EX-10.2 3 d528816dex102.htm OPERATIONS TRANSFER AGREEMENT OPERATIONS TRANSFER AGREEMENT
Exhibit 10.2
THIS OPERATIONS TRANSFER AGREEMENT (the “OTA Agreement”) is made and entered into on April 23, 2013 (the “Execution Date”), to be effective as of the Closing Date under the Purchase Agreement (as defined herein) (the “Effective Date”), by and among BHC PROPERTIES, LLC, an Arkansas limited liability company (“BHC”), WHC PROPERTIES, LLC, an Arkansas limited liability company (“WHC”), SHC PROPERTIES, LLC, an Arkansas limited liability company (“SHC”), NHC PROPERTIES, LLC, an Arkansas limited liability company (“NHC”), MHC PROPERTIES, LLC, an Arkansas limited liability company (“MHC”), JHC PROPERTIES, LLC, an Arkansas limited liability company (“JHC”), LVRC PROPERTIES, LLC, an Arkansas limited liability company (“LVRC”; BHC, WHC, SHC, NHC, MHC, JHC and LVRC are each individually referred to as a “Seller” and, collectively, as the “Sellers”), BATESVILLE HEALTHCARE CENTER, LLC, an Arkansas limited liability company (“Batesville Operator”); WEST MEMPHIS HEALTHCARE CENTER, LLC, an Arkansas limited liability company (“West Memphis Operator”); SEARCY HEALTHCARE CENTER, LLC, an Arkansas limited liability company (“Searcy Operator”); MINE CREEK HEALTHCARE CENTER, LLC, an Arkansas limited liability company (“Mine Creek Operator”); MAGNOLIA HEALTHCARE CENTER, LLC, an Arkansas limited liability company (“Magnolia Operator”); JONESBORO HEALTHCARE CENTER, LLC, an Arkansas limited liability company (“Jonesboro Operator”); LAKE VILLAGE RESIDENTIAL CARE CENTER, LLC, an Arkansas limited liability company (“Lake Village Operator; Batesville Operator, West Memphis Operator, Searcy Operator, Mine Creek Operator, Magnolia Operator, Jonesboro Operator and Lake Village Operator are each individually referred to as an “Existing Operator” and, collectively, as the “Existing Operators”), ARKANSAS SNF OPERATIONS ACQUISITION III, LLC, a Delaware limited liability company, and its assigns in accordance with Section 6.01 hereof (the “New Operator Parent”), ARKANSAS SNF OPERATIONS ACQUISITION, LLC, a Delaware limited liability company (the “NOP Indemnity Affiliate”), BATESVILLE HEALTH AND REHAB, LLC, an Arkansas limited liability company (“New Batesville Operator”); BROADWAY HEALTH AND REHAB, LLC, an Arkansas limited liability company (“New West Memphis Operator”); SEARCY HEALTH AND REHAB, LLC, an Arkansas limited liability company (“New Searcy Operator”); MINE CREEK HEALTH AND REHAB, LLC, an Arkansas limited liability company (“New Mine Creek Operator”); MAGNOLIA HEALTH AND REHAB, LLC, an Arkansas limited liability company (“New Magnolia Operator”); JONESBORO HEALTH AND REHAB, LLC, an Arkansas limited liability company (“New Jonesboro Operator”); LAKE VILLAGE SENIOR LIVING, LLC, an Arkansas limited liability company (“New Lake Village Operator”; New Batesville Operator, New West Memphis Operator, New Searcy Operator, New Mine Creek Operator, New Magnolia Operator, New Jonesboro Operator and New Lake Village Operator are each individually referred to as a “New Operator” and, collectively, as the “New Operators”).
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AGREEMENT
ARTICLE I
“ADH” means the Arkansas Department of Health.
“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, and for purposes of this definition, the term “control” means the direct or indirect power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
“Closing” means the consummation of the transactions contemplated by this Agreement on the Closing Date (effective as of 12:00 AM on the Closing Date).
“Closing Date” means (i) with respect to the Lake Village Facility, the Closing Date under the Lake Village Purchase Agreement; and (ii) with respect to the Six Facilities, August 1, 2013; provided that, to the extent any New Operator (other than Lake Village Operator) has not obtained all New Operator Licenses with respect to a particular Facility, the Closing Date for such Facility shall be extended to the date that such New Operator obtains all of the New Operator Licenses with respect to such Facility.
“Code” means the Internal Revenue Code of 1986, as amended.
“Cost Reports” means Medicare, Medicaid and other cost reports pertaining to any Facility.
“Employee Records” means all books, data and records (including electronic versions thereof) related to the Existing Employees.
“Environmental Laws” means all currently existing federal, state, and local statutes, ordinances, rules, orders, regulations, remediation standards, and other provisions having the force of law for the protection of the environment, including the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the federal Resource Conservation and recovery Act, as amended, and related state statutes.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
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“Excluded Assets” means those assets described on Exhibit C attached hereto.
“Excluded Records” means: (a) any records that, if provided to New Operator Parent and/or any New Operator, would violate any applicable Law, (b) any records relating to Sellers’ and/or Existing Operators’ efforts to market the Facilities for sale, including any correspondence or other communications with other bidders, (c) any records, the disclosure of which would, in the opinion of legal counsel to Existing Operators, (i) jeopardize any legal privilege available to any Seller, any Existing Operator, or any of their respective Affiliates, relating to such records, or (ii) cause any Seller, any Existing Operator, or any of their respective Affiliates, to breach a confidentiality obligation by which such Person is bound, and (d) policy and procedure manuals (subject to Section 3.08(c) hereof). Under no circumstances shall any Resident Records (as defined below) and any Employee Records be Excluded Records.
“Governmental Authority” means any nation or government, any state, local or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
“Interim Period Agreements” means the Management Agreements and the Consulting Agreements. For the avoidance of doubt, the Lake Village Facility shall not be subject to the Interim Period Agreements.
“Law” or “Laws” means all foreign, federal, state, county and local laws, statutes, rules, regulations, codes, ordinances, orders, judgments, writs, injunctions, decisions or demand letters issued, entered or promulgated by any Governmental Authority, including common law.
“Liens” means any and all liens, encumbrances, charges, pledge and/or security interest.
“New Operator Licenses” has the meaning set forth in Section 4.02(d) hereof.
“New Owners” means CHP Batesville Healthcare Owner, LLC, CHP Broadway Healthcare Owner, LLC, CHP Searcy Healthcare Owner, LLC, CHP Mine Creek Healthcare Owner, LLC, CHP Magnolia Healthcare Owner, LLC, CHP Jonesboro Healthcare Owner, LLC and Lake Village RE Purchaser.
“OTA Agreement” means this OTA Agreement and all Exhibits and Schedules attached to this OTA Agreement, which are hereby incorporated into and made a part of this OTA Agreement as if set forth in full herein, provided, however, that in no event shall “OTA Agreement” include the Purchase Agreement.
“OTA Assets” means the assets described on Exhibit B attached hereto.
“OTA Assumed Liabilities” means the liabilities described on Exhibit D attached hereto.
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“OTA Excluded Liabilities” means all liabilities of Sellers and/or Existing Operators (other than the OTA Assumed Liabilities), including, without limitation: (a) any costs of operations, lawsuits, patient, employee or third party claims, demands, losses and expenses arising, occurring and incurred during periods prior to the Closing Date, (b) quality assurance fees or bed taxes for periods prior to the Closing Date, and (c) liabilities under Assumed Contracts arising, occurring and incurred during periods prior to the Closing Date.
