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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is made effective this
____ day of __________, 2000, by and among Midtown Real Estate Company, LLC, a
Michigan limited liability company (the "BUYER"), Professional Health Care
Management, Inc. (the "SELLER"), Frenchtown Nursing Home, Inc., Xxxxxxx Nursing
Center, Inc., Middlebelt Nursing Home, Inc. and St. Xxxxxxx Nursing Home, Inc.,
each a wholly owned subsidiary of Seller (hereinafter referred to, individually,
as a "SUBSIDIARY LESSEE" or, collectively, as the "SUBSIDIARY LESSEES") who
agree as follows:
ARTICLE 1. BACKGROUND; DEFINITIONS; PURCHASE AND SALE.
1.01. Background.
A. Seller. Seller is a corporation formed under and
existing by virtue of the laws of the State of Michigan and is in the business,
among other things, of owning and/or operating skilled nursing facilities in the
State of Michigan.
B. Subsidiary Lessees. Each Subsidiary Lessee is a
corporation formed under and existing by virtue of the laws of the State of
Michigan and is in the business of operating a skilled nursing facility in the
State of Michigan under a lease from Seller (each, a "SUBSIDIARY LEASE," and
collectively, the "SUBSIDIARY LEASES").
1. Frenchtown Nursing Home, Inc. is engaged in
the business of operating a 229 bed nursing home facility known as Frenchtown
Nursing Care Center located in Monroe, Michigan (individually referred to
"Frenchtown").
2. Xxxxxxx Nursing Center, Inc. is engaged in
the business of operating a 138 bed nursing home facility known as Xxxxxxx
Nursing Care Center located in Detroit, Michigan (individually referred to as
"Xxxxxxx").
3. Middlebelt Nursing Home, Inc. is engaged in
the business of operating a 162 bed nursing home facility known as Middlebelt
Nursing Care Center located in Livonia, Michigan (individually referred to as
"Middlebelt").
4. St. Xxxxxxx Nursing Home, Inc. is engaged in
the business of operating a 102 bed nursing home facility known as St. Xxxxxxx
Nursing Care Center located in Warren, Michigan (individually referred to as
"St. Xxxxxxx").
C. Facilities. Seller owns and the Subsidiary Lessees
operate the respective skilled nursing facilities identified on EXHIBIT 1.02-4
(the "FACILITIES").
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D. Seller and each of the Subsidiary Lessees are debtors
and debtors-in-possession (collectively, the "DEBTORS") in cases pending in the
United States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY
COURT") as follows: Professional Health Care Management, Inc. 00-00198;
Frenchtown Nursing Home, Inc. 00-00148; Xxxxxxx Nursing Center, Inc. 00-00190;
Middlebelt Nursing Home, Inc. 00-00192; and St. Xxxxxxx Nursing Home, Inc.
00-00202 (collectively, the "BANKRUPTCY CASE").
E. Buyer. Buyer is a limited liability company formed
under and existing by virtue of the laws of the State of Michigan.
F. Intent of the Parties. Seller desires to sell the
Acquired Assets (as hereinafter defined) with respect to its Facilities, free
and clear of the Subsidiary Leases, except the Excluded Assets (as hereinafter
defined), and retain all of the liabilities associated therewith except the
Assumed Liabilities (as hereinafter defined) related to the Facilities, and
Buyer desires to acquire from the Seller all of the Acquired Assets relative to
the Facilities except the Excluded Assets, and is willing to assume the Assumed
Liabilities, subject to the terms and conditions set forth herein.
1.02. Definitions. The following terms shall have the meanings given to
them in this Section 1.02:
"ACQUIRED ASSETS" means, with respect to the Facilities, except with
respect to the Excluded Assets relative to such Facilities, all of Seller's and
the Subsidiary Lessees' right, title and interest in and to the following, all
of which shall be conveyed by Seller in "as is" condition:
(1) Prepaids. All prepaid expenses, advanced payments,
deposits and other similar assets relating exclusively to the
Facilities or the operation thereof, including, without limitation,
prepaid deposits with respect to licenses, suppliers and utilities
(collectively, the "PREPAIDS") which Prepaids, to the extent the same
shall exceed $10,000 individually, are set forth on EXHIBIT 1.02-2.
(2) Inventory. All inventories of products, goods and
supplies located at, or held by the Seller and the Subsidiary Lessees
exclusively for, the Facilities (collectively, the "INVENTORY" or the
"INVENTORIES").
(3) Other Assets. All tangible personal property and
equipment located at, and held by the Seller and the Subsidiary Lessees
exclusively for use at, the Facilities, including, without limitation,
equipment, maintenance equipment, office furniture and office
equipment, other furnishings, trucks, automobiles and other vehicles
and transportation equipment, and construction-in-process, and all
intangible property and Software, if any, held by Seller and the
Subsidiary Lessees solely for use at the Facilities, all as described
on EXHIBIT 1.02-3 to the extent any such assets have a book value as of
the date hereof in excess of $10,000 (collectively, the "OTHER
ASSETS"), but specifically excluding any clinical equipment now located
at the Facilities used to provide ancillary
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services, to the extent not owned by Seller and the Subsidiary Lessees
and any and all rights respecting computer and data processing
hardware, Software or firmware that is proprietary to Seller or any of
its Affiliates, other than hardware, Software or firmware used
exclusively in connection with the operation of any one or more of the
Facilities.
(4) Real Property. The real property rights and interests
(including fee and, if any, leasehold) for the property described
below, which consist of: (i) the real property more particularly
described on EXHIBIT 1.02-4, (ii) all buildings, structures, and
leasehold improvements located thereon and all appurtenances relating
thereto, including, without limitation, easements pertaining thereto,
(iii) all adjacent streets, alleys or rights of way included therein,
and (iv) all fixtures, apparatus or equipment affixed to said premises,
including, without limitation, all of the electrical, heating,
plumbing, air conditioning, air compression and all other systems
located on said premises, and all other structures, fences and
improvements (collectively, the "REAL PROPERTY").
(5) Business Records. All books and records relating
solely to the Facilities or the operation thereof, including, without
limitation, files, invoices, forms, accounts, correspondence, patient
records, technical, accounting and procedural manuals, employment
records, studies, reports or summaries relating to any environmental
matters, and other books and records relating solely to the operation
of any of the Acquired Assets and any confidential information which
has been reduced to writing or other tangible medium relating solely to
the Facilities (collectively, the "BUSINESS RECORDS"), but expressly
excluding any books and records relating to the Seller and the
Subsidiary Lessees, including their organizational documents and all
business records listed as Excluded Assets for the Facilities or
relating primarily to the Excluded Assets for the Facilities.
(6) Intellectual Property Rights. The trademarks and
trade names associated with the Facilities described on EXHIBIT 1.02-6,
excluding any right to use the name "Mariner Post-Acute Network,"
"Mariner Health Group" or any derivation thereof.
(7) Reserved
(8) Permits. All licenses, permits, approvals, variances,
waivers or consents set forth on EXHIBIT 1.02-8 (collectively, the
"PERMITS"), to the extent transferable or assignable, issued by any
federal, state or local governmental entity or municipality or
subdivision thereof or any authority, department, commission, board,
bureau, agency, court or instrumentality (collectively, the
"GOVERNMENTAL AUTHORITIES") and used exclusively in the operation of
the Facilities;
(9) Goodwill. The goodwill of the Seller relating to the
Facilities.
(10) Miscellaneous. All other assets, properties, rights
and interests of the Seller otherwise employed exclusively in the
operation of the Facilities, of every kind,
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nature and description, whether tangible or intangible, real, personal
or other, and wherever situated, all of which are to be sold,
transferred, conveyed, assigned and delivered to the Buyer at the
Closing (as hereinafter defined) pursuant to this Agreement.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.04.
"BANKRUPTCY CASE" has the meaning set forth in Section 1.01D.
"BANKRUPTCY COURT" has the meaning set forth in Section 1.01D.
"BUSINESS" shall be the business of owning and operating the Facilities
using the Acquired Assets, as currently constituted and operated and as the same
continues to be constituted and operated until Closing.
"BUSINESS RECORDS" has the meaning set forth under subsection (5) of
the definition of "Acquired Assets."
"BUYER CONSENTS" has the meaning set forth in Section 5.04.
"BUYER DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"BUYER INDEMNITEES" has the meaning set forth in Section 12.02.B.
"BUYER'S AGENTS" has the meaning set forth in Section 3.06.B.
"BUYER'S INVESTIGATION" has the meaning set forth in Section 3.06F.
"BUYER'S LESSEE" has the meaning set forth in Section 6.14A.
"CLAIMS" has the meaning set forth in Section 3.06C.
"CLOSING" has the meaning set forth in Section 9.01.
"CLOSING DATE" has the meaning set forth in Section 9.01.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Buyer on the one hand, or the Seller and the
Subsidiary Lessees on the other, that is not generally available to the public
as of the date of this Agreement. Confidential Information shall not include any
information that: (a) is or subsequently becomes publicly available without
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the receiving Party's breach of any obligation owed to the disclosing Party; (b)
became known to the receiving Party from a source other than the disclosing
Party in a manner that did not involve the breach of an obligation of
confidentiality owed to the disclosing Party; or (c) is independently developed
by the receiving Party.
"CONTRACTS" has the meaning set forth in subsection (7) of the
definition of Acquired Assets.
"DEBTORS" has the meaning set forth in Section 1.01D.
"DECISION DATE" has the meaning set forth in Section 3.01.
"DEED" has the meaning set forth in Section 9.03A.
"DEPOSIT" has the meaning set forth in Section 6.13.
"DESIGNEE" has the meaning set forth in Section 13.14.
"DUE DILIGENCE REVIEW" has the meaning set forth in Section 3.01.
"EFFECTIVE TIME" has the meaning set forth in Section 9.01.
"EMPLOYEE BENEFIT PLAN" means any plan of the Seller or its
subsidiaries established to provide health, welfare or other similar benefits
for its employees at its Facilities.
"EMPLOYEE CREDIT" means a dollar amount equal to the amount which
Seller is legally obligated to pay, as of the Effective Time, of (i) all sick
leave earned by, but not paid to any Transferred Employees, and (ii) all
vacation and personal leave earned by, but not paid to any Transferred
Employees, which sums are required to be paid to a Transferred Employee pursuant
to any statute, rule, regulation or established policy applicable to any
Transferred Employee in the event such sick, vacation and personal leave is
earned, but not used, by such Transferred Employee. Seller shall be responsible
for the payment of any such required amounts.
"ENVIRONMENTAL LAW" means any federal, state or local statute, rule,
regulation, treaty, ordinance, order, judgment, decree, injunction or common law
pertaining to the protection of human health or the environment, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C.ss.ss.9601-9675), the Toxic Substance Control Act (15
U.S.C.ss.ss.2601-2671), the Hazardous Materials Transportation Act (49
U.S.C.ss.ss.1801-1813), the Federal Water Pollution Control Act (33
U.S.C.ss.ss.1251-1387), the Clean Air Act (42 U.S.C.ss.ss.7401-7671q), the Safe
Drinking Water Act (42 U.S.C.ss.ss.300f-300j-26), the Solid Waste Disposal Act
(42 U.S.C.ss.ss.6901-6992k), the Coastal Zone Management Act (16
U.S.C.ss.ss.1451-1464), and the Occupational Safety and Health Act (29 X.X.X.xx.
651 et seq.), and any similar federal, state or local law, as supplemented or
amended.
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"ENVIRONMENTAL REPORTS" means those certain environmental Phase I
reports, if any, obtained by Buyer (at Buyer's sole cost and expense) with
respect to the environmental condition of the Facilities, including the Real
Property.
"EXCLUDED ASSETS" has the meaning set forth in Section 1.03.
"FACILITIES" has the meaning set forth in Section 1.01C.
"FINANCING STATEMENTS" has the meaning set forth in Section 2.02.
"GOVERNMENTAL AUTHORITIES" has the meaning set forth in subsection (8)
of the definition of "Acquired Assets."
"GUARANTORS" means, jointly and severally, Ciena Healthcare Management,
Inc., a Michigan corporation and Xxxxxxxx Xxxx, an individual resident of the
State of Michigan.
"GUARANTY" has the meaning set forth in Section 2.02.
"HAZARDOUS SUBSTANCE" means any hazardous, toxic or infectious
substance, material, waste, pollutant or contaminant as defined, listed or
regulated under any Environmental Law, as well as friable asbestos and petroleum
products and bi-products.
"INDEMNIFIED PARTY" has the meaning set forth in Section 12.03.
"INDEMNIFYING PARTY" has the meaning set forth in Section 12.03.
"INDEMNITEES" has the meaning set forth in Section 3.06C.
"INFORMATION" has the meaning set forth in Section 3.06F.
"INVENTORY" OR "INVENTORIES" has the meaning set forth in subsection
(2) of the definition of "Acquired Assets."
"KNOWLEDGE" means the actual (i.e., without investigation) knowledge of
Xxxx X. Xxxxxx, Vice President and Treasurer of Seller and each of the
Subsidiary Lessees, the administrator of each of the Facilities and Aruna
Poddatoori, Vice President - Divestiture Group.
"LICENSES" has the meaning set forth in Section 6.9A.
"LOSSES" has the meaning set forth in Section 12.02.
