or agreements
contained in this Section 6(f). In the event of an alleged or threatened
breach by Seller of any of the provisions of this Section 6(f), Buyer or
its successors or assigns may, in addition to all other rights and
remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce or prevent any violations of the provisions hereof
(including the extension of the Noncompete Period by a period equal to the
length of
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the violation of this Section 6(f)). In the event of an alleged breach or
violation by Seller of any of the provisions of this Section 6(i), the
Non-Competition Period shall be tolled until such alleged breach or
violation is resolved. Seller agrees that these restrictions are
reasonable.
(iv) If, at the time of enforcement of any of the provisions of
this Section 6(f), a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto
agree that the maximum period, scope or geographical area reasonable under
such circumstances shall be substituted for the stated period, scope or
area.
(v) Seller agrees that the covenants made in Section 6(f)(i) and
(ii) shall be construed as an agreement independent of any other provision
of this Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Agreement.
(g) Employees. Immediately after the Closing, all employees employed by
Seller immediately prior to the Closing shall become employees of Buyer on terms
and conditions substantially similar to their employment by Seller. Each such
employee shall be entitled to participate in all Buyer employee benefit and
employee welfare plans to the same extent as similarly situated employees of
Buyer (it being understood that each of Seller's employees shall be entitled to
prior service credit in respect of Buyer's vacation policy). When employed by
Buyer, all former employees of Seller shall be employees-at-will of Buyer and
nothing contained herein shall entitle any employee to remain in the employment
of Buyer or affect the right of Buyer to terminate any employee at any time.
SECTION 7. TERMINATION. This Agreement may be terminated:
(a) by mutual written consent of Buyer and Seller at any time
prior to the Closing; or
(b) by Buyer or Seller, by giving written notice to the other party (the
"Nonterminating Party") at any time prior to Closing (i) in the event that the
Nonterminating Party has breached any representation, warranty or covenant
contained in this Agreement in any material respect, or (ii) if the Closing
shall not have occurred on or before December 31, 1996.
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If any party terminates this Agreement pursuant to this Section 7, all rights
and obligations of the parties hereunder shall terminate without any liability
of any party to any other party, except for any liability of Seller for a breach
of Section 6(e) hereof.
SECTION 8. DEFINITIONS.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Employee Benefit Plan" means any (i) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan,
(ii) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (iv) Employee Welfare Benefit Plan, fringe benefit,
bonus plan or other plan or program.
"Employee Pension Benefit Plan" shall have the meaning set forth in
Section 3(2) of ERISA.
"Employee Welfare Benefit Plan" shall have the meaning set forth in
Section 3(1) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Intellectual Property" means (i) all inventions, all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (ii) all registered and unregistered
trademarks, service marks, trade dress, logos, trade names, and corporate names,
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (iv) all trade secrets, know-how and confidential business
information, (v) all
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computer software, (vi) all other proprietary rights, and (vii) all copies and
tangible embodiments thereof.
"Lien" shall mean any security interest, pledge, bailment (in the nature
of a pledge or for purposes of security), mortgage, deed of trust, the grant of
a power to confess judgment, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, other than (i)
leases (other than financing leases) and (ii) Liens of landlords and lessors of
real property.
"Multiemployer Plan" shall have the meaning set forth in Section 3(37) of
ERISA.
"Person" means any individual, partnership, corporation, limited liability
company, association, trust, joint venture or other organization or entity.
SECTION 9. MISCELLANEOUS.
(a) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
(b) Entire Agreement. This Agreement and the Schedules and Exhibits hereto
(including the documents referred to herein and therein) constitute the entire
agreement among the parties hereto and supersedes any prior understandings,
agreements or representations by or between the parties hereto, written or oral,
that may have related in any way to the subject matter hereof.
(c) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective legal representatives,
successors, heirs and permitted assigns. No Seller nor Buyer may assign either
this Agreement or any of his, her or its rights, interests, or obligations
hereunder without the prior written approval of the other party; provided,
however, that Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder.
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(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given when delivered
personally to the recipient or sent to the recipient by reputable express
courier service (charges prepaid), and addressed to the intended recipient as
set forth below:
If to Seller:
Sierra Tucson, Inc.
00000 Xxxxx Xxxx Xxx Xxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Buyer:
Soften Realty, L.L.C.
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
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(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(i) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(j) Construction. The language used in this Agreement shall be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.
(k) Remedies. The parties shall each have and retain all other rights and
remedies existing in their favor at law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other
equitable relief (including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this Agreement. Without
limiting the generality of the foregoing, Seller hereby agrees that in the event
Seller fails to convey the Acquired Assets to Buyer in accordance with the
provisions of this Agreement, Buyer's remedy at law may be inadequate. In such
event, Buyer shall have the right, in addition to all other rights and remedies
it may have, to specific performance of the obligations of Seller to convey the
Acquired Assets.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER:
SOFTEN REALTY, L.L.C., a Delaware
limited liability company
By: NEXTHEALTH, INC., a Delaware
corporation
By: /s/ Xxx Xxxxxx
____________________________________
Name: Xxx Xxxxxx
Title: Authorized Representative
SELLER:
SIERRA TUCSON, INC., a Delaware
corporation
By: /s/ Xxx Xxxxxx
____________________________________
Name: Xxx Xxxxxx
Title: Authorized Representative
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EXHIBIT B-1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT
AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED
TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
A TERM NOTE
$8,090,000 November 14, 1996
FOR VALUE RECEIVED, NEXTHEALTH, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of AP LOM LLC (the "Lender"),
in lawful money of the United States of America in immediately available funds,
at Lender's office located at 1301 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or at such other office as may be designated, from time to time,
by the holder hereof in writing, on the Maturity Date the principal sum of EIGHT
MILLION NINETY THOUSAND DOLLARS ($8,090,000), or, if less, the unpaid principal
amount of the A Term Loan made by the Lender pursuant to the Credit Agreement.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to such terms in the Credit Agreement referred to below.