“PBS” means Perennial Business Services, LLC, a Maryland limited liability company.
“PCS” means Perennial Consulting Services, LLC, a Maryland limited liability company.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority.
“Records” means Resident Records, Employee Records and all other books and records, in whatever medium and wherever located, owned by Sellers and/or Existing Operators exclusively for (or in connection with) the ownership of the OTA Assets or the operations of one or more of the Facilities, including, to the extent such exists and is in the possession of a Seller and/or an Existing Operator, all Cost Reports, contracts, agreements, correspondence, accounting records, legal records, employment and employee records, medical and clinical records, quality of care records, management records, resident and family complaints, records that would indicate payment for care provided to residents, and corporate and internal records, but not the Excluded Records.
“Resident Records” has the meaning set forth in Section 4.01(p)(xvi) hereof.
“Seller’s and Existing Operator’s Knowledge” means the actual knowledge of V. Xxxxx Xxxxxxxxxxx, Xxxxxx Xxxxxxxxxxx and/or Xxxxx Xxxxx, without independent verification or investigation.
“Seller/Existing Operator Licenses” has the meaning set forth in Section 4.01(f) hereof.
“Taxes” means all taxes, however denominated, including any interest, penalties, or additions to tax that may become payable in respect thereof, imposed by any Governmental Authority, whether arising before, on, or after the Closing Date.
ARTICLE II
TRANSFER OF OTA ASSETS; ASSUMPTION OF OTA ASSUMED LIABILITIES
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acquire, the OTA Assets (but not the Excluded Assets), in consideration of the sum of Ten Dollars ($10.00), the assumption of the OTA Assumed Liabilities (but not the OTA Excluded Liabilities), and the mutual covenants set forth herein.
(a) Bills of Sale with respect to the OTA Assets, duly executed by Sellers and Existing Operators, in the form attached hereto as Exhibit E;
(b) Assignment and Assumption Agreements with respect to the OTA Assumed Liabilities (subject to Section 2.02 hereof), duly executed by Sellers and Existing Operators, in the form attached hereto as Exhibit F;
(c) The Indemnity Escrow Agreement (as defined below), duly executed by Sellers and Existing Operators.
(d) All Seller/Existing Operator Required Consents;
(e) Certificates of Good Standing with respect to Sellers and Existing Operators (dated no more than fifteen (15) days prior to the Closing Date) issued by the Secretary of State (or other duly authorized official) of Arkansas; and
(f) A copy, certified by an authorized manager of each Seller and Existing Operator, of resolutions authorizing the execution and delivery of this OTA Agreement and consummation of the transactions contemplated hereby.
(a) Assignment and Assumption Agreements with respect to the OTA Assumed Liabilities (subject to Section 2.02 hereof), duly executed by New Operators, in the form attached hereto as Exhibit F;
(b) The Indemnity Escrow Agreement duly executed by New Operators
(c) All New Operator Required Consents;
(d) Certificates of Good Standing with respect to New Operator Parent and New Operators (dated no more than fifteen (15) days prior to the Closing Date) issued by the Secretary of State (or other duly authorized official) of Delaware (with respect to New Operator Parent) and Arkansas (with respect to New Operators); and
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(e) A copy, certified by a duly authorized officer of New Operator Parent, NOP Indemnity Affiliate and New Operators, of resolutions authorizing the execution and delivery of this OTA Agreement and the consummation of the transactions contemplated hereby.
2.07 Closing Costs. Each party shall pay all costs and fees of its respective counsel.
ARTICLE III
3.02 Cost Reports and Related Liabilities.
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Existing Operators’ right and responsibility, and New Operator Parent, New Operators, and their respective Affiliates and representatives (the “New Operators’ Indemnified Parties”), shall be indemnified, defended and held harmless by Sellers and Existing Operators if any liability, claim or obligation relating to such reimbursements or Cost Reports (the “Existing Operator Cost Report Obligations”) is imposed upon New Operators’ Indemnified Parties, (except to the extent such liability, claim or obligation relates to the Interim Period) subject to the Interim Period Agreements.
(c) New Operators’ Billing. From the Closing Date until the date that is two (2) years after the Closing Date, New Operators shall, in connection with any and all Medicare Cost Reports submitted following such Closing Date, include in all such Cost Reports an amount equal to the amount of bad debt carried on the books of the Existing Operators arising from services to beneficiaries of the Medicare program prior to the Closing Date, provided that, Existing Operators provide New Operators with logs and supporting backup documentation for such bad debt (collectively, “Existing Operators’ Bad Debt”). On settlement of such amounts under the Medicare program, New Operators shall promptly forward to Existing Operators all such amounts within five (5) business days after receipt by New Operators, subject to the Interim Period Agreements. In addition, from the Closing Date until the date that is two (2) years after the Closing Date, New Operators shall xxxx all Medicare claims of Existing Operators for services to beneficiaries of the Medicare program prior to the Closing Date. Within five (5) business days after receipt of such payments, New Operators shall promptly forward all such amounts to the Existing Operators, subject to the Interim Period Agreements.
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immediately prior to the Effective Date (collectively, the “PBS/PCS Transferred Employees”). New Operators shall offer to hire at least seventy-five percent (75%) of all of the EO Employees who are actively working as of the date immediately prior to the Closing Date (collectively, the “EO Transferred Employees”; together with the PBS/PCS Transferred Employees collectively referred to herein as, the “Transferred Employees”). New Operators, Addit and SLC shall employ such personnel including providing such compensation and benefits for such period and at such level sufficient for Existing Operators, PBS and PCS to satisfy any WARN Act (as defined below) liabilities. For the purposes of this Section 3.03(c), “actively working” shall mean those employees who are in good standing with the Existing Operators, PBS and/or PCS, and who are not temporarily absent from active employment by reason of disability, illness, injury, workers’ compensation, approved leave of absence or layoff. New Operators, Addit and/or SLC reserve the right to establish new terms and conditions of employment. Transferred Employees, at the option of New Operators, Addit and/or SLC, may be required to submit to and pass background checks, pre-employment physicals and drug screening as a condition to their hiring and retention by New Operators, Addit and/or SLC.
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(i) Except as set forth in Schedule 3.03(h)(i), there are no employment-related complaints or charges pending or, to Seller’s and Existing Operator’s Knowledge, threatened against Existing Operators, PBS or PCS with the Equal Employment Opportunity Commission, Department of Labor, or any other comparable state or local agency.
(ii) Except as set forth on Schedule 3.03(h)(ii), there are no workers’ compensation claims pending or, to Seller’s and Existing Operator’s Knowledge, threatened against Sellers, Existing Operators, PBS or PCS. To the extent any such workers’ compensation claims are pending or threatened against Sellers, Existing Operators, PBS or PCS, Schedule 3.03(h)(ii) also details whether such claim or claims are covered by workers’ compensation insurance.
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forwarded by Existing Operators within five (5) business days to New Operators, together with applicable remittance advices, in each case, subject to the Interim Period Agreements.
(i) If such payments either specifically indicate on the accompanying remittance advice, or if the parties agree, that they relate to periods prior to the Closing Date, they shall be forwarded to Existing Operators by the New Operators, along with the remittance advice, within five (5) business days after receipt thereof, subject to the Interim Period Agreements;
(ii) If such payments indicate on the accompanying remittance advice, or if the parties agree, that they relate to periods on and after the Closing Date, they shall be retained by the New Operators, subject to the Interim Period Agreements;
(iii) If such payments indicate on the accompanying remittance advice, or if the parties agree, that they relate to periods for which both parties are entitled to payment under the terms hereof, the portion thereof which relates to the periods prior to the Closing Date shall be remitted to Existing Operators within five (5) business days after receipt thereof, and the balance shall be retained by the applicable New Operators and if received by Existing Operators, shall be forwarded to by Existing Operators within five (5) business days to New Operators, in each case, subject to the Interim Period Agreements; and
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(iv) For a period of thirty (30) days after the Closing Date, if there is no remittance advice accompanying any payment received by New Operators, or if the accompanying remittance advice does not indicate the period to which a payment relates, then any such unidentified payment shall first be applied to pre-Closing Date balances and be remitted to Existing Operators within five (5) business days after receipt thereof (subject to the Interim Period Agreements), with any excess applied to balances due for services rendered by the New Operators on and after the Closing Date. Thereafter, if there is no remittance advice accompanying any payment received, or if the accompanying remittance advice does not indicate the period to which a payment relates, then any such unidentified payment shall first be applied to post-Closing Date balances and be remitted to New Operators within five (5) business days after receipt thereof, with any excess applied to balances due for services rendered by the Existing Operators before the Closing Date, subject to the Interim Period Agreements. Upon the reasonable request of the other party, each party shall provide the requesting party copies of all documents and information supporting or relating to any unidentified payment within five (5) business days of such request.
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(a) Each of Sellers and Existing Operators (on one hand) and New Operators (on the other hand) agree that all non-public information relating to the Facilities and their operations, in whatever form delivered, made available, or disclosed before or after the Closing Date (the “Confidential Information”) is of a confidential and proprietary nature. Each party agrees: (i) that it will maintain the confidentiality of the Confidential Information, (ii) that it will protect and secure the Confidential Information in a commercially reasonable manner, and in any event in a manner no less protected and secure than such Person’s own confidential information, (iii) that it will not use the Confidential Information other than in connection with the consummation of the transactions contemplated by this OTA Agreement (or to enforce its rights under this OTA Agreement) or to own and operate the Facilities, and (iv) that it will disclose the Confidential Information only: (x) as may be required by Law, or (y) to its directors, officers, employee, agents, and representatives (including potential lenders) on a need-to-know basis in order to consummate the transactions contemplated hereby (or to enforce its rights hereunder), or in connection with the ownership and operation of the Facilities. Each party agrees to cause its directors, officers, employees, agents, and representatives to comply with the obligations of such Person under this Section 3.10.
(b) Each party recognizes that irreparable injury will result from a breach by such Person of Section 3.08 and/or this Section 3.10, and that money damages will be inadequate to fully remedy such injury. Accordingly, in the event of a breach or threatened breach of such provisions, a non-breaching party shall be entitled to seek (in addition to any other remedies which may be available to such Person) one or more preliminary or permanent orders (i) restraining and enjoining any act which would constitute a breach or (ii) compelling the performance of any obligation which, if not performed, would constitute a breach.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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(as defined in the Order) who has been determined by competent authority to be subject to the prohibitions contained in the Orders, or (iii) is owned or controlled by (including without limitation by virtue of such Person being a director or owning voting shares or interests), or acts for or on behalf of, any Person on the Lists or any other Person who has been determined by competent authority to be subject to the prohibitions contained in the Orders. Neither any Seller nor any Existing Operator is acting, directly or indirectly for, or on behalf of, any Person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked Person, entity, or nation pursuant to any Law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in the transactions contemplated herein, directly or indirectly, on behalf of, or instigating or facilitating the transactions contemplated herein, directly or indirectly, on behalf of, any such Person, group, entity or nation.
(i) Except as otherwise provided in this OTA Agreement: (a) Sellers and Existing Operators have filed or caused to be filed in a timely manner (within any applicable extension periods) all material Tax returns, reports and forms required to be filed by the Code or by applicable state, local or foreign Tax laws, and all such Tax returns, reports and forms, to the extent they relate to the OTA Assets or the operation of the Facilities, are complete and accurate in all material respects, (b) all Taxes shown to be due on such Tax returns, reports and forms have been timely paid in full or will be timely paid in full by the due date thereof, and (c) to each Seller’s and Existing Operator’s Knowledge, no Tax liens have been filed with respect to any Taxes in connection with any OTA Assets.
(ii) Sellers and Existing Operators have made available to New Operators all material income Tax returns filed with respect to the OTA Assets or the operation of the Facilities for Tax periods ended on or after December 31, 2009.
(iii) No claim has ever been made by a taxing authority in a jurisdiction where any Seller or Existing Operator does not file Tax returns that a Seller or Existing Operator is or may be subject to taxation by that jurisdiction.
(iv) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, there is no action, suit, investigation, audit or assessment pending or, to each Seller’s and Existing Operator’s Knowledge, threatened, with respect to Taxes in connection with the OTA Assets or the operation of the Facilities.
(v) To each Seller’s and Existing Operator’s Knowledge, except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities: (i) all monies required to be withheld by Sellers or Existing Operators with respect to the OTA Assets or the operation of the Facilities (including from EO Employees, PCS Employees and PBS Employees for income Taxes and social security and other payroll Taxes) have been collected or withheld and paid to
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the respective taxing authorities in all material respects, and (ii) each Seller and Existing Operator has withheld and paid, in all material respects, all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any EO Employee, any PBS Employee, any PCS Employee, independent contractor, creditor, stockholder, or other person, and all Internal Revenue Service (“IRS”) Forms W-2 and 1099 required with respect thereto have been properly completed in all material respects and timely filed.
(vi) To each Seller’s and Existing Operator’s Knowledge, no “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(1) promulgated under the Code (including any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2)) has been effected in connection with the operation of the Facilities.
(vii) To each Seller’s and Existing Operator’s Knowledge, (i) none of Sellers, Existing Operators or their respective Affiliates has made with respect to Sellers and Existing Operators, or any OTA Assets, any consent under Section 341 of the Code, (ii) none of the OTA Assets is “tax exempt use property” within the meaning of Section 68(h) of the Code, and (iii) none of the OTA Assets is a lease made pursuant to Section 68(f)(8) of the Code.
(viii) No Seller or Existing Operator is a “foreign person” within the meaning of Section 445 of the Code.
(i) Sellers and Existing Operators have made available to New Operators: (i) balance sheet information with respect to the OTA Assets as of December 31, 2012 (the “Balance Sheet Information”) and (ii) income statements for the operations of the Facilities for the twelve (12) month period ending December 31, 2012 and year-to-date income statements for the operations of the Facilities as of March 31, 2013 (the “Income Statement Information”). The Balance Sheet Information and the Income Statement Information have been prepared from the books and records of Sellers and Existing Operators in conformity with generally accepted accounting principles consistently applied (“GAAP”) (except in each case as described in the notes thereto) and on that basis and to Seller’s and Existing Operator’s Knowledge, fairly present (subject, in the case of any statements or information for periods other than a complete fiscal year, to normal, recurring year-end audit adjustments) the financial condition and results of operations of the Facilities as of the respective dates thereof and for the respective periods indicated. To Seller’s and Existing Operator’s Knowledge, the books and records of Sellers and Existing Operators accurately, fairly and correctly set out and disclose, in all material respects, all financial transactions of Sellers and Existing Operators relating to the operation of the Facilities for the periods noted therein.
(ii) To Seller’s and Existing Operator’s Knowledge, the Existing Operators and the Facilities do not have any material liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise), except (i) as disclosed, reflected or reserved against in the Balance Sheet Information or the Income Statement Information, (ii) for items set forth in Schedule 4.01(m)(ii), and (iii) for
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liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the applicable balance sheet or income statement and not in violation of this OTA Agreement.
(iii) To Seller’s and Existing Operator’s Knowledge, the accounting for advance payments and patient trust fund accounts provided to New Operators by Sellers and Existing Operators pursuant to this OTA Agreement is accurate in all material respects.
(p) Health Care Representations. To each Seller’s and Existing Operator’s Knowledge:
(i) Each Facility is duly licensed as a skilled nursing facility or assisted living facility as required under the applicable Laws of the ADH. The licensed bed capacity of each Facility as of the Execution Date is as set forth in Exhibit A. There are no proceedings or actions pending or contemplated to reduce the number of licensed beds of any Facility.
(ii) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, the Existing Operators (and the operation of each Facility participating in the Medicare and/or Medicaid programs) are in substantial compliance in all material respects with the applicable provisions of the applicable Laws of any Governmental Authority having jurisdiction over the ownership, use or operation of any Facility, including (a) staffing requirements, (b) health and fire safety codes (except for code-required sprinkler systems which are being installed at the Batesville Healthcare Center and the Xxxxxx Healthcare Center, as previously disclosed to New Operators (the “Sprinkler System Installation Project”)), including safety standards, (c) applicable Laws relating to the prevention of fraud and abuse, (d) insurance, reimbursement and cost reporting requirements, government payment program requirements and disclosure of ownership and related information requirements, (e) requirements of applicable Governmental Authorities, including those relating to each Facility’s physical structure and environment, licensing, rate setting, equipment and personnel, and (f) any other applicable Laws or agreements for reimbursement with respect to each Facility.
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(iii) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities: (a) each Existing Operator is in compliance in all material respects with the requirements for participation in the Medicare and Medicaid programs with respect to each Facility that currently participates in such programs, (b) no Existing Operator had any deficiencies on its most recent survey (standard or complaint) that would result in a denial of payment for new admissions and (c) no Existing Operator had any deficiencies at “level G” or above on its most recent survey (standard or complaint), nor has any Existing Operator been cited with any substandard quality of care deficiencies (as that term is defined in Part 488 of 42 C.F.R.) on its most recent survey. During the past two (2) years, no Facility has been designated as a Special Focus Facility (as such term is defined by CMS Special Focus Facility Program).
(iv) There are no contracts or agreements with residents of any Facility or with any other persons or organizations that deviate in any material respect from or that conflict with any statutory or regulatory requirements.
(v) Other than the Medicare, Medicaid, Veterans Administration and Total Life Healthcare, Inc., programs, no Existing Operator is a participant in any federal, state or local program whereby any Governmental Authority or any intermediary, agency, board or other authority or entity may have the right to recover funds with respect to any Facility by reason of the advance of federal, state or local funds, including those authorized under the Xxxx-Xxxxxx Act (42 U.S.C. § 291, et seq.). The Existing Operators have received no written notice, and have no knowledge, of any actual or alleged violation of applicable antitrust laws by any Existing Operator.
(vi) Except as set forth on Schedule 4.01(p)(vi) (the “Existing Liens”), all third party payor accounts receivable of each Existing Operator are free of any Liens and no such receivables have been pledged as collateral security for any loan or indebtedness. The Existing Liens shall be terminated on or before the Closing Date.
(vii) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, each Existing Operator is in compliance in all material respects with the Health Care Insurance Portability and Accountability Act of 1996, and the regulations promulgated thereunder.
(viii) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, there is no threatened or pending revocation, suspension, termination, probation, restriction, limitation, or non-renewal of an Seller/Existing Operator License affecting any Existing Operator or any Facility or Medicare or Medicaid provider agreement.
(ix) All Medicare, Medicaid, and private insurance Cost Reports and financial reports required to be submitted by or on behalf of each Facility during the past
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two (2) years are accurate and complete in all material respects and have not been misleading in any material respects. Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, (a) there are no current, pending or outstanding Medicare, Medicaid or third party payor programs reimbursement audits or appeals, and (ii) there are no current or pending Medicare, Medicaid or third party payor programs recoupment claims and there is no basis for making any such recoupment claims, in each case with respect to any Facility (other than a Medicaid related recoupment claim with respect to the Jonesboro Healthcare Center).
(x) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, each Facility and the use thereof complies in all material respects with all applicable local, state, and federal building codes, fire codes (other than the Sprinkler System Installation Project), and other similar regulatory requirements and no waivers of such physical plant standards exist at any of the Facilities.
(xi) Not including any materials protected by attorney-client privilege or constituting attorney work product, true and complete copies of all survey reports, notices and waivers of deficiencies, plans of correction, and any other Governmental Authority investigation reports issued with respect to the Facilities, together with material correspondence with Governmental Authorities concerning the Facilities for the last two (2) years have been made available to New Operators.
(xii) Except as set forth in Schedule 4.01(p)(xii), no Existing Operator or Facility has received any written notice or written communication from any Governmental Authority, alleging any violation of accreditation, professional, trade, industry, ethical or other applicable standards by any Existing Operator or Facility.
(xiii) No Existing Operator or any of its Affiliates have provided any incentives to contracted provider networks or providers that have violated any applicable Law with respect to inducing, directly or indirectly, such contracted provider networks or providers to refer patients to any of the Facilities. Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, each Existing Operator and each Facility are, and during the past two (2) years have been, in material compliance with the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), Xxxxx law (42 U.S.C. § 1395nn), False Claims Act (31 U.S.C. § 3729 et seq.) and any state law prohibiting kickbacks or certain referrals relating or applicable to Medicare or any other state or federal health care programs. In addition, the Existing Operators and each Facility are, and during the past two (2) years have been, in material compliance with all applicable Laws pertaining to (a) xxxxxxxx to insurance companies, health maintenance organizations and other managed care plans or otherwise related to insurance fraud and (b) collection agencies and the performance of collection services.
(xiv) To Seller’s and Existing Operator’s Knowledge, each employee of any Existing Operator who is required by Law to hold a permit or other qualification to deliver health care services to patients (including the performance of diagnostic services such as x-ray or lab services) holds such permit or other qualification and is performing only those services which are permitted by such permit or other qualification.
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(xv) Sellers and Existing Operators have made available to New Operators, Patient Census Information that is true, complete and accurate in all material respects for each of the Facilities for the last two (2) calendar years and current year-to-date.
(xvi) To Seller’s and Existing Operator’s Knowledge, (i) Resident Records (as hereinafter defined) used or developed in connection with the operation of the Facilities have been maintained in all material respects in accordance with all Laws governing the preparation, maintenance of confidentiality, transfer and/or destruction of such records and (ii) there is no material deficiency in the Resident Records. For the purposes of this Agreement, the “Resident Records” means all books, data and records (including electronic versions thereof) related to the operation of the Facilities, including financial and accounting records, customer lists, patient lists, resident lists, patient charts and care plans, family or emergency contact lists, referral source lists, regulatory surveys and reports, incident tracking reports, advertising and marketing materials and competitive analyses, all policy and procedure manuals, and all records and reports (except for such records and reports where transfer is prohibited by Law) relating to all residents or patients at the Facilities.
(i) To each Seller’s and Existing Operator’s Knowledge, except for any Assumed Contract, such Seller or Existing Operator is not a party to or bound by any contract, agreement, lease, commitment, or instrument: (i) that has been entered into, renewed, extended, or otherwise amended in the ordinary course of operating the Facilities; and (ii) that such Seller or Existing Operator is unable to terminate as of the Closing without penalty or prospective liability.
(ii) To each Seller’s and Existing Operator’s Knowledge, except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, all Assumed Contracts are valid,
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binding and in full force and effect and are enforceable by Seller or Existing Operator party thereto, in accordance with their terms, subject to the effect any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the enforcement of creditor’s rights generally. Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, each Seller or Existing Operator, as applicable, has performed all material obligations required to be performed by them to date under the Assumed Contracts, and they are not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to each Seller’s and Existing Operator’s Knowledge, no other party to any Assumed Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder. Except as disclosed in the applicable Disclosure Schedule, no Seller or Existing Operator has (i) received any notice of the intention of any party to terminate any Assumed Contract listed in any schedule or (ii) delivered to the other party any notice of its intention to terminate any Assumed Contract listed in any Disclosure Schedule. Complete and correct copies of all contracts listed in the Disclosure Schedules, together with all modifications and amendments thereto, have been delivered to New Operators.
(iii) Sample forms of patient admission agreements and resident admission agreements (“Patient/Resident Contracts”) have been delivered to New Operators. Except as set forth in Schedule 4.01(r)(iii), no Patient/Resident Contract deviates in any substantial respect from such sample forms. To Seller’s and Existing Operator’s Knowledge, all residents of the Facilities have executed Patient/Resident Contracts.
(i) Schedule 4.01(s)(i) sets forth a true and complete list of all “employee pension benefit plans” (as defined in Section 3(2) of ERISA), established, maintained or contributed to by any Seller or any Existing Operator for the benefit of any officers or EO Employees, PCS Employees or PBS Employees (“EO Pension Plans”) and all “employee welfare benefit plans” (as defined in Section 3(1) of ERISA), bonus, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, restricted stock, stock appreciation right, vacation, employment, retention, severance, medical, dental, vision, disability, death benefit, sick leave, insurance, fringe benefit or other plan, arrangement or understanding, in each case established, maintained, or contributed to by any Seller, Existing Operator or any of their respective affiliates for the benefit of any officers or EO Employees, PCS Employees or PBS Employees (all the foregoing, including EO Pension Plans, being herein called “EO Benefit Plans”). None of the EO Benefit Plans is a “multiemployer plan” as defined in Section 3(37) of ERISA
(ii) Sellers and Existing Operators have made available to New Operators, with respect to each EO Benefit Plan, true, complete and correct copies of: (i) all EO Benefit Plan documents and amendments (or, in the case of any unwritten EO
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Benefit Plans, descriptions thereof), (ii) the current and most recent summary plan description for each EO Benefit Plan for which such a summary plan description is required, (iii) each trust agreement, group annuity contract or other funding and financing arrangement relating to any EO Benefit Plan, and (iv) any discrimination tests performed during the last three (3) plan years.
(iii) Each EO Benefit Plan which is intended by its terms to be qualified under Section 401(a) of the Code (i) has received a favorable determination letter from the IRS that such EO Benefit Plan is so qualified under the Code, or (ii) is the adoption of a prototype or volume submitter plan that has received a favorable opinion letter or advisory letter from the IRS, and, to each Seller’s and Existing Operator’s Knowledge, no circumstance exists which would reasonably be expected to cause such EO Benefit Plan to cease being so qualified. Each EO Benefit Plan complies, and has been maintained, in all material respects in accordance with its terms and all requirements of applicable Laws, and there has been no notice issued by any Governmental Authority questioning or challenging such compliance. There are no actions, suits or claims (other than routine claims for benefits) pending or, to each Seller’s and Existing Operator’s Knowledge, threatened against or involving any EO Benefit Plan or the assets of any EO Benefit Plan. No Seller or Existing Operator has any liability of any kind whatsoever, whether direct, indirect, contingent or otherwise, on account of (i) any violation of the Health Care Requirements of Part 6 of Title I of ERISA or Section 4980B of the Code, (B) under Section 502(i) or Section 502(l) of ERISA or Section 4975 of the Code, (C) under Section 302 of ERISA or Section 412 of the Code, or (D) under Title IV of ERISA.
(iv) Other than with respect to any Assumed Liabilities, no amounts related to any bonus, severance, job security or similar benefit will become payable as a result of the Closing for which any New Operator will bear any liability after the Closing.
(t) Employee and Labor Matters.
(i) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities: (a) there is no, and during the past three (3) years there has not been any, labor strike, dispute, work stoppage or lockout pending, or, to each Seller’s and Existing Operator’s Knowledge, threatened, against or affecting the operation of the Facilities; (b) to each Seller’s and Existing Operator’s Knowledge, no union organizational campaign is in progress with respect to the EO Employees, PCS Employees and/or PBS Employees and no question concerning representation of such EO Employees, PCS Employees and/or PBS Employees exists; (c) no Seller or Existing Operator is engaged in any unfair labor practice in connection with the operation of the Facilities; (d) there are no unfair labor practice charges or complaints pending, or, to each Seller’s and Existing Operator’s Knowledge, threatened, before the National Labor Relations Board or any state or local labor relations board in connection with the operation of the Facilities; (e) there are no pending, or, to each Seller’s and Existing Operator’s Knowledge, threatened, union grievances in connection with the operation of the Facilities; (f) there are no pending, or, to each Seller’s and Existing Operator’s Knowledge, threatened, charges in connection with the operation of the Facilities against any Seller or Existing Operator or any current or former employee
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of the Facility before the Equal Employment Opportunity Commission or any state or local agency responsible for the prevention of unlawful employment practices (except for the EEOC charge Mine Creek Healthcare Center as previously disclosed to New Operators); and (g) no Seller or Existing Operator has received written notice during the past three (3) years of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation of or affecting the operation of the Facilities and, to each Seller’s and Existing Operator’s Knowledge, no such investigation is in progress.
(ii) No Existing Employee is, to each Seller’s and Existing Operator’s Knowledge, a party to or bound by any contract, or subject to any judgment that may interfere with the use of such Existing Employee’s best efforts to promote the interests of the Facilities, may conflict with the operation of the Facilities, this OTA Agreement, the OTA Sale Transaction or the APA Sale Transaction or that has had or could reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities. To each Seller’s and Existing Operator’s Knowledge, no activity of any employee at a Facility as or while an employee of such Facility has caused a violation of any employment contract, confidentiality agreement, patent disclosure agreement or other contract to which such employee was a party. To each Seller’s and Existing Operator’s Knowledge, neither the execution and delivery of this OTA Agreement, the consummation of the OTA Sale Transaction or the APA Sale Transaction, nor the conduct of the operation of the Facilities by the Existing Employees, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, under which any such Existing Employee is now obligated.
(iii) Except as would not reasonably be expected to have a material adverse effect on the OTA Assets and the operations of the Facilities, since the enactment of the WARN Act, to each Seller’s and Existing Operator’s Knowledge, (i) no Seller or Existing Operator has effectuated a “plant closing” (as defined in the WARN Act) affecting any Facility, (ii) there has not occurred a “mass layoff” (as defined in the WARN Act) affecting any Facility, (iii) no Seller or Existing Operator has been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar applicable Law and (iv) none of the Existing Employees will have suffered an “employment loss” (as defined in the WARN Act) during the six (6) month period prior to the Effective Date.
(iv) Other than West Memphis Operator, no Existing Operator is a party to any collective bargaining agreement or other labor contract applicable to any EO Employees.
(v) To each Seller’s and Existing Operator’s Knowledge, (a) none of the funds or other assets of any Seller or Existing Operator or any of their affiliates constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or Governmental Authority subject to trade restrictions under U.S. applicable Law, including the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any executive orders or regulations promulgated thereunder with the result that the investment in any Seller or
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Existing Operator or any of their Affiliates, as applicable (whether directly or indirectly), is prohibited by law (an “Embargoed Person”); (b) no Embargoed Person has any interest of any nature whatsoever in any Seller, any Existing Operator or any of their Affiliates, as applicable, with the result that the investment in any Seller, any Existing Operator or any of their Affiliates, as applicable (whether directly or indirectly), is prohibited by applicable Law; and (c) none of the funds of any Seller, any Existing Operator or any of their Affiliates, as applicable, have been derived from any unlawful activity with the result that the investment in any Seller, any Existing Operator or any of their Affiliates, as applicable (whether directly or indirectly), is prohibited by applicable Law.
(u) Broker’s Fee. No broker, finder, or other Person is entitled to any brokerage fees, commissions, or finder’s fees for which New Operator Parent or New Operators could become liable or obligated in connection with the transactions contemplated hereby by reason of any action taken by Sellers or Existing Operators. Sellers and/or Existing Operators shall be solely obligated to pay any and all commissions due to any party resulting from the sale and purchase of the OTA Assets, including Vantage Medical, Inc.
Each New Operator hereby acknowledges and agrees that, except with respect to the foregoing representations and warranties set forth in this Section 4.01, the OTA Assets are being conveyed by Sellers and Existing Operators to New Operators in “as-is, where-is” condition without warranty or representation, express or implied.
4.02 New Operator Parent’s, NOP Indemnity Affiliate, and New Operators’ Representations and Warranties. New Operator Parent, NOP Indemnity Affiliate and each New Operator hereby represents and warrants (as of the Effective Date) to Sellers as follows:
(a) Organization. New Operator Parent and NOP Indemnity Affiliate are each duly organized and validly existing under the Laws of Delaware. Each New Operator is duly organized and validly existing under the Laws of Arkansas.
(b) Authority. The execution, delivery, and performance by New Operator Parent, NOP Indemnity Affiliate, and each New Operator of this OTA Agreement have been duly authorized by all necessary corporate or limited liability company action by a duly authorized officer or manager, and no other proceedings on the part of such Person are necessary to authorize such execution, delivery, and performance. This OTA Agreement has been duly executed by New Operator Parent, NOP Indemnity Affiliate, and each New Operator and constitutes its valid and binding obligation, enforceable in accordance with its terms, subject to bankruptcy, insolvency, and other statutes affecting creditors’ rights generally.
(c) No Conflict or Violation. The execution, delivery, and (subject to the receipt of all consents, approvals, authorizations, certifications, waivers, and notifications set forth on Schedule 4.02(c) of the Disclosure Schedules (the “New Operator Required Consents”)) performance by New Operator Parent, NOP Indemnity Affiliate, and each New Operator of this OTA Agreement does not and will not: (i) violate or conflict with any provision of the articles or certificate of incorporation or bylaws (or certificate of organization or operating agreement) of New Operator Parent and each New Operator, (ii) violate any provision of Law applicable to such Person, or (iii) violate any judgment, order or decree applicable to any such Person, or result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contract to which such Person is a party.
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(d) Licenses. To each New Operators’ knowledge, Schedule 4.02(d) sets forth a complete and correct list of all material permits, licenses, certifications, registrations, authorizations and accreditations from any Governmental Authority required to be obtained or held by any New Operator in connection with the ownership of the OTA Assets and operation of the Facilities (the “New Operator Licenses”).
(e) OFAC. New Operator Parent, NOP Indemnity Affiliate, and each New Operator is in compliance with the requirements of the Orders. Neither such Person nor any of its Affiliates (i) is listed on the Lists, (ii) is a Person (as defined in the Order) who has been determined by competent authority to be subject to the prohibitions contained in the Orders, or (iii) is owned or controlled by (including without limitation by virtue of such Person being a director or owning voting shares or interests), or acts for or on behalf of, any Person on the Lists or any other Person who has been determined by competent authority to be subject to the prohibitions contained in the Orders. Neither New Operator Parent, nor NOP Indemnity Affiliate, nor any New Operator is acting, directly or indirectly for, or on behalf of, any Person, group, entity or nation named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked Person, entity, or nation pursuant to any Law that is enforced or administered by the Office of Foreign Assets Control, and is not engaging in the transactions contemplated herein, directly or indirectly, on behalf of, or instigating or facilitating the transactions contemplated herein, directly or indirectly, on behalf of, any such Person, group, entity or nation.
(f) Broker’s Fee. No broker, finder, or other Person is entitled to any brokerage fees, commissions, or finder’s fees for which Sellers and/or Existing Operators could become liable or obligated in connection with the transactions contemplated hereby by reason of any action taken by New Operator Parent, NOP Indemnity Affiliate, or New Operators.
ARTICLE V
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Section 3.03) hereof, (b) any breach by Sellers and/or Existing Operators of any covenants of Sellers and/or Existing Operators set forth in this OTA Agreement, (c) any OTA Excluded Liabilities, including, without limitation, (i) the operation of the Facilities by Sellers and Existing Operators prior to the Closing Date (including, without limitation, failure to comply with employment Laws during any such period, and/or workers’ compensation claims with respect to work performed during any such period), and (ii) deficiencies in the Trust Funds which arise on and prior to the Effective Date, (d) any Existing Operators Bad Debt, and (e) the first $150,000.00 of any Losses suffered by New Operators’ Indemnified Parties with respect to any professional liability claims arising from the operation of the Facilities occurring on and after the Effective Date (the “Professional Liability Losses”). Notwithstanding the foregoing, in no event shall any New Operators’ Indemnified Party have a right to be indemnified for any Losses relating to Sellers’ and Existing Operators’ breach of any representations or warranties hereunder if any New Operators’ Indemnified Party had knowledge of the applicable breach (resulting in such Losses) at the time of Closing.
5.03 New Operator Parent, NOP Indemnity Affiliate, and New Operator Indemnification Obligations. Subject to the provisions of this Article V, New Operator Parent, NOP Indemnity Affiliate, and New Operators, jointly and severally, will indemnify, defend, and hold harmless Sellers, Existing Operators and their respective Affiliates and representatives (collectively, the “Existing Operators’ Indemnified Parties”) from and against any and all Losses actually incurred by any Existing Operators’ Indemnified Party as a result of (or arising from) (a) any breach by New Operator Parent, NOP Indemnity Affiliate, and/or New Operators of any of the representations and warranties of New Operator Parent, NOP Indemnity Affiliate, and/or New Operators set forth in Section 4.02 hereof, (b) any breach by New Operators of any covenants of New Operators set forth in this OTA Agreement, and (c) any OTA Assumed Liabilities, including, without limitation, (i) the operation of the Facilities on and after the Closing Date, and (ii) deficiencies in the Trust Funds which arise after the Closing Date. Notwithstanding the foregoing, in no event shall any Existing Operators’ Indemnified Party have a right to be indemnified for any Losses relating to New Operator Parent and/or New Operators’ breach of any representations or warranties hereunder if any Existing Operators’ Indemnified Party had knowledge of the applicable breach (resulting in such Losses) at the time of Closing.
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upon written notice to the Indemnitee delivered within fifteen (15) business days following its receipt of such notice from the Indemnitee, to retain counsel and conduct the defense of the claim while reserving its right to contest the issue of whether it is liable to the Indemnitee for any indemnification hereunder. If the Indemnitor elects to conduct the defense of the claim, the Indemnitee will cooperate fully with respect thereto, and the costs of any separate counsel retained by the Indemnitee will be borne solely by the Indemnitee. In the event the Indemnitor fails to respond to the written notice of a claim, or refuses to retain counsel and conduct the defense of the claim, the Indemnitee may retain counsel and conduct the defense of the claim, and the Indemnitor will be liable for all reasonable defense costs (including reasonable attorneys’ fees) to the extent the Indemnitor is otherwise obligated hereunder to indemnify the Indemnitee with respect to such claim. In connection with any claim for which the Indemnitor exercises its right hereunder to conduct the defense of such claim, the Indemnitor will have full authority to make all decisions and determine all actions to be taken with respect to the defense and settlement of the claim, including the right to pay, compromise, settle, or otherwise dispose of the claim at the Indemnitor’s expense; provided that any such settlement will be subject to the prior consent of the Indemnitee, which will not be unreasonably withheld or delayed, if the settlement involves relief other than or in addition to the payment of money. A failure to give timely notice under this Section 5.05 will affect the rights and obligations of a party hereunder only to the extent that, as a result of such failure, the party entitled to receive the notice was actually prejudiced as a result of such failure; provided, however, that in no event will a claim for indemnification for breaches of representations and warranties be valid if made after the expiration of the applicable survival period set forth in Section 5.01.
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of the same act, omission, event or breach of, concerning, or by the Sellers and/or the Existing Operators (the “Single Loss Limitation”). Sellers and/or the Existing Operators shall have no obligation to pay or fund any single Loss more than once, though indemnity payments made hereunder may be allocated among the New Operators’ Indemnified Parties (including, with respect to any Losses incurred as a result of (or arising from) clauses (a) and (b) of Section 5.02 above, the New Owners) in such manner as they agree among themselves.
(a) New Operator Parent, NOP Indemnity Affiliate, and each New Operator acknowledges that (i) no Seller or Existing Operator is making (or has made) any representation or warranty, express or implied, in connection with the transactions contemplated in (and the subject matter of) this OTA Agreement, except as set forth in Section 4.01 of this OTA Agreement (and Section 3.03 hereof), and (ii) New Operator Parent, NOP Indemnity Affiliate, and each New Operator is not relying (and has not relied) upon any representations or warranties, express or implied, made by any other Person in connection with the transactions contemplated in (and the subject matter of) this OTA Agreement.
(b) Each Seller and each Existing Operator acknowledges that (i) New Operator Parent, NOP Indemnity Affiliate, and each New Operator are not making (nor has it made) any representation or warranty, express or implied, in connection with the transactions contemplated in (and the subject matter of) this Agreement, except as set forth in Section 4.02 of this OTA Agreement, and (ii) Seller and Existing Operators are not relying (and have not relied) upon any representations or warranties, express or implied, made by any other Person in connection with the transactions contemplated in (and the subject matter of) this Agreement.
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the applicable disbursement date, and such funds in the Indemnity Escrow Account shall remain on deposit with the Indemnity Escrow Agent until the final resolution of such claims. All fees and costs associated with the Indemnity Escrow Account shall be borne by New Operators. Notwithstanding anything to the contrary in the foregoing, if any Professional Liability Losses are paid out of the Indemnity Escrow Account, then Sellers and Existing Operators shall within seven (7) days of such withdrawal deposit into the Indemnity Escrow Account an amount equal to the amount withdrawn from the Indemnity Escrow Account for the payment of such Professional Liability Losses.
ARTICLE VI
6.02 Applicable Law; Dispute Resolution.
(a) This OTA Agreement shall be governed by and construed in accordance with the laws of Arkansas, without regard to conflicts of law rules or principles.
(b) Subject to Section 3.10(b) hereof, in the event of any dispute among the parties arising under or relating to this OTA Agreement, the parties shall use their best efforts to resolve such dispute by negotiation. If the parties fail to resolve such dispute within ten (10) days after any party provides written notice to the other parties of such party’s intent to submit the dispute to arbitration pursuant hereto, such dispute shall be submitted by the parties to binding arbitration in accordance with the procedures of the American Arbitration Association. Any resulting hearing shall be held in the Baltimore, Maryland area, or at such other location as may be agreed upon by the parties. The resolution of any dispute achieved through such arbitration shall be binding and enforceable by a court of competent jurisdiction. The costs of any arbitration shall be borne equally by Sellers and Existing Operators (on one hand) and New Operators (on the other hand).
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If to Sellers or Existing Operators | Perennial Business Services, LLC Executive Plaza III 00000 XxXxxxxxx Xxxx, Xxxxx 000 Xxxx Xxxxxx, XX 00000 Attn: Mr. V. Xxxxx Xxxxxxxxxxx | |
With a copy to: | Xxxxxxx LLP 000 X. Xxxxx Xxxxxx, Xxxxx 000 Xxxxxxxxx, XX 00000 Attn: Xxxxxx X. X. Xxxxxxxxxx , Esq. | |
If to New Operator Parent, NOP Indemnity Affiliate, or New Operators: | Arkansas SNF Operations Acquisition III, LLC c/o Capital Funding Group 0000X Xxxxxxxxx Xxxx Xxxxxxxxx, XX 00000 Attn: Mr. Xxxxx Xxxxxxxx | |
With a copy to: | Fenigstein & Xxxxxxx 1900 Avenue of the Stars, Xxxxx 0000 Xxx Xxxxxxx, XX 00000 Attn: S. Xxxx Xxxxxxxxxx, Esq. |
All such notices shall be effective upon receipt or refusal of delivery, whichever shall occur first. Any party may change its address for the purpose of notice by giving written notice in accordance with the provisions of this Section.
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6.11 General Construction. The word “including” means “including without limitation.” Words such as “herein,” “hereof,” “hereby,” and “hereunder” and words of similar import refer to this OTA Agreement as a whole and not to any particular Section or Subsection of this OTA Agreement.
(a) Sellers hereby join in this OTA Agreement for the purposes of assuming responsibility, jointly and severally, with Existing Operators for the accuracy of all
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representations and warranties and for the performance of all covenants or obligations (including, without limitation, any indemnification obligations), of the Existing Operators as set forth in this OTA Agreement.
(b) Each of New Operator Parent and NOP Indemnity Affiliate hereby joins in this OTA Agreement for the purposes of assuming responsibility, jointly and severally, with New Operators for the accuracy of all representations and warranties and for the performance of all covenants or obligations (including, without limitation, any indemnification obligations), of the New Operators as set forth in this OTA Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, Sellers have executed this Operations Transfer Agreement on the Execution Date, to be effective as of the Effective Date.
SELLERS:
BHC PROPERTIES, LLC, an Arkansas limited liability company | WHC PROPERTIES, LLC, an Arkansas limited liability company | |||||||||||
By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | |||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||
V. Xxxxx Xxxxxxxxxxx | V. Xxxxx Xxxxxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
SHC PROPERTIES, LLC, an Arkansas limited liability company | NHC PROPERTIES, LLC, an Arkansas limited liability company | |||||||||||
By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | |||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||
V. Xxxxx Xxxxxxxxxxx | V. Xxxxx Xxxxxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
MHC PROPERTIES, LLC, an Arkansas limited liability company | JHC PROPERTIES, LLC, an Arkansas limited liability company | |||||||||||
By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | |||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||
V. Xxxxx Xxxxxxxxxxx | V. Xxxxx Xxxxxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
LVRC PROPERTIES, LLC, An Arkansas limited liability company | ||||||||||||
By: | JSJB PROPERTIES, LLC, a Delaware limited liability company, its Manager | |||||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||||
V. Xxxxx Xxxxxxxxxxx | ||||||||||||
Title: | Manager |
IN WITNESS WHEREOF, Existing Operators have executed this Operations Transfer Agreement on the Execution Date, to be effective as of the Effective Date.
EXISTING OPERATORS:
BATESVILLE HEALTHCARE CENTER, LLC, an Arkansas limited liability company | WEST MEMPHIS HEALTHCARE CENTER, LLC, an Arkansas limited liability company | |||||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||
V. Xxxxx Xxxxxxxxxxx | V. Xxxxx Xxxxxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
SEARCY HEALTHCARE CENTER, LLC, an Arkansas limited liability company | MAGNOLIA HEALTHCARE CENTER, LLC, an Arkansas limited liability company | |||||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||
V. Xxxxx Xxxxxxxxxxx | V. Xxxxx Xxxxxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
MINE CREEK HEALTHCARE CENTER, LLC, an Arkansas limited liability company | JONESBORO HEALTHCARE CENTER, LLC, an Arkansas limited liability company | |||||||||||
By: | /s/ V. Xxxxx Xxxxxxxxxxx | By: | /s/ V. Xxxxx Xxxxxxxxxxx | |||||||||
V. Xxxxx Xxxxxxxxxxx | V. Xxxxx Xxxxxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
LAKE VILLAGE RESIDENTIAL CARE CENTER, LLC, an Arkansas limited liability company | ||||||||||||
By: | /s/ X. Xxxxx Santarsieros | |||||||||||
V. Xxxxx Xxxxxxxxxxx | ||||||||||||
Title: | Manager |
IN WITNESS WHEREOF, Each of New Operator Parent and NOP Indemnity Affiliate has executed this Operations Transfer Agreement on the Execution Date, to be effective as of the Effective Date.
NEW OPERATOR PARENT: | ||||||
ARKANSAS SNF OPERATIONS ACQUISITION III, LLC, | ||||||
a Delaware limited liability company | ||||||
By: | /s/ Xxxxx Xxxxxxxx | |||||
Name: | Xxxxx Xxxxxxxx | |||||
Title: | Manager | |||||
NOP INDEMNITY AFFILIATE: | ||||||
ARKANSAS SNF OPERATIONS ACQUISITION, LLC, | ||||||
a Delaware limited liability company | ||||||
By: | /s/ Xxxxx Xxxxxxxx | |||||
Name: | Xxxxx Xxxxxxxx | |||||
Title: | Manager |
IN WITNESS WHEREOF, New Operators have executed this Operations Transfer Agreement on the Execution Date, to be effective as of the Effective Date.
NEW OPERATORS:
BATESVILLE HEALTH AND REHAB, LLC, an Arkansas limited liability company | BROADWAY HEALTH AND REHAB, LLC, an Arkansas limited liability company | |||||||||||
By: | /s/ Xxxxx Xxxxxxxx | By: | /s/ Xxxxx Xxxxxxxx | |||||||||
Xxxxx Xxxxxxxx | Xxxxx Xxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
SEARCY HEALTH AND REHAB, LLC, an Arkansas limited liability company | MAGNOLIA HEALTH AND REHAB, LLC, an Arkansas limited liability company | |||||||||||
By: | /s/ Xxxxx Xxxxxxxx | By: | /s/ Xxxxx Xxxxxxxx | |||||||||
Xxxxx Xxxxxxxx | Xxxxx Xxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
MINE CREEK HEALTH AND REHAB, LLC, an Arkansas limited liability company | JONESBORO HEALTH AND REHAB, LLC, an Arkansas limited liability company | |||||||||||
By: | /s/ Xxxxx Xxxxxxxx | By: | /s/ Xxxxx Xxxxxxxx | |||||||||
Xxxxx Xxxxxxxx | Xxxxx Xxxxxxxx | |||||||||||
Title: | Manager | Title: | Manager | |||||||||
LAKE VILLAGE SENIOR LIVING, LLC, an Arkansas limited liability company | ||||||||||||
By: | /s/ Xxxxx Xxxxxxxx | |||||||||||
Xxxxx Xxxxxxxx | ||||||||||||
Title: | Manager |
NEW OWNERS HEREBY CONFIRM, ON BEHALF OF THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, THAT THEY ARE BOUND BY THE SINGLE LOSS LIMITATION PROVISONS OF SECTION 5.06 OF THIS AGREEMENT.
CHP PARTNERS, LP, a Delaware limited partnership | ||||||||
By: | CHP GP, LLC, a Delaware limited liability company, its General Partner | |||||||
By: | CNL Healthcare Properties, Inc., a Maryland corporation, its sole member | |||||||
By: | /s/ Xxxxxx Xxxxxx | |||||||
Name: | Xxxxxx Xxxxxx | |||||||
Title: | Vice President |
List of Exhibits and Schedules
[Intentionally Omitted]
Exhibit A
Facilities
[Intentionally Omitted]
Exhibit B
OTA Assets
[Intentionally Omitted]
OPERATIONS TRANSFER AGREEMENT
Exhibit C
Excluded Assets
[Intentionally Omitted]
OPERATIONS TRANSFER AGREEMENT
Exhibit D
OTA Assumed Liabilities
[Intentionally Omitted]
OPERATIONS TRANSFER AGREEMENT
Exhibit E
Form of Xxxx of Sale
[Intentionally Omitted]
OPERATIONS TRANSFER AGREEMENT
Exhibit F
Form of Assignment and Assumption Agreement
[Intentionally Omitted]
OPERATIONS TRANSFER AGREEMENT
Exhibit G
Form of Indemnity Escrow Agreement
[Intentionally Omitted]