ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF PORTSMOUTH, INC.,
as Buyer
and
RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP
as Seller
and
XXXXXXX CORPORATION
as General Partner
Dated as of January 24, 1997
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF PORTSMOUTH, INC., a Delaware
corporation ("Buyer"), RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP, a
Virginia limited partnership ("Seller") and XXXXXXX CORPORATION, a Virginia
corporation ("General Partner" or "Xxxxxxx Corporation" and, together with
Seller, collectively, the "Operators" and individually, an "Operator").
RECITALS
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility (as hereinafter defined), the Business (as hereinafter defined) and
substantially all of the other assets of Seller used in connection with the
Facility and the Business, upon the terms and conditions hereinafter set forth;
WHEREAS, General Partner is the sole general partner under the
Partnership Agreement (as hereinafter defined) of Seller and Manager manages the
Facility and the Business for Seller pursuant to the Existing Management
Agreement (as hereinafter defined); and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
A. Definitions. The following capitalized terms used in
this Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), used with respect to any Person, shall mean the
possession, directly or indirectly, whether by contract or otherwise, of the
power to direct or cause the direction of the management and policies of such
Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Xxxxxxx Development Corporation, a Virginia corporation.
Xxxx of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller, in
conjunction with the Manager, of owning, planning, developing, using for the
Intended Purpose, operating and maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner or the Manager for the
benefit of Seller pursuant to authority granted under the Partnership Agreement,
the Existing Management Agreement or otherwise or (iii) any of the Acquisition
Assets are bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner or the
Manager is a party thereto under a Contract for the benefit of Seller pursuant
to authority granted under the Partnership Agreement, the Existing Management
Agreement or otherwise, such other Operator Affiliate will assign to Buyer at
Closing including, without limitation, the Option Contract, and, upon such
assignment, those Contracts under which Buyer will assume the obligations
arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition, equitable interest, option, pledge, voting trust,
right of first refusal, or restriction of any kind, including any restriction on
use, voting or dividends (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership) or other thing commonly
known as an encumbrance; and "Encumber" means the creation of any Encumbrance.
Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup"), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
as the same may be amended from time to time, or any successor law and the rules
and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%) percent of the Purchase Price shall be held in escrow by the
Escrow Agent as security for Seller's indemnification obligations under this
Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
Existing Management Agreement: The Management Agreement dated June 4,
1987 between Seller and Manager pursuant to which Manager has been managing the
Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"Churchland House", and comprised of an assisted-living facility, containing 48
licensed beds and approximately 18,775 square feet and the related amenities.
Financing Source: Any Person which provides financing for the
transactions contemplated by this Agreement, including any Person which may
acquire the Facility (and/or any of the other Acquisition Assets) and
concurrently lease the same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Seller, BDC, Xxxxxxx Corporation as successor to
Retirement Home of Gloucester Limited Partnership, Ghent Arms Limited
Partnership, Retirement Home of Virginia Beach Limited Partnership, Xxxxxxx
Corporation and its principal shareholder, the Manager and its principal
shareholder, Buyer and the other Affiliates of Integrated Living Communities,
Inc., which are "Buyers" under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "Churchland House" and all derivations
and variations thereof, and any other trade names, service xxxx, logo, symbol,
trade dress, design, or representation or expression of any thereof, or
registration or application for registration thereof, or any invention, trade
secret, technical information, know-how, proprietary right (including
Resident/Patient lists, supplier lists and operating manuals) or intellectual
property used by an Operator Affiliate in connection with the operation of, or
otherwise pertaining to, the Property or the Business but specifically excluding
software and computer programs licensed by a third party to an Operator
Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
City of Portsmouth, State of Virginia, consisting of approximately 1.7164 acres
and more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: American Retirement Homes, Inc., a Virginia corporation.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
Operator Affiliates: Collectively, Seller, General Partner, Manager and
each of the principal shareholders of each of General Partner and Manager,
respectively.
Option Contract: That certain Option Agreement, dated May 7, 1996,
amended and extended on December 4, 1996 and further amended on January 14,
1997, between Xxxxxxx Corporation as successor to Seller, as optionee, and Xxxx
X. Xxxxxx and Xxxx X. Xxxxxx, as optionors, pursuant to which Xxxxxxx
Corporation has the right and option to purchase the Option Land for a purchase
price of $65,000.
Option Land: That certain parcel or contiguous parcels of land located
in the City of Portsmouth, State of Virginia covered by and more particularly
described in the Option Contract.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and Xxxxx Xxxxx, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
a) all equipment, machinery, furniture and furnishings, Inventory,
vehicles and other tangible personal property (including all components
thereof) (whether or not set forth on Exhibit B), now or on the Closing Date
located in, on or used in connection with (A) the Facility (and whether or not
affixed to the facility) or (B) the Business, including all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air cooling and air conditioning systems, apparatus, sprinkler systems, fire and
theft protection equipment, built-in oxygen and vacuum systems, tools, repair
parts, appliances and communications equipment, to the extent any of the
foregoing items are not Fixtures and are not conveyed to Buyer as part of the
Facility pursuant to the Deed, and those specific items of tangible personal
property (including any vehicles which are used for the Business) described on
Exhibit B; and
a) all Resident and/or Patient Agreements and other Designated
Contracts, telephone numbers and Resident/Patient records and invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property,
inventory, occupancy, withholding, payroll, gift, estate or inheritance tax),
levy, assessment, tariff, impost, imposition, toll, duty (including any customs
duty), deficiency or fee, and any related charge or amount (including any fine,
penalty or interest), imposed, assessed or collected by or for any authority or
payable (including pursuant to any tax-sharing agreement or pursuant to any
agreement, arrangement or understanding relating to the sharing or payment of
any such tax, levy, assessment, tariff, impost, imposition, toll, duty,
deficiency or fee).
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Xxxx of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Seller, BDC, Xxxxxxx Corporation as successor to Retirement
Home of Gloucester Limited Partnership, Ghent Arms Limited Partnership,
Retirement Home of Virginia Beach Limited Partnership, and Xxxxxxx Corporation,
each as sellers of assisted living facilities and the related business, Buyer
and other Affiliates of Integrated Living Communities, Inc. which are purchasing
such facilities and businesses pursuant to this Agreement and the other
Acquisition Agreements, and the Manager.
Year End Financial Statements: As defined in Section 6.3.
A. Construction of Certain Terms. For all purposes of this
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, (i) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(ii) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP, as at the time applicable; (iii) all
references in this Agreement to designated "Articles," "Sections", "Schedules",
"Exhibits" and other subdivisions are to the designated Articles, Sections,
Schedules and Exhibits and other subdivisions of this Agreement; (iv) the word
"including" shall have the same meaning as the phrase "including, without
limitation," and other phrases of similar import; (v) the words "herein, "
"hereof " and "hereunder' and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and (vi) all references to
this Agreement shall include all Schedules and Exhibits attached hereto.
A. Disclosure Letter. The disclosures in the Disclosure
Letter, and those in any supplement thereto, relate only to the representations
and warranties in the Section of this Agreement to which they expressly relate
and not to any other representation or warranty in this Agreement. In the event
of any inconsistency between the statements in the body of this Agreement and
those in the Disclosure Letter (other than an exception expressly set forth as
such in the Disclosure Letter with respect to a specifically identified
representation or warranty in a specific Section of this Agreement), the
statements in the body of this Agreement will control.
A. Parties' Intent. The parties intend that the assets to be
conveyed to Buyer pursuant to Section 2.1 include all of the assets employed in
and necessary to operate the Facility and the Business in substantially the
manner as the Business has heretofore been operated.
A. Knowledge. Wherever a representation is made in this
Agreement based upon the knowledge of an Operator (whether or not expressly
after due inquiry), it shall be deemed to have been made by such Operator after
due inquiry of the Manager of the Facility and each of the principal
shareholders of the General Partner and the Manager.
I. ARTICLE
TERMS OF THE SALE AND PURCHASE
A. Assets to Be Sold. Subject to the terms and conditions of
this Agreement, at Closing, Seller (and the other Operator Affiliates to the
extent such assets are owned by them) will sell, convey, assign, transfer and
deliver to Buyer and/or Buyer's designee or assignee as provided in Section
13.11, and Buyer and/or Buyer's designee or assignee, will purchase and acquire,
as a going concern, the Facility and all of the assets, properties (real or
personal, tangible or intangible), rights, prepaid expense items and business
goodwill used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
A. Excluded Assets. Notwithstanding Section 2.1, the
Acquisition Assets do not include: (1) claims for refunds of Taxes and other
governmental charges of whatever nature for periods prior to the Closing Date;
(2) Accounts Receivable; (3) the minute books, stock records and corporate seal
of Seller or, subject to Buyer's right to review and obtain copies of same as
provided in Section 13.8, Seller's financial books and records (whether in paper
or computer format), provided, however, Resident/Patient records are Acquisition
Assets; (4) Contracts other than the Designated Contracts; (5) Seller's bank
accounts, cash and cash equivalents and securities (except that deposits and
trust funds held for Residents/Patients shall be transferred to Buyer (or trust
accounts designated by Buyer for such Residents/Patients); (6) the Purchase
Price and rights under this Agreement; (7) personal property located at the
Facility which is owned by the Residents/Patients; and (8) the assets,
properties, and rights listed in Schedule 2.2 (collectively, the "Excluded
Assets").
