1
EXHIBIT 2.5
AGREEMENT OF SALE
THIS AGREEMENT, made and entered into as of this 23rd day of February,
1996, by and between MOUNT ROYAL PINES, L.P., a Pennsylvania limited
partnership (hereinafter referred to as "Seller");
AND
BALANCED CARE CORPORATION, or its assigns, a Delaware business
corporation (hereinafter referred to as "Buyer");
W I T N E S S E T H:
That Seller is the owner of that certain assisted living facility
located on Xxxxxxx Road in Xxxxxxx Park, Allegheny County, Pennsylvania (the
"Facility"), and desires to sell certain assets used or held for use in the
operation of the Facility to Buyer on the terms and conditions hereinafter set
forth, to which Buyer is agreeable, and accordingly in consideration thereof
and the mutual covenants hereinafter set forth, and for good, valuable and
sufficient consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto, each intending to be legally bound hereby, do
covenant and agree as follows:
SECTION 1. PURCHASE OF ASSETS.
1.1 Included Assets. Under the terms and conditions set forth in this
Agreement, and based upon the representations and warranties of Seller on the
Closing Date (as defined in Section 3.1), Seller shall sell, assign, convey,
transfer and deliver to Buyer, and Buyer shall purchase from Seller, all of
Seller's right, title and interest in and to the following assets, property,
leases, contracts and other rights of Seller (collectively the "Assets"):
(a) All real property owned or leased by Seller or any
affiliated entity used or related to the operation of the Facility or
the Assets, including, without limitation, the real property and
fixtures, Facility and other improvements on the real property
described on Schedule 1.1(a)(1) and all easements and rights of way
(collectively the "Property"), which shall be conveyed to Buyer
subject to no liens, claims, encumbrances, easements or restrictions,
except for (i) easements for public utilities or to provide service to
the Facility and (ii) the permitted exceptions listed on Schedule
1.1(a)(2) (collectively the "Permitted Exceptions").
(b) All tangible personal property used in the operation of
the Facility, other than the leased personal property covered by
Section 1.1(e) below, including all of Seller's furniture, fixtures,
machinery, vehicles, office furnishings and equipment, and
construction in process, if any (collectively the "Personality") used
in the operation of the Facility, whether or not carried on the books
of Seller, all of which, except for individual items the original cost
of which is less than $1,000, are set forth in Schedule 1.1(b)(1). The
Personality shall be conveyed free and clear of any and all claims,
liens, encumbrances, security interests, capital lease obligations,
and restrictions except for those shown on
Page 1
2
Schedule 1.1(b)(2).
(c) The inventories of supplies, drugs, food and other
disposables and consumables which are owned by Seller and on hand at
the Facility on the Closing Date (the "Inventory"). The Inventory
shall be conveyed free and clear of any and all claims, liens,
encumbrances, and security interests except those set forth in
Schedule 1.1(c).
(d) All security deposits and rentals of Seller, together
with all interest, late charges, penalties, collection fees and other
sums that are or may become due and payable with respect thereto.
(e) All resident records, employment records, staff roster
and files, prepaid assets (except for insurance), chooses in action,
financial records, proprietary materials, programs, manuals,
promotional materials and other tangible and intangible property owned
by Seller relating to the Assets, and all rights of Seller in and to
(i) any leases for real or personal property, equipment, furnishings
or furniture (collectively the "Leases") listed on Schedule 1.1(e),
(ii) Contracts (as hereinafter defined in Section 4.18) relating to
the Assets listed on Schedule 1.1(e), (iii) Licenses and Permits (as
hereinafter defined in Section 4.11) used or held or used in the
operation of the Assets as set forth on Schedule 4.11 (to the extent
legally possible) and (iv) express or implied warranties from the
suppliers of Seller with respect to the Assets, in each case to the
extent which transfer is permitted by law. Such items shall be
conveyed free and clear of all claims, liens and encumbrances, subject
to the rights of others under the applicable documents disclosed on
Schedule 1.1(e).
(f) All of Seller's right, title and interest in and to the
trade name "Mt. Royal Pines", or variations thereof, and all other
trade names used exclusively at the Facility, each of which are set
forth in Schedule 1.1(f).
(g) All of Seller's right, title and interest in and to
construction plans, permits, designs or drawings related to the
Facility licenses and permits from State.
1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets shall not include, and Seller shall retain as its property,
the assets listed on Schedule 1.2 (collectively the "Excluded Assets").
SECTION 2. ASSUMPTION OF LIABILITIES.
2.1 Assumed Liabilities. Subject to the terms and conditions
set forth in this Agreement, Buyer shall assume and agree to pay,
perform and discharge the following and only the following liabilities
of Seller as the same exist on midnight of the day preceding the
Closing Date (collectively the "Assumed Liabilities"):
(a) Seller's liability after the Closing Date for the Leases
listed on Schedule 1.1(e).
Page 2
3
(b) Seller's liability after the Closing Date for the
Contracts listed on Schedule 1.1(e).
(c) Seller's obligations under open purchase orders as of the
Closing for inventory and supplies to be delivered after the Closing
in the ordinary course of business and which inventory and supplies
are not included in the inventory and supplies purchased by Buyer at
the Closing.
2.2 Excluded Liabilities. Except for the Assumed Liabilities, no
obligation or liability of Seller relating to or arising from the operation of
the business of Seller, the Facility or the Assets prior to the Closing, of any
nature (whether expressed or implied, fixed or contingent, liquidated or
unliquidated, known or unknown, accrued, due or to become due), is to be
assumed by Buyer, nor shall Buyer be liable to pay, perform or discharge any
such obligation or liability, nor shall the Assets be subject to any such
obligation or liability (all such obligations or liabilities other than the
Assumed Liabilities are referred to as the "Excluded Liabilities"). The term
"Excluded Liabilities" includes without limitation, the following to the extent
that such items are not Assumed Liabilities:
(a) Long-term indebtedness and other obligations or guaranties
of Seller.
(b) Federal, state or local tax liabilities or obligations of
Seller in respect to periods prior to the Closing, and the
transactions contemplated hereunder, including, without limitation,
income taxes payable under the Internal Revenue Code 1986, as amended
("IRC"), any income tax, any franchise tax, any tax recapture, any
accrued ad valorem property taxes, any FICA, workers' compensation and
any and all other taxes or amounts due or payable for a period prior
to the Closing; Sales and use taxes, transfer taxes, and all other
impositions of tax arising solely by reason of the transfers
contemplated by this Agreement (excluding all federal, state and local
income and gross receipt taxes on the earnings or gross receipts of
the Facility prior to the Closing Date, which shall remain the sole
responsibility of Seller) shall be the responsibility of and shall be
borne equally by Seller and Buyer (any real estate and personal
property taxes for the year in which the Closing occurs shall be
pro-rated to the Closing Date (based on a calendar year basis), if the
tax rates for the year in which the Closing occurs shall not be fixed
prior to the Closing Date for a particular item of Assets, the
pro-ration of taxes thereon shall be based upon the tax rate for the
year prior to the Closing applied to the latest assessment valuation;
However, in the event that any such taxes are increased for the year
in which the Closing occurs, Seller shall then reimburse Buyer for
amounts in excess of the proration as determined as of the Closing
Date).
(c) Liability in connection with any employee benefit plan
(as defined in Section 3(3) of the Employer Income Security Act of
1974, as amended ("ERISA")) covering any of Seller's employees and
liability for all employee wages and benefits, including any liability
for workers compensation benefits, of Seller's employees for periods
prior to the Closing.
(d) Liabilities or obligations of Seller for brokerage or
other commissions
Page 3
4
relating to this Agreement or to the transactions contemplated
hereunder.
(e) Liabilities or obligations arising out of any breach by
Seller occurring prior to the Closing of any Contract, Equipment Lease
or any other agreement whether assumed by Buyer.
(f) Any liability arising out of or in connection with
claims, acts or omissions arising from or relating to the ownership or
operation of the Assets by Seller prior to Closing; all meters or
other measures of actual use or consumption of any utility services of
any kind, whether public, quasi-public or private, at or for the
Property shall be read during the daylight hours on the day
immediately preceding the Closing Date, with all charges, costs and
expenses of such utility services so determined by such readings to be
paid by Seller.
(g) Any debt, obligation, expense or liability of Seller
arising out of or incurred in respect of any transaction of Seller for
any violation occurring prior to the Closing by Seller of any federal,
state or local law, statute, rule, regulation, ordinance, order,
judgment or decree.
(h) Any liability or obligation (contingent or otherwise) of
Seller regarding occurrences prior to the Closing arising out of any
threatened or pending litigation or claim (known or unknown).
(i) Any obligation or liability of Seller relating to any
Hazardous Substances (as hereinafter defined in Section 6.2),
including clean-up or other remedial action related thereto, that
arises out of or results from any act, omission or occurrence or state
of facts existing prior to Closing.
(j) Any other liabilities or obligations of Seller
(contingent or otherwise) existing on the Closing Date or based on
facts existing on or prior thereto and not expressly assumed by Buyer
under this Agreement, including but not limited to any workers
compensation claims and all management fees and related expenses
incurred by Seller in the operation of the Facility prior to the
Closing.
