[EXECUTION COPY]
EXHIBIT 2.2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
FORTRESS NBA ACQUISITION, LLC,
AS PURCHASER,
FORTRESS INVESTMENT FUND II LLC,
AS GUARANTOR,
THE NATIONAL BENEVOLENT ASSOCIATION OF THE CHRISTIAN
CHURCH (DISCIPLES OF ▇▇▇▇▇▇)
AND
THE COMPANIES AFFILIATED THEREWITH NAMED ON SCHEDULE I
ATTACHED HERETO,
AS SELLERS
DATED AS OF SEPTEMBER 3, 2004
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TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF BUSINESS............................................ 1
Section 1.01 Purchase and Sale of Business......................................... 1
Section 1.02 Excluded Assets....................................................... 5
Section 1.03 Assumed Liabilities................................................... 6
Section 1.04 Excluded Liabilities.................................................. 6
Section 1.05 Shared Assets and Contracts........................................... 9
Section 1.06 Transitional Services................................................. 10
Section 1.07 Use of Name........................................................... 11
ARTICLE II THE CLOSING.............................................................. 11
Section 2.01 Closing............................................................... 11
Section 2.02 Purchase Price Deposit................................................ 11
Section 2.03 Purchase Price........................................................ 12
Section 2.04 Adjustments and Apportionments........................................ 12
Section 2.05 Transactions to be Effected; Closing and Other Deliveries............. 14
Section 2.06 Payments and Computations............................................. 16
Section 2.07 Title Commitments; New Surveys; Engineering Reports; Environmental
Reports............................................................... 17
Section 2.08 Intentionally Omitted................................................. 18
Section 2.09 No Other Representations.............................................. 18
Section 2.10 Partial Closing....................................................... 18
Section 2.11 Certain Purchaser Agreements.......................................... 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS................................ 20
Section 3.01 Incorporation, Qualification and Authority of Seller.................. 20
Section 3.02 No Conflict........................................................... 21
Section 3.03 Consents and Approvals................................................ 21
Section 3.04 Real Property Assets.................................................. 22
Section 3.05 Absence of Certain Changes............................................ 23
Section 3.06 Absence of Litigation................................................. 23
Section 3.07 Compliance with Laws.................................................. 23
Section 3.08 Certificates of Need or Provider Agreements........................... 24
Section 3.09 Residency Agreements; Commercial Leases............................... 24
Section 3.10 Governmental Licenses and Permits..................................... 25
Section 3.11 Environmental Matters................................................. 26
Section 3.12 Material Contracts.................................................... 27
Section 3.13 Regulatory Filings.................................................... 27
Section 3.14 Employee Benefits; Employees.......................................... 28
Section 3.15 Personal Property Assets.............................................. 30
Section 3.16 Insurance............................................................. 30
Section 3.17 Taxes................................................................. 30
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 3.18 Health Care Regulatory Compliance..................................... 30
Section 3.19 Life Safety Code Compliance........................................... 32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................. 32
Section 4.01 Incorporation and Authority of Purchaser.............................. 32
Section 4.02 Qualification of Purchaser............................................ 32
Section 4.03 No Conflict........................................................... 33
Section 4.04 Consents and Approvals................................................ 33
Section 4.05 Financial Ability..................................................... 33
Section 4.06 Brokers............................................................... 34
Section 4.07 Litigation............................................................ 34
Section 4.08 Health Care Regulatory Compliance..................................... 34
Section 4.09 Acknowledgement Regarding Condition of the Business................... 35
ARTICLE V ADDITIONAL AGREEMENTS.................................................... 36
Section 5.01 Conduct of Business Prior to the Closing.............................. 36
Section 5.02 Access to Information................................................. 38
Section 5.03 Intentionally Omitted................................................. 38
Section 5.04 Supplemental Disclosure............................................... 39
Section 5.05 Regulatory and Other Authorizations; Reasonable Efforts............... 39
Section 5.06 Submission for Bankruptcy Court Approval.............................. 40
Section 5.07 Consultation; Notification; No Conflict............................... 45
Section 5.08 Bidding Procedures.................................................... 45
Section 5.09 Break-Up Fee and Expense Reimbursement................................ 46
Section 5.10 Other Assets and Agreements........................................... 47
Section 5.11 Notice of Certain Events.............................................. 47
Section 5.12 Employment and Employee Benefits...................................... 48
Section 5.13 Public Announcements.................................................. 50
Section 5.14 No Waiver............................................................. 50
ARTICLE VI ADDITIONAL POST-CLOSING COVENANTS........................................ 51
Section 6.01 Further Assurances.................................................... 51
Section 6.02 Books and Records; Personnel.......................................... 51
Section 6.03 Undisclosed Contracts; Contested Cure Amount Contracts................ 51
ARTICLE VII CONDITIONS PRECEDENT..................................................... 52
Section 7.01 Conditions Precedent to Obligations of Purchaser and Sellers.......... 52
Section 7.02 Conditions Precedent to Obligations of Purchaser...................... 52
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 7.03 Conditions Precedent to Obligations of Sellers........................ 54
Section 7.04 Frustration of Closing Conditions..................................... 55
ARTICLE VIII FURTHER AGREEMENTS AND TERMINATION....................................... 55
Section 8.01 Termination........................................................... 55
Section 8.02 Procedure and Effect of Termination................................... 57
ARTICLE IX CASUALTY AND CONDEMNATION OF THE REAL PROPERTY........................... 57
Section 9.01 Casualty.............................................................. 57
Section 9.02 Condemnation Pending Closing.......................................... 59
ARTICLE X INDEMNIFICATION.......................................................... 59
Section 10.01 Survival.............................................................. 59
Section 10.02 Matters Involving Third Parties....................................... 60
Section 10.03 Certain Additional Provisions Relating to Indemnification............. 61
ARTICLE XI GENERAL PROVISIONS....................................................... 62
Section 11.01 Notices............................................................... 62
Section 11.02 Descriptive Headings.................................................. 63
Section 11.03 Entire Agreement; Assignment.......................................... 63
Section 11.04 Governing Law......................................................... 63
Section 11.05 Venue and Retention of Jurisdiction................................... 63
Section 11.06 Expenses.............................................................. 63
Section 11.07 Amendment............................................................. 64
Section 11.08 Waiver................................................................ 64
Section 11.09 Counterparts; Effectiveness........................................... 64
Section 11.10 Severability; Validity; Parties in Interest........................... 64
Section 11.11 Enforcement of Agreement.............................................. 64
Section 11.12 No Other Representation............................................... 64
Section 11.13 No Personal Liability................................................. 65
Section 11.14 Schedules............................................................. 65
Section 11.15 Drafting.............................................................. 65
Section 11.16 Bulk Sales Laws....................................................... 65
Section 11.17 Guaranty.............................................................. 66
ARTICLE XII DEFINITIONS.............................................................. 66
Section 12.01 Certain Defined Terms................................................. 66
EXHIBIT
Exhibit A Bidding Procedures
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INDEX OF DEFINED TERMS
PAGE
Accrued Expenses................................................................ 13
Accrued Fringe Benefits......................................................... 49
Acquired Assets................................................................. 2
Action or Proceeding............................................................ 67
Additional Amount............................................................... 19
Affiliate....................................................................... 67
Agreement....................................................................... 1
Alternative Transaction......................................................... 47
Anticipated Closing Date........................................................ 12
Applicable Law.................................................................. 67
Assignment and Assumption of Commercial Leases................................. 15
Assumed Contracts............................................................... 3
Assumed Liabilities............................................................. 2
Auction Transaction............................................................. 46
Bankruptcy Cases................................................................ 1
Bankruptcy Code................................................................. 1
Bankruptcy Court................................................................ 67
Bankruptcy Rules................................................................ 1
Benefit Plans................................................................... 29
Bidding Procedures.............................................................. 46
Bidding Procedures Motion....................................................... 41
Bidding Procedures Order........................................................ 41
Break-Up Fee.................................................................... 47
Business........................................................................ 67
Business Day.................................................................... 68
Casualty Event.................................................................. 58
Certificate of Need............................................................. 24
Chief Executive Officers........................................................ 48
Closing......................................................................... 12
Closing Adjustments............................................................. 12
Closing Amount.................................................................. 15
Closing Date.................................................................... 12
Closing Statement............................................................... 16
COBRA........................................................................... 68
Code............................................................................ 68
Commercial Lease................................................................ 68
Company......................................................................... 1
Company Subsidiary.............................................................. 1
Confidentiality Agreement....................................................... 68
Contemplated Transactions....................................................... 1
Contract........................................................................ 68
Cure Amounts.................................................................... 68
Cypress Village................................................................. 23
Cypress Village Ground Lease.................................................... 23
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INDEX OF DEFINED TERMS
(CONTINUED)
PAGE
Cypress Village Ground Lessor................................................... 54
Damages......................................................................... 69
Deferred Capital Expenditures................................................... 14
Designated Facilities........................................................... 19
Designated Facility Release Price............................................... 19
Encumbrances.................................................................... 2
Entrance Fee Resident........................................................... 25
Environmental Laws.............................................................. 69
Environmental Permits........................................................... 69
Environmental Reports........................................................... 18
Equity Home..................................................................... 26
Equity Home Engineering Report.................................................. 18
Equity Home Servicing Agreements................................................ 69
ERISA........................................................................... 69
ERISA Affiliate................................................................. 29
Escrow Agent.................................................................... 69
Escrow Agreement................................................................ 69
Estimation Hearing.............................................................. 20
Excluded Assets................................................................. 5
Excluded Liabilities............................................................ 7
Existing Litigation Matters..................................................... 24
Expense Reimbursement........................................................... 47
Facilities...................................................................... 23
Federal Health Care Programs.................................................... 32
Final Amount.................................................................... 20
Final Decision.................................................................. 20
Final Purchase Price............................................................ 12
GAAP............................................................................ 69
Good Faith Deposit.............................................................. 12
Governmental Approvals.......................................................... 22
Governmental Authority.......................................................... 69
Guarantor....................................................................... 1
Hazardous Materials............................................................. 69
HIPAA........................................................................... 32
HSR Act......................................................................... 22
include......................................................................... 70
including....................................................................... 70
Indemnified Party............................................................... 61
Indemnifying Party.............................................................. 61
Institutional Mortgagee......................................................... 70
Intellectual Property........................................................... 70
Knowledge....................................................................... 70
Land............................................................................ 72
Law............................................................................. 70
Lease Financing Provisions...................................................... 70
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INDEX OF DEFINED TERMS
(CONTINUED)
PAGE
Leased Real Property............................................................ 71
Legal Proceeding................................................................ 71
Liability....................................................................... 71
Liens........................................................................... 71
Manager......................................................................... 71
Material Adverse Effect......................................................... 71
Material Contract............................................................... 72
Material Permits................................................................ 26
Material Taking................................................................. 60
Material Title Objections....................................................... 17
May 6th Order................................................................... 72
Mediator........................................................................ 72
Medicaid........................................................................ 24
Medicare........................................................................ 24
NBA Assets...................................................................... 72
New Survey...................................................................... 72
Non-Essential Facilities........................................................ 19
Order........................................................................... 72
Other Businesses................................................................ 10
Owned Real Property............................................................. 72
Permits......................................................................... 73
Permitted Encumbrances.......................................................... 73
Person.......................................................................... 73
Petition Date................................................................... 1
Petitions....................................................................... 1
PILOTS.......................................................................... 74
Post-Closing Period............................................................. 13
Potential Claimants............................................................. 42
Pre-Closing Period.............................................................. 13
Preliminary Title Objections.................................................... 17
Prepaid Expenses................................................................ 13
Property Agreements............................................................. 73
Property Condition Reports...................................................... 18
Provider Agreements............................................................. 24
Purchase Price.................................................................. 12
Purchaser....................................................................... 1
Purchaser Required Governmental Approval........................................ 34
Real Property Assets............................................................ 73
Real Property Expenses.......................................................... 13
Refurbishment Amount............................................................ 19
Release......................................................................... 74
Rent............................................................................ 74
Rent Freeze..................................................................... 19
Rent Rolls...................................................................... 25
Representatives................................................................. 74
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INDEX OF DEFINED TERMS
(CONTINUED)
PAGE
Residency Agreement............................................................. 74
Resident Dispute Amount......................................................... 20
Resident Dispute Resolution..................................................... 20
Resident Escrow................................................................. 20
Resident Litigation............................................................. 74
Resolution Amount............................................................... 20
Sale............................................................................ 46
Sale Hearing.................................................................... 41
Sale Motion..................................................................... 42
Sale Order...................................................................... 42
Seller.......................................................................... 1
Seller Marks.................................................................... 11
Seller Representatives.......................................................... 52
Seller Required Governmental Approval........................................... 22
Sellers......................................................................... 1
Sellers' Taxes.................................................................. 7
Shared Assets................................................................... 9
Shared Contracts................................................................ 10
Surviving Permitted Encumbrances................................................ 74
Tax............................................................................. 74
Tax Refund...................................................................... 74
Tax Returns..................................................................... 74
Taxes........................................................................... 74
Termination Date................................................................ 57
Third Party..................................................................... 74
Third Party Payor Programs...................................................... 24
Title Commitments............................................................... 17
Title Insurer................................................................... 17
Transaction Agreements.......................................................... 75
Transaction Broker.............................................................. 32
Transfer Taxes.................................................................. 6
Transferred Employees........................................................... 49
Transitional Services........................................................... 11
WARN............................................................................ 75
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ASSET PURCHASE AGREEMENT, dated as of September 3, 2004 (this
"AGREEMENT"), by and among FORTRESS NBA ACQUISITION, LLC, a Delaware limited
liability company (the "PURCHASER"), FORTRESS INVESTMENT FUND II LLC, a Delaware
limited liability company (for the purpose of Section 11.17 only) (the
"GUARANTOR"), THE NATIONAL BENEVOLENT ASSOCIATION OF THE CHRISTIAN CHURCH
(DISCIPLES OF ▇▇▇▇▇▇), a Missouri not-for-profit corporation (the "COMPANY") and
each of its affiliated companies listed on Schedule I attached hereto
(individually a "COMPANY SUBSIDIARY" and, together with the Company, each a
"SELLER" and, collectively, the "SELLERS").