"MATERIAL ADVERSE CHANGE" OR "MATERIAL ADVERSE EFFECT" or other similar
phrase including the word "material" with respect to the condition (financial or
otherwise) of assets, liabilities, Business or operations of the Seller or its
Subsidiary Lessees shall mean any adverse
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change or effect or potential adverse change or effect or any series of changes
or effects that substantially reduce the value of the Facilities to be acquired.
"MORTGAGE" has the meaning set forth in Section 2.02.
"NEW FACILITY NUMBERS" has the meaning set forth in Section 6.15.
"OMEGA" has the meaning set forth in Section 2.02.
"OMEGA AGREEMENT" has the meaning set forth in Section 7.11.
"OPERATING STATEMENTS" has the meaning set forth in Section 3.02.
"ORDER" has the meaning set forth in Section 6.16.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
the Facilities consistent with past custom and practice (including with respect
to quantity and frequency).
"OTHER ASSETS" has the meaning set forth in subsection (3) of the
definition of "Acquired Assets."
"PARTIES" means Buyer, Seller and the Subsidiary Lessees.
"PARTY" means Buyer, Seller or the Subsidiary Lessees, as the context
may require.
"PAYABLE" means any account payable of the Seller or the Subsidiary
Lessees (as the case may be) outstanding as of the Effective Time incurred in
the Ordinary Course of Business, regardless of whether Seller or such Subsidiary
Lessee has received an invoice in respect of such account payable as of the
Effective Time.
"PERMITS" has the meaning set forth in subsection (8) of the definition
of "Acquired Assets."
"PERMITTED EXCEPTIONS" has the meaning set forth in Section 3.01.
"PERMITTED LIENS" has the meaning set forth in Section 4.04.
"PERSON" means an individual, partnership, corporation, company,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization, or governmental entity (or any department,
agency, or political subdivision thereof).
"PLEDGE AGREEMENT" has the meaning set forth in Section 2.02.
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"PREPAIDS" has the meaning set forth under subsection (1) of the
definition of "Acquired Assets."
"PROMISSORY NOTE" has the meaning set forth in Section 2.02.
"PURCHASE PRICE" has the meaning set forth in Section 2.01.
"REAL PROPERTY" has the meaning set forth in subsection (4) of the
definition of "Acquired Assets."
"RECEIVABLES" has the meaning set forth in Section 10.05.
"SECURITY AGREEMENT" has the meaning set forth in Section 2.02.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than: (a) mechanic's, materialmen's
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SELLER CONSENTS" has the meaning set forth in Section 6.02.
"SELLER DISCLOSURE SCHEDULE" has the meaning set forth in Section 4.01.
"SELLER INDEMNITEES" has the meaning set forth in Section 12.02.
"SOFTWARE" means computer software programs and software systems,
including all databases, compilations, tool sets, compilers, higher level
"proprietary" languages, related documentation and materials, whether in source
code, object code or human readable form, used exclusively in connection with
the operation of the Facilities.
"STATE" shall mean the State of Michigan.
"SUBSIDIARY" means any corporation or other entity with respect to
which a specified Person (or a Subsidiary thereof) beneficially owns a majority
of the issued and outstanding common stock or other voting securities or
interests, or has the power to vote or direct the voting of such securities, in
either case sufficient to elect a majority of such corporation's or other
entity's directors or managers, as the case may be.
"SUBSIDIARY LEASE" or "SUBSIDIARY LEASES" means those leases made by
and between Seller and the Subsidiary Lessees (defined in the preface above)
with respect to the Facilities.
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"SUBSIDIARY LESSEE" or "SUBSIDIARY LESSEES" has the meaning set forth
in the preface above.
"SURVEYS" means physical surveys of the Facilities that may be
performed by a licensed surveyor and/or structural engineer retained by the
Buyer, at the sole cost and expense of the Buyer.
"TANGIBLE PERSONAL PROPERTY" shall mean the personal property owned by
Seller described in Section 1.02(3).
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX CLAIMS" has the meaning set forth in Section 6.16.
"TAX RETURN" means a return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule
attached thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" and "THIRD PARTY CLAIMS" have the meanings set
forth in Section 12.03.
"TITLE COMPANY" means the title insurance company selected by the Buyer
to deliver the Title Insurance Commitment as provided in Section 3.01.
"TITLE INSURANCE COMMITMENT" means a commitment to issue an ALTA
Owner's Title Insurance Policy, issued by the Title Company, dated the Closing
Date and obtained by Seller naming Buyer as the insured, in the face amount of
the portion of the Purchase Price allocated to the Real Property, showing Buyer
to be the owner in fee simple of the Real Property, subject to no exceptions
other than Permitted Exceptions.
"TRANSFERRED EMPLOYEE LIABILITY" has the meaning set forth in Section
2.04.
"TRANSFERRED EMPLOYEES" means, with respect to the Facilities, any and
all employees who are hired by Buyer effective as of the Effective Time and who,
prior to the Effective Time, were employed by the Seller at the Facilities.
"TRANSACTION DOCUMENTS" has the meaning set forth in Section 4.02.
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"TRUST FUNDS" means the monies held by Seller (or any Affiliate of
Seller) on behalf of and in trust for the benefit of patients and residents of
the Facilities.
"UCC SEARCHES" means the results of any search of the Uniform
Commercial Code records applicable to Seller, the Subsidiary Lessees and the
Facilities conducted by Buyer, at Buyer's sole cost and expense.
"VISIT" has the meaning set forth in Section 3.03A.
1.03. Purchase and Sale. On and subject to the terms and conditions of
this Agreement, Seller and the Subsidiary Lessees shall cancel the Subsidiary
Leases, the Subsidiary Lessees shall convey and assign to Seller all of their
right, title and interest in and to the Acquired Assets with respect to the
Facilities, the Buyer shall purchase from the Seller, and the Seller shall sell
to the Buyer, all of the Acquired Assets with respect to the Facilities, free
and clear of all liabilities and encumbrances, except for the Assumed
Liabilities, the Permitted Liens and the Permitted Exceptions.
Notwithstanding anything contained in this Agreement to the contrary, the
Acquired Assets shall not include the following excluded assets (the "EXCLUDED
ASSETS"):
A. all Receivables of every kind and nature, and all
renewed and accrued interest pertaining thereto;
B. corporate minute books, stock ledgers, stock transfer
records, records or books relating to any Receivables, and any other corporate
records that are not related solely to the Acquired Assets or the Facilities;
C. cash and cash equivalents;
D. any claims against third parties not directly related
solely to the Acquired Assets, including, without limitation, claims that the
Seller or Subsidiary Lessees may have and that may arise under the Bankruptcy
Code;
E. any federal, state, local, and foreign tax refunds,
credits or benefits or income tax attributes of Seller or the Subsidiary Lessees
pertaining to or arising out of periods prior to the Effective Time;
F. any overpayments made with regard to any xxxxxxx'x
compensation policies maintained by the Seller or the Subsidiary Lessees
pertaining to or arising out of periods prior to the Effective Time;
G. all prepayments made with regard to insurance
policies not assumed by the Buyer pertaining to or arising out of periods prior
to the Effective Time;
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H. all financial records pertaining to the operation of
any Facility; and
I. any other asset, properties, rights and interests of
the Seller or Subsidiary Lessee otherwise not employed exclusively in the
operation of the Facilities, of every kind, nature and description, whether
tangible or intangible, real, personal or other, and wherever situated.
1.04. Exclusions from Sale. Except for the Acquired Assets, all other
assets of Seller and the Subsidiary Lessees that are not used exclusively in
connection with the operation of the Facilities, including, without limitation,
the Excluded Assets, are specifically excluded from the assets being sold,
assigned, transferred and conveyed pursuant to this Agreement.
1.05. Title Documents.
A. The Real Property shall be conveyed to Buyer by means
of a limited warranty deed.
B. The Acquired Assets shall be conveyed to Buyer by
means of a limited warranty xxxx of sale.
ARTICLE 2. CONSIDERATION FOR TRANSFER.
2.01. Purchase Price. The consideration for the purchase and sale of
the Acquired Assets, payable as provided in Section 2.02, shall be $9,000,000,
plus the amount of all Prepaids (the "PURCHASE PRICE"). At the Closing the
Purchase Price shall be appropriately adjusted in order to reflect any
applicable prorations and allocations of closing costs and other items as
provided in this Agreement.
2.02. Payment of Purchase Price; Security. On the Closing Date, Buyer
and Seller shall execute a Loan Agreement in the form of EXHIBIT 2.02LA (the
"LOAN AGREEMENT") setting forth the terms and conditions of the purchase money
financing between Buyer and Seller. On the Closing Date, the Buyer shall deliver
to Seller its promissory note in the form of EXHIBIT 2.02PN (the "PROMISSORY
NOTE") in an amount equal to the Purchase Price, reduced by any adjustment by
reason of any applicable prorations and the allocation of closing costs and
other items described below. On the Closing Date, to secure payment of the
Promissory Note, the Buyer shall execute and deliver to Seller a mortgage in the
form of EXHIBIT 2.02M (the "MORTGAGE"), a security agreement in the form of
Exhibit 2.02SA (the "SECURITY AGREEMENT"), UCC financing statements (the
"FINANCING STATEMENTS") as in the judgment of the Seller, reasonably exercised,
are necessary and appropriate to perfect the security interest of the Seller in
the Collateral (as defined in the Security Agreement) and a stock pledge
agreement in the form of EXHIBIT 2.02PA (the "PLEDGE AGREEMENT"), and shall
cause the Guarantors to execute and deliver to Seller a limited guaranty by
Xxxxxxxx Xxxx and a guaranty by Ciena Healthcare Management, Inc. in favor of
Seller in the forms of EXHIBIT 2.02G-1 AND EXHIBIT 2.02G-2 (collectively the
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"GUARANTY"). Buyer acknowledges that, in connection with settling certain claims
of Omega Healthcare Investors, Inc. ("Omega") against it and certain of its
affiliates, Seller is required to assign all of its right, title and interest
in, to and under the Promissory Note, the Mortgage, the Security Agreement, the
Financing Statements and the Guaranty to Omega on the Closing Date, and Buyer
hereby consents to such assignment.
2.03. Allocation of Purchase Price. Each of the Parties shall report
the purchase and sale of the Acquired Assets, including, without limitation, in
all federal, state, local and other tax returns and reports prepared and filed
by or for Seller and Buyer, in accordance with the basis of allocation described
on EXHIBIT 2.03.
2.04. Assumption of Liabilities. In addition to the delivery of the
Promissory Note and the other Transaction Documents as required in this
Agreement, on the terms and conditions set forth in this Agreement, Buyer shall
assume as of the Effective Time, and shall thereafter pay, perform and discharge
as and when due if applicable pursuant to Section 6.08A, all liabilities
relating to or arising solely in connection with the operation of the Facilities
on and after the Effective Time, all of which liabilities are collectively
referred to as the "ASSUMED LIABILITIES." Except for the Assumed Liabilities,
Buyer does not assume any liability for any expenses of the operation of the
Facilities which relate to the period prior to the Effective Time, including
without limitation the operational expenses described in Section 10.04 hereof.
Seller shall pay or escrow appropriate funds for the payment of any expenses of
the operation of the Facilities which relate to the period prior to the
Effective Time which were: (i) incurred after January 18, 2000, and qualify for
treatment as an expense of administration in the Bankruptcy Cases under 11 USC
ss. 503, or (ii) incurred prior to January 18, 2000, which may result in a lien
on the Facilities or any part thereof which Seller cannot avoid or set aside and
which is not removed from the Facilities by an order of the Bankruptcy Court.
2.05. Sales and Use Taxes. Seller shall pay the sales and use taxes, if
any, arising out of the sale of the Acquired Assets. Buyer shall not be
responsible for any Taxes related to any period before the Effective Time.
2.06. Stamp and Transfer Taxes. Seller shall pay any and all stamp or
documentary transfer taxes imposed by any Governmental Authority and arising
solely out of the transfer of the Real Property.
ARTICLE 3. DUE DILIGENCE AND DECISION DATE.
Buyer acknowledges that Buyer has inspected the Facilities and has
otherwise completed its due diligence review of the Facilities (the "Due
Diligence Review") and that, accordingly, the date by which Buyer was to
complete its Due Diligence Review (the "Decision Date") has passed.