2.3 Collection of Rentals. Rentals arising in connection with the
Facility shall be prorated to the Closing Date, and Buyer shall be entitled to
collect the same for the account of Buyer on and as of the Closing; provided,
however, any rentals accruing prior to Closing but received by Buyer shall be
held by Buyer as trustee for the account of Seller.
2.4 No Expansion of Third Party Rights. The assumption by Buyer of the
Assumed Liabilities and the transfer thereof by Seller shall not expand the
rights or remedies of any person or entity against Buyer or Seller as compared
to the rights and remedies that such person or entity would have had against
Seller had Buyer not assumed the Assumed Liabilities. Without limiting the
generality of the foregoing, the assumption by Buyer of the Assumed Liabilities
shall not create any third party beneficiary rights.
Page 4
5
SECTION 3. PURCHASE PRICE, PAYMENT OF PURCHASE PRICE AND CLOSING.
3.1 Purchase Price. The purchase price payable to Seller for the
Assets (the "Price") is and shall be a total of Two Million Five Hundred
Thousand Dollars ($2,500,000.00). The Price shall be allocated in the manner
set out in Schedule 3.1, and the parties agree to report the transaction for
federal tax purposes in accordance with such allocation.
3.2 Payment of Purchase Price. The Price shall be paid to Seller as
follows:
(a) Upon execution and delivery of this Agreement by the
parties hereto, Buyer shall deliver to Seller a good faith deposit in
the sum of Twenty Five Thousand Dollars ($25,000.00) (the "Deposit").
At the Closing, the Deposit shall be against the Price in favor of
Buyer. Except as provided in Paragraph 10.16, if the Closing does not
occur for any other reason, the Deposit shall be retained by Seller.
(b) The balance of the Price shall be paid to Seller at the
Closing by wire transfer, bank cashier's check or certified check, as
may be satisfactory to Seller.
3.3. Closing Date and the Closing. The closing for the sale and
purchase of the Assets hereunder (the "Closing") shall be conducted at a place
mutually acceptable to the parties on the first to occur of (i) a date mutually
agreed upon by the parties or (ii) the date that is ten (10) days after all of
the conditions precedent set forth in this Agreement have been met and
satisfied; however, in no event later than March 29, 1996 (the "Closing Date").
TIME IS AND SHALL BE OF THE ESSENCE WITH RESPECT TO THE CLOSING.
3.4 Closing Documents. At and as of the Closing, Seller and Buyer
shall execute and deliver all such bills of sale, consents, endorsements,
assignments and other instruments of assignment, transfer and conveyance as
shall be necessary to transfer, assign and convey to Buyer all of the Assets to
be transferred, assigned and conveyed under this Agreement, and for Buyer to
assume the Assumed Liabilities hereunder, together with all consents and
certificates required hereunder and all documents otherwise required under this
Agreement, including, but not limited to, the following (collectively the
"Closing Documents"):
(a) A standard common law or statutory special warranty deed
in recordable form, sufficient to convey indefeasible fee simple title
to the Property to Buyer in accordance with the provisions hereof; the
deed shall be deemed to include all appurtenances to the Property,
including all right, title and interest, if any, of the grantor in and
to any land lying in the bed of any street adjoining the Property to
the centerline thereof, and the existing improvements located on the
Property.
(b) A xxxx of sale in form and substance satisfactory to
Buyer transferring to Buyer all of Seller's right, title and interest
in and to the Personality, and covenanting and warranting that Seller
has good and marketable title to the items thereby transferred, free
and clear of all liens, mortgages, charges, security interests and
other encumbrances and against the acts of Seller.
Page 5
6
(c) An assignment in form and substance satisfactory to Buyer
transferring to Buyer all of Seller's right, title and interest in and
to (i) the Contracts, Leases and Permits and Licenses (to the extent
legally possible) and (ii) all warranties and guarantees by third
persons with respect to (A) any of the property under the Contracts
and Leases or (B) any of the other Assets as provided herein.
(d) Such affidavits and indemnities from Seller as Buyer's
title insurance company may reasonably require in order to omit from
any title insurance policies all exceptions except for the Permitted
Exceptions, including but not limited to exceptions for (i) judgments,
bankruptcies, taxes and municipal claims, (ii) parties in possession
other than current occupants pursuant to agreements with Seller, (iii)
mechanics' or materialmens' liens and (iv) encroachments or survey
discrepancies of any nature.
(e) A certificate in form and substance satisfactory to Buyer
from Seller certifying that all representations and warranties made by
Seller in this Agreement and any of the Closing Documents are and
continue to be true and correct in all respects on and as of the
Closing Date and each and every covenant and agreement of Seller to be
performed prior to or as of Closing Date pursuant to this Agreement or
any of the Closing Documents have been performed.
(f) A "FIRPTA" certificate in form and substance satisfactory
to Buyer and in conformance with Section 1445(b)(2) of the IRC, to the
effect that neither Seller nor any third-party seller/transferor is a
foreign person.
(g) Certification of corporate or partnership existence and
good standing of each entity comprising Seller from the Pennsylvania
Corporation Bureau dated no more than thirty (30) days prior to
Closing.
(h) Such certificates, affidavits and other documents
reflecting the power and authority of Seller to enter into and to
perform its obligations hereunder, and as to the due authorization of
any person acting for Seller at the Closing or otherwise, as legal
counsel for Buyer or any title insurance company may reasonably
request.
(i) Copies of lien searches with respect to Seller and the
Assets conducted in Allegheny County, Pennsylvania and at the Office
of the Secretary of State for the Commonwealth of Pennsylvania.
(j) An opinion of Seller's counsel ("Counsel"), dated as of
the Closing Date, and addressed to Buyer to the effect that (i) Seller
is a limited partnership duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania and is
qualified to do business therein; (ii) the execution and delivery of
this Agreement and the Closing Documents by Seller, the performance by
Seller of its obligations hereunder and thereunder and the sale and
purchase of the Assets have been duly authorized by all necessary
partnership action on the part of Seller (including any necessary
approval by Seller's general partner); (iii) this Agreement and the
Closing Documents executed by Seller are valid and binding obligations
of Seller enforceable
Page 6
7
against Seller in accordance with their respective terms; (iv) the
execution and delivery of this Agreement and the Closing Documents,
and the consummation of the transactions hereunder and thereunder, by
Seller, do not and will not constitute an event of default under, or a
violation of, (A) any law, statute, rule or regulation of any court or
governmental authority now in effect applicable to Seller or the
Assets, (B) Seller's partnership agreement or (C) any instrument,
contract or other agreement to which Seller is a party or by which
Seller is bound; (v) there is no pending or, to the best of Counsel's
knowledge, threatened, litigation or other proceeding or governmental
investigation against or relating to Seller or to the Assets or to the
transactions contemplated by this Agreement and the Closing Documents;
(vi) Seller has given all notices required under Paragraph 7.10 of
this Agreement which are in full force and effect and, based on the
representations and warranties of Seller, any other notices to any
other third parties that are necessary to permit the sale, transfer
and conveyance of the Assets in accordance with the provisions of this
Agreement and any applicable laws, statutes and regulations, which are
in full force and effect; (vii) other than the notices referred to in
Subparagraph (vi), to the best of Counsel's knowledge, no consent,
approval or authorization of, or registration or filing with, any
third party is required to permit the sale, transfer and conveyance of
the Assets in accordance with the provisions of this Agreement and any
applicable laws, statutes and regulations; (viii) to the best of
Counsel's knowledge, there are no zoning restrictions, general plans
or other applicable land use regulations or any private covenants,
conditions or restrictions affecting the Property that prohibit the
transfer of the Property or Buyer's intended use thereof as a matter
of right for an unlimited time period and not merely as a legal
non-conforming use and (ix) the Property is taxed as a separate parcel
and, to the best of Counsel's knowledge, there is nothing that
prohibits the Property from being mortgaged, conveyed or otherwise
dealt with as a separate lot or parcel.
(k) All other instruments, certificates, documents and
information to which Buyer may be entitled under any other provisions
of this Agreement or that Buyer may reasonably request in order to
complete the Closing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents, warrants and covenants to and in favor of
Buyer, Buyer's designee(s), nominee(s), and assigns(s) that:
4.1 Organization and Power. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, is qualified to do business in the Commonwealth
of Pennsylvania and has the full power, authority and legal right to conduct
the business in which it is engaged, to lease and own the properties leased or
owned by it and to execute and deliver and to perform the provisions of this
Agreement and the Closing Documents to which it is a party. Seller's general
partner is a corporation duly organized, validly existing and in good standing
under the laws of Pennsylvania.
4.2 Authorization. The execution and delivery of this Agreement and
the Closing Documents by Seller, the performance by Seller of its obligations
under this Agreement and the Closing Documents and the sale and purchase of the
Assets have been duly authorized by all
Page 7
8
necessary partnership action on the part of Seller (including any necessary
approval by Seller's general partner). This Agreement has been, and on the
Closing Date the Closing Documents executed by Seller hereunder will have been,
duly executed and delivered by Seller, and constitute and will constitute the
valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms.
