EXHIBIT 10.36
AGREEMENT FOR SALE OF NURSING HOME PROPERTIES
DATED AS OF JULY 13, 2001
BETWEEN
THE ENTITIES SET FORTH ON SCHEDULE 1 HERETO
AND
NMC OF FLORIDA, LLC
TABLE OF CONTENTS
Page
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ARTICLE 1. Definitions................................................................2
1.1 Assigned Contracts......................................................2
1.2 Effective Time..........................................................2
1.3 Equipment Leases........................................................2
1.4 Excluded Assets.........................................................2
1.5 Facilities..............................................................3
1.6 Operating Contracts.....................................................3
1.7 Personal Property.......................................................3
1.8 Purchased Assets........................................................4
1.9 Real Property...........................................................4
1.10 Additional Defined Terms................................................4
ARTICLE 2. Transfer of the Purchased Assets...........................................5
2.1 Conveyance of the Purchased Assets......................................5
2.2 Purchase Price..........................................................6
2.3 ▇▇▇▇▇▇▇ Money...........................................................6
2.4 Condition of Purchased Assets...........................................7
ARTICLE 3. The Closing................................................................7
3.1 Closing and Effective Times.............................................7
ARTICLE 4. The Assignments or Subleases...............................................7
4.1 Form of Sublease or Assignment..........................................7
4.2 Security Deposits under Subleases.......................................8
ARTICLE 5. Actions to Effect Consideration and Conveyance.............................9
5.1 Deliveries by the ▇▇▇▇▇▇▇ Entities......................................9
5.2 Deliveries by Buyer....................................................10
5.3 Other Deliveries.......................................................11
ARTICLE 6. Prorations, Credits and Costs.............................................11
6.1 Prorations.............................................................11
6.2 Taxes..................................................................12
6.3 Expenses...............................................................12
6.4 Diligence..............................................................12
6.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings..............................................12
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6.6 Other Closing Costs....................................................12
6.7 Credit for PTO.........................................................13
ARTICLE 7. Representations and Warranties............................................13
7.1 Representations and Warranties of the ▇▇▇▇▇▇▇ Entities.................13
7.2 Representations and Warranties of Buyer................................23
ARTICLE 8. Covenants.................................................................25
8.1 Covenants of the ▇▇▇▇▇▇▇ Entities......................................25
8.2 Covenants of Buyer.....................................................31
ARTICLE 9. Additional Provisions.....................................................36
9.1 Title..................................................................36
9.2 Risk of Loss or Condemnation...........................................37
9.3 Termination of a Condemned Facility....................................38
9.4 The ▇▇▇▇▇▇▇ Entities' Obligation to Pay Break-Up Fee Under Certain
Circumstances..........................................................38
9.5 Equipment Leases; Computer Hardware/Software; Manuals; Intellectual
Property Rights........................................................39
9.6 [Intentionally Omitted.]...............................................40
ARTICLE 10. Conditions To Closing....................................................40
10.1 Conditions Precedent to Buyer's Performance............................40
10.2 Conditions Precedent to the ▇▇▇▇▇▇▇ Entities' Performance..............42
ARTICLE 11...........................................................................44
11.1 Leased Facilities......................................................44
11.2 Furniture, Trade Fixtures and Business Equipment.......................44
11.3 Personal Property......................................................44
11.4 Loss or Damage.........................................................45
ARTICLE 12. Termination..............................................................45
12.1 Termination............................................................45
12.2 Due Diligence..........................................................46
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ARTICLE 13. Survival and Indemnification.............................................46
13.1 Survival of Representations............................................46
13.2 Indemnity by the ▇▇▇▇▇▇▇ Entities......................................46
13.3 Indemnity by Buyer.....................................................48
13.4 Defense of Claims......................................................49
ARTICLE 14. Miscellaneous............................................................50
14.1 Further Assurances.....................................................50
14.2 Assignment.............................................................50
14.3 Parties in Interest....................................................50
14.4 Notices................................................................50
14.5 Applicable Law.........................................................51
14.6 Counterparts...........................................................51
14.7 Effect of Captions and Table of Contents...............................51
14.8 Attorney's Fees........................................................52
14.9 Incorporation by Reference.............................................52
14.10 Entire Agreement: Modification; Waiver.................................52
14.11 Publicity..............................................................52
14.12 Confidentiality........................................................52
14.13 Time of the Essence....................................................52
14.14 Survival...............................................................52
14.15 Severability...........................................................52
14.16 Escrow Facilities......................................................52
14.17 Non-Competition........................................................53
14.18 Liability with Appointees..............................................54
14.19 ▇▇▇▇▇▇▇ Entities Liability.............................................55
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EXHIBITS
Exhibit A-1 -- Owned Facilities
Exhibit A-2 -- Leased Facilities
Exhibit B -- Excluded Assets
Exhibit C -- Allocation of Purchase Price
Exhibit D -- Principal Terms and Conditions of Sublease
Exhibit E -- Assignment and Assumption of Lease
Exhibit F -- Special Warranty Deed
Exhibit G -- Memorandum of Sublease
Exhibit H -- ▇▇▇▇ of Sale
Exhibit I -- Assignment and Assumption of Contracts
Exhibit J -- Assignment of Trade Names
Exhibit M -- Audit Materials
SCHEDULES
Schedule 1 -- The ▇▇▇▇▇▇▇ Entities
Schedule 1.1 -- Assigned Contracts
Schedule 1.4.4 -- Deposits; Escrowed Funds
Schedule 1.4.8 -- Deposits under the Leases
Schedule 1.4.10 -- National Contracts
Schedule 4.2 -- Sublease Security Deposits
Schedule 7.1.4 -- Labor Contracts
Schedule 7.1.6(A) -- Environmental Matters
Schedule 7.1.6(B) -- Environmental Reports
Schedule 7.1.7(C) -- Leases and Management Agreement
Schedule 7.1.10 -- Litigation
Schedule 7.1.16 -- Employee Benefit Plans
Schedule 7.1.17 -- Taxes
Schedule 7.1.18(b) -- Patient Admission Contracts
Schedule 7.1.21(a) -- IP Registration
Schedule 7.1.21(b) -- Maintenance
Schedule 7.1.21(c) -- Unregistered Trademark Properties
Schedule 7.1.21(d) -- Infringement
Schedule 7.1.21(e) -- IP Rights Granted to Others
Schedule 7.1.21(f) -- IP Claims
Schedule 7.1.24 -- Notices
Schedule 7.1.25 -- Medicare and Medicaid Participation
Schedule 7.1.26 -- Patient Records
Schedule 7.1.30 -- Patient Trust Funds
Schedule 7.1.31 -- Licensure
Schedule 8.1.10 -- PTO Schedule
Schedule 9.1.D -- Unpermitted Encumbrances
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AGREEMENT FOR SALE OF NURSING HOME PROPERTIES
THIS AGREEMENT (the "Agreement") is made and entered into as
of the ____ day of ____________, 2001, by and between the entities set forth on
Schedule 1 (singular and collectively, the "▇▇▇▇▇▇▇ Entities"), and NMC of
Florida, LLC, a
Florida limited liability company ("Buyer").
Recitals
A. The ▇▇▇▇▇▇▇ Entities are the owners of forty-six (46)
nursing and retirement facilities (the "Owned Facilities") more fully described
in Exhibit A-1 attached hereto. Exhibit A-1 sets forth the names and addresses
of the Owned Facilities.
B. One of the ▇▇▇▇▇▇▇ Entities manages one (1) nursing
facility (the "Managed Facility") and other ▇▇▇▇▇▇▇ Entities lease the six (6)
nursing facilities (the "Leased Facilities") more fully described in Exhibit A-2
attached hereto, pursuant to (i) a management agreement between one of the
▇▇▇▇▇▇▇ Entities and the owner of the Managed Facility (as such management
agreement may have been amended, the "Management Agreement") and (ii) leases
between certain ▇▇▇▇▇▇▇ Entities and the owners thereof (individually, a "Lease"
and collectively, the "Leases"). Exhibit A-2 sets forth the names and addresses
of the Managed Facility and the Leased Facilities and the identity of the owners
and/or sublessors, if applicable, of the Managed Facility and the Leased
Facilities (the "Lessors").
C. The ▇▇▇▇▇▇▇ Entities are also the owners of certain
Personal Property (as hereinafter defined), and are parties to certain Operating
Contracts and Equipment Leases (as such terms are hereinafter defined) with
respect to the Facilities.
D. Among other things, (i) the ▇▇▇▇▇▇▇ Entities wish to sell
the Owned Facilities and the Personal Property to Buyer; (ii) the ▇▇▇▇▇▇▇
Entities wish to assign and/or sublease the Leased Facilities and the Managed
Facility and to assign certain of the Operating Contracts and Equipment Leases
to Buyer; (iii) Buyer wishes to purchase the Owned Facilities and Personal
Property from the ▇▇▇▇▇▇▇ Entities; and (iv) Buyer wishes to assume and/or
sublease the Leased Facilities and the Managed Facility from the ▇▇▇▇▇▇▇
Entities and to assume the ▇▇▇▇▇▇▇ Entities' obligations under the Operating
Contracts and the Equipment Leases, all subject to the terms of this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing, the
covenants, agreements, representations and warranties hereinafter set forth and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
Definitions
For purposes of this Agreement and in addition to any and all
definitions and interpretations otherwise provided throughout this Agreement,
the following words and phrases shall have the meanings set forth below:
1.1 Assigned Contracts. A collective term meaning all Equipment Leases and
Operating Contracts. Schedule 1.1 attached hereto sets forth all Assigned
Contracts as of the date hereof that are Material Contracts (defined below),
though not all contracts listed on such schedule are Material Contracts. For
purposes of this Agreement, "Material Contracts" shall mean any contracts,
agreements or leases relating to any of the Facilities that require payments in
excess of $2,000 per month and that cannot be terminated upon sixty (60) days or
less notice. Notwithstanding anything to the contrary, any contracts excluded in
accordance with Section 8.2.13 shall be excluded from Assigned Contracts.
1.2 Effective Time. 11:59 p.m. local time on the last day of the month in which
the Closing occurs.
1.3 Equipment Leases. A collective term meaning all leases pursuant to which the
▇▇▇▇▇▇▇ Entities are leasing equipment used at the Facilities immediately prior
to the Effective Time other than National Contracts and other than those
Material Contracts that are rejected by Buyer pursuant to Section 8.2.13 hereof.
1.4 Excluded Assets. Shall mean the following:
1.4.1 All of the ▇▇▇▇▇▇▇ Entities' right, title and interest in the
accounts receivable of the Facilities as of the Effective Time
("Accounts Receivable").
1.4.2 Cash and cash equivalents on hand at the Facilities, or relating
to the Facilities, as of the Effective Time, except as otherwise
expressly provided in this Agreement.
1.4.3 All prepayments of insurance on the Purchased Assets prorated to
the Effective Time.
1.4.4 All refunds or reimbursements of whatever nature or description
which relate to or are attributable to the period prior to the
Effective Time and all deposits, escrowed funds and similar funds
(regardless of the form of deposit, escrowed funds, or similar funds),
except as otherwise expressly provided in this Agreement. All such
deposits, escrowed funds and similar funds are listed on Schedule 1.4.4
attached hereto.
1.4.5 All claims, disputes and litigation, and all amounts of any
nature or description relating thereto, to the extent such dispute,
claim or litigation is related to the period prior to the Effective
Time and constitute an asset.
1.4.6 Except as otherwise specifically provided in this Agreement,
proprietary materials of the ▇▇▇▇▇▇▇ Entities respecting their
ownership and operation of the Purchased Assets, including, but not
limited to, internal financial information, policy and procedure and
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training manuals, employee records, dietary menus, contracts and forms
promulgated by any ▇▇▇▇▇▇▇ Entity, and in-service training materials,
except that copies of policy and procedure manuals, employee records
and dietary menus shall be provided as information to Buyer.
1.4.7 Computer equipment, software and computer programs and vehicles
used in connection with any of the Facilities, whether owned or leased
by any ▇▇▇▇▇▇▇ Entity.
1.4.8 All option deposits and security deposits under the Leases as
shown on Schedule 1.4.8 (to be provided within ten (10) days after the
date hereof), except as otherwise specifically provided in this
Agreement and the Subleases.
1.4.9 All items set forth on Exhibit B attached hereto.
1.4.10 All contracts (and rights thereunder) for supplies and/or
services that are set forth on Schedule 1.4.10 attached hereto (the
"National Contracts"), which contracts are national in nature and/or
affect properties other than the Facilities.
1.5 Facilities. A collective term meaning the Owned Facilities, the Leased
Facilities and the Managed Facility.
1.6 Operating Contracts. A collective term meaning any and all maintenance
contracts, service contracts and other similar commitments to which any ▇▇▇▇▇▇▇
Entity is a party with respect to the Facilities immediately prior to the
Effective Time, other than National Contracts and other than those Material
Contracts that are rejected by Buyer pursuant to Section 8.2.13 hereof.
1.7 Personal Property. Personal Property is a collective term meaning, except
for the Excluded Assets, any and all tangible and intangible personal property
owned by the ▇▇▇▇▇▇▇ Entities and now located at the Facilities or that may have
been temporarily removed for repair or storage, subject to usage and replacement
in the ordinary course of business through the Effective Time. Personal Property
shall include, but shall not be limited to, the ▇▇▇▇▇▇▇ Entities' right, title
and interest in and to the following: any and all consumable inventory,
supplies, drugs, medicines and foodstuffs (collectively, "Supplies"); patient
and/or resident records and agreements, provider agreements, records of
inspection of the Purchased Assets by governmental agencies, copies of employee
records (excluding any internal evaluations), records of construction,
architectural plans, surveys, construction contracts and specifications, copies
of all financial statements and warranties related to the Purchased Assets (in
each case, relating to the Facilities collectively, the "Business Records"), as
such may exist in the ▇▇▇▇▇▇▇ Entities' possession at the Effective Time; the
use of the names of the Facilities as set forth in Exhibits A-1 and A-2 hereto,
excluding however, any right to the use of any of the following names, designs
or marks: "▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇ Enterprises", "▇▇▇▇▇▇▇ Enterprises -
Florida",
"Leisure Lodge" and any variation, derivative or combination thereof and
associated trademarks, service marks and logos; linens and other items used in
connection with the operation of the Purchased Assets, beds, furniture and
equipment, nursing equipment, therapy equipment, food service preparation and
distribution equipment, housekeeping equipment, maintenance equipment,
activities equipment and other equipment located in and upon each of the
Facilities. Tangible Personal
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Property with respect to the Leased Facilities that are to be subleased to Buyer
in accordance with the terms hereof shall be set forth on an inventory conducted
by the parties hereto five (5) days prior to the Effective Time and set forth on
an exhibit to be attached to the applicable Subleases.
1.8 Purchased Assets. All of the following:
1.8.1 The Real Property and certain rights to the Leased Facilities and
interests in the Leases as set forth in this Agreement, the Lease
Assignments and/or the Subleases, as applicable.
1.8.2 The Personal Property.
1.8.3 The Assigned Contracts.
1.9 Real Property. A collective term meaning the real estate and all easements,
structures, improvements, rights, and appurtenances attached thereto, the
nursing home and retirement buildings and accessory buildings, if any, located
on the real estate, and all fixtures attached to the real estate, including,
without limitation, all mechanical fixtures and kitchen fixtures, and all
landscaping, lawn, trees, shrubs, parking areas, sidewalks and other
improvements with respect to the Owned Facilities. Exhibit A-1 sets forth the
common street addresses for the Real Property.
1.10 Additional Defined Terms. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Actual Census 10.1.9
Agreement Preamble
▇▇▇▇▇▇▇ Entities Preamble
▇▇▇▇▇▇▇ Excepted Matters 13.3.2D
▇▇▇▇▇▇▇ Indemnitees 13.3.1
Break-Up Fee 9.4(a)
Business Records 1.7
Buyer Preamble
Buyer Excepted Matters 13.2.2F
Buyer Indemnitees 13.2.1
CIA 8.2.6
Closing 3.1
Closing Date 3.1
Department 8.1.6E
Deposit 2.3
DOL 8.2.9
Employment Benefit Plan 7.1.15(a)
Environmental Laws 7.1.5
Escrow Facilities 14.19
Accounts Receivable 1.4.1
FIFO 8.2.11
Financial Statements 7.1.11
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Hazardous Materials 7.1.5
HSR Act 6.5
Intellectual Property 7.1.20(a)
Labor Dispute 7.1.4
Lease Recital B
Lease Assignment(s) 4.1(b)
Leased Facilities Recital B
Leases Recital B
Lessor Consent and Estoppel 8.1.8
Lessors Recital B
Letter of Credit 8.2.11
Liabilities 13.2.1
LIFO 8.2.11
Managed Facility Recital B
Managed Facility Consent 9.1E
Management Agreement Recital B
Material Contracts 1.1
National Contracts 1.4.10
OIG 10.1.10
Owned Facilities Recital A
Patient Admissions Contracts 7.1.17(b)
Permitted Encumbrances 9.1D
Plans 7.1.15
PTO 8.1.9
PTO Schedule 8.1.10
Purchase Price 2.2
Security Deposit 4.2
Sublease(s) 4.1(a)
Supplies 1.7
Surveys 9.1A
Title Commitments 9.1B
Title Company 5.3
Union Meetings 8.1.14
WARN Act 8.2.9
ARTICLE 2.
Transfer of the Purchased Assets
2.1 Conveyance of the Purchased Assets. The ▇▇▇▇▇▇▇ Entities shall sell, convey,
assign and transfer, or sublease, as appropriate, to Buyer on a going concern
basis and upon the terms and conditions set forth herein, in the Subleases, the
Lease Assignments and in the documents executed and delivered in connection
herewith and therewith, all of the ▇▇▇▇▇▇▇ Entities' right, title and interest
in and to the Purchased Assets. Subject to the terms and conditions set forth
herein, in the Subleases, the Lease Assignments and in the documents executed
and delivered in connection herewith and therewith, Buyer agrees to purchase,
assume and/or sublease, as the case
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may be, the Purchased Assets from the ▇▇▇▇▇▇▇ Entities at the Closing effective
as of the Effective Time. Except as provided for herein, Buyer assumes no
liabilities or obligations of the ▇▇▇▇▇▇▇ Entities.
2.2 Purchase Price. In consideration of the transfer of the Purchased Assets as
described herein, Buyer shall pay the ▇▇▇▇▇▇▇ Entities the sum of One Hundred
Sixty-Five Million Dollars ($165,000,000) (as may be adjusted pursuant to
Section 14.16 hereof, the "Purchase Price") to be paid in immediately available
funds at Closing. The Purchase Price will be allocated as specified in Exhibit C
attached hereto.
2.3 ▇▇▇▇▇▇▇ Money. Simultaneously with the execution and delivery of this
Agreement by all parties hereto, Buyer shall deliver to Fidelity National Title
Insurance Company ("Escrow Agent") (pursuant to its standard form escrow
agreement reasonably acceptable to Buyer and the ▇▇▇▇▇▇▇ Entities) an ▇▇▇▇▇▇▇
money deposit in the amount of Three Million Two Hundred Thousand Dollars
($3,200,000) (the "Deposit"), which Deposit is non-refundable, except as
described below. The Deposit shall be held in an interest bearing account. Any
accrued interest shall be transferred with the Deposit.
2.3.1 In the event the transactions contemplated under this Agreement
shall close as provided herein, the Deposit, less any offsets for
expenses paid for by the ▇▇▇▇▇▇▇ Entities prior to Closing and not
reimbursed by Buyer (to the extent Buyer is obligated to pay for such
expenses hereunder), shall be applied against the Purchase Price at the
Closing. In the event that the transactions contemplated under this
Agreement shall fail to close as provided herein due to a breach of
this Agreement by the Buyer, then the Escrow Agent shall pay the
Deposit to the ▇▇▇▇▇▇▇ Entities as liquidated damages. In the event the
Agreement is terminated as a result of (i) a breach of this Agreement
by the ▇▇▇▇▇▇▇ Entities, (ii) the failure to satisfy any condition to
closing contained in Article 10 provided that Buyer is not then in
breach of this Agreement and such breach has been noticed in writing by
the ▇▇▇▇▇▇▇ Entities to the Buyer, or (iii) termination of the
Agreement in accordance with paragraph 12.2, then the Escrow Agent
shall pay the Deposit to the Buyer.
2.3.2 The parties hereto acknowledge that the actual damages sustained
by the ▇▇▇▇▇▇▇ Entities if the transactions contemplated hereby shall
fail to close are difficult to ascertain, and the parties hereby
further agree that the liquidated damages amounts set forth in this
Section 2.3 are a reasonable estimate of the amount of damages,
including consequential damages, which the ▇▇▇▇▇▇▇ Entities would
suffer by reason of Buyer's failure to close under this Agreement, and
further that the retention of the Deposit is the ▇▇▇▇▇▇▇ Entities sole
and exclusive remedy with respect thereto.
2.3.3 In the event the transactions contemplated hereby fail to close
as a result of a material breach hereof by the ▇▇▇▇▇▇▇ Entities of any
provision hereof that is reasonably within the ▇▇▇▇▇▇▇ Entities'
control, then the ▇▇▇▇▇▇▇ Entities shall pay Buyer an amount equal to
the sum of (i) Buyer's reasonable out-of-pocket costs in pursuing the
transactions contemplated hereby, not to exceed Five Million Dollars
($5,000,000) and (ii) One Million Dollars ($1,000,000). Buyer shall
provide the ▇▇▇▇▇▇▇ Entities with reasonable documentation of such
costs. All payments under this Section 2.3.3 shall constitute
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liquidated damages to Buyer. The parties hereto acknowledge that the
actual damages sustained by Buyer if the transactions contemplated
hereby shall fail to close are difficult to ascertain, and the parties
hereby further agree that the liquidated damages amounts set forth in
this Section 2.3.3 are a reasonable estimate of the amount of damages,
including consequential damages, which Buyer would suffer by reason of
the ▇▇▇▇▇▇▇ Entities' failure to close under this Agreement, and
further that the retention of the Deposit is Buyer's sole and exclusive
remedy with respect thereto.
2.4 Condition of Purchased Assets. Except for the representations and warranties
expressly contained in this Agreement, the Purchased Assets are sold or
subleased, as the case may be, in "AS IS, WHERE IS" condition with no warranties
whatsoever, either express or implied, whether of merchantability, of fitness
for a particular purpose, of physical condition, of the ▇▇▇▇▇▇▇ Entities'
operation thereof or otherwise, whether with regard to the Purchased Assets,
real or personal, tangible or intangible, whether conveyed hereby, contained
therein, or related thereto, or with regard to the ▇▇▇▇▇▇▇ Entities' operation
of the Purchased Assets.
ARTICLE 3.
The Closing
3.1 Closing and Effective Times. The Closing pursuant to this Agreement (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Sears Tower,
Chicago, Illinois (or, at Buyer's request, at the offices of Buyer's lender or
its lender's counsel in New York, New York) on the last business day of the
month containing the day that is fifteen (15) days after the day on which Buyer
satisfies the condition described in Section 10.1.4 hereof with respect to at
least forty-three (43) of the Facilities or such other date as the parties may
agree (the "Closing Date"), to be effective as of the Effective Time, but in no
event later than October 31, 2001, to be effective as of the Effective Time;
provided, however, that if the Closing with respect to at least forty-three (43)
Facilities has not occurred on or before October 31, 2001 and Buyer has not
satisfied the condition contained in Section 10.1.4 hereof with respect to at
least forty-three (43) Facilities by such date and Buyer is otherwise in
material compliance with all of its duties and obligations hereunder, then Buyer
may, by written notice to the ▇▇▇▇▇▇▇ Entities, extend the final date for the
Closing with respect to at least forty-three (43) Facilities to occur to
November 30, 2001. The parties hereto may by mutual consent expressed in writing
fix another time to be the Effective Time or the Closing Date or another
location for the Closing, subject to Article 12 hereof.
ARTICLE 4.
The Assignments or Subleases
4.1 Form of Sublease or Assignment. Subject to the terms and conditions of this
Agreement, the ▇▇▇▇▇▇▇ Entities agree, with respect to each Leased Facility,
either:
(a) if the applicable ▇▇▇▇▇▇▇ Entity is not released by the
applicable Lessor from all material liability arising after
the Effective Date under the applicable Lease, to sublease to
Buyer, and Buyer agrees to sublease from the applicable
▇▇▇▇▇▇▇ Entity at the Closing, effective at the Effective
Time, such Leased Facility pursuant to a sublease on the terms
and conditions set forth on Exhibit D attached
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hereto, and such other terms and conditions by which the
parties hereto agree (each a "Sublease" and, collectively, the
"Subleases") provided that the ▇▇▇▇▇▇▇ Entities obtain from
the applicable Lessor the elimination of any provisions that
could cause a default of the Lease based on acts or omissions
of the ▇▇▇▇▇▇▇ Entities with respect to other agreements
between the ▇▇▇▇▇▇▇ Entities and the applicable Lessor, or
cross renewal provisions in the applicable leases. The
Subleases generally shall pass through to the Buyer, as
sublessee, all rights and obligations of the applicable
▇▇▇▇▇▇▇ Entity, as tenant, under the Leases, including,
without limitation, the right to exercise all renewal options
provided to the ▇▇▇▇▇▇▇ Entities under the Leases but not
including any obligations or liabilities which constitute an
Excluded Liability; or
(b) if the applicable ▇▇▇▇▇▇▇ Entity is released by the
applicable Lessor from all material liability arising after
the Effective Date under the applicable Lease provided that
the ▇▇▇▇▇▇▇ Entities obtain from the applicable Lessor the
elimination of any provisions that could cause a default of
the Lease based on acts or omissions of the ▇▇▇▇▇▇▇ Entities
with respect to other agreements between the ▇▇▇▇▇▇▇ Entities
and the applicable Lessor, or cross renewal provisions in the
applicable leases to assign its rights and obligations under
the Leases to Buyer pursuant to an Assignment and Assumption
of Lease, substantially in the form of Exhibit E ---------
attached hereto (each a "Lease Assignment" and, collectively,
the "Lease Assignments"), which Lease Assignments shall
provide that the ▇▇▇▇▇▇▇ Entities remain obligated for any
Excluded Liability and Buyer shall not assume any Excluded
Liability.