1. Purchase Price. The purchase price for the Acquisition
Assets will be Two Million Two Hundred Ninety Thousand Dollars ($2,290,000.00),
subject to upward or downward adjustment as hereinafter provided (as adjusted,
the "Purchase Price").
1. The Purchase Price (without giving effect to any
post-Closing adjustments) shall be paid by Buyer to Seller
as follows:
(i) One Hundred Sixty-Eight Thousand Nine Hundred
Fifty-Eight and 17/100 Dollars ($168,958.17) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
A. Prorations and Purchase Price Adjustments. (a) On the
Closing Date, the following shall be apportioned and prorated as of the Closing
Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets
(including charges for sewer, water,
drainage or other services) assessed for the tax year in
which the Closing Date occurs;
(ii) personal property taxes attributable to the
Personal Property for the tax year in which the Closing Date
occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final xxxx or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of current
utility and fuel bills. If the Closing shall occur before the tax rate is fixed,
the apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding tax year applied to the latest assessed valuation, and
shall be subject to adjustment upon receipt by Buyer of notice of the tax rate
for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
A. Allocation of Purchase Price. After the Closing, the
parties agree to make consistent use of the allocation, fair market value and
useful life of the Purchase Price in any and all filings, declarations and
reports with the Internal Revenue Service in respect thereof, including the
reports required to be filed under Section 1060 of the Code, if applicable.
Buyer shall prepare and deliver IRS Form 8594 to Seller within forty-five (45)
days after the Closing Date.
A. Assumption of Liabilities. (a) Subject to the terms and
conditions of this Agreement, at Closing, Buyer shall assume and thereafter in
due course fully satisfy those obligations arising under the Designated
Contracts which are assignable and are assigned by Seller to Buyer, with respect
to, and only with respect to, performance of obligations (including payments to
be made on account of services) to be rendered thereunder after the Closing
Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
A. Consents to Assignments. (a) The Operators will use their
best efforts and shall diligently proceed to obtain all Consents of all Persons
necessary to permit the assignment of the Designated Contracts or to assign or
transfer any of the other Acquisition Assets. In the event that any of the
Acquisition Assets are not assignable, or the Person(s) from whom a Consent to
any such assignment or transfer, fail(s) or refuse(s) to Consent thereto before
the Closing Date, Buyer shall have no obligation to assume and will not assume
any such Designated Contract and shall have no obligation to purchase any such
Acquisition Asset. In addition, this Agreement shall not constitute an agreement
to assign or transfer any such Acquisition Asset or part thereof or any right or
benefit arising thereunder or resulting therefrom if an attempted assignment or
transfer thereof, without the Consent of such Person, would constitute a breach
thereof or in any way affect the rights of Buyer or Seller thereunder.
Notwithstanding the foregoing, all references in this Agreement or any other
Transaction Document (other than the Deed, any Xxxx of Sale and Assignment and
any other instrument or document conveying title to any Acquisition Assets) to
"Acquisition Asset" or "Acquisition Assets" shall continue to have the meaning
set forth in Section 2.1 without giving effect to this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
I. ARTICLE
CLOSING
1. Closing. The purchase and sale of the Acquisition Assets
provided for in this Agreement (the "Closing") shall take place on January 27,
1997 (the "Originally Scheduled Closing Date") at the offices of Buyer's
financing source (or counsel therefor), or at such other place, time or date as
Seller and Buyer may mutually agree to. The Originally Scheduled Closing Date,
any other such date as Seller and Buyer may mutually agree to as the date on
which the Closing shall occur, and any other date to which the same may be
extended by Seller or Buyer as hereinafter provided, are each herein referred to
as a "Scheduled Closing Date" and the latest of such Scheduled Closing Dates is
herein referred to as the "Closing Date".
2. If, prior to or by the Originally Scheduled Closing Date,
any Governmental Authority with jurisdiction over the licensing of the Facility
has not issued to Buyer a license to operate the Facility (including as proposed
to be expanded following acquisition of the Option Land) immediately upon
Buyer's acquisition of the Acquisition Assets, then, in such event, provided (i)
Buyer shall have furnished to such Governmental Authority all information
requested by such Governmental Authority as of such date in connection with its
application for the issuance of such license, (ii) this Agreement, the other
Acquisition Agreements and the Unification Agreement shall have been executed by
all of the parties thereto and (iii) First American Title Insurance Company of
New York, as escrow agent under the Deposit Escrow Agreement shall have been
authorized by the parties thereto to release the Escrow Deposit to the General
Partner, then Buyer shall be entitled to extend the Closing Date for a period of
up to ninety (90) days (the "Extension Period").
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of
this Agreement by Buyer pursuant to this Section 3.1(c), however, shall release
or relieve any Operator or other Operator Affiliate of any liability that they
may have for any breach of any representation, warranty, covenant or obligation
of an Operator in this Agreement or of any Operator Affiliate in any Transaction
Document.
1. In the event that the Closing is to take place
through an escrow or sub-escrow, the Operator Affiliates and Buyer shall
mutually execute and deliver to Title Insurer, as escrow holder, joint escrow
and/or recording instructions consistent with this Agreement on or prior to the
Closing Date. In the event of any conflict between the provisions of this
Agreement and any such escrow and/or recording instructions and/or any general
instructions required by Title Insurer to be executed by Buyer and Seller, or
any other Operator Affiliate in connection therewith, the provisions of this
Agreement and the Unification Agreement shall control.
1. Items to Be Delivered by Seller at Closing. At the Closing,
subject to the terms and conditions of this Agreement, Seller shall deliver, or
cause to be delivered to Buyer or, if the Closing is to take place in escrow, to
Title Insurer in escrow, such instruments as shall be necessary to convey to
Buyer or its designee or assignee good and marketable title to the Acquisition
Assets, free and clear of all Encumbrances (except for Permitted Encumbrances).
Among other things, Seller will deliver to Buyer or, if applicable, Title
Insurer in escrow:
a) A full warranty deed (the "Deed") in the form of
Exhibit C, which Deed shall be duly executed, acknowledged and in
recordable form. The Deed shall include (if applicable) the appropriate
state, county and local real estate transfer tax declaration of real
estate value or other affidavit as to the tax due upon the sale.
a) One or more Bills of Sale and Assignments in the
form of Exhibit B, duly executed and acknowledged by each of the
Operators.
a) "FIRPTA" affidavit or certificate in form and
substance satisfactory to Buyer and in conformance with Section
1445(b)(2) of the Code, to the effect that Seller is not a foreign
person and such other affidavits or certificates as may be reasonably
required by Buyer to the effect that Buyer is not required to withhold
taxes from the payment of sale proceeds to Seller under any other
applicable Law.
a) Uniform Commercial Code Form 3s in favor of
Seller, for filing with the appropriate state and local authorities,
for the release of any Encumbrance (other than a Permitted Encumbrance)
covering any of the Acquisition Assets as to which Uniform Commercial
Code Form 1s have been filed.
a) If the Closing shall not occur on the date hereof,
a certificate executed by each Operator wherein the Operators represent
and warrant to Buyer that, except as otherwise stated in such
certificate, each of the Operators' representations and warranties in
this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if
made on the Closing Date (giving full effect to any supplements to the
Disclosure Letter that were delivered by Seller to Buyer prior to the
Closing Date).
a) A certificate of the General Partner certifying
true and correct copies of Seller's Partnership Agreement and other
Organizational Documents, if any, which certificate and Organizational
Documents shall be in form and substance reasonably satisfactory to
Buyer.
a) A certificate of the Secretary of General Partner
certifying true and correct copies of General Partner's Organizational
Documents, which certificate and the accompanying Organizational
Documents shall be in form and substance reasonably satisfactory to
Buyer.
a) Opinion of Seller's and General Partner's Counsel
opining as to the matters set forth on Exhibit E and otherwise in form
and substance satisfactory to Buyer.
b) The Escrow Agreement duly executed and
acknowledged by Seller, General Partner and each other Operator
Affiliate and Escrow Agent.
a) The originals of all Designated Contracts, title
instruments in the Operators' or the Manager's possession pertaining to
the Acquisition Assets and the original Governmental Authorizations.
a) All other Transaction Documents to which Seller or
any other Operator Affiliate is a party duly executed and delivered by
each such party.
a) All other proper instruments required for the
conveyance of good and marketable title to the Acquisition Assets or
required by Title Insurer for the issuance of the Title Policy.
1. In addition, at the Closing, Seller shall deliver
or cause to be delivered possession of the Facility and other Acquisition Assets
(including keys and combinations for obtaining entry or access thereto).
A. Items to Be Delivered by Buyer at Closing. Among other
things, Buyer will deliver to the Escrow Agent:
a) The Assumption of Designated Contracts Agreement,
executed by Buyer.
a) A certificate executed by Buyer representing and
warranting to Seller that, except as otherwise stated in such
certificate, each of Buyer's representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement
and is accurate in all respects as of the Closing Date as if made on
the Closing Date.
a) A certificate of the Secretary of Buyer certifying
true and correct copies of resolutions adopted by Buyer's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents to be executed by Buyer
and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in
furtherance of this Agreement.
a) The Escrow Agreement duly executed and
acknowledged by Buyer and the Escrow Agent.
a) All other Transaction Documents to which Buyer is
a party duly executed and delivered by Buyer.
A. Other Closing Documents. Each party shall execute
and deliver such other instruments and take such other actions as either party
or the Title Insurer or Buyer's Financing Source may reasonably request in order
to effectuate the purposes of this Agreement.
I. ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
A. Performance. Each of the Operators shall have performed
each and all of the covenants and obligations required to be performed by it
under this Agreement on or prior to the Closing.
A. Representations and Warranties. Each and all of the
representations and warranties of the Operators hereunder shall be true and
correct on and as of the Closing Date, as if made as of the Closing Date.
A. Closing Documents. Seller shall have delivered (or caused
to have been delivered) to Buyer each of the items to be delivered by Seller or
an Operator Affiliate at Closing pursuant to Sections 3.2 and 3.4. Seller shall
have paid or shall have made arrangements for the payment of those costs and
expenses required to be paid by Seller pursuant to Section 13.2.
A. Title Insurance. Buyer shall have received, at Buyer's
expense, a commitment from Title Insurer satisfactory to Buyer for the issuance,
at standard rates, of an ALTA extended coverage (but without exception for
creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
A. Survey. Buyer shall have received, at Buyer's expense, and
approved either (a) a final "as-built" ALTA survey of the Facility completed in
accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, with additional Title A survey requirements, jointly established
and adopted by ALTA and ACSM in 1992 that meets the requirements of a Class A
Survey as defined therein, certified within thirty (30) days of the Closing Date
or (b) such other form of property survey which is in form, substance and all
other respects satisfactory to Buyer and its Financing Source in their sole
discretion. Such survey shall (i) be certified to Buyer, Title Insurer, and
Buyer's Financing Source, if any, as being true and accurate, and such
certification shall include the acreage of the Land and a statement that the
Land is not located in a Flood Hazard Area; (ii) identify thereon all telephone,
water, sewage, electricity, gas and other utility facilities to the points of
connection; and (iii) show no encroachments onto or conflicts with any adjacent
property other than pursuant to easements appurtenant to the Facility or such
other agreements with the affected landowner approved by Buyer and which are, in
turn, insured under the Title Policy.
A. Entitlements. Buyer shall have received and approved with
respect to the Facility copies of (a) the applicable zoning ordinances and map
marked to show the location of such Facility and certified by an appropriate
Governmental Authority to be complete and accurate; (b) evidence that such
zoning ordinances and the general plans/specific plans and all other land use
regulations of the applicable municipal jurisdictions and all Encumbrances, if
any, affecting the Facility permit the transfer of the Facility and use thereof
for its Intended Use (and reconstruction and resumption of use in the event of
damage, destruction, or cessation of use) as a matter of right for an unlimited
time period and not merely as a legal nonconforming use; (c) all licenses,
certificates, approvals and authorizations, including plot plan and subdivision
approvals, zoning variances, sewer, building, foundation, grading and other
permits and all other authorizations required by Governmental Authorities or by
any applicable covenants, conditions and restrictions for the use and operation
of the Facility for its Intended Use, in each instance in accordance with all
applicable Legal Requirements; and (d) evidence satisfactory to it that (i) the
Facility holds all Governmental Authorizations required for the operation
thereof for its Intended Use, including from the Virginia Department of Social
Services; and (ii) the Facility is not subject to, or threatened with, any hold
on admissions or other sanction and there are no outstanding, or threatened,
notices of deficiency resulting from any survey of the Facility which have not
been fully responded to with an acceptable plan of correction with which the
Facility is being operated in compliance.
A. No Material Adverse Change. Since the date of the Interim
Financial Statements, there has not been any material adverse change in the
business, results of operations, assets, liabilities, condition (financial or
otherwise), operations or prospects of Seller, or the Business or the Facility,
and no event has occurred or circumstance exists that may result in such a
material adverse change, and Buyer shall have received evidence satisfactory to
it to that effect.
A. Consents. The Consents of all Persons necessary for the
consummation of the transactions contemplated hereby and for Buyer to conduct
the Business shall have been obtained, including Consents required, if any,
under the Designated Contracts, all Governmental Authorizations, any tax
clearance or similar Consent, the Consent of Buyer's (or its parent company's)
lenders to the extent required, if any. None of the Consents (i) shall have been
conditioned upon the modification, cancellation or termination of any Designated
Contract, easement, right or other Consent with respect to the Facility, or (ii)
shall impose on the Buyer any material condition or provision or requirement
with respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
A. Completion of Other Transactions. Each of the transactions
contemplated by this Agreement, the other Acquisition Agreements and the
Unification Agreement shall have been consummated contemporaneously.
I. ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
A. Performance. Buyer shall have performed each and all of the
covenants and obligations required to be performed by it on or prior to the
Closing;
A. Representations and Warranties. Each and all of the
representations and warranties of Buyer hereunder shall be true and correct on
and as of the Closing Date, as if made as of the Closing Date; and
A. Consents. Seller shall have received a certificate of the
Secretary or other officer of Buyer certifying a copy of the resolutions of the
Board of Directors of Buyer authorizing Buyer's execution, delivery and
performance of this Agreement and the other Transaction Documents to be executed
by Buyer and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in furtherance of
this Agreement.
A. Closing Documents. Buyer shall have delivered (or caused to
have been delivered) to Seller each of the items to be delivered by Buyer at
Closing pursuant to Sections 3.3 and 3.4.
A. Completion of Other Transactions and Entering Into of Other
Agreements. Each of the transactions contemplated by the Unification Agreement
shall have been consummated contemporaneously with the consummation of the
transactions contemplated by this Agreement and Buyer shall have entered into
each of the other agreements contemplated to be entered into by Buyer pursuant
to the Unification Agreement.
I. ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
A. Organization and Good Standing.
1. (i) Seller (A) is duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia as
a limited partnership and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Seller conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Seller has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
(iii) General Partner is the sole General Partner
of Seller.
1. (i) General Partner (A) is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
General Partner conducts no activities and neither owns nor uses properties in
any other jurisdiction which requires it, under the laws of such jurisdiction,
to qualify to do business as a foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true
and complete copies of its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement)
is the sole shareholder of General Partner.
1. (i) Manager (A) is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Manager conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Manager has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
(iii) B (as defined in the Indemnification
Agreement) is the sole shareholder of Manager.
A. Authority; No Conflict; Consents.
1. This Agreement constitutes and, when
executed and delivered, the other Transaction Documents to which an Operator is
or is to become a party will constitute, legal, valid and binding obligations of
each of Seller and General Partner, respectively, enforceable against such
Person in accordance with their respective terms. Each of the Operators have the
absolute and unrestricted right, power, authority and legal capacity to execute
and deliver this Agreement and such other Transaction Documents to which such
Person is or is to become a party is and to perform their respective obligations
hereunder and thereunder.
1. Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the transactions
contemplated by this Agreement by Seller, General Partner, Manager or the
Bullocks will, directly or indirectly (with or without notice or lapse of time):
a) contravene, conflict with or result
in a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any of the Organizational
Documents of such party or any Contract or any agreement to which such party
(whether or not Seller is a party thereto) or any Acquisition Assets may be
subject;
a) contravene, conflict with, or result
in a violation of any applicable Law to which such party or any Acquisition
Assets may be subject or give any Governmental Authority or other Person the
right to challenge any of the transactions contemplated by this Agreement or to
exercise any remedy or obtain any relief under any Law to which such party or
any of the Acquisition Assets may be subject;
a) contravene, conflict with, or result
in a violation of any of the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by Seller or that otherwise relates
to the Business, the Facility or any other the Acquisition Assets;
a) cause Buyer to become subject to, or
to become liable for the payment of, any Tax for the Business's operations prior
to the Closing;
a) cause any of the Acquisition Assets
to be reassessed or revalued by any Governmental Authority (except to the extent
that any of the same
would customarily be reassessed or revalued by such Governmental Authority upon
a sale of such asset); or
a) result in the imposition or creation
of any Encumbrance (except a Permitted Encumbrance) upon or with respect to any
Acquisition Assets.
1. Except for those Governmental Authorizations
and Consents under Designated Contracts indicated, respectively, in Section 6.17
and Section 6.11(c) of the Disclosure Letter, no notices to, or Consents from,
any Person are required in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Operators'
obligations under this Agreement, including the transfer and assignment of any
Governmental Authorization or other Acquisition Asset necessary or desirable for
Buyer to conduct the Business.
A. Financial and Operating Statements.
Seller has delivered to Buyer: (a) audited balance sheets and
related statements of profits and losses for the Facility and the Business as at
and for each of the calendar years ended December 31, 1994 and 1995, together
with the audit reports thereon of Xxxxxxx & Company, LLC, independent public
accountants (the "Year End Financial Statements"), (b) an unaudited balance
sheet and the related statement of profits and losses for the Facility and the
Business as at and for the ten (10) months ended October 31, 1996 (the "Interim
Financial Statement"), including, in each case, with the notes thereto. All such
financial statements and notes fairly present the financial condition and the
results of operations for the Facility and the Business as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP subject to normal, immaterial changes resulting from
year-end audit adjustments. The financial statements referred to in this Section
6.3 reflect the consistent application of such accounting principles throughout
the periods involved, except as disclosed in the notes to such financial
statements. No financial statements of any Person other than Seller would be
required by GAAP to be included in the consolidated financial statements of
Seller. Seller has also delivered to Buyer a report of net operating income
adjustments detailing all adjustments to revenue and expenses at the Facility
level that represent obligations that will not be assumed by Buyer hereunder for
the calendar years ended December 31, 1994 and December 31, 1995 and for the ten
(10) months ended October 31, 1996. Such report is true, correct and complete
and is based on assumptions that were true, correct and reasonable when made but
was not prepared in accordance with GAAP. All such financial statements and
reports have been prepared from and in accordance with the books and records of
Seller.