4.3 Solvency. Seller is solvent and is not in default in the payment
of liability or obligation, or subject to any judgment, order, decree, rule or
regulation of any governmental authority that would, in each case or in the
aggregate, adversely affect its condition, financial or otherwise, or the
transactions contemplated under this Agreement.
4.4 Consents. Other than the notices referred to in Paragraph 4.11 and
except as set forth on Schedule 4.4, to the best of Seller's knowledge, no
other consent, approval or other authorization of, or registration, declaration
or filing with, any third party is required to permit the sale, transfer and
conveyance of the Assets in accordance with the provisions of this Agreement or
any applicable laws, statues and regulations.
4.5 Litigation. Except as set forth on Schedule 4.5, there are no
actions, proceedings or investigations, pending or threatened, against or
affecting Seller or the Assets, seeking to enjoin, challenge or collect damages
in connection with the transactions contemplated under this Agreement or which
could reasonably be expected to materially affect the financial condition or
operations of Seller or the Assets or the ability of Seller to carry out the
transactions contemplated hereunder, or which in any way challenge or affect
the sale and purchase of the Assets pursuant to this Agreement.
4.6 No Violation. Except as set forth on Schedule 4.6, the execution
and delivery of this Agreement and the Closing Documents by Seller, compliance
with the provisions hereof and thereof and the consummation of the transactions
contemplated herein and therein will not result in (i) the breach or violation
of (A) any law, statute, rule or regulation of any court or governmental
authority now in effect applicable to Seller or the Assets, (B) the partnership
agreement of Seller, (C) any judgment, order or decree of any court or
governmental authority binding on Seller, (D) any Contract, instrument or other
agreement to which Seller is a party or by which Seller is bound or (E) any
franchise, License or Permit applicable to Seller or the Assets; (ii) the
acceleration of any obligation of Seller or (iii) the creation of any lien upon
the Assets (other than pursuant to this Agreement and the Permitted Exceptions).
4.7 The Property. Seller has good and marketable title to the Property
described on Schedule 1.1(a)(1), free and clear of all liens, restrictions or
encumbrances except for the Permitted Exceptions. A true, correct and complete
copy of each Permitted Exception has heretofore been delivered to Buyer. Except
as set forth on Schedule 4.7:
(a) Prior to Closing, Buyer shall have investigated and
inspected the Property to Buyer's satisfaction. Except as expressly
provided in this Agreement, Seller has not given, and Buyer has not
relied on, any representations, warranties, promises or
understandings, express or implied, of Seller with respect to the
Property, and Buyer is purchasing the Property in its present
condition and state of repair, "as is." Schedule 4.7
Page 8
9
is a copy of all inspections by licensure and health officials, fire
authorities, insurance inspectors or other parties of the Property
which includes all matters that were noted by such party requiring
correction or requested or recommended modifications, and the present
status of each such noted matter.
(b) Seller holds all valid and effective certificates,
approvals and other Permits and Licenses required by applicable law
relating to the operation of the Property, including without
limitation all certificates of occupancy, underwriters' certificates
relating to electrical work, zoning, building, housing, safety, fire
and health approvals.
(c) All public utilities, including telephone, gas, electric
power, sanitary and storm sewer and water, are available at the
Property and, to the best of Seller's knowledge, such utilities are
adequate for Buyer's intended use of the Property.
(d) To the best of Seller's knowledge, there are no zoning
restrictions, general plans or other applicable land use regulations
or any private covenants, conditions or restrictions affecting the
Property that prohibit the transfer of the Property or Buyer's
intended use thereof as a matter of right for an unlimited timeperiod
and not merely as a legal non-conforming use. Seller has not
commenced, nor has Seller received notice of the commencement of any
proceeding that would affect the present zoning classification of the
Property.
(e) To the best of Seller's knowledge, (i) no consent,
approval or other authorization of, or registration, declaration or
filing with, any third party is required to permit the sale, transfer
and conveyance of the Property in accordance with the provisions of
this Agreement or any applicable laws, statutes and regulations and
(ii) the Property is in compliance with all applicable zoning
ordinances and the Permitted Exceptions.
(f) During the period of Seller's ownership of the Property
and, to the best of Seller's knowledge during the period prior to
Seller's ownership, (i) there are no underground tanks or Hazardous
Substances (as hereinafter defined in Section 6.2) located at, in, on,
under, from, over or related to the Property, no such tanks have been
located on the Property and no such Hazardous Substances have been
present, used, stored, treated, released from or disposed of on the
Property; (ii) no enforcement, cleanup, removal or other governmental
or regulatory actions have been instituted, or to the best of Seller's
knowledge, threatened with respect to the Property; (iii) there is no
current or, to the best of Seller's knowledge, prior violation or
state of noncompliance with the Environmental Laws (as hereinafter
defined in Section 6.2) with respect to the Property; (iv) no claims
have been made, or to the best of Seller's knowledge, threatened by
any third party with respect to the Property relating to damage,
contribution, cost recovery, compensation, loss or injury resulting
from or related to any Hazardous Substance; and (v) to the best of
Seller's knowledge, there are no current, and have been no, businesses
engaged in the storage, treatment or disposal of Hazardous Substances
on any property adjacent to the Property.
Page 9
10
(g) To the best of Seller's knowledge, the Property is not
located within an area of special risk with respect to natural or
man-made disasters or hazards, including any flood hazard area.
(h) Other than as may be set forth in Paragraph 4.7(f), to
the best of Seller's knowledge, there are no adverse geological or
soil conditions affecting the Property.
(i) The Property is taxed as a separate parcel and, to the
best of Seller's knowledge, there is nothing that prohibits the
Property form being mortgaged, conveyed or otherwise dealt with as a
separate lot or parcel.
(j) There are no eminent domain or condemnation proceedings
pending or threatened against or affecting the Property.
4.8 Personal Property. Seller has good title to all Personality to be
conveyed to Buyer hereunder, free and clear of all liens, claims, encumbrances
whatsoever, and except as set forth on Schedule 4.8,:
(a) The Personality, together with the leased equipment, in
the aggregate constitutes all of the tangible personal property used
in or related to the conduct by the Facility of its business as now
conducted; and
(b) Except for the Excluded Assets, the Assets (including the
Assets held under leases which are to be transferred to Buyer
hereunder) constitute all of the rights, properties and assets Seller
uses or holds to operate the Facility.
4.9. Financial Statements.
Seller has delivered to Buyer monthly statements of profit and loss
for 1994 the first ten (10) months of 1995 with respect to the operation of the
Facility, and in addition, Seller shall provide to Buyer, as promptly as each
becomes available through the Closing Date, all monthly financial statements of
Seller with respect to the operation of the Facility (collectively, the
"Financial Statements"). The Financial Statements are true, correct and
complete in all material respects, have been prepared in accordance with the
books and records for the Facility and fairly and accurately present the
financial condition of Seller and its operation of the Facility at the dates
and for the periods indicated. Except as set forth on Schedule 4.9, since
November 1, 1995:
(i) There has not been any material adverse change from that
disclosed in the Financial Statements in the financial condition of
Seller, the Assets or Assumed Liabilities, either individually or in
the aggregate.
(ii) Through the date of this Agreement, Seller has not
suffered any casualty loss (whether or not such loss or damage shall
have been covered by insurance) that affects the ability of Seller to
conduct its business.
Page 10
11
(iii) Seller has not incurred any liability or obligation of
any nature (whether absolute, accrued, contingent or otherwise) which
may become an Assumed Liability hereunder except in the ordinary and
regular course of Seller's business.
(iv) Seller has not made any capital expenditure or
commitment for additions to property, plant or equipment in excess of
Five Thousand Dollars ($5,000.00).
(v) Seller has not paid any amount to any federal, state or
local government or authority or any other third party for any claim,
obligation, liability, loss, damage or expense, of whatever kind or
nature, incurred or imposed under any Environmental Law.
(vi) There has not been any increase in the compensation or
benefits to any employee (except in the ordinary course consistent
with past practices).
(vii) There has not been any transaction by Seller relating
to the Facility or its operation outside the ordinary course of
business which materially and adversely affects the Assets or any
Assumed Liability, either individually or in the aggregate.
4.10 Insurance. A complete and accurate list of all insurance policies
(including a statement of policy limits and deductibles) held by Seller
relating to the Facility now in force and effect, including, without
limitation, malpractice, public liability, property damage, business
interruption, product liability and workers compensation or other coverage, is
contained on Schedule 4.10. There are no outstanding requirements or
recommendations by any insurance company that issued any such policy or by any
Board of Fire Underwriters, governmental authority or other similar body
exercising similar functions that require or recommend any changes in the
operation of the Facility, or any repairs or other work to be done on or with
respect to any of the Assets. Seller has not received any notice or other
communication from any such insurance company within three (3) years preceding
the date hereof canceling or amending said insurance policies. There are no
workers compensation claims (actual, or to the best of Seller's knowledge,
threatened or pending) not covered by insurance.