Subject to the terms and conditions of this Agreement, the
▇▇▇▇▇▇▇ Entities agree, with respect to the Managed Facility, to assign their
rights and obligations under the Management Agreement and any related documents
including but not limited to any purchase options, lease renewal rights, and
options to renew, if any, pursuant to an assignment and assumption of management
agreement, containing reasonable terms and conditions to which the parties
hereto shall agree.
4.2 Security Deposits under Subleases. At the Closing, in accordance with
Schedule 4.2 Buyer shall deposit with the ▇▇▇▇▇▇▇ Entities cash or an
irrevocable letter of credit, from an institution and in a form acceptable to
the ▇▇▇▇▇▇▇ Entities, in an amount equal to six (6) months of the aggregate base
rent under the Subleases plus six (6) months of payments under the Management
Agreement, to be held by the ▇▇▇▇▇▇▇ Entities pursuant to the terms of the
Subleases and the assignment and assumption of the Management Agreement (the
"Security Deposit") as security for every Sublease and for the assignment of the
Management Agreement. The Security Deposit shall be held by the ▇▇▇▇▇▇▇ Entities
until expiration of the Subleases and the Management Agreement or termination of
or release of the ▇▇▇▇▇▇▇ Entities from liability under the applicable Leases or
the Management Agreement.
8
ARTICLE 5.
Actions to Effect Consideration and Conveyance
5.1 Deliveries by the ▇▇▇▇▇▇▇ Entities. At the Closing the ▇▇▇▇▇▇▇ Entities
shall deliver, execute and deliver or cause to be executed and delivered, as
applicable, to Buyer the following:
5.1.1 Counterpart to a closing statement.
5.1.2 Special Warranty Deeds (or the local equivalent) to the Real
Property for each of the Owned Facilities, substantially in the form of
Exhibit F attached hereto.
5.1.3 Counterpart to a Lease Assignment with respect to each of the
Leases to be assigned, in proper form for recording.
5.1.4 Counterparts to a Sublease with respect to each of the Leased
Facilities to be subleased.
5.1.5 Counterparts to a Memorandum of Sublease for each Sublease in the
form of Exhibit G attached hereto, and otherwise in proper form for
recording.
5.1.6 ▇▇▇▇ of Sale with respect to the Personal Property at each
Facility owned by the ▇▇▇▇▇▇▇ Entities, substantially in the form of
Exhibit H attached hereto.
5.1.7 Counterpart to an Assignment and Assumption of Contracts,
substantially in the form of Exhibit I attached hereto.
5.1.8 An Assignment of Trade Names, substantially in the form of
Exhibit J attached hereto assigning all of the ▇▇▇▇▇▇▇ Entities' right,
title and interest in and to the use of the names of the Facilities set
forth on Exhibits A-1 and A-2 hereto (excepting the names listed in
Section 1.7 hereto).
5.1.9 Necessary state, county and city real estate transfer tax
declarations for each Facility.
5.1.10 A certificate of non-foreign status (pursuant to Section 1445 of
the Internal Revenue Code).
5.1.11 A Certificate of the ▇▇▇▇▇▇▇ Entities that all representations
and warranties of the ▇▇▇▇▇▇▇ Entities in this Agreement are true and
correct in all material respects as of the Closing Date.
5.1.12 Certificate or Certificates of the Secretary or Assistant
Secretary of the ▇▇▇▇▇▇▇ Entities certifying the: (a) Articles of
Incorporation and Bylaws of the ▇▇▇▇▇▇▇ Entities, (b) incumbency and
signatures of officers of the ▇▇▇▇▇▇▇ Entities and (c) resolutions of
the ▇▇▇▇▇▇▇ Entities authorizing the transactions contemplated hereby.
5.1.13 Certificates of Good Standing for the ▇▇▇▇▇▇▇ Entities from
their respective States of incorporation.
9
5.1.14 Certificate of the Secretary of State of the State of
Florida
certifying the ▇▇▇▇▇▇▇ Entities' qualification and good standing as a
foreign corporation.
5.1.15 Any and all consents, approvals, instruments, certificates, and
agreements obtained from the Lessors pursuant to Section 8.1.8 hereof,
including, without limitation, the Lessor Consent and Estoppel.
5.1.16 Any other documents reasonably required by the Title Company to
issue the title insurance policies described in Section 5.3 hereof.
5.1.17 Evidence of the authority of the ▇▇▇▇▇▇▇ Entities to execute and
deliver the documents necessary to effectuate the Closing.
5.1.18 Counterpart to an assignment and assumption of management
agreement with respect to the Management Agreement.
5.1.19 Counterparts to transition agreements, in form and substance
reasonably acceptable to the ▇▇▇▇▇▇▇ Entities ("Transition
Agreements"), among the ▇▇▇▇▇▇▇ Entities, Buyer and any appointees of
Buyer permitted hereunder, pursuant to which such appointee agrees to
perform all obligations hereunder which Buyer designates and Buyer
agrees to be jointly and severally liable therefor.
5.2 Deliveries by Buyer. At the Closing Buyer shall deliver, execute and deliver
or cause to be executed and delivered, as applicable, to the ▇▇▇▇▇▇▇ Entities
the following:
5.2.1 The Purchase Price as specified in Section 2.2 hereto.
5.2.2 Counterpart to a closing statement.
5.2.3 Counterpart to a Lease Assignment with respect to each of the
Leases to be assigned, in proper form for recording.
5.2.4 Counterpart to a Sublease with respect to each of the Leased
Facilities to be subleased.
5.2.5 Counterpart to a Memorandum of Sublease for each underlying
Sublease.
5.2.6 The Security Deposit.
5.2.7 Counterpart to an Assignment and Assumption of Contracts,
substantially in the form of Exhibit I hereto.
5.2.8 Necessary state, county and city real estate transfer tax
declarations for each Facility.
5.2.9 A Certificate of Buyer that all representations and warranties of
Buyer in this Agreement are true and correct in all material respects
as of the Closing Date.
10
5.2.10 Certificate of the Secretary or Assistant Secretary of Buyer
certifying the: (a) Articles of Incorporation and Bylaws of Buyer, (b)
incumbency and signatures of officers of Buyer and (c) resolutions of
Buyer authorizing the transactions contemplated hereby.
5.2.11 Certificate of Good Standing for Buyer from the Secretary of
State of the State of
Florida as of a recent date.
5.2.12 Certificate of the Secretary of State of the State of
Florida
certifying Buyer's qualification and good standing as a foreign
corporation.
5.2.13 Any other documents reasonably required by the Title Company to
issue the title insurance policies described in Section 5.3 hereof.
5.2.14 Evidence of the authority of Buyer to execute and deliver the
documents necessary to effectuate the Closing.
5.2.15 Counterpart to an assignment and assumption of management
agreement with respect to the Management Agreement.
5.2.16 Counterparts to Transition Agreements.
5.3 Other Deliveries. Fidelity National Title Insurance Company located in Troy,
Michigan, and another title insurance company selected by Buyer to perform
(collectively the "Title Company"), shall deliver at Closing the title insurance
policies in the form of the Title Commitments, and insuring over the items on
Schedule 9.1.D hereto.
ARTICLE 6.
Prorations, Credits and Costs
6.1 Prorations. The following items shall be prorated as of the Effective Time.
In the event that amounts as of the Effective Time cannot be accurately
determined, such amounts shall be estimated and adjusted as promptly as
practicable thereafter but in no event later than thirty (30) days after the
Effective Time.
6.1.1 Taxes. All state, county, city, school, ad valorem, and other
local real and personal property taxes and assessments relating to or
assessed against the Purchased Assets shall be prorated as of the
Effective Time notwithstanding the date of the assessment. If the real
property tax rate for the current tax year is not established by the
Effective Time, the prorations shall be made on the basis of the rate
in effect for the preceding tax year and shall be adjusted when exact
amounts are determined. All such prorations shall be based upon the
most recent available assessed value of the Facilities prior to the
Effective Time. The ▇▇▇▇▇▇▇ Entities shall pay all income, gains and
other similar taxes, as well as all franchise taxes, incurred by it in
carrying out the transactions contemplated under this Agreement.
6.1.2 Utilities and Rents. All utilities and rents shall be prorated or
paid by the ▇▇▇▇▇▇▇ Entities as of the Effective Time.
11
6.1.3 Prepayments and Deposits. The ▇▇▇▇▇▇▇ Entities shall credit to
Buyer payments received by any ▇▇▇▇▇▇▇ Entity for patient and resident
or other services to be provided on or after the Effective Time. The
▇▇▇▇▇▇▇ Entities shall be credited with all prepayments made by any
▇▇▇▇▇▇▇ Entity for services relating to the Facilities to be provided
after the Effective Time and amounts described in Sections 1.4.4 and
1.4.8 hereof to the extent Buyer receives the contracted amount for
services in accordance with the ▇▇▇▇▇▇▇ Entities' agreements with such
vendors.
6.2 Taxes. All sales, use, personal property transfer taxes and excise taxes, if
any, by whatever jurisdiction levied, arising out of the transfer of the
Purchased Assets contemplated hereunder, including, but not limited to,
documentary transfer taxes relating to personal property, shall be paid by
Buyer. The ▇▇▇▇▇▇▇ Entities shall pay for all real property transfer taxes
including but not limited to any real property documentary stamp taxes with
respect to the transactions contemplated hereby.
6.3 Expenses. Each of the parties shall pay its own costs and expenses incurred
or to be incurred by it in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated herein, except as may
otherwise be provided herein.
6.4 Diligence. Buyer shall pay all costs and expenses associated with any
appraisals, UCC searches and other diligence undertaken by Buyer with respect to
the transactions contemplated under this Agreement. If Buyer is not required by
its lender to obtain new environmental surveys (other than a "desktop" review)
for the Facilities and Buyer obtains third party beneficiary certificates
allowing the Buyer and Buyer's lender to rely on the Phase I Environmental Site
Assessments for the Facilities, prepared by Guidewire Consulting, LLC and
ordered by the ▇▇▇▇▇▇▇ Entities prior to the date hereof ("Environment
Surveys"), at Closing Buyer shall pay fifty (50%) percent of the costs and
expenses for the Environmental Surveys not to exceed forty-five thousand dollars
$45,000). At Closing, Buyer, on the one hand, and the ▇▇▇▇▇▇▇ Entities, on the
other hand, shall each pay fifty percent (50%) of the costs and expenses for
obtaining ALTA/ACSM real property surveys of the Facilities. All such amounts
expended by the ▇▇▇▇▇▇▇ Entities for which Buyer is responsible shall be
credited to the ▇▇▇▇▇▇▇ Entities at Closing. In the event this Agreement is
terminated for any reason other than a breach by Buyer, Seller shall pay all
costs related to the Environmental Surveys and the ALTA/ACSM real property
surveys for the Facilities.
6.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings. The ▇▇▇▇▇▇▇ Entities and Buyer are each
responsible for preparing their own required filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), and for their own costs of preparing
such information, documents and filings as may be required pursuant to, and the
costs of otherwise complying with the HSR Act. Notwithstanding the above, the
filing fee for the first filing required under the HSR Act shall be shared
evenly between the ▇▇▇▇▇▇▇ Entities and Buyer. If any subsequent filings are
required, the filing fees shall be paid solely by Buyer.
6.6 Other Closing Costs. Buyer shall pay for any recording costs and tax
certificate fees with respect to the transactions contemplated hereby. Buyer, on
the one hand, and the ▇▇▇▇▇▇▇ Entities, on the other hand, shall each pay fifty
percent (50%) of all title insurance costs, fees and
12
premiums with respect to the transactions contemplated hereby (other than with
respect to any endorsements requested by Buyer or Buyer's lender's title
insurance requirements, which shall be paid one hundred percent (100%) by
Buyer). All such amounts expended by the ▇▇▇▇▇▇▇ Entities shall be credited to
the ▇▇▇▇▇▇▇ Entities at Closing.
6.7 Credit for PTO. At the Closing, Buyer shall receive a credit against the
Purchase Price for the value, as of the Effective Time, of all PTO for all
employees employed at the Facilities as of the Effective Time. Buyer hereby
assumes all liability for the PTO included on the PTO Schedule and agrees to
indemnify and hold harmless the ▇▇▇▇▇▇▇ Entities from and against all liability,
claims and demands against the ▇▇▇▇▇▇▇ Entities (including, without limitation,
defense thereof) arising in connection with such PTO Schedule.
ARTICLE 7.
Representations and Warranties
7.1 Representations and Warranties of the ▇▇▇▇▇▇▇ Entities. Each of the ▇▇▇▇▇▇▇
Entities hereby represents and warrants to Buyer as follows:
7.1.1 Organization. The ▇▇▇▇▇▇▇ Entities are duly incorporated and
validly existing corporations organized under the laws of and in good
standing in their respective States of incorporation, and are qualified
to do business as a foreign corporation in the State of
Florida. Each
of the ▇▇▇▇▇▇▇ Entities has full power and authority to own and lease
its properties and to carry on its business as currently conducted.
None of the ▇▇▇▇▇▇▇ Entities is insolvent, and none will be rendered
insolvent by the transactions contemplated by this Agreement. None of
the ▇▇▇▇▇▇▇ Entities has any material, unpaid and past due liability
with respect to any creditor, supplier, landlord, or service provider
of any of the Facilities.
7.1.2 Authority. The ▇▇▇▇▇▇▇ Entities have complete and unrestricted
corporate power to enter into this Agreement and perform its
obligations hereunder. When executed and delivered, this Agreement will
constitute a valid and binding obligation of the ▇▇▇▇▇▇▇ Entities,
enforceable in accordance with its terms, except as limited by
applicable laws relating to bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application
relating to or affecting creditors' rights.
7.1.3 Personal Property. The ▇▇▇▇▇▇▇ Entities are the owners of the
Personal Property constituting Purchased Assets. At the Closing,
effective as of the Effective Time, the ▇▇▇▇▇▇▇ Entities shall convey
good title to same, free and clear of liens and encumbrances, except as
set forth on Schedule 9.1.D attached hereto.
7.1.4 Labor Relations; Employees. Except as set forth on Schedule 7.1.4
attached hereto, (a) there have been no strikes, picketing (including
recognitional), work stoppages, or to the ▇▇▇▇▇▇▇ Entities' actual
knowledge, demands for recognition, unfair labor practice charges,
representational petitions filed with a regional office of the National
Labor Relations Board, soliciting for a showing of interest or any
formal demands served upon the ▇▇▇▇▇▇▇ Entities with respect to the
Facilities for collective bargaining by any union or labor organization
at any time since January 1, 1998; (b) none
13
of the ▇▇▇▇▇▇▇ Entities has received a written notice of a dispute or
controversy with any union or other organization of employees of the
▇▇▇▇▇▇▇ Entities with respect to the Facilities; (c) there are no
unfair labor practice charges or, to the ▇▇▇▇▇▇▇ Entities' actual
knowledge, requests for injunctions pursuant to Section 10(j) of the
National Labor Relations Act pending or, to the ▇▇▇▇▇▇▇ Entities'
actual knowledge, threatened against the ▇▇▇▇▇▇▇ Entities with respect
to the Facilities before the National Labor Relations Board or before
any court; (d) there are no arbitration proceedings pending of which
notice has been given to the ▇▇▇▇▇▇▇ Entities or, to the ▇▇▇▇▇▇▇
Entities' actual knowledge, threatened, involving any material dispute
or controversy with any union or other organization of employees with
respect to the Facilities; and (e) there are no ongoing negotiations
with any unions with respect to any of the Facilities (herein
collectively referred to as a "Labor Dispute").Except as set forth on
Schedule 7.1.4 attached hereto, the ▇▇▇▇▇▇▇ Entities have no labor
union contracts or collective bargaining agreement with its employees
at the Facilities or executive employment agreements with respect to
the Facilities.
7.1.5 PTO. As of the date of delivery of the PTO Schedule pursuant to
Section 8.1.10, the PTO Schedule will contain true and complete
information with respect to the annual base salary or hourly rate of
the employees of the Facilities and overtime, vacation, sick and
holiday pay, flex benefits, bonus payments (other than "retention" or
"stay-on" bonuses paid in connection with the transactions contemplated
hereby), commissions, severance payments or other monetary compensation
paid to, or which may become payable to the employees of the
Facilities. The PTO Schedule will be true, correct and complete in all
material respects and will reflect PTO that complies with the ▇▇▇▇▇▇▇
Entities' employment policies, applicable
Florida law and applicable
federal law.
7.1.6 Environmental Matters
A. Except as set forth on Schedule 7.1.6(A) attached hereto or as revealed in
any of the environmental reports set forth on Schedule 7.1.6(B) attached hereto
which reports have been provided to Buyer, to the actual knowledge of the
▇▇▇▇▇▇▇ Entities, there has not occurred any unauthorized or illegal emission,
leak, discharge, spill or release into the environment of any Hazardous
Materials (in excess of levels that could reasonably be expected to require
investigation or remediation under applicable Environmental Laws) by the ▇▇▇▇▇▇▇
Entities or by any prior owner or tenant of any of the Facilities or of any use
of Hazardous Materials on or from the Facilities which, in any material respect,
violates federal, state or local laws, rules and regulations governing the use,
storage, treatment, handling, production or disposal of such Hazardous Materials
or any other Environmental Laws.
B. For purposes of this Section 7.1.6, the term "Hazardous Materials" shall
include, without limitation, any pollutants, contaminants, chemicals, wastes and
other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise hazardous
substance or materials (whether solid, liquid or gaseous) subject to regulation,
control or remediation under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801 et seq.), the Resources Conservation and Recovery Act, as amended
(42 U.S.C. Section 6901 et seq.), the Toxic Substances Control Act, as amended,
the Clean Water Act, as amended, the Safe Drinking
14
Water Act, as amended, the Clean Air Act, as amended, the Occupational Safety
and Health Act, as amended, the Atomic Energy Act of 1954, as amended, and all
analogous or related laws enacted, promulgated or issued in any jurisdiction in
which a Facility is located and in the regulations adopted and publications
promulgated pursuant thereto, or any other federal, state or local environmental
law, ordinance, rule or regulation (collectively, the "Environmental Laws").
C. The ▇▇▇▇▇▇▇ Entities shall indemnify and hold Buyer harmless for any
"Recognized Environmental Condition" as defined and disclosed in the
Environmental Surveys set forth on Schedule 7.1.6(B) and any related Liabilities
together with any "Recognized Environmental Condition" identified in any Phase
II site assessment conducted pursuant to an express recommendation, if any,
contained in any Environmental Survey set forth on Schedule 7.1.6(B).
7.1.7 Title to Facilities
A. Exhibit A-1 hereto completely and accurately states the name and address of
each of the Owned Facilities. Exhibit A-2 hereto completely and accurately
states the name, address, lessee and lessor of each of the Leased Facilities.
Exhibit A-2 hereto completely and accurately states the name, address, owner and
manager of the Managed Facility.
B. The applicable ▇▇▇▇▇▇▇ Entities set forth on Exhibit A-1 are, or will be as
of the Closing Date, the owners of the Purchased Assets, including Real Property
constituting the Owned Facilities; provided, however, that with respect to the
Real Property held via the ▇▇▇▇▇▇▇ Entities' synthetic lease facility, the
applicable ▇▇▇▇▇▇▇ Entity is not on the date hereof the owner of fee simple
title to such Real Property but will be entitled to cause the deed to such Real
Property to be executed and delivered to its designee. At the Closing, the
applicable ▇▇▇▇▇▇▇ Entities shall convey to Buyer good and marketable fee title
to such Real Property free and clear of liens, covenants, restrictions,
conditions, reservations, rights, easements and encumbrances of record,
excepting only (i) Permitted Encumbrances (as hereinafter defined) and (ii) such
exceptions as may otherwise be approved by Buyer in accordance with the
provisions hereof.
C. The applicable ▇▇▇▇▇▇▇ Entities set forth on Exhibit A-2 are the holders of
valid and existing leasehold interests, as lessee, of the premises constituting
the Leased Facilities, for the terms set forth in and pursuant to the terms of
the Leases. The applicable ▇▇▇▇▇▇▇ Entity set forth on Exhibit A-2 hereto is the
manager pursuant to a valid and existing management agreement with respect to
the Managed Facility. Subject to receipt of all required consents from the
Lessors or the owner of the Managed Facility, as applicable, the applicable
▇▇▇▇▇▇▇ Entities shall enter into valid and binding assignment and assumption of
Management Agreement, Lease Assignments and/or Subleases covering the Leased
Facilities and the Managed Facility, as applicable. Subject to the terms of the
assignment of Management Agreement, the Subleases and Lease Assignments, the
assignment of Management Agreement, the Subleases and Lease Assignments, as
applicable, shall convey the rights and interests therein provided free and
clear of liens and encumbrances, excepting only the Permitted Encumbrances and
such exceptions as may otherwise be approved by Buyer. True and complete copies
(including amendments, if any) of the Leases and the Management Agreement have
been made available to Buyer and are listed on Schedule 7.1.7(C).
15
D. All of the Leases and the Management Agreement are in full force and effect
and the ▇▇▇▇▇▇▇ Entities are not in default or breach in any material respect
under any of the Leases and the Management Agreement. No event has occurred
which, with the giving of notice or lapse of time or both, would cause a
material breach or a material default by the ▇▇▇▇▇▇▇ Entities under any of the
Leases or the Management Agreement. The ▇▇▇▇▇▇▇ Entities have no actual
knowledge of any breach or anticipated breach by the other parties to the Leases
or the Management Agreement.
E. The ▇▇▇▇▇▇▇ Entities have no actual knowledge of (i) any condemnation
proceeding affecting any portion of the Facilities or contemplated by any
governmental authority; (ii) any special assessment affecting any portion of the
Facilities or contemplated by any governmental authority, except as set forth in
the title insurance policies referred to in Section 9.1 hereof; or (iii) any
pending or threatened enforcement proceeding by any governmental authority
relating to an alleged zoning violation affecting any portion of the Facilities.
7.1.8 Leases, Contracts, Commitments. Except for the Excluded Assets
and the Purchased Assets, as of the Effective Time there will be no
contracts, agreements or commitments of any kind relating to the
business at the Facilities, no leases in force at the Effective Time
affecting the use or occupancy of the Facilities, and no equipment
leases, or other similar agreements, obligations or commitments the
absence of which will materially adversely affect Buyer, any Facility
or the Purchased Assets subsequent to the Effective Time.
7.1.9 Compliance with Laws. The Facilities are in compliance with any
and all applicable laws, rules, regulations and ordinances, federal,
state and local, the violation of which, taken as a whole, would have a
material adverse effect on the Facilities taken as a whole.
7.1.10 Litigation; Governmental Proceedings. Except as set forth on
Schedule 7.1.10 attached hereto, there is no litigation, proceeding or
governmental investigation pending or, to the actual knowledge of the
▇▇▇▇▇▇▇ Entities, threatened against the ▇▇▇▇▇▇▇ Entities (with respect
to the Facilities) or the Facilities which materially adversely affects
the ▇▇▇▇▇▇▇ Entities or the Facilities. The ▇▇▇▇▇▇▇ Entities shall
continue to have all responsibility for the handling and defense of and
any liability or obligation arising from the matters listed on Schedule
7.1.10 subsequent to the Closing and Buyer shall use good faith
reasonable efforts to cooperate with such handling and defense, but
said obligation to cooperate shall not be deemed to require Buyer to
incur any material out-of-pocket expense. To the actual knowledge of
the ▇▇▇▇▇▇▇ Entities, there is no Q-Tam proceeding currently pending
against any of the ▇▇▇▇▇▇▇ Entities with respect to any of the
Facilities.
7.1.11 Absence of Certain Changes. Since September 30, 2000 with
respect to the Facilities taken as a whole, there has not been any
material adverse change in the financial condition, assets,
liabilities, or prospects of the ▇▇▇▇▇▇▇ Entities with respect to the
Facilities taken as a whole , and the ▇▇▇▇▇▇▇ Entities have not
conducted the operation of the Facilities other than in the ordinary
course of business; provided, however, that no representation or
warranty is made with respect to any changes in the prospects of the
▇▇▇▇▇▇▇ Entities or the Facilities subsequent to the date of this
Agreement as a result of
16
the pending sale of the Facilities. Buyer acknowledges and agrees that
the representation and warranty contained in this Section 7.1.11 shall
be made only as of the date hereof.