WHEREAS, certain of the Sellers and certain other affiliated
companies of the Sellers have filed voluntary petitions (the "PETITIONS") on
February 16, 2004 (the "PETITION DATE") for relief commencing a case under
Chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections 101 - 1330,
as amended (the "BANKRUPTCY CODE"), and the regulations promulgated thereunder
(the "BANKRUPTCY RULES"), in the United States Bankruptcy Court for the Western
District of Texas (jointly administered under Case No. 04-50948) (collectively,
with respect to such Sellers and such affiliated companies and individually with
respect to any such Seller or such other affiliated company, the "BANKRUPTCY
CASES") and are conducting their business as debtors in possession in accordance
with the Bankruptcy Code; and
WHEREAS, among other things, the Sellers conduct the Business, using
the Acquired Assets and subject to the Assumed Liabilities (as each such
capitalized term is hereinafter defined); and
WHEREAS, Sellers desire to sell, transfer and assign to Purchaser,
and Purchaser desires to purchase and acquire from Sellers, the Acquired Assets,
and Purchaser is willing to assume the Assumed Liabilities, all in the manner
and subject to the terms and conditions set forth herein and in accordance with
sections 105, 363, 365 and, insofar as applicable, 1146 of the Bankruptcy Code
(the "CONTEMPLATED TRANSACTIONS"); and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein
(including the definitions of terms used herein contained in ARTICLE XII), the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF BUSINESS
Section 1.01 Purchase and Sale of Business. Subject to SECTION 2.10,
on the terms and subject to the conditions set forth in this Agreement, at the
Closing, (i) the Company Subsidiaries shall sell, assign, transfer, convey and
deliver to Purchaser, and Purchaser shall purchase and acquire from the Company
Subsidiaries, all of the Company Subsidiaries' legal and beneficial right, title
and interest in and to all of their respective
properties, assets, contracts and rights as of the Closing Date (subject to the
provisions of SECTION 5.01) used or held for use in the Business of whatever
kind or nature, whether real or personal, tangible or intangible, wherever
located, except for such assets, contracts and rights as are provided hereby to
be expressly excluded from such sale and purchase (but subject to SECTION 1.05),
subject to and together with the assumption by Purchaser of Liabilities of the
Company Subsidiaries specifically provided for herein and (ii) the Company shall
sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall
purchase and acquire from the Company, all of the Company's legal and beneficial
right, title and interest in and to the properties, assets, contracts and rights
as of the Closing Date (subject to the provisions of SECTION 5.01) used or held
for use in the Business and specifically included and described in clauses (a)
through (n) below (except as expressly excluded hereunder and subject to SECTION
1.05), subject to and together with, in each case, the assumption by Purchaser
of the Liabilities of the Company specifically provided for herein, in each case
free and clear of all "claims" (as defined in the Bankruptcy Code), Liens,
encumbrances and other interests therein (collectively, "ENCUMBRANCES") as
provided in the Sale Order, other than Surviving Permitted Encumbrances and
Liabilities to be assumed by Purchaser as specifically provided herein. The
assets to be so acquired by Purchaser are hereinafter referred to collectively
as the "ACQUIRED ASSETS" and the Liabilities to be so assumed by Purchaser are
hereinafter referred to collectively as the "ASSUMED LIABILITIES". Without
limiting the provisions of clause (i) or (ii) above, the Acquired Assets shall
include all of Sellers' legal and beneficial right, title, and interest in and
to the assets, properties, rights and claims described in clauses (a) through
(n) below (except as expressly excluded hereunder):
(a) the Real Property Assets;
(b) (i) subject to SECTION 1.05 and SECTION 1.06, all equipment,
furniture, machinery, furnishings, appliances, tools, spare parts, supplies and
other tangible personal property related to the Business (excluding, however,
any artworks or other tangible personal property having religious or historic
significance, but economically of insignificant value, which may be removed
without damaging the Facilities) and owned by a Company Subsidiary, and (ii)
subject to SECTIONS 1.06, all equipment, furniture, machinery, furnishings,
appliances, tools, spare parts, supplies and other tangible personal property
related to the Business, owned by the Company and specifically described on
SCHEDULE 1.01(b);
(c) all inventory of the Business held at the Real Property Assets
or any location controlled or used by the Sellers;
(d) all Property Agreements;
(e) the fixtures built on or attached to the Real Property Assets;
(f) any agreements, permits, variances and approvals relating to the
development of any of the Real Property Assets (to the extent transferable
pursuant to Applicable Law);
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(g) all copies of marketing brochures and materials and other
printed or written materials in any form or medium used in connection with the
Business that Sellers are not required by law to retain and duplicates of any
such materials that Sellers are required by law to retain;
(h) all rights under all warranties, representations, and guarantees
related to the Business made by suppliers, manufacturers, and contractors and
applicable to an Acquired Asset or Assumed Liability (to the extent transferable
pursuant to Applicable Law);
(i) all Permits held by Sellers (or, to the extent any such Permits
are not freely transferable by the holder of such Permits, all rights, title and
interests of Sellers in such Permits to the full extent such right, title and
interest may be transferred);
(j) subject to SECTION 1.05 and SECTION 1.06, all books, records,
files or papers (whether in hardcopy or computer format) related to the
Business, including data processing records, employment and personnel records,
engineering information, technical information, customer lists, drawings,
designs, computer software, files and records, advertising and marketing data
and records, designs, drawings, credit records, records relating to suppliers,
and other data that Sellers are not required by law to retain and duplicates of
any such materials that Sellers are required by law to retain, except any books,
records, files or papers relating to any matter referred to in SECTIONS 1.02(l)
OR 5.14; provided, however, that Sellers shall not be required to transfer to
Purchaser any information (pursuant to this subparagraph or any of the other
provisions of this Section) if Sellers are prohibited by Applicable Law from
disclosing such information or if Sellers are subject to any non-disclosure or
confidentiality agreement with respect to such information and Purchaser is not
assuming such non-disclosure or confidentiality agreement pursuant to this
Agreement;
(k) subject to the exclusion of a Contract pursuant to SECTION
1.04(h), (i) all Contracts to which a Company Subsidiary is a party or any
Acquired Assets held thereby is bound and (ii) all Contracts to which the
Company is a party or any Acquired Assets held thereby is bound described in
SCHEDULE 1.01(k); provided, however, that (A) in the case of Contracts relating
to the Business entered into by Sellers after the date of this Agreement in
compliance with SECTION 5.01, Purchaser shall have been furnished with a true
and complete copy of such Contracts, and, after a reasonable opportunity to
review such Contracts (which, unless otherwise agreed by the parties shall be
conclusively considered to be five (5) Business Days from Purchaser's receipt of
a true and complete copy of such Contracts), has not elected by notice to the
Sellers not to assume such Contracts and all the liabilities thereunder and (B)
Purchaser shall not be required to assume contracts with respect to which access
has not been provided to Purchaser in accordance with the last sentence of
SECTION 5.02 (the Contracts referred to in clauses (i) and (ii) above but
subject to the proviso, collectively, the "ASSUMED CONTRACTS");
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(l) all credits, prepaid expenses, deferred charges, advance
payments, security deposits, and prepaid items related to the Business;
(m) subject to SECTIONS 1.02(l) AND 5.14, all rights, privileges,
claims, demands, refunds, and indemnification agreements (but not any insurance
policies) in favor of Sellers, and any indemnification and similar rights,
offsets, recoupment rights, and other claims against Third Parties, in each case
relating to any Acquired Asset or Assumed Liability (excluding any claims or
actions for preferences, fraudulent conveyances, and other avoidance power
claims and any recoveries under sections 542, 544, 545, 547, 548, 549, 550 and
553 of the Bankruptcy Code relating to any Acquired Asset or Assumed Liability,
other than claims or actions in respect of payments made on account of any
Assumed Contracts or Property Agreements); and
(n) with respect to the Real Property Asset in Indiana commonly
known as ▇▇▇▇▇ Run, the cash amount in the segregated account held by Seller,
for which no adjustment shall be made to the Purchase Price, which as of July
31, 2004 totaled $5,476,065;
(o) with respect to the Real Property Asset in Florida commonly
known as Cypress Village, the cash amount in the segregated account held by an
escrow agent or trustee pursuant to the terms of an escrow or trust agreement,
for which no adjustment shall be made to the Purchase Price, which as of July
31, 2004 totaled $1,102,926;
(p) subject to the penultimate sentence of SECTION 1.04, all
security deposits under all Residency Agreements in Sellers' possession or
control and all rights of Sellers under any such deposits not within Sellers'
possession or control (including under any escrow arrangement) to the extent
permitted by Applicable Law (and Sellers shall, within ten (10) Business Days of
the date hereof, deliver a schedule of same to Purchaser);
(q) subject to SECTION 1.07, all Intellectual Property reasonably
agreed by the parties to be Acquired Assets; and
(r) all other assets of any nature whatsoever owned, by any of the
Company Subsidiaries and used in connection with the Business.
The Sellers shall assume in accordance with the Bankruptcy Code all the
Residency Agreements for assignment to the Purchaser in accordance herewith and
shall in such regard pay all Cure Amounts relating thereto, except where in
accordance with SECTION 1.04(h) Purchaser shall assume or shall be responsible
to reimburse the Sellers for any of such Cure Amounts and subject to the
Sellers' or Purchaser's election to terminate this Agreement as provided in
SECTION 1.04(h) and SECTION 8.01(b)(ii). In addition, at the Closing, the
Sellers shall deliver or cause to be delivered to the Purchaser all entrance
fees previously received by Sellers pursuant to the terms of any Residency
Agreement, which entrance fees (or portions thereof) have been deposited by
Sellers into segregated
4
accounts for the benefit of the applicable residents and which are, as of the
Closing Date, in the possession of the Sellers as required by the terms of the
applicable Residency Agreement or otherwise by Applicable Law or which by their
terms are fully refundable and due and payable as of, or will become due and
payable as a result of an event which has already occurred prior to, the date of
Closing.
Section 1.02 Excluded Assets. The following assets, properties, and
rights (the "EXCLUDED ASSETS") are not included in the Acquired Assets and shall
be retained by Sellers:
(a) subject to SECTION 1.01(n), SECTION 1.01(o), and SECTION 1.01(p)
and the last sentence of SECTION 1.01, all cash, cash equivalents, accounts
receivable and securities of any type or nature owned by the Sellers or any of
their Affiliates and any rights of Sellers or any of their Affiliates under any
credit agreement, letter of credit agreement or similar financial accomodation;
(b) all membership interests of the Company in the Company
Subsidiaries and all intercompany receivables owed by any Seller to any other
Seller or any Affiliate thereof;
(c) except as otherwise provided in SECTION 1.01(m), any claims,
rights or causes of action arising under sections 542, 544, 545, 547, 548, 549,
550 and 553 of the Bankruptcy Code;
(d) Sellers' rights under this Agreement, any Transaction Agreements
and any other agreements between Purchaser and Sellers relating to the
transactions contemplated hereby, and any other rights, claims or causes of
action (if any) of Sellers against Purchaser or any of its Affiliates ;
(e) any claims (if any) against current or former directors,
trustees, officers or other employees of, or agents, accountants or other
advisors of or to, Sellers;
(f) minute books, articles or certificates of incorporation,
by-laws, limited liability company certificates or articles of formation,
limited liability company operating agreements, all amendments thereto, stock
and membership ledgers and stock certificates of Sellers;
(g) Tax Refunds in respect of the Business that relate to any
period, or portion of any period, ending on or prior to the Closing Date;
(h) intellectual property other than the intellectual property
described in SECTION 1.01(q);
(i) any rights or claims of the Sellers relating to any assets other
than Acquired Assets;
5
(j) any assets excluded pursuant to the election contemplated by the
penultimate sentence of SECTION 1.05(b);
(k) the items referred to in the parenthetical contained in SECTION
1.01(b); and
(l) any rights, claims, demands or causes of action, at law or in
equity, or any remedies therefor, of any of the Sellers against Purchaser or
Guarantor, or against any lender, creditor, issuer of any letter of credit,
participating bank in any letter of credit, secured party under any security
agreement or similar agreement, bondholder, trustee under any indenture relating
to any bond, or against any Affiliate or any officer, director, employee, agent,
representative or advisor of any of the foregoing, or against any other Person
who acted or acts in concert with any of them, in respect of any act or omission
in relation to any of the Sellers, whether or not any of the foregoing Persons
held such status before, during or after the time of any act or omission in
relation to any of the Sellers, or whether or not such right, claim, demand, or
cause of action arose before or after the date hereof, or was or is asserted
before or after the date hereof, including any right, claim, demand or cause of
action with respect to a continuation of such activity after the date hereof and
any damages sustained therefrom before or after the date hereof, and any books,
records, files or papers relating to any of the foregoing..
Section 1.03 Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Purchaser shall assume
and/or accept an assignment from Sellers of, and thereafter pay, perform, or
discharge in accordance with their terms, each of the following obligations of
Sellers:
(a) all Liabilities constituting a Surviving Permitted Encumbrance
and all the obligations of a Seller under the Assumed Contracts or Property
Agreements (other than in respect of any Cure Amounts) to the extent relating to
any transaction or event occurring after the Closing (except as otherwise
provided by SECTION 1.04(h)), and those Liabilities relating to the funds or
rights to funds referred to in SECTIONS 1.01(l), (n), (o) and (p);
(b) 50% of the taxes payable to any city, county, state or other
Governmental Authority as a transfer, documentary stamp tax or similar tax
payable with respect to the sale of real or personal property assets, including
any sales taxes ("TRANSFER TAXES") (if any); and
(c) any Cure Amounts which Purchaser has assumed in accordance with
SECTION 1.04(h).