4.11 Compliance with Laws and Licenses. Seller has complied with all
laws, regulations and orders relating to the operation of the Facility. Seller
holds all licenses, permits, registrations, approvals, certificates, contracts,
consents, accreditations and franchises (the "Licenses and Permits") required
to be held by it to own, occupy, lease and use the Assets and to conduct and
operate the Facility in compliance with all applicable laws and regulations,
including, without limitation, all licenses, certificates and permits required
by the Pennsylvania Department of Public Welfare. Without limiting the
generality of the foregoing, the equipment and operations of the Facility
satisfy the applicable licensing requirements of the Commonwealth of
Pennsylvania. Schedule 4.11 describes each License and Permit and a true and
correct copy of each has previously been delivered to Buyer by Seller. Except
as set forth on Schedule 4.11, no notice from any authority in respect of the
revocation, termination, suspension or limitation of any License or Permit has
been issued or given, nor is Seller aware of the proposed or threatened
issuance of any such notice. Seller has given all notices to the Pennsylvania
Department of Public Welfare, the appropriate human service agencies (as that
term is defined by the Pennsylvania Department of Public Welfare), the Facility
residents and any other third parties that are necessary
Page 11
12
to permit the transactions contemplated herein in accordance with the provisions
of this Agreement and any applicable statutes, laws and regulations, all of
which are in full force and effect. Other than the foregoing notices, to the
best of Seller's knowledge, no consents, approvals or authorizations are
required from any third parties that are necessary to permit the transactions
contemplated herein in accordance with the provisions of this Agreement or any
applicable statutes, laws and regulations. Seller has previously delivered to
Buyer true and complete copies of the Facility's most recent survey report and
deficiency list, if any, the Facility's most recent state licensing report and
deficiency list, if any, and the Facility's most recent life-safety inspection
report and deficiency list, if any. The Facility is, and at the Closing Date
will be, licensed by the Pennsylvania Department of Public Welfare for an
aggregate of 101 personal care beds.
4.12 Rentals. Except as set forth on Schedule 4.12, the rentals of
Seller with respect to the Facility on and as of the Closing Date are fully
collectible, valid and existing and there are not, and on the Closing Date will
not be, any refunds, setoffs or other adjustments payable or assessable with
respect to such rentals.
4.13 Inventories. The Inventory of Seller on the Closing Date
constitutes the entire inventory of Seller with respect to the Facility. The
quantities of all Inventory are reasonable and justified under the normal
operations of the Facility.
4.14 Wage Claims. Except as set forth on Schedule 4.14, no present or
former employee of Seller has asserted any claim (whether under federal or
state law, under any employment agreement or otherwise) on account of or for
wages or salary.
4.15 Employment Matters. Except as set forth on Schedule 4.15, (i)
Seller is in compliance with all federal and state laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against Seller pending before the National Labor
Relations Board; (iii) there is no labor strike, dispute, slowdowns or stoppage
actually pending or, to the best of Seller's knowledge, threatened against or
involving or affecting Seller; (iv) no grievance or any arbitration proceeding
is pending or, to the best of Seller's knowledge, threatened against or
involving or affecting Seller; (v) there is no collective bargaining agreement
which is binding on Seller and (vi) Seller has not experienced any labor
stoppage during the last five (5) years.
4.16 Leases. Except as set forth on Schedule 1.1(e), neither Seller
nor the Facility is a party to or subject to any Lease relating to the
operations of the Facility. Each Lease described on Schedule 1.1(e) is valid
and in full force and effect and there are no existing defaults by Seller
thereunder. No event has occurred that (whether with notice, lapse of time, or
both) would constitute an existing default by Seller under the Leases. Except
as set forth on Schedule 1.1(e), all of the Leases may be assigned to Buyer
without the consent of any other party thereto.
4.17 Employee Benefit Plans.
Page 12
13
(a) Benefit Plans. For purposes of this Section 4.17, the
term "Benefit Plan" means any plan, program, arrangement, practice or
contract which provides benefits or compensation to or on behalf of
employees or former employees, whether formal or informal, whether or
not written, including, but not limited to, the following types of
Benefit Plans:
(i) Executive and Employee Arrangements. Any
bonus, incentive compensation, stock option, deferred
compensation, commission, severance, golden parachute or
other executive compensation plan, rabbi trust, program,
contract, arrangement or practice;
(ii) ERISA Plans. Any "employee benefit plan" (as
defined in Section 3(1) of ERISA, including, but not limited
to, any multi-employer plan (as defined in Section 3(37) and
Section 4001(a)(3) of ERISA), defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or
thrift plan, stock bonus plan, employee stock ownership plan
or any plan, fund, program, arrangement of practice providing
for medical (including post-retirement medical),
hospitalization, accident, sickness, disability or life
insurance benefits; and
(iii) Other Employee Fringe Benefits. Any stock
purchase, vacation, scholarship, day care, prepaid legal
services, severance pay or other fringe benefit plan,
program, arrangement, contract or practice.
(b) Identification of Benefit Plans. Except as set forth on
Schedule 4.17 hereto, Seller does not maintain any Benefit Plan and
each such plan is and has been operated and administered in accordance
with the applicable requirements under ERISA and the IRC (including,
but not limited to, the requirements of IRC Section 401(a) for
employer benefit plans intended to be qualified thereunder).
All contributions and other payments required to be made by Seller to
any Benefit Plan, for or on behalf of any employees or former employees of the
Facility have been made or reserves adequate for such purpose have been set
aside therefor in accordance with the terms of each such plan. All
contributions made by Facility employees of Seller as of the date hereof have
been deposited by them with the appropriate funding agency of each Benefit Plan
in accordance with the terms of each such plan, ERISA and the IRC, or reserves
adequate for such purposes have been set aside therefor. There are not
outstanding liabilities of any such Benefit Plan other than liabilities for
benefits to be paid to participants in such plan and their beneficiaries in
accordance with the terms of such plan.
There are no undischarged liabilities of Seller arising under or in
connection with any Benefit Plan which has heretofore covered any of Seller's
Facility employees or former Facility employees which Seller has heretofore
maintained or to which Seller has heretofore contributed other than benefits to
be paid to participants in such plans and their beneficiaries in accordance
with the terms of such plans.
Page 13
14
4.18 Contracts. Except as set forth on Schedule 1.1(e), neither Seller
nor the Facility is a party to or subject to any contract, agreement,
concession or commitment (collectively, the "Contracts") relating to the
operations of the Facility. Each Contract described on Schedule 1.1(e) is valid
and in full force and effect and there are no existing defaults by Seller
thereunder. No event has occurred that (whether with notice, lapse of time, or
both) would constitute an existing default by Seller under the Contracts.
Except as set forth on Schedule 1.1(e), all of the Contracts may be assigned to
Buyer without the consent of any other party thereto.
4.19 Broker's and Finder's Fees. Except as set forth on Schedule 4.19,
neither Seller, nor anyone acting on behalf of Seller, has done anything to
cause or incur any liability for any broker's or finder's fees or the like in
connection with this Agreement or any transaction contemplated hereby.
4.20 Tax Returns. Except as set forth on Schedule 4.20 hereto, Seller
has filed all federal, state, local and other tax returns, reports and
statements required by whatsoever jurisdiction and for whatsoever reason, and
has properly paid all taxes, assessments, fees, charges and other sums so
reported or otherwise due to any government or jurisdiction, or installments or
estimated payments thereof, as of the date hereof (with the exception of matters
to be pro-rated as of the Closing) and as of the Closing Date, including but not
limited to income taxes, capital stock taxes, personal property taxes,
unemployment compensation taxes, charges or contributions, social security
("FICA") contributions, withholding and employment taxes or similar amounts,
sales and use taxes, real estate taxes, workmen's compensation premiums or
assessments and any and all interests, additions and penalties thereon; none of
Seller's federal or state income tax returns, Pennsylvania state sales/use tax
returns or any other tax or similar returns, reports or statements required by
whatsoever jurisdiction have been audited or are currently under audit by the
Internal Revenue Service, the Pennsylvania Department of Revenue or any other
governmental authority, jurisdiction, agency, department or instrumentality; no
action has been taken, no matter exists and no transaction has been completed or
is pending that will or may result in a deficiency for additional taxes,
interest, additions or penalties levied or imposed for any period prior to or
ending as of the date of this Agreement; there are no outstanding agreements or
consents extending the statutory period of limitations applicable to any
federal, state or local tax return, report or statement or the taxes reported
thereon for any period ending on or before the date of this Agreement and there
are no tax petitions, tax settlements, tax assessments or other tax claims or
charges that have been, or to the best of Seller's knowledge and information,
may be or might be assessed against Seller.
4.21 Survival of Representations and Warranties. The representations
and warranties of Seller set forth in this Section 4 as made on the Closing
Date shall survive the Closing as made until the 3rd anniversary of the Closing
Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as follows:
5.1 Corporate Organization; Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified and
Page 14
15
authorized to do business in the Commonwealth of Pennsylvania and has full
power, authority and legal right to execute and deliver and to perform and
observe the provisions of this Agreement and the Closing Documents to which it
is a party and otherwise to carry out the transactions contemplated hereunder
and thereunder.