7.1.12 Information Supplied to Buyer. The ▇▇▇▇▇▇▇ Entities have
provided Buyer with copies of unaudited profit and loss statements for
each of the Facilities for the calendar years 1999 and 2000 and for the
year-to-date period ending May 31, 2001 (collectively, the "Financial
Statements"). Since September 30, 2000, there has been no change in the
accounting methods or practices of the ▇▇▇▇▇▇▇ Entities. The Financial
Statements were prepared on the basis of the books and records of the
▇▇▇▇▇▇▇ Entities and ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc.,
and are the financial statements used by the ▇▇▇▇▇▇▇ Entities and
▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. for internal
accounting purposes and have been prepared on a basis consistent with
the other internal operating statements used by the ▇▇▇▇▇▇▇ Entity in
the ordinary course of business. It is understood that the Financial
Statements are prepared as internal operating statements that do not
necessarily reflect adjustments required to cause such statements to
fairly present or otherwise accurately reflect the operations of the
Facilities in accordance with generally accepted accounting principles
or otherwise. Notwithstanding the foregoing, the Financial Statements
accurately reflect the operations of the Facilities and are true and
correct in all material respects. There are no adjustments to the
Financial Statements by the outside auditors with respect to the
Facilities taken as a whole, that would materially affect the
Facilities taken as a whole.
7.1.13 Trust Accounts for Patients and Residents. For the period of
their operation of the Facilities, the ▇▇▇▇▇▇▇ Entities have dealt with
the trust accounts for patients and residents referred to in Section
8.2.4 hereof in the fiduciary capacity required by law.
7.1.14 Brokers, Finders. The ▇▇▇▇▇▇▇ Entities know of no brokerage or
finder's fees or commissions which will be payable in connection with
the sale of the Purchased Assets hereunder, and if any such fees or
commissions are claimed or payable as the result of any other party's
claimed representation of the ▇▇▇▇▇▇▇ Entities, such fees and
commissions shall be the ▇▇▇▇▇▇▇ Entities' sole responsibility, without
regard to the provisions of Sections 13.2.2D and 13.2.2F.
7.1.15 Accuracy of Representations and Warranties. Except as expressly
herein otherwise provided, the representations and warranties of the
▇▇▇▇▇▇▇ Entities set forth in this Agreement (other than those
contained in Section 7.1.10 hereof) shall be true and correct when made
and on and as of the Closing Date and as of the Effective Time as
though such representations and warranties were made at such times.
7.1.16 ERISA and Related Matters.
(a) As used in this Agreement, the term "Employment Benefit
Plan" means any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA), and any other bonus, profit sharing,
pension, severance, deferred compensation, fringe benefit,
insurance, welfare, medical, medical reimbursement, health,
life, stock option, stock purchase, tuition refund, service
award, company car, scholarship,
17
relocation, disability, accident, sick pay, sick leave,
vacation, incentive, commission, retention or other plan,
policy, trust fund or arrangement.
(b) Schedule 7.1.16 attached hereto contains a true and
complete list of all Employee Benefit Plans currently in
effect, (i) maintained, sponsored, participated in, or
contributed to by Seller on behalf of any of its employees
(whether current or former) working at or in connection with
the Facilities or their beneficiaries, (ii) which provides or
provided benefits to any such employee or beneficiary, or
(iii) with respect to which the ▇▇▇▇▇▇▇ Entities have or have
had any obligation on behalf of any such employee or
beneficiary (each a "Plan" and collectively the "Plans").
(i) each Plan has, at all times, been maintained and
operated in compliance, in all material respects,
with its terms and the requirements of all applicable
laws, including without limitation, ERISA, as
amended, and the Code;
(ii) each Plan intended to be qualified under Section
401(a) of the Code has been determined to be so
qualified, as to design, by the Internal Revenue
Service. Each Plan intended to be tax-qualified is
qualified under Section 401(a) of the Code (and with
respect to the ▇▇▇▇▇▇▇ Entities' 401(k) plan, Section
401(k) of the Code); and
(iii) each trust established in connection with any
Plan which is intended to be exempt from federal
income taxation under Section 501(a) of the Code
continues to be exempt.
7.1.17 Taxes. Except as set forth in Schedule 7.1.17 attached hereto,
(i) all taxes including, without limitation, income, property, sales,
use, franchise, value added, employees' income withholding and social
security taxes imposed by the United States or by any state,
municipality, subdivision or instrumentality of the United States, or
by any other taxing authority, which are due and payable by ▇▇▇▇▇▇▇
Entities with respect to the Facilities and all interest and penalties
thereon, whether disputed or not (hereinafter, the "Taxes"), have been
paid in full or are being contested in accordance with applicable law,
and (ii) all Tax returns required to be filed in connection therewith
have been accurately prepared and duly and timely filed.
7.1.18 Contracts.
(a) Schedule 1.1 attached hereto includes without limitation a
true and correct list as of the date of this Agreement of all
outstanding Assigned Contracts that are Material Contracts
(though not all contracts on such schedule are Material
Contracts) to which the ▇▇▇▇▇▇▇ Entities are parties and
▇▇▇▇▇▇▇ Entities have provided or will provide to Buyer access
to true and complete copies of each such written contract.
There is no default existing or continuing by ▇▇▇▇▇▇▇ Entities
or to their knowledge, of any other party, under the terms of
any contracts listed on
18
Schedule 1.1 hereto which could reasonably be expected to have
a material adverse effect on the Facilities effected by the
contract.
(b) The ▇▇▇▇▇▇▇ Entities have provided or will provide Buyer with
specimen patient admission agreements with residents of the
Facilities, if any, or with any other persons or organizations
("Patient Admissions Contracts"). Except as set forth on
Schedule 7.1.18(b) attached hereto, no Patient Admissions
Contract deviates from such standard forms, and all residents
of the Facilities have executed Patient Admissions Contracts,
except where such deviations or failures taken as a whole to
execute a Patient Admissions Contract could reasonably be
expected to have a material adverse effect on the Facilities
taken as a whole.
7.1.19 Condition of Assets.
(a) All of the Purchased Assets are in ▇▇▇▇▇▇▇ Entities'
possession or control and located at or on the Real Property.
(b) The Personal Property is in working order, sufficient for
normal operation of the business of the ▇▇▇▇▇▇▇ Entities
consistent with the ▇▇▇▇▇▇▇ Entities' customary practice, in
all material respects, and has been properly repaired,
replaced and maintained by the ▇▇▇▇▇▇▇ Entities in the
ordinary course of business and consistent with the ▇▇▇▇▇▇▇
Entities' customary practice.
(c) The Real Property is working order and has been maintained
in operating condition and has been properly repaired,
replaced and maintained by the ▇▇▇▇▇▇▇ Entities in the
ordinary course of business and consistent with the ▇▇▇▇▇▇▇
Entities' customary practice.
7.1.20 Survey Reports, Etc. True and complete copies of all survey
reports, waivers of deficiencies, plans of correction, and any other
investigation reports issued with respect to the Facilities for the
last two (2) years have been provided or will be provided to Buyer.
7.1.21 Intellectual Property.
(a) Definition of Intellectual Property. "Intellectual
Property" shall mean (i) the trademarks, service marks, trade
dress, trade names and corporate names and registrations and
applications for registrations thereof (other than those names
excluded in the immediately succeeding sentence collectively,
"Trademark Properties"); (ii) financial and marketing plans,
and customer and supplier lists and information ("Trade
Secrets"); (iii) the telephone numbers used by each Seller and
each Facility in the conduct of their business and operations;
and (iv) the goodwill symbolized by all of the foregoing and
connected therewith throughout the world. Notwithstanding
anything to the contrary, Intellectual Property shall exclude
the following names, designs or marks: "▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇
Enterprises", "▇▇▇▇▇▇▇ Enterprises
Florida", "Leisure Lodge"
and any variation, derivative or combination thereof and
associated trademarks, service marks and logos and all
Excluded Assets.
19
(b) Ownership of Intellectual Property. Except as would not
have a material adverse effect on any Facility, Sellers own
and have good and marketable title to all such Intellectual
Property as is presently used by or in connection with each
Facility in the conduct of their businesses free and clear of
all liens, charges and encumbrances or have the right to use
pursuant to valid license all such Intellectual Property.
(c) Registrations. Schedule 7.1.21(a) (which shall be
furnished within fourteen (14) days after the date hereof)
sets forth a complete list of all Intellectual Properties used
by ▇▇▇▇▇▇▇ Entities in the operation of the Facilities that
are currently registered in any jurisdiction, and identifies
the jurisdiction, Property, registration number and date of
registration. None of such registrations has been determined
to be invalid.
(d) Maintenance. Except as set forth in Schedule 7.1.21(b)
(which shall be furnished within fourteen (14) days after the
date hereof) and except as would not have a material adverse
effect on any Facility, all filing and maintenance fees that
are required to maintain registrations of the ▇▇▇▇▇▇▇
Entities' Intellectual Property used in the operation of the
businesses at the Facilities and that are due as of the date
of this Agreement have been filed and paid and none of ▇▇▇▇▇▇▇
Entities' Intellectual Property rights are subject to any
renewal or maintenance filings, fees, taxes, or actions
falling due within ninety (90) days after the date of this
Agreement.
(e) Unregistered Trademark Properties. Schedule 7.1.21(c)
(which shall be furnished within fourteen (14) days after the
date hereof) sets forth a complete list of all unregistered
Trademark Properties used by ▇▇▇▇▇▇▇ Entities in the conduct
of their respective businesses at the Facilities that would
have a material adverse effect on any Facility.
(f) Non-infringement. Except as disclosed in Schedule
7.1.21(d) (which shall be furnished within fourteen (14) days
after the date hereof), to the ▇▇▇▇▇▇▇ Entities' actual
knowledge, the ▇▇▇▇▇▇▇ Entities have not infringed,
misappropriated, or otherwise used in an unauthorized manner
the proprietary rights (including but not limited to, the
patent, trade secret, trademark, service ▇▇▇▇, trade dress, or
copyright rights) of any third party in the operation of the
businesses at the Facilities that would have a material
adverse effect on any Facility.
(g) Rights Granted to Others. The ▇▇▇▇▇▇▇ Entities have not
granted or committed to grant any rights in their Intellectual
Property used in the operation of the business at the
Facilities of any nature whatsoever to any third party except
as disclosed in Schedule 7.1.21(e) (which shall be furnished
within fourteen (14) days after the date hereof) and except as
would not have a material adverse effect on any Facility.
20
(h) No Claims. Except as disclosed in Schedule 7.1.21(f)
(which shall be furnished within fourteen (14) days after the
date hereof) and except as would not have a material adverse
effect on any Facility, the ▇▇▇▇▇▇▇ Entities have received no
written notice of any claim asserted by any person: (i)
claiming that any action by the ▇▇▇▇▇▇▇ Entities in the
operation of their businesses at the Facilities infringes on
the intellectual property rights of any other person or (ii)
challenging or questioning the right of the ▇▇▇▇▇▇▇ Entities
to use any of the Intellectual Property being used by them in
the operation of their businesses at the Facilities.
(i) Unauthorized Use. Except as would not have a material
adverse effect on any Facility, the ▇▇▇▇▇▇▇ Entities do not
have actual knowledge of any unauthorized use, infringement or
misappropriation of any of their Intellectual Property in the
operation of their businesses at the Facilities by any third
party, including, but not limited to, any employee or former
employee of the ▇▇▇▇▇▇▇ Entities.
7.1.22 Capital Expenditures. Other than the construction activities
currently in progress at (i) ▇▇▇ Convalescent Center (Facility #789)
with respect to renovations, (ii) Coral Trace (Facility #793) with
respect to water pipe replacements and (iii) Harbor Beach (Facility
#2168) with respect to a parking lot expansion, there are no
construction activities currently in progress at the Facilities other
than in the ordinary course of business.
7.1.23 Inventory and Supplies. The inventories of perishable food,
nonperishable food, central supplies, linen, housekeeping and other
supplies are in sufficient quantity and condition for the operation of
the business of the ▇▇▇▇▇▇▇ Entities at the Facilities consistent with
past practices.
7.1.24 Absence of Notices. Except as disclosed on Schedule 7.1.24, the
▇▇▇▇▇▇▇ Entities have not received written notice that any customer or
supplier of the ▇▇▇▇▇▇▇ Entities intends to discontinue or
substantially alter prices or terms to, or significantly diminish its
relationship with the ▇▇▇▇▇▇▇ Entities as a result of the transactions
contemplated hereby or otherwise which collectively would have a
material adverse effect on the Facilities taken as a whole.
7.1.25 Medicare and Medicaid Participation:
(a) Except as set forth on Schedule 7.1.25,
(i) Each of the Facilities that is eligible to
receive payment under Title XVIII ("Medicare") and
Title XIX ("Medicaid") of the Social Security Act has
valid and current provider agreements and one or more
provider numbers with the federal Medicare, all
applicable state Medicaid and successor programs
through intermediaries;
(ii) Each of the Facilities that is receiving
payments under CHAMPUS or TRICARE has valid and
current provider agreements with one or more
21
provider numbers with CHAMPUS and/or TRICARE programs
through intermediaries;
(iii) Medicare, Medicaid, CHAMPUS, TRICARE and other
federal, state or local governmental reimbursement
programs, or successor programs to any of the above,
are referred to herein as "Government Programs"; and
(iv) Each of the Facilities is in compliance with the
conditions of participation for applicable Government
Programs except where the failure to so comply taken
as a whole would have a material adverse effect on
the Facilities taken as a whole.
(b) The ▇▇▇▇▇▇▇ Entities are in compliance in all material
respects with the obligations under the CIA.
7.1.26 Patient Records. Except as provided on Schedule 7.1.26 and other
than as would not have a material adverse effect on the Facilities
taken as a whole, to the ▇▇▇▇▇▇▇ Entities' actual knowledge, there is
no deficiency in the patient records of the ▇▇▇▇▇▇▇ Entities, used or
developed in connection with the business conducted at the Facilities,
to be delivered by ▇▇▇▇▇▇▇ Entities to Buyer pursuant to the terms of
this Agreement, and all such records have, prior to the date of this
Agreement, been created and maintained in compliance with all
applicable federal, state or local laws and regulations governing the
preparation, maintenance confidentiality, transfer and/or destruction
of such records.
7.1.27 Knowledge. For the purposes of this Agreement, "knowledge",
"actual knowledge" and similar standards with respect to the ▇▇▇▇▇▇▇
Entities shall mean actual awareness of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the regional directors for the Facilities, following
reasonable inquiry, and ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
7.1.28 Leased Facilities; Real and Personal Property. The real and
personal property leased pursuant to the Leases is in all material
respects in a condition that satisfies the requirements that each Lease
may have for the condition of such property upon termination of the
applicable Lease.
7.1.29 Managed Facility. The real and personal property of the Managed
Facility is in all material respects in a condition that satisfies the
requirements that the Management Agreement may have for the condition
of such property upon termination of the Management Agreement.
7.1.30 Patient Trust Funds. Except as provided on Schedule 7.1.30, the
▇▇▇▇▇▇▇ Entities have maintained patient trust funds on behalf of the
residents of the Facilities in material compliance with all applicable
laws, rules and regulations, and have maintained an accurate and
updated accounting of such trust funds.
22
7.1.31 Licensure. With respect to each Facility, the ▇▇▇▇▇▇▇ Entities
have in full force and effect licenses for the operation of each such
Facility. Except as set forth on Schedule 7.1.31, there are no current,
or to the actual knowledge of the ▇▇▇▇▇▇▇ Entities, threatened
investigations by any applicable licensing authority that would
materially affect any of the licenses or the ▇▇▇▇▇▇▇ Entities' ability
to continue to operate any of the Facilities as the lawful operator of
such Facilities. The ▇▇▇▇▇▇▇ Entities are in the process of correcting,
contesting or appealing, in accordance with applicable law, all
deficiencies identified in a state survey of any Facility.
7.1.32 BHRS. ▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc. ("BHRS")
owns, either directly or indirectly, the outstanding shares of all
nursing facilities operated by ▇▇▇▇▇▇▇ Enterprises, Inc. or its
affiliates. The assets of BHRS constitute not less than seventy percent
(70%) of the total assets of ▇▇▇▇▇▇▇ Enterprises, Inc. For the years
ending December 31, 1998, 1999 and 2000, BHRS contributed in excess of
one hundred percent (100%) of the operating income (excluding unusual
and extraordinary items) of ▇▇▇▇▇▇▇ Enterprises, Inc.
7.2 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the ▇▇▇▇▇▇▇ Entities as follows:
7.2.1 Organization. Buyer is a duly organized and validly existing
limited liability company organized under the laws of and in good
standing in the State of Florida, and is qualified to do business in
the State of Florida, the only jurisdiction in which the nature of its
business or the location of property makes such qualification
necessary. Buyer has full power and authority to own and lease the
Facilities and to carry on the business contemplated by this Agreement.
7.2.2 Authority. Buyer has the complete and unrestricted limited
liability company power to enter into this Agreement and perform its
obligations hereunder. The execution, delivery and performance of this
Agreement have been duly authorized by the board of directors of Buyer
in accordance with its operating agreement, and no further limited
liability company action by Buyer or approval of its members or of any
third party, other than contemplated in this Agreement, will be
required to make this Agreement valid and binding upon Buyer in
accordance with its terms. When executed and delivered, this Agreement
and all instruments executed and delivered pursuant hereto will
constitute valid and binding obligations of Buyer, enforceable in
accordance with their terms, except as limited by applicable laws
relating to bankruptcy, insolvency, reorganization, liquidation,
moratorium or other similar laws of general application relating to or
affecting creditors' rights.
7.2.3 Licensure and Financing
A. Buyer is aware of no existing event, matter or situation or any pending or
threatened litigation or event, happening or occurrence which would prevent or
materially and adversely impair Buyer's ability to obtain licensure in its name
as required by applicable law for its
23
ownership and/or operation of the Facilities. Neither Buyer nor any of its
affiliates has been denied licensure of a nursing home in any state.
B. Buyer acknowledges and agrees that its ability to obtain financing for the
consummation of this transaction are not conditions to Closing.
7.2.4 Condition of the Purchased Assets. Notwithstanding that all the
members of Buyer have not had the opportunity to inspect the Purchased
Assets, or to conduct all of its due diligence, Buyer accepts the
Purchased Assets in the condition set forth in Section 2.4 hereof.
Buyer has not relied on any representations, warranties, statements,
summaries or annotations by any of the ▇▇▇▇▇▇▇ Entities other than as
set forth in this Agreement and in any other agreement contemplated
herein.
7.2.5 Litigation. To the actual knowledge of Buyer, there does not
exist any pending or threatened litigation (including, without
limitation, derivative actions), arbitration proceeding or governmental
proceeding which could prevent or delay the consummation of the
transactions contemplated hereby.
7.2.6 The ▇▇▇▇▇▇▇ Entities' Representations and Warranties. Buyer has
no knowledge of any breach, untruth or inaccuracy by the ▇▇▇▇▇▇▇
Entities of a representation, warranty, or covenant made by the ▇▇▇▇▇▇▇
Entities in or pursuant to this Agreement. This Section 7.2.6 shall not
affect Buyer's rights with respect to any breach, untruth or inaccuracy
by the ▇▇▇▇▇▇▇ Entities discovered after the Closing.
7.2.7 Brokers, Finders. Buyer knows of no brokerage or finder's fees or
commissions which will be payable in connection with the sale of the
Purchased Assets hereunder other than Formation Capital, and if any
such fees or commissions are claimed or payable as the result of any
other party's claimed representation of Buyer, such fees and
commissions shall be Buyer's sole responsibility without regard to the
provisions of Section 13.3.2D.
7.2.8 Accuracy of Representations and Warranties. Except as expressly
herein otherwise provided or contemplated, the representations and
warranties of Buyer set forth in this Agreement shall be true on and as
of the Closing Date and as of the Effective Time as though such
representations and warranties were made at such times.
7.2.9 Solvency. Each of Buyer and its appointees permitted hereunder is
solvent, has not made a general assignment for the benefit of its
creditors, and has not admitted in writing its inability to pay its
debts as they become due. Further, each of Buyer and its appointees
permitted hereunder has not filed, nor does Buyer or its permitted
appointees contemplate the filing of, any bankruptcy, reorganization,
or arrangement, insolvency or liquidation proceedings, or any other
proceedings for the relief of debtors in general, nor has any such
proceeding been instituted by or against Buyer or its permitted
appointees, nor has any such proceeding, to Buyer's and its permitted
appointees actual knowledge, been threatened or contemplated.
24
7.2.10 Knowledge. For the purposes of this Agreement, "knowledge,"
"actual knowledge" and similar standards with respect to Buyer shall
mean the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ following
reasonable inquiry.
7.2.11 Buyer's Net Worth. Immediately after the Effective Time, Buyer's
net worth shall be at least Fifteen Million Dollars ($15,000,000).
ARTICLE 8.
Covenants
8.1 Covenants of the ▇▇▇▇▇▇▇ Entities. The ▇▇▇▇▇▇▇ Entities hereby covenant and
agree as follows:
8.1.1 Accounts Payable. The ▇▇▇▇▇▇▇ Entities shall pay all accounts
payable with respect to the Facilities that relate to the period prior
to the Effective Time including, without limitation, all Supplies
received prior to the Effective Time and for all other goods and
services delivered, rendered, or performed prior to the Effective Time.
8.1.2 The ▇▇▇▇▇▇▇ Entities' Cost Reports. The ▇▇▇▇▇▇▇ Entities shall
prepare and file with the appropriate Medicare and Medicaid agencies
their final cost reports with respect to their operation of the
Facilities as soon as practicable after the Effective Time and within
the time required by law, and will provide Buyer copies of said reports
at least five (5) business days after such filing. In the event the
federal or state agencies making payments to the ▇▇▇▇▇▇▇ Entities for
services performed prior to the Effective Time make any claim for
reimbursement of overpayment occurring for any such period, then the
▇▇▇▇▇▇▇ Entities shall be responsible for such claims and shall notify
Buyer of such claims within five (5) business days after the ▇▇▇▇▇▇▇
Entities' receipt thereof.
8.1.3 Maintenance of Supplies, etc. Prior to Closing, the ▇▇▇▇▇▇▇
Entities agree to maintain the Supplies, foodstuffs and other
consumable inventory at levels which are consistent with their
operations, in the ordinary course of business, in compliance with all
health care regulations, and shall not sell or remove any personal
property after the date hereof except in the ordinary course of
business.
8.1.4 Maintenance of Standards. The ▇▇▇▇▇▇▇ Entities agree to continue
the operations of the Facilities between the date hereof and the
Effective Time in accordance with the same standards of care and
diligence historically applied to the operation of the Facilities by
the ▇▇▇▇▇▇▇ Entities and in material compliance with all applicable
laws, rules and regulations.
8.1.5 Access to Records, Properties and Premises. Between the date
hereof and the Closing, the ▇▇▇▇▇▇▇ Entities shall cooperate with Buyer
and their accountants, engineers, counsel and other representatives in
obtaining reasonable access to all assets, properties, books,
contracts, agreements, records, documents and other data of the
Facilities in the
25
▇▇▇▇▇▇▇ Entities' possession or under its control, as Buyer or its
representatives shall reasonably request.
8.1.6 Preserve Business
A. For the period between the date of this Agreement and the Effective Time, the
▇▇▇▇▇▇▇ Entities shall use their commercially reasonable efforts to continue,
carry on, maintain, protect and preserve the businesses operated by them at the
Facilities, preserve their relationships with patients and residents, hospitals,
suppliers, third party payors and others with which they have business relations
and shall otherwise deal in the Facilities only in the ordinary course of
business and in the same manner as was customary prior to the date hereof. For
the period between the date of this Agreement and the Effective Time, the
▇▇▇▇▇▇▇ Entities shall keep and maintain in full force and effect the same or
reasonably equivalent insurance coverage relating to the Facilities which were
in effect on the date hereof. For the period between the date of this Agreement
and the Effective Time, the ▇▇▇▇▇▇▇ Entities further covenant and agree that
they shall promptly pay when due any and all uncontested liabilities,
obligations or indebtedness relating in any manner or respect to the Facilities
with respect to such time period.
B. For the period between the date of this Agreement and the Effective Time, the
▇▇▇▇▇▇▇ Entities shall maintain in full force and effect any and all licenses,
authorizations, permits, permissions, approvals and provider agreements (whether
obtained from local, state, federal or other governmental authorities) relating
to the Facilities, and shall apply or reapply, as the case may be, for any such
licenses, permits, authorizations, permissions, approvals or provider agreements
now in force and necessary to the Facilities to operate as they are currently
being operated and provide copies of any such applications to the Buyer within
five days of submittal of said application to the appropriate government
authority.
C. For the period between the date of this Agreement and the Effective Time, and
with respect to the Facilities, the ▇▇▇▇▇▇▇ Entities shall not, without prior
written consent of Buyer:
(i) enter into any contract or commitment, incur any
liability, absolute or contingent, or waive any right which is
not in the ordinary course of business or which would
materially and adversely affect the Facilities;
(ii) extend, renew, modify or amend any collective
bargaining agreement, except as required under applicable law;
(iii) sell, assign, mortgage, pledge, hypothecate or
otherwise transfer or encumber (or attempt to commit to do the
same) any of the Facilities;
(iv) take any action which, if taken prior to the
date hereof, would constitute or result in a material breach
of any of the representations, warranties or covenants of the
▇▇▇▇▇▇▇ Entities set forth in this Agreement;
(v) adjust the wages of any employee at the
Facilities other than in the ordinary course of business,
except for "retention" or "stay-on"
26
bonuses paid in connection with the transactions contemplated
by this Agreement; or
(vi) lease any equipment under any lease that the
▇▇▇▇▇▇▇ Entities capitalize in the ordinary course of business
where the amount capitalized exceeds Five Thousand Dollars
($5,000).