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3.01. Documents; Termination Rights. Seller and the Subsidiary Lessees
have delivered and made available to Buyer for inspection at one or more
locations designated by the Seller, any material documents in Seller's or the
Subsidiary Lessees' possession relating exclusively to the Facilities,
(collectively, with respect to the Facilities, the "FACILITY DOCUMENTS") (but
excluding any such items that are protected by the attorney-client privilege or
attorney work product privilege). Buyer has conducted its own Due Diligence
Review of the Facilities (including, without limitation, conducting all physical
testing, soil, geological, engineering, termite tests and reports, and other
inspections of the Facilities, and reviewing all zoning requirements, federal,
state and local laws, ordinances, rules, regulations, permits, licenses,
approvals and orders applicable to the Facilities as Buyer has deemed necessary
as well as reviewing the Title Insurance Commitment (a copy of which shall be
delivered to Seller within ten (10) days following the date hereof), the results
of the UCC Searches and any Surveys to determine whether the Facilities are
suitable for Buyer's intended use. All (i) exceptions to title shown on the
Title Insurance Commitment (other than easements and other similar encumbrances
that would customarily be shown on a survey), (ii) current installments of
general and special real property taxes and assessments which are a lien but not
yet delinquent, and (iii) any encumbrance arising from the acts or omissions of
Buyer, are herein collectively called the "PERMITTED EXCEPTIONS." By furnishing
Buyer with the Facility Documents, neither Seller nor the Subsidiary Lessees has
made any warranty or representation with respect to the accuracy, completeness,
conclusions or statements expressed in such materials, nor do they represent or
warrant that these are the sole materials now available with respect to the
matters covered thereby; provided, however, that if any information contained in
the Facility Documents conflicts with specific representation(s) or warranty(s)
of the Seller or the Subsidiary Lessees contained in this Agreement, then such
representation(s) or warranty(s) shall control. Buyer acknowledges that (i)
Buyer will rely solely on the results of any Surveys, studies or reports, if
any, obtained or performed under Buyer's direction and (ii) except as
specifically set forth in this Agreement, Seller and the Subsidiary Lessees have
made no representations or warranties of any kind whatsoever, express or
implied, in connection with this Agreement, the purchase of the Acquired Assets
by Buyer, regarding the physical condition of the Facilities or any Acquired
Asset or whether any Acquired Asset is appropriate for Buyer's intended use.
Except for the Closing certificates required to be delivered at Closing pursuant
to Section 7.04, neither Seller nor the Subsidiary Lessees assume any duty to
furnish Buyer with any other existing information, reports or updates of such
materials. Buyer hereby waives any and all claims against Seller and the
Subsidiary Lessees arising out of the accuracy, completeness, conclusions or
statements expressed in any materials furnished, and any and all claims arising
out of any duty of Sellers or the Subsidiary Lessees to acquire, seek or obtain
such materials, except as specifically referenced in the representations and
warranties set forth in this Agreement.
3.02. Operating Financial Statements. Buyer has received and reviewed
the operating financial statements for the Facilities for the two fiscal years
ending September 30, 1999 as well as similar financial statements for the
current fiscal year to the extent reasonably available to Seller and the
Subsidiary Lessees without undue expense (the "OPERATING STATEMENTS") and has
had the opportunity to ask Seller and the Subsidiary Lessees such questions and
obtain such
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further and additional information relating thereto as Buyer shall
have deemed appropriate under the circumstances.
3.03. Inspections.
A. Buyer may conduct an inspection of the Facilities
(collectively, the "VISITS"), subject to Buyer's agreement that, without the
Seller's prior written consent, Buyer will not permit any of its representatives
or any Buyer Agents to discuss the reason for a Visit with any of Seller's or
Subsidiary Lessees' Facility-level employees until after the Decision Date, and
then only if: (i) this Agreement has not been terminated prior thereto; and (ii)
Buyer gives prior written notice to Seller and the applicable Subsidiary Lessee
of such intended Visit no less than three (3) business days prior to such
intended Visit; and (iii) Buyer is accompanied during the Visit by a
representative or agent of the Seller or the applicable Subsidiary Lessee as the
Seller shall designate. Buyer further agrees to coordinate with the Seller and
the applicable Subsidiary Lessee so that all Visits undertaken pursuant to the
terms hereof will be conducted in such a manner as will minimize any disruption
to normal business operations of the Facilities and the resident patients
therein.
B. Buyer acknowledges that, based upon its inspection of
the Facilities through the Visits, Buyer has approved the inspection of the
Facilities and has no right to terminate this Agreement for any reason arising
out of or related to such Visits.
3.04. Buyer's Termination. If Buyer elects to terminate this Agreement
as provided in Section 6.02, then: (i) Buyer shall give Seller timely written
notice that Buyer elects to so terminate this Agreement, which notice shall
state the reason for termination with particularity; (ii) Buyer shall deliver to
Seller all information, materials and data that Buyer and/or Buyer's Agents
discover, obtain or generate in connection with or resulting from Buyer's Due
Diligence Review (including, without limitation, pursuant to Section 3.06);
(iii) the Deposit shall be returned to the Buyer (less any amounts withheld in
respect of damages or repairs to the Facilities occasioned by Buyer's
inspection) and (iv) the Parties shall thereafter have no further rights or
obligations under this Agreement unless expressly provided otherwise herein.
3.05. Seller's Termination. If Seller elects to terminate this
Agreement as provided in Sections 6.02, 6.09A or 9.01, or as a result of any
material breach of Buyer's obligations hereunder, then Seller shall give Buyer
written notice that Seller elects to so terminate this Agreement. Upon any
termination by Seller, Buyer shall deliver to Seller all information, materials
and data that Buyer and/or Buyer's Agents discover, obtain or generate in
connection with or resulting from Buyer's investigation of the Facilities
(including, without limitation, pursuant to Section 3.06); and the Parties shall
thereafter have no further rights or obligations under this Agreement unless
expressly provided otherwise herein. Upon any such termination (other than
pursuant to Section 3.07), the Deposit (plus all accrued interest thereon) shall
be paid to Seller.
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3.06. Access to Property.
A. Liens. Buyer agrees to keep the Facilities free from
any liens arising out of any work performed, materials furnished or obligations
incurred by or on behalf of Buyer or Buyer's Agents with respect to any
inspection, testing or Visits of the Facilities (and whether incurred before or
after the date of this Agreement). If any such lien at any time shall be filed,
Buyer shall cause the same to be discharged of record within twenty (20) days
thereafter by satisfying the same or, if Buyer, in its discretion and in good
faith determines that such lien should be contested, by recording a bond.
Failure by Buyer to discharge such lien or procure such bond shall be a material
breach of this Agreement and Seller may terminate this Agreement in accordance
with the terms of Section 3.05.
B. Compliance with Laws. Buyer represents, warrants and
covenants that it has and will, at its sole cost and expense, comply, and has
caused and will cause its agents, employees, representatives or contractors
(collectively, "BUYER'S AGENTS") to comply, with all applicable federal, state
and local laws, statutes, rules, regulations, ordinances or policies in
conducting any inspection, testing or Visits, whether conducted before or after
the date of this Agreement.
C. Indemnity. Buyer hereby agrees to hold harmless,
protect, defend and indemnify, and hereby releases the Seller, the Subsidiary
Lessees and their respective trustees, officers, directors, employees,
contractors, agents, subsidiaries and affiliates, and its and their respective
successors and assigns (collectively, the "INDEMNITEES") and the Facilities from
and against any and all claims, demands, causes of action, suits, judgments,
losses, damages, injuries, liabilities, penalties, enforcement actions, fines,
taxes, liens, encumbrances, costs or expenses or sums paid in settlement of any
of the foregoing, (including, without limitation, reasonable attorneys' fees,
litigation, arbitration and/or administrative proceeding costs, expert and
consultant fees and laboratory costs), whether direct or indirect, known or
unknown (collectively, "CLAIMS"), arising out of, connected with or incidental
to: (i) any injuries to persons (including death) or property (real or
personal), or (ii) any mechanics', workers' or other liens on the Facilities, in
each case by reason of or relating to the work or activities conducted on the
Facilities by Buyer or Buyer's Agents. The provisions of this Section 3.06C
shall not be limited in any way by any other terms of this Agreement.
D. Clean Up and Repair. Buyer shall, at its sole cost
and expense, clean up and repair the Facilities, in whatever manner necessary,
after Buyer's or Buyer's Agents' entry thereon, to correct, restore or repair
any part of a Facility that was changed as a result of such entry so that the
Facilities shall be returned to the same condition that existed prior to Buyer's
or Buyer's Agents' entry thereon.
E. Information. Seller shall promptly be provided with a
copy of any and all information, materials and data that Buyer and/or Buyer's
Agents discover, obtain or generate in connection with or resulting from any
inspection, testing and/or work hereunder with respect to the Facilities. All
such information, materials and data (the "INFORMATION") shall be deemed
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Confidential Information, except that Buyer may share the Information with
Buyer's Agents involved in "Buyer's Investigation" (as defined below), and Buyer
represents, warrants and agrees that (i) without the prior written consent of
the Seller, which consent may be withheld in the Seller's sole and absolute
discretion, prior to Closing, the Information shall constitute Confidential
Information, and the Information will not be used other than in connection with
the Buyer's investigation and evaluation of the Facilities ("BUYER'S
INVESTIGATION"); (ii) Buyer will use its best efforts to safeguard the
Information from unauthorized disclosure; and (iii) Buyer will not disclose to
any unauthorized person: (A) that the Information has been made available to
Buyer, (B) that Buyer has inspected any portion of the Information, or (C) the
terms and conditions of this Agreement. Buyer shall indemnify the Indemnitees
from and against any and all Claims resulting from, arising out of or in
connection with Buyer's breach of its obligations under this Section 3.06E. This
Section 3.06E shall not apply to any period after Closing.
3.07 Buyer's Termination after Due Diligence Period.
Notwithstanding anything herein to the contrary in this Agreement, Buyer shall
be entitled to a return of its Deposit even if it does not terminate this
Agreement within the Due Diligence Review for the following reasons: (1) Buyer's
failure to secure, through no fault of its own, all necessary Licenses from
Governmental Authorities, or (2) in the event of a Material Adverse Change after
the date of this Agreement but prior to the Closing as described in Section 7.05
hereof.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER
AND SUBSIDIARY LESSEES.
4.01. Representations and Warranties Generally. Seller and the
Subsidiary Lessees represent and warrant to Buyer that the statements contained
in this Article 4 are true, correct and complete as of the date of this
Agreement and will be true, correct and complete as of the Effective Time,
except as set forth in the disclosure schedule delivered by Seller and the
Subsidiary Lessees to Buyer on the date hereof and initialed by the Parties (the
"SELLER DISCLOSURE SCHEDULE"), as the same may be modified or amended from time
to time, and that such statements do not, and will not as of the Effective Time,
omit to state any material fact necessary in order to make the statements and
information contained in this Article 4 not misleading. The Seller Disclosure
Schedules shall be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Agreement.
4.02. Organization, Qualification, and Corporate Power. A. Seller (i)
is a corporation duly organized, validly existing and in good standing under the
laws of the State, is authorized to do business in the State and has all
necessary corporate powers to own the Facilities and the Acquired Assets and
carry on the business as now conducted by it at the Facilities; and (ii) subject
to the requirements of Bankruptcy Court approval, has the requisite power and
authority to enter into and perform this Agreement and the transactions
contemplated hereby. This Agreement and the other agreements and instruments
executed or to be executed in connection herewith by the Parties (the
"TRANSACTION DOCUMENTS") to which Seller is a signatory constitute the valid and
binding obligations of the Seller, enforceable in accordance with their
respective
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terms, except for the requirement of obtaining the approval of the Bankruptcy
Court of the transactions contemplated therein, and except as the enforceability
hereof and thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors generally and to the
equitable discretion of any court in which enforcement hereof may be sought.
B. Each of the respective Subsidiary Lessees represents and warrants to
Buyer that it is a corporation duly organized, validly existing and in good
standing under the laws of the State, is authorized to do business in the State
and carry on the business now operated by it at the applicable Facility
location; and, subject to the requirements of Bankruptcy Court approval, has the
requisite power and authority to enter into and perform under this Agreement and
the transactions contemplated hereby to which Seller is a signatory
4.03. Non-contravention. Neither the execution and the delivery of this
Agreement and the Transaction Documents, nor the consummation and performance of
the transactions contemplated hereby and thereby by the Seller and the
Subsidiary Lessees, will: (i) violate, conflict with, or constitute a default
under, any of the terms of the Seller's or any Subsidiary Lessee's articles of
incorporation or bylaws, or any provisions of, or result in the acceleration of
any obligation under, any contract, security agreement, mortgage, note, lease
agreement or instrument by which Seller or the Subsidiary Lessees are bound
(other than those constituting prepetition obligations in the Bankruptcy cases)
or under any order, judgment or decree, relating to the Facilities or the
operation thereof or the Acquired Assets to be conveyed by Seller, or by which
the Seller, the Subsidiary Lessees or the Acquired Assets are bound; (ii) result
in the creation or imposition of any liens or claims in favor of any Person or
entity upon any of the Acquired Assets except as contemplated herein; (iii)
violate any law, statute, judgment, decree, order, rule or regulation of any
Governmental Authority where such violation would have a material adverse effect
on the Facilities or the ability of Seller or any Subsidiary Lessee to
consummate the transactions contemplated herein; or (iv) constitute an event
which, after notice or lapse of time or both, would result in such violation,
conflict, default, acceleration, or creation or imposition of liens or claims;
other than the requirement in each of the foregoing cases to obtain the approval
of the Bankruptcy Court .
4.04. Acquired Assets; Title to the Acquired Assets. Seller has good
and marketable title to the Real Property, subject to the Subsidiary Leases, the
Permitted Exceptions and the Permitted Liens (as hereinafter defined), and as of
the Effective Time the Acquired Assets shall be free and clear of all liens and
claims of any kind or nature whatsoever (including, without limitation, liens or
claims for Taxes), except for Assumed Liabilities, Permitted Liens set forth on
Section 4.04 of the Seller Disclosure Schedule (collectively, the "PERMITTED
LIENS") and Permitted Exceptions.
4.05. Regulatory Compliance. Except as set forth on Section 4.05 of the
Seller Disclosure Schedule, to the Knowledge of Seller and the Subsidiary
Lessees, the operation of the Facilities has been conducted in substantial
compliance with all applicable laws, rules, regulations and requirements of all
Governmental Authorities, except for such violations as
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would not adversely affect the operation of its Facilities in any material
respect. With respect to the Facilities, Seller has the appropriate CLIA
Registration, Medicare Certification and Medicaid Provider Agreements
(collectively, the "Material Licenses and Permits") necessary in order to
conduct the Business and, to the Seller's knowledge, no other material
franchise, license, permit, order or approval of any Authority is material to or
necessary for the operation of the Business as presently conducted. Each
Material License and Permit is in full force and effect except as disclosed in
Section 4.05 of the Seller Disclosure Schedule; the Seller is now in all
material respects in compliance with each Material License and Permit, and
except a set forth in Section 4.05 of the Seller Disclosure Schedule, no current
violations are recorded by any Authority in respect of any Material License or
Permit; and no proceeding is pending or, to the Knowledge of the Seller,
threatened to revoke, amend or limit any Material License or Permit including
but not limited to material compliance with the Medicaid requirements for
nursing home Facilities. Except as may be provided in Section 4.05 of Seller
Disclosure Schedule, to the Seller's Knowledge, neither the Seller nor any of
its officers, directors, agents or employees have been disqualified from
participating in either the Medicare or Medicaid programs. Except as disclosed
in Section 4.05 of Seller Disclosure Schedule, there are no pending or, to the
Knowledge of the Seller, threatened proceedings by or before any Governmental
Authority which involve new special assessments, assessment districts, bonds,
Taxes, condemnation actions, Laws or Orders or similar matters which, if
instituted, could reasonably be expected to have a Material Adverse Effect upon
the condition (financial or otherwise), assets, liabilities, business or
prospects or the Seller, the value or utility of the Assets or the Seller's
ability to consummate the transaction contemplated in this Agreement.
4.06. Real Property. Except as set forth on Section 4.06 of the Seller
Disclosure Schedule and except for the Permitted Exceptions:
A. To the Knowledge of Seller and the Subsidiary
Lessees, there are no pending condemnation proceedings relating to or involving
the Real Property.
B. To the Knowledge of Seller and the Subsidiary
Lessees, no written waivers or variances have been obtained from any
Governmental Authority that, in the event of damage or destruction to the
Facilities, would prevent restoration of the Facilities to their prior condition
in all material respects.
C. To the Knowledge of Seller and the Subsidiary
Lessees, there exists no plan, study or effort by any Governmental Authority
which in any way materially affects or would materially affect the present
zoning or use of the Facilities.
D. To the Knowledge of Seller and the Subsidiary
Lessees, no portion of the improvements on the Real Property encroaches upon any
adjacent real property in any material respect and no improvements to any
adjacent real property encroaches upon the Real Property in any material
respect.
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E. Seller and the Subsidiary Lessees have received no
written notice that any Governmental Authority has asserted that the current use
of the Real Property violates any ordinance, law, regulation or order of any
Governmental Authority or that any investigation has been commenced or is
contemplated respecting such possible violation which investigation, if
concluded adversely, would have a material adverse effect on Seller.
F. Seller and the Subsidiary Lessees have not received
any written notice from any insurance company of any material defects or
deficiencies in the Real Property which would materially adversely affect the
insurability of the Facilities or materially increase the cost of insuring the
Facilities beyond that which has been incurred by Seller and the Subsidiary
Lessees during the period covered by the Operating Financial Statements.
4.07. Litigation. Seller and the Subsidiary Lessees have not received
any written notice from any Person asserting an intent to initiate any action,
suit, proceeding or claim of any kind against Seller or the Subsidiary Lessees
relating to the Facilities except as set forth by Seller in Section 4.07 of the
Seller Disclosure Schedule.
4.08. Facilities. Seller and the Subsidiary Lessees represents and
warrants to Buyer that the Facilities are duly and properly licensed to operate
as skilled nursing facilities.
4.09. Trust Funds. Seller or the applicable Subsidiary Lessees have
maintained and accounted for and provided the accounting for all Trust Funds
relative to the Facilities (or the residents of such Facilities) in accordance
with all applicable laws, rules and regulations.
4.10. Operating Statements. The Operating Statements which have
provided to Buyer are true and correct in all material respects.
4.11. Absence of Certain Changes of Events. Except as disclosed and set
forth in Exhibit 4.11, since September 30, 1999, the Seller and/or Subsidiary
Lessees have not sold, assigned, transferred, leased or otherwise disposed of
any properties or assets relating to the Business, except in the Ordinary Course
of Business.
4.12. Tax Matters. Seller has paid or made arrangement for payment of
all employment taxes required to be paid by Seller with respect to the
Facilities.
4.13. Environmental Matters. Except as set forth in Section 4.13 of the
Seller Disclosure Schedule, to the Seller's Knowledge, the Seller has not
received any notice that it is and, to the Seller's Knowledge, the Seller is not
liable as an owner, operator, or otherwise for the remediation of contamination
at, on or under the Real Property. Except as set forth in Section 4.13 of the
Seller Disclosure Schedule and in any Environmental Report, if any, to the
Seller's Knowledge the Seller has not: (i) used the Property for the use,
generation, treatment, storage, transportation or disposal of any Hazardous
Material (as such term is defined below) in quantities that would constitute a
violation of any Environmental Law or pose a threat to the environment; (ii)
released or discharged any Hazardous Materials into the environment from, at
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on or under the Property in quantities that would constitute a violation of any
Environmental Law or pose a threat to the environment; (iii) used the Real
Property at any time as a landfill or a disposal site for garbage, waste or
refuse of any kind; or (iv) installed or removed underground storage tanks on or
from the Real Property. As used herein, "Hazardous Materials" shall mean any
substances which are defined as "hazardous substances" by CERCLA or other
applicable federal or state laws, rules and regulations governing and regulating
environmental matters, and specifically including petroleum products; provided,
however, that the foregoing definition of "Hazardous Materials" shall not be
deemed to include (1) such of the foregoing as may exist on or be brought upon
the Facilities or Real Property in amounts which do not constitute a material
violation of, or could give rise to a material liability under, application
Environmental Laws, (2) the existence at the Facilities and on the Real Property
of standard cleaning, pesticide and maintenance fluids, equipment and materials
in normal quantities customarily used in connection with the development and
operation of the Facilities or Real Property and in material compliance with
applicable Environmental Laws, but only so long as the quantities thereof would
not pose a threat to the environment, or would necessitate a "response" or
"removal" action as those terms are defined in CERCLA, and so long as Borrower
complies or causes compliance with all Environmental Laws; or (3) oil and
gasoline products in normal quantities customarily used in compliance with
applicable Environmental Laws in connection with the development and operation
of the Facilities or Real Property.
4.14. No Impediments to Licensures. To Seller's Knowledge, there is no
fact which the Seller has not disclosed to Buyer in writing which could
reasonably be expected to preclude Buyer from obtaining all necessary Material
Licenses and Permits for the number of beds listed in the recitals to this
Agreement.
4.15. Full Disclosure. All documents and other papers delivered to
Buyer by or on behalf of the Seller in connection with this Agreement and the
transactions contemplated in this Agreement are, to Seller's Knowledge,
accurate, complete and authentic in all material respects.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
5.01. Representations and Warranties, Generally. Buyer represents and
warrants to the Seller and the Subsidiary Lessees that the statements contained
in this Article 5 are true, correct and complete as of the date of this
Agreement and will be true, correct and complete as of the Effective Time,
except as set forth in the disclosure schedule delivered by Buyer to Seller and
the Subsidiary Lessees on the date hereof and initialed by the Parties (the
"BUYER DISCLOSURE SCHEDULE"), as the same may be modified or amended from time
to time, and that such statements do not, and will not as of the Effective Time,
omit to state any material fact necessary in order to make the statements and
information contained in this Article 5 not misleading. The Buyer Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Agreement.
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5.02. Organization, Qualification, and Corporate Power. Buyer is a
limited liability company duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its organization. Buyer has the requisite
power and authority and has all material licenses, permits, and authorizations
necessary to carry on its business as now being conducted and to enter into and
perform this Agreement and the transactions contemplated hereby. This Agreement
and the Transaction Documents to which Buyer is a Party constitute the valid and
binding obligations of Buyer, enforceable in accordance with their respective
terms; except as the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally and to the equitable discretion of any court in
which enforcement hereof may be sought.
5.03. Non-contravention. Neither the execution and the delivery by
Buyer of this Agreement or the Transaction Documents to which Buyer is a party,
nor the consummation and performance of the transactions contemplated hereby and
thereby by Buyer, will: (i) violate, conflict with, or constitute a default
under, any of the terms of Buyer's organizational documents, or any provisions
of, or result in the acceleration of any obligation under, any contract, sales
commitment, license, purchase order, security agreement, mortgage, note, deed,
lien, lease, agreement or instrument by which Buyer is bound; or (ii) violate
any material law, statute, judgment, decree, order, rule or regulation of any
Governmental Authority binding upon Buyer.
5.04. Approval. Section 5.04 of the Buyer Disclosure Schedule sets
forth a list of all consents (the "BUYER CONSENTS") that must be obtained or
satisfied by Buyer or Buyer's Lessee in order to permit the consummation of the
transactions contemplated by this Agreement including, without limitation, all
consents prescribed by any law, rule, regulation or requirement of any
Governmental Authority or any contract, agreement, commitment or undertaking.
Other than as set forth in Section 5.04 of the Buyer Disclosure Schedule, Buyer
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority in order for
the Parties to consummate the transactions contemplated by this Agreement.
5.05. No Impediments to Licensures. Buyer is not aware of any facts or
circumstances that could prevent the issuance of the Licenses to Buyer and
Buyer's Lessee on or prior to January 1, 2001.
ARTICLE 6. PRE-CLOSING COVENANTS.
6.01. Generally. The Parties shall comply with the provisions of this
Article 6 with respect to the period between the execution of this Agreement and
the Effective Time. Each of the Parties shall use its commercially reasonable
best efforts to take all action and to do all things necessary, proper or
advisable in order to consummate and make effective in a timely manner the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article 7 and Article 8 below).
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6.02. Notices and Consents. Seller and the Subsidiary Lessees shall
give any notices to third parties, and will use their commercially reasonable
best efforts to obtain, at Seller's sole expense, such consents, waivers,
approvals or agreements as may be necessary in connection with the consummation
of the transactions by the Subsidiary Lessees and Seller contemplated hereby,
from all third parties required in connection with the sale of the Acquired
Assets, including, but not limited to, Governmental Authorities and the approval
of the Bankruptcy Court ("SELLER CONSENTS"). Buyer shall give any notices to
third parties and shall use its commercially reasonable best efforts to obtain,
at Buyer's sole expense, the Buyer Consents, as well as any other waivers,
approvals or agreements necessary or desirable in connection with the
consummation of the transactions contemplated hereby from all third parties,
including, but not limited to, Governmental Authorities as well as providing the
Bankruptcy Court with such information, affidavits and other materials as may be
necessary or appropriate to assist Seller in obtaining the approval of the
Bankruptcy Court of the subject transactions. If Seller or any Subsidiary
Lessee, on the one hand, or Buyer on the other, fails to obtain at or prior to
the Closing Date any required Seller Consent or Buyer Consent, as appropriate,
then the Party that shall not have defaulted in its obligations under this
Section 6.02 shall have the right to terminate this Agreement. Any such
termination by Buyer or Seller shall be in accordance with Section 3.04 or
Section 3.05, as appropriate. Buyer's failure to provide such notice of
termination on or before the Closing Date shall constitute Buyer's waiver of
such condition.
6.03. Operation of Facilities. From the date of this Agreement until
the Closing Date, Seller shall cause the Subsidiary Lessees to operate the
Facilities in the Ordinary Course of Business (subject at all times to the
jurisdiction of the Bankruptcy Court), use commercially reasonable, diligent
efforts to preserve intact the business operations and relationships of the
Facilities with third parties and use commercially reasonable efforts to keep
available the services of the Employees. Without limiting the generality of the
preceding sentence, until the Closing Date, the Seller and the Subsidiary
Lessees:
A. will not sell, lease, license or otherwise dispose of any of the
Personal Property except in the Ordinary Course of Business;
B. will not intentionally take or fail to take any action that would
make any of their representations or warranties under this Agreement inaccurate
in any material respect on, or as of any time prior to, the Closing Date;
C. will maintain all Records in such manner so that on the Closing
Date, all Records will be current and complete;
D. will not increase any wages or benefits of any of the Employees
except for such increases as are currently scheduled or as are otherwise
consistent with past practice;
E. except for a transfer in connection with an emergency or a transfer
specifically requested by a patient, a patient's family, conservator, physician
or other responsible party, will
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not transfer any patient to any other facility owned, managed or operated by
Seller or an Affiliate of Seller;
F. will not make any changes in the private pay rates of residents of
the Facilities without the prior written consent of Buyer; and
G. will resolve all liabilities of Seller incurred prior to the Closing
Date in accordance with Seller's prior payment practice, including, without
limitation, all vendor accounts payable and Taxes, except as prohibited by the
Bankruptcy Code or the Bankruptcy Court (and, if any such liabilities have not
been resolved prior to the Closing Date, Seller shall use its best efforts to
resolve the same at its expense as soon as practicable after the Closing Date
and shall indemnify and hold Buyer harmless against such liabilities and any
costs incurred in the resolution thereof); provided, however, that nothing
contained herein shall require Seller to pay any liability which it is not
required to pay under Section 2.04, and neither Seller nor any Subsidiary Lessee
shall be required to indemnify or hold Buyer harmless against any such
liability.