A. Books and Records. The books of account and other records
of Seller (including any such books and records kept by the General Partner or
the Manager on behalf of Seller) pertaining to the Facility or other Acquisition
Assets, all of which have been made available to Buyer, are complete and correct
in all material respects,
reflect in all material respects all transactions affecting the Business, the
Facility and the other Acquisition Assets and have been kept and maintained in
accordance with sound business practices.
B. No Undisclosed Liabilities or Material Adverse Change.
1. Except as set forth in Section 6.5(a) of the Disclosure
Letter, Seller has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Interim
Financial Statement and current liabilities incurred in the ordinary course of
business of Seller since the respective dates thereof.
1. Since the date of the Interim Financial Statements, there
has not been any material adverse change in the business, results of operations,
assets, liabilities or the condition (financial or otherwise), or prospects of
the Business or the Facility, or any damage or destruction of the Facility by
fire or other casualty, whether or not covered by Insurance, and the Operators
and the Manager have, and until the Closing, will have, operated the Facility
only in the normal course. The Operator Affiliates have identified and
communicated to Buyer all material information with respect to any fact or
condition that might adversely affect the future prospects (financial, licensure
status or otherwise) of the Business or the Facility.
A. Taxes; FIRPTA.
1. Seller has filed all Tax Returns that are required to have
been filed in any jurisdiction, has paid all Taxes shown to be due and payable
on such Tax Returns and, before they have become delinquent, has paid all other
Taxes levied upon Seller or its properties, assets (including the Acquisition
Assets), income or franchises, to the extent such Taxes have become due and
payable, except for any Taxes (i) as set forth in Section 6.6 of the Disclosure
Letter or (ii) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
Seller has established adequate reserves in accordance with GAAP in the Interim
Financial Statements. The Operator Affiliates know of no basis for any other Tax
or assessment that could be assessed against Seller. The charges, accruals and
reserves on the Interim Financial Statements in respect of Taxes for all fiscal
periods are adequate. Seller's income tax returns have never been audited.
1. Buyer is not required to withhold taxes from the payment of
sale proceeds to Seller under the Code or any applicable state, commonwealth or
local tax Laws. Seller is not a foreign person for purposes of Section 1445 of
the Code.
A. Title, Condition and Sufficiency of the Facility.
1. Seller has delivered or made available to Buyer copies of
all title insurance policies, opinions, abstracts, and surveys in the possession
of Seller and relating to the Facility. Seller owns good indefeasible and
marketable fee simple title to the Facility, free and clear of all Encumbrances
other than the Permitted Encumbrances. All of the Improvements located on the
Land are situated solely within the boundaries of the Land and do not encroach
upon the property of, or otherwise conflict with the property rights of, any
other Person.
2. No exception to title to or other Encumbrance and no
interest in the Facility will interfere with the use of the Facility for its
Intended Use or cause the value of the Facility to be materially less than the
portion of the Purchase Price allocated thereto.
1. There are no leases or other agreements granting any Person
(other than Seller) the right to use or occupy any part of the Facility other
than the Resident and/or Patient Agreements set forth in Section 6.7(c) of the
Disclosure Letter, and no Person has any ownership interest (other than Seller)
or option or right of first refusal to acquire any ownership interest in the
Facility or any part thereof.
1. The Facility is structurally sound, is in good operating
condition and repair (normal wear and tear excepted) and is not in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The Improvements (including the heating,
ventilating and air conditioning, plumbing, electrical, mechanical and drainage
systems, and roof) are in good operating condition, repair and working order,
and have passed all previous safety and/or licensing inspections, the last such
inspection being on the date set forth in the Disclosure Letter, and such
systems are adequate for the use of the Facility for its Intended Use.
1. Except as set forth in Section 6.7(e) of the Disclosure
Letter, the Improvements (including all roads, parking areas, curbs, sidewalks,
sewers and other utilities) have been completed and installed in accordance the
Plans and Specifications which were approved by the appropriate Governmental
Authorities. Permanent certificates of occupancy and all other Governmental
Authorizations which were required to be issued for the Improvements have been
issued and are in full force and effect; and the requisite annual fire safety
and life safety inspections as were required to be conducted for the
Improvements, have been conducted.
1. The maintenance, operations and use of the Improvements
comply with (i) all Legal Requirements, (ii) any certificate of occupancy or
other Governmental Authorizations issued for the Facility and (iii) all
restrictive covenants and other Permitted Encumbrances. No Operator Affiliate
has received or is aware of the
issuance of any notice of noncompliance or violation from any Governmental
Authority regarding the Facility or any part thereof or the use thereof.
1. Current local zoning ordinances, general plans and other
applicable land use regulations and all private covenants, conditions and
restrictions, if any, affecting the Property, permit the transfer of the
Facility and the use of the Facility for its Intended Use (and reconstruction
and resumption of such use in the event of damage, destruction or cessation of
use) as a matter of right for an unlimited time period and not merely as a legal
non-conforming use.
1. To the best knowledge of the Operators, (i) there is no
plan, study or effort by any Governmental Authority which in any way affects or
would affect the present use or zoning of the Facility or any part thereof; (ii)
there is no existing, proposed or contemplated plan to widen, modify or realign
any street or highway or existing, proposed or contemplated Condemnation
proceedings that would affect the Facility in any way whatsoever; and (iii) no
subdivision plan or plans (preliminary or otherwise) have been filed with
respect to the Land.
1. The Land is adjacent to and has direct access to each
abutting street. All streets adjoining or traversing the Land have been
dedicated to and accepted by the local municipal authorities and the means of
ingress and egress, parking, access to public streets and drainage facilities
are adequate for the use of the Facility for its Intended Use. There are no
easements traversing or contiguous to the Land which are not disclosed in
Section 6.7(i) of the Disclosure Letter or which interfere with the use and
operation of the Facility for its Intended Use.
1. All public utilities, including telephone, gas, electric
power, sanitary and storm sewer and water, required for the operation of the
Facility either enter the Facility through adjoining public streets, or if they
pass through adjoining private land, do so in accordance with valid recorded
easements held by Seller. Such utilities are adequate for use of the Facility
for its Intended Use.
1. The Facility is not located within an area of special risk
with respect to natural or man-made disasters or hazards, including any Flood
Hazard Area.
1. There are no adverse geological or soil conditions
affecting the Facility.
1. The Facility is a legal lot or parcel which for all
purposes may be mortgaged, conveyed and otherwise dealt with as separate parcels
and is not taxed together with any other property.
1. There is no proceeding pending to which a Operator
Affiliate is a party relating to the assessed valuation of the Facility and no
assessment for
public improvements have been made against the Facility that remain unpaid. All
public improvements ordered, commenced or completed prior to the date of this
Agreement or prior to the Closing Date shall be paid for in full by the Seller
prior to the Closing.
1. Except as set forth in Section 6.7(o) of the Disclosure
Letter: (i) Seller and the Facility are, and at all times prior to the date
hereof have been, in full compliance with, and have not been and are not in
violation of or liable under, any Environmental Law, (ii) there are no
underground storage tanks or Hazardous Materials currently located in or on the
Facility, and to the best of the Operators' knowledge (after due inquiry) no
such tanks have ever been located on the Facility and no such Hazardous
Materials have ever been present, used, stored, generated, treated or Released
from or on or disposed of or on or transported to or from the Facility; (iii) no
Environmental Claims have been made or, to the best of the Operators' knowledge
(after due inquiry), threatened by any Person against Seller or the Facility;
and (iv) to the best of the Operators' knowledge (after due inquiry), there are
no current, and have been no, businesses engaged in the storage, treatment or
disposal of Hazardous Materials on any property adjacent to the Land.
1. Section 6.7(p) of the Disclosure Letter lists all reports
received during the last five (5) years from any Governmental Authority with
respect to the Facility, true and complete copies of such reports to Buyer.
1. Seller has obtained all zoning and site plan approvals
(true and correct copies of which have been provided by Seller to Buyer)
necessary in connection with the construction of the additional facility
proposed to be constructed by Seller (and Buyer following the Closing) on the
Land and the Option Land as an addition to the building on the Facility.
A. Title, Condition And Sufficiency of the Personal Property.
1. Except for the security interest(s) listed and described in
Section 6.8(a) of the Disclosure Letter, Seller has good and marketable title to
the Personal Property, including, but not limited to, the motor vehicle set
forth on Schedule 2.1 hereto, subject to no Encumbrance or restraint on transfer
whatsoever. No other person has any right to the use or possession of any of the
Personal Property and, except as set forth in Section 6.8(a) of the Disclosure
Letter, no currently effective financing statement with respect to the Personal
Property has been filed in any jurisdiction, and Seller has not signed any such
financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement. Except as set forth in Section
6.8(a) of the Disclosure Letter, none of the Personal Property is subject to a
conditional sale, lease, security interest or similar arrangement. During last
five (5) years, Seller has conducted its business activities only under its
partnership name of Retirement Home of Portsmouth Limited Partnership and/or
trade name "Churchland House"
1. All of the tangible Personal Property is in good operating
condition and repair, is not in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost and is functioning in the manner and for the purpose for which it was
intended. All of the Personal Property is in material compliance with all Legal
Requirements, and is sufficient and suitable to enable the Buyer to operate the
Facility and the Business in a normal and efficient manner.