D. The ▇▇▇▇▇▇▇ Entities shall advise Buyer in writing as to the particulars of
any governmental investigations, inspections or proceedings, of which it has
knowledge, commenced against the ▇▇▇▇▇▇▇ Entities (with respect to the
Facilities) or the Facilities after the date hereof and prior to the Effective
Time, to the extent such investigations, inspections or proceedings could
reasonably be expected to have a material adverse effect on any Facility. The
▇▇▇▇▇▇▇ Entities shall provide such notice within ten (10) days after gaining
such knowledge.
E. The ▇▇▇▇▇▇▇ Entities shall advise Buyer in writing of the particulars of any
structural deficiencies (with respect to the Facilities), of which it has
knowledge, cited by the Agency for Health Care Administration (the "Department")
or other appropriate regulatory authorities after the date hereof and prior to
the Effective Time. The ▇▇▇▇▇▇▇ Entities shall provide such notice within ten
(10) days after gaining such knowledge. The ▇▇▇▇▇▇▇ Entities shall respond to
all such deficiencies in accordance with applicable law.
8.1.7 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The ▇▇▇▇▇▇▇ Entities shall use commercially
reasonable efforts to furnish, or cause to be furnished, such
information, and promptly file, or cause to be filed, such documents as
may be required in order for the ▇▇▇▇▇▇▇ Entities to comply with the
HSR Act, and the ▇▇▇▇▇▇▇ Entities shall cooperate fully in order that
all necessary filings by Buyer in connection therewith shall be
completed as soon as possible after the execution and delivery of this
Agreement or earlier if practicable. The ▇▇▇▇▇▇▇ Entities shall use
commercially reasonable efforts to respond promptly to any request for
additional information received in connection with any HSR Act filing,
and the ▇▇▇▇▇▇▇ Entities shall promptly notify Buyer of any such
request for additional information.
8.1.8 Landlord Documents
A. Subject to Section 9.1E hereof, the ▇▇▇▇▇▇▇ Entities shall use commercially
reasonable efforts to obtain (i) from the Lessors, if required under the Leases,
written consent to the Subleases or Lease Assignments and reasonably acceptable
to Buyer and the ▇▇▇▇▇▇▇ Entities, including without limitation, the applicable
Lessor's written agreement, if necessary, that the applicable Lease and Sublease
will not be adversely impacted by any other agreement of the ▇▇▇▇▇▇▇ Entities
with Lessor and any renewal options will not require the renewal of leases
relating to other Facilities (the "Lessor Consent and Estoppel"), and (ii) from
the owner of the Managed Facility, if required under the Management Agreement,
written consent to the assignment of the Management Agreement and any rights
held by the ▇▇▇▇▇▇▇ Entities with respect to the Managed Facility (the "Managed
Facility Consent"). The ▇▇▇▇▇▇▇ Entities shall also use commercially reasonable
efforts to obtain from the Lessors and lessee of the Managed Facility a release
of the ▇▇▇▇▇▇▇ Entities from all liability under such Leases and Management
Agreements, in which event such Leases and Management Agreement will be assigned
to Buyer as provided in Section 4.1(b) hereof.
27
B. The ▇▇▇▇▇▇▇ Entities' agreement to use commercially reasonable efforts
pursuant to this Section 8.1.8 shall not be deemed to require the ▇▇▇▇▇▇▇
Entities to incur any out-of-pocket expense or obligation in connection with
such efforts in excess of Ten Thousand Dollars ($10,000) per Leased or Managed
Facility.
8.1.9 Payroll. The ▇▇▇▇▇▇▇ Entities shall, except as otherwise agreed
herein, be responsible for and shall pay any and all obligations for
wages, salaries, earned and unused vacation benefits, health and
welfare benefits (including, but not limited to, health, dental,
disability, life and severance pay, if any), deferred or incentive
compensation including but not limited to bonus payments (and
including, without limitation "retention" and "stay-on" bonuses) and
commissions, any other benefits payable to employees upon their
termination in accordance with the applicable ▇▇▇▇▇▇▇ Entity's policies
at each Facility (collectively, "PTO") and all other payroll expenses
and taxes for its employees, in each case, owed as of the Effective
Time. The ▇▇▇▇▇▇▇ Entities shall be responsible for all claims and
obligations under insurance policies and similar coverage arising out
of events occurring prior to the Effective Time.
8.1.10 List of Employees. Within thirty (30) days after the execution
of this Agreement, the ▇▇▇▇▇▇▇ Entities shall provide a list of all
employees of the ▇▇▇▇▇▇▇ Entities at the Facilities and a schedule of
their rates of pay, length of employment, current benefits, including
overtime, vacation, sick and holiday pay and flex benefits, and
deferred or incentive compensation, including any bonus plans (other
than "retention" or "stay-on" bonuses in connection with the
transactions contemplated by this Agreement) as of the Effective Time
(the "PTO Schedule"). Approximately five (5) days prior to the Closing
Date, the ▇▇▇▇▇▇▇ Entities shall provide an updated PTO Schedule.
8.1.11 Trust Accounts for Patients and Residents. Within thirty (30)
days following the Effective Time, the ▇▇▇▇▇▇▇ Entities shall deliver
to Buyer an accounting, properly reconciled as of the Effective Time,
of all patient and resident trust funds that the ▇▇▇▇▇▇▇ Entities held
with respect to the Facilities at the Effective Time.
8.1.12 Licensure Notices. As soon as reasonably practicable but in no
event later than ten days after the date of this Agreement, the ▇▇▇▇▇▇▇
Entities shall provide notice of the transactions contemplated hereby
to the Department. The ▇▇▇▇▇▇▇ Entities shall cooperate with Buyer and
take reasonable measures to shorten the periods required under
applicable law for notice, licensure approval and other similar
processes in connection with Buyer's receipt of licensure as described
in Section 8.2.1 hereof. If the ▇▇▇▇▇▇▇ Entities and Buyer mutually
agree to pay fees to the Department to shorten such periods, the
▇▇▇▇▇▇▇ Entities shall pay fifty percent (50%) of all such fees.
8.1.13 Final Cost Report. The ▇▇▇▇▇▇▇ Entities shall prepare a final
cost report for both Medicare and Medicaid for each Facility within the
time frame required by law.
8.1.14 Unions. The ▇▇▇▇▇▇▇ Entities shall use commercially reasonable
efforts to assist Buyer in scheduling meetings, within thirty (30) days
after the execution of this Agreement, between Buyer or Buyer's
representative and representatives from the unions
28
that have members that are employees of the ▇▇▇▇▇▇▇ Entities at the
Facilities ("Union Meetings").
8.1.15 Patient Census Information and Financial Information. The
▇▇▇▇▇▇▇ Entities shall deliver to Buyer monthly, commencing upon the
execution of this Agreement, census information on the number of
licensed beds occupied by bona fide residents pursuant to Patient
Admissions Contracts at normal and customary rates then in effect for
the ▇▇▇▇▇▇▇ Entities, monthly financial statements for each Facility
and any other financial report generated by the ▇▇▇▇▇▇▇ Entities in the
ordinary course of business for any of the Facilities and requested by
Buyer.
8.1.16 Construction. In the event the construction at Facilities ##
789, 793 and 2168 set forth in Section 7.1.21 hereof is not expected to
be completed on or before the Closing Date, Buyer and the ▇▇▇▇▇▇▇
Entities agree to enter into a construction management agreement on or
prior to the Closing Date on commercially reasonable and customary
terms and conditions pursuant to which the ▇▇▇▇▇▇▇ Entities will manage
the completion of such construction (the "Construction Management
Agreement"). During the management of such construction, the ▇▇▇▇▇▇▇
Entities shall cooperate with Buyer in all reasonable respects to allow
Buyer to monitor the completion of such construction. On or before the
Closing Date, the ▇▇▇▇▇▇▇ Entities shall cause the general contractor
responsible for performing such construction to name Buyer as an
additional obligee on the performance bond it has provided the ▇▇▇▇▇▇▇
Entities or the applicable ▇▇▇▇▇▇▇ Entity and Buyer shall enter into a
mutually acceptable agreement to provide for the allocation of any
proceeds of such bond. The ▇▇▇▇▇▇▇ Entities shall pay all costs and
expenses related to the construction described in this paragraph.
8.1.17 No Solicitation. Until the No Solicitation End Date (as defined
below), so long as Buyer is in material compliance with all of its
obligations hereunder, the ▇▇▇▇▇▇▇ Entities agree they shall not
directly or indirectly, through any officer, director, employee, agent
or otherwise, enter into or conduct substantive discussions or
negotiations, solicit, initiate or encourage submission of proposals or
offers from any person relating to any acquisition of any or all of the
Facilities, or furnish to any other person any information with respect
to, negotiate, discuss or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. Upon
and after the No Solicitation End Date, the ▇▇▇▇▇▇▇ Entities shall not
engage in any of the activities described in this section until the
fifth (5th) day after the later of the No Solicitation End Date and the
date it has provided notice to Buyer of its intent to do so. During
such five (5) day period, the ▇▇▇▇▇▇▇ Entities shall provide Buyer with
a reasonable opportunity to consult with the ▇▇▇▇▇▇▇ Entities about the
reasons for their decision to engage in such activities. After such
five (5) day period, the ▇▇▇▇▇▇▇ Entities may in their sole discretion
proceed to engage in such activities. Notwithstanding the foregoing,
the ▇▇▇▇▇▇▇ Entities may not enter into a definitive purchase and sale
agreement with respect to any or all of the Facilities prior to the
expiration or valid termination of this Agreement. The "No Solicitation
End Date" shall be the thirtieth (30th) or forty-fifth (45th) day, as
applicable, after the execution and
29
delivery hereof by all parties hereto if, but only if, Buyer has not
made the deliveries required by such dates pursuant to Section 8.2.12
hereof.
8.1.18 Regulatory Inspections. The ▇▇▇▇▇▇▇ Entities shall be
responsible for, and shall bear all costs and expenses incurred in
connection with any regulatory inspection or survey conducted prior to
the Effective Time; provided, however, that with respect to matters
relating to the life safety code and physical plant of the Facilities
that are revealed in any such inspection or survey occurring after the
date hereof, Buyer shall not be required to pay any amount in excess of
One Million Five Hundred Thousand Dollars ($1,500,000) in the aggregate
for all Facilities.
8.1.19 Lifecare Contracts. The ▇▇▇▇▇▇▇ Entities shall reimburse Buyer
for the "Contract Cost" (as defined below) for any resident in any
Facility who is a resident pursuant to a multi-year admissions
agreement that provides for a payment by such resident of a fixed
amount that is below market rates by more than ten percent (10%). For
any such resident, the "Contract Cost" shall be calculated as the net
present value (using a discount rate of 9% per annum) of the applicable
Facility's average cost of care minus the amount actually required to
be paid by such resident under his/her admissions agreement, calculated
over the shorter of (i) the remaining term of such admissions agreement
and (ii) the remaining life of such resident as determined by
applicable actuarial tables.
8.1.20 Cooperation. From the date hereof and until the Closing Date,
the ▇▇▇▇▇▇▇ Entities shall cooperate in all commercially reasonable
respects if requested by Buyer to assist in the transition of the
operations of the Facilities from the ▇▇▇▇▇▇▇ Entities to Buyer,
including but not limited to, after Buyer has filed its applications
for operating licenses with the Department, providing the Buyer access
to all the Facilities and employees of the Facility and provide
insurance cost runs and claims history for general liability,
professional liability, property and workers' compensation insurance
for the previous three (3) years, provided that the ▇▇▇▇▇▇▇ Entities
shall not be required to incur any material out-of-pocket costs or
expenses in connection with such cooperation.
8.1.21 Depreciation Recapture. The ▇▇▇▇▇▇▇ Entities shall pay any
amounts due arising from the recapture of depreciation or recapture of
fair rental value index to the extent owed under Florida law.
8.1.22 Notification. From the date hereof through the Closing Date, the
▇▇▇▇▇▇▇ Entities shall promptly notify the Buyer in writing of any
discovery on their part of any event, fact or circumstance that would
constitute a breach if the representations or warranties were made as
of the date of discovery; provided, however, that nothing herein shall
relieve Buyer of its obligations to close the transaction contemplated
hereby in the event that the ▇▇▇▇▇▇▇ Entities correct such event, fact
or circumstance such that the representations are true as of Closing.
No such notification shall be deemed to relieve the ▇▇▇▇▇▇▇ Entities of
its obligations hereunder.
8.1.24 OIG Confirmation. The ▇▇▇▇▇▇▇ Entities shall use their
commercially reasonable efforts to secure the letter or evidence from OIG
contained in Section 10.1.10.
30
8.2 Covenants of Buyer. Buyer hereby covenants and agrees as follows:
8.2.1 Licensure. Prior to the Closing, Buyer shall use commercially
reasonable efforts and due diligence to obtain a license from the
Department, or commitment that such license will be issued as of the
Effective Time, and such other licenses and permits as may be required,
to authorize Buyer or its appointees to operate the Facilities as they
are currently operated and to obtain Medicare and Medicaid
certification and provider agreements thereunder. As soon as reasonably
practicable after the ▇▇▇▇▇▇▇ Entities provide the notices described in
Section 8.1.12 hereof, Buyer shall cause all applications for such
licenses and permits to be submitted, properly completed, to the
Department and other appropriate regulatory authorities. Buyer shall
cooperate with the ▇▇▇▇▇▇▇ Entities and take reasonable measures to
shorten the periods required under applicable law for notice, licensure
approval and other similar processes in connection with the receipt of
licensure as described in this Section. If the ▇▇▇▇▇▇▇ Entities and
Buyer mutually agree to pay fees to the Department to shorten such
periods, Buyer shall pay fifty percent (50%) of all such fees. In the
event for any reason Buyer shall be unable to obtain necessary licenses
for any of the Facilities prior to the Closing Date, then each such
Facility shall be deemed an Escrow Facility.
8.2.2 Assumption of Contracts. Buyer covenants and agrees to assume, or
to cause its appointees to assume all the terms and provisions of the
Leases, the Management Agreement and Assigned Contracts and to perform
all obligations accruing pursuant to any of the Leases, the Management
Agreement and Assigned Contracts subsequent to the Effective Time.
Notwithstanding the foregoing or any other provision of this Agreement,
Buyer shall not assume, and the ▇▇▇▇▇▇▇ Entities shall be responsible
for any Non-Assumed Liability. For the purposes of this Agreement,
"Non-Assumed Liability" means any liability, obligation or commitment
or obligation arising under the Leases, Management Agreement or
Assigned Contract that (a) arises on or prior to the Effective Time,
(b) are attributable to any breach of such Management Agreement or
Assigned Contract by one or more of the ▇▇▇▇▇▇▇ Entities, or (c) arise
from any event, circumstance or condition occurring or existing on or
prior to Effective Time that but for notice or lapse of time would
constitute a breach of such Management Agreement or Assigned Contract
prior to the Effective Time, except to the extent Buyer has exacerbated
such event, circumstance or condition.
8.2.3 Accounts Payable. Buyer agrees to assume, or to cause its
appointees to assume, all accounts payable for Supplies and other goods
or equipment received at the Facilities on and subsequent to the
Effective Time, and for services rendered and performed on and
subsequent to the Effective Time.
8.2.4 Trust Accounts for Patients and Residents. Buyer recognizes the
▇▇▇▇▇▇▇ Entities will, at the Closing, transfer to Buyer or its
appointees all trust accounts for patients and residents currently held
by the ▇▇▇▇▇▇▇ Entities. With respect to such trust accounts for
patients and residents, Buyer agrees to assume, or to cause its
appointees to assume, custody of such accounts and treat such accounts
in the fiduciary capacity required by law.
31
8.2.5 Maintenance of Patient and Resident Records. Buyer understands
that all ▇▇▇▇▇▇▇ Entities' patient and resident records are being
transferred hereunder to Buyer, and, with respect to all patient and
resident records, Buyer agrees to, and to the extent doing so is within
Buyer's control, to cause any future owner, operator, lessee and
manager to, maintain such records as prescribed by law and in
accordance with the CIA (as more fully set forth in Section 8.2.6
hereof), to allow the ▇▇▇▇▇▇▇ Entities, or their agents or
representatives, to examine from time to time such records relating to
the period of the ▇▇▇▇▇▇▇ Entities' operation of the Facilities, to
promptly cooperate with the ▇▇▇▇▇▇▇ Entities, their agents or
representatives in their examination or review of such records and to
promptly provide the ▇▇▇▇▇▇▇ Entities with copies thereof at the
▇▇▇▇▇▇▇ Entities' expense. Without limiting the generality of the
foregoing sentence, Buyer shall obtain from any purchaser of any
Facility a contractual obligation to comply with the obligations set
forth in this Section 8.2.5, which contract shall name the ▇▇▇▇▇▇▇
Entities as third party beneficiaries.
8.2.6 Cooperation. Buyer and its employees, officers, directors,
partners, agents and consultants shall, and shall cause the operator of
each Facility to, cooperate in all reasonable respects with the ▇▇▇▇▇▇▇
Entities and their attorneys and agents in the investigation, trial and
defense of any claim, lawsuit or action, and any appeal therefrom,
relating to the ▇▇▇▇▇▇▇ Entities' ownership of the Facilities. Buyer
shall promptly cooperate in all reasonable respects and promptly comply
with the ▇▇▇▇▇▇▇ Entities' reasonable requests in connection with
obtaining Lessor Consent and Estoppels for any of the Leased Facilities
and consent to the assignment of the Management Agreement. Subsequent
to the Effective Time, upon reasonable notice, Buyer shall allow, and
shall cause any future owner, lessee, manager and operator of the
Facilities to allow the ▇▇▇▇▇▇▇ Entities and their agents and
representatives to have reasonable access to, and to make copies of,
the books, records and supporting material of the Facilities relating
to the period prior to the Effective Time to the extent reasonably
necessary to enable the ▇▇▇▇▇▇▇ Entities to investigate and defend
malpractice or employee claims, to file or defend cost reports and tax
returns and to perform similar matters. Without limiting the generality
of the foregoing, in connection with any Medicare audit relating to
periods prior to the Effective Time, Buyer shall allow, or shall cause
any future owner, lessee, manager and operator to allow, the ▇▇▇▇▇▇▇
Entities, their agents and representatives and any auditors and their
agents and representatives to have access to (i) the Facilities, (ii)
any and all staff involved with payroll and timekeeping functions at
any of the Facilities and (iii) the materials listed on Exhibit M
hereto. In addition, the ▇▇▇▇▇▇▇ Entities shall be entitled to remove
any such records for purposes of litigation involving a patient or
employee to whom such record refers; provided, however, prior to
removing any original records, the ▇▇▇▇▇▇▇ Entities will, at their sole
cost and expense, provide Buyer with complete copies of such removed
records. Any records so removed shall be returned promptly following
its use. Buyer agrees to, and agrees to require any future lessee to,
maintain such books, records and other material relating to the
Facilities' operations prior to the Effective Time, including, but not
limited to, patient records and records of patient funds, in the manner
required by law and as required by that certain Corporate Integrity
Agreement effective February 3, 2000, ("CIA") between ▇▇▇▇▇▇▇
Enterprises, Inc., a Delaware corporation, and the Office of Inspector
General of the Department of Health
32
and Human Services, said time period being seven (7) years from filing
of reimbursement claim, or as required by law, whichever time period is
longer. To the extent doing so is within Buyer's control, Buyer shall
cause any future owner, lessee, manager and operator of any Facility to
comply with the obligations of Buyer set forth in this Section 8.2.6.
Without limiting the generality of the foregoing sentence, Buyer shall
obtain from any purchaser of any Facility a contractual obligation to
comply with the obligations set forth in this Section 8.2.6, which
contract shall name the ▇▇▇▇▇▇▇ Entities as third party beneficiaries.
8.2.7 Regulatory Inspections; Surveys. Buyer shall be responsible for
and shall bear all costs and expense incurred in connection with any
requirements of regulatory inspections or surveys conducted after the
Effective Time and implementing any plans of correction relating to
such surveys or inspections. Subject to the requirements of applicable
law, Buyer agrees that it shall not request any regulatory inspection
or survey of any Facility by any regulatory authority until after the
Effective Time.
8.2.8 Reimbursement. If Buyer receives from any federal or state agency
payment which represents reimbursement in respect to underpayments made
to the ▇▇▇▇▇▇▇ Entities for services rendered prior to the Effective
Time, then it shall be deemed to be holder of such in trust for the
▇▇▇▇▇▇▇ Entities' benefit and it shall promptly remit such payments to
the ▇▇▇▇▇▇▇ Entities. If Buyer receives from any federal or state
agency any claim for reimbursement of overpayments made to the ▇▇▇▇▇▇▇
Entities for services rendered prior to the Effective Time, then Buyer
shall notify the ▇▇▇▇▇▇▇ Entities of any such notices within ten (10)
business days after Buyer's receipt thereof; provided that failure to
provide such notice shall not limit or diminish the ▇▇▇▇▇▇▇ Entities'
indemnification obligations under Section 13.2 hereof, except to the
extent such failure to provide any Medicaid notice causes actual loss
to the ▇▇▇▇▇▇▇ Entities and then only to the extent of such actual
loss.
8.2.9 Employees; WARN Act Compliance. The employment of all employees
of the ▇▇▇▇▇▇▇ Entities at the Facilities shall terminate effective at
the Effective Time. Buyer has complied in all material respects with
and hereby agrees to comply in all material respects with the Worker
Adjustment and Retaining Notification Act ("WARN Act") and all
Department of Labor ("DOL") regulations related thereto to the extent
that the WARN Act and the DOL regulations pertain to Buyer with respect
to the transfer of the Facilities. Buyer covenants that Buyer will,
upon Closing of the transactions contemplated hereby, offer employment
to substantially all employees of the ▇▇▇▇▇▇▇ Entities at the
Facilities as employees at will. Buyer shall offer each such individual
employment at substantially the same compensation, same seniority, and
substantially comparable benefits as offered by the ▇▇▇▇▇▇▇ Entities
immediately prior to the Effective Time or as required by any
collective bargaining agreement. Except as required by any collective
bargaining agreement, it is agreed that the Plans are not being
continued or assumed by Buyer and, under no circumstances, shall Buyer
have any liability or obligation with respect to the Plans. Buyer
agrees to provide all such employees with benefits as required by and
in accordance with all applicable federal and state laws.
33
8.2.10 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. Buyer shall use commercially reasonable
efforts to furnish, or cause to be furnished, such information, and
promptly file, or cause to be filed, such documents as may be required
in order for Buyer to comply with the HSR Act, and Buyer shall
cooperate fully in order that all necessary filings by the ▇▇▇▇▇▇▇
Entities in connection therewith may be completed as soon as possible
after the execution and delivery of this Agreement, or earlier if
practicable. Buyer shall use commercially reasonable efforts to respond
promptly to any requests for additional information received in
connection with any HSR Act filing, and Buyer shall promptly notify the
▇▇▇▇▇▇▇ Entities of any such request for additional information.
8.2.11 Accounts Receivable. Buyer agrees to fully cooperate with and
assist the ▇▇▇▇▇▇▇ Entities in their collection of the private pay and
private portion of Medicaid receivables, which such portion of the
receivables shall be processed, to the extent permitted by applicable
law, first-in-first-out ("FIFO") for thirty (30) days following the
Closing, and thereafter last-in-first-out ("LIFO"). It is further
agreed that, in connection with the non-private pay portion of Medicare
and Medicaid receivables, collections relating to patients and
residents who continue to reside at the Facilities after the Effective
Time shall be applied to the account and period specified by the paying
agency until the account is liquidated. Buyer further agrees to make
available to the ▇▇▇▇▇▇▇ Entities reasonably adequate space, equipment,
and facilities at the Facilities to permit an employee of the ▇▇▇▇▇▇▇
Entities to review and process the accounts receivable after the
Effective Time, and to provide such employee with full access to the
collection records with respect to the patients and residents owing
such accounts receivable. Any funds received by Buyer which are due and
payable to the ▇▇▇▇▇▇▇ Entities under this Section 8.2.11 shall be
deemed to be held in trust by Buyer for the ▇▇▇▇▇▇▇ Entities' benefit
and shall be remitted to the ▇▇▇▇▇▇▇ Entities no less frequently than
once a month beginning fifteen (15) days after the Closing.
Buyer shall assume responsibility for the billing for and
collection of payments on account of services rendered by it at the
Facilities on and after the Effective Time. The ▇▇▇▇▇▇▇ Entities shall
retain all rights in and title to the Accounts Receivable prior to the
Effective Date and shall retain full responsibility for the collection
thereof. The ▇▇▇▇▇▇▇ Entities agree that they may not institute legal
action against any current resident at one of the Facilities in order
to collect the Accounts Receivable without Buyer's prior written
consent, which shall not be unreasonably withheld; provided, however,
that with respect to any current resident for which consent is
reasonably withheld, all payments received on behalf of such resident
shall thereafter be processed, to the extent permitted by applicable
law, on a FIFO basis until the ▇▇▇▇▇▇▇ Entities are paid in full.
All third party payor payments (Medicare, Medicaid, etc.)
received by Buyer from and after the Effective Time shall relate to the
pre-Effective Time or post-Effective Time account of the resident for
whom the payment is made in accordance with the dates of service
indicated on the remittance, and Buyer shall remit to the applicable
▇▇▇▇▇▇▇ Entities within fifteen (15) business days of its receipt
thereof any payment
34
received by Buyer that applies to a pre-Effective Time account,
together with a copy of the remittance advice.