6.04. Access Following Decision Date. Subject at all times to the terms
and conditions of Section 3.03 and Section 3.06, subsequent to the Decision Date
Seller and the Subsidiary Lessees shall permit representatives of Buyer to have
full access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of its Facilities, to all Business Records
(including Tax records and financial statements), Permits, and documents of or
pertaining solely to the Facilities.
6.05. Notice of Certain Events. Seller shall promptly notify the Buyer
of:
A. any written notice received from any Person alleging that the
consent of such Person is required in connection with the consummation of the
transactions contemplated by this Agreement;
B. any written notice received from any Governmental Authority in
connection with or regarding the transactions contemplated by this Agreement;
C. the commencement of any action, suit, legal or arbitral proceeding,
administrative proceeding or investigation relating to or involving or otherwise
affecting the Seller or the Facilities that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
4.07 or that relates to the consummation of the transactions contemplated by
this Agreement, in either case, when Seller shall have Knowledge of the same;
D. the occurrence of any event that results in any of the
representations and warranties of Seller or the Subsidiary Lessees in this
Agreement becoming untrue in any material respect when Seller or any Subsidiary
Lessee shall have Knowledge of the same; and
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E. the sale, lease, license or other disposition of any of the Acquired
Assets, excluding Inventory and any dispositions in the Ordinary Course of
Business, having an aggregate book value that exceeds $25,000.
6.06. Confidentiality. The Parties hereto shall hold in confidence and
not divulge to any other Person, and shall cause their Affiliates, officers,
directors, employees, consultants and representatives to hold in confidence and
not divulge to any other Person, the specific terms of the transactions
contemplated by this Agreement or any Confidential Information designated as
such (either orally or in writing) and received from another Party, except as
necessary or appropriate to receive Bankruptcy Court approval of this Agreement
and the transactions contemplated hereby. The parties understand that the
process of Bankruptcy Court approval will require filing this Agreement with the
Bankruptcy Court and serving it on various parties, and will also require
disclosing the terms of this Agreement to a creditors committee and
representatives of certain lenders before Bankruptcy Court approval is sought.
If a Party is requested or required by any Governmental Authority, other than
the Bankruptcy Court, to disclose any of the Confidential Information, such
Party agrees to provide the other Party with prompt notice of such request or
requirement, whereupon the other Party may seek appropriate protective relief
from all or such part of such request or requirement or waive compliance by the
requesting Party with the provisions of this Agreement with respect to all or
part of such request or requirement. If, after the Parties have had a reasonable
opportunity to seek such relief (at the sole cost of the Party seeking to
preserve the confidentiality of the Confidential Information), the Parties fail
to obtain such relief and, in the opinion of counsel to the requesting Party,
the requesting Party is legally compelled to disclose any of the Confidential
Information, the requesting Party shall disclose only that portion of the
Confidential Information that it is required to disclose.
6.07. Risk of Loss. All risk of loss of, or damage to, or destruction
of, the Acquired Assets shall belong to and be borne by the Seller up to the
Effective Time. In the event that any Acquired Asset suffers a material loss or
damage or any Acquired Asset is destroyed such that such loss, damage or
destruction would materially impair Buyer's ability to operate the Facilities as
presently operated and the Seller fails or is unable to repair or replace such
asset in a manner reasonably satisfactory to Buyer prior to the Effective Time,
then Buyer at its option (a) shall be entitled to receive the insurance proceeds
with respect to such asset and shall close the transactions contemplated herein
notwithstanding such loss, damage or destruction, or (b) shall by notice to
Seller exclude the damaged Facility from the transaction and close the
transactions contemplated herein with a reduction of the Purchase Price, the
amount of such reduction to be agreed upon by the parties and if they are unable
to reach agreement on or before the Closing, the Parties shall jointly seek an
order of the Bankruptcy Court determining the amount of such reduction and the
Closing shall be postponed until the entry of such order.
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6.08. Employee Matters.
A. Continuation of Employment. On the Closing Date,
Seller or the applicable Subsidiary Lessee shall give each employee of each
Facility notice that his or her employment is terminated, and upon delivery of
such notices, Buyer shall immediately hire as its employees those former
employees of Seller or the applicable Subsidiary Lessee who, as of the Effective
Time, were employed at a Facility and were employed on average for 20 hours or
more per week ("TRANSFERRED EMPLOYEES"), and Buyer agrees not to terminate more
than one-third (1/3) of the Transferred Employees within ninety (90) days
following the Closing Date except as hereinafter provided. The continued
employment of a Transferred Employee by Buyer shall be on terms which require
such Transferred Employee to perform comparable services, in a comparable
position and at substantially the same base salary as such Transferred Employee
enjoyed with the applicable Facility prior to the Effective Time or on such
other terms as shall be compatible with the policies, needs and requirements of
Buyer. Buyer shall recognize each such Transferred Employee's original hire date
and shall continue to employ each such Transferred Employee for a period of no
less than ninety (90) days following the Closing Date unless the employment of
such Transferred Employee is terminated in accordance with Buyer's personnel
policies or as a result of such Transferred Employee's resignation. The
provisions of this Section are designed solely to ensure that Seller and the
Subsidiary Lessees are not required to give notice to the employees of the
Facilities of the "closure" thereof under the Worker Adjustment and Retraining
Notification Act (the "WARN Act") or under any comparable applicable state law.
Nothing in this Section 6.08 shall be deemed to be an assumption by Buyer of any
liability to any employee or other person not a party hereto that arises or
accrues prior to the Effective Time, or to create any rights in favor of any
Person not a party hereto, including the employees of the Facilities, or to
constitute an employment agreement or condition of employment for any employee
of Seller or any affiliate of Seller who is a Transferred Employee. At Closing,
either Seller shall present evidence to Buyer that all wages, withholding taxes
and similar obligations for or relating to all employees at the Facilities for
all periods prior to the Effective Time have been paid in full, or Buyer shall
receive a credit in an amount equal to the reasonably estimated unpaid amount
thereof, in which latter event Buyer shall assume the liability of Seller
therefore to the extent of such credit and shall pay such unpaid wages,
withholding taxes and similar obligations for or relating to such employees at
the Facilities to the extent of such credit.
B. COBRA Subject to the approval of the Bankruptcy
Court, Seller shall offer and provide, as appropriate, group health plan
continuation coverage pursuant to the requirements of Section 601, et seq. of
ERISA and Section 4980B of the Internal Revenue Code ("COBRA") to all of the
employees of the Facilities to whom it is required to offer the same under
applicable law. Seller acknowledges and agrees that Buyer is not assuming any of
Seller's obligations to its employees under COBRA or otherwise. As of the
Closing Date, all active employees of Seller: (i) who participate as of the
Effective Time in group health insurance coverage sponsored by Seller and (ii)
who remain employees of Buyer after the Effective Time, shall be eligible for
participation in such group health plan (as defined for purposes of Internal
Revenue Code Section 4980B), if any, established and maintained by Buyer for the
general benefit of its employees and their dependents and all such employees
shall be covered without a
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waiting period and without regard to any pre-existing condition unless (A) they
are under a waiting period with Seller at the Effective Time, in which case they
shall be required to complete their waiting period while under Buyer's group
health plan or (B) they were subject to a pre-existing condition exclusion while
under Seller's group health plan, in which case they shall be subject to the
same exclusion while in Buyer's group health plan, which exclusion shall, if
applicable, be subject to the same time limitation while in Buyer's employ as
was applicable thereto while such employees were in Seller's or any Subsidiary
Lessee's employ, with the time limit calculated from the date the same commenced
while in Seller's or any Subsidiary Lessee's employ. Seller and Buyer
acknowledge and agree that it is the intent of this provision that Seller shall
not be required to provide continued health coverage under ERISA or Section 4980
of the Internal Revenue Code to any of such employees of Buyer who are retained
on and after the Closing Date or to any qualified beneficiary (as defined for
purposes of Section 4980B of the Internal Revenue Code) with respect to any such
employees who are eligible for any group health plan, if any, maintained by
Buyer.
C. Intent to Maintain Operations. It is the intention of
the Buyer following the Closing Date to continue to conduct the business of the
Facilities at the present locations and otherwise substantially as it is
currently being conducted. In the event that any of the Persons who become
employees of the Buyer pursuant to Section 6.08A should at any time thereafter
become entitled to severance pay, notice pay and/or accrued but unused vacation
or sick pay for any reason, only if such entitlement arises after the Closing
shall Buyer be obligated to make such payments and to indemnify Seller and the
Subsidiary Lessees for any costs or expenses incurred by Seller in conjunction
herewith.
D. Worker's Compensation. Buyer shall have no liability
(including, without limitation, administrative functions) for any: (i) claims
pending as of the Effective Time, or (ii) claims made subsequent to the Closing
Date in respect of incidents or conditions which occurred prior to the Closing
Date by any present or former employee of Seller and the Subsidiary Lessees in
connection with their employment at the Facilities based on incidents or
conditions arising prior to the Closing Date.
E. Termination of Seller's Liability. Seller and the
Subsidiary Lessees shall not have any obligation or liability subsequent to the
Closing Date with respect to any plan providing benefits to present or former
employees of the Facilities except with respect to liability arising prior to
the Closing Date.
F. Michigan Tax and Unemployment Contribution
Liabilities. Buyer shall have the right, at its option, to require that at
Closing Seller place in escrow with Omega the amount of Michigan sales and use
taxes, withholding tax, single business tax, income and unemployment taxes, if
any, owed and unpaid by Seller and the Subsidiary Lessees for which Buyer may
have successor liability, such escrowed amount to be released to Seller upon the
elimination of the possibility of such successor liability or, at Seller's
direction, paid to the appropriate governmental agency or agencies in order to
eliminate such successor liability. Buyer shall give Seller notice of the amount
required to be placed in escrow not less than ten
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(10) calendar days prior to the Date of Closing. In connection with the
foregoing, Buyer, Seller and Omega shall execute an escrow agreement acceptable
to the parties thereto.
6.09. Licenses.
A. Buyer to Obtain. Immediately following the execution
and delivery of this Agreement, Buyer shall use diligent and commercially
reasonable best efforts to obtain any and all licenses, permits, certificates
and approvals, including, without limitation, approvals for Medicare and
Medicaid participation and certificates of need or comparable authorizations,
required by any Governmental Authority with jurisdiction over the Facilities
and/or the Real Properties, so that, on or after the Closing Date, Buyer shall
have all necessary legal authority to operate the applicable Facilities as
skilled nursing facilities (collectively, with respect to each Facility, the
"LICENSES"). Buyer shall file complete nursing home licensure and Medicare and
Medicaid enrollment application packages for the Facilities no later than
December 15, 2000. If the State has an expedited review process, Buyer agrees to
pay the requisite fee(s) to the applicable Governmental Authorities in order to
expedite such applications and approval processes. Buyer shall deliver to Seller
evidence of the submission of appropriate application materials and payment of
any available expediting fee no later than December 20, 2000 and shall
thereafter provide Seller with periodic updates regarding the status of such
applications no less frequently than weekly. If Buyer shall fail to submit said
applications or shall fail to pay said fee(s) to expedite such applications and
approval processes, it shall be a material breach of this Agreement and Seller
may terminate this Agreement in accordance with the terms of Section 3.05 and
keep all of the Deposit (and any interest accrued thereon) as liquidated damages
in accordance with Section 3.05. Buyer shall be fully responsible for and shall
pay all costs and fees required to be paid in connection with the transfer or
issuance of any and all Licenses.
B. Failure to Obtain. If at the Effective Time Buyer
shall not have obtained health facility licensure approvals for the facilities
from the State of Michigan and made timely applications for Medicare and
Medicaid certification necessary for third party payor reimbursement with
respect to the Facilities or any of them as required under Section 6.09.A,
Seller, or a Subsidiary Lessee as applicable, and Buyer shall enter into a
management agreement and a submanagement agreement in form an substance mutually
satisfactory to the parties thereto pursuant to which Buyer shall perform all
management functions relating to the operation of the Facilities except for
those functions which Seller, or the Subsidiary Lessee, as the case may be, is
required to perform as the holder of the necessary Licenses, until such time as
Buyer, in accordance with applicable law, either (i) obtains nursing licenses
for the Facilities in its own name or (ii) is authorized by the applicable state
and federal governmental authorities to xxxx under the Seller's, or the
Subsidiary Lessee's, Medicare and Medicaid Provider numbers for services
rendered by it after the Effective Time, provided that in no event shall any
obligation of the Seller or the Subsidiary Lessee hereunder require that Seller
or Subsidiary Lessee assume pursuant to Section 365 of the Bankruptcy Code any
provider agreement to which Seller, Subsidiary Lessee or any of their Affiliates
may be a party.
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6.10. Regulatory Filings. Between the date of this Agreement and the
Closing Date, the Parties shall promptly take all actions necessary to make the
filings such Parties are required to make with any Governmental Authority, as a
condition to the consummation of this Agreement.
6.11. Trust Funds.
A. Accounting. Prior to Closing, the Seller shall
provide Buyer, or cause Buyer to be provided, with an accounting of any and all
Trust Funds relative to the Facilities (and/or the residents or patients at the
Facilities) held by Seller or the Subsidiary Lessees as of the Closing Date.
B. Transfer of Trust Funds. On the Closing Date, the
Seller shall deliver to Buyer the Trust Funds for the Facilities. Buyer shall
acknowledge in writing receipt of, and expressly assume, all of Seller's
financial and custodial obligations with respect thereto, it being the intent
and purpose of this provision that, at the Closing, the Seller will be relieved
of all fiduciary and custodial obligations with respect to said Trust Funds, and
that Buyer will assume all the obligations and be directly accountable to the
residents or patients of the Facilities with respect thereto.
6.12. Consents. Notwithstanding anything to the contrary in this
Agreement, this Agreement shall not constitute an agreement to assign or
transfer any contract, lease, permit, determination of need, license or other
agreement, if any such assignment or transfer would constitute a breach or
violation under such contract, lease, permit, determination of need, license or
other agreement that would prevent assignment under Section 365 of the
Bankruptcy Code or adversely affect the rights of Buyer, Seller or the
Subsidiary Lessees thereunder notwithstanding the provisions of Section 365 of
the Bankruptcy Code, and any such transfer or assignment that requires the
consent or approval of a third party shall be made subject to such consent or
approval being obtained or the inclusion in the Order (as defined below) of a
provision authorizing such assignment. If any such consent, approval or
provision in the Order is not obtained on or prior to the Closing Date and the
failure to obtain such consent, approval or provision in the Order is waived by
Buyer at Closing, Seller shall continue to use commercially reasonable efforts
to obtain any such approval, consent or Order approving such assignment after
the Closing Date until such time as such consent, approval or Order approving
such assignment has been obtained, and Seller shall cooperate with Buyer in any
lawful and economically feasible arrangement to provide that Buyer shall receive
the interest of Seller in the benefits under any such contract, lease,
determination of need, permit, license or other agreement and Buyer shall
discharge or reimburse Seller for any liabilities or obligations arising
thereunder.
6.13. Deposit. At the Closing, Buyer shall deposit with Omega $540,000
(the "DEPOSIT") in the form of an unconditional, irrevocable letter of credit in
form and substance acceptable to Seller and Omega, issued by a commercial bank
that has a rating of "A" or better by Standard & Poor's Corporation or Xxxxx'x
Investors Service, or similar, nationally recognized credit rating agency (the
"Letter of Credit") which shall be exchanged for a deposit previously made by
Buyer in the principal amount of $25,000, plus any interest accrued thereon,
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which shall be returned to Buyer. The Deposit will be held by Omega in
accordance with the terms and upon the conditions set forth in a Letter of
Credit Agreement in form and substance satisfactory to Seller and Omega to be
entered into between Seller, Omega and Buyer (the "Letter of Credit Agreement").
The Deposit is non-refundable except as otherwise provided herein, and at the
Closing the Deposit shall be delivered to Omega under the Loan Documents between
Omega and Buyer and become the Liquidity Deposit required by the Loan Documents.
6.14. Patient Property. Seller shall prepare and deliver to Buyer at
Closing a true, correct and complete inventory of all property belonging to
residents of the Facilities that is held by Seller at the Effective Time, and
shall transfer possession of such property to Buyer at closing.
6.15. Telephones. At Closing, Buyer shall make arrangements with the
appropriate utility companies for new telephone numbers to be used by the
Facilities (the "NEW FACILITY NUMBERS"). From and after the Effective Time,
Seller shall cooperate with Buyer in making arrangements with the appropriate
utility companies for forwarding calls received by the old telephone numbers
used by the Facilities to the New Facility Numbers.
6.16. Bankruptcy Court Approval. As soon as possible following the
Decision Date (assuming that no cure period shall then be in effect) Seller and
the Subsidiary Lessees shall prepare, file and thereafter in good faith support
a motion seeking the entry by the Bankruptcy Court of an order (the "ORDER"),
which Order: (A) shall approve the consummation by Seller and the Subsidiary
Lessees of the transactions set forth herein; and (B) shall provide that: (i)
Title shall be transferred to Buyer free and clear of all encumbrances except
for any encumbrances which Buyer has expressly agreed to assume under the terms
of this Agreement; (ii) Buyer is purchasing the Acquired Assets in "good faith"
within the meaning of Section 363(m) of the Bankruptcy Code; (iii) the transfer
of the Acquired Assets constitutes a transfer for reasonably equivalent value
and fair consideration; (iv) there exist valid business reasons for the prompt
and speedy sale of the Acquired Assets; (v) the sale of the Acquired Assets is
in the best interests of Seller, and the Subsidiary Lessees, and their
respective estates creditors and holders of equity interests; (vi) all holders
of any encumbrances and of any claims against Seller or any Subsidiary Lessee
(including, but not limited to any claims of any taxing authorities in respect
of Taxes asserted to be due and owing (the "TAX CLAIMS") will be forever barred
from asserting any encumbrances or claims against Buyer, its successor and
assigns, the Acquired Assets or any other assets of Buyer and its successors and
assigns as a consequence of such Tax Claims; (vii) all claims and encumbrances
against and interests in Seller or any Subsidiary Lessee or their respective
assets shall be channeled to the Purchase Price proceeds, and following the
Closing Date, the sole and exclusive right and remedy available to such
claimants and interest holders with respect to their claims against Seller or
any Subsidiary Lessee shall be the right to assert claims against the Purchase
Price proceeds payable to Seller; (viii) there has been proper and adequate
service of a motion by Seller and the Subsidiary Lessees seeking the relief
granted by the Order and proper and adequate notice and an opportunity for a
hearing given to all holders of any encumbrances, and all other parties required
by law to receive notice of the sale of the Acquired Assets; (ix) the Bankruptcy
Court will retain jurisdiction to enforce the Order to bar the enforcement or
assertion of any encumbrances or other claims against Buyer and its successors
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and assigns, the Acquired Assets or any other assets of Buyer and its successors
and assigns; (x) the Acquired Assets and the business represented by the
Acquired Assets have been adequately marketed and will lose value absent a
prompt and speedy sale; (xi) Buyer is not, as a result of the consummation of
the transactions contemplated by this Agreement, subject to any liabilities or
obligations of Seller or any of the Subsidiary Lessees, except as specifically
set forth in this Agreement; but that nothing in the Order shall purport to
affect any potential successor liability arising from the assumption and
assignment of any Medicare provider agreement to Buyer or any designee(s) of
Buyer; (xii) the requirements of Section 363 of the Bankruptcy Code have been
met; and (xiii) any claim of Buyer arising under the Agreement, including,
without limitation, any claim for indemnification, shall constitute an expense
of administration under 11 U.S.C. ss. 503(b). The Order shall not impose any
material obligations on the parities not contemplated by this Agreement. Buyer
shall use its commercially reasonable best efforts to cooperate with and
facilitate the efforts of Seller and the Subsidiary Lessees to obtain the Order.
ARTICLE 7. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE.
7.01. Generally. The obligation of Buyer to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the conditions set
forth in this Article 7 on or prior to the Closing Date. Buyer may waive any
condition specified in this Article 7 if it executes a writing so stating at or
prior to the Closing.
7.02. Representations and Warranties. The representations and
warranties of Seller and the Subsidiary Lessees set forth in Article 4 shall be
true and correct in all material respects at and as of the Closing Date.
7.03. Performance of Covenants. The Seller and the Subsidiary Lessees
shall have performed and complied with all of its respective covenants hereunder
in all material respects prior to or at the Closing.
7.04. Officer's Certificate. The Seller and each Subsidiary Lessee
shall have delivered at the Closing a Certificate of a duly authorized officer
of Seller or such Subsidiary Lessee certifying:
A. the authenticity of the resolutions of the Board of
Directors of Seller or such Subsidiary Lessee, authorizing and approving this
Agreement and the transactions contemplated hereby;
B. the articles of incorporation and bylaws of Seller or
such Subsidiary Lessee;
C. the signature(s) of the officer(s) of Seller or such
Subsidiary Lessee who execute this Agreement and the other Transaction Documents
contemplated hereby to be executed by such Party;
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D. that the covenants of Seller or such Subsidiary
Lessee set forth herein have been performed and complied with in all material
respects prior to or at the Closing; and
E. that the representations and warranties of Seller or
such Subsidiary Lessee contained in Article 4 are true and correct as of the
Closing Date.
7.05. No Material Change. No material adverse change shall have
occurred affecting the condition (financial or otherwise) of the Acquired Assets
to be acquired on the Closing Date.
7.06. Good Standing. The Seller shall have delivered to Buyer a
customary good standing certificate for such Party from the Secretary of State
of the state of its incorporation dated not more than thirty (30) days prior to
the Closing;
7.07. Delivery of Documents. The Seller and each Subsidiary Lessee
shall have executed and delivered each of the Transaction Documents to which it
is a party.
7.08. Decision Date. Buyer shall determine in good faith that the
Surveys, Environmental Reports, Title Insurance Commitment, UCC Searches and
inspection of the Facilities meet with Buyer's reasonable approval. Buyer
acknowledges that this condition shall be deemed satisfied.
7.09. Delivery of Consents. Seller and the Subsidiary Lessees shall
have delivered to Buyer all Seller Consents, including the Order required under
the terms of this Agreement (other than approval of the transfer of any
determination(s) of need obtained by Seller and the Subsidiary Lessees which the
Parties agree may occur, if at all, post Closing).
7.10. Approval Order. The Bankruptcy Court shall have entered an order
(1) approving this Agreement and the consummation of the transaction described
herein; and, (2) providing that Buyer shall not be responsible for any
obligations of Seller except those expressly assumed in this Agreement. The
Seller shall have delivered to Buyer a copy of such order, and no stay of such
order shall then be in effect.
7.11. Title Insurance Policy . The Buyer shall have received from the
Title Company a copy of the Title Insurance Commitment, marked up by an
authorized agent of the Title Company to delete all exceptions other than the
Permitted Exceptions and unconditionally commit the Title Company to issue the
Title Policy to Buyer in the form required by this Agreement.
7.12. Omega Loan Commitment. Omega shall have issued, and Buyer shall
have accepted, a commitment to lend Buyer up to Five Hundred Thousand Dollars
($500,000.00) for the purpose of making certain repairs and improvements to the
Facilities on terms and conditions specified therein.
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7.13. HCFA Arrangement. An agreement shall have been made with the
Health Care Finance Administration ("HCFA") pursuant to which the existing
Medicare provider agreements for the Facilities will be assumed and assigned by
Seller to Buyer (or by the applicable Subsidiary Lessee to Seller, and then to
Buyer); provided, however, that Buyer acknowledges that such arrangement does
not ensure that Buyer will not be liable for recoupment of Medicare overpayments
for services rendered prior to the Effective Time. Accordingly, Seller and Buyer
agree that, should HCFA proceed against Buyer to recoup any amounts for Medicare
overpayments for services rendered prior to the Effective Time, Seller agrees to
and does hereby indemnify Buyer from such claim, loss, cost or damage and
further agrees that the indemnification obligation hereby assumed in connection
with amounts which may be paid by Buyer in connection with such recoupment shall
constitute an administrative claim in Seller's Bankruptcy Case. Notwithstanding
the foregoing, Seller agrees to continue to use good faith efforts to reach a
satisfactory arrangement with HCFA even though this may not occur until after
January 1, 2001, if at all.
7.14. Medicaid Arrangement. Buyer shall submit Medicaid enrollment
materials for the Facilities to obtain new Medicaid provider agreements in
accordance with Section 6.09. Buyer reasonably anticipates that new Medicaid
provider contracts will be issued in due course and without successor liability
for services rendered prior to the Effective Time based on statements by
Michigan Medicaid Agency representatives that successor liability will generally
not be imposed if the Agency receives ninety (90) days advance written notice of
the proposed change of ownerships. Seller acknowledges that notice of the
proposed change of ownership of the Facilities was given to the Michigan
Medicaid Agency on July ____, 2000.
ARTICLE 8. CONDITIONS PRECEDENT TO PERFORMANCE BY SELLER AND
SUBSIDIARY LESSEES.
8.01. Generally. The obligation of Seller and the Subsidiary Lessees to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the conditions set forth in this Article 8 on or prior to the
Closing Date. Subject to the approval of the Bankruptcy Court, Seller and the
Subsidiary Lessees may waive any condition specified in this Article 8 if they
executes a writing so stating at or prior to the Closing.
8.02. Representations and Warranties. The representations and
warranties by Buyer set forth in Article 5 above shall be true and correct in
all material respects at and as of the Closing Date.
8.03. Performance of Covenants. Buyer shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing.
8.04. Officer's Certificate. Buyer shall have delivered at the Closing
a Certificate of a duly authorized officer of Buyer certifying:
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A. that, other than the Bankruptcy Cases, no action,
suit, or proceeding is pending against Buyer or any Affiliate of Buyer before
any court or quasi-judicial or administrative agency of any federal, state,
local or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge is in effect);
B. the authenticity of the resolutions of the Members of
Buyer authorizing and approving this Agreement and the transactions contemplated
hereby;
C. the organizational documents and operating agreement
of Buyer;
D. the signature of the officer(s) or members of Buyer
who execute this Agreement and the other Transaction Documents contemplated
hereby;
E. that the covenants of Buyer set forth herein have
been performed and complied with in all material respects prior to or at the
Closing; and
F. that the representations and warranties of Buyer
contained in Article 5 are true and correct as of the Closing Date.