The Borrower promises also to pay interest on the unpaid principal amount
hereof in like money at said office from the date hereof until paid at the rates
and at the times provided in Section 2.4 of the Credit Agreement.
This Note is the A Term Note referred to in the Credit Agreement, dated as
of November 14, 1996 (as amended, modified or supplemented from time to time,
the "Credit Agreement"), between the Borrower and the Lender and is entitled to
the benefits thereof and of the other Loan Documents. This Note is secured by
the Mortgage, the Security Agreement and the Pledge Agreement and is entitled to
the benefits of the Guaranty. This Note is subject to voluntary prepayment and
mandatory repayment, in whole or in part, prior to the Maturity Date as provided
in the Credit Agreement.
Lender shall, and is hereby authorized by Borrower to, endorse on the
Schedule annexed to this Note, or otherwise record in Lender's internal records,
an appropriate notation evidencing the date and amount of all principal
disbursed by the Lender hereunder, as well as the date and amount of each
repayment and prepayment hereunder; provided, however, that the failure of
Lender to make such a notation or any error in such notation shall not affect
the obligation of the Borrower under this Note. The Lender shall provide to the
Borrower on request from time to time copies of the Schedule annexed to this
Note showing all endorsements thereto at the time of each such request.
In case an Event of Default shall occur and be continuing, the principal
of and accrued interest on this Note may become or be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
25
The Borrower hereby waives presentment, demand, protest, notice of
dishonor, notice of nonpayment, notice of protest and diligence in collection,
and assents to the terms hereof and to any extension or postponement of the time
for payment or any other indulgence in connection with this Note. The Borrower
consents that the property securing this Note, or any part of such security, may
be released, exchanged, added to or substituted for by the Lender, without in
any way modifying, altering, releasing, affecting or limiting its liability
hereunder or the liens of the Mortgage, Security Agreement and Pledge Agreement,
and further agrees that the Lender shall not be required to first institute any
suit, or to exhaust any of its remedies against the Borrower or any other person
or party liable or to become liable hereunder, in order to enforce payment of
this Note.
This Note shall be construed in accordance with and governed by the laws
of the State of New York.
NEXTHEALTH, INC.
(Seal)
By:__________________
Name:
Title:
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EXHIBIT B-2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT
AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED
TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
B TERM NOTE
$5,000,000 November 14, 1996
FOR VALUE RECEIVED, NEXTHEALTH, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of AP LOM LLC (the "Lender"),
in lawful money of the United States of America in immediately available funds,
at Lender's office located at 1301 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or at such other office as may be designated, from time to time,
by the holder hereof in writing, on the Maturity Date the principal sum of FIVE
MILLION DOLLARS ($5,000,000), or, if less, the unpaid principal amount of the B
Term Loans made by the Lender pursuant to the Credit Agreement. Unless otherwise
defined herein, capitalized terms used herein shall have the meanings ascribed
to such terms in the Credit Agreement referred to below.
The Borrower promises also to pay interest on the unpaid principal amount
hereof in like money at said office from the date hereof until paid at the rates
and at the times provided in Section 2.4 of the Credit Agreement.
This Note is the B Term Note referred to in the Credit Agreement, dated as
of November 14, 1996 (as amended, modified or supplemented from time to time,
the "Credit Agreement"), between the Borrower and the Lender and is entitled to
the benefits thereof and of the other Loan Documents. This Note is secured by
the Mortgage, the Security Agreement and the Pledge Agreement and is entitled to
the benefits of the Guaranty. This Note is subject to voluntary prepayment and
mandatory repayment, in whole or in part, prior to the Maturity Date as provided
in the Credit Agreement.
Lender shall, and is hereby authorized by Borrower to, endorse on the
Schedule annexed to this Note, or otherwise record in Lender's internal records,
an appropriate notation evidencing the date and amount of all principal
disbursed by the Lender hereunder, as well as the date and amount of each
repayment and prepayment hereunder; provided, however, that the failure of
Lender to make such a notation or any error in such notation shall not affect
the obligation of the Borrower under this Note. The Lender shall provide to the
Borrower on request from time to time copies of the Schedule annexed to this
Note showing all endorsements thereto at the time of each such request.
In case an Event of Default shall occur and be continuing, the principal
of and accrued interest on this Note may become or be declared to be due and
payable in the manner and with the effect provided in the Credit Agreement.
27
The Borrower hereby waives presentment, demand, protest, notice of
dishonor, notice of nonpayment, notice of protest and diligence in collection,
and assents to the terms hereof and to any extension or postponement of the time
for payment or any other indulgence in connection with this Note. The Borrower
consents that the property securing this Note, or any part of such security, may
be released, exchanged, added to or substituted for by the Lender, without in
any way modifying, altering, releasing, affecting or limiting its liability
hereunder or the liens of the Mortgage, Security Agreement and Pledge Agreement,
and further agrees that the Lender shall not be required to first institute any
suit, or to exhaust any of its remedies against the Borrower or any other person
or party liable or to become liable hereunder, in order to enforce payment of
this Note.
This Note shall be construed in accordance with and governed by the laws
of the State of New York.
NEXTHEALTH, INC.
(Seal)
By:_____________
Name:
Title:
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