In addition, Buyer shall remit to the ▇▇▇▇▇▇▇ Entities within
fifteen (15) business days of its receipt thereof any repayment or
reimbursement received by Buyer arising out of cost reports filed for
the cost reporting period ending prior to the Effective Time.
The ▇▇▇▇▇▇▇ Entities agree that any payment, whether received
by the ▇▇▇▇▇▇▇ Entities from private pay patients or as repayment or
reimbursement arising out of cost reports, that pertain to the period
from and after the Effective Time shall be remitted by the ▇▇▇▇▇▇▇
Entities to Buyer within fifteen (15) business days of the ▇▇▇▇▇▇▇
Entities' receipt thereof to be applied and/or disbursed by Buyer in
accordance with the terms of this Section.
8.2.12 Financing Commitments. On or before the fifth (5th) day after
the execution and delivery of this Agreement by all parties hereto,
Buyer shall deliver to the ▇▇▇▇▇▇▇ Entities a true, correct and
complete copy of its fully executed loan application (which shall
contain, among other things, all conditions precedent to the funding of
such loans) for senior and junior debt to finance the Purchase Price,
subject to the last sentence of this paragraph. On or before the
thirtieth (30th) day after the execution and delivery of this Agreement
by all parties hereto, Buyer shall deliver to the ▇▇▇▇▇▇▇ Entities a
written, signed acknowledgement, in form and substance reasonably
acceptable to the ▇▇▇▇▇▇▇ Entities, by each of its senior and junior
lenders (subject to the last sentence of this paragraph) financing the
Purchase Price, describing the status of such lender's diligence
process and stating that based on the diligence it has performed to
such date, such lender knows of no state of facts that could reasonably
be expected to prevent it from funding the senior and junior loans, as
applicable (each, a "Comfort Letter"). In the event the Comfort Letters
are not delivered on or before such thirtieth (30th) day, or if the
Comfort Letters are not reasonably acceptable to the ▇▇▇▇▇▇▇ Entities,
then the ▇▇▇▇▇▇▇ Entities shall so notify Buyer. Buyer shall have five
(5) business days after such notice to deliver a revised or replacement
Comfort Letter from a lending institution, reasonably acceptable to the
▇▇▇▇▇▇▇ Entities, if applicable, from which the senior and if
applicable junior loans will be available. On or before the forty-fifth
(45th) day after the execution and delivery of this Agreement by all
parties hereto, Buyer shall deliver to the ▇▇▇▇▇▇▇ Entities a written,
signed acknowledgement from each of its senior and junior lender(s)
financing the Purchase Price that such lender(s) have completed all
diligence and received all approvals required for the funding of such
loans provided that failure to deliver the Financing Commitments
required hereunder shall not be deemed a breach of this Agreement.
Buyer's failure to timely comply with the provisions of this Section
8.2.12 shall permit the ▇▇▇▇▇▇▇ Entities, at their option, by written
notice to Buyer delivered to Buyer not later than the fifth (5th)
business day after the required date for such delivery, to terminate
this Agreement, provided that the ▇▇▇▇▇▇▇ Entities are not then in
material breach of this Agreement. If the ▇▇▇▇▇▇▇ Entities have not
timely terminated this Agreement pursuant to the immediately preceding
sentence, such termination right shall be waived. In the event of said
termination, the Escrow Agent shall pay the Deposit to
35
Buyer. Notwithstanding anything to the contrary contained herein, in
the event that Buyer does not obtain or elects not to pursue junior or
mezzanine financing, then on such thirtieth (30th) day and forty-fifth
(45th) day, Buyer shall provide the ▇▇▇▇▇▇▇ Entities with evidence
reasonably satisfactory to the ▇▇▇▇▇▇▇ Entities that equity
contributions will be available in an amount sufficient, when
aggregated with senior financing, to pay the Purchase Price.
8.2.13 Material Contracts. On or before the forty-fifth (45th) day
after the date hereof, Buyer shall notify the ▇▇▇▇▇▇▇ Entities of those
Material Contracts that it refuses to assume and the terms "Operating
Contracts" or "Equipment Leases", as applicable, shall thereafter not
include such contracts.
8.2.14 OIG Confirmation. Buyer shall use commercially reasonable
efforts to assist the ▇▇▇▇▇▇▇ Entities in securing the letter or
evidence from OIG contained in Section 10.1.10.
ARTICLE 9.
Additional Provisions
9.1 Title
A. Buyer has been provided the real property surveys covering each of the
Facilities provided by the ▇▇▇▇▇▇▇ Entities (the "Surveys").
B. Buyer has been provided title insurance commitments for an owner's policy of
title insurance for each of the Facilities other than the Managed Facility (the
"Title Commitments"), which commitments have been issued by Fidelity. The
aggregate amount of insurance for the Facilities shall not exceed the Purchase
Price.
C. Intentionally deleted.
D. For the purposes of this Agreement, the term "Permitted Encumbrances" shall
mean (i) rights or claims of possession of patients and residents in the
Facilities as residents or patients only, with no option to purchase or acquire
an interest in the Facilities; (ii) the specific (not generally part of the
promulgated title commitment form) exceptions set forth on the Title
Commitments, other than those set forth on Schedule 9.1D hereof (as such
schedule is modified according to Section 9.1G hereof); and (iii) items revealed
on the Surveys, other than those set forth on Schedule 9.1D hereof (as such
schedule is modified according to Section 9.1G hereof).
E. Notwithstanding any provision hereof to the contrary, the parties acknowledge
that the ▇▇▇▇▇▇▇ Entities might be unable to effect (i) valid Subleases or Lease
Assignments without first obtaining a Lessor Consent and Estoppel from each of
the Lessors and their lenders, if required or (ii) a valid assignment of the
Management Agreement without first obtaining the Managed Facility Consent. In
the event for any reason the ▇▇▇▇▇▇▇ Entities shall be unable to obtain a
necessary Lessor Consent and Estoppel for any of the Leased Facilities or the
Managed Facility
36
Consent for the Managed Facility by the Closing Date, then such Leased Facility
or Managed Facility, as applicable, shall be deemed an Escrow Facility.
F. Notwithstanding any provision hereof to the contrary, the parties acknowledge
that the ▇▇▇▇▇▇▇ Entities might be unable to remove or insure over title
exceptions on certain Title Commitments relating to liens arising out of bond
financings placed on a specific Facility by the Closing Date. In such event, the
affected Facility shall be deemed an Escrow Facility.
G. Within thirty (30) days of the date hereof, Buyer shall review the Title
Commitments and the Surveys and provide the ▇▇▇▇▇▇▇ Entities with a list of
additional title and survey clearance items to include on Schedule 9.1D attached
hereto; provided, however, that Buyer may not include any additional title
and/or survey clearance items on Schedule 9.1D attached hereto unless such item
would (i) have a material adverse effect on the use of the affected Facility as
a nursing home or as an assisted living facility consistent with the ▇▇▇▇▇▇▇
Entities' past operations thereof or (ii) have a material adverse effect on the
marketability of title to the affected Facility. Any objections to the Title
Commitments or Surveys that are not provided to the ▇▇▇▇▇▇▇ Entities within
thirty (30) days of the date hereof shall be deemed waived, except that if after
such date and before the Closing Date, any other matters of record, additional
liens or encumbrances to the title to the Facilities are created or discovered,
then Buyer may add any such encumbrances to Schedule 9.1D if such other matters
of record, additional liens or encumbrances satisfy the condition contained in
the proviso of the immediately preceding sentence.
9.2 Risk of Loss or Condemnation
(a) The ▇▇▇▇▇▇▇ Entities agree to give Buyer prompt written
notice of any fire or other casualty affecting any Facility or
of any actual or threatened (to the extent that the ▇▇▇▇▇▇▇
Entities have current actual knowledge thereof) taking or
condemnation of all or any portion of any Facility.
(b) If prior to the Closing there shall occur:
(i) damage to any Facility caused by fire or other
casualty which would (A) cost an amount greater than,
or equal to, FIVE HUNDRED THOUSAND DOLLARS
($500,000), in the aggregate, to repair, and (B)
materially interfere with the use of such Facility as
currently operated; or
(ii) the taking or condemnation of all or any portion
of any Facility which would materially interfere with
the use of such Facility as currently operated;
then, in such event, such Facility shall be deemed an Escrow Facility upon
Buyer's providing written notice thereof delivered to the ▇▇▇▇▇▇▇ Entities
within ten (10) days after Buyer receives written notice from the ▇▇▇▇▇▇▇
Entities. If Buyer does not so timely elect to treat the Facility as an Escrow
Facility, then the Closing shall take place as provided herein and Buyer shall
receive a credit at Closing in the amount of applicable insurance deductibles
and shall be assigned at the Closing all interest of the ▇▇▇▇▇▇▇ Entities in and
to any insurance proceeds (including, but not limited to, any proceeds of
business interruption insurance for the period after the Effective
37
Time) or condemnation awards payable to the ▇▇▇▇▇▇▇ Entities on account of that
event, less sums which the ▇▇▇▇▇▇▇ Entities incurs before the Closing for the
direct cost of the repair of any of the damage or in pursuing the collection of
any such insurance proceeds or participating in any condemnation proceeding.
(c) If before the Closing there occurs:
(i) damage to any Facility caused by fire or other
casualty which would (A) cost an amount less than
FIVE HUNDRED THOUSAND DOLLARS ($500,000), in the
aggregate, to repair, or (B) not materially interfere
with the use of such Facility as currently operated;
or
(ii) the taking or condemnation of all or any portion
of any Facility which would not materially interfere
with the use of such Facility as currently operated;
then, in such event, the Facility shall not be deemed an Escrow Facility and
Buyer shall receive a credit at Closing in the amount of applicable insurance
deductibles and shall be assigned at the Closing all interest of the ▇▇▇▇▇▇▇
Entities in and to any insurance proceeds (including, but not limited to, any
proceeds of business interruption insurance for the period after the Effective
Time) or condemnation awards payable to the ▇▇▇▇▇▇▇ Entities on account of that
event, less sums which the ▇▇▇▇▇▇▇ Entities incurs before the Closing for the
direct cost of the repair of any of the damage or in pursuing the collection of
any such insurance proceeds or participating in any condemnation proceeding.
9.3 Termination of a Condemned Facility. Upon any Facility being deemed an
Escrow Facility hereunder as a result of a condemnation or taking as set forth
in Section 9.2, this Agreement shall terminate as to such Facility and Buyer and
the ▇▇▇▇▇▇▇ Entities shall be released from all further obligations hereunder
with respect to such Facility, and the Purchase Price shall be reduced by the
amount allocated to such Facility on Exhibit C hereto.
9.4 The ▇▇▇▇▇▇▇ Entities' Obligation to Pay Break-Up Fee Under Certain
Circumstances.
(a) The ▇▇▇▇▇▇▇ Entities shall pay (by wire transfer of
immediately available funds) to Buyer a break-up fee
("Break-Up Fee") of (i) Ten Million Dollars ($10,000,000) in
the event the ▇▇▇▇▇▇▇ Entities transfer, sell, lease or enter
into a management agreement for the Facilities to a
third-party unrelated to Buyer within two (2) years after the
termination of this Agreement other than as a result of (w) a
material breach of this Agreement by Buyer, (x) the conditions
to closing in Article 10 hereof not being satisfied, (y)
termination under Sections 8.2.12, 9.3 or 14.16 hereof or (z)
termination of this Agreement as a result of a material breach
by the ▇▇▇▇▇▇▇ Entities that is not reasonably within their
control or (ii) Six Million Dollars ($6,000,000) in the event
the ▇▇▇▇▇▇▇ Entities elect not to sell the Facilities to Buyer
and do not sell the Facilities to a third-party unrelated to
Buyer within two (2) years after the termination of this
Agreement other than as a result of (w) a material breach of
this Agreement by Buyer, (x) the conditions to closing in
Article 10 hereof not being satisfied, (y) termination under
Sections 8.2.12, 9.3
38
or 14.16 hereof or (z) termination of this Agreement as a
result of a material breach by the ▇▇▇▇▇▇▇ Entities that is
not reasonably within their control. Notwithstanding the
foregoing, if either of such events described in the
immediately preceding sentence occur with respect to less than
all of the Facilities, the Break-Up Fee shall be limited to an
amount equal to two (2) times the Purchase Price allocated to
such Facilities, not to exceed the Break-Up Fee that would
otherwise be payable hereunder. The ▇▇▇▇▇▇▇ Entities shall
receive a credit in the amount of any amounts payable under
Section 2.3.3 hereof against any amounts payable to Buyer
under this Section 9.4(a).
(b) The parties hereto acknowledge that the actual damages
sustained by the Buyer resulting from the events set forth in
subsection (a)(i) or (a)(ii) above are difficult to ascertain,
and the parties hereby further agree that the liquidated
damages amounts set forth in this Section 9.4 are a reasonable
estimate of the amount of damages, including consequential
damages, which the Buyer would suffer by reason of such event
by the ▇▇▇▇▇▇▇ Entities, gauged by the circumstances existing
at the time this Agreement is executed. The payment of such
amount by the ▇▇▇▇▇▇▇ Entities is intended not as a penalty,
but as full liquidated damages. Receipt of such payment as
full liquidated damages is the Buyer's sole and exclusive
remedy, and the Buyer hereby waives and releases any right to
(and hereby covenants that it shall not) ▇▇▇ the ▇▇▇▇▇▇▇
Entities (a) for specific performance of this Agreement or (b)
to recover actual damages in excess of such amount if Buyer
receives such amount. Notwithstanding anything to the contrary
contained herein, after the initial Closing Date (as described
in the first sentence of Section 3.1 hereof has occurred), the
▇▇▇▇▇▇▇ Entities shall be obligated to pay only a pro rata
portion of the Break-Up Fee (based on the allocated amount as
set forth in Exhibit C hereto) for the reasons described in
this Section 9.4 with respect to the occurrence of either
event set forth in subsections (a)(i) or (a)(ii) above with
respect to any Escrow Facility. Notwithstanding anything
herein to the contrary, at any time, the ▇▇▇▇▇▇▇ Entities may
pay Buyer the Break-Up Fee (which Break-Up Fee shall
constitute full liquidated damages and is Buyer's sole and
exclusive remedy), and Buyer shall thereafter be prohibited
from commencing an action for specific performance or other
remedies and shall promptly terminate all such actions already
commenced.
9.5 Equipment Leases; Computer Hardware/Software; Manuals; Intellectual Property
Rights
(a) During the sixty (60) day period immediately following the
Closing, the ▇▇▇▇▇▇▇ Entities shall permit Buyer to use the
leased computer equipment (hardware only) located in the
Facilities and excluding any VSAT equipment, to the extent
permitted under the applicable leases and in consideration
thereof, (a) Buyer shall be responsible for any payments under
the applicable leases which relate to post-Effective Time
periods, and (b) Buyer shall indemnify, defend and hold
harmless the ▇▇▇▇▇▇▇ Entities for any and all claims,
liabilities, losses, damages, costs and expenses incurred by
the ▇▇▇▇▇▇▇ Entities arising out of Buyer's use of such
equipment during the post-Effective Time period. Buyer shall
39
notify the ▇▇▇▇▇▇▇ Entities at least thirty (30) days prior to
the Closing Date if it desires to use such equipment.
(b) Buyer acknowledges that the ▇▇▇▇▇▇▇ Entities have advised
Buyer that the ▇▇▇▇▇▇▇ Entities intend to remove from the
Facilities all of the computer hardware and software which is
connected to the ▇▇▇▇▇▇▇ Entities' corporate accounting and
medical records network and any and all other computer systems
which are subject to master leases or master financing
arrangements. In order to assist Buyer to ensure the continued
operation of the Facilities after the Closing Date in
compliance with applicable law and in a manner which does not
jeopardize the health and welfare of the residents and
patients of the Facilities, the ▇▇▇▇▇▇▇ Entities shall, at
their option, within ten (10) business days before the Closing
Date, either (i) print out the medical treatment records and
physician orders for each resident and patient and deliver
such records and orders to Buyer or (ii) electronically
transfer such information to Buyer's information management
systems to provide Buyer with complete records for each
resident and patient.
9.6 [Intentionally Omitted.].
ARTICLE 10.
Conditions To Closing
10.1 Conditions Precedent to Buyer's Performance. The obligations of Buyer under
this Agreement are subject to the satisfaction, at or before the Closing, of the
conditions set forth in this Section 10.1. Buyer may waive any or all of these
conditions in whole or in part without prior notice and the closing of the
transactions contemplated hereby shall mean that such conditions are deemed
satisfied or waived.
10.1.1 Accuracy of Representations and Warranties. All representations
and warranties of the ▇▇▇▇▇▇▇ Entities in this Agreement (other than
those contained in Section 7.1.10 hereof) shall be true and correct in
all material respects at Closing as though made at that time, except as
otherwise expressly provided in this Agreement; provided, that if any
representations or warranties are untrue in any material respect with
respect to one or more individual Facilities (other than
representations or warranties made with respect to the Facilities taken
as a whole), such Facilities shall be deemed Escrow Facilities and the
condition shall be deemed to have been met with respect to all other
Facilities.
10.1.2 The ▇▇▇▇▇▇▇ Entities' Performance. The ▇▇▇▇▇▇▇ Entities shall
have performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by this Agreement to
be performed, satisfied or complied with by the ▇▇▇▇▇▇▇ Entities prior
to Closing, including, without limitation, the delivery of all items
set forth in Section 5.1 hereof.
10.1.3 Actions, Suits, Proceedings. No action, suit or proceeding
pertaining to the transactions contemplated by this Agreement, shall
have been instituted on or before the
40
Effective Time that enjoins or restrains the ▇▇▇▇▇▇▇ Entities or the
Buyer in connection with the Closing or that could reasonably be
expected to subject Buyer to material liability as a result of closing
the transactions contemplated hereby or that could reasonably be
expected to materially interfere with Buyer's ability to operate the
Facilities following the Closing.
10.1.4 Licenses, Permits. Buyer or its appointee shall have received a
permanent license from the Department to operate the Facilities as they
are currently operated; provided that in the event for any reason Buyer
or its appointee shall be unable to obtain necessary licenses for any
of the Facilities by the Closing Date, then each such Facility shall be
deemed an Escrow Facility and the condition shall be deemed to have
been met with respect to all other Facilities.
10.1.5 Consents. All necessary governmental and third party consents,
approvals and filings, including without limitation filings and
approvals pursuant to the HSR Act, approval by state and federal
government agencies of Medicare and Medicaid provider agreements with
Buyer for the Facilities and as otherwise required to consummate the
transactions contemplated herein have been obtained.
10.1.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. Any person required in connection with the
transactions contemplated hereby to file a notification and report form
in compliance with the HSR Act shall have filed such form, and the
applicable waiting period with respect to each such form (including any
extension thereof by reason of a request for additional information)
shall have expired or been terminated.
10.1.7 Lessors' Consents. With respect to the Leased Facilities and the
Managed Facility, the ▇▇▇▇▇▇▇ Entities shall have obtained the Lessor
Consent and Estoppels and Managed Facility Consent and Estoppel
required to be obtained from the Lessors or owner, as applicable, in
order to sublease or assign the Management Agreement or the leasehold
interest in the Leased Facilities to Buyer pursuant to the assignment
of Management Agreement, Subleases and Lease Assignments, as
applicable, provided, that, if the ▇▇▇▇▇▇▇ Entities fail to obtain the
Lessor Consent and Estoppels or Managed Facility Consent required to be
obtained for any Leased Facilities or Managed Facility, as applicable,
such Leased Facilities or Managed Facility, as applicable, shall be
deemed Escrow Facilities and the condition shall be deemed to have been
met with respect to all other Leased Facilities and the Managed
Facility, as applicable.
10.1.8 Bond Financings. The ▇▇▇▇▇▇▇ Entities shall cause the Title
Company to remove or insure over any liens (in a manner reasonably
satisfactory to Buyer and Buyer's lender) arising out of the bond
financings placed on the applicable Facilities, provided, that if such
title insurance coverage is not obtained with respect to any such
Facilities, such Facilities shall be deemed Escrow Facilities and the
condition shall be deemed to have been met with respect to all other
Facilities.
10.1.9 [Intentionally Omitted.]
41
10.1.10 CIA Confirmation. The Office of Inspector General of the
Department of Health and Human Services ("OIG") shall have provided a
letter or other evidence reasonably acceptable to Buyer stating that,
with respect to the Facilities, Buyer will not be subject to the terms
of the CIA.
10.1.11 No Material Adverse Change. Since May 31, 2001, there has not
been any material adverse change in the financial condition, assets,
liabilities or prospects of the Facilities taken as a whole, except as
may have been caused by Buyer's acts or omissions.
10.1.12 Medicaid Reimbursement. Provided that Buyer has properly filed
its applications for licensing with the Department on or prior to
August 30, 2001, and timely responded to requests from the Department,
Buyer shall receive a Medicaid reimbursement rate increase as provided
by applicable Florida change of ownership law.
10.2 Conditions Precedent to the ▇▇▇▇▇▇▇ Entities' Performance. The obligations
of the ▇▇▇▇▇▇▇ Entities under this Agreement are subject to the satisfaction, at
or before the Closing, of the conditions set forth in this Section 10.2. The
▇▇▇▇▇▇▇ Entities may waive any or all of these conditions in whole or in part
without prior notice and the closing of the transactions contemplated hereby
shall mean that such conditions are deemed satisfied or waived.
10.2.1 Accuracy of Representations and Warranties. All representations
and warranties of Buyer in this Agreement shall be true in all material
respects at Closing as though made at that time, except as otherwise
provided in this Agreement.
10.2.2 Buyer's Performance. Buyer shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by Buyer prior to Closing, including, without limitation,
delivery of the items set forth in Section 5.2 hereof.
10.2.3 Actions, Suits, Proceedings. No action, suit or proceeding by
any governmental authority, pertaining to the transactions contemplated
by this Agreement, shall have been instituted or threatened on or
before the Effective Time that could reasonably be expected to subject
the ▇▇▇▇▇▇▇ Entities to material liability.
10.2.4 Licenses, Permits. Buyer shall have received a license from the
Department to operate the Facilities as they are currently operated;
provided that in the event (i) Buyer or its appointee shall not have
received a license for any of the Facilities on the Closing Date and
such failure is due to any reason that is reasonably within Buyer's
control, then the ▇▇▇▇▇▇▇ Entities shall have the option of (a)
terminating this Agreement with respect to such Facility or (b)
treating such Facility as an "Escrow Facility" and the condition shall
be deemed to have been met with respect to all other Facilities and
(ii) Buyer or its appointee shall not have received a permanent license
for any of the Facilities by the Closing Date for any other reason
except as set forth in (a) above, then each such Facility shall be
deemed an Escrow Facility and the condition shall be deemed to have
been met with respect to all other Facilities.
42
10.2.5 Consents. All necessary governmental and third party consents,
approvals and filings, including without limitation (a) consents of the
owner of the Managed Facility, Lessors and their lenders, (b) filings
and approvals pursuant to the HSR Act and (c) consents and approvals
pursuant to the bond financings, and as otherwise required to
consummate the transactions contemplated herein have been obtained;
provided that in the event for any reason Buyer or the ▇▇▇▇▇▇▇ Entities
is unable to obtain the required consents for any of the Facilities by
the Closing Date, then each such Facility shall be deemed an Escrow
Facility and the condition shall be deemed to have been met with
respect to all other Facilities.
10.2.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. Any person required in connection with the
transactions contemplated hereby to file a notification and report form
in compliance with the HSR Act shall have filed such form and the
applicable waiting period with respect to each such form (including any
extension thereof by reason of a request for additional information)
shall have expired or been terminated.
10.2.7 Regulatory Inspection Liability. The aggregate amount of costs
for all Facilities required to remedy matters relating to life safety
code and physical plant that have been identified in regulatory
inspections or surveys conducted after the date hereof and prior to the
Effective Time ("Regulatory Costs") shall not exceed One Million Five
Hundred Thousand Dollars ($1,500,000). In the event the Regulatory
Costs exceed One Million Five Hundred Thousand Dollars ($1,500,000)
Buyer may waive this condition so long as Buyer assumes and pays all
liabilities in excess of such amounts.
10.2.8 Pharmerica Contract. On or before July 31, 2001, Buyer and/or
its appointee shall have entered into a valid and binding agreement
with Pharmerica, Inc. for a maximum term of five years to assume,
effective as of the Effective Time, all rights and obligations of the
▇▇▇▇▇▇▇ Entities under their preferred provider agreement with
Pharmerica, Inc. with respect to all of the Facilities (the "Pharmerica
Assumption"). The agreement shall be at competitive pricing not
materially less favorable than the Buyer can obtain from alternative
sources providing comparable products. If Buyer has not entered into
the Pharmerica Assumption with Pharmerica, Inc. on or before July 31,
2001, then the ▇▇▇▇▇▇▇ Entities may terminate this Agreement by
providing written notice to Buyer within three (3) business days after
such date, and failure to provide such notice shall be a waiver of such
termination rights; provided, however, that if Buyer has not entered
into the Pharmerica Assumption on or before such date as a result of
Pharmerica, Inc. refusing to agree to competitive pricing as described
above, then, if the ▇▇▇▇▇▇▇ Entities terminate this Agreement as
provided, the Escrow Agent shall pay the Deposit to Buyer.