A. Inventory.
1. All food, beverages, pharmaceuticals and medical supplies
comprising Inventory on supply at the Facility are fit for the purposes for
which they are intended, meet all governmental standards therefor and are of
merchantable quality. All linens, clothing and similar items comprising the
Inventory located at the Facility are in good condition, reasonable wear and
tear excepted.
1. On the Closing Date, there will be in supply at the
Facility Inventory (to be included as part of the Acquisition Assets) which are
in a quantity and condition customary and sufficient to meet Buyer's needs in
operating the Business and the Facility in a manner similar to that in which the
Business and the Facility have been operated by Seller prior to the Closing
Date.
2. Section 6.9(c) of the Disclosure Letter contains a list of
all suppliers of Inventory to Seller. No Operator and, to the best of such
Operator's knowledge (after due inquiry), no other Operator Affiliate has
received any notice, or has any reason to believe, that any significant supplier
will cease selling Inventory to Seller or to Buyer at any time after the Closing
Date on terms and conditions not substantially similar to the terms and
conditions on which such Inventory are currently being sold to Seller.
A. Intellectual Property.
1. Section 6.10(a) of the Disclosure Letter sets forth a
complete and accurate list of all Intellectual Property owned by, or (even if
not included in the Acquisition Assets) licensed to, Seller or (even though not
an Acquisition Asset) General Partner or the Manager, and sets forth separately
which are owned by, and which are licensed to, Seller, General Partner and the
Manager. Such Intellectual Property is sufficient to conduct the Business being
conducted at the Facility.
1. No proceeding is pending (or, to the best of the Operators'
knowledge, after due inquiry, threatened) against any Operator that alleges that
any Operator or other Operator Affiliate is infringing upon any intellectual
property asset (including the name Churchland) of any Person or that challenges,
or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any Operator Affiliate's (or Buyer's, to the extent
an Acquisition Asset, upon consummation of the transactions contemplated by this
Agreement) use of the Intellectual Property. No event
has occurred or circumstance exists that may give rise to or serve as a basis
for the commencement of any such proceeding.
1. No Person has been granted the right, or been permitted, to
use any Intellectual Property owned by, or licensed to, Seller. To the best
knowledge (after due inquiry) of each Operator, no Person is believed to be
infringing upon the Intellectual Property.
A. Contracts.
1. Section 6.11(a) of the Disclosure Letter contains a
complete and accurate list, including its term and summary of financial terms,
of each Contract, other than the Resident and/or Patient Agreements set forth in
Section 6.11(b) of the Disclosure Letter, to which Seller is subject or bound
that is in existence and which pertains to the Business of the Facility or to
which any of the Acquisition Assets are subject. Seller has delivered to Buyer
true and complete copies of each such Contract.
1. Section 6.11(b) of the Disclosure Letter sets forth a
listing, as of the date of this Agreement, of the names of all
Residents/Patients at the Facility, the date of admission of each such
Resident/Patient and the rental amounts payable and the term of each related
Resident and/or Patient Agreement and a material variation in such Resident
and/or Patient Agreement from the Seller's standard form thereof (in addition to
the rental amount and term indicated in Section 6.11(b) of the Disclosure
Letter).
2. Each Designated Contract is in full force and effect, is
valid and enforceable in accordance with its terms and is (except as noted in
Section 6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost
or modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
1. Seller has not given to or received from any other Person,
at any time since January 1, 1996, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible or potential violation
or breach of, or default under, any Designated Contract, which individually or
in the aggregate would constitute a material violation or breach of or default
under any such Designated Contract. Section 6.11(d) of the Disclosure Letter
sets forth the names of Residents/Patients from or to whom Seller has received
or given (whether or not written) any such notice or communication (whether or
not of a material nature) on a chronic or repeat basis. The parties to the
Designated Contracts (other than the Seller) are not, to the best of the
Operators' knowledge, in default of their respective obligations under any of
such Designated Contracts, and there has not occurred any event which, with the
passage of
time or giving of notice (or both), would constitute such a default or breach
under any of such Designated Contracts.
1. There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable by or to
Seller under, any Designated Contracts.
1. Except as described in Section 6.11(f) of the Disclosure
Letter, each Designated Contract has been entered into in the ordinary course of
business on an arm's-length basis with an unaffiliated third party and has been
entered into without the commission of any act, alone or in concert with any
other Person, or any consideration having been paid or promised, that is or
would be in violation of any applicable Law.
A. Insurance. Section 6.12 of the Disclosure Letter contains a
complete and correct list of all forms of Insurance held or owned by Seller or
(even though not an Acquisition Asset) the General Partner or the Manager
pertaining in any way to the Facility or other Acquisition Assets, or to the
Operators or the Manager which, although not specifically covering the Facility
or other Acquisition Assets would cover activities conducted at or in connection
with the Facility or other Acquisition Assets or liability arising therefrom,
including a description of the name of the insurer and the insured, the amount
of coverage, the type of insurance included under each such policy and a brief
description of any claims made thereunder during the past five (5) years and in
the case of any bond or agreement, a description thereof and the name of the
surety or indemnifying party. All such Insurance is in full force and effect,
all premiums due on such policies have been paid, and no Operator nor, to the
best of its knowledge (after due inquiry), any other Operator Affiliate has been
advised by any Insurance carriers of an intention to terminate or modify any
such Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
A. Employees.
1. Section 6.13(a) of the Disclosure Letter contains a
complete and accurate list of the following information for each employee
(separately indicating any who are not Business Employees, as defined in Section
9.1), director, independent contractor, consultant and agent of Seller,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable regularly scheduled hours of employment;
and all payroll-related liabilities or obligations of Seller.
1. To the best knowledge (after due inquiry) of the Operators,
no current employee of Seller is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition, or
proprietary rights agreement that (i) was breached or violated by employment
with, or services performed for, Seller or (ii) will adversely affect the
ability of such employee to perform his or her duties with Buyer.
A. Labor Matters.
1. Except as disclosed in Section 6.14(a) of the Disclosure
Letter, Seller has not been, and is not now, a party to nor bound by or subject
to any collective bargaining agreement or other labor Contract. During the last
five (5) years, there has not been or, to the Operators' knowledge, threatened
strike, slowdown, picketing, lockout or work stoppage, or any labor arbitration
or proceeding in respect of the grievance of any employee, application or
complaint filed by an employee, employee group or union with the National Labor
Relation Board or any other Governmental Authority, organizational activity, or
other labor dispute against or affecting the Business or the Facility. No
application for certification of a collective bargaining unit is pending or, to
the Operators' knowledge, is threatened against Seller or the Facility. To the
best of the Operators' knowledge, after due inquiry, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. Seller and the Manager have complied in all respects with all
applicable Legal Requirements (including, if applicable, the Worker Adjustment
and Retraining Notification Act) relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, social security and similar Taxes, occupational safety and health,
and plant closing (including, if applicable, with respect to the transactions
contemplated by this Agreement) of employees at the Facility. Seller is not
liable for the payment of any taxes, fines, penalties, or other amounts
(including sums related to EEOC or employment discrimination charges, complaints
or settlements), however designated, for failure to comply with any of the
foregoing Legal Requirements.
1. Section 6.14(b) of the Disclosure Letter sets forth a
complete and accurate list of all judicial or agency determinations, settlements
or conciliations of complaints, claims, charges or citations against Seller or
the Manager since January 1, 1991, arising under the National Labor Relations
Act, the Fair Labor Standards Act, the Immigration Reform and Control Act, the
Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Americans with Disability
Act of 1990, 42 U.S.C. ss. 1981, and any other Law, relating to employment
discrimination, occupational safety and health, employee benefits, or wages and
hours of employees.
A. Benefit Plans.
1. Seller has not established, maintained, sponsored,
contributed to (including any Multiemployer Plan as defined in Section
4001(a)(3) of ERISA), been required to contribute to, or otherwise participated
in any employee benefit plan, program, agreement or arrangement under which any
present or past employee of Seller or any ERISA Affiliate of Seller may be
entitled to any benefits (including death, health, medical, deferred
compensation, bonus or other arrangements), whether written or oral, whether
formal or informal, whether or not insured, and whether legally binding or
not, other than Seller's sick and vacation pay policies, neither of which is
subject to ERISA and true and correct copies of which have heretofore been
delivered by Seller to Buyer.
1. Except as set forth in Section 6.15(b) of the Disclosure
Letter, all payments required to have been made by Seller or Manager under such
sick pay and vacation pay policies have been made.
A. Compliance with Laws; Deficiencies. Except as set forth in
Section 6.16 of the Disclosure Letter:
1. No Operator nor, to the best of its knowledge (after due
inquiry), no other Operator Affiliate has received, at any time since January 1,
1991, any notice or other communication (whether oral or written) from any
Governmental Authority or any other Person regarding (A) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement pertaining to the Facility, the use thereof or the Business
conducted thereat, or (B) any actual, alleged, possible, or potential obligation
on the part of Seller to undertake, or to bear all or any portion of the cost
of, any Cleanup or other corrective, remedial, mitigation, response or other
action of any nature (including any investigation, study, sampling, monitoring
or testing) with respect to the Facility;
1. Except as described in Section 6.16(b) of the Disclosure
Letter, there is no pending nor, to the best knowledge of the Operators (after
due inquiry) is there any threatened or contemplated, investigation or inquiry,
proceeding, suit, claim (including any Environmental Claim), action or
litigation, or administrative, arbitration or other proceeding or governmental
investigation or inquiry against Seller or any of the Acquisition Assets. The
Operators have delivered to Buyer copies of all pleadings, correspondence and
other documents relating to each matter listed in Section 6.16(b) of the
Disclosure Letter. The matters listed in Section 16(b) of the Disclosure Letter
(either individually or in the aggregate) will not have a Material Adverse
Effect on the business, operations, assets (including the Acquisition Assets) or
prospects of Seller, the Facility or the Business. There is no pending, nor, to
the best knowledge of the Operators (after due inquiry) threatened, proceeding
against the Operators or any other Operator Affiliate that challenges or may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated by this Agreement.
1. There has occurred no event nor does any circumstance exist
that (with or without notice or lapse of time) may constitute or result in a
violation or a failure on the part of the Operators or, to the best of knowledge
of the Operators (after due inquiry), on the part of any other Operator
Affiliate to comply with, any Legal Requirement pertaining to the Facility, the
use thereof or the Business.
1. Except as set forth in Section 6.16(d) of the Disclosure
Letter, no Operator nor any of the assets (including the Acquisition Assets)
owned or
used by Seller in connection with the Business or the Facility nor, to the best
of its knowledge (after due inquiry), any other Operator Affiliate, is, or
during the past five years was, subject to any judgment, decree, injunction or
order of any Governmental Authority.
1. Section 6.16(e) of the Disclosure Letter sets forth a true
and complete list of all violations and deficiencies found or alleged by any
Governmental Authority with respect to the Facility or Seller within the past
three (3) years. All such violations and deficiencies have been fully withdrawn
by the applicable Governmental Authority or remedied. No violations or
deficiencies found or alleged by any Governmental Authority with respect to the
Facility or Seller (whether or not listed in said Section 6.16(e) of the
Disclosure Letter) will result in any adverse effect upon Buyer in its operation
of the Facility or conduct of the Business or upon any of the transactions
contemplated herein (including any adverse effect upon any application by Buyer
for any Governmental Authorization required for Buyer's operation of the
Facility) or otherwise have any Material Adverse Effect.
1. No Operator, nor to the best knowledge of the Operators,
any other Person associated with or acting for or on behalf of an Operator, has
directly or indirectly in connection with the conduct of the Business (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Seller.
A. Governmental Authorizations. Seller has (in good standing)
all requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization.
A. Affiliated Relationships. Except as disclosed in Section
6.18 of the Disclosure Letter, neither Seller, General Partner or the Manager,
nor any partner, shareholder, director or officer thereof , or any member of
such Person's immediate family, has, or at any time within the last two (2)
years has had, a material ownership interest in any business that is or was a
party to any business relationships or arrangement of any kind relating to the
operation of the Facility or the Business.
A. Residents/Patients; Licensed Beds And Fees.
1. Seller has cared for the Residents/Patients located at any
time at the Facility in accordance with recognized standards pertaining to
assisted living facilities. Seller does not have any agreement with any of its
Residents/Patients which have been prepaid for more than one month.
1. Section 6.19(b) of the Disclosure Letter sets forth a true
and correct list of: (i) the maximum number of permitted licensed assisted
living care beds at the Facility; (ii) the number of beds or units presently
occupied at the Facility; (iii) the current standard rates and other fees and
amounts charged by Seller to Residents/Patients at the Facility; (iv) any
Residents/Patients having special rates or fee arrangements, together with a
list of such special rates or description of such special arrangements.
A. Brokers or Finders. No Operator Affiliate has dealt with
any broker or agent in connection with the sale of the Acquisition Assets and no
Operator has any knowledge of any Person who would be entitled to a brokerage or
finder's fee or agent's commission or other similar payment in connection with
the sale of the Acquisition Assets or the transactions contemplated hereby as a
result of Seller's dealings.
A. Disclosure.
1. No representation or warranty or other statement made by
any Operator or any other Operator Affiliate in this Agreement, in the
Disclosure Letter or in any document, certificate or instrument furnished or to
be furnished by any Operator Affiliate to Buyer and no financial or operating
statement furnished or to be furnished by any Operator Affiliate to Buyer is or
will be false or misleading as to any material fact, or omits or will omit to
state a material fact necessary to make the statements contained therein or, in
light of the circumstances in which they were made, not misleading. The Operator
Affiliates have provided to Buyer all material information related to the
Acquisition Assets and the Business.
1. The Operators have no knowledge of any fact (other than
general economic or industry conditions) that would have, or as far as the
Operators can reasonably foresee could have, a Material Adverse Effect.
A. Bankruptcy. No insolvency proceeding of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors (including any assignment for the benefit of creditors),
voluntary or involuntary, affecting Seller, General Partner or any other
Operator Affiliate (other than as a creditor) or the Acquisition Assets, is
pending or is being contemplated, or to the Operators' best knowledge (after due
inquiry) is being threatened, against Seller, General Partner or any other
Operator Affiliate by any other Person, and neither Seller nor any other
Operator Affiliate has made any assignment for the benefit of creditors or taken
any action in contemplation of, or which would constitute the basis for, the
institution of any such insolvency proceedings.
A. Third Party Provider Liabilities.
1. Except as set forth in Section 6.23 of the Disclosure
Letter, no services provided by Seller at the Facility have ever been reimbursed
by Medicaid or Medicare or, since January 1, 1995, any other third party
provider (including any managed care organization). Since January 1, 1995,
Seller has not received any notice of recoupment from and has no liability for
reimbursements of any third party reimbursement source (inclusive of managed
care organizations) and Seller is not aware of any basis for the assertion of
any such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
A. Due Diligence Information. Seller has delivered or caused
to be delivered or furnished to Buyer for its review true and complete copies of
all of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
I. ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
A. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and, to the extent applicable, in good standing
under the laws of the State of Delaware; is, or will be on the Closing Date,
duly qualified and authorized to do business in the Commonwealth of Virginia;
and has full power, authority and legal right to execute and deliver and
(subject to obtaining requisite Governmental Authorizations) to acquire and
operate the Facility and the Business and to perform and observe the provisions
of this Agreement, and all other Transaction Documents to which
it is or is to become a party and otherwise to carry out the transactions
contemplated hereunder.
A. Authority. This Agreement constitutes and, when executed
and delivered, all the other Transaction Documents to which Buyer is or is to
become a party will constitute, the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power and authority to execute
and deliver this Agreement and such other Transaction Documents to which it is
or is to become a party and to perform its obligations hereunder and thereunder.
A. Certain Proceedings. There is no pending proceeding that
has been commenced, nor, to the knowledge of Buyer, threatened against Buyer
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
A. Brokers or Finders. Buyer has not dealt with any broker or
agent in connection with the purchase of the Acquisition Assets or the
transactions contemplated hereby as a result of Buyer's dealings and Buyer knows
of no Person who would be entitled to a brokerage or finder's fees or agent's
commissions or other similar payment.
A. Due Diligence Review. Buyer acknowledges that Seller has
delivered or furnished to Buyer information, documents, reports and records
which Buyer requested in connection with its due diligence review of the
Facility and other Acquisition Assets and that Buyer has been afforded the
opportunity to inspect the Facility. The foregoing notwithstanding, such review
and/or inspection is not intended to diminish or impair the representations and
warranties made by Seller, General Partner or any other Operator Affiliate
hereunder or under any other Transaction Document.
I. ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
A. Access and Investigation. Between the date of this
Agreement and the Closing Date, Seller will (and the General Partner will cause
Seller to): (a) afford Buyer and its representatives and prospective Financing
Sources and their representatives (collectively, "Buyer's Advisors") full and
free access to Seller's personnel, properties, Contracts, books and records,
financial and operating data and other information and documents pertaining to
the Acquisition Assets and the Business, (b) furnish Buyer and Buyer's Advisors
with copies of all such Contracts, books and records, and other existing
documents and data as Buyer may reasonably request, (c) furnish Buyer and
Buyer's Advisors with such additional financial, operating and other relevant
data and information as Buyer may reasonably request, and (d) otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer's
investigation of the properties, assets and financial condition of Seller, the
Acquisition Assets and the Business. Seller shall cause its accountants to
cooperate with Buyer and to disclose the results of audits and financial
statement reviews relating to Seller and/or to the Facility and to produce the
work papers relating thereto. No such investigation by Buyer or its
representatives shall affect any of the Seller's representations and warranties
in this Agreement or Buyer's right to rely thereon. Buyer shall conduct its
investigation hereunder in such manner as will not cause any unreasonable
disruption to the business of the Facility.
A. Maps, Plans, Surveys, Etc. Seller shall deliver, or cause
to be delivered, to the Buyer all existing plans, maps, surveys, descriptions,
and title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
A. Operation of Seller's Business. Between the date of this
Agreement and the Closing Date, Seller will (and the General Partner will cause
Seller to):
1. conduct the Business of Seller only in the ordinary course
of business;
1. use their best efforts to preserve intact Seller's current
business organization, keep available the services of the current officers,
employees and agents of Seller, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with Seller;
1. confer with Buyer concerning operational matters of a
material nature;
1. otherwise report periodically to Buyer concerning the
status of the Business, including its operations and financial condition,
including delivering to Buyer monthly operating statements for the Facility and
the Business within thirty (30) days after the end of each calendar month
between the date of this Agreement and the Closing;;
1. make no material changes in management personnel without
prior notice to Buyer;
1. maintain the Acquisition Assets in a state of repair and
condition consistent with the requirements of this Agreement and normal conduct
of the Business, not dispose of or Encumber or permit the disposition or
Encumbrance of the Acquisition Assets;
1. use their best efforts to keep in full force and effect and
not amend, or waive or permit to be amended or waived, Insurance covering
Seller, the Facility or the other Acquisition Assets or any other material
rights relating primarily or exclusively to the Business or the Acquisition
Assets;
1. maintain all books and records relating to the Business in
the usual, regular and ordinary manner;
(i) maintain Inventory at least at current levels and in any
event at levels that are customary and sufficient to operate the Facility for
its Intended Use;
(j) not amend or permit to be amended any Contract related to
the Acquisition Assets or the Business except in the ordinary and usual practice
of the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances
upon the Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or
assumed any Contract related to the Acquisition Assets or the Business except in
the ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach
of any Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to
the Facility without the written approval of Buyer, other than (i) renovations
and repairs to the
Facility which have been disclosed to Buyer and which are to be completed prior
to the Closing Date and (ii) those required by or in order to retain or maintain
in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by
Law for the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly
with any and all Legal Requirements affecting the Acquisition Assets and all
orders of any board of fire underwriters or other similar bodies, and promptly,
and in no event later than twenty-four (24) hours from the time of its receipt
of any notice of non-compliance, notify Buyer of any failure of Seller to comply
with the same;
(q) not, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within their control,
which would cause any of Seller's and the General Partner's' representations and
warranties contained in this Agreement to be untrue; and
(r) take all actions and timely make all payments required in
order to keep the Option Contract in full force and effect and not amend or
permit to be amended the Option Contract.
A. Required Consents. As promptly as practicable after the
date of this Agreement, Seller will make all filings required to be made by it
in order to consummate the transactions contemplated by this Agreement. Between
the date of this Agreement and the Closing Date, Seller and the General Partner
will: (a) cooperate with Buyer with respect to all filings and provide all
information that Buyer elects to make or provide or is required to make or
provide in order to consummate the transactions contemplated by this Agreement
(including, with potential Financing Sources), and (b) cooperate with Buyer in
obtaining all Consents which Buyer considers necessary or appropriate in order
to consummate the transactions contemplated hereby.
A. Notification; Supplements to Disclosure Letter. Prior to
the Closing, the Operators will promptly notify Buyer in writing of (i) all
events, circumstances, facts, conditions or occurrences arising subsequent to
the date of this Agreement which could result in any of Seller's or General
Partner's representations becoming untrue or incorrect in any respect and (ii)
all other material developments affecting the Acquisition Assets or the Business
or the prospects thereof. Should any such event, circumstance, fact, condition
or occurrence require any change in the Disclosure Letter (if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
A. No Negotiation. Until such time, if any, as this Agreement
is terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the Business or the Acquisition Assets or the partnership
interests in Seller or merger of Seller or a similar transaction involving
Seller.
A. Best Efforts. Between the date of this Agreement and the
Closing Date, the Operators will use their best efforts to cause the conditions
in Section 4 to be satisfied.
I. ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
A. Information on Business Employees. On and prior to the
Closing Date, Buyer will be given reasonable access to the personnel records
(including performance appraisals, disciplinary actions, grievances) of all
Business Employees.
A. Employment of Business Employees by Buyer.
1. Effective as of 11:00 pm on the date of the Closing, Seller
will terminate the employment of all Business Employees and Buyer shall offer
employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
1. No Operator Affiliate, directly or indirectly, shall
solicit the employment of any Business Employee.
1. It is understood and agreed that accepted employment with
Buyer will be on an "at will" basis and may be terminated by Buyer or by an
employee at any time for any reason and with or without notice (subject to any
written agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her
accrued and unpaid vacation and sick employer paid leave as of the Closing. In
the event that any such Rehired Employee uses any of such vacation or sick leave
during said 180-day period while it is an employee of Buyer or otherwise becomes
entitled to be paid for the same during said period, Seller agrees to pay to
Buyer promptly after demand setting forth reasonable detail therefor the amount
of accrued vacation or sick leave pay paid to such Rehired Employees during said
period.
1. Seller shall be responsible for the payment of all wages
and other remuneration due to employees of Seller with respect to their services
prior to 11:00 pm on the date of the Closing and, if and to the extent
applicable, the payment of any termination or severance payments due to, and
will comply with all Legal Requirements relating to, any employee who did not
accept Buyer's offer of employment.
1. Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all Rehired Employees, except for such employees as
Seller shall warrant are exempt from such requirement.
1. Buyer shall not have any responsibility, liability or
obligation, whether to Business Employees, former employees, their beneficiaries
or to any other Person with respect to, and the Operators shall, jointly and
severally, indemnify and hold Buyer harmless with respect to, any unlawful
employment, labor or immigration practice arising from, or as a consequence of,
the Operators' or the Manager's conduct of the Business prior to the Closing, or
any employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
1. Notwithstanding anything contained in this Section, the
provisions of this Section are not intended to, and shall not in any way be
construed to, confer upon any Person other than the parties hereto any rights or
remedies hereunder.
I. ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
A. Damage and Destruction. Seller shall have the risk of loss
or damage to the Property and liability arising out of the Business or the
Acquisition Assets from any cause whatsoever prior to the Closing Date. In the
event of any loss or damage to the Property, the following procedure shall be
used, Buyer may: (a) elect to extend the Closing Date for a period up to one
hundred eighty (180) days and require Seller to repair or replace such damaged
or destroyed Property, and, in which event Seller shall be entitled to retain
the Insurance proceeds and shall promptly proceed, at Seller's expense, to
repair or replace such damaged or destroyed Property; the Purchase Price shall
not be affected or adjusted in any way provided such damage or destruction is
fully repaired or replaced; (b) elect to proceed with the transaction
contemplated herein, and have the Insurance proceeds concerning the loss
assigned at Closing to Buyer, and if all or part of the loss is not covered by
Insurance, reduce the Purchase Price payable at the Closing by an amount equal
to the uninsured loss in which event Seller shall not be obligated to repair or
replace such damaged or destroyed Property; or (c) if the aggregate loss or
damage to the Property (from one or more events) at or prior to the Closing
exceeds ten (10%) percent of the Purchase Price, or would take longer than
thirty (30) days to repair or replace, elect to terminate this Agreement, in
which event neither Seller nor Buyer shall have any further rights or
obligations to the other hereunder.
A. Condemnation. In the event that prior to the Closing all or
any portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
I. ARTICLE
INDEMNIFICATION
A. Indemnification Agreement. The Operators indemnification
and reimbursement obligations arising from or in connection with any breach of
any representation, warranty or covenant made by them or another Operator
Affiliate in this Agreement and the Buyer's indemnification and reimbursement
obligations arising from or in connection with any breach of any representation,
warranty or covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
A. Independent Investigation. The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
I. ARTICLE
MISCELLANEOUS COVENANTS
A. Confidentiality. Between the date of this Agreement and the
Closing Date, the parties to this Agreement will maintain in confidence, and
will cause their respective directors, officers, partners, employees, agents and
advisors to maintain in confidence, and not use to the detriment of another
party any written, oral, or other information obtained in confidence from
another party in connection with this Agreement or the transactions contemplated
by this Agreement, unless (a) such information is in the "public domain" or
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication.
If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy (as determined in writing by the
other party) as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, the Operators waive
any cause of action, right, or claim arising out of the access of Buyer or its
representatives to any trade secrets or other confidential information except
for the intentional competitive misuse by Buyer of such trade secrets or
confidential information (including forms, manuals, policies and other
Intellectual Property).
A. Public Announcements. Any general public announcements or
similar media publicity with respect to this Agreement or the transactions
contemplated herein shall be at such time and in such manner as Buyer shall
determine; provided that nothing herein shall prevent either party, upon notice
to the other, from making such
written notices as such party's counsel may consider advisable in order to
satisfy the party's legal and contractual obligations in such regard.
A. Non-Competition. (a) Seller shall not engage or participate
in any effort or act to induce any of the suppliers, associates, employees,
independent contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no
Operator Affiliate shall, directly or indirectly, for or on behalf of itself or
any other person, firm, entity or other enterprises, have a proprietary interest
in, be employed by, be a director or manager of, act as a consultant for, be a
partner in, give advice to, loan money to or otherwise associate with, any
person, enterprise, partnership, association, corporation, joint venture or
other entity which directly or indirectly engages in the business of owning,
operating or managing any facility of any type, licensed or unlicensed, which is
engaged in or provides assisted living care, nursing home care, senior housing,
adult day care, retirement housing, Alzheimer care living facility or adult
congregate living care anywhere within a twenty (20) mile radius of the
Facility, except that (i) any Operator Affiliate may operate any of the above
types of facilities for low income residents (defined as a facility with a base
rate of less than $1,250 per month, to be adjusted annually for changes in the
Consumer Price Index from January 1, 1997 using as the Consumer Price Index for
all Urban Wage Earners and Clerical Workers, 1982 -84 = 100, All Items for
Washington, D.C., Maryland and Virginia as published by the United States Bureau
of Labor Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained
in this Article 12 are reasonable and necessary to protect the legitimate
business interests of Buyer and that any violation thereof would result in
irreparable harm to Buyer for which the remedy at law would be inadequate.