Section 1.04 Excluded Liabilities. Notwithstanding anything to the
contrary contained herein, Purchaser shall not assume, or in any way be liable
or responsible for, any Liabilities of Sellers or their Affiliates (including
under any successor liability or similar theory) except for the Assumed
Liabilities. Without limiting
6
the generality of the foregoing, Purchaser shall not assume, and Sellers shall
remain responsible for, the following (the "EXCLUDED LIABILITIES"):
(a) all Liabilities for any administrative expenses or fees or
expenses of professional persons (including any attorney, consultant or
financial advisor) employed or retained by or on behalf of Sellers in connection
with, resulting from or attributable to the Contemplated Transactions, the
Bankruptcy Cases, or any transaction relating to an Excluded Asset;
(b) subject to SECTION 1.04(h) regarding certain Cure Amounts and
other than for Surviving Permitted Encumbrances referred to in Section 1.03(a),
subject to the provisions of SECTION 2.04, all Liabilities which accrue with
respect to, arise out of, or relate to, the Acquired Assets on or prior to the
Closing Date, including any Liability of Sellers or any of their respective
employees, directors, trustees, officers, affiliates, or agents arising out of,
relating to, or caused by (whether directly or indirectly), Sellers' ownership,
possession, operation, interest in, use or control of the Acquired Assets and
any claims, litigation or actions against Sellers or their Affiliates, or with
respect to the Business, relating to the period prior to the Closing;
(c) except as provided in SECTION 1.03(b) relating to Transfer
Taxes, any Liability for (i) Taxes of Sellers or any of their respective
Affiliates or (ii) Taxes attributable to the Acquired Assets or the Business, in
each case, relating to any period or any portion of any period ending on or
prior to the Closing Date (for this purpose, ad valorem taxes shall be prorated
as of the Closing Date) (the Taxes under clauses (i) and (ii), collectively, the
"SELLERS' TAXES");
(d) with respect to current or former employees, officers,
directors, trustees and consultants of Sellers and their Affiliates, all
Liabilities in respect of any compensation, benefit plan, pension or other
post-employment benefit plan, unpaid vacation days, any agreement, arrangement,
program, policy or understanding relating to such matters, their service to and
tenure with Sellers and their Affiliates, and their benefits, including any
employment, consulting, severance or other termination payments, liability in
respect of WARN, change in control or similar agreements, workers' compensation
liabilities or any other employment-related claim (including for actual,
constructive or deemed termination, employment discrimination or wrongful
discharge) or any right of indemnification;
(e) all Liabilities which arise, whether before, on or after the
Closing Date, out of, or in connection with, the Excluded Assets;
(f) all Liabilities arising out of or in connection with any actual
or potential indebtedness (including any letter of credit reimbursement
obligation) of Sellers or any of their Affiliates;
(g) all Liabilities arising from any litigation, investigation or
other proceeding in respect of Sellers or any of their Affiliates or any
officers, directors,
7
trustees, employees, representatives or agents thereof or, to the extent
relating to any transaction or event occurring on or prior to the Closing, in
respect of the Acquired Assets;
(h) all Cure Amounts; provided, however, that, (i) if and to the
extent the aggregate Cure Amounts for all of the Assumed Contracts and all of
the Commercial Leases exceed $4,250,000, the Sellers shall not be required to
assume an Assumed Contract or Commercial Lease for assignment to the Purchaser
pursuant hereto unless and except to the extent the Purchaser shall agree in
writing by notice to the Sellers to pay any excess Cure Amount attributable to
such Assumed Contract or Commercial Lease; it being understood and agreed that
in such event the Purchaser may (A) select from among the Assumed Contracts and
Commercial Leases which Assumed Contracts and Commercial Leases the Sellers
shall be required to assume and assign to the Purchaser in accordance herewith
up to such maximum amount, and the Sellers shall not be required to assume any
Assumed Contracts or Commercial Leases to the extent that the aggregate Cure
Amounts are in excess of such aggregate maximum amount and such additional
amount as the Purchaser may agree to pay in respect of excess Cure Amounts in
accordance herewith, or (B) choose not to proceed to Closing pursuant to SECTION
7.02(g) and SECTION 8.01(d)(iv) if, in the absence of Purchaser assuming such
Assumed Contracts or Commercial Leases, there would be a Material Adverse
Effect, (ii) Sellers' obligation to pay any Cure Amounts related to the Resident
Litigation shall be limited as provided by the last paragraph of this SECTION
1.04 (after giving effect to SECTION 2.11), and (iii) if and to the extent the
aggregate Cure Amounts for all of the Residency Agreements for matters other
than the Resident Litigation are less than $1,000,000, such Cure Amounts shall
be borne by Purchaser and, if such Cure Amounts exceed $1,000,000, then (X) the
Sellers and/or Purchaser may elect to pay such excess Cure Amounts as provided
by the last paragraph of this SECTION 1.04 or (Y) if neither the Sellers nor the
Purchaser elects to pay all such excess Cure Amounts, the Sellers or Purchaser
may elect to terminate this Agreement pursuant to SECTION 8.01(b)(ii);
(i) all liabilities and obligations incurred by Sellers on or after
the Closing Date other than any Assumed Liabilities; and
(j) all liabilities of Sellers to their Affiliates.
The Sellers shall as soon as practicable take such actions as are
necessary under the Bankruptcy Code to obtain a determination by the Bankruptcy
Court (finally or by estimation) of the aggregate Cure Amounts with respect to
the Residency Agreements and shall keep the Purchaser reasonably informed in
respect of the determination of such Cure Amounts. If upon such determination,
the aggregate Cure Amounts with respect to the Residency Agreements, other than
any portion of such Cure Amounts that is in respect of the Resident Litigation,
exceed $1,000,000, the Sellers may elect by notice to the Purchaser to pay all
such Cure Amounts in excess of $1,000,000. The Sellers may also elect to pay
such Cure Amounts out of the Additional Amount as provided by SECTION 2.11 if
the Additional Amount available is sufficient to pay all such Cure Amounts. If
the Sellers have not theretofore made such election and thereby provided for
8
payment of all such Cure Amounts, the Sellers shall give written notice thereof
to the Purchaser not later than twenty Business Days before the Anticipated
Closing Date and the Purchaser may elect by written notice to the Sellers,
within 15 Business Days after receiving such notice from the Sellers (or, if
earlier, the day prior to the Closing Date) to pay all such Cure Amounts in
excess of $1,000,000. Alternatively, the Sellers and the Purchaser may agree to
split responsibility for payment of all such Cure Amounts in excess of
$1,000,000 in any way in which they, each in their absolute discretion, may
agree upon in writing. If at any time after the close of business on the 15th
Business Day following such notice by the Sellers (or, if earlier, the day prior
to the Closing Date), the Sellers have not elected to pay all such Cure Amounts,
the Purchaser has not elected to pay all such Cure Amounts and the Sellers and
the Purchaser have not agreed in writing to split responsibility for payment of
all such Cure Amounts, either the Sellers or the Purchaser may terminate this
Agreement in accordance with SECTION 8.01(b)(ii). The Sellers may, but shall not
be required to, pay any Cure Amounts with respect to the Residency Agreements
that are in respect of the Resident Litigation; provided, however, that the
Sellers may elect to pay such Cure Amounts out of the Additional Amount
available to Sellers from the Purchaser as provided in SECTION 2.11(c). If the
Sellers do not elect to pay any such Cure Amounts in excess of such amount
available from the Purchaser, the Sellers shall give notice thereof to the
Purchaser not later than twenty Business Days before the Anticipated Closing
Date and the Purchaser may elect by notice to the Sellers, within 15 Business
Days after receiving such notice from the Sellers (or, if earlier, the day prior
to the Closing Date), to pay all such Cure Amounts. Alternatively, the Sellers
and the Purchaser may agree to split responsibility for payment of all such
excess Cure Amounts in any way in which they, each in their absolute discretion,
may agree upon in writing. If at any time after the close of business on the
15th Business Day following such notice by the Sellers (or, if earlier, the day
prior to the Closing Date), the Sellers have not elected to pay all such Cure
Amounts, the Purchaser has not elected to pay all such Cure Amounts and the
Sellers and the Purchaser have not agreed in writing to split responsibility for
payment of all such Cure Amounts, either the Sellers or the Purchaser may
terminate this Agreement in accordance with SECTION 8.01(b)(ii). Notwithstanding
the responsibility of the Sellers and/or the Purchaser in accordance with this
SECTION 1.04 with respect to payment of a Cure Amount, in the case of any Cure
Amount that has been estimated, the Sellers and/or the Purchasers shall not be
required to make a payment to cure any defaults or otherwise effectuate,
pursuant to the Bankruptcy Code, the assumption by a Seller or Sellers and
assignment to and assumption by Purchaser of Assumed Contracts or Residency
Agreements to be assigned to Purchaser in accordance herewith unless and until
such Cure Amount is required by agreement or order of the Bankruptcy Court to be
paid or reserved or deposited in escrow, in which case the party responsible
shall be entitled to any excess of the amount reserved or escrowed over the
amount ultimately determined to be payable for such purpose.
Section 1.05 Shared Assets and Contracts.
(a) The assets identified in SCHEDULE 1.05(a) (the "SHARED ASSETS")
are used in the Business and are also used in the businesses of NBA and
affiliated
9
companies which are not being offered for sale by the Sellers (the "OTHER
BUSINESSES"), which businesses are currently expected to be continued by the
Sellers in reorganized form. Accordingly, the Shared Assets shall not be sold,
assigned, transferred, conveyed or delivered to Purchaser at the Closing and no
part of the Purchase Price shall be allocated to the Shared Assets. Instead of
acquiring the Shared Assets at the Closing in consideration of the Purchase
Price, from the Closing Date until the time provided below, the Shared Assets
shall continue to be owned by the Sellers, and the Purchaser shall be entitled
to use the Shared Assets in connection with the Business under such arrangements
consistent with the terms hereinafter provided.
(b) Subject to the last sentence of this SECTION 1.05(b), the
Contracts identified in SCHEDULE 1.05(b) (the "SHARED CONTRACTS") relate to the
conduct of the Business and also the conduct of the Other Businesses. The Shared
Contracts shall not be assumed by Purchaser at the Closing and no part of the
Purchase Price shall be allocated to the Shared Contracts. Instead of the
Sellers assigning to the Purchaser and the Purchaser assuming the Shared
Contracts at the Closing, from the Closing Date until the time provided below,
the Shared Contracts shall continue to be the owned by and be the obligations
and responsibility of the Sellers. For a period of up to three (3) months, the
Purchaser shall have the option to require the Sellers to use their commercially
reasonable efforts to cooperate with the Purchaser in establishing and
maintaining any reasonable arrangement designed to provide the Purchaser with
all of the benefits under such Shared Contract that the Purchaser requires to
conduct the Business consistent with the ordinary course of the conduct of the
Business before the date hereof for such period as Purchaser shall determine.
Alternatively, the Purchaser and the Sellers may agree, at or after the Closing,
to assign a Shared Contract to the Purchaser and to establish and maintain
similar reasonable arrangements designed to provide the Sellers (or their
assignees) with all the benefits under such Shared Contract that the Sellers (or
their assignees) require for the reasonable conduct of their Other Businesses
consistent with the ordinary course of the conduct of such Other Businesses
before the date hereof.
(c) The arrangements regarding Shared Assets or Shared Contracts
referred to in the foregoing paragraphs of this SECTION 1.05 may include (i)
contracts between a Seller and the Purchaser to provide to Purchaser the goods
or services available to be provided by the Shared Assets, (ii) the lease,
subcontracting, sublicensing or partial assignment to the Purchaser of any and
all rights of the Sellers against the counterparty or counterparties under a
Shared Contract and (iii) the enforcement by the Sellers for the benefit (and at
the cost) of the Purchaser of any rights under a Shared Contract pertinent to
the Business. In any such reasonable arrangement, the Purchaser shall be
required to reimburse the Sellers for the direct or indirect cost incurred by
the Sellers in providing the benefit to the Purchaser of the goods or services
available to be provided by the Shared Assets or Sellers' incurrence after the
Closing Date of Liabilities under the Shared Contracts. Such arrangements shall
continue (i) in the case of a Shared Contract until such time as the Shared
Contract expires in accordance with its terms (without giving effect to any
extensions thereto at the option of the Sellers or such earlier time as the
Purchaser elects to terminate upon reasonable notice and (ii) in the case of
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Shared Assets for a period not longer than six (6) months after the Closing
(unless the parties shall otherwise agree). Such arrangements shall otherwise be
of such manner and on such terms and conditions of a shared services agreement
as are reasonably acceptable to the Sellers and the Purchaser to be negotiated
in good faith by the Sellers and the Purchaser prior to the Closing and approved
by the Bankruptcy Court as may be required pursuant to the Bankruptcy Code. The
provisions of this SECTION 1.05 shall survive the Closing to the extent
contemplated herein.
Section 1.06 Transitional Services. With respect to the transitional
services identified in SCHEDULE 1.06 (the "TRANSITIONAL SERVICES"), from and
after the Closing Date for a period of up to six (6) months, and without
limiting the parties' obligations pursuant to SECTION 6.02, (i) at the option of
the Purchaser, the Sellers shall provide, or procure the provision of, the
Transitional Services to the Purchaser using administrative facilities and
capacities (including personnel) retained by the Sellers or sold to another
party other than the Purchaser after the Closing, and (ii) at the option of the
Sellers, the Purchaser shall provide or procure the provision of Transitional
Services to the Sellers using administrative facilities and capacities
(including personnel) acquired by the Purchaser in the Contemplated Transactions
(or, at Purchaser's election, otherwise available to it), in each case on a
basis consistent with the Sellers' historical cost of providing such
Transitional Services and otherwise on terms and conditions of a transitional
services agreement reasonably acceptable to the Sellers and the Purchaser to be
negotiated in good faith by the Sellers and the Purchaser prior to the Closing
and approved by the Bankruptcy Court as may be required pursuant to the
Bankruptcy Code. The provisions of this SECTION 1.06 shall survive the Closing
to the extent contemplated herein.
Section 1.07 Use of Name. Purchaser agrees that it shall (i) as soon
as practicable after the Closing Date and in any event within 90 days following
the Closing Date, cease to make any use of the name "National Benevolent
Association" or any abbreviation or derivation thereof or any service marks,
trademarks, trade names, identifying symbols, logos, emblems, signs or insignia
related thereto or containing or comprising the foregoing, including any name or
▇▇▇▇ confusingly similar thereto (collectively the "SELLER MARKS"), and any
Internet domain rights associated therewith and (ii) immediately after the
Closing, cease to hold itself out as having any affiliation with Sellers or any
of their Affiliates. In furtherance thereof, as promptly as practicable but in
no event later than 90 days following the Closing Date, Purchaser shall remove,
strike over or otherwise obliterate all Seller Marks from all materials
including any vehicles, business cards, schedules, stationary, packaging
materials, displays, signs, promotional materials, manuals, forms, computer
software and other materials used by it in the conduct of the Business (nor
shall it be entitled to use the Seller Marks in any other respect).
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ARTICLE II
THE CLOSING
Section 2.01 Closing. The closing of the Contemplated Transactions
(the "CLOSING") shall take place at the New York offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (or the offices of Purchaser's lender, in New York
City, at Purchaser's election) at 10:00 a.m. on the second Business Day after
the conditions set forth in ARTICLE VII (other than those required to be
performed at the Closing but subject to the satisfaction of such conditions)
shall have been satisfied or waived or at such other time, date and place as
shall be fixed by agreement among Purchaser and Sellers (the date of the Closing
being herein referred to as the "CLOSING DATE"). The Sellers shall give notice
to the Purchaser of the anticipated Closing Date (the "ANTICIPATED CLOSING
DATE") not less than 25 Business Days in advance of the date it in good faith
expects all the conditions set forth in ARTICLE VII (other than those required
to be performed at the Closing but subject to the satisfaction of such
conditions) to be satisfied.