10.2.9 Aegis Contract. On or before July 31, 2001, Buyer and/or its
appointee shall have entered into a valid and binding agreement with
Aegis Therapies, Inc. for Aegis Therapies, Inc. to provide all contract
therapy services (PT/OT/ST) at all of the Facilities for a period of
five (5) years after the Effective Time (the "Aegis Agreement"),
effective automatically as of the Effective Time. The Aegis Agreement
shall be at competitive pricing on market terms and service levels no
less favorable than the Buyer can obtain from alternative sources
providing comparable services. If Buyer has not entered into the Aegis
Agreement with Aegis Therapies, Inc. on or before July 31, 2001, then
the ▇▇▇▇▇▇▇
43
Entities may terminate this Agreement by providing written notice to
Buyer within three (3) business days after such date, and failure to
provide such notice shall be a waiver of such termination rights;
provided, however, that if Buyer has not entered into the Aegis
Agreement on or before such date as a result of Aegis Therapies, Inc.
refusing to agree to the conditions as described above, then, if the
▇▇▇▇▇▇▇ Entities terminate this Agreement as provided, the Escrow Agent
shall pay the Deposit to Buyer. If Buyer's appointee(s) enter into the
Aegis Agreement, Buyer shall provide Aegis Therapies, Inc. with a full
payment guaranty of all of such appointee(s)' obligations thereunder.
ARTICLE 11.
Surrender
11.1 Leased Facilities. With respect to the Managed Facility and the Leased
Facilities that are subleased to Buyer under a Sublease, except as otherwise
provided herein or in the Subleases, Buyer shall on the last day of the term of
the assignment of the Managed Agreement and of each Sublease or upon any earlier
termination of the assignment of the Managed Agreement or any Sublease,
surrender and deliver up the Managed Facility and the Leased Facility relating
to such Sublease, and, to the extent transferable, any and all appropriate
licenses and certificates related thereto, to the possession and use of the
applicable ▇▇▇▇▇▇▇ Entity without delay and in good order, condition and repair,
except for reasonable wear and tear to the Managed Facility and the Leased
Facility, pursuant to its obligations hereunder or under the assignment of
Management Agreement or Subleases, as applicable, free and clear of all lettings
and occupancies other than the patients, subleases then terminable at the option
of the ▇▇▇▇▇▇▇ Entities or subleases to which the ▇▇▇▇▇▇▇ Entities shall have
specifically consented, and free and clear of all liens and encumbrances other
than those, if any, currently existing or created or suffered by the ▇▇▇▇▇▇▇
Entities, without any payment or allowance whatever by the ▇▇▇▇▇▇▇ Entities in
respect of any improvements to the Leased Facilities or Managed Facility. Buyer
shall provide the ▇▇▇▇▇▇▇ Entities with such assurances as the ▇▇▇▇▇▇▇ Entities
reasonably require that it has satisfied any and all obligations that it had to
any of its employees who may have been employed at the Leased Facilities or
Managed Facility at any time during the term of the Sublease or assignment of
the Management Agreement.
11.2 Furniture, Trade Fixtures and Business Equipment. Subject to the terms of
the assignment of Management Agreement and Subleases, furniture and equipment
installed by Buyer may not be removed by Buyer at or prior to the termination of
the assignment of Management Agreement or Sublease, as applicable, such
furniture shall be and become the property of the applicable ▇▇▇▇▇▇▇ Entity or
the lessee of the Managed Facility or the applicable Lessor, upon installation
thereof to the extent required by the Management Agreement or the Leases, as
applicable.
11.3 Personal Property. Subject to the terms of the assignment of Management
Agreement and the Subleases, with respect to the Managed Facility and the Leased
Facilities that are subleased to Buyer, any personal property of Buyer or any
sublessee which shall remain in the Managed Facility and the Leased Facilities
after the termination of the assignment of Management Agreement and the Sublease
and the vacation of Buyer or such sublessee from the Managed
44
Facility and the Leased Facilities, may, at the option of the applicable ▇▇▇▇▇▇▇
Entity, be deemed to have been abandoned by Buyer or such sublessee and either
may be retained by such ▇▇▇▇▇▇▇ Entity as its property or be disposed of,
without accountability, in such manner as such ▇▇▇▇▇▇▇ Entity may see fit, or if
such ▇▇▇▇▇▇▇ Entity shall have given written notice to Buyer to such effect,
such property shall be removed by Buyer at Buyer's sole cost and expense.
11.4 Loss or Damage. With respect to the Leased Facilities and the Managed
Facility, the ▇▇▇▇▇▇▇ Entities shall not be responsible for any loss or damage
occurring after the Effective Time to any property owned by Buyer or any
sublessee.
ARTICLE 12.
Termination
12.1 Termination. If any condition precedent to the ▇▇▇▇▇▇▇ Entities'
obligations hereunder is not satisfied and such condition is not waived by the
▇▇▇▇▇▇▇ Entities at or prior to the Closing Date, or if any condition precedent
to Buyer's obligations hereunder is not satisfied and such condition is not
waived by Buyer at or prior to the Closing Date, the ▇▇▇▇▇▇▇ Entities or Buyer,
as the case may be, may terminate this Agreement at its option by notice to the
other party. In the event of the termination of this Agreement by either party
as above provided, neither party shall have any liability hereunder of any
nature whatsoever to the other party, other than as expressly set forth in this
Agreement hereof, including, without limitation, any liability for damages,
unless the other party has acted in bad faith and knowingly and willfully failed
to perform its obligations hereunder, in which event the party in default shall
be liable to the other party for such default. Either party may terminate this
Agreement if the Closing has not occurred on or prior to October 31, 2001
subject to the extension rights expressly set forth in Section 3.1 hereof.
45
12.2 Due Diligence. For a period of four (4) weeks ending on the first business
day after the date this Agreement is fully executed, Buyer may perform due
diligence on the financial statements provided by the ▇▇▇▇▇▇▇ Entities with
respect to the Facilities. The ▇▇▇▇▇▇▇ Entities shall provide immediate access
to the Facilities and all information reasonably requested by Buyer or its
representatives to conduct such due diligence. If, during such four (4) week
diligence period, Buyer discovers that the representations and warranties
contained in Sections 7.1.11 and 7.1.12 are not true, complete and correct in
all material respects, in addition to its other rights to terminate this
Agreement as provided herein, then Buyer may terminate this Agreement upon
written notice to the ▇▇▇▇▇▇▇ Entities provided within ten (10) days after such
discovery and Escrow Agent shall pay the Deposit to Buyer, and the ▇▇▇▇▇▇▇
Entities shall reimburse Buyer for its actual reasonable out-of-pocket costs and
expenses incurred in connection with the transactions contemplated hereby
(provided that Buyer shall provide the ▇▇▇▇▇▇▇ Entities with reasonable
documentation of such costs and expenses). Return of the Deposit to Buyer and
reimbursement of such costs and expenses by the ▇▇▇▇▇▇▇ Entities shall
constitute liquidated damages to Buyer for the ▇▇▇▇▇▇▇ Entities' default under
this Agreement. The parties hereto acknowledge that the actual damages sustained
by the Buyer for such a default by the ▇▇▇▇▇▇▇ Entities are difficult to
ascertain, and the parties hereby further agree that the liquidated damages
amounts set forth in this Section 12.2 are a reasonable estimate of the amount
of damages, including consequential damages, which the Buyer would suffer by
reason of such default, gauged by the circumstances existing at the time this
Agreement is executed.
ARTICLE 13.
Survival and Indemnification
13.1 Survival of Representations. Except for the representations and warranties
made in Sections 7.1.9, 7.1.17 and 7.1.25 which shall survive indefinitely, the
representations and warranties of the ▇▇▇▇▇▇▇ Entities and Buyer contained
herein shall survive the Effective Time for a period of one (1) year.
Notwithstanding the foregoing, if one or more of the parties hereto had actual
knowledge of a breach of its representations or warranties and failed to
disclose it in writing to the other parties prior to the Effective Time, such
representations and warranties shall survive for a period of two years following
the Closing Date. Such one or two year period shall be referred to herein as the
"Survival Period".
13.2 Indemnity by the ▇▇▇▇▇▇▇ Entities
13.2.1 The ▇▇▇▇▇▇▇ Entities hereby agree to indemnify, defend and hold
Buyer and its affiliates, officers, directors, shareholders, employees,
partners, agents and representatives (collectively, "Buyer
Indemnitees") harmless from any and all claims, demands, obligations,
losses, liabilities, damages, recoveries and deficiencies, including
interest, penalties and reasonable attorneys' fees, costs and expenses
(collectively, the "Liabilities") suffered by any Buyer Indemnitee as a
result of the ▇▇▇▇▇▇▇ Entities' ownership or operation of the
Facilities prior to the Effective Time (subject to the provisions of
Section 2.4) or the inaccuracy of any of the representations or the
breach of any of the warranties or covenants of the ▇▇▇▇▇▇▇ Entities
herein or given pursuant hereto (including any other document delivered
by the ▇▇▇▇▇▇▇ Entities at the Closing), including
46
without limitation (i) any liability, commitment or obligation to third
parties arising on or prior to the Effective Time, (ii) Reimbursement
Exposure, (iii) Buyer Excepted Matters, or (iv) the inaccuracy of any
of the representations or the breach of any of the warranties or
covenants of the ▇▇▇▇▇▇▇ Entities herein or given pursuant hereto
(including any other document delivered by the ▇▇▇▇▇▇▇ Entities at the
Closing). For the purposes of this Agreement, "Excluded Liabilities"
means the matters referred in clause (i), (ii) and (iii) and any
liabilities related thereto.
13.2.2 Notwithstanding any provision of this Agreement to the contrary
and other than with respect to Excluded Liabilities:
A. [Intentionally Omitted.]
B. The ▇▇▇▇▇▇▇ Entities shall not be responsible for lost profits or
consequential damages; provided, however, Medicaid and Medicare recapture
payments relating to periods prior to the Effective Time and realized through
adjustments in Medicaid or Medicare reimbursement rates shall not be deemed lost
profits or consequential damages.
C. [Intentionally Omitted.]
D. If and to the extent any Liabilities for which indemnification is sought
relate to events or circumstances occurring both prior to and after the
Effective Time or are from both a cause that is indemnified and one that is not
so indemnified, the ▇▇▇▇▇▇▇ Entities' obligations hereunder shall extend only to
the Liabilities attributable to events or circumstances prior to the Effective
Time or the indemnified event, circumstance or cause.
E. Except for the matters addressed in Section 13.1 hereof, which shall survive
as set forth therein, the ▇▇▇▇▇▇▇ Entities shall not be responsible for any
claim that is asserted more than the Survival Period, except for claims relating
to Excluded Liabilities, which shall survive indefinitely. Any claim to be
timely asserted must be asserted in writing and with reasonable specificity as
to the facts forming the basis of such claim.
F. The aggregate Liabilities indemnified hereunder shall not exceed, in the
aggregate, Twenty Million Dollars ($20,000,000), except that Medicaid and
Medicare overpayments or recapture, and fair rental value depreciation recapture
and tax liabilities relating to periods prior to the Effective Time and
obligations pursuant to Section 6.1 shall not be subject to such limit
(collectively, "Buyer Excepted Matters").
G. The ▇▇▇▇▇▇▇ Entities shall not be liable for the breach or inaccuracy of any
representation or warranty hereunder if Buyer discovered (or, with respect to
matters or other conditions that are revealed in reports or audits from third
parties obtained by Buyer, or obtained by the ▇▇▇▇▇▇▇ Entities and to which
Buyer has had access) the existence of the condition or conditions the existence
of which, if required, would have made such representation or warranty untrue or
inaccurate.
H. Buyer shall not be entitled to receive an indemnification payment with
respect to any Liabilities (other than the Buyer Excepted Matters) unless the
aggregate payments claimed by
47
Buyer hereunder with respect to all Liabilities (other than the Buyer Excepted
Matters) equal or exceed Two Hundred Fifty Thousand Dollars ($250,000), and the
▇▇▇▇▇▇▇ Entities shall only be responsible for Liabilities in excess of such
amount.
I. After the Closing Date, the provisions of this Section 13.2 are agreed, to
the extent permitted by law, to be the sole and exclusive remedy of Buyer for
any breach by the ▇▇▇▇▇▇▇ Entities of the representations, warranties and
covenants contained in this Agreement (or any other document delivered by the
▇▇▇▇▇▇▇ Entities at the Closing) and Buyer waives all other remedies other than
in the case of fraud. Notwithstanding anything to the contrary, (a) Buyer shall
be permitted to seek legal remedies with respect to the Buyer Excepted Matters
to the full extent permitted by law and (b) this subsection 13.2.2(J) shall not
in any way limit the parties' equitable rights and remedies (including the right
to an injunction and the right to specific performance) pursuant to Section
14.17 hereof.
13.3 Indemnity by Buyer
13.3.1 (a) Buyer hereby agrees to indemnify, defend and hold the
▇▇▇▇▇▇▇ Entities and its affiliates, officers, directors, shareholders,
employees, partners, agents and representatives (collectively, "▇▇▇▇▇▇▇
Indemnitees") harmless from any and all Liabilities suffered by any
▇▇▇▇▇▇▇ Indemnitee as a result of Buyer's ownership or operation of the
Facilities subsequent to the Effective Time and the untruth of any of
the representations or the breach of any of the warranties or covenants
of Buyer herein or given pursuant hereto (including any other document
delivered by Buyer at the Closing).
(b) Further, Buyer hereby agrees to indemnify, defend
and hold the ▇▇▇▇▇▇▇ Indemnitees harmless from any and all Liabilities
suffered by any ▇▇▇▇▇▇▇ Indemnitee with respect to the Managed Facility
and any of the Leases to the extent such liabilities arise after the
Effective Time.
13.3.2 Notwithstanding any provision of this Agreement to the contrary:
A. Buyer shall not be responsible for lost profits or consequential damages;
provided, however, Medicaid and Medicare recapture payments realized through
adjustments in Medicaid or Medicare reimbursement rates shall not be deemed lost
profits or consequential damages.
B. If and to the extent any Liabilities for which indemnification is sought
relate to events or circumstances occurring both prior to and after the
Effective Time or are from both a cause that is indemnified and one that is not
so indemnified, Buyer's obligations hereunder shall extend only to the
Liabilities attributable to events or circumstances subsequent to the Effective
Time or the indemnified event, circumstance or cause.
C. Except for the matters addressed in Section 13.1 hereof, which shall survive
as set forth therein, Buyer shall not be responsible for any claim that is
asserted more than the Survival Period, except for claims relating to ▇▇▇▇▇▇▇
Excepted Matters (as hereinafter defined), which shall survive indefinitely. Any
claim to be timely asserted must be asserted in writing and with reasonable
specificity as to the facts forming the basis of such claim.
48
D. The ▇▇▇▇▇▇▇ Entities shall not be entitled to receive an indemnification
payment with respect to any Liabilities (other than the Buyer's failure to (i)
comply with its indemnification obligations under Sections 6.7 and 9.5 hereof
and its obligation to indemnify the ▇▇▇▇▇▇▇ Entities for breach of its covenants
in Section 8.2.9 hereof, (ii) comply with all of the covenants set forth in
Section 8.2 hereof, (iii) remit payments on account of reimbursements and
accounts receivable as herein provided, and (iv) Liabilities arising under
Section 13.3.1(b) (collectively, the "▇▇▇▇▇▇▇ Excepted Matters")) unless the
aggregate payments claimed by the ▇▇▇▇▇▇▇ Entities hereunder with respect to all
Liabilities (other than the ▇▇▇▇▇▇▇ Excepted Matters) equal or exceed Two
Hundred Fifty Thousand Dollars ($250,000), and Buyer shall only be responsible
for Liabilities in excess of such amount.
E. After the Closing Date, the provisions of this Section 13.3 are agreed, to
the extent permitted by law, to be the sole and exclusive remedy of the ▇▇▇▇▇▇▇
Entities for any breach by Buyer of representations, warranties and covenants
contained in this Agreement (or any other document delivered by Buyer at the
Closing) and the ▇▇▇▇▇▇▇ Entities waive all other remedies other than in the
case of fraud. Notwithstanding anything to the contrary contained herein, (i)
the ▇▇▇▇▇▇▇ Entities shall be permitted to seek legal remedies with respect to
the ▇▇▇▇▇▇▇ Excepted Matters to the full extent permitted by law and (ii) in the
event the ▇▇▇▇▇▇▇ Entities knowingly and intentionally made a material
misrepresentation or committed fraud in making any of the representations or
warranties contained in Section 7.1 hereof, if Buyer terminates this Agreement
as a result thereof, then the Deposit shall be paid to Buyer, and the ▇▇▇▇▇▇▇
Entities shall reimburse Buyer for its actual reasonable out-of-pocket costs and
expenses in connection with the transactions contemplated hereby (provided that
Buyer shall provide the ▇▇▇▇▇▇▇ Entities with reasonable documentation of such
costs and expenses). Reimbursement of such costs and expenses by the ▇▇▇▇▇▇▇
Entities shall constitute liquidated damages to Buyer for such fraud by the
▇▇▇▇▇▇▇ Entities. The parties hereto acknowledge that the actual damages
sustained by the Buyer for such fraud by the ▇▇▇▇▇▇▇ Entities are difficult to
ascertain, and the parties hereby further agree that the liquidated damages
amounts set forth in this Section 13.3.2E are a reasonable estimate of the
amount of damages, including consequential damages, which the Buyer would suffer
by reason of such fraud, gauged by the circumstances existing at the time this
Agreement is executed.
13.4 Defense of Claims. If a claim for Liabilities is to be made by a party
seeking indemnification hereunder against the indemnifying party, the party
seeking indemnification shall give written notice to the indemnifying party as
soon as practicable after the party seeking indemnification becomes aware of any
fact, condition or event which may give rise to Liabilities for which
indemnification may be sought under this Article 13. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice hereof shall be given to the indemnifying
party as promptly as practicable (and in any event within thirty (30) days after
the service of the citation or summons). After such notice, if the indemnifying
party shall acknowledge in writing to the indemnified party that the
indemnifying party shall be obligated under the terms of its indemnity hereunder
in connection with such lawsuit or action, then the indemnifying party shall be
entitled, if it so elects, to take control of the defense and investigation of
such lawsuit or action and to employ and engage attorneys of its own choice to
handle and defend the same, at the indemnifying party's cost, risk and expense,
provided that the indemnifying party and its counsel shall proceed with
diligence and in good
49
faith with respect thereto. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. If the indemnifying party has
acknowledged to the indemnified party its obligation to indemnify hereunder, the
indemnifying party shall not settle such lawsuit or enforcement action without
twenty (20) days' prior notice to the indemnified party.
ARTICLE 14.
Miscellaneous
14.1 Further Assurances. Each party hereto agrees to use all reasonable efforts
and to proceed with due diligence to cause the conditions to its obligations
herein set forth to be satisfied at or prior to the Closing. Each of the parties
hereto agrees to execute and deliver any and all further agreements, documents
or instruments reasonably necessary to effectuate this Agreement, the Subleases,
the Lease Assignments and the transfer of the Purchased Assets to, and the
assumption of the Assigned Contracts by Buyer. All parties will make all
reasonable efforts to effect an orderly transfer of control of the Facilities
from the ▇▇▇▇▇▇▇ Entities to Buyer and to complete the transactions contemplated
by this Agreement as promptly as practicable. Each party will promptly notify
the other party of any information delivered to or obtained by such party which
would prevent or delay the consummation of the transactions contemplated by this
Agreement, or would indicate a breach of the representations or warranties of
any of the parties to this Agreement.
14.2 Assignment. Neither party may make any assignment of this Agreement or any
rights thereof without the prior written consent of the other party in each
instance. Notwithstanding the foregoing, Buyer may assign the Agreement to one
or more affiliates that are controlled by Buyer or under common control with
Buyer or that controls Buyer, without the prior written consent of the ▇▇▇▇▇▇▇
Entities, provided that Buyer shall remain jointly and severally liable with
such assignee for all obligations of Buyer under this Agreement in the event of
such assignment. The ▇▇▇▇▇▇▇ Entities shall execute and deliver such documents
and agreements as shall be reasonably necessary to effectuate the transactions
contemplated hereby.
14.3 Parties in Interest. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than Buyer and the ▇▇▇▇▇▇▇ Entities and their
respective permitted successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provisions give any third
person any right or subrogation of action over or against any party to this
Agreement.
14.4 Notices. Any notice, request, instruction or other document given hereunder
by either party to the other shall be in writing and delivered personally, by
mail (certified mail, postage prepaid, return receipt requested, such mailed
notice to be effective three (3) days after deposit) by overnight courier (to be
effective the business day following deposit), by telex or facsimile
transmission (to be effective when receipt acknowledged unless sent after 2:00
p.m. on any business day or on the weekend, in which event they will be deemed
received on the next business day), as follows:
50
To the ▇▇▇▇▇▇▇
Entities: ▇▇▇▇▇▇▇ Enterprises - Florida, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to the same address: Attention: ▇▇▇▇ ▇▇▇▇
and: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer: NMC of Florida, LLC
Attention: President
Telecopier:
Telephone:
with a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party may by like notice designate to the
other in writing.
14.5 Applicable Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Florida with the exception of
its conflict of laws provisions, which shall not apply.
14.6 Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.7 Effect of Captions and Table of Contents. The captions of Articles,
Sections and Sub-Sections of this Agreement and the Table of Contents have been
inserted solely for convenience of reference, and shall not control or affect
the meaning of construction of any of the provisions of this Agreement.
51
14.8 Attorney's Fees. In the event either party brings an action against the
other to enforce any condition or covenant of this Agreement, the prevailing
party in such action shall be entitled to recover the court costs and reasonable
attorney's fees in the judgment rendered through such action.
14.9 Incorporation by Reference. All Exhibits and Schedules hereto shall be
deemed incorporated by reference.
14.10 Entire Agreement: Modification; Waiver. This Agreement and the Exhibits
and Schedules hereto constitute the entire Agreement between the ▇▇▇▇▇▇▇
Entities and Buyer pertaining to the subject matter contained therein and
supersedes all prior agreements, representations and all understanding of the
parties. No supplement, modification or amendment of this Agreement shall be
binding unless expressed as such and executed in writing by Buyer and the
▇▇▇▇▇▇▇ Entities. Except as set forth herein, no waiver of any of the provisions
of this Agreement shall be deemed to be or shall constitute a waiver of any
other provisions hereof, whether or not similar, nor shall any such waiver
constitute a continuing waiver. No waiver shall be binding unless expressed as
such in a document executed by the party making the waiver.
14.11 Publicity. All publicity concerning the transactions contemplated by this
Agreement and all notices respecting publicity shall be jointly planned,
coordinated and released by and between Buyer and the ▇▇▇▇▇▇▇ Entities. Neither
of the parties shall act unilaterally in this regard without prior notice to the
other, except as may be required to comply with law.
14.12 Confidentiality. Each party hereto agrees not to divulge, communicate or
disclose, except as may be required by law or for the performance of this
Agreement, or use to the detriment of the other, or for the benefit of any other
person or persons or misuse in any way, any confidential information or trade
secrets of the other concerning the subject matter hereof, including personnel
information, know-how, patient and resident lists or other information. Each
party acknowledges and agrees that any information or data it has acquired on
any of these matters or items was received in confidence.
14.13 Time of the Essence. Time is of the essence of this Agreement.
14.14 Survival. Subject to the limitations set forth in Sections 13.2.2(E) and
13.3.2(C) hereof, all representations, warranties, covenants, agreements and
obligations of the parties to this Agreement shall survive the Closing.
14.15 Severability. If any provision of this Agreement or any of the documents
executed and delivered at Closing pursuant hereto, or the application thereof to
any particular circumstance, shall to any extent be invalid or unenforceable,
the remainder of this Agreement and all other documents executed at Closing, or
the application of such provision to persons or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby, and
each provision of this Agreement and the documents executed at Closing pursuant
hereto shall be valid and enforceable to the fullest extent permitted by law.
14.16 Escrow Facilities. In the event one or more Facilities has been deemed an
"Escrow Facility" hereunder (the "Escrow Facilities"), then the Closing shall
proceed with respect to all
52
other Facilities, the closing with respect to the Escrow Facility shall be
closed in escrow, such that the documents and other items that are required to
be delivered pursuant to Article 5 hereof and that relate to the Escrow Facility
or Escrow Facilities, including, without limitation, the amount, if any, of the
Purchase Price allocated to such Escrow Facility or Escrow Facilities as set
forth on Exhibit C hereto, shall be placed into escrow with the Title Company or
such other party as the parties hereto shall designate, pursuant to an escrow
agreement mutually acceptable to the parties hereto in their reasonable
discretion, on the Closing Date for a period of six (6) months. Such escrow or
the termination of the Agreement with respect to such Escrow Facility shall not
affect the Closing with respect to all other Facilities pursuant hereto. The
closing with respect to each Escrow Facility pursuant to this Section 14.16
shall take place as soon as practicable, but in no event later than thirty (30)
days after the cause for such Facility being deemed an Escrow Facility has been
remedied, and such date will be deemed the "Closing Date" with respect to such
Escrow Facility and the "Effective Time" with respect to such Escrow Facility
shall be 11:59 p.m. on such Closing Date. In the event the closing with respect
to any Escrow Facility pursuant to this Section 14.16 does not occur within such
six (6) month escrow period, the escrow period shall be extended for an
additional one (1) month period, during which the parties hereto shall negotiate
in good faith to determine whether the transactions contemplated hereby with
respect to such Escrow Facility shall close, and thereafter, absent an agreement
between the parties to the contrary, this Agreement shall terminate with respect
to such Escrow Facility and the portion of the Purchase Price, if any, allocated
to such Escrow Facility or Escrow Facilities on Exhibit C shall be refunded to
Buyer and the documents placed in escrow shall be returned to the executing
party. Notwithstanding any other provision in this Agreement to the contrary,
return of the purchase price pursuant to this Section 14.16 or placement of
closing documents, purchase price and other items into escrow pursuant to this
Section 14.16, as applicable, shall be Buyer's exclusive remedy for the ▇▇▇▇▇▇▇
Entities' failure to obtain the Lessor Consent and Estoppel with respect to any
or all of the Leased Facilities, or the Managed Facility Consent with respect to
the Managed Facility, and for any other failure of the ▇▇▇▇▇▇▇ Entities that has
resulted in such Facility being deemed an Escrow Facility.
14.17 Non-Competition.
14.17.1 Except as permitted in this Section 14.17, during the period
commencing on the Effective Time and ending on the second anniversary
of the Effective Time, the ▇▇▇▇▇▇▇ Entities agree that they shall not,
and shall cause their affiliates not to, (i) engage in the operation of
any Competing Business (defined in Section 14.17.4 below) within five
(5) miles of any Facility (a "Territory"), or (ii) acquire, lease, own
or be a controlling shareholder, controlling partner, controlling
member or controlling equity holder of, or acquire or maintain a
controlling interest in, any Competing Business that is located in a
Territory. Notwithstanding the foregoing, this Section 14.17 shall not
apply to (i) any person that succeeds to a substantial portion of any
▇▇▇▇▇▇▇ Entity's or any of its affiliate's assets, (ii) the acquisition
of a Competing Business within a Territory to the extent the aggregate
number of Competing Businesses within any one or more Territories
constitutes less than twenty (20%) of the facilities acquired by the
▇▇▇▇▇▇▇ Entities or their affiliates in any one transaction or series
of related transactions, (iii) any ▇▇▇▇▇▇▇ Entity if such ▇▇▇▇▇▇▇
Entity is acquired by or merged with or into any other person that owns
or operates a Competing Business, (iv) any ▇▇▇▇▇▇▇ Entity's (a)
ownership and/or
53
operation of Jupiter Care Center in Jupiter, Florida and ▇▇▇▇▇ Point in
Orange Park, Florida, which are leased and/or subleased to third-party
operators as of the date hereof or any of the Leased Facilities or the
Managed Facility and (b) operation of such facilities in the event the
applicable ▇▇▇▇▇▇▇ Entity exercises its remedies under any such lease,
(v) any of the Facilities for which a Closing does not occur in
accordance with the terms and provisions of this Agreement or (vi) any
▇▇▇▇▇▇▇ Entities' ownership and/or operation of the Whispering Pines
facility in Newport ▇▇▇▇▇▇, Florida, in the event the sale of such
facility has not closed prior to the Effective Time, as currently
contemplated. As used herein, "controlling" means having possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a person whether through ownership of
voting securities, by contract or otherwise.
14.17.2 The ▇▇▇▇▇▇▇ Entities recognize that the covenants in this
Section 14.17, and the territorial, time and other limitations with
respect thereto, are reasonable and properly required for the adequate
protection of the acquisition of the Purchased Assets by Buyer, and
agree that such limitations are reasonable with respect to its
activities, business and public purpose. The ▇▇▇▇▇▇▇ Entities agrees
and acknowledges that the violation of the covenants or agreements in
this Section 14.17 would cause irreparable injury to Buyer and that the
remedy at law for any violation or threatened violation thereof would
be inadequate and that, in addition to whatever other remedies may be
available at law or in equity, Buyer shall be entitled to temporary and
permanent injunctive or other equitable relief without the necessity of
proving actual damages or posting bond. The parties also waive any
requirement of proving actual damages in connection with the obtaining
of any such injunctive or other equitable relief.
14.17.3 It is the intention of each party hereto that the provisions of
this Section 14.17 shall be enforced to the fullest extent permissible
under the laws and the public policies of the State of Florida and of
any other jurisdiction in which enforcement may be sought, but that the
unenforceability (or the modification to conform with such laws or
public policies) of any provisions hereof shall not render
unenforceable or impair the remainder of this Agreement. Accordingly,
if any term or provision of this Section 14.17 shall be determined to
be illegal, invalid or unenforceable, either in whole or in part, this
Agreement shall be deemed amended to delete or modify, as necessary,
the offending provisions and to alter the balance of this Agreement in
order to render the same valid and enforceable to the fullest extent
permissible as aforesaid.
14.17.4 For purposes of this Section 14.17, the term "Competing
Business" means the business of owning and operating skilled nursing or
assisted living facilities.
14.18 Liability with Appointees. With respect to any provision of this Agreement
that permits Buyer to cause its "appointee(s)" to perform any obligation, Buyer
shall be jointly and severally liable with such appointee for such appointee's
failure to perform or default in the performance of the applicable obligation at
any time. Buyer may not designate any appointee to assume any obligation
hereunder unless such appointee is the duly licensed operator of the Facility to
which such obligation is applicable.
54
14.19 ▇▇▇▇▇▇▇ Entities Liability. With the exception of ▇▇▇▇▇▇▇ Health and
Rehabilitation Services, Inc. which shall be liable for all of the obligations,
covenants and agreements herein of the ▇▇▇▇▇▇▇ Entities hereunder, and shall
cause the other ▇▇▇▇▇▇▇ Entities to comply with all their obligations hereunder,
each of the ▇▇▇▇▇▇▇ Entities is severally and not jointly liable for its
obligations hereunder. Each representation and warranty by the ▇▇▇▇▇▇▇ Entities
shall be deemed made by each ▇▇▇▇▇▇▇ Entity as to itself only and not as to any
other ▇▇▇▇▇▇▇ Entity, and each covenant and agreement made by the ▇▇▇▇▇▇▇
Entities shall be deemed made by each ▇▇▇▇▇▇▇ Entity on behalf of itself only
and not on behalf of any other ▇▇▇▇▇▇▇ Entity. .
[SIGNATURE PAGE FOLLOWS]
55
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their respective
duly authorized officers, as of the date first above written.
Signed, sealed and delivered ▇▇▇▇▇▇▇ ENTERPRISES - FLORIDA,
in the presence of INC.,
a California corporation
---------------------------------------
Printed Name: By:
-------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Printed Name:
--------------------------
Signed, sealed and delivered ▇▇▇▇▇▇▇ HEALTH AND
in the presence of REHABILITATION SERVICES, INC.,
a California corporation
---------------------------------------
Printed Name: By:
-------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Printed Name:
--------------------------
Signed, sealed and delivered ▇▇▇▇▇▇▇ SAVANA CAY MANOR, INC.,
in the presence of a California corporation
---------------------------------------
Printed Name: By:
-------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Printed Name:
--------------------------
Signed, sealed and delivered VANTAGE HEALTHCARE
in the presence of CORPORATION,
a Delaware corporation
---------------------------------------
Printed Name: By:
-------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Printed Name:
--------------------------
S-1
Signed, sealed and delivered ▇▇▇▇▇▇▇▇ HEALTH CARE, INC.,
in the presence of a Florida corporation
---------------------------------------
Printed Name: By:
-------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Printed Name:
--------------------------
Signed, sealed and delivered BUYER:
in the presence of
NMC OF FLORIDA, LLC
a Florida limited liability company
---------------------------------------
Printed Name: By:
-------------------------- -------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Printed Name:
--------------------------
S-2
EXHIBIT A-1
OWNED FACILITIES
NAME OF ▇▇▇▇▇▇▇
FACILITY # NAME LOCATION ENTITY AS OWNER
---------- ---- -------- ---------------
77 Tampa Health Care Center Tampa, Hillsborough County, ▇▇▇▇▇▇▇ California
Florida Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Villas Kissimmee, Osceola County, ▇▇▇▇▇▇▇ Enterprises -
Florida Florida, Inc. d/b/a
▇▇▇▇▇▇▇ Gulf
Coast-Florida, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Enterprises -
Florida, Inc.
225 Eastbrooke Healthcare Brooksville, ▇▇▇▇▇▇▇ Enterprises -
Center Hernando County, Florida Florida, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Specialty Care Green Cove Springs, ▇▇▇▇▇▇▇ Enterprises -
Center Clay County, Florida Florida, Inc.
302 ▇▇▇▇▇▇▇ Healthcare-Winter Winter Garden, ▇▇▇▇▇▇▇ Enterprises -
Garden Orange County, Florida Florida, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises -
Specialty Care Center Broward County, Florida Florida, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Specialty Gainesville, ▇▇▇▇▇▇▇ Enterprises -
Care Center Alachua County, Florida Florida, Inc. (as to
Parcel I) and ▇▇▇▇▇▇▇
Enterprises (as to
Parcel II)
495 ▇▇▇▇▇▇▇ Healthcare-Deltona Deltona, Volusia County, Florida ▇▇▇▇▇▇▇ Enterprises -
Florida, Inc.
496 Heritage Health Care Center Venice, ▇▇▇▇▇▇▇ Health and
Sarasota County, Florida Rehabilitation
Services, Inc.
A-1-1
754 ▇▇▇▇▇▇▇ Kissimmee, ▇▇▇▇▇▇▇ Enterprises -
Healthcare-Kissimmee Osceola County, Florida Florida, Inc. d/b/a
▇▇▇▇▇▇▇ Gulf
Coast-Florida, Inc.
785 Cross Creek Healthcare Pensacola, ▇▇▇▇▇▇▇ Enterprises -
Center Escambia County, Florida Florida, Inc.
786 Spanish Gardens Nursing Dunedin, ▇▇▇▇▇▇▇ Enterprises
Center Pinellas County, Florida d/b/a ▇▇▇▇▇▇▇-Gulf
Coast, Inc.,
successor to
S.G.N.C.H., Inc.
788 Heritage Healthcare and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Health and
Rehabilitation Center ▇▇▇▇▇▇▇ County, Florida Rehabilitation
Services, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Vantage Healthcare
▇▇▇ County, Florida Corporation
791 ▇▇▇▇▇▇▇ Health and Englewood, ▇▇▇▇▇▇▇ Enterprises
Rehabilitation-Englewood Charlotte County, Florida
792 Heritage Healthcare Center Tallahassee, ▇▇▇▇▇▇▇ Enterprises -
▇▇▇▇ County, Florida Florida, Inc.
qualified to do
business in the State
of Florida as ▇▇▇▇▇▇▇
Gulf Coast-Florida,
Inc.
793 ▇▇▇▇▇▇▇ Health and Rehab Cape Coral, ▇▇▇▇▇▇▇ Enterprises -
at Coral Terrace ▇▇▇ County, Florida Florida, Inc.
800 ▇▇▇▇▇▇▇ Health and ▇▇▇▇▇▇▇ Island, ▇▇▇▇▇▇▇ Enterprises -
Rehabilitation Brevard County, Florida Florida, Inc.
Services-▇▇▇▇▇▇▇ Island
807 Vista Manor Titusville, ▇▇▇▇▇▇▇ Enterprises -
Brevard County, Florida Florida, Inc.
891 ▇▇▇▇▇▇▇ Healthcare-Rosemont ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises -
Orange County, Florida Florida, Inc.
A-1-2
2003 Beauclerc Manor Jacksonville, ▇▇▇▇▇▇▇ Enterprises -
▇▇▇▇▇ County, Florida Florida, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises
Pinellas County, Florida d/b/a ▇▇▇▇▇▇▇-Gulf
Coast, Inc.,
successor to
S.G.N.C.H., Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises
Center Broward County, Florida Florida, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises -
▇▇▇ County, Florida Florida, Inc.
2296 Countryside Healthcare Palm Harbor, ▇▇▇▇▇▇▇ Health and
Center Pinellas County, Florida Rehabilitation
Services, Inc.
2553 Washington Manor Nursing Hollywood, ▇▇▇▇▇▇▇ Enterprises -
and Rehabilitation Center Broward County, Florida Florida, Inc.
2598 ▇▇▇▇▇▇▇ Healthcare-West West Palm Beach, ▇▇▇▇▇▇▇ Enterprises -
Palm Beach Palm Beach County, Florida Florida, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises -
Sarasota County, Florida Florida, Inc.
3580 ▇▇▇▇▇▇▇ Health and Palm Coast, ▇▇▇▇▇▇▇ Enterprises -
Rehabilitation Center of Flagler County, Florida Florida, Inc.
Palm Coast
3581 Plantation Bay St. Cloud, ▇▇▇▇▇▇▇ Enterprises -
Rehabilitation Center Osceola County, Florida Florida, Inc.
(Plantation Bay Healthcare
Center)
3625 ▇▇▇▇▇▇▇ Health and Brooksville, ▇▇▇▇▇▇▇ Enterprises -
Rehabilitation-Spring ▇▇▇▇ ▇▇▇▇▇▇▇▇ County, Florida Florida, Inc.
3643 ▇▇▇▇▇▇▇ Health and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Enterprises -
Rehabilitation Center of Hillsborough County, Florida Florida, Inc.
▇▇▇▇▇▇▇
3668 Capital Healthcare Center Tallahassee, Vantage Healthcare
▇▇▇▇ County, Florida Corporation
A-1-3
3672 ▇▇▇▇▇▇▇ Health and South Daytona, ▇▇▇▇▇▇▇▇ Health Care,
Rehabilitation Volusia County, Florida Inc.
Services-South Daytona
3696 Brentwood Retirement Lecanto, ▇▇▇▇▇▇▇▇ Health Care,
Community Citrus County, Florida Inc.
3697 Health Center at Brentwood Lecanto, ▇▇▇▇▇▇▇▇ Health Care,
Citrus County, Florida Inc.
3813 ▇▇▇▇▇▇▇ Healthcare-Largo Largo, BMO Leasing (U.S.),
Pinellas County, Florida Inc. (fee simple
interest); ▇▇▇▇▇▇▇
Enterprises--Florida,
Inc. (leasehold
interest)
3818 ▇▇▇▇▇▇▇ Health and Palm Bay, ▇▇▇▇▇▇▇ Enterprises -
Rehabilitation Brevard County, Florida Florida, Inc.
Services-Palm Bay
3824 ▇▇▇▇▇▇▇ Healthcare-Lakeland Lakeland, BMO Leasing (U.S.),
Polk County, Florida Inc. (fee simple
interest); ▇▇▇▇▇▇▇
Savana Cay Manor,
Inc. (leasehold
interest)
3957 Destin Healthcare and Destin, Vantage Healthcare
Rehabilitation Center Okaloosa County, Florida Corporation
4126 ▇▇▇▇▇▇▇ Health and Tampa, BMO Leasing (U.S.),
Rehabilitation-▇▇▇▇▇▇▇▇ Hillsborough County, Florida Inc. (fee simple
(Tampa Health Care Center) interest); ▇▇▇▇▇▇▇▇
Health Care, Inc.
(leasehold interest)
4131 ▇▇▇▇▇▇▇ Bradenton, BMO Leasing (U.S.),
Healthcare-Bradenton Manatee County, Florida Inc. (fee simple
interest); Vantage
Healthcare
Corporation
(leasehold interest)
4851 ▇▇▇▇▇▇▇ Healthcare-Emerald Callaway, ▇▇▇▇▇▇▇▇ Health Care,
Shores Bay County, Florida Inc.
A-1-4
4911 ▇▇▇▇▇▇▇ Healthcare-N. Crestview, BMO Leasing (U.S.),
Okaloosa Okaloosa County, Florida Inc. (fee interest);
▇▇▇▇▇▇▇ Savana Cay
Manor, Inc.
(leasehold interest)
4936 ▇▇▇▇▇▇▇ Healthcare-Lake ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ Savana Cay
▇▇▇▇ Seminole County, Florida Manor, Inc.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
MANAGED FACILITY AND LEASED FACILITIES
NAME OF ▇▇▇▇▇▇▇
FACILITY # NAME LESSOR LOCATION ENTITY AS LESSEE
---------- ---- ------ -------- ----------------
759(1)
Managed Gulf Coast Fee Owner: Gulf Panama City (Bay ▇▇▇▇▇▇▇ Health and
Facility Convalescent Center Coast Convalescent County) Florida Rehabilitation
Center, Inc. Services, Inc. is
manager, not lessee
Fee Owner's Lessee:
Brookwood-Gulf Coast
Convalescent Center
803 Beverly Health and City of Tarpon Tarpon Springs Beverly Enterprises
Rehabilitation-Tarpon Springs, Florida (Pinellas County) - Florida, Inc.
Springs Florida
804 Beverly Health and Jacksonville Nursing Jacksonville (Duval Beverly Enterprises
Rehabilitation - Paradise Home, Ltd. County) Florida - Florida, Inc.
Pines
2052 Beverly Health and Health Care Property Orlando (Orange County) Beverly Enterprises
Rehabilitation - Rio Pinar Investors, Inc. Florida - Florida, Inc.
2129 Beverly Health and Nationwide Health Fort Pierce (St. Lucie Beverly Enterprises
Rehabilitation - Fort Pierce Properties Finance County) Florida - Florida, Inc.
Corporation
3928 Cypress Manor Encore Nursing Fort Myers (Lee County) Beverly Enterprises
Center Partners, Florida - Florida, Inc.
Ltd. -85
4132 Beverly Healthcare-Evans City of Fort Myers, Fort Myers (Lee County) Vantage Healthcare
Florida Florida Corporation
----------
(1) Note: Beverly is the manager, not the lessee, of this Facility.
A-2-1
EXHIBIT B
EXCLUDED ASSETS
Micro fiche readers
Training tapes and miscellaneous in-service training materials, including
Corporate Integrity Agreement materials and manuals
"Hot Line" posters
"Employee of the Month" plaques and stands
Facility brochures and marketing manuals
Employee "Dress for Success" and "Professional" mirrors
Beverly promulgated forms, contracts and internal financial statements
Employee uniforms not owned by the Beverly Entities
Employee uniforms owned by the Beverly Entities, except to the extent Buyer
permanently removes or covers, in a manner reasonably acceptable to the Beverly
Entities, any Beverly trademarks, service marks and logos.
Policy and procedures manuals, employee records and dietary menus
All owned and leased computer equipment and programs, including, but not limited
to, equipment racks, terminals, keyboards, printers, data processing systems,
programs and software
Claims or actions against third parties
Deposits held by third parties relating to Beverly's operations
Insurance maintained by Beverly
Cash, cash equivalents, tax reimbursement or other refunds due Beverly
Use of Beverly's tradename or logo, including, without limitation, any right to
the use of any of the following names, designs or marks: "Beverly", "Beverly
Enterprises", "Beverly Enterprises-Florida", "Leisure Lodge" and any variation,
derivative or combination thereof and associated trademarks, service marks and
logos
Exhibit B-1
Vehicles at the Facilities [owned] or leased by Beverly
Kronos Time Clock Software
Xerox Copiers
Pitney Bowes Postage Meters and Postage Machines
VSAT Equipment
Bed monitors
Exhibit B-2
ADDENDUM TO
AGREEMENT FOR SALE OF NURSING HOME PROPERTIES
This Addendum to
Agreement for Sale of Nursing Home Properties
(this "Addendum") is made and entered into as of the 13th day of July, 2001 by
and among the Entities set forth on Schedule 1 hereto (collectively, the
"Beverly Entities") and NMC of Florida, LLC, a Florida limited liability company
("Buyer").
WITNESSETH:
WHEREAS, the Beverly Entities and Buyer are parties to that
certain
Agreement for Sale of Nursing Home Properties, dated as of July 13, 2001
(as amended, supplemented or otherwise modified from time to time, the "Purchase
Agreement"; capitalized terms not otherwise defined herein shall have the
definitions provided therefore in the Purchase Agreement); and
WHEREAS, the Beverly Entities and Buyer wish to supplement and
amend the Purchase Agreement as more specifically provided herein.
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Addendum to the Purchase Agreement
a. Appointees.
(1) The Purchase Agreement is hereby amended by deleting all references
to the phrases "its appointees", "its appointee", "any appointee",
"such appointee", "its appointees permitted hereunder" and "its
permitted appointees" wherever they appear therein and replacing each
such phrase with the phrase "the Proposed Operators".
(2) Section 5.1.19 of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
Counterparts to transition agreements, in form and substance
reasonably acceptable to the Beverly Entities ("Transition
Agreements"), among the Beverly Entities, Buyer and the
Proposed Operators, pursuant to which Buyer or such Proposed
Operators agree to perform all obligations hereunder which are
to be performed by the operator of the Facilities (including,
without limitation, those set forth in Sections 8.2.5, 8.2.6,
8.2.7, 8.2.8, 8.2.9 and 8.2.11 hereof) and Buyer agrees to be
jointly and severally liable therefor.
(3) The last sentence of Subsection 10.2.9 is hereby amended and
restated to read as follows:
If wholly-owned subsidiaries of the Proposed Operators enter
into the Aegis Agreement, each Proposed Operator shall provide
Aegis Therapies, Inc. with a
full payment guaranty of all of such Proposed Operators'
subsidiaries' obligations thereunder.
(4) Section 14.18 of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
14.18 Liability with Appointees. With respect to any provision
of this Agreement that permits Buyer to cause the Proposed
Operators to perform any obligation, Buyer shall be jointly
and severally liable with the applicable Proposed Operator for
such Proposed Operator's failure to perform or default in the
performance of the applicable obligation at any time. Buyer
may not designate any Proposed Operator to assume any
obligation hereunder unless such Proposed Operator is the duly
licensed operator of the Facility to which such obligation is
applicable.
(5) Buyer shall cause the Proposed Operators to perform all of the
covenants set forth in Sections 8.2.5, 8.2.6, 8.2.7, 8.2.8, 8.2.9,
8.2.10, 8.2.11 and 8.2.13 of the Purchase Agreement.
b. Section 1.10 (Additional Defined Terms). Section 1.10 of the
Purchase Agreement is hereby amended by adding the following reference in proper
alphabetical order:
Additional Deposit 2.3.4
Proposed Operators 8.2.15
c. Section 2.2 (Purchase Price). Section 2.2 of the Purchase Agreement
is hereby amended and restated in its entirety to read as follows:
2.2 Purchase Price. In consideration of the transfer of the
Purchased Assets as described herein, Buyer shall pay the
Beverly Entities the sum of One Hundred Sixty-Five Million
Dollars ($165,000,000) (as may be increased as set forth in
this Section 2.2 and/or as otherwise adjusted pursuant to
Section 14.16 hereof, the "Purchase Price") to be paid in
immediately available funds at Closing. If Buyer elects to
extend the date by which the Closing must occur from October
31, 2001 to November 30, 2001 in accordance with Section 3.1
hereof and if all applications for licenses and permits (other
than Form 855) contemplated by Section 8.2.1 hereof were not
filed, substantially completed in proper form (other than Form
855) on or before July 31, 2001, then the Purchase Price shall
be increased in the amount of Two Million Five Hundred
Thousand Dollars ($2,500,000). The Purchase Price will be
allocated as specified in Exhibit C attached hereto; provided,
however, that if the Purchase Price is increased as provided
in this Section 2.2, then such increased amount shall be
allocated to the Facilities pro rata based on the allocations
set forth in Exhibit C attached hereto.
d. Earnest Money. Buyer acknowledges that the Beverly Entities have
advanced or will advance the sum of Five Hundred Thousand Dollars ($500,000) to
Buyer's senior lender, UBS Warburg Real Estate Investments, Inc., in order to
allow UBS Warburg Real Estate Investments,
2
Inc. to begin to obtain third party diligence reports necessary in connection
with its financing. As consideration for making such advance, in the event that
the transactions contemplated by the Purchase Agreement shall fail to close as a
result of (i) Buyer's material breach of the terms of the Purchase Agreement,
(ii) termination of the Purchase Agreement by the Beverly Entities as permitted
thereunder, or (iii) Buyer's failure to satisfy a condition to closing that is
reasonably within Buyer's control, then Buyer hereby assigns, without additional
consideration, all of its rights to such third party reports to the Beverly
Entities and shall promptly deliver such reports to the Beverly Entities. In the
event that the transaction contemplated by the Purchase Agreement shall fail to
close for any other reason, then upon the Beverly Entity's payment to Buyer of
the actual amount Buyer paid, directly or indirectly, to UBS Warburg Real Estate
Investments, Inc. for the preparation of any of such reports that the Beverly
Entities desire to purchase, then Buyer shall assign, all of its rights to such
third party reports to the Beverly Entities and shall promptly deliver (or, if
such reports are not in Buyer's possession, direct UBS Warburg Real Estate
Investments, Inc. to deliver) such reports to the Beverly Entities; provided,
however, that if the Beverly Entities have not been reimbursed for the advance
made to UBS Warburg Real Estate Investments, Inc. as described in this
paragraph, the Beverly Entities shall not be required to make any such payment
for such reports. Buyer and the Beverly Entities desire to provide for the
Beverly Entities to be reimbursed for such advance by the amendments to the
Purchase Agreement set forth below.
(1) The first paragraph of Section 2.3 of the Purchase Agreement is
hereby amended and restated to read as follows:
Simultaneously with the execution and delivery of this
Agreement by all parties hereto, Buyer shall deliver (i) to
Fidelity National Title Insurance Company ("Escrow Agent")
(pursuant to its standard form escrow agreement reasonably
acceptable to Buyer and the Beverly Entities) an earnest money
deposit in the amount of One Million One Hundred Thousand
Dollars ($1,100,000) (together with all Additional Deposits,
the "Escrowed Deposit"), and (ii) to the Beverly Entities a
deposit in the amount of Five Hundred Thousand Dollars
($500,000) (the "Diligence Deposit", and together with the
Escrowed Deposit, the "Deposit"), which Deposit is
non-refundable, except as described below. The Escrowed
Deposit shall be held in an interest bearing account, but the
Diligence Deposit shall not be required to be held in an
interest bearing account. Any accrued interest shall be
transferred with the Escrowed Deposit.
(2) Subsection 2.3.1 of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
In the event the transactions contemplated under this
Agreement shall close as provided herein, the Deposit, less
any offsets for expenses paid for by the Beverly Entities
prior to Closing and not reimbursed by Buyer (to the extent
Buyer is obligated to pay for such expenses hereunder), shall
be applied against the Purchase Price at the Closing. In the
event that the transactions contemplated under this Agreement
shall fail to close as provided herein due to a breach of this
Agreement by the Buyer, then the Escrow Agent shall pay the
Escrowed Deposit
3
to the Beverly Entities as liquidated damages and the Beverly
Entities shall retain the Diligence Deposit as liquidated
damages. In the event the Agreement is terminated as a result
of (i) a breach of this Agreement by the Beverly Entities,
(ii) the failure to satisfy any condition to closing contained
in Article 10 provided that Buyer is not then in breach of
this Agreement and such breach has been noticed in writing by
the Beverly Entities to the Buyer, or (iii) termination of the
Agreement in accordance with Section 12.2, then the Escrow
Agent shall pay the Escrowed Deposit to the Buyer and the
Beverly Entities shall retain the Diligence Deposit; provided,
however, that if a termination by Buyer occurs under Section
12.2, then the Beverly Entities shall pay the Diligence
Deposit to Buyer.
(3) The following new subsection 2.3.4 is hereby added to the Purchase
Agreement in proper numerical order:
On or before July 18, 2001, Buyer shall increase the Escrowed
Deposit by the amount of One Million Six Hundred Thousand
Dollars ($1,600,000) (the "Additional Deposit").
Notwithstanding anything to the contrary contained herein, on
the date that is forty-five (45) days after the date hereof,
the Diligence Deposit shall become the exclusive property of
the Beverly Entities and shall cease to be any part of the
Deposit. On or before the date that is forty-six (46) days
after the date hereof, Buyer shall increase the Escrowed
Deposit by the amount of One Million Five Hundred Thousand
Dollars ($1,500,000) (also, the "Additional Deposit"), at
which time the Escrowed Deposit shall thereafter comprise the
entire amount of the "Deposit." In the event that Buyer fails
to increase the Escrowed Deposit by the required amounts on or
before July 18, 2001 or such forty-sixth (46th) day after the
date hereof, as applicable, the Beverly Entities may terminate
this Agreement by providing written notice to Buyer and the
Beverly Entities may retain the Deposit (including, without
limitation, the Diligence Deposit), and neither party shall
have any other liability hereunder of any nature whatsoever to
the other party, including, without limitation, any liability
for damages.
(4) Subject to the provisions set forth in Section 2.3.1 of the
Purchase Agreement as amended hereby pursuant to which the Beverly
Entities shall return the Diligence Deposit to Buyer in the event the
Purchase Agreement is terminated by Buyer under Section 12.2 thereof,
the Purchase Agreement is hereby amended to provide, notwithstanding
anything to the contrary set forth therein, that in the event of the
termination of the Purchase Agreement for any reason and regardless of
which of Buyer or the Beverly Entities is entitled to retain the
Escrowed Deposit, the Beverly Entities shall be entitled to retain the
Diligence Deposit as reimbursement of the advance of funds to UBS
Warburg Real Estate Investments, Inc.
(5) All references in the Purchase Agreement to Buyer or the Beverly
Entities being entitled to "retain" either the Deposit or the Escrowed
Deposit shall be interpreted to mean that the Escrow Agent shall pay
the Deposit or the Escrowed Deposit, as applicable, to the applicable
party.
4
e. Section 7.1.19 (Condition of Assets). Section 7.1.19(c) of the
Purchase Agreement is hereby amended by inserting the word "in" between the
words "is" and "working".
f. Section 7.1.25 (Medicare and Medicaid Participation). Section
7.1.25(a)(iv) is hereby amended by inserting the word "not" immediately before
the word "material".
g. Section 7.2.10 (Knowledge). Section 7.2.10 of the Purchase Agreement
is hereby amended and restated in its entirety to read as follows:
For the purposes of this Agreement, "knowledge," "actual
knowledge" and similar standards with respect to Buyer shall
mean the actual knowledge of Arnold Whitman, Steve Fishman and
William Smith, following reasonable inquiry.
h. Section 8.1.12 (Licensure Notices). Section 8.1.12 of the Purchase
Agreement is hereby amended by deleting the phrase "As soon as reasonably
practicable but in no event later than ten days after the date of this
Agreement" that appears therein and replacing it with the phrase "No later than
two (2) business days after the Beverly Entities issue a press release making
public disclosure of the execution and delivery of this Agreement".
i. Section 8.1.17 (No Solicitation). Section 8.1.17 of the Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
8.1.17 No Solicitation. Until July 31, 2001, so long as Buyer
is in material compliance with all of its obligations
hereunder, the Beverly Entities agree they shall not directly
or indirectly, through any officer, director, employee, agent
or otherwise, enter into or conduct substantive discussions or
negotiations, solicit, initiate or encourage submission of
proposals or offers from any person relating to any
acquisition of any or all of the Facilities, or furnish to any
other person any information with respect to, negotiate,
discuss or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt
by any other person to do or seek any of the foregoing. From
August 1, 2001 through August 15, 2001, the Beverly Entities
agree they shall not directly or indirectly, through any
officer, director, employee, agent or otherwise, enter into or
conduct substantive discussions or negotiations, solicit,
initiate or encourage submission of proposals or offers from
any Proposed Operator with whom Buyer has entered into a valid
and binding term sheet, as contemplated by Section 8.2.15
hereof, relating to any acquisition of any or all of the
Facilities, or furnish to any such Proposed Operator any
information with respect to, negotiate, discuss or otherwise
cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Between August 1,
2001 and August 15, 2001, the Beverly Entities may conduct any
of the aforementioned activities with any person (other than
any Proposed Operator with whom Buyer has entered into a valid
and binding term sheet, as contemplated by Section 8.2.15
hereof); provided, however, that the Beverly Entities may not
enter into any written term sheet, letter of intent or other
agreement with respect to the sale of the Facilities to any
such person. After
5
August 15, 2001, this Section 8.1.17 shall be of no further
force or effect. Notwithstanding anything to the contrary
contained herein, nothing in this Section 8.1.17 shall
prohibit the Beverly Entities from making inquiries and having
discussions from time to time with any Proposed Operator as to
the status of such Proposed Operator's transaction with Buyer
as contemplated by this Agreement.
j. .Section 8.1.18 (Regulatory Inspections). Section 8.1.18 of the
Purchase Agreement is hereby amended by replacing the word "Buyer" with the
phrase "the Beverly Entities."
k. Section 8.2.1 (Licensure). Section 8.2.1 of the Purchase Agreement
is hereby amended and restated in its entirety to read as follows:
8.2.1 Licensure. Prior to the Closing, Buyer shall, and Buyer
shall cause its Proposed Operators to, use commercially
reasonable efforts and due diligence to obtain licenses from
the Department, or commitment that such licenses will be
issued as of the Effective Time, and such other licenses and
permits as may be required, to authorize the Proposed
Operators to operate the Facilities as they are currently
operated and to obtain Medicare and Medicaid certification and
provider agreements thereunder, if applicable. Buyer shall,
and Buyer shall cause its Proposed Operators to, use
commercially reasonable efforts to cause all applications
(other than form 855) for such licenses and permits to be
submitted, substantially completed in proper form (other than
Form 855), to the Department and other appropriate regulatory
authorities on or before July 31, 2001; provided, however,
that Buyer shall, and Buyer shall cause its Proposed Operators
to, cause all applications for such licenses and permits to be
submitted, substantially completed in proper form (other than
form 855), to the Department and other appropriate regulatory
authorities on or before August 7, 2001; provided, however,
that Buyer shall, and Buyer shall cause the Proposed Operators
to, cause all Forms 855 for all of the Facilities to be
submitted substantially complete in proper form on or before
August 15, 2001. In the event of a breach of the obligations
for the submission of applications in accordance with this
Section 8.2.1 (including, without limitation, the timing
requirements set forth herein), then the Beverly Entities may
terminate this Agreement by providing written notice to Buyer
and retain the Deposit (including, without limitation, the
Diligence Deposit), and neither party shall have any other
liability hereunder of any nature whatsoever to the other
party, including, without limitation, any liability for
damages. Buyer shall, and Buyer shall cause the Proposed
Operators to, cooperate with the Beverly Entities and take
reasonable measures to shorten the periods required under
applicable law for notice, licensure approval and other
similar processes in connection with the receipt of licensure
as described in this Section. If the Beverly Entities and
Buyer mutually agree to pay fees to the Department to shorten
such periods, Buyer shall pay fifty percent (50%) of all such
fees. In the event for any reason Buyer shall be unable to
obtain necessary licenses for any of the Facilities prior to
the Closing Date, then each such Facility shall be deemed an
Escrow Facility.
6
l. Section 8.2.7 (Regulatory Inspections; Surveys). The last sentence
of Section 8.2.7 of the Purchase Agreement is hereby amended and restated in its
entirety to read as follows:
Subject to the requirements of applicable law, Buyer shall
not, and Buyer shall cause the Proposed Operators not to,
request any regulatory inspection or survey of any Facility by
any regulatory authority until after the Effective Time.
m. Section 8.2.10 (Hart-Scott-Rodino). Section 8.2.10 of the Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
Buyer shall use commercially reasonable efforts to furnish, or
cause to be furnished, such information, and promptly file, or
cause to be filed, such documents as may be required in order
for Buyer and the Proposed Operators to comply with the HSR
Act, and Buyer shall cooperate fully in order that all
necessary filings by the Beverly Entities in connection
therewith may be completed as soon as possible after the
execution and delivery of this Agreement, or earlier if
practicable. Buyer shall, and shall cause the Proposed
Operators to, use commercially reasonable efforts to respond
promptly to any requests for additional information received
in connection with any HSR Act filing, and Buyer shall
promptly notify the Beverly Entities of any such request for
additional information.
n. Section 8.2.12 (Financing Commitments). Section 8.2.12 of the
Purchase Agreement is hereby amended by deleting the third (3rd) and fourth
(4th) sentences thereof in their entirety. Additionally, the last two sentences
of Section 8.2.12 of the Purchase Agreement are hereby amended and restated in
their entirety to read as follows:
In the event of said termination, the Escrow Agent shall pay
the Escrowed Deposit to Buyer and the Beverly Entities shall
retain the Diligence Deposit. Notwithstanding anything herein
to the contrary, the aggregate contributions from the senior
and junior lenders (net of all origination, commitment and
other fees, prepayments, reserves and other deductions of any
nature whatsoever) available to Buyer to finance the Purchase
Price and any other amounts owing by Buyer hereunder at the
Closing shall total at least One Hundred Fifty Million Dollars
($150,000,000), and all deliveries by Buyer under this Section
8.2.12 shall evidence such availability or Buyer shall be
deemed not to have made the deliveries required hereunder;
provided, however that nothing herein shall obligate Buyer to
actually incur junior or mezzanine financing at Closing if all
funds that would have been provided by such junior or
mezzanine financing are replaced with equity contributions
obtained by Buyer (other than pursuant to Section 9.6 hereof).
o. Section 8.2.15 (Proposed Operators). The following new Section
8.2.15 is hereby added to the Purchase Agreement in proper numerical order:
8.2.15 Proposed Operators
7
(a) Attached hereto as Schedule 8.2.15 is Buyer's
list of potential operators of the Facilities. Buyer may add
potential operators to such schedule only with the Beverly
Entities' prior written consent, which shall not be
unreasonably withheld or delayed. The Beverly Entities shall
respond to any request to add potential operators to Schedule
8.2.15 within one (1) business day after its receipt of
Buyer's written request to do so. If the Beverly Entities fail
to respond to such written request within such time period,
then such request shall be deemed approved and such potential
operators shall be deemed added to Scheduled 8.2.15. Buyer
shall use commercially reasonable efforts to arrange for
representatives of the Beverly Entities to meet (or have other
communications reasonably acceptable to the Beverly Entities)
with all operators listed on Schedule 8.2.15 promptly after
Buyer has met with such operators to open discussions
regarding the terms and conditions of operating leases. On or
before July 23, 2001, Buyer shall identify which of the
potential operators listed on Schedule 8.2.15 it intends to
have operate the Facilities (the "Proposed Operators"). Buyer
may identify more than two (2) or less than two (2) Proposed
Operators from those listed on Schedule 8.2.15 only with the
Beverly Entities' prior written consent, which shall not be
unreasonably withheld or delayed, and such operators that
Beverly so approves shall also be "Proposed Operators." The
Beverly Entities shall respond to any request to allow Buyer
to identify more than two (2) or less than two (2) Proposed
Operators within three (3) business days after its receipt of
Buyer's written request to do so. If the Beverly Entities fail
to respond to such written request within such time period,
then such request shall be deemed approved.
(b) On or before July 31, 2001, Buyer and the
Proposed Operators shall have entered into valid and binding
term sheets (including, without limitation, all material
economic and other terms) for the operating leases (or in the
case of New Millennium Care and/or Aurora Healthcare, an
operating structure, other than a lease, reasonably acceptable
to the Beverly Entities) necessary to allow the Proposed
Operators to operate all of the Facilities. On or before July
31, 2001, Buyer shall deliver fully-executed copies to the
Beverly Entities of all such valid and binding term sheets. On
or before August 15, 2001, Buyer and the Proposed Operators
shall have entered into valid and binding operating leases (or
in the case of New Millennium Care and/or Aurora Healthcare,
valid and binding documentation of an operating structure,
other than a lease, reasonably acceptable to the Beverly
Entities) necessary to allow the Proposed Operators to operate
all of the Facilities. On or before August 15, 2001, Buyer
shall deliver fully-executed copies to the Beverly Entities of
all such valid and binding operating leases. In the event
Buyer and the Proposed Operators fail to enter into such valid
and binding term sheets and operating leases on or before the
dates provided in this Section 8.2.15, or if fully-executed
copies of all of such term sheets and operating leases have
not been delivered to the Beverly Entities on or before such
dates, then the Beverly Entities may terminate this Agreement
by providing written notice to Buyer and the Beverly Entities
may retain the Deposit (including,
8
without limitation, the Diligence Deposit), and neither party
shall have any other liability hereunder of any nature
whatsoever to the other party, including, without limitation,
any liability for damages. The foregoing term sheets and
operating leases and all information contained therein shall
be deemed confidential information of Buyer and shall be
treated by the Beverly Entities in accordance with Section
14.12 hereof.
p. Section 9.4 (The Beverly Entities' Obligation to Pay Break-Up Fee
Under Certain Circumstances). Section 9.4 of the Purchase Agreement is hereby
amended to add the phrase "2.3.4, 8.2.1, 8.2.15," immediately after the phrase
"Section 8.2.12" in both places that such phrase appears in such section.
q. Section 9.6 (Funding Contingency). The following new Section 9.6 is
hereby added to the Purchase Agreement in proper numerical order:
9.6 Funding Contingency
(a) In the event that, at the Closing, Buyer does not
have funds available that, when aggregated with all amounts
available from Buyer's senior and junior lenders, are
sufficient to allow Buyer to pay the Purchase Price and all
other amounts owing by Buyer hereunder as of the Closing, then
the Beverly Entities, in their sole discretion, may elect to
make, and Buyer shall accept, a loan in the amount of such
deficiency, in no event to exceed Fifteen Million Dollars
($15,000,000), which amount may be increased in the Beverly
Entities sole discretion (the "Funding Contingency Credit").
To evidence the Funding Contingency Credit, at the Closing,
Buyer shall execute and deliver to the Beverly Entities a
promissory note in the principal amount equal to the amount of
the Funding Contingency Credit actually credited against the
Purchase Price by the Beverly Entities plus Five Million
Dollars ($5,000,000) (the "Funding Contingency Note"). The
Funding Contingency Note shall be for a term of one (1) year,
shall bear interest at the rate of fifteen percent (15%) per
annum and shall require monthly payments of interest and
principal based on a five (5) year straight-line amortization
schedule. Notwithstanding the foregoing, instead of a Funding
Contingency Credit, the Beverly Entities may elect, in their
sole discretion, to provide, and Buyer shall accept, a
guaranty or other form of credit support in favor of a third
party lender making a loan to Buyer in the amount of the
Funding Contingency Credit (a "Funding Contingency Guaranty"),
in which event Buyer shall execute and deliver, at the
Closing, a Funding Contingency Note in the principal amount of
Five Million Dollars ($5,000,000). Buyer acknowledges and
agrees that it is within the Beverly Entities' sole discretion
to provide either a Funding Contingency Credit, a Funding
Contingency Guaranty, a combination of a Funding Contingency
Credit and a Funding Contingency Guaranty or none of the
foregoing.
(b) To secure the Funding Contingency Credit and/or
the Funding Contingency Guaranty, at the Closing Buyer shall
execute and deliver to the
9
Beverly Entities second mortgages on the Funding Contingency
Security Facilities (as defined below). The "Funding
Contingency Security Facilities" shall be those Facilities (i)
that are fee-owned, (ii) that are encumbered only by a
mortgage in favor of Heller Healthcare Finance (the "Heller
Mortgage"), (iii) for which (A) the product of six (6) times
Adjusted EBITDA (as defined below) equals or exceeds (B) the
sum of the original face amount of the Funding Contingency
Note plus the total amount of all of the Beverly Entities'
contingent liabilities under any Funding Contingency Guaranty
plus the amount secured by the Heller Mortgage, (iv) at least
half of which are no older than ten (10) years and none of
which are older than twenty (20) years and (v) that are
mutually identified by the Beverly Entities, Buyer's senior
lender and Heller Healthcare Finance. The Beverly Entities
shall negotiate in good faith the form of second mortgage and
an intercreditor agreement with Heller Healthcare Financial,
which is satisfactory to the Beverly Entities in their sole
discretion. For purposes of this Section 9.6, "Adjusted
EBITDA" shall mean EBITDA calculated and adjusted using the
same methodology and procedures as used in that certain
Beverly Enterprises Florida Facilities Descriptive Memorandum,
dated September 30, 2000, regarding the disposition of the
Facilities.
(c) The documents described in this Section 9.6, and
all other documents and instruments reasonably required by the
Beverly Entities in connection with the Funding Contingency
Credit shall be executed and delivered at the Closing
regardless of whether they are listed in Article 5 of this
Agreement.
r. Section 10.1.11 (No Material Adverse Change). Section 10.1.11 of the
Purchase Agreement is hereby amended by inserting the phrase "or the Proposed
Operators'" immediately after the word "Buyer's".
s. Section 10.1.13 (Restrictions on Payment). The following new Section
10.1.13 is hereby added to the Purchase Agreement in proper numerical order:
10.1.13 Restrictions on Payment. As of the Effective Time no
Facility shall be under a Denial of Payment for New Admissions
or similar prohibition on the operator of such Facility
receiving payment for providing care or services to residents
of such Facility under government reimbursement programs, in
each case that would have a material adverse effect on such
Facility; provided that in the event for any reason any
Facility shall be under such a Denial of Payment for New
Admissions or similar prohibition, then each such Facility
shall be deemed an Escrow Facility and the condition shall be
deemed to have been met with respect to all other Facilities.
t. Section 10.2.8 (Pharmerica Contract). All references to the date
"July 31, 2001" in Section 10.2.8 of the Purchase Agreement are hereby amended
to be "August 15, 2001". Additionally, the third sentence of Section 10.2.8 of
the Purchase Agreement is hereby amended and restated in its entirety to read as
follows:
10
If Buyer has not entered into the Pharmerica Assumption with
Pharmerica, Inc. on or before August 15, 2001, then the
Beverly Entities may terminate this Agreement by providing
written notice to Buyer within three (3) business days after
such date and the Beverly Entities may retain the Deposit
(including, without limitation, the Diligence Deposit) as
liquidated damages, and failure to provide such notice shall
be a waiver of such termination rights; provided, however,
that if Buyer has not entered into the Pharmerica Assumption
on or before such date as a result of Pharmerica, Inc.
refusing to agree to competitive pricing as described above,
then, if the Beverly Entities terminate this Agreement as
provided, the Escrow Agent shall pay the Escrowed Deposit to
Buyer and the Beverly Entities may retain the Diligence
Deposit.
u. Section 10.2.9 (Aegis Contract). All references to the date "July
31, 2001" in Section 10.2.9 of the Purchase Agreement are hereby amended to be
"August 15, 2001". The third sentence of Section 10.2.9 of the Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
If Buyer has not entered into the Aegis Agreement with Aegis
Therapies, Inc. on or before August 15, 2001, then the Beverly
Entities may terminate this Agreement by providing written
notice to Buyer within three (3) business days after such date
and the Beverly Entities may retain the Deposit (including,
without limitation, the Diligence Deposit) as liquidated
damages, and failure to provide such notice shall be a waiver
of such termination rights; provided, however, that if Buyer
has not entered into the Aegis Agreement on or before such
date as a result of Aegis Therapies, Inc. refusing to agree to
the conditions as described above, then, if the Beverly
Entities terminate this Agreement as provided, the Escrow
Agent shall pay the Escrowed Deposit to Buyer and the Beverly
Entities may retain the Diligence Deposit.
v. Further Assurances. Section 14.1 of the Purchase Agreement is hereby
amended by adding the following sentence to the end thereof:
The Beverly Entities acknowledge and agree that Buyer may
assign this agreement to one or more wholly-owned subsidiaries
(as permitted under and in accordance with Section 14.2
hereof) and that the Proposed Operators may create one or more
wholly-owned subsidiaries to lease the facilities from Buyer
and/or its subsidiaries, and the Beverly Entities consent to
the foregoing. The Beverly Entities agree to execute and
deliver any and all agreements, documents or instruments
reasonably necessary to accomplish the foregoing and to convey
title to Buyer's permitted assignees, including but not
limited to special warranty deeds, bills of sale and
assignments of contracts.
3. Miscellaneous
a. Captions. Section captions used in this Addendum are for convenience
only, and shall not affect the construction of this Addendum.
11
b. Governing Law. This Addendum shall be a contract made under and
governed by the laws of the State of Florida, without regard to conflict of laws
principles. Whenever possible each provision of this Addendum shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Addendum shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Addendum.
c. Counterparts. This Addendum may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Addendum.
d. Successors and Assigns. This Addendum shall be binding upon Buyer
and the Beverly Entities and their respective successors and assigns, and shall
inure to the sole benefit of Buyer and the Beverly Entities and the successors
and assigns of Buyer and the Beverly Entities.
e. References. Any reference to the Purchase Agreement contained in any
notice, request, certificate, or other document executed concurrently with or
after the execution and delivery of this Addendum shall be deemed to include
this Addendum unless the context shall otherwise require.
f. Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this Addendum are not intended to and do not serve to effect a
novation as to the Purchase Agreement. The Purchase Agreement as supplemented
and amended hereby remains in full force and effect.
[SIGNATURE PAGE FOLLOWS]
12
IN WITNESS WHEREOF, the parties hereto have caused this
Addendum to be duly executed on their respective behalf, by their respective
duly authorized officers, as of the date first above written.
NMC OF FLORIDA, LLC, a Florida limited BEVERLY ENTERPRISES - FLORIDA,
liability company INC.,
a California corporation
By: Vantage Medical, Inc., its sole
manager
By:
--------------------------------
By: Name:
---------------------------- -----------------------------
Name: Title:
-------------------------- ----------------------------
Title:
------------------------
BEVERLY HEALTH AND BEVERLY SAVANA CAY MANOR, INC.,
REHABILITATION SERVICES, INC., a California corporation
a California corporation
By: By:
------------------------------------- -------------------------------
Name: Name:
---------------------------------- -----------------------------
Title: Title:
--------------------------------- ----------------------------
VANTAGE HEALTHCARE CORPORATION, PETERSEN HEALTH CARE, INC.,
a Delaware corporation a Florida corporation
By: By:
------------------------------------- -------------------------------
Name: Name:
---------------------------------- -----------------------------
Title: Title:
--------------------------------- ----------------------------
[SIGNATURE PAGE TO ADDENDUM TO PURCHASE AGREEMENT]
SCHEDULE 1
BEVERLY ENTITIES
BEVERLY ENTERPRISES - FLORIDA, INC., a California corporation
BEVERLY HEALTH AND REHABILITATION SERVICES, INC., a California corporation
BEVERLY SAVANA CAY MANOR, INC., a California corporation
VANTAGE HEALTHCARE CORPORATION, a Delaware corporation
PETERSEN HEALTH CARE, INC., a Florida corporation
SCHEDULE 8.2.15
POTENTIAL OPERATORS
Delta Healthcare
Harborside Healthcare
Tandem Healthcare
An entity controlled by Paul Diaz
Northpoint Health Services, Inc.
Adventist Health System
New Millennium Care, Inc. and/or Aurora Healthcare (an anticipated spin-off of
the nursing home operating business of New Millennium Care, Inc.)
LifeCare Centers of America, Inc.
Healthmark Group - Matt Robertson
National Health Investors - Andy Adams