5.2 Authorization. The execution and delivery of this Agreement and
the Closing Documents by Buyer, the performance by Buyer of its obligations
hereunder and thereunder and the sale and purchase of the Assets have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been, and on the Closing Date the Closing Documents executed by
Buyer hereunder will have been, duly executed and delivered by Buyer, and
constitute and will constitute the valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms.
5.3 Consents. Other than the notices required to be given by Seller as
set forth in Paragraph 4.11 and except as set forth on Schedule 5.3 hereto, to
the best of Buyer's knowledge, no consent, approval or other authorization of,
or registration, declaration or filing with, any third party is required for the
due execution and delivery of this Agreement, for the validity or enforceability
thereof against Buyer or for the performance by Buyer of its obligations
hereunder.
5.4 Litigation. Except as set forth on Schedule 5.4 hereto, there are
no actions, proceedings or investigations, pending or threatened, against or
affecting Buyer seeking to enjoin, challenge or collect damages in connection
with the transactions contemplated under this Agreement or which could
reasonably be expected to materially affect the financial condition or
operations of Buyer or the ability of Buyer to carry out the transactions
contemplated hereunder, or which in any way challenge or affect the sale and
purchase of the Assets pursuant to this Agreement.
5.5 No Violation. Except as set forth on Schedule 5.5 hereto, the
execution and delivery of this Agreement and the Closing Documents by Buyer,
compliance with the provisions hereof and thereof and the consummation of the
transactions contemplated herein and therein will not result in (i) the breach
or violation of (A) any law, statute, rule or regulation of any court or
governmental authority now in effect applicable to Buyer; (B) the articles of
incorporation and bylaws of Buyer; (C) any judgment, order or decree of any
court or governmental authority binding on Buyer or (D) any instrument,
contract or other agreement to which Buyer is a party or by which Buyer is
bound.
5.6 Broker's and Finder's Fees. Except as set forth on Schedule 5.6
attached hereto, except Neither Buyer, nor anyone acting on behalf of Buyer,
has done anything to cause or incur any liability for any broker's or finder's
fees or the like in connection with this Agreement or any transaction
contemplated hereby.
5.7 Survival of Representations and Warranties. The representations
and warranties of Buyer set forth in this Section 5 as made on the Closing Date
shall survive the Closing as made until the 3rd anniversary of the Closing
Date.
SECTION 6. ENVIRONMENTAL INSPECTION.
Page 15
16
6.1 Inspections. At any time on or after the date of this Agreement,
Buyer or Buyer's agent may make one (1) or more inspections and tests of the
Property for the presence of or contamination by Hazardous Substances (as that
term is defined below). Buyer shall have the absolute right to choose and
determine who shall perform such inspections and tests and when they shall be
performed. Buyer shall be responsible for any cost or expense with regards to
such inspections and tests. If the result or results of such inspections and/or
tests show the presence of or contamination by Hazardous Substances of the
Property or any part thereof, Buyer at its sole and absolute option may
terminate this Agreement without any liability to Seller whatsoever except that
the Deposit shall be retained by Seller.
6.2 Definitions. Where used in this Agreement, the term "Hazardous
Substances" shall mean and include: (a) all hazardous or toxic substances,
wastes or materials, including but not limited to those as now or hereafter
defined by or designated in or pursuant to Environmental Laws (as hereinafter
defined), and further including without limitation petroleum and products and
derivatives thereof and other pollutants or contaminants, whether or not
naturally occurring, including but not limited to asbestos or asbestos
containing materials; (b) any activity now or hereafter undertaken, whether on,
at or off the Property, that would (i) cause the Property to become a hazardous
waste treatment, storage or disposal facility under, or otherwise subject the
Property to the provisions of the Resource Conservation and Recovery Act of
1976, as amended, 42 U.S.C. Section 6901 et seq., (ii) cause a release or
disposal of Hazardous Substances on the Property under, or otherwise subject the
Property to the provisions of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq., the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. Section 6020.101 et
seq., the Pennsylvania Storage Tank and Spill Prevention Act, 35 P.S.
Section 6021.101 et seq., or any similar state or local law or ordinance, (iii)
cause the discharge of pollutants, contaminants or effluents into any water
source or system, whether surface or subsurface, or of any emissions into the
air, which would require a permit under the Federal Water Pollution Control Act,
33 U.S.C. Section 1251 et seq., or the Clean Air Act, 42 U.S.C. Section 7401 et
seq., or any similar state or local law or ordinance or (iv) cause any
substances or conditions in, on or under the Property which may support a claim,
charge or cause of action under any of the abovementioned laws or any other
federal, state or local environmental laws, ordinances, rules, regulations,
administrative or judicial orders, or any other environmental requirements
(collectively the "Environmental Laws"), including without limitation the
presence of any underground storage tanks or underground deposits located on the
Property, or the presence of asbestos or asbestos containing materials in the
Facility.
SECTION 7. COVENANTS AND AGREEMENTS.
7.1 Pre-Closing Activities. Seller shall, from the date of this
Agreement to the Closing Date, except as otherwise specifically agreed to in
writing by Buyer:
(a) Make no borrowing or hypothecations that would encumber
the Property or any part thereof as of the date of or after the
Closing or incur or agree to incur any liability or obligation of any
material nature (absolute or contemplated) which may become an Assumed
Liability hereunder except in the ordinary and regular course of
Seller's business;
Page 16
17
(b) Not modify, amend or cancel any of the Contracts, Leases
or Permits and Licenses, or enter into any new contracts or leases
with any third party, except on account of a default by any party
(other than Seller) to the same or the normal expiration of the stated
term thereof;
(c) Not authorize or make any non-emergency capital
expenditure in excess of five thousand Dollars ($5,000.00);
(d) Not increase the salary of any employee except in the
ordinary course of business, or pay or agree to pay any bonus to any
employee or adopt any Benefit Plan, except in the ordinary course of
business (and except where required by law);
(e) Not sell, assign, lease or otherwise transfer or dispose
of, or enter into any agreement to sell, assign, lease or transfer,
any property or equipment of Seller relating to the Facility or its
business, except in the normal course of business;
(f) Not merge or consolidate or agree to merge or consolidate
with or into any other entity;
(g) Make such repairs, restorations and replacements as may
be necessary or appropriate to keep and maintain the Property,
Personality and property under the Contracts and Leases in their
present physical condition and state of repair and operation as they
exist and are operated as of the date hereof, reasonable wear and tear
excepted;
(h) Keep and maintain any and all insurance for the Assets in
full force and effect;
(i) Not enter into any agreements or other arrangements that
will or may incur obligations binding upon or against the Assets or
Buyer subsequent to the Closing Date;
(j) Comply with and cure all violations of laws, ordinances,
rules, regulations, orders, decrees or requirements, whether public or
private, affecting the Assets;
(k) Timely pay, satisfy and discharge any amount of
principal, interest, premium or penalty due or becoming due under any
obligation with respect to the Assets and all other bills, charges and
sums due or becoming due prior to the Closing Date with respect
thereto or otherwise, including but not limited to the discharge of
any liens, encumbrances, judgments, taxes, charges, assessments,
security interests or chattel mortgages or any other claims now or
hereafter imposed against the Assets;
(l) Fully perform and observe all requirements, obligations
and provisions of the Contracts, Leases, Permits and Licenses and any
other agreements and arrangements for or relating to the Assets or
operation, occupancy or maintenance thereof and promptly cure any
violation, default or breach by Seller thereunder;
(m) Not undertake any courses of conduct or action, or fail
to do so,
Page 17
18
inconsistent with the requirements of this Agreement and Seller's
obligations, covenants, representations and warranties herein provided,
or that may prevent or hinder Buyer from satisfying its conditions
precedent hereof, consummating the purchase of the Assets hereunder or
fully realizing the acquisition of the Assets as hereby intended;
(n) Use Seller's reasonable efforts to maintain present
employees and maintain Seller's relationship with suppliers, residents
and others having business relations with the Facility;
(o) Permit Buyer to make offers of employment to work at the
Facility after the Closing to any of Seller's personnel who work at
the Facility, which personnel shall be allowed to accept or reject
such offers without penalty;
(p) Permit Buyer and its authorized representatives
(including without limitation, any attorneys or accountants designated
by Buyer) to have access during normal daylight business hours upon
prior notice to Seller to all properties, records and documents with
respect to the Assets for the purpose of making such inspections and
examinations as Buyer shall deem advisable, and furnish to Buyer and
such representatives financial and other information with respect to
the Assets as Buyer may from time to time request. Buyer and its
representative shall not unduly interfere with Seller's normal
business operations in effectuating any of the foregoing. In the event
of termination of this Agreement, Buyer shall return to Seller all
such information and documents including copies thereof made by Buyer;
(q) Permit Buyer to conduct architectural, environmental and
engineering inspections of the Property at reasonable times and upon
prior notice to Seller; and
(r) Permit Buyer to validate Seller's inventory and if Buyer
deems necessary to conduct a physical inventory.
7.2 Pre-Closing Deliveries. In addition to the other documents and
information to be provided by Seller as elsewhere herein provided, within ten
(10) days after the date hereof, Seller shall deliver to Buyer the following
instruments and documents, or true, correct and complete copies thereof, which
shall be reasonably satisfactory to Buyer both as to form and substance:
(a) All Contracts or Leases and other instruments required or
appropriate for the ownership, use, occupancy, operation or maintenance
of the Property or any of the other Assets;
(b) All real estate and personal property tax statements or
bills for or relating to the Property or any of the other Assets for
the applicable current tax year or years, and all tax assessments or
notices thereof upon which such taxes are based;
(c) All plans, specifications and other drawings used in the
construction of the Property or any renovations thereof and all
guarantees and warranties made by third parties with respect to the
Personality, the property under the Contracts and Leases or any
Page 18
19
of the other Assets;
(d) All pleadings, motions and related documents filed in any
pending litigation relating to or affecting any of the Assets;
(e) All building permits, zoning permits, subdivision plans,
surveys and any appraisals prepared within thirty-six (36) months
before the date hereof, for or relating to the Property;
(f) All correspondence, communications or notices, including
but not limited to those asserting default, violation or breach or
declaring a cancellation or termination, relating to any of the
agreements, instruments, documents or other information identified or
set forth in this Section 7, or to any matters affecting the Assets;
(g) All Contracts, Leases, Permits and Licenses or other
instruments or arrangements relating to the ownership, operation, use,
occupancy or maintenance of the Assets currently being negotiated by
Seller or hereafter entered into by Seller (but only with the prior
written consent of Buyer);
(h) Copies of any instruments, documents or any other
information that varies or changes any of the agreements, instruments,
documents or information identified or set forth in this Agreement, or
in the Schedules hereto attached or in any of the Exhibits or other
documents or information to be supplied to Buyer by Seller as
elsewhere herein provided;
(i) A current statement regarding workers' compensation claims
made or threatened against the Facility and the Facility's current
experience rating; and
(j) Reports as provided for in Section 4.11.
7.3 Seller's Best Efforts. Seller covenants and agrees to use all
reasonable efforts to cause all of its covenants and agreements and all
conditions precedent to Seller's obligations to close hereunder to be
performed, satisfied and fulfilled.
7.4 Buyer's Best Efforts. Buyer covenants and agrees to use all
reasonable efforts to cause all of its covenants and agreements and all
conditions precedent to Buyer's obligations to close hereunder to be performed,
satisfied and fulfilled.
7.5 Preservation of Records. After the Closing, Buyer shall keep and
preserve all records and other records of the Facility existing as of the
Closing and which are required to be kept and preserved (i) by any applicable
federal or state law or regulations or (ii) in connection with any claim or
controversy still pending involving Seller. After the Closing, upon reasonable
written notice by Seller to Buyer, Seller, at its own cost and expense, shall
be entitled, during regular business hours, to have access to and make copies
of all records pertaining to the operation of the Facility (other than medical
records which shall be governed by the provisions of
Page 19
20
Section 7.6) prior to the Closing for any lawful corporate purpose.
7.6 Seller's Access to Resident Records. To the extent permitted by
law, Seller, at its own cost and expense, shall be entitled, after the Closing,
during the regular business hours of the Facility, to have access to and make
copies of the resident records. In addition, subject to the prior consent of
Buyer, Seller shall be entitled to copy and remove any such record or chart,
but only for purposes of pending litigation involving a resident to whom such
record or chart refers, as certified in writing prior to removal by an officer
of Seller or counsel retained by Seller in connection with such litigation.
7.7 Casualty. If any part of the Assets are damaged or destroyed in
whole or in part prior to the Closing, and the fair market value of such damage
or destruction is less than One Hundred Thousand Dollars ($100,000.00), Seller
shall, at Buyer's option, either (i) reduce the Price by the fair market value
of the Assets damaged or destroyed, such value to be determined as of the date
immediately prior to such damage or destruction and Seller may keep the
insurance proceeds or (ii) upon the Closing, transfer the proceeds of the
insurance to Buyer, and Buyer may restore the improvements. If any part of the
Assets are damaged or destroyed in whole or in part prior to Closing and the
fair market value of such damage is greater than One Hundred Thousand Dollars
($100,000.00), Buyer may elect either to (i) require Seller upon the Closing to
transfer the proceeds of the insurance to Buyer, and Buyer may restore the
improvements or (ii) terminate this Agreement; provided the Deposit shall be
retained by Seller. At the request of Buyer and at Buyer's sole expense, the
amount of insurance against fire and other casualties that, at the date of this
Agreement, Seller carries with respect to any of the Assets shall be increased
by an amount equal to the Price, provided that it is feasible to obtain such
insurance from Seller's current insurance carrier.
7.8 Paid Time Off. Prior to the Closing, Seller shall provide Buyer
with Schedule 7.8 containing all accrued sick, vacation, holiday and personal
days covering regular full-time and part-time employees of Seller estimated as
of the Closing Date based upon existing employment policies of the Facility.
7.9 Seller's Insurance. After the Closing, Seller's liability for
malpractice claims relating to or arising from acts or omissions prior to the
Closing shall continue to be covered by insurance maintained by or on behalf of
Seller.
7.10 License Reissuance. As set forth in Paragraph 10.5, assurance to
Buyer of the intention of the Pennsylvania Department of Public Welfare to
issue the necessary Licenses and Permits for the operation of the Facility upon
and after Closing hereunder is a condition to Buyer's obligation to close.
Accordingly, Seller shall cooperate with Buyer's efforts to obtain such
assurance by taking all action reasonably required of Seller to assist Buyer.
Upon execution and delivery of this Agreement, Seller shall:
(a) Provide Buyer with copies of all Licenses and Permits;
(b) Notify the Pennsylvania Department of Public Welfare of
the pending change of ownership of the Facility; and
Page 20
21
(c) Provide such other notices as required by law including
(i) notices to residents of the Facility and (ii) notices to human
service agencies (as that term is defined by the Pennsylvania
Department of Public Welfare). Prior to sending the notices, Seller
shall provide copies to Buyer for review and approval, which shall not
be unreasonably withheld.
SECTION 8. TERMINATION.
Anything herein or elsewhere to the contrary notwithstanding, this
Agreement and the obligations of the parties hereunder may be terminated on or
prior to the Closing Date, without any liability to the other, as follows:
(a) By Buyer (i) in the event that the transactions
contemplated hereunder have been prohibited or enjoined by any reason
of any final judgment, decree or order entered or issued by a court of
competent jurisdiction in litigation or proceedings involving either
Buyer or Seller; (ii) in the event the conditions precedent to Buyer's
obligation to close are not reasonably satisfied and performed at or
prior to the Closing; (iii) in the event Seller breaches or violates
any provision of this Agreement in any material respect or fails to
perform any covenant or agreement to be performed by Seller under the
terms of this Agreement in any material respect and such breach,
violation or failure is not waived by Buyer prior to Closing.
(b) By Seller (i) in the event that the transactions
contemplated hereunder have been prohibited or enjoined by reason of
any final judgment, decree or order entered or issued by a court of
competent jurisdiction in litigation or proceedings involving either
Buyer or Seller; (ii) in the event the conditions precedent to
Seller's obligation to close are not reasonably satisfied and
performed at or prior to the Closing; or (iii) in the event Buyer
breaches or violates any provision of this Agreement in any material
respect or fails to perform any covenant or agreement to be performed
by Buyer under the terms of this Agreement in any material respect,
and such breach, violation or failure is not waived by Seller prior to
Closing.
(c) By Buyer or Seller if the Closing hereunder shall not
have taken place by the Closing Date or such later date as shall be
agreed upon by an amendment to this Agreement; provided, however, that
a party shall not have the right to terminate under this Section 8(c)
if the conditions precedent to such party's obligation to close have
been satisfied and such party has failed or refused to close after
being requested in writing to close by the other party.
(d) By Seller and Buyer by mutual agreement.
SECTION 9. AMENDMENT OF AGREEMENT
At any time on or prior to the Closing Date, Buyer or Seller, may, by
written notice to the other (and without a written amendment signed by both
parties):
Page 21
22
(a) Extend the time for performance by the other party:
(b) Waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any
document delivered pursuant hereto; and
(c) Waive compliance by the other party with any of the
covenants or conditions contained in this Agreement (including,
without limitation, a condition precedent to its obligations to
close).
SECTION 10. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
The obligation of Buyer to consummate the transactions contemplated by
this Agreement is subject to and contingent upon the satisfaction on or before
the Closing Date of the following express conditions precedent:
10.1 Performance. Seller shall have performed each and every covenant
and obligation required to be performed by it on or prior to the Closing.