Section 2.02 Purchase Price Deposit. Within two Business Days
following the filing by Sellers of the Bidding Procedures Motion with the
Bankruptcy Court, pursuant to the terms of the Escrow Agreement, Purchaser shall
immediately deposit with the Escrow Agent the sum of $21,000,000 by wire
transfer of immediately available funds (the "GOOD FAITH DEPOSIT"), to be
released by the Escrow Agent and delivered to either Purchaser or Sellers, in
accordance with the provisions of the Escrow Agreement. Pursuant to the Escrow
Agreement, the Good Faith Deposit (together with all accrued investment income
thereon) shall be distributed as follows:
(a) if the Closing shall occur, the Good Faith Deposit and all
accrued investment income thereon shall be applied towards the Purchase Price
payable by Purchaser to Sellers under SECTION 2.03 at the Closing;
(b) if this Agreement is terminated by Sellers pursuant to SECTION
8.01(e)(i), the Good Faith Deposit, together with all accrued investment income
thereon, shall be delivered to Sellers promptly following such termination; or
(c) if this Agreement is terminated pursuant to ARTICLE VIII for any
reason other than by Sellers pursuant to SECTION 8.01(e)(i), the Good Faith
Deposit, together with all accrued investment income thereon, shall in each case
be returned to Purchaser promptly following such termination.
Section 2.03 Purchase Price. Subject to SECTION 2.10 and SECTION
5.09, the aggregate purchase price payable by Purchaser to Sellers shall be
$210,000,000 (the "PURCHASE PRICE"), as further increased or decreased in
accordance with SECTION 2.04 (the "CLOSING ADJUSTMENTS"). The Purchase Price, as
adjusted by the Closing Adjustments, is hereinafter referred to as the "FINAL
PURCHASE Price." Prior to Closing, Purchaser shall designate in writing to
Sellers its allocation of the Purchase Price for the
12
Real Property Assets, personal property and goodwill with respect to each
Facility for which an allocation has not been made pursuant to SECTION 2.10 (and
for the Facilities identified in SECTION 2.10, an allocation for personal
property and goodwill at such Facilities), which allocation shall be binding on
Purchaser and Sellers.
Section 2.04 Adjustments and Apportionments. (a) Sellers and
Purchaser acknowledge and agree that, as of the Closing Date, certain costs and
expenses relating to the Real Property Assets owned or leased by the Company or
a Company Subsidiary, including real estate Taxes (if any), water meter and
water charges, sewer rents, fuel and other utility expenses, rent payable under
the Cypress Village Ground Lease (all such costs and expenses, collectively,
"REAL PROPERTY EXPENSES"), (x) may have accrued during the period prior to the
Closing Date (the "PRE-CLOSING PERIOD") but will not be due and payable by the
Company or a Company Subsidiary until after the Closing Date (such accrued
expenses, if any, that are unpaid as of the Closing Date being hereinafter
referred to as "ACCRUED EXPENSES") or (y) will not accrue until the period on or
after the Closing Date (the "POST-CLOSING PERIOD") but have been paid by the
Company or a Company Subsidiary during the Pre-Closing Period (such unaccrued
expenses, if any, that have been prepaid as the Closing Date being hereinafter
referred to as "PREPAID EXPENSES"). The expenses described in this SECTION
2.04(a) shall be pro rated as of 12:01 a.m. (New York time) on the Closing Date
and apportioned (on the basis of a 365-day year) to (i) Sellers with respect to
the Pre-Closing Period and (ii) Purchaser with respect to the Post-Closing
Period, provided that rents under the Property Agreements shall be prorated as
of 12:01 a.m. (New York time) on the Closing Date and apportioned (on the basis
of a 365-day year) as follows:
(i) Rents for the month in which the Closing occurs (to the
extent already paid) shall be apportioned to Sellers with respect to the
Pre-Closing Period and to Purchaser with respect to the Post-Closing
Period.
(ii) If any tenant under any Property Agreement is in arrears
in the payment of Rent on the Closing Date, Rents received from such
tenant after the Closing shall be applied in the following order of
priority: (A) first, to the month in which the Closing occurs; (B) second,
to any month or months following the month in which the Closing occurred;
and (C) third, after the applicable lease is brought current for the
period from and after the Closing Date, to any Rents which were delinquent
at Closing. If Rents or any portion thereof received by Sellers or
Purchaser after the Closing (including rent arrearages) are payable to the
other party by reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees, costs and expenses
of collection thereof, shall be promptly paid to the other party, which
obligation shall survive the Closing. Purchaser shall use its commercially
reasonable efforts (without the obligation to commence any litigation or
eviction proceedings or engage a collection agency) to collect any rents
which were delinquent at Closing and promptly pay them over to the Sellers
upon receipt to the extent allocable to a Pre-Closing Period in accordance
with this SECTION 2.04(a).
13
(iii) If any additional Rents are collected by Purchaser after
the Closing which are attributable in whole or in part to any period prior
to the Closing, then Purchaser shall promptly pay to Sellers, Sellers'
proportionate share thereof, less a proportionate share of any reasonable
attorneys' fees, costs and expenses of collection thereof, in accordance
with SECTION 2.04(a)(i) hereof, which obligation shall survive the
Closing. If any additional Rents are collected by Sellers or for the
benefit of Sellers which are attributable in whole or part to any period
on or after the Closing Date, then Sellers shall promptly pay to
Purchaser, Purchaser's proportionate share thereof.
(b) Not later than ten (10) Business Days prior to the Closing Date,
Sellers shall prepare and deliver to Purchaser a written statement setting
forth, as of the anticipated Closing Date, a reasonably detailed good faith
calculation of the apportionments contemplated by SECTION 2.04(a) for each of
the Real Property Assets. Purchaser shall have the right to review such written
statement and shall notify Sellers of any objection thereto within three (3)
Business Days after the receipt thereof. Sellers and Purchaser shall negotiate
in good faith to attempt to resolve any such objection made by Purchaser,
provided that if such parties are unable to agree upon a reasonably detailed
calculation of such apportionments at least five (5) Business Days prior to the
Closing Date, such dispute shall be resolved by the Mediator. If Purchaser does
not notify Sellers of any such objection within such three (3) Business Day
period, Purchaser shall be deemed to have agreed with the apportionments
specified in Sellers' written statement. If, after the Closing, a manifest error
or omission in the calculation of the apportionments set forth above is found by
one of the parties, such manifest error or omission shall be promptly corrected
and the party receiving the over-payment shall pay the amount of the
over-payment to the party entitled thereto. The foregoing obligation to correct
apportionments shall survive the Closing for a period of ninety (90) days.
(c) The Purchase Price shall be (i) reduced by the excess, if any,
of the aggregate amount of Accrued Expenses and rent previously paid to any
Seller which is attributable to a Post-Closing Period over the aggregate amount
of Prepaid Expenses, (ii) increased by the excess, if any, of the aggregate
amount of Prepaid Expenses over the aggregate amount of Accrued Expenses and
rent previously paid to any Seller which is attributable to a Post-Closing
Period.
(d) Additionally, it is agreed that the Purchase Price was agreed
upon between Sellers and Purchaser on the assumption that the Facilities and
those capital improvements with respect to the Equity Homes for which the
Sellers are responsible are not, in the aggregate, in need of deferred
maintenance expenditures and deferred capital expenditures, in excess of
$10,000,000. If prior to Closing the Property Condition Reports indicate that
the anticipated cost of deferred maintenance and deferred capital expenditures
with respect to the Facilities and those capital improvements with respect to
the Equity Homes for which the Sellers are responsible, as reflected in such
reports (all of such costs relating to the period prior to the date of the
Property Condition Reports, collectively, "DEFERRED CAPITAL EXPENDITURES"),
exceed $10,000,000, in the aggregate, then the Purchase Price shall be decreased
by the positive excess, if any, of (x) aggregate
14
Deferred Capital Expenditures over (y) $10,000,000; provided, however, if the
Deferred Capital Expenditures exceed $15,000,000, then Sellers have the right to
terminate this Agreement pursuant to SECTION 8.01(e)(iv).
Section 2.05 Transactions to be Effected; Closing and Other
Deliveries. At the Closing, upon the terms and subject to the conditions set
forth in this Agreement:
(a) Purchaser shall pay to Sellers a net amount (the "CLOSING
AMOUNT") equal to the Final Purchase Price by wire transfer of immediately
available funds to an account designated in writing by Sellers at least three
(3) Business Days prior to the Closing Date;
(b) Sellers shall deliver to Purchaser certified copies of all
orders of the Bankruptcy Court pertaining to the Contemplated Transaction,
including the Sale Order;
(c) Each of Purchaser and the applicable Sellers shall execute and
deliver to each other:
(i) an assignment and assumption of commercial leases (the
"ASSIGNMENT AND ASSUMPTION OF COMMERCIAL LEASES"), in a form reasonably
acceptable to Sellers and Purchaser, duly executed by the applicable
Sellers, so as to assign to Purchaser from and after the Closing Date all
of said Seller's right, title and interest as lessor under the Property
Agreements (including any guaranties or other documents relating thereto)
that are in effect as of the Closing Date;
(ii) unless the Leased Real Property is to be purchased by the
Purchaser from the Cypress Village Ground Lessor and the Cypress Village
Ground Lease is to be terminated as contemplated by SECTION 7.02(c)(i), an
assignment and assumption of Cypress Village Ground Lease in a form to be
reasonably agreed upon by the Sellers and the Purchaser, duly executed by
the applicable Sellers, so as to assign to Purchaser from and after the
Closing Date all of said Seller's right, title and interest as lessee
under the Cypress Village Ground Lease;
(iii) appropriate instruments of assignment and assumption of
the Residency Agreements and Assumed Contracts, each in form and substance
reasonably acceptable to the Sellers and the Purchaser, duly executed by
the applicable Seller, so as to assign to Purchaser from and after the
Closing Date all of such Seller's right, title and interest in and to such
Residency Agreements and Assumed Contracts; provided, however, that such
assignment shall not prejudice, impair or restrict Sellers' ability to
assert any defenses, counterclaims or objections the Sellers may have with
respect to any Assumed Contracts or Residency Agreements;
15
(iv) applicable Transfer Tax returns; and
(v) such other documents and instruments as may reasonably be
required by the Sellers in order to consummate the transactions
contemplated by this Agreement and to otherwise effect the agreements of
the parties pursuant to this Agreement.
(d) Sellers and Purchaser shall jointly prepare and deliver a final
closing statement (the "CLOSING STATEMENT") setting forth the Final Purchase
Price and the Closing Amount, and including a reasonably detailed calculation of
each of (i) the components of the Purchase Price and (ii) the Closing
Adjustments, if any, all as determined in accordance with the applicable
provisions of this Agreement.
(e) Sellers shall deliver, or shall cause to be delivered, to
Purchaser each of the following:
(i) a bargain and sale deed with covenants against grantor's
acts in form and substance reasonably satisfactory to Purchaser's counsel
with respect to each Owned Real Property so as to convey to Purchaser all
of the applicable Seller's right, title and interest in and to the Owned
Real Property, subject only to the Surviving Permitted Encumbrances;
(ii) customary title affidavits required by a title company in
order to issue any new title policy, each executed by the applicable
Sellers and in form and substance acceptable to the applicable title
company;
(iii) an affidavit, in accordance with the Foreign Investment
in Real Property Tax Act, confirming that Seller is a "United States
Person" within the meaning of Section 1445 of the Code;
(iv) copies of any necessary transfer notices, together with
evidence of their delivery to, and acceptance by, the applicable
Governmental and quasi-Governmental Authorities, if applicable;
(v) notices executed by the applicable Sellers and addressed
to the counterparties under the Property Agreements in effect on the
Closing Date, informing such counterparties of the sale of the applicable
Facility to Purchaser, of the name and notice address of the Purchaser as
successor to Seller under the Property Agreements and directing such
counterparties to make all payments thereafter coming due under the
Property Agreements to Purchaser or as Purchaser may otherwise direct; and
(vi) such other documents and instruments as may reasonably be
required by Purchaser or the applicable title company in order to
consummate the transactions contemplated by this Agreement and to
otherwise effect the agreements of the parties pursuant to this Agreement.
16
(f) In addition to the foregoing, at or prior to the Closing, (i)
Sellers will deliver to Purchaser the certificate referred to in SECTION 7.02(a)
and SECTION 7.02(b), and (ii) Purchaser will deliver to Sellers the certificate
referred to in SECTION 7.03(a) and SECTION 7.03(b).
(g) At Purchaser's election, Purchaser may take title to each
Facility (subject to any Surviving Permitted Encumbrances) through a separate
limited liability company, limited partnership or corporation, upon Purchaser's
written notice to Sellers, delivered at least five (5) Business Days prior to
the Closing; provided, however, that such action shall not relieve Purchaser of
any of its obligations hereunder (including in respect of any Assumed Liability
related to the Facility).
Section 2.06 Payments and Computations. All payments to be made by
either party under this Agreement will be paid by wire transfer of immediately
available funds to the account or accounts designated by the party receiving
such payment. All computations of interest with respect to any amounts due from
or to either party pursuant to this Agreement will be made on the basis of a
year of 365 days, in each case for the actual number of days (excluding the
first day, but including the last day) occurring in the period for which such
interest is payable.
Section 2.07 Title Commitments; New Surveys; Engineering Reports;
Environmental Reports.
(a) The Sellers shall obtain from a title insurer selected by
Sellers and reasonably acceptable to the Purchaser (the "TITLE INSURER") and
furnish or make available to Purchaser one or more preliminary title reports or
commitments (together with any updates, amendments, endorsements and
modifications thereto, the "TITLE COMMITMENTS") to issue one or more owner's
title insurance policies insuring Purchaser's title to the Owned Real Property
and its leasehold interest in the Leased Real Property (assuming that the
Cypress Village Ground Lease is to be assigned to the Purchaser in accordance
with the terms of this Agreement) in an aggregate amount equal to the Purchase
Price, subject only to the Permitted Encumbrances and other Liens not
constituting objections to title in accordance herewith. Within ten (10) days
following Purchaser's receipt of both a Title Commitment and a corresponding New
Survey with respect to the property to be insured under such Title Commitment,
Purchaser shall notify Sellers in writing as to whether it believes that any
conditions of title or survey matters reflected on such Title Commitment and New
Survey, respectively, if unmodified or uncured, would result in a breach of the
representations and warranties contained in SECTION 3.04 (the "PRELIMINARY TITLE
OBJECTIONS"). Sellers shall have the right, but not the obligation, to cure or
cause to be cured on or prior to Closing any Preliminary Title Objections which,
if uncured, would entitle the Purchaser to terminate the Agreement pursuant to
SECTION 8.01(d)(iii) as a result of a breach of the representations and
warranties contained in SECTION 3.04 (the "MATERIAL TITLE OBJECTIONS"), in which
case the Closing shall proceed in accordance with the terms of this Agreement.
If Sellers fail to cure any Material Title Objection on or prior to the Closing
Date, Purchaser shall have the right to terminate this Agreement in accordance
with the terms of SECTION 8.01(d)(iii)
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as a result of the Material Title Objections. The cost of any title policies
(and any endorsements thereto) issued pursuant to the Title Commitments shall be
paid by the Purchaser. The cost of any title searches and other expenses of the
Title Insurer (other than policy premiums and fees for any endorsements to such
policies) shall be paid by the Sellers. Purchaser acknowledges and agrees that
Sellers may furnish copies of the Title Commitments to other potential bidders
for the Real Property Assets and to any other Person in Sellers' sole and
absolute discretion.
(b) Sellers shall furnish to the Purchaser New Surveys with respect
to the Owned Real Property and the Leased Real Property (assuming that the
Cypress Village Ground Lease is to be assigned to the Purchaser in accordance
with the terms of this Agreement). Purchaser shall have the right to object to
any matters reflected on the New Surveys in accordance with SECTION 2.07(a). The
cost of the New Surveys shall be paid by the Sellers. Purchaser acknowledges and
agrees that Sellers may furnish copies of the New Surveys to other potential
bidders for the Real Property Assets and to any other Person in Sellers' sole
and absolute discretion.
(c) Sellers shall obtain and make available to the Purchaser copies
of commercially standard engineering and property condition reports prepared by
a nationally recognized provider of such reports (the "PROPERTY CONDITION
REPORTS") and Phase I environmental and mold assessment reports (the
"ENVIRONMENTAL REPORTS") with respect to the Owned Real Property and the Leased
Real Property (assuming that the Cypress Village Ground Lease is to be assigned
to the Purchaser in accordance with the terms of this Agreement). In addition,
Sellers shall obtain Property Condition Reports assessing the condition of any
capital improvements to the Equity Homes (based upon a representative sample
thereof) for which the Sellers are responsible pursuant to the Equity Homes
Servicing Agreements (the "EQUITY HOME ENGINEERING REPORT"). Purchaser shall
have the ability to consult with the preparers of the Property Condition Reports
and to comment on the substance of such reports. The cost of the Property
Condition Reports, the Equity Home Engineering Report and the Environmental
Reports shall be paid by the Sellers. Purchaser acknowledges and agrees that
Sellers may furnish copies of the Property Condition Reports, the Equity Home
Engineering Report and the Environmental Reports to other potential bidders for
the Real Property Assets and to any other Person in Sellers' sole and absolute
discretion.
Section 2.08 Intentionally Omitted.
Section 2.09 No Other Representations. No representation, warranty
or covenant made by Sellers in this Agreement or any document delivered pursuant
to this Agreement shall survive the Closing except as expressly provided in this
Agreement. Purchaser has not relied upon, and Sellers are not liable or bound in
any manner by, any verbal or written statements, representations, real estate
brokers' "set-ups" or information pertaining to the Real Property Assets
furnished by any real estate broker, agent, employee, servant to other Persons
unless the same are expressly set forth in this Agreement.
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Section 2.10 Partial Closing. SCHEDULE 2.10 sets forth a list of
three Facilities (the "DESIGNATED FACILITIES") and the portion of the purchase
price allocable with respect to each such Facility (the "DESIGNATED FACILITY
RELEASE PRICE") and also sets forth the purchase price allocable to Lenoir
Retirement Community and California Christian Home (which Facilities, coupled
with the Designated Facilities are hereinafter referred to as, the
"NON-ESSENTIAL FACILITIES"). Sellers shall have the right at any time prior to
the date which is thirty (30) days following the selection of the Successful Bid
to exclude from this Agreement one or more of the Designated Facilities and not
sell such Facilities to Purchaser, which thereupon shall not constitute an
Acquired Asset and shall not be transferred to the Purchaser hereunder and the
Purchase Price shall be reduced by the applicable Designated Facility Release
Price (and the Liabilities relating thereto shall constitute Excluded
Liabilities). In the event (i) all regulatory approvals contemplated hereby with
respect to the Facilities other than one or more of the Non-Essential Facilities
have been obtained (and all other conditions to the Contemplated Transactions
contemplated hereby with respect to such Facilities have been satisfied or
waived) and (ii) all regulatory approvals contemplated hereby with respect to
one or more of the Non-Essential Facilities have not been obtained, Sellers
shall have the right to promptly consummate the Contemplated Transactions with
respect to the Facilities other than such Non-Essential Facilities, subject to
an appropriate reduction in the Purchase Price based on the portion of the
Purchase Price allocable to such Non-Essential Facilities and Sellers' right
(for so long as this Agreement shall not have been terminated in accordance with
the terms hereof) to consummate the Contemplated Transactions with respect such
Non-Essential Facilities upon receipt such regulatory approvals (and
satisfaction or waiver of all other applicable conditions).
Section 2.11 Certain Purchaser Agreements.
(a) The Purchaser agrees, subject to the terms of this SECTION 2.11,
to (i) expend not less than $10,000,000 plus the cost of the Equity Home
Engineering Report (to a maximum of $500,000) (the "REFURBISHMENT AMOUNT"), on
an aggregate basis, for capital expenditures at the Real Property Assets and the
Equity Homes, which work shall be commenced during the twelve (12) month period
following the Closing and (ii) not increase the base rent and monthly service
fees payable by the current occupants of the independent living units at the
Facilities for one year following the Closing (the "RENT FREEZE"), provided, if
the average occupancy rate of any Facility is less than 98% of the occupancy
rate thereof as of the date hereof, then such Facility's Rent Freeze shall no
longer be applicable.
(b) The Refurbishment Amount may be used to perform the Deferred
Capital Expenditures and the remainder, if any (the "ADDITIONAL AMOUNT"), of the
Refurbishment Amount shall, subject to Section 2.11(c), be used by Purchaser to
perform additional capital expenditures at the Facilities, it being understood
that Purchaser may use the Additional Amount to perform any capital expenditures
at the Facilities as it sees fit and shall not be required to apply such sums to
the Deferred Capital Expenditures and will endeavor to consult with the
residents at the Facilities as to the type of capital
19
expenditures the Additional Amount shall be used for, provided the Additional
Amount shall be reduced to the extent provided in SECTION 2.11(c).
(c) If necessary, at Sellers' discretion, Sellers shall (in their
discretion, in connection with the filing of a plan of reorganization or
otherwise), in a timely manner, file appropriate pleadings with the Bankruptcy
Court seeking a determination (the "ESTIMATION HEARING") of the potential
liability, if any, of the Sellers in respect of the Resident Litigation and the
assumption and assignment of the Residency Agreements (to the extent the amount
of such liability as estimated by the Bankruptcy Court relates to Resident
Litigation and Deferred Capital Expenditures, the "RESIDENT DISPUTE AMOUNT"). At
the request of Sellers, the Purchaser shall deposit, at Closing, in an
appropriate escrow, the lesser of (x) the Resident Dispute Amount pursuant to
the terms of the Estimation Hearing and (y) the Additional Amount (such escrowed
amount the "RESIDENT ESCROW"). The Resident Escrow shall remain in escrow until
the earlier of (i) the time when Sellers and the residents agree in writing to a
resolution (the "RESIDENT DISPUTE RESOLUTION") of the Resident Litigation and
the assumption and assignment of the Residency Agreements for an amount (such
amount the "RESOLUTION AMOUNT") or (ii) entry of a final decision (the "FINAL
DECISION") of a court of an appropriate jurisdiction as to the damages amount
(the damages amount or the Resolution Amount shall be the "FINAL AMOUNT").
Provided the Final Amount is equal to or greater than the Resident Escrow then
the Resident Escrow shall be disbursed in accordance with the Resident Dispute
Resolution or Final Decision. If the Final Amount is less than the Resident
Escrow the Final Amount shall be disbursed in accordance with the Resident
Dispute Resolution or Final Decision and the remainder of the Resident Escrow
shall be released to Purchaser. In the event the Resident Escrow is equal to or
greater than $1,000,000, then Purchaser shall no longer provide the Rent Freeze
at any Facility. Notwithstanding the foregoing, if at any time prior to the
Estimation Hearing there is a Resident Dispute Resolution, then Purchaser shall
deposit, at Closing, in an appropriate escrow, the lesser of the Resolution
Amount or the Additional Amount, to be disbursed following Closing in accordance
with the terms of Resident Dispute Resolution. Subject to the last paragraph of
SECTION 1.04, it shall be a condition of any Resident Dispute Resolution or
Final Decision in which funds of Purchaser are otherwise used to pay a portion
of the Final Amount that Sellers agree to pay any portion of the awards used to
settle the Resident Litigation, not otherwise paid by Purchaser under this
SECTION 2.11. Any procedure for the deposit, escrow or disbursement of funds of
Sellers under this SECTION 2.11 shall be subject to the prior written approval
of Purchaser, such approval not to be unreasonably withheld, conditioned or
delayed.
(d) Purchaser shall apply all entrance fees and security deposits
and rights with respect thereto it receives pursuant to SECTIONS 1.01(l), (n),
(o) and (p) to satisfy the obligations in respect of which such funds were
segregated.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchaser that the
statements contained in this ARTICLE III (subject to the disclosures contained
in the Schedules delivered simultaneously with the execution hereof) are true
and correct as of the date hereof, and will be true and correct as of the
Closing Date as though made on the Closing Date.
Section 3.01 Incorporation, Qualification and Authority of Seller.
(a) The Company is a not-for-profit corporation duly formed, validly existing
and in good standing under the laws of the State of Missouri and each Company
Subsidiary is a not-for-profit corporation duly formed, validly existing and in
good standing under the law of the State identified on SCHEDULE I. Each Seller
has all requisite power and authority to operate its business as now conducted
and is duly qualified to do business, and is in good standing in each
jurisdiction where the character of its owned, operated or leased properties or
the nature of its activities makes such qualification necessary, except for
failures to so qualify or be in good standing that, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a Material
Adverse Effect. Subject to the approval of the Bankruptcy Court and the actions
of the Attorneys General of the states identified on SCHEDULE I, each Seller has
all requisite power to enter into, and to consummate the transactions
contemplated by, and to carry out its obligations under, each of the Transaction
Agreements to which such Seller is or will be a party. The execution and
delivery by each Seller of each of the Transaction Agreements to which such
Seller is or will be a party, and the consummation by each Seller of the
transactions contemplated by, and the performance by each Seller of its
obligations under, each of such Transaction Agreements have been duly authorized
by all requisite corporate action on the part of each Seller and its members.
This Agreement has been, and at the Closing, each of the other Transaction
Agreements to which each Seller is then a party will be, duly executed and
delivered by such Seller, and (assuming due authorization, execution and
delivery thereof by Purchaser) this Agreement constitutes, and as of the Closing
each of the other Transaction Agreements to which such Seller is then a party
will constitute, the legal, valid and binding obligations of such Seller
enforceable against it in accordance with their respective terms.
Section 3.02 No Conflict. Provided that any order relating to this
Agreement and the transactions contemplated hereby required under the Bankruptcy
Code (as hereinafter more specifically described) has been entered and is in
effect and provided that all consents, approvals, authorizations and other
actions described in SCHEDULE 3.03 have been obtained or taken, then, except as
otherwise provided in this ARTICLE III and except as may relate to any actions
taken or required to be taken by Purchaser or its Affiliates (as opposed to any
other third party), the execution, delivery and performance by Sellers of, and
the consummation by Sellers of the transactions contemplated by, this Agreement
and the other Transaction Agreements to which any Seller is or will be a party,
do not and will not (a) violate or conflict with the
21
organizational documents of such Seller, (b) conflict with or violate any Law or
other Order applicable to each Seller or by which any of them or any of their
respective properties or assets is bound or affected, or (c) result in any
breach of or loss of any contractual benefit under, or constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, or give to any Person any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Lien on the
Acquired Assets pursuant to, or the payment of any penalty or liquidated damages
under, any note, bond, loan or credit agreement, mortgage, indenture, contract,
agreement, lease, license, franchise or other material instrument to which
Sellers are a party or by which any of them or any of their respective
properties or assets is bound or affected, except, in the case of clause (c),
any such conflicts, violations, breaches, loss of contractual benefits,
defaults, rights or Liens, failure to obtain consents or approvals, or payments
that, individually or in the aggregate, do not have, and would not reasonably be
expected to have, a Material Adverse Effect.
Section 3.03 Consents and Approvals. Except as may relate to any
actions taken or required to be taken by Purchaser or its Affiliates (as opposed
to any other third party), the execution and delivery by Sellers of this
Agreement do not, and the execution and delivery by Sellers of the other
Transaction Agreements to which Sellers are or will be a party do not or will
not, and the performance by Sellers of, and the consummation by Sellers of the
transactions contemplated by, this Agreement and the other Transaction
Agreements to which Sellers are or will be a party will not, require any
consent, approval, license, permit, authorization, registration, or filing with
or notification to any Governmental Authority ("GOVERNMENTAL APPROVALS") except
(i) consents, approvals or authorizations of, or declarations or filings with,
the Bankruptcy Court; (ii) the filing of a notification and report form under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT") and the expiration or earlier termination of the applicable waiting period
thereunder; (iii) the consents listed on SCHEDULE 3.03 (each of the matters
referred to in the foregoing clauses (i), (ii) and (iii), collectively, a
"SELLER REQUIRED GOVERNMENTAL APPROVAL"); and (iv) where the failure to obtain
or make any or all of which could not reasonably be expected to prevent or
materially delay the consummation by Sellers of the transactions contemplated
by, or the performance by Sellers of any of their obligations under, any of the
Transaction Agreements to which Sellers are or will be a party or to have a
Material Adverse Effect.
Section 3.04 Real Property Assets.