Accordingly, the Operators agree that upon the violation by them of any of the
restrictions contained in this Article 12, Buyer shall be entitled to obtain
from any court of competent jurisdiction a preliminary and permanent injunction,
as well as any other relief provided at law or equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted in such a manner
or for such a time (or both) as is adjudged to be reasonable.
I. ARTICLE
GENERAL PROVISIONS
A. Survival. All covenants, representations and warranties
made by Seller and Buyer hereunder or in any certificates or other instruments
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and Closing.
A. Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In
addition, the following expenses will be paid by the following respective
parties:
1. Seller will pay:
a) any and all state, municipal or
other documentary, transfer, stamp, sales, use or similar taxes payable in
connection with the delivery of any instrument or document provided in or
contemplated by this Agreement, or the transactions contemplated hereby,
together with interest and penalties, if any, thereon;
a) any and all broker's fees or similar
fees claimed by any Person acting by or on behalf of Seller in connection with
the transactions contemplated hereby.
1. Buyer will pay
a) all expenses of or related to the
issuance of the title insurance commitment and policy (including the costs of
any survey required by Buyer and the Title Insurer), chain of title reports, and
all closer escrow fees and charges;
a) the cost of any environmental report,
market and feasibility study and appraisal prepared for Buyer at Buyer's
request, and the expenses of or related to Buyer's Due Diligence Review;
a) the charges for or in connection with
the recording and/or filing of any instrument or document provided for herein or
contemplated by this Agreement or any agreement or document described or
referred to herein; and
a) any and all broker's fees or similar
fees claimed by any Person acting by or on behalf of Buyer in connection with
the transactions contemplated hereby.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
A. Arbitration. The parties hereto shall submit to arbitration
any dispute, controversy or claim arising out of or relating to this Agreement
or any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
A. Notices. Any notice, consent, approval, demand or other
communication required or permitted to be given under this Agreement or any
other Transaction Document (a "notice") shall be in writing, shall be delivered
to the addressee at the address set forth below (or at such other address as
shall be designated hereunder by notice to the other parties) personally, by
FedEx (or other equivalent national overnight courier) for next Business Day
delivery or by registered or certified United States mail, return receipt
requested, in each case with the cost of delivery prepaid or for the account of
the sender and shall be deemed to have been given (a) when delivered, if
delivered in person, (b) on the next Business Day, if sent by FedEx (or other
equivalent national overnight courier) or (c) five (5) Business Days after
mailing, if mailed by
registered or certified United States mail. The respective addresses of the
parties for notice are as follows:
If to Buyer: Integrated Living Communities of
Portsmouth, Inc.
Bernwood Centre
00000 Xxx 00 Xxxx, Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Paretts Xxxxxx, Esq.
If to Operator
Affiliates: Xxxxxxx Corporation
000 Xxxxxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxxxx
with a copy to: Xxxxxx, Hamlett, Lowry, Xxxxxxxxx & Tweel, P.C.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxx Xxxxxxxx, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
A. Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
A. Financial Statement Audits. The Operators shall use their
best efforts to cause Seller's Auditors to deliver to Buyer at Buyer's expense,
within sixty (60)
days following the Closing Date, such audited financial statements of Seller
necessary to comply with Rule 3-05 of Regulation S-X promulgated by the
Securities and Exchange Commission for filing by Integrated Living Communities,
Inc. with a Current Report on Form 8-K regarding the transactions contemplated
herein, and to cause Seller's Auditors to cooperate with Buyer's Auditors in
preparing the required pro forma financial statements for filing therewith.
Notwithstanding the level of review of the Facility's financial statements by
Buyer pursuant to Section 8.1 above, Seller shall cooperate with Buyer and its
independent certified public accountants, if Buyer deems it necessary or
desirable, to audit the balance sheets, statements of operations and statements
of cash flow of Seller for up to three (3) calendar years ended prior to
Closing. Without limiting the foregoing, the Operators shall make available all
information requested by Buyer or its auditors, and the Operators (and their
chief executive and chief financial officers) shall execute and deliver to the
auditors all representation letters requested by Buyer's auditors. Such audits
shall be conducted at Buyer's expense.
A. Intentionally omitted.
A. Copies of Books and Records. The Operators shall, for a
period of five (5) years after the Closing Date, provide to Buyer copies,
whether in paper or computer format, as may be reasonably requested from time to
time by Buyer, of Seller's financial and tax books and records and Manager's
financial records insofar as they relate to the operation of the Facility and
the Business prior to the Closing.
A. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. No delay in exercising any right
or remedy shall constitute a waiver thereof, and no waiver by Buyer or any
Operator of any covenant of this Agreement shall be construed as a waiver of any
preceding or succeeding breach of the same or any other covenant or condition of
this Agreement.
A. Entire Agreement and Modification. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter (including the Letter of Intent) and constitutes (along with the
Transaction Documents, including the Unification Agreement, referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by each of the parties.
A. Assignments, Successors and Third Party Beneficiaries.
1. No party may assign any of its rights under
this Agreement without the prior consent of the other party which will not be
unreasonably withheld, except that Buyer may assign all or certain of its
rights, duties and obligations hereunder to one or more Affiliates of Buyer, or,
in connection with the financing or refinancing of Buyer's purchase of the
Acquisitions Assets, to a real estate investment trust or other Financing Source
or its Affiliate, without the prior written consent of Seller, provided that in
the instance of any such assignment Buyer shall not be released from any of, and
remain responsible for its obligations under, this Agreement.
1. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
1. Except as otherwise expressly provided in
this Section, this Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and permitted assigns and nothing in this Agreement will be construed
to give any Person other than the parties to this Agreement or their respective
successors and assigns any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement. B.
Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
A. Section Headings. The headings of Articles and Sections in
this Agreement are provided for convenience only and will not affect the
construction or interpretation of this Agreement.
A. Governing Law. This Agreement will be governed by and
construed under the laws of the Commonwealth of Virginia without regard to
conflicts of laws principles.
A. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF PORTSMOUTH, INC.
By: ______________________________________
Xxxx Xxxxx, Chief Financial Officer
RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP
By: XXXXXXX CORPORATION,
General Partner
By: __________________________________
Xxxxx X. Xxxxxxx, President
XXXXXXX CORPORATION
By: ______________________________________
Xxxxx X. Xxxxxxx, President
TABLE OF CONTENTS
Page
ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 11
TERMS OF THE SALE AND PURCHASE 11
2.1 Assets to Be Sold 11
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 12
2.5 Allocation of Purchase Price 13
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 14
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 16
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 18
ARTICLE 4 18
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 18
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 19
4.7 No Material Adverse Change19
4.8 Consents 19
4.9 Completion of Other Transactions 20
ARTICLE 5 20
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 20
5.1 Performance 20
5.2 Representations and Warranties 20
5.3 Consents 20
TABLE OF CONTENTS (cont'd)
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into of Other Agreements 20
ARTICLE 6 21
REPRESENTATIONS AND WARRANTIESOF OPERATORS 21
6.1 Organization and Good Standing 21
6.2 Authority; No Conflict; Consents 22
6.3 Financial and Operating Statements 23
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 24
6.6 Taxes; FIRPTA 24
6.7 Title, Condition and Sufficiency of the Facility. 24
6.8 Title, Condition And Sufficiency of the Personal Property 27
6.9 Inventory 27
6.10 Intellectual Property 28
6.11 Contracts 28
6.12 Insurance 29
6.13 Employees 30
6.14 Labor Matters 30
6.15 Benefit Plans 31
6.16 Compliance with Laws; Deficiencies 31
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 33
6.19 Residents/Patients; Licensed Beds And Fees 33
6.20 Brokers or Finders 33
6.21 Disclosure 33
6.22 Bankruptcy 34
6.23 Third Party Provider Liabilities 34
6.24 Due Diligence Information 34
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 35
7.2 Authority 35
7.3 Certain Proceedings 35
7.4 Brokers or Finders 35
7.5 Due Diligence Review 35
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc.36
8.3 Operation of Seller's Business 36
8.4 Required Consents 38
TABLE OF CONTENTS (cont'd)
8.5 Notification 38
8.6 No Negotiation 38
8.7 Best Efforts 38
ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 39
ARTICLE 10 40
DAMAGE, DESTRUCTION OR CONDEMNATION 40
10.1 Damage and Destruction 40
10.2 Condemnation 40
ARTICLE 11 41
INDEMNIFICATION 41
11.1 Indemnification Agreement 41
11.2 Independent Investigation 41
ARTICLE 12 41
MISCELLANEOUS COVENANTS 41
12.1 Confidentiality 41
12.2 Public Announcements 42
12.3 Non-Competition 42
ARTICLE 13 43
GENERAL PROVISIONS 43
13.1 Survival 43
13.2 Expenses 43
13.3 Arbitration 44
13.4 Notices 44
13.5 Further Assurances 45
13.6 Financial Statement Audits 45
13.7 Intentionally omitted 46
13.8 Copies of Books and Records 46
13.9 Waiver 46
13.10 Entire Agreement and Modification 46
13.11 Assignments, Successors and Third Party Beneficiaries 46
13.12 Severability 47
13.13 Section Headings 47
13.14 Governing Law 47
13.15 Counterparts 47
EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Xxxx of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's and General Partner's
Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