8.05. Good Standing. Buyer shall have delivered to Seller a customary
good standing certificate for Buyer from the Secretary of State of the state of
its organization, dated not more than thirty (30) days prior to the Closing;
8.06. Delivery of Documents. Buyer shall have executed and delivered to
Seller each of the Transaction Documents to which it is a party.
8.07. Licensing. Buyer and Buyer's Lessee shall have obtained all
Licenses necessary for the operation of the Facilities as skilled nursing
facilities or Buyer shall certify that no obstacle to the issuance of such
Licenses exists and that such Licenses will be issued promptly following the
Closing.
8.08 Bankruptcy Court Approval. The Bankruptcy Court shall have entered
an order approving this Agreement and the consummation of the transaction
described herein and no stay of such order shall be in effect.
8.09. Seller's Agreement with Omega. Seller and Omega shall have
entered into an agreement (the "Omega Agreement") pursuant to which, among other
things, Seller's obligation to Omega shall have been restructured on terms and
conditions satisfactory to Seller and Omega and Seller shall have agreed to
transfer without recourse, and Omega shall have agreed to acquire an undivided
fifty percent (50%) interest in, the Promissory Note, the Mortgage, the Security
Agreement, the Financing Statements and the Pledge Agreement, and an order of
the Bankruptcy
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Court shall have been entered approving the execution and performance of the
Omega Agreement by the Seller; no stay of such order shall be in effect; and the
closing under the Omega Agreement shall have occurred or shall occur
concurrently with the Closing under this Agreement.
8.10. HCFA Arrangement. An agreement satisfactory to Seller shall have
been made with HCFA pursuant to which the existing Medicare provider agreements
for the Facilities will be assumed and assigned by Seller to Buyer.
8.11. Medicaid Arrangement. An arrangement satisfactory to Seller shall
have made pursuant to which Buyer may obtain a new Medicaid provider contract
without creating any administrative claim or expansion of any offset or
recoupment right against the Seller.
8.12. Designees. If Facilities are to be transferred to a Designee of
Buyer, this Agreement shall have been assigned by Buyer to, and assumed by
Designee, in a writing delivered to Seller, and Designee shall also deliver the
documents and items described in Sections 8.03, 8.04, 8.05, 8.06 and 8.07. In no
event shall any such assignment release Buyer from its obligations hereunder
arising prior to such assignment.
End of Article 8
ARTICLE 9. CLOSING.
9.01. Closing. The recordation and exchange of documents with respect
to the transfer of the Acquired Assets, the assumption of Assumed Liabilities
and the delivery of the Promissory Note for the Purchase Price for such Acquired
Assets and of the other Transaction Documents shall be referred to herein as the
"CLOSING." The transactions provided for in this Agreement shall be deemed to be
consummated as of 12:01 A.M. (EST) on the actual Closing Date (the "EFFECTIVE
TIME"). Provided all conditions precedent to Buyer's and Seller's obligations to
consummate the transactions contemplated by this Agreement have been either met
or waived in writing, the Closing shall be consummated on a date and at a time
agreed upon by Buyer and Seller (the "CLOSING DATE") either (a) at such place as
shall be agreed upon by Buyer and Seller, or (b) by agreement of the parties
through a "New York style" closing, which Closing must occur no later than sixty
(60) days following the satisfaction or waiver of all such conditions precedent.
9.02. Buyer's Obligations at Closing. Buyer shall pay Seller the
Purchase Price as provided in Section 2.02 above and shall deliver or cause to
be delivered the Promissory Note, the Mortgage, the Security Agreement, the
Financing Statements, the Pledge Agreement, the Guaranty Agreement and such
other instruments and funds as are reasonably required to consummate the
transactions contemplated in this Agreement.
9.03. Seller's Obligations at Closing. Prior to 1:00 P.M. (EDT) on the
Closing Date Seller shall deliver or cause to be delivered the following, in
each case duly executed by Seller:
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A. Evidence of the cancellation of the Subsidiary
Leases.
B. Deeds. Limited warranty deeds, subject to the
Permitted Exceptions, conveying the Real Property to Buyer (the "DEEDS");
C. Transfer Documents. Bills of sale and instruments of
assignment and other appropriate instruments of transfer of all of the other
Acquired Assets being transferred by the Subsidiary Lessees to Seller and by
Seller to Buyer, at the Closing;
D. Non-foreign Affidavit. A transferor's certificate of
non-foreign status pursuant to Section 1445 of the Internal Revenue Code of
1986, as amended, certifying that the Seller is not a foreign person;
E. Records, and Documents. Unless already provided to
Buyer, originals or copies of all documents evidencing the Assumed Liabilities
and all records and other documents, including resident records, relating to the
Facilities, all of which may be constructively delivered to Buyer by reason of
being stored at the Facilities; and
F. Additional Funds and Documents. Such other
instruments and funds (including Trust Funds) as are reasonably required to
consummate the transactions contemplated in this Agreement.
9.04. Real and Personal Property Tax and Assessment Prorations. Real
estate taxes and assessments and personal property taxes shall be prorated on a
"fiscal year" basis as of the Effective Time on the basis of the most recent tax
statement for each parcel of Real Property and the personal property that is
being acquired by Buyer. If supplemental taxes are assessed after the Closing
for the period prior to the Effective Time, the Parties shall make any necessary
adjustment after the Closing by cash payment, upon demand, to the Party entitled
thereto so that Seller shall have borne all taxes allocable to the portion of
the taxing authorities' fiscal years prior to the Effective Time (including all
supplemental taxes which are allocable to such period) and Buyer shall bear all
taxes allocable to the portion of the taxing authorities' fiscal years on and
after the Effective Time (including all supplemental taxes which are allocable
to such period). This Section 9.04 shall survive consummation of the Closing.
ARTICLE 10. POST-CLOSING OBLIGATIONS.
10.01. Generally. The Parties agree that the provisions of this Article
10 shall apply with respect to the stated periods following the Closing, and
such provisions shall survive the consummation of the Closing.
10.02. Transition. Seller will refer all customer inquiries relating to
the Facilities to Buyer from and after the Effective Time. Buyer will cooperate
with Seller and the Subsidiary Lessees and make available the appropriate
financial accounting staff to complete the final
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financial and cost reports, payroll, trade payables, Tax Returns, and other
accounting, Tax and financial requirements.
10.03. Full Access. Following the Closing, (a) Buyer will permit
representatives of Seller and the Subsidiary Lessees to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of Buyer, to all business records of Buyer and, if
necessary, any Transferred Employee for the purpose of (i) defending any claims
being asserted against Seller or any Subsidiary Lessee by Buyer or any third
party, and (ii) completing or defending any Tax Returns, cost and other reports
relating to periods prior to the Effective Time, and (b) Seller and the
Subsidiary Lessees will permit representatives of Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with their normal
business operations, to all business records of Seller and the Subsidiary
Lessees relating to the Facilities, for the purpose of (i) defending any claims
being asserted against Buyer by Seller, any Subsidiary Lessee or any third
party, and (ii) completing or defending any Tax Returns, cost and other reports
relating to periods on and after to the Effective Time.
10.04. Prorations. No later than forty-five (45) days following the
Closing Date or such other date as the Parties shall mutually agree: (i) Seller
shall prepare or cause to be prepared a statement of the following operational
expenses paid or incurred by the Seller and the Subsidiary Lessees; and (ii)
Buyer shall prepare or cause to be prepared a corresponding statement of such
operational expenses paid or incurred by Buyer:
A. rentals, prepaid rentals, lease payments and prepaid
lease payments for the applicable Acquired Assets (and all accrued interest
thereon, if any);
B. all utility charges and other items of expense for
the applicable Acquired Assets; and
C. wages, withholding taxes and similar obligations for
or relating to employees at the Facilities.
Amounts paid by Seller and the Subsidiary Lessees that relate to
periods on and following the Effective Time shall be netted against amounts paid
by Buyer that relate to periods prior to the Effective Time. Such net amount, if
owed to Seller or any Subsidiary Lessee, shall be paid by Buyer by wire transfer
of immediately available funds to such account(s) as may be designated by such
Seller or such Subsidiary Lessee or, if owed to Buyer, shall be paid by the
Seller by wire transfer of immediately available funds to such account(s) as may
be designated by Buyer. The Parties will meet within said forty-five (45) day
period to reach final settlement with respect to the proration of such
operational expenses and the final settlement amount shall be paid within seven
(7) days of reaching the final determination. All prorations shall be made as of
the Effective Time on the basis of a 365-day year period (or 366-day year
period, as applicable).
10.05. Accounts Receivable and Other Funds Due Seller.
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A. Retention of Receivables. Seller and the Subsidiary
Lessees shall retain all cash on hand, cash equivalents and accounts receivable
arising out of the conduct of the business of the Facilities which accrue prior
to the Effective Time, which include the following (collectively, the
"RECEIVABLES"):
1. All cash and cash equivalents, except for
the Trust Funds;
2. All revenues of any nature including, but
not limited to, all unpaid accounts receivable with
respect to the Facilities which relate to the period
prior to the Effective Time, including, but not
limited to, any accounts receivable arising from rate
adjustments which relate to the period prior to the
Effective Time even if such adjustments occur after
the Effective Time, any rights to prosecute any
governmental underpayments and accounts receivable(s)
and notes representing xxxxxxxx for services rendered
and goods and supplies sold by the Seller or any
Subsidiary Lessee to any residents or patients of the
Facilities prior to the Effective Time; and
3. All refunds, rebates and dividends paid in
respect of workers' compensation or other insurance
premiums paid by Seller or any Subsidiary Lessee
prior to the Effective Time, and any settlements,
refunds, deposits, returns or additional recoveries
by or payments to Seller or Subsidiary Lessees from
any Person arising from or connected to Seller's or
Subsidiary Lessees' operation of the Facilities prior
to the Effective Time (in any case, however, other
than Prepaids which are specifically included in the
Purchase Price).
B. Payments Received After Effective Time. Payments
received by Buyer after the Effective Time whether from private pay sources,
including patients, or from third party payers, such as Medicare, Medicaid and
VA for services rendered by Seller in the cost reporting period in which the
Effective Time occurs shall be handled as follows:
1. If and to the extent such payments either
specifically indicate on the accompanying remittance advice that they relate, or
are agreed by the parties to relate, to the period prior to the Effective Time
the same shall be remitted by Buyer to Seller within seven (7) days after
receipt thereof; provided, however, during the first sixty (60) days following
the Effective Time, in the event payment is received without remittance advice
such payments shall be first applied to any pre-Closing balances of Seller, with
any remaining portion of the payment remitted to Buyer;
2. If and to the extent such payments either
specifically indicate on the accompanying remittance advice that they relate, or
are agreed by the parties to relate, to the period on or after the Effective
Time, they shall be retained by Buyer; and
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3. In the event the parties mutually determine
that any payment hereunder was misapplied by the parties, the party which
erroneously received said payment shall remit the same to the other within three
(3) days after said determination is made.
4. In addition to their inspection rights as
set forth elsewhere herein, Seller shall have the right to inspect all pertinent
records of Buyer, and Buyer shall have the right to inspect all pertinent
records of Seller, in order to confirm the parties mutual compliance with the
obligations imposed on it under this Section.
Payments received by the Seller after the Effective
Time which either specifically indicate on the accompanying remittance advice
that they relate, or are agreed by the parties to relate, to the period on or
after the Effective Time shall be paid by Seller to Buyer.
10.06. Identification of Receivables. Buyer will cooperate with Seller
and the Subsidiary Lessees in the continued collection of the Receivables. For a
period of twenty-four (24) months after the Closing Date, Buyer shall permit
Seller's accountants and other agents access, at times designated by Buyer, upon
reasonable prior notice, to its books and records relating to the Facilities,
including all such records relating to the posting of receipts and payments to
enable Seller to verify that Buyer has fully performed its obligations
hereunder. Buyer shall have the right to have a representative present in
connection with any review of such books and records.
10.07. Removal of Signage. Promptly following the Closing, Buyer shall
either remove or redesign any signage at the Facilities to remove any references
to "Mariner," "Mariner Post-Acute Network," "Mariner Health Group" and any
derivations thereof.
ARTICLE 11. COSTS.
11.01. Expenses. Except as may otherwise be provided for herein, each
Party shall pay all costs and expenses incurred or to be incurred by each Party
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
11.02. Payment of Closing Costs.
A. Closing Costs Borne by Seller. Seller shall pay the
following amounts or items at the Closing: (i) the sums necessary to obtain and
record any conveyance required hereby; (ii) an amount sufficient to pay any
stamp or documentary transfer taxes imposed by any state or local authority and
arising out of the transfer of the Real Property; (iii) an amount sufficient to
pay any and all sales and use taxes that may be due in connection with the
transactions contemplated in this Agreement; (iv) the cost of the premium for
the Title Insurance, including ALTA extended coverage and endorsement costs; and
(v) unless otherwise specified in this Agreement, any additional costs and
charges customarily charged to sellers in accordance with established convention
in the State.
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B. Closing Costs Borne by Buyer. Buyer shall pay the
following amounts or items at the Closing: (i) the costs incurred in connection
with the UCC Searches, any inspection, physical testing, the Surveys, and the
Environmental Reports; and (ii) unless otherwise specified in this Agreement,
any additional charges customarily charged to buyers in accordance with
established convention in the State.
ARTICLE 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
12.01. Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
terminate at Closing; provided, however, that such termination shall not apply
to: (i) claims by a Party based on or arising out of any recoupment in
connection with Medicare or Medicaid reimbursement, which claims shall survive
for a thirty-nine (39) month period following the Closing Date, and/or (ii)
claims by a Party with respect to any Tax matter, which claims shall survive a
three (3) year period following the Closing Date.
12.02. A. Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller, the Subsidiary Lessees, and their respective officers,
directors, employees, contractors, agents, subsidiaries, Affiliates, and their
respective successors and assigns (collectively, the "SELLER INDEMNITEES"),
against any and all charges, expenses, liabilities, losses, damages and costs
(including reasonable attorney's fees) (being referred to herein collectively as
"LOSSES") incurred by any of the Seller Indemnitees in connection with: (i) any
breach by Buyer of any representation or warranty of Buyer contained in this
Agreement or in any of the other agreements contemplated hereby; (ii) the breach
or nonperformance, partial or total, of any covenant or agreement of Buyer
contained in this Agreement or in any of the other agreements contemplated
hereby, in either case to the extent not expressly waived in writing by Seller
and any applicable Subsidiary Lessees; and (iii) any Third Party Claims (to the
extent such Third Party Claim involves a matter for which Buyer would otherwise
be required to indemnify Seller Indemnitees under this Agreement). In addition
to the foregoing, the Buyer shall indemnify the Seller Indemnitees for failure
to satisfy or discharge all Assumed Liabilities and shall indemnify the Seller
Indemnitees with respect to any Losses arising with respect to all acts,
omissions, claims or conditions arising with respect to the operation by Buyer
of the Facilities on and after the Effective Time, including but not limited to,
Losses arising pursuant to any reports of Buyer submitted for reimbursement to
any federal, state or local governmental agency in connection with the provision
of goods and services by Buyer at the Facilities and Losses arising in
connection with any alleged or actual violation by Buyer of any federal, state
or local law rule or regulation to which Buyer and/or the Facilities is subject.
B. Indemnification by Seller. Seller shall indemnify and
hold harmless Buyer and the respective officers, directors, employees,
contractors, members, agents of Buyer, and their respective assigns
(collectively the "BUYER INDEMNITEES"), against any and all charges, expenses,
liabilities, losses, damages and costs (including reasonable attorney's fees)
(being
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referred to collectively as "LOSSES") incurred by any of the Buyer Indemnitees
in connection with: (i) any breach by Seller or its Subsidiary Lessees of any
representation or warranty of Seller contained in this Agreement or in any of
the other agreements contemplated hereby; (ii) the breach or nonperformance,
partial or total, of any covenant or agreement of Seller or its Subsidiary
Lessees contained in this Agreement or in any of the other agreements
contemplated hereby, in either case to the extent not expressly waived in
writing by Buyer.
12.03. Third Party Claims. In the event that any Seller Indemnitee or
Buyer Indemnitee (the "INDEMNIFIED PARTY") is named as a party with respect to
any claim or proceeding initiated or threatened by a claimant not a party to
this Agreement with respect to the matters contained herein (each, a "THIRD
PARTY CLAIM" and collectively, "THIRD PARTY CLAIMS") for which the Indemnified
Party, intends to seek indemnification under this Article 12 from such other
Indemnified Party (referred to herein as the "INDEMNIFYING PARTY"), the
Indemnified Party shall promptly (and in any case within ten (10) days of such
claim being asserted in writing) notify the Indemnifying Party of such Third
Party Claim. Such notice shall describe in reasonable detail the nature and
estimated amount of the Third Party Claim and the provisions of this Agreement
under which such right to indemnity is asserted. The Indemnifying Party shall,
within ten (10) business days after receipt of such notice, undertake, conduct
and control, through counsel of its own choosing (subject to the Indemnified
Party's reasonable approval) and at its expense, the settlement or defense
thereof, and the Indemnified Party shall cooperate (at the Indemnifying Party's
expense) with it in connection therewith; provided that: (i) the Indemnifying
Party shall permit the Indemnified Party to participate in such settlement or
defense through separate counsel chosen by the Indemnified Party, provided that
the fees and expenses of such separate counsel shall be borne by the Indemnified
Party; (ii) the Indemnifying Party shall promptly reimburse, on demand therefor,
the Indemnified Party for the full amount of any Losses resulting from such
claim; and (iii) if the defendants in such Third Party Claim include both the
Indemnified Party and any Indemnifying Party and the Indemnified Party shall
have concluded on the advice of counsel that there may be legal defenses or
counterclaims available to it which are different from or additional to those
available to such Indemnifying Party, the Indemnified Party shall have the right
to select and retain separate counsel at the Indemnifying Party's expense to
assert such legal defenses or counterclaims and to otherwise participate in the
defense of such Third Party Claim on behalf of the Indemnified Party. So long as
the Indemnifying Party is reasonably contesting any such claim in good faith and
is able to provide to the Indemnified Party reasonable evidence of such
Indemnifying Party's financial ability to reimburse the Indemnified Party for
any Losses such Indemnified Party may sustain or incur in connection with such
claim, the Indemnified Party shall not pay, compromise, adjust or settle any
such claim. If the requirements of the immediately preceding sentence, as they
relate to the Indemnifying Party, are not satisfied, then the Indemnified Party
shall have the right to pay, compromise, adjust or settle any such claim, and in
such event it shall not thereby waive or be deemed to have waived any right to
indemnity therefor by the Indemnified Party. If the Indemnifying Party does not,
within ten (10) business days after the receipt of the Indemnified Party's
notice of a claim or indemnity hereunder, undertake the defense thereof, then in
addition to other remedies the Indemnified Party may have hereunder against the
Indemnifying Party, the Indemnified Party shall have the right (but not the
obligation) to defend, contest, settle, adjust or compromise the
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claim in the exercise of its reasonable judgment, all for the sole account and
risk and at the sole expense of the Indemnifying Party. The Indemnifying Party
will not settle or compromise any Third Party Claim without the consent of the
Indemnified Party unless the settlement or compromise shall include a general
release by the claimant of any liability by the Indemnified Party regarding such
Third Party Claim.
12.04. When Indemnification May be Sought. The Indemnified Party shall
not be entitled to be paid indemnification hereunder unless and until the amount
owed to such Indemnified Party has become finally ascertainable. An amount owed
will be deemed to be finally ascertained if: (i) the Parties agree as to the
amount of the indemnification claim; or (ii) the amount owed is determined by a
final decision of a court or arbitration panel of competent jurisdiction which
is non-appealable or as to which any applicable time periods for taking an
appeal have run.
ARTICLE 13. MISCELLANEOUS.
13.01. Entire Agreement. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter contained herein
and supersedes all prior and contemporaneous agreements and understandings,
written or oral, of the Parties.
13.02. Modification; Waiver. No supplement, modification or amendment
to this Agreement shall be binding unless executed in writing by all Parties. No
waiver of any provision of this Agreement shall be deemed or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the Party making the waiver.
13.03. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.04. Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the Parties and their respective
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
Party to this Agreement, nor shall any provisions give any third persons any
right of subrogation or action over and against any Party to this Agreement.
13.05. Assignment. This Agreement shall be binding on, and shall inure
to the benefit of, the Parties and their respective heirs, legal
representatives, successors and permitted assigns. Neither Buyer nor Seller may
assign their respective rights or obligations hereunder to any Person, without
prior written consent; provided, however, that Buyer may designate its
Affiliate(s) to take title to the Acquired Assets as provided in Section 13.14.
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13.06. Notices. All notices, requests, demands and other communications
under or in connection with this Agreement shall be in writing and shall be
deemed to have been duly given and received at the following times: (i) on the
date of delivery if personally delivered to the Party to whom notice is to be
given; (ii) on the day of transmission if transmitted by telecopy (so long as
the sender obtains a machine generated confirmation of successful transmission);
(c) on the first business day after deposit if deposited with a nationally
recognized overnight express courier service; or (d) on the fifth day after
deposit with the United States Postal Service if mailed to the Party to whom
notice is to be given, by first-class mail, registered or certified, postage
prepaid, return receipt requested and properly addressed as follows:
Seller: Professional Health Care Management, Inc.
c/o Xxxxxxx X. Xxxxx, Esq.
Mariner Post-Acute Network, Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
With copy to: Xxxxxxx X. Xxxxxxx, Esq.
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.,
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
It is acknowledged and agreed by the Parties that notice to Seller shall be
deemed to constitute notice to the Subsidiary Lessees.
Buyer: Midtown Real Estate Company, LLC
c/o Ciena Healthcare Management, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxxx Xxxx
Fax: (000) 000-0000
With copy to: Xxxx X. Xxxxx, Esq.
Bassey and Selesko P.C.
1400 American Center
00000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Any Party may change its address for purposes of this Section by giving the
other Party written notice of the new address in the manner set forth above.
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13.07. Further Assurances. At any time after the Closing Date, the
Parties shall execute, acknowledge and deliver any further deeds, assignments,
conveyances and other assurances, documents and instruments of transfer and
assumption as may be reasonably requested by either Buyer or Seller and will
take any other action consistent with the terms of this Agreement that may
reasonably be requested by Buyer or Seller for the purpose of assigning,
transferring, granting, conveying and confirming to Buyer or reducing to
possession any or all property to be conveyed and transferred by Seller pursuant
to this Agreement.
13.08. Severability. If any provision of this Agreement is held to be
unenforceable for any reason, the enforceability thereof shall not affect the
remainder of this Agreement, which shall remain in full force and effect and
shall be enforceable in accordance with its terms.
13.09. Governing Law and Forum Selection. This Agreement shall be
construed in accordance with and governed by the laws of the State of Michigan
and the provisions of the United States Bankruptcy Code. The state and federal
courts located in the State of Michigan, City of Xxxxxxxxxx, Xxxxxxx Xxxxxx XXX
XXX XXXXXX XXXXXX BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE shall have
exclusive jurisdiction over any judicial proceedings relating to any dispute
arising out of the interpretation, performance or breach of this Agreement;
provided, however, that until the effective date of a plan of reorganization in
Seller's Bankruptcy Case, the United States Bankruptcy Court for the District of
Delaware shall have exclusive jurisdiction over any such judicial proceedings.
13.10. Attorneys' Fees. If any action or other proceeding is brought
for the enforcement or interpretation of this Agreement because of an alleged
dispute, default or misrepresentation in connection with any of its provisions,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in the action or proceeding, in
addition to any other relief to which it may be entitled.
13.11. Time of Essence. Time is of the essence with respect to all
matters related to this Agreement.
13.12. Recitals, Schedules and Exhibits. The recitals, schedules and
exhibits contained in and attached to this Agreement are hereby made a part of
this Agreement and are incorporated in this Agreement by the respective
references to them, whether or not they are actually attached. Reference to
"this Agreement" includes matters incorporated by reference. The words:
"herein," "hereof" and other words of like import shall refer to this Agreement
and not to any particular provision or section of this Agreement.
13.13. Ambiguities. This Agreement has been negotiated at arm's length
and between Persons sophisticated and knowledgeable in the matters dealt with in
this Agreement. In addition, each Party had the benefit of legal advice from
experienced and knowledgeable legal counsel. Accordingly, any rule of or legal
decision that would require interpretation of any ambiguities in this Agreement
against the Party that has drafted it is not applicable and is waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect
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the purpose of the Parties. The captions on the various sections of this
Agreement shall not affect the meaning of any of its provisions.
13.14 Designee(s). Buyer shall have the right to designate one or more
of its Affiliates as the Person to take title to the Acquired Assets of the
Facilities and assume the Assumed Liabilities with respect to the Facilities
(each, a "DESIGNEE"); provided, however, that such designation shall not relieve
Buyer of any of its obligations under this Agreement (including indemnification
obligations) and Buyer and such Designees shall be jointly and severally liable
with respect to all of Buyer's obligations hereunder.
13.15 Survival. Any provisions of this Agreement relating to
confidentiality, non-disclosure, proprietary rights, limitations of liability,
liquidated damages, post-Closing obligations and indemnification shall survive
the Closing.
[REMAINDER OF PAGE DELIBERATELY LEFT BLANK]
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IN WITNESS WHEREOF the Parties have cause this Agreement to be executed
and delivered by their respective duly authorized officers as of the date first
set forth above.
SELLER:
PROFESSIONAL HEALTHCARE
MANAGEMENT, INC.
By:
--------------------------------
Its:
-------------------------------
SUBSIDIARY LESSEES:
FRENCHTOWN NURSING HOME, INC.
By:
--------------------------------
Its:
-------------------------------
XXXXXXX NURSING CENTER, INC.
By:
--------------------------------
Its:
-------------------------------
MIDDLEBELT NURSING HOME, INC.
By:
--------------------------------
Its:
-------------------------------
ST. XXXXXXX NURSING HOME, INC.
By:
--------------------------------
Its:
-------------------------------
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BUYER:
MIDTOWN REAL ESTATE COMPANY, LLC
By:
--------------------------------
Xxxxxxxx Xxxx
Its: Member
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