(a) SCHEDULE 3.04(a) is a true and complete list identifying the
Owned Real Property and which of the Sellers is the owner thereof. Sellers have
made available to Purchaser with respect to each Owned Real Property the legal
address thereof and a general description thereof, a general description of the
improvements thereto and the uses being made thereof in the Business. Except as
set forth in SCHEDULE 3.04(a), the Seller listed on SCHEDULE 3.04(a) owns good
and marketable title in fee simple absolute to the Owned Real Property
identified on such Schedule and to all buildings, structures and other
improvements located thereon (collectively, together with the Company's right,
title and interest in and to the Leased Real Property and the buildings,
structures and
22
other improvements located thereon, the "FACILITIES"), in each case subject only
to the Permitted Encumbrances. Except as set forth on SCHEDULE 3.04(a), the
Sellers have complied in all material respects with all encumbrances, agreements
and other obligations which may be binding upon any of the Owned Real Properties
or to which any Owned Real Property may be subject, and none of Sellers is in
breach or default under, or in violation of or noncompliance with, in any
material respect, any such encumbrances, agreements or obligations and no event
has occurred and no condition or state of facts exists which, with the passage
of time or the giving of notice or both, would constitute such a breach,
default, violation or noncompliance. All public utilities, including water,
sewer, gas, electric, telephone and drainage facilities, give adequate service
to the Facilities, and each of the Facilities has access to and from publicly
dedicated streets, the responsibility for maintenance of which has been accepted
by the appropriate Governmental Authority. Complete and correct copies of any
surveys in any of the Sellers' possession and any policies of title insurance
currently in force and in the possession of any of Sellers with respect to each
such parcel have heretofore been or shall promptly be made available to
Purchaser. Subject to SECTION 9.02 and except as set forth in SCHEDULE 3.04(a),
neither the whole nor any part of any Owned Real Property is subject to any
pending suit for condemnation or other taking by any public authority, and, to
the Knowledge of Sellers, no such condemnation or other taking is threatened or
contemplated. Subject to SECTION 9.01, neither the whole nor any material part
(as defined in SECTION 9.01) of any Owned Real Property used, owned or occupied
by any of Sellers is subject to any casualty or loss that has not been repaired
and restored (and for which all costs in connection therewith have been paid in
full).
(b) A portion of the Facilities comprising the senior care
facilities commonly known as "CYPRESS VILLAGE" are located on land which is
leased by the Company pursuant to the terms of a ground lease described on
SCHEDULE 3.04(b), a true and complete copy of which Sellers have made available
to the Purchaser (such lease, as the same may be amended pursuant to SECTION
7.02(c), the "CYPRESS VILLAGE GROUND LEASE"). The Cypress Village Ground Lease
is the only lease of real property used in connection with the Business under
which a Seller is the tenant. No default has occurred and is continuing under
the Cypress Village Ground Lease (except to the extent there exists any default
related to the commencement of the Bankruptcy Cases). The Company has the right
to quiet enjoyment of the Leased Real Property for the full term of the Cypress
Village Ground Lease (and any renewal option), and the leasehold or other
interest of the Company in the Leased Real Property is not subject or
subordinate to any agreement or Encumbrance other than Permitted Encumbrances.
Complete and correct copies of any surveys in Sellers' possession and any
policies of title insurance currently in force and in Sellers' possession with
respect to the Leased Real Property have been or shall promptly be made
available by Sellers to Purchaser.
Section 3.05 Absence of Certain Changes. Since December 31, 2003,
Sellers have conducted the Business in the ordinary course consistent with past
practice, and there has not occurred any events, conditions or circumstances
that, individually or in the aggregate, have had, or would reasonably be
expected to have, a Material Adverse
23
Effect, except to the extent Purchaser had Knowledge of such events, conditions
or circumstances.
Section 3.06 Absence of Litigation. Except as set forth on SCHEDULE
3.06 (the "EXISTING LITIGATION MATTERS"), to the Knowledge of Sellers, there are
no Actions pending or threatened against Sellers and pertaining to the Business
or the Real Property Assets, other than claims filed in or adversary Action
commenced in the Bankruptcy Cases, which could reasonably be expected to prevent
or materially delay the consummation by Sellers of the transactions contemplated
by, or the performance by Sellers of any of their obligations under, any of the
Transaction Agreements to which Sellers are or will be a party or to have a
Material Adverse Effect.
Section 3.07 Compliance with Laws. Excluding Environmental Laws and
Orders arising under Environmental Laws (which are covered in SECTION 3.11) and
Tax laws, none of the Sellers is in violation of any Laws or Orders applicable
to it or the Acquired Assets which (i) could reasonably be expected to prevent
or materially delay the consummation by Sellers of the transactions contemplated
by, or the performance by Sellers of any of their obligations under, any of the
Transaction Agreements to which Sellers are or will be a party or to have a
Material Adverse Effect or (ii) otherwise affect in any material respect the
ownership, use or operation of any of the Facilities. Sellers are not party to,
or bound by, and the Facilities are not bound by, any Order that affects in any
material respect the ownership, use or operation of the Business or any of the
Facilities.
Section 3.08 Certificates of Need or Provider Agreements. Except as
described in SCHEDULE 3.08, no Certificates of Need (hereinafter defined) or
Provider Agreements (hereinafter defined) are used or required in connection
with the ownership, operation and maintenance of any of the Facilities. Each
Certificate of Need and Provider Agreement (hereinafter defined) applicable to a
Facility is valid, binding and in full force and effect according to its terms.
For purposes of this Agreement, the term "PROVIDER AGREEMENTS" shall mean any
provider agreements held by or issued to Sellers under which the Seller is in
respect of the applicable Facility eligible to receive payment under Title XVII
("MEDICARE"), Title XIX ("MEDICAID") or any other governmental or
quasi-governmental third party payor programs or any private or quasi-private
healthcare reimbursement or private payor programs (including so-called "HMO"
and "PPO" programs) ("THIRD PARTY PAYOR PROGRAMS") as well as any other
agreement, arrangement, program or understanding with any federal, state or
local governmental agency or organization or private organization pursuant to
which the applicable Facility qualifies for payment or reimbursement for medical
or therapeutic care or other goods or services rendered or supplied to any
resident. For purposes of this Agreement, the term "CERTIFICATE OF NEED" shall
mean a certificate of need or similar permit or approval (not including
conventional building permits or health care licenses) from a Governmental
Authority related to the construction and/or operation of any Facility for the
use of a specified number of beds in a nursing facility, assisted living
facility and/or rehabilitation hospital, or alteration of the applicable
Facility or modification of services provided at the applicable Facility.
Notwithstanding anything contained herein, upon written notice to
24
the Sellers given at least five (5) Business Days prior to the Closing,
Purchaser may elect not to assume any or all of the Provider Agreements at
Closing.
Section 3.09 Residency Agreements; Commercial Leases. (a) The
Sellers have made available to the Purchaser each form of Residency Agreement
currently in effect at the Facilities known as Cypress Village, ▇▇▇▇▇ Run
Retirement Home, Foxwood Springs Living Center, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Home,
Kansas Christian Home, Lenoir Retirement Community and Oklahoma Christian
Retirement Community, with respect to any occupant of such Facilities who paid
an entrance fee in connection with becoming an occupant of such Facility (each
an "ENTRANCE FEE RESIDENT"). Sellers represent and warrant that, as of August
25, 2004, they had posted on the "Project NBA" intralinks website all forms of
Residency Agreements in effect with the Entrance Fee Residents and, with respect
to each Entrance Fee Resident, such forms have not been materially amended,
modified or supplemented. SCHEDULE 3.09(a) lists the Entrance Fee Residency
Agreement Forms for Cypress Village that have been amended by the letter
agreement attached hereto as EXHIBIT 3.09.
(b) Sellers represent and warrant that, as of August 25, 2004, they
had posted on the "Project NBA" intralinks website a rent roll (or equivalent
information) with respect to each Facility (collectively, the "RENT ROLLS").
Such rent roll is true, complete and correct as of the date printed thereon in
all material respects, and, with respect to each unit at each facility, sets
forth the type of unit (and/or level of care provided at each such unit), the
original move-in-date of the applicable occupant and all rent, fees and charges
payable by such occupant on a monthly basis. No unit within any Facility is
leased or reserved for lease as an affordable housing unit, or for low or
moderate-income residents, pursuant to a presently existing agreement or
requirement of law. Except as set forth in the Residency Agreements, there are
no agreements or orders of any court or Governmental Authority restricting the
amount of rent that may be charged to residents at the Facilities.
(c) SCHEDULE 3.09(c) is a true, correct and complete, in all
material respects, list of all Commercial Leases that are currently in effect,
including any amendments, modifications and supplements thereto, and any related
guaranties, and true and complete copies thereof have been made available to
Purchaser. Except as otherwise indicated on SCHEDULE 3.09(c), (i) Sellers have
not received any written notice from any tenant under any currently effective
Commercial Lease that Sellers are in default in any material respect of any
material obligations of Sellers to such Tenant under such Commercial Lease which
default has not been cured, (ii) Sellers have not delivered any written notice
to a tenant under a Commercial Lease that such tenant is in default in any
material respect of any material obligations of such Tenant under such
Commercial Lease which default has not been cured and (iii) no tenant is
entitled to rent concessions, free rent periods, rebates, rent abatements,
rights of set-off or offset against rent except, in each case, as set forth in
SCHEDULE 3.09(c).
(d) Except as otherwise indicated on SCHEDULE 3.09(d), none of the
Commercial Leases or any other agreements that will be binding on Purchaser
restrict or
25
limit the Persons that can own or operate the Real Property Assets, or require
that the Real Property Assets, or any portion thereof, be used for a charitable
or religious purpose.
(e) Each unit listed on the Rent Rolls as a "Home" at the Facilities
known as Cypress Village, Foxwood Springs, ▇▇▇▇▇ Run Village and Village at
Skyline represents a separate residence owned in fee simple by the occupant
thereof (each an "EQUITY HOME"). The owner of the Real Property Assets at each
of Cypress Village, Foxwood Springs, ▇▇▇▇▇ Run Village and Village at Skyline is
not a party to any agreements or understandings with the owners of the Equity
Homes other than the agreements described in SCHEDULE 3.09(e). SCHEDULE 3.09(e)
is a true, correct and complete, in all material respects, list of such
agreements that are currently in effect, including any amendments, modifications
and supplements thereto, and true and complete copies thereof have been made
available to Purchaser.
Section 3.10 Governmental Licenses and Permits. (a) Excluding
Environmental Permits (representations as to which are set forth in SECTION
3.11), each of the Sellers holds all governmental qualifications, registrations,
filings, licenses, permits, orders, approvals or authorizations necessary to
conduct the Business and to own or use the Acquired Assets, as the Business is
conducted and the Acquired Assets are owned and used on the date hereof, where
such qualification, registration, filing, license, permit, order, approval or
authorization is material to the conduct of the Business at a Facility
(collectively, the "MATERIAL PERMITS").
(b) All Material Permits are valid and in full force and effect in
all material respects. Except as set forth in SCHEDULE 3.10(b) and excluding
Environmental Permits (representations as to which are set forth in SECTION
3.11), none of Sellers is in default or violation of any of the Material Permits
in any material respect. Except as set forth in SCHEDULE 3.10(b), (i) no
Material Permit has been revoked, non renewed, terminated or impaired in any
material respect, (ii) none of Sellers currently is the subject of any pending
or, to the Knowledge of the Sellers, threatened Action seeking the revocation,
suspension, non-renewal, termination, modification or impairment of any Material
Permit in any material respect, and (iii) to the Knowledge of Sellers, there is
no existing condition of any of Sellers, nor has any of Sellers received any
notice from any Governmental Authority of any fact or condition, which, if left
uncured, would result in the revocation, limitation, suspension or non-renewal
of any Material Permit. Except as set forth in SCHEDULE 3.10(b), none of Sellers
is operating under an Order or voluntary agreement with any regulatory
authorities of any jurisdiction in which it now holds a Material Permit which
restricts in any material respect its authority to do the Business authorized
pursuant to such Material Permit or which would prohibit or materially delay the
consummation of the transactions contemplated hereby. Subject to obtaining the
consents set forth in SCHEDULE 3.03, none of the Material Permits will be
subject to revocation, limitation, suspension, non-renewal, withdrawal,
termination or modification as a result of the consummation of the transactions
contemplated hereby, except where such revocation, limitation, suspension,
non-renewal, withdrawal, termination or modification, individually or in the
aggregate, would not reasonably be expected to have a material and adverse
effect on any Real Property Asset.
26
Section 3.11 Environmental Matters. (a) True and complete copies of
all environmental reports, investigations and audits (whether conducted by or on
behalf of the Sellers or a third party, and whether done at the initiative of
the Sellers or directed by a Governmental Authority or other third party) that
were issued during the past five years relating to the Real Property Assets have
been delivered or otherwise made available to the Purchaser. Except as described
in SCHEDULE 3.11, (i) none of the Sellers is subject with respect to a Real
Property Asset to a written notice or written request for information or order
from or agreement with a Governmental Authority or third party respecting a
Release or threatened Release or the violation of any Environmental Law; (ii) to
the Knowledge of Sellers, there has been no Release on, at or under any Real
Property Asset, while owned, leased or otherwise used by any of Sellers, or
arising out of the conduct by Sellers of their respective business or previously
that would reasonably be expected to result in the imposition of any material
liability to any of Sellers under the Environmental Laws; (iii) to the Knowledge
of Sellers, there has been no Release at any parcels of real property other than
any real property referred to in clause (ii) that, individually or in the
aggregate, would reasonably be expected to have a material and adverse effect on
any Real Property Asset or Sellers or the Business; (iv) to the Knowledge of
Sellers, none of the Real Property Assets is subject to any Lien in favor of any
Governmental Authority for (A) any material liability under any Environmental
Laws or (B) material costs incurred by a Governmental Authority in response to a
Release or threatened Release; (v) to the Knowledge of Sellers, no radon, lead
paint, or lead in drinking water is present at any Real Property Asset at any
level which is in violation of any Environmental Law or which could reasonably
be expected to present a significant risk to human health or the structure
within which such radon, lead paint, or lead is present; (vi) to the Knowledge
of Sellers, no underground storage tanks, PCBs, asbestos, or asbestos-containing
materials are present at any Real Property Asset and the Sellers do not have any
mold-related liabilities (for remediation, third-party tort claims or otherwise)
at any of the Real Property Assets; (vii) with respect to any of the Real
Property Assets, there are no material Actions pending or, to the Knowledge of
the Sellers, threatened, arising under or relating to an Environmental Law or
Hazardous Materials or the making of any claim based on an Environmental Law for
personal injury, wrongful death or property damage; (viii) to the Knowledge of
Sellers, the Sellers have operated and are operating their respective businesses
in compliance in all material respects with applicable Environmental Laws; and
(ix) to the Knowledge of Sellers, Sellers have obtained all material
Environmental Permits that are necessary in connection with the operation of the
Business as conducted on the date of this Agreement on the premises of the Real
Property Assets, all such permits are in good standing and Sellers are in
compliance in all material respects with the terms and conditions of such
permits.
Section 3.12 Material Contracts. (a) SCHEDULE 3.12(a) lists each of
the Material Contracts as in effect on the date of this Agreement and, where
applicable, the applicable Real Property Asset to which they relate.