10.2 Representations and Warranties. Each and all of the
representations and warranties of Seller contained in this Agreement shall be
true and correct on and as of the Closing Date in all material respects, as
though given as of the Closing Date, and Seller shall have delivered to Buyer
officers' certificates to that effect.
10.3 Proceedings. Buyer shall have reviewed and approved all
proceedings to be taken by Seller in connection with the transactions
contemplated hereunder and all documents and certificates incident thereto,
including Seller's partnership agreement, resolutions adopted by Seller,
certified by the managing general partner of Seller, approving this Agreement
and the transactions contemplated hereby and such other documents and
certificates as Buyer shall reasonably request.
10.4 The Property. With regard to the Property,
(a) There shall be no pending or threatened condemnation or
eminent domain proceedings.
(b) Buyer shall have obtained a commitment for an owners
title insurance policy on the Property in the face amount of the Price
and in form reasonably satisfactory to Buyer and its lender from a
reputable title insurance company, showing good and indefeasible title
to the Property in fee simple vested in Buyer as of the Closing,
subject only to the Permitted Exceptions. Such policy, when issued,
shall: (i) be current ALTA extended coverage owner's form (but without
a general exception for creditors' rights); (ii) include such
endorsements as Buyer may reasonably require, including without
limitation endorsements 100 (no violations, etc., modified for an
owner), access, survey accuracy and zoning and (iii) insure (A) that
any conditions, covenants and restrictions affecting the Property have
not been violated and that a future violation thereof will not result
in a forfeiture or reversion of title, (B) if obtainable, that all
streets adjoining the Property have
Page 22
23
been completed, dedicated and accepted for public maintenance and use
by the appropriate governmental authorities and that the Property has
access to public streets, (C) if obtainable, that local zoning
ordinances, general plans and all other applicable land use regulations
and all private conditions and restrictions, if any, permit the
transfer and Buyer's intended use of the Property as a matter of right
for an unlimited time period, and not as a legal non-conforming use or
any other legal status which would by its terms or by operation of law
limit the duration of such use and (D) over and against all parties in
possession except current occupants thereof. Buyer shall pay the cost
of such policy.
10.5 Governmental Concurrences. At its own cost and expense, Buyer
shall have obtained and approved copies of (i) the applicable zoning ordinances
and map marked to show the location of the Property and certified by an
appropriate governmental authority to be complete and accurate; (ii) evidence
that such zoning ordinances and the general plans and all other land use
regulations of the municipality having jurisdiction over the Property and all
covenant, conditions and restrictions, if any, affecting the Property permit
the transfer of the Property and Buyer's intended use thereof as a matter of
right for an unlimited time period and not merely as a legal non-conforming
use; (iii) all licenses, certificates, approvals and authorizations, including
plot plan and subdivision approvals, variances, sewer, building and other
permits and all other authorizations required by any governmental authority or
by any applicable covenants, conditions and restrictions for the operation of
the Property for Buyer's intended use thereof, all in accordance with all
applicable governmental requirements; (iv) evidence satisfactory to Buyer that
(A) the Facility holds all licenses, permits, accreditations, authorizations
and certifications required for the operation thereof from any applicable
governmental authority, (B) the Facility is not subject to, or threatened with,
any hold on admissions or other sanction and there are no outstanding, or
threatened, notices of deficiency resulting from any inspection of the Facility
that have not been fully responded to with an acceptable plan of correction
with which the Facility is being operated in compliance, and (C) Buyer shall be
able to obtain all licenses, permits, accreditations, authorizations and
certifications required for the operation of the Facility by Buyer for its
intended use thereof from any applicable governmental authority upon and after
Closing.
10.6 Environmental Report. At its own cost and expense, Buyer shall
have obtained a written report from a qualified geotechnical or engineering
firm, in a form and substance, satisfactory to Buyer, concerning the presence,
handling, treatment and disposal of Hazardous Substances on, in or under the
Property and disclosing (i) the results of a review of prior uses of the
Property disclosed by local public records, including the chain of title, (ii)
contacts with local officials to determine whether any records exist with
respect to the disposal of Hazardous Substances on the Property; and (iii) if
recommended to or required by Buyer, soil samples and groundwater samples
consistent with good engineering practice.
10.7 Survey. At its own cost and expense, Buyer shall have obtained
and approved an ALTA survey of the Property completed in accordance with the
minimum standard detail requirements for ALTA/ACSM Land Title Surveys, with
additional Title A3 survey requirements, jointly established and adopted by ALTA
and ACSM that meet the requirements of a Class A Survey as defined therein, (i)
certified to Buyer and its title insurance company as being true and accurate,
which such certification shall include the acreage of the Property and a
statement that the Property is not located in a flood hazard area; (ii)
identifying thereon all telephone, water,
Page 23
24
sewage, electricity, gas and other utility facilities to the points of
connection; (iii) identifying thereon the relationship between legal setback
requirements and the footprint of the Property; and (iv) showing no
encroachments onto or conflicts with any adjacent property.
10.8 Utilities and Access. Buyer shall have satisfied itself that (i)
all utilities, including telephone, water, sewage, electricity and gas, are
available to service the Property and adequate for Buyer's intended use of the
Property and (ii) all means of ingress and egress, access to public streets and
drainage facilities are available to the Property and adequate for Buyer's
intended use of the Property.
10.9 Physical Inspection. At its own cost and expense, Buyer shall
have inspected and approved the physical condition of the Property including
the improvements and the HVAC, electrical, plumbing and other systems, and
shall receive the written report in form and substance satisfactory to Buyer
from a qualified engineering firm approved by Buyer or any engineer employed by
Buyer to the effect that the improvements on the Property have been constructed
in compliance with, and currently are in compliance with, all governmental
requirements, including without limitation the Americans With Disabilities Act,
and with all restrictions of record applicable thereto which materially affect
the Buyer's intended use of the Property.
10.10 Financing Commitment. Buyer shall have received a written
binding commitment from a real estate investment trust or other financing
source(s) to provide the necessary financing for Buyer's acquisition of the
Assets under terms and conditions satisfactory to Buyer in its sole and
absolute discretion.
10.11 Litigation. No action or proceeding shall have been instituted
and no order, decree or judgment of any court, agency, commission or authority
shall be in affect questioning the validity of this Agreement or seeking to
restrain the consummation thereof which would in Buyer's good faith opinion
render it impossible or inadvisable to consummate the transactions provided for
in this Agreement.
10.12 Opinion of Counsel. Buyer shall have received an opinion of
counsel of Seller, acceptable to Buyer's Counsel, substantially in the form as
set forth in Section 3.4(j).
10.13 Notices; Consents. Seller shall give all notices required under
Section 7.10 and obtain all required consents (if any) for assignment of the
Contracts, Leases, Permits and Licenses in compliance with all applicable laws,
statutes and regulations.
10.14 Schedules and Other Instruments. Each certificate and
Schedule to this Agreement shall be considered a part hereof as if set forth
herein in full. Each Schedule shall be updated by Seller and approved by Buyer
as of Closing. Notwithstanding any other provision herein to the contrary, all
certificates, Schedules or other instruments provided for herein and not
delivered at the time of execution of this Agreement or which are incomplete at
the time of execution of this Agreement shall be delivered or completed as soon
as practicable, in any event on or before Closing; and it shall be deemed a
condition precedent to the Closing hereunder that each such certificate,
Schedule or other instrument shall meet with the reasonable approval of Buyer.
Page 24
25
10.15 Due Diligence. Buyer shall be reasonably satisfied with the
completion of such other due diligence terms as are customary in a transaction
of this type.
10.16 Loans at Closing by Seller. At Closing, Buyer shall have
received a loan from Seller in an amount equal to One Hundred Thousand Dollars
($100,000), which loan shall be represented by two identical notes each in the
amount of Fifty Thousand Dollars ($50,000) substantially in the form of Exhibit
A attached hereto and incorporated herein. If the condition set forth in this
Paragraph 10.16 is not satisfied or waived by Buyer on or prior to Closing,
Buyer at its sole and absolute option may terminate this Agreement without any
liability to Seller whatsoever and the Deposit shall be retained by Buyer.
SECTION 11. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER TO CLOSE.
The obligation of Seller to consummate the transaction contemplated by
this Agreement is subject to and contingent upon the satisfaction on or before
the Closing Date of the following express conditions precedent:
11.1 Performance. Buyer shall have performed each and every covenant
and obligation required to be performed by it on or prior to the Closing.
11.2 Representations and Warranties. Each and all of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct on and as of the Closing Date in all material respects, as
though given as of the Closing Date.
11.3 Litigation. No action or proceeding shall have been instituted
and no order, decree or judgment of any court, agency, commission or authority
shall be in affect questioning the validity of this Agreement or seeking to
restrain the consummation thereof which would in Seller's good faith opinion
render it impossible or inadvisable to consummate the transactions provided for
in this Agreement.
SECTION 12. INDEMNIFICATION.
12.1 Indemnification by Seller.
From and after the Closing Date, Seller agrees to and does hereby
indemnify and hold Buyer, its successors and assigns, harmless at all times
from and against and in respect of any of the following, to the extent that
they are in existence at the Closing Date or arise after the Closing Date based
upon facts, circumstances or conditions existing prior to the Closing or on the
Closing Date (regardless of the date of discovery):
(a) Any and all damages, claims, deficiencies, liabilities,
losses or costs resulting from any Excluded Liability, or from any
breach of any representation or warranty of Seller or from any breach
of any covenant or agreement of Seller under this Agreement, or from
the ownership, lease, management, operations and interests of Seller
in or to the Assets prior to Closing, and from any act or omission of
Seller, its agents or employees prior to Closing.
Page 25
26
(b) All demands, assessments, judgments, costs and legal or
other expenses (including reasonable attorneys' fees, penalties and
interest) incurred by Buyer arising from or in connection with any
action, suit, proceeding or claim incident to any of the matters set
forth in (a) above.
(c) Subject to the provisions of clause (d) below, Buyer
shall be reimbursed on demand for loss, damage, cost or expense
suffered by it in connection with any action, suit, proceeding or
claim incident to any of the matters set forth in (a) or (b) above.
(d) Should any claim be made by a person or entity not a
party to this Agreement with respect to any matter to which the
foregoing indemnity and hold harmless agreement relates, Buyer shall,
promptly after its receipt of notice of the commencement of any
action, suit or proceeding relating to such claim, give written notice
to Seller of the commencement thereof ("Buyer's Notice"), but the
failure to notify Seller shall not relieve Seller of any liability
that it may have to Buyer hereunder, except to the extent Seller
demonstrates that the defense of such action, suit or proceeding is
prejudiced thereby. Within fifteen (15) days of the date of Buyer's
Notice, Seller shall, at it own cost and expense, assume the defense
of such action, suit or proceeding with counsel reasonably acceptable
to Buyer. If Seller fails to assume the defense within the applicable
time period, Buyer may, at it option, assume the defense or make
settlement of such claim, and such settlement shall be binding on
Seller for the purposes of this Agreement.
12.2 Indemnification by Buyer.
From and after the Closing Date, Buyer agrees to and does hereby
indemnify and hold Seller, its successors and assigns, harmless at all time
from and against and in respect of any of the following, to the extent that
they are in existence at the Closing Date or arise after the Closing Date based
upon facts, circumstances or conditions arising prior to the Closing, on or
after the Closing Date (regardless of the date of discovery):
(a) Any and all damages, claims, deficiencies, liabilities,
losses or costs resulting from any Assumed Liability, or from any
breach of any representation or warranty of Buyer or agreement on the
part of Buyer under this Agreement, or from the ownership, lease,
management, operations and interests of Buyer in or to the Assets after
the Closing, and from any act or omission of Buyer, its agents and
employees, after the Closing.
(b) All demands, assessments, judgments, costs and legal or
other expenses (including reasonable attorneys' fees, penalties and
interest) incurred by Seller arising from or in connection with any
action, suit, proceeding or claim incident to any of the matters set
forth in (a) above.
(c) Seller shall be reimbursed on demand for loss, damage,
cost or expense suffered by it in connection with any action, suit,
proceeding or claim incident to any of the matters set forth in (a) or
(b) above.
Page 26
27
12.3 Covenant-Not-To Compete. For a period of three (3) years after
the Closing, neither Seller, any entity controlled by Seller, nor any partner
of Seller, directly or indirectly, shall own or operate an assisted living
facility within a radius of seven (7) miles from the Facility. This restrictive
covenant shall be specifically enforceable by a preliminary and/or permanent
injunction issued by a court sitting in equity, in addition to all other
remedies that may be available for its violation; it being acknowledged,
understood and agreed that the violation of such covenant will cause immediate
and irreparable harm and injury to Buyer.
SECTION 13. DEFAULT
13.1 Seller Default. If Seller defaults under any of the terms or
provisions of this Agreement or in the observance or performance of any
Seller's obligations hereunder, Buyer shall be entitled to pursue and enforce
any and all of Buyer's rights and remedies, whether at law, in equity or
otherwise, including without limitation the right to seek a decree of specific
performance or appropriate injunctive relief, as Buyer in its sole discretion
may determine.
13.2 Buyer Default. If Buyer defaults under any of the terms or
provisions of this Agreement or in the observance or performance of any Buyer's
obligations hereunder, Seller shall be entitled to pursue and enforce any and
all of Seller's rights and remedies, whether at law, in equity or otherwise,
except any right to seek a decree of specific performance or appropriate
injunctive relief, as Seller in its sole discretion may determine.
SECTION 14. ASSIGNMENT
Neither this Agreement nor any of the rights, interests or obligations
herein shall be transferred or assigned by either party without the prior
written consent of the other party (not to be unreasonably withheld). The
preceding sentence shall not apply to or limit Buyer's right to assign this
Agreement to any entity which is (i) controlled by Buyer or (ii) a real estate
investment trust which will provide the financing for Buyer to acquire and take
title to the Assets hereunder. Nothing expressed or referred to in this
Agreement is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or permitted assigns
any legal or equitable right, benefit, remedy or claim under or in respect of
this Agreement or any provision contained herein.
SECTION 15. NOTICE.
All notices given under or with respect to the provisions of this
Agreement shall be sent either by first class, certified or registered mail,
with return receipt requested and postage prepaid, or by independent courier
service, in either case properly addressed to the intended party as follows and
shall be deemed to have been given as of the date received:
If to Seller: Mount Royal Pines, L.P.
c/o Spectrum Management, Inc.
Xxxxxx X. Xxxx, President
0000 Xxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Page 27
28
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx Mojock Xxxxxxxx Xxxxx & Xxxxxx
Suite 500
First Federal Plaza
00 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxx, XX 00000
If to Buyer: Balanced Care Corporation
Attn: Xxxx Xxxxxxxxx, President
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Balanced Care Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
SECTION 16. COOPERATION.
Each of the parties hereto shall cooperate fully with the other party,
both before and after the Closing, in performing their respective obligations
and consummating the sale and purchase of the Facility and the Assets,
including but not limited to supplying any additional information or documents
reasonably requested by the other party, and the execution, acknowledgment,
delivery, filing and recording of statements, certificates, memoranda,
instruments and other documents as may be necessary or appropriate to evidence
or perfect Buyer's purchase and ownership of the Facility and Assets and carry
out the provisions of this Agreement.
SECTION 17. PAYMENT OF EXPENSES.
Legal, accountings and other expenses incident to this Agreement
incurred by Seller shall be paid by Seller; legal, accounting and other
expenses incurred by Buyer shall be paid by Buyer.
SECTION 18. PUBLIC ANNOUNCEMENTS.
Seller and Buyer mutually agree that no party hereto shall make any
release, publish or otherwise make available to the public in any manner
whatsoever any announcement regarding the transactions herein contemplated
without the prior written consent of Seller and Buyer, except for information
reasonably necessary to be directed to governmental agencies to fully and
lawfully effect the transactions herein contemplated.
SECTION 19. CONSTRUCTION.
Page 28
29
This Agreement constitutes and is the complete and final integration
embodying the entire agreement between the parties hereto, and no promise,
representation, agreement, condition or term not herein expressly set forth
shall be deemed or permitted to vary, modify or otherwise change any of the
provisions hereof unless made in writing after the date hereof and signed by
both of the parties hereto. Nothing in this Agreement shall be construed to be
or create an employment agreement between Buyer and any employee of Buyer after
this Closing. The terms and provisions of a certain letter of intent dated
December 13, 1995 (as modified by letter dated January 24, 1996), between
Seller and Buyer are incorporated herein by reference. The waiver by either
party of breach or violation of any provision of this Agreement shall not
operate as, or be construed to be, a waiver of any subsequent breach of the
same or other provision hereof. The captions of the several paragraphs herein
contained are inserted solely for the purpose of convenience, and shall not
limit, influence or affect the meaning or construction of any of the provisions
hereof. Where herein used, the words "hereof", "hereunder", "hereto", and other
similar compounds of the word "here" shall refer to this entire Agreement,
unless the context otherwise clearly requires, and the singular shall include
the plural and vice versa. This Agreement and each provision hereof shall be
construed under and enforced in accordance with the laws of the Commonwealth of
Pennsylvania, and shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
SECTION 20. CONSTRUCTION.
This Agreement may be executed in one (1) or more counterparts. Each
full counterpart shall be deemed an original, but all such counterparts
together shall constitute one and the same instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
Page 29
30
IN WITNESS WHEREOF, Seller and Buyer, each intending to be legally
bound hereby, have duly executed this Agreement on this day, month and year
first above written.
SELLER:
MOUNT ROYAL PINES, L.P.
By: Spectrum Management, Inc.,
ATTEST: General Partner
/s/ [Illegible]
------------------------ By: /s/ Xxxxxx X. Xxxx
Assistant Secretary ----------------------------
Xxxxxx X. Xxxx, President
BUYER:
WITNESS: BALANCED CARE CORPORATION
/s/ Xxxxx X. Xxxxxx
------------------------ By: /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------
Xxxxxx X. Xxxxxx, Xx. Vice President
Page 30