(b) Each Material Contract is a legal, valid and binding obligation
of the applicable Seller and, to the Knowledge of the Seller, each other party
to such
27
Material Contract, and is enforceable against such applicable Seller and, to the
Knowledge of the Sellers, each such other party, in accordance with its terms
(except in each case as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other Laws regarding fraudulent conveyances and preferential
transfers, and subject to the limitations imposed by general equitable
principles (whether or not such enforceability is considered in a proceeding at
law or in equity)), and, except as described in SCHEDULE 3.12(b), none of the
Sellers or, to the Knowledge of the Sellers, any other party to a Material
Contract is in material default or material breach or has failed to perform any
material obligation under a Material Contract, and, to the Knowledge of the
Sellers, there does not exist any event, condition or omission that would
constitute such a material breach or material default (whether by lapse of time
or notice or both), or give to the other party thereto any rights of
termination, amendment, acceleration or cancellation of, or result in the
payment of any penalty or liquidated damages under, a Material Contract, other
than any arising by virtue of the Sellers' commencement of the Bankruptcy Cases.
Section 3.13 Regulatory Filings. Sellers have made available for
inspection by Purchaser (i) each annual statement required to be filed with or
submitted to any Governmental Authority having regulatory authority over the
Business by each Seller since January 1, 1999 and (ii) any reports of
examination (including financial, market conduct and similar examinations) of
each Seller issued by any such regulatory authority, in any case, since January
1, 1999. Except as set forth in SCHEDULE 3.13, all material deficiencies or
violations noted in the examination reports described in clause (ii) above have
been resolved to the material satisfaction of the regulatory department that
noted such deficiencies or violations. Each Seller has filed all material
reports, statements, documents, registrations, filings or submissions required
to be filed with any Governmental Authority since January 1, 1999. All such
registrations, reports, statements, documents, filings and submissions were in
material compliance with applicable Laws when filed, and, except as described in
SCHEDULE 3.13, no material deficiencies have been asserted by any such
Governmental Authority or other regulatory body with respect to such
registrations, filings or submissions that have not been or are not in the
process of being satisfied. The representations and warranties contained in this
SECTION 3.13 shall not apply to Taxes and Tax Returns.
Section 3.14 Employee Benefits; Employees. (a) Except as set forth
in SCHEDULE 3.14(a), none of Sellers and their respective ERISA Affiliates has
any (i) "employee benefit plans," as defined in Section 3(3) of ERISA, or (ii)
incentive, profit-sharing, stock option, stock purchase, other equity-based,
employment, consulting, compensation, vacation or other leave, change in
control, retention, supplemental retirement, termination, severance, health,
medical, disability, life insurance, deferred compensation and other employee
compensation and benefit plans, programs, policies, agreements, arrangements and
practices, in each case established or maintained by Sellers, or any of its
ERISA Affiliates or to which Sellers or any of their ERISA
28
Affiliates contributed or is obligated to contribute thereunder, for the benefit
of any of the current employees of Sellers (collectively, the "BENEFIT PLANS").
(b) None of Sellers and their respective ERISA Affiliates has
sponsored, maintained, contributed to or been obligated to contribute to any
Benefit Plan subject to Section 412 of the Code, Section 302 of ERISA, or Title
IV of ERISA within the six years prior to the Closing Date. All contributions
required to be made with respect to any Benefit Plan have been timely made.
There are no pending, threatened or anticipated claims by or on behalf of any
Benefit Plan, by any employee or beneficiary covered under any such Benefit Plan
with respect to such plan, or otherwise involving any such Benefit Plan (other
than routine claims for benefits). With respect to the Benefit Plans,
individually and in the aggregate, no event has occurred and, to the Knowledge
of Sellers, there exists no condition or set of circumstances in connection with
which Purchaser could be subject to any liabilities under ERISA, the Code or any
other applicable Law (including the law of contracts).
(c) Each of Sellers and their respective ERISA Affiliates (i) is in
compliance in all material respects with all applicable Laws respecting the
Benefit Plans, employment, employment practices, terms and conditions of
employment and wages and hours, and (ii) has withheld all amounts required by
applicable Laws or by agreement to be withheld from the wages, salaries and
other payments to such current and former employees and independent contractors,
except where the failure to do so would have a Material Adverse Effect.
(d) Each Benefit Plan intended to be "qualified" within the meaning
of Section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under Section 501(a) of the Code. Neither
Sellers, any of their ERISA affiliates, any Benefit Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which Sellers, any of their ERISA affiliates, any
Benefit Plan, any such trust or any trustee or administrator thereof could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.
(e) For purposes of this Agreement, "ERISA AFFILIATE" shall mean any
Person that would be treated as a single employer or under common control with
the Company under Section 4001 of ERISA or Section 414 of the Code.
(f) Sellers are neither party to, nor bound by, any labor agreement,
collective bargaining agreement, work rules or practices, or any other
labor-related agreements or arrangements with any labor union, labor
organization or works council with respect to employees of the Business; there
are no labor agreements, collective bargaining agreements, work rules or
practices, or any other labor-related agreements or arrangements that pertain to
any of the employees of the Business in their capacity as employees of Sellers;
and no employees of the Business in their capacity as employees of Sellers are
represented by any labor organization.
29
(g) No labor union, labor organization, works council, or group of
employees of the Business has made a pending demand for recognition or
certification with respect to Sellers, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or
authority. Sellers have no Knowledge of any labor union organizing activities
with respect to any employees of Business in their capacity as employees of
Sellers.
(h) From January 1, 2000 to the date of this Agreement, there have
been no actual or, to the knowledge of Sellers, threatened material
arbitrations, material grievances, labor disputes, strikes, lockouts, slowdowns
or work stoppages against or affecting the Business.
(i) With respect to the Business, Sellers are in compliance in all
material respects with all Applicable Laws respecting employment and employment
practices, including all Laws respecting terms and conditions of employment,
health and safety, wages and hours, child labor, immigration, employment
discrimination, disability rights or benefits, equal opportunity, plant closures
and layoffs, affirmative action, workers' compensation, labor relations,
employee leave issues and unemployment insurance. Sellers and their respective
employees, agents or representatives have not committed any material unfair
labor practice as defined in the National Labor Relations Act with respect to
employees of the Business.
Section 3.15 Personal Property Assets. The Company Subsidiaries own
or lease all equipment, furniture, machinery, furnishings, appliances, tools,
spare parts, supplies and other tangible personal property (other than fixtures
appurtenant to real property) necessary for the conduct of the Businesses. Each
Company Subsidiary (i) has good title to all such personal property that it
purports to own, free and clear of all Encumbrances other than Permitted
Encumbrances, and (ii) has a valid leasehold interest in or valid rights under
contract to use such personal property that it purports to lease or license.
Sellers are in possession of all such personal property and, immediately after
the Closing, such personal property will be substantially all of the personal
property that is located in the Facilities and necessary for use in the conduct
of the Business in the ordinary course.
Section 3.16 Insurance. SCHEDULE 3.16 sets forth a true and complete
list of all current policies of property and liability insurance covering
Sellers and pertaining to the Business and true and complete copies thereof have
been made available to Purchaser. Except as set forth on SCHEDULE 3.16, none of
the insurance policies covering the Company and the Company Subsidiaries
provides for claims to be made on an occurrence or equivalent basis. With
respect to the Business, each Seller is, and at all times has been, covered on
an uninterrupted basis by valid and effective insurance policies or binders
which are in full force and effect (and all premiums due and payable thereon
have been paid in full on a timely basis), and no written notice of
cancellation, termination, revocation or limitation or other indication that any
insurance policy is no
30
longer in full force or effect or that the issuer of any policy is not willing
or able to perform its obligations thereunder has been received by any of
Sellers, and, to the Knowledge of Sellers, none of Sellers is in default of any
provision thereof, except for such defaults that, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect.
Section 3.17 Taxes. Each of Sellers is an organization described in
Section 501(c)(3) of the Code, and is generally exempt from Federal income Tax
pursuant to Section 501(a) of the Code and has paid all material Taxes required
to be paid in respect of the Business to the extent due and payable, except for
any such Tax that is currently being contested in good faith and for which
adequate reserves have been established.
Section 3.18 Health Care Regulatory Compliance
(a) No Litigation Relating to Licensing Matters. None of Sellers is
involved in any litigation, proceeding, or investigation (by or with any Person,
resident, Governmental Authority) which, if determined or resolved adversely,
would have a material adverse impact on the conduct of the Business or the
operation of the Acquired Assets.
(b) No Violations. To the Knowledge of Sellers, none of Sellers, nor
any of the Real Property Assets, is the subject of any proceeding by any
Governmental Authority, and no notice of any violation has been issued, or, to
the Knowledge of the Sellers, will be issued, by a Governmental Authority that
would, directly or indirectly, or with the passage of time, (i) impact Seller's
ability to accept and/or retain residents at Facility, (ii) have a material and
adverse effect on any of Sellers' ability to accept and/or retain residents or
operate any Facility or result in the imposition of a material fine or for
services rendered to eligible residents, or (iii) modify, limit or annul or
result in the transfer, suspension, or revocation or imposition of probationary
use of any license or permit necessary for the operation of the Facility.
(c) Fraud and Abuse. The Sellers, and, to the knowledge of the
Sellers, their respective officers, directors, trustees, employees, shareholders
and providers, have not knowingly engaged in any activities that are prohibited
under (i) statutes, 42 U.S.C. Section 1320a-7a and 7b, or the regulations
promulgated pursuant to such statutes or similar or related state or local
statutes or regulations or (ii) by rules of professional conduct or which
otherwise constitute fraud, including the following: (w) making or causing to be
made a false statement or misrepresentation of a material fact in any
application for any benefit or payment; (x) making or causing to be made any
false statement or misrepresentation of a material fact for use in determining
rights to any benefit or payment; (y) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on its behalf or on behalf of another, with intent to
secure such benefit or payment fraudulently; and (z) soliciting, paying or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind or offering to pay
31
such remuneration (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by the Federal Health Care Programs (as
defined below) or any private payor source or (b) in return for purchasing,
leasing, or ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service, or item for which payment may be made in
whole or in part by the Federal Health Care Programs or any private payor
source. For the purposes of this Agreement, the term "FEDERAL HEALTH CARE
PROGRAMS" means the Medicare program, the Medicaid program and the TRICARE
program.
(d) Third-Party Payors. All contracts with third-party payors were
entered into by the Sellers in the ordinary course of business. The Sellers have
properly charged and billed in accordance with the terms of those contracts,
including, where applicable, billing and collection of all deductibles and
co-payments, except to the extent that any failure to be in compliance or
properly charge and ▇▇▇▇ could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(e) HIPAA Compliance. The Sellers are in compliance, to the extent
currently applicable, with the Administrative Simplification provisions of the
Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and all
regulations promulgated pursuant to HIPAA, including the Transaction Code Set
Standards, the Privacy Rules and the Security Rules set forth at 45 C.F.R. Parts
160 and 164, except to the extent that any failure to be in compliance could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.19 Life Safety Code Compliance. The Facilities comply in
all material respects with all requirements of the life safety code as
applicable. Except as described in SCHEDULE 3.19, no waivers, temporary or
otherwise, are in effect regarding compliance with the life safety code for any
of the Facilities.
Section 3.20 Brokers. Other than ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ (the
"TRANSACTION BROKER"), neither Sellers nor any of their respective Affiliates
has any obligation to any broker or finder or has incurred any liability for any
investment banking fees, brokerage fees, commissions or finders' fees in
connection with the Contemplated Transactions, and neither Purchaser nor its
Affiliates has or could have any liability for such fees. The Transaction
Broker's fees shall be paid at Closing by Sellers as a cost of the Contemplated
Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
Section 4.01 Incorporation and Authority of Purchaser. Purchaser is
a Delaware limited liability company duly formed, validly existing and in good
standing
32
under the Laws of the State of Delaware and has all requisite limited liability
company power to enter into, and to consummate the transactions contemplated by,
and to carry out its obligations under, each of the Transaction Agreements to
which Purchaser is or will be a party. The execution and delivery by Purchaser
of each of the Transaction Agreements to which Purchaser is or will be a party,
and the consummation of the Contemplated Transactions, and the performance by
Purchaser of its obligations under each such Transaction Agreements, have been
duly authorized by all requisite action on the part of Purchaser. This Agreement
has been, and at the Closing each of the Transaction Agreements to which
Purchaser is then a party will be, duly executed and delivered by Purchaser, and
(assuming due authorization, execution and delivery thereof by Sellers) this
Agreement constitutes, and as of the Closing each of the other Transaction
Agreements to which Purchaser is then a party will constitute, the legal, valid
and binding obligations of Purchaser enforceable against Purchaser in accordance
with their respective terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance or similar Laws
relating to or affecting creditors' rights generally and subject, as to
enforceability, to the effect of general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.02 Qualification of Purchaser. Purchaser has all requisite
power and authority to operate its business as now conducted and is duly
qualified to do business and, to the extent legally applicable, is in good
standing in each jurisdiction where the character of its owned, operated or
leased properties or the nature of its activities makes such qualification
necessary, except for such failures as would not materially impair or delay the
ability of Purchaser to consummate the transactions contemplated by, or perform
its material obligations under, the Transaction Agreements to which Purchaser is
or will be a party.
Section 4.03 No Conflict. Provided that any order relating to this
Agreement and the transactions contemplated hereby required under the Bankruptcy
Code (as hereinafter specifically described) has been entered and is in effect
and provided that all consents, approvals, authorizations and other actions
described in SECTION 4.04 have been obtained or taken, and except as may result
from any actions taken or required to be taken by Sellers or their Affiliates
(as opposed to any other third party), the execution, delivery and performance
by Purchaser of, and the consummation by Purchaser of the transactions
contemplated by, this Agreement and each of the other Transaction Agreements to
which Purchaser is or will be a party, do not and will not (a) violate or
conflict with the organizational documents of Purchaser, (b) conflict with or
violate any Law or other Order applicable to Purchaser or (c) result in any
breach of, or constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, or give to any Person any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any Lien on any of the assets or properties of Purchaser
pursuant to, any note, bond, loan or credit agreement, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other material
instrument to which Purchaser or any of its Affiliates is a party or by
33
which any of them or any of their respective assets or properties is bound or
affected, except, in the case of clause (c), any such conflicts, violations,
breaches, loss of contractual benefits, defaults, rights or Liens as would not
materially impair or delay the ability of Purchaser to consummate the
transactions contemplated by, or perform its material obligations under, any of
the Transaction Agreements to which Purchaser is or will be a party.
Section 4.04 Consents and Approvals. Except as may relate to any
actions taken or required to be taken by Sellers or their Affiliates (as opposed
to any other third party), the execution and delivery by Purchaser of this
Agreement do not, and the execution and delivery by Purchaser of the other
Transaction Agreements to which Purchaser is or will be a party do not or will
not, and the performance by Purchaser of, and the consummation by Purchaser of
the transactions contemplated by, each of the Transaction Agreements to which
Purchaser is or will be a party will not, require any Governmental Approval,
except (i) consents, approvals or authorizations of, or declarations or filings
with, the Bankruptcy Court; (ii) the filing of a notification and report form
under the HSR Act, and the expiration or earlier termination of the applicable
waiting period thereunder (each of the matters referred to in the foregoing
clauses (i) and (ii), a "PURCHASER REQUIRED GOVERNMENTAL APPROVAL"); and (iii)
where the failure to obtain such Governmental Approval could not reasonably be
expected to prevent or materially delay Purchaser from consummating the
transactions contemplated by, or performing any of its material obligations
under, any of the Transaction Agreements to which Purchaser is or will be a
party.
Section 4.05 Financial Ability. Purchaser (i) has, and at the
Closing will have, sufficient funds (without giving effect to any unfunded
financing regardless of whether any such financing is committed) available to
pay the Closing Amount and any fees or expenses incurred by Purchaser in
connection with the Contemplated Transactions, (ii) has, and at the Closing will
have, the resources and capabilities (financial or otherwise) to perform its
obligations hereunder, and (iii) has not incurred any obligation, commitment,
restriction or Liability of any kind, which would materially impair or adversely
affect such resources and capabilities.
Section 4.06 Brokers. Neither Purchaser nor any of its Affiliates
has employed any broker or finder or incurred any liability for any investment
banking fees, brokerage fees, commissions or finders' fees in connection with
the transactions contemplated by this Agreement for which Sellers or any of
their Affiliates has or could have any liability.
Section 4.07 Litigation. There are no Legal Proceedings pending or,
to the knowledge of Purchaser, threatened against Purchaser, or to which
Purchaser is otherwise a party before any Governmental Authority, which, if
adversely determined, would reasonably be expected to have a material adverse
effect on the ability of Purchaser to perform its obligations under this
Agreement or the other Transaction Agreements or to consummate the Contemplated
Transactions. Purchaser is not subject to any Order except to the extent the
same would not reasonably be expected to have a
34
material adverse effect on the ability of Purchaser to perform its obligations
under this Agreement or the other Transaction Agreements to which it is or will
be party or to consummate the Contemplated Transactions.
Section 4.08 Health Care Regulatory Compliance.
(a) No Litigation Relating to Licensing Matters. To the Knowledge of
the Purchaser, neither Purchaser nor the Manager nor any of their Affiliates is
involved in any litigation, proceeding, or investigation (by or with any Person,
resident or Governmental Authority) which, if determined or resolved adversely,
would have a adverse impact on the ability of Purchaser to obtain or maintain
any governmental qualifications, registrations, filings, licenses, permits,
orders, approvals or authorizations necessary for Purchaser or the Manager to
conduct the Business and to own or use the Real Property Assets, as the Business
is conducted and the Real Property Assets are owned and used on the date hereof,
where the failure to have such qualifications, registrations, filings, licenses,
permits, orders, approvals or authorizations could reasonably be expected to
prevent or materially delay the consummation of the Contemplated Transactions or
the performance by Purchaser or the Manager of any of their obligations under
any of the Transaction Agreements to which either of them are or will be a
party.
(b) Fraud and Abuse. The Purchaser and the Manager, and, to the
knowledge of the Purchaser, their respective officers, directors, employees,
shareholders and providers, have not knowingly engaged in any activities that
are prohibited under (i) statutes, 42 U.S.C. Section 1320a-7a and 7b, or the
regulations promulgated pursuant to such statutes or similar or related state or
local statutes or regulations or (ii) by rules of professional conduct or which
otherwise constitute fraud, including the following: (w) making or causing to be
made a false statement or misrepresentation of a material fact in any
application for any benefit or payment; (x) making or causing to be made any
false statement or misrepresentation of a material fact for use in determining
rights to any benefit or payment; (y) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on its behalf or on behalf of another, with intent to
secure such benefit or payment fraudulently; and (z) soliciting, paying or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, overtly or covertly, in cash or in kind or offering to pay such
remuneration (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by the Federal Health Care Programs (as
defined above) or any private payor source or (b) in return for purchasing,
leasing, or ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service, or item for which payment may be made in
whole or in part by the Federal Health Care Programs or any private payor
source.
Section 4.09 Acknowledgement Regarding Condition of the Business.
Notwithstanding anything contained in this Agreement to the contrary, Purchaser
acknowledges and agrees that Sellers are not making any representations or
warranties
35
whatsoever, express or implied, beyond those expressly given by Sellers in
ARTICLE III hereof, and Purchaser acknowledges and agrees that, except for the
representations and warranties contained therein, the Acquired Assets and the
Business are being transferred on a "where is" and, as to condition, "as is"
basis. Any claims Purchaser may have for breach of representation or warranty
shall be based solely on the representations and warranties of Sellers set forth
in ARTICLE III hereof. Purchaser further acknowledges that none of the Sellers
or any of their Affiliates or any other Person has made any representation or
warranty to Purchaser, express or implied, as to the accuracy or completeness of
any information regarding Sellers or any of their subsidiaries, the Business or
the Contemplated Transactions not expressly set forth in this Agreement, and
none of Sellers, any of their Affiliates or any other Person will have or be
subject to any liability to Purchaser or any other Person resulting from the
distribution to Purchaser or its representatives or Purchaser's use of, any such
information, including any confidential memoranda distributed on behalf of any
Seller relating to the Business or the Acquired Assets or other publications or
data room information provided to Purchaser or its representatives, or any other
document or information in any form provided to Purchaser or its representatives
in connection with the sale of the Business and the Acquired Assets and the
Contemplated Transactions except in the case of fraud or intentional
misrepresentation. Purchaser acknowledges that it has conducted to its
satisfaction, its own independent investigation of the Business and the Acquired
Assets and, in making the determination to proceed with the Contemplated
Transactions, Purchaser has relied on the results of its own independent
investigation.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Conduct of Business Prior to the Closing. Subject to
any obligations as a debtor in possession under the Bankruptcy Code, prior to
the Closing Date, each Seller shall use its commercially reasonable efforts to
preserve intact and operate in the ordinary course the Business consistent with
past practice, including meeting its post-Petition Date obligations as they
become due, in each instance taking into account the filing of the Petitions,
the directives of the Bankruptcy Court and the additional covenants and
agreements set forth herein; provided that the foregoing shall not prevent
Sellers from rejecting Contracts that are not Assumed Contracts being assumed by
Purchaser hereunder. Except as otherwise contemplated under this Agreement or
set forth in SCHEDULE 5.01, from the date hereof until the Closing Date, without
the prior written consent of Purchaser each Seller shall not, solely as it
relates to the Business:
(a) amend its certificate of incorporation or by-laws (or other
comparable organizational documents);
(b) merge or consolidate with any other Person;
36
(c) sell, lease, exchange, or otherwise dispose of any Acquired
Assets (other than transactions occurring in the ordinary course of business
consistent with past practice) and subject to SECTION 5.01(n) with respect to
Residency Agreements and Commercial Leases, for which the aggregate
consideration paid or payable in any individual transaction is in excess of
$25,000 or in the aggregate in excess of $100,000, or sell any Equity Home owned
by Sellers;
(d) incur any financial indebtedness for borrowed money from third
party lending sources (other than current trade accounts payable incurred in
respect of property or services purchased in the ordinary course of business
consistent with past practices) or assume, grant, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances (other than, in each case, in the ordinary
course of business consistent with past practice or which will otherwise be
repaid prior to the Closing or which constitutes an Excluded Liability);
(e) except in the ordinary course of business and consistent with
past practice, enter into or amend (in any material respect) or, other than
pursuant to its current terms, terminate, renew or extend any Material Contract
relating to an Acquired Asset;
(f) in the case of a Company Subsidiary or with respect to any
Facility, enter into any new line of business or introduce any new product or
service that is unrelated to the Business;
(g) enter into, amend, terminate (other than pursuant to its current
terms), renew or extend any contract, agreement, lease, license, commitment,
instrument, arrangement, relationship or understanding with any Affiliate of a
Seller including any stockholder, member, director, trustee or officer of a
Seller (or any of their respective family members or Affiliates), except for
transactions in the ordinary course of the Business consistent with past
practice between Company Subsidiaries or between a Company Subsidiary and the
Company;
(h) subject to SECTION 5.01(p), settle or compromise any Action or
Proceeding or threatened Action or Proceeding relating to the Business, except
in each case for (1) claims under policies and certificates of insurance within
applicable policy limits, (2) claims not in excess of $50,000 so long as any
such claims will not adversely affect any of the Acquired Assets and (3) any
action, claim or proceeding referred to in SECTIONS 1.02(l) OR 5.14;
(i) subject to SECTION 5.01(p), pay, discharge or satisfy any
liabilities or obligations relating to the Business, other than payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practice;
37
(j) enter into any agreement relating to the ownership and operation
of the Acquired Assets, unless such agreement shall be fully cancelable or
terminable without penalty on seventy-five (75) days' notice;
(k) allow any Acquired Asset to become subject to any Encumbrance
other than a Permitted Encumbrance;
(l) in the case of a Company Subsidiary, directly or indirectly
acquire assets of any Person other than in the ordinary course of business or
offer to sell, or solicit any offers to purchase or negotiate for the sale or
disposal of any Acquired Asset with any Person other than Purchaser other than
immaterial personal property;
(m) create or allow any severance obligation for Purchaser or any
Seller with respect to any employee who may become a Transferred Employee,
except for obligations that are Excluded Liabilities;
(n) enter into or amend, modify, extend or terminate any Property
Agreement or any other Assumed Contract, except in the ordinary course of the
Business, on market terms, consistent with past practice, provided that, in no
event shall Sellers (i) increase the entrance fee under any Residency Agreement
in exchange for a decrease in monthly charges payable by the occupant
thereunder, (ii) amend any Residency Agreement to reduce the amount payable by
the occupant thereunder, (iii) grant any occupant under a Residency Agreement a
free rent concession in excess of one (1) month or (iv) enter into any
Commercial Lease;
(o) enter into any agreement, or amend, modify, extend or terminate
any existing agreement, relating to the construction, demolition, or alteration
of any of the Real Property Assets, other than capital repairs required by Law
or any Governmental Authority not in excess of $100,000 with respect to each
Real Property Asset;
(p) except with Purchaser's consent, which shall not be unreasonably
withheld, settle any claim for overcharges under any Residency Agreement which
may in any manner limit Purchaser's rights (including limiting or reducing the
Rent it may charge) following the Closing; or
(q) announce or enter into any legally binding commitment with
respect to any of the foregoing.
In addition, each Seller shall, insofar as pertinent to the
Business:
(x) maintain books of account and records in the usual,
regular and ordinary manner, and consistent with past practice;
(y) maintain inventory levels in the usual, regular and
ordinary manner, and consistent with past practice; and
38
(z) maintain all insurance policies (and pay all deductibles
thereunder, if applicable) and all Permits maintained or required in
connection with the Business.
Section 5.02 Access to Information. Sellers shall afford to
Purchaser and to Purchaser's financial advisors, lenders, and their respective
legal counsel, accountants, consultants and other authorized representatives
reasonable access without unreasonable disruption to the Business throughout the
period prior to the Closing Date to all its books, documents, records,
properties, facilities and personnel that relate to the Business, the Acquired
Assets and the Assumed Liabilities and during such period, shall furnish as
promptly as practicable to Purchaser all information as Purchaser reasonably may
request in furtherance of the Contemplated Transactions. Any and all information
obtained by Purchaser or Purchaser's financial advisors, legal counsel,
accountants, consultants and other authorized representatives pursuant to this
SECTION 5.02 shall be subject to and maintained in compliance with the
Confidentiality Agreement. No investigation pursuant to this SECTION 5.02 shall
affect any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Contemplated
Transactions. Notwithstanding anything herein to the contrary, (i) no such
investigation or examination pursuant to this Agreement shall be permitted to
the extent that it would require Sellers to disclose information subject to
attorney-client privilege, work product or any other privilege, or protected
under privacy rights afforded by Applicable Law or by confidentiality agreements
(unless the parties thereto have waived confidentiality, which waiver the
Sellers shall use their commercially reasonable efforts to obtain), and (ii)
Sellers shall not be required to afford to Purchaser pursuant to this Agreement
access to any information, books, records, files or papers concerning the
matters referred to in SECTION 5.14.
Section 5.03 Intentionally Omitted.
Section 5.04 Supplemental Disclosure. Prior to the Closing, but as
soon as practicable after the discovery thereof, Sellers will supplement or
amend the Schedules with respect to any matter that, to the Knowledge of
Sellers, arises or is discovered after the date hereof that, if existing or
known at the date hereof, would have been required to be set forth or listed in
a Schedule; provided, however, that for purposes of determining the satisfaction
of the conditions contained in SECTIONS 7.02(a) and (b) and of Purchaser's right
of termination pursuant to SECTION 8.01(d)(iii), any and all such supplements
and amendments shall be disregarded.
Section 5.05 Regulatory and Other Authorizations; Reasonable
Efforts.
(a) Subject to the terms and conditions of this SECTION 5.05, the
parties hereto agree to use their commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or to cause to be done, all things
necessary, proper, advisable or appropriate to consummate and make effective the
transactions contemplated by the Transaction Agreements as soon as practicable,
including to cooperate in good faith to facilitate the Closing and to refrain
from taking any action that could reasonably be
39
expected to cause a condition to the Closing to not be satisfied or otherwise
materially impair, delay or impede the Closing. In furtherance of the foregoing,
the parties hereto shall promptly make all filings and notifications with, and
shall use their reasonable best efforts to promptly obtain all authorizations,
consents, orders and approvals of, all Governmental Authorities that may be or
become necessary for their respective execution and delivery of, and the
performance of their respective obligations pursuant to, and the consummation of
the transactions contemplated by, this Agreement and comply at the earliest
practicable date with a request for information, documents or other materials by
any such Governmental Authorities to obtain such authorizations, consents,
orders and approvals; provided, however, that in no event shall Purchaser or any
of its Affiliates be required to agree to (i) the divestiture of any business or
entity or (ii) any requirement imposed by a Governmental Authority that would
reasonably be expected to have a (A) Material Adverse Effect taken as a whole,
or (B) material and adverse effect on the aggregate economic value and business
benefits that would reasonably be expected to be obtained by Purchaser and its
Affiliates from the transactions contemplated by this Agreement. The parties
will cooperate with the reasonable requests of each other in promptly seeking to
obtain all such authorizations, consents, orders and approvals (including by
making available, upon reasonable notice, appropriate Representatives for
participation in meetings with Governmental Authorities).
(b) Prior to the Closing, each of Sellers and Purchaser shall
promptly notify one another of any communication it receives from any
Governmental Authority relating to any consent, approval, qualification,
registration or license necessary for the consummation of the transactions
contemplated hereby and use its commercially reasonable efforts to permit the
other party to review in advance any proposed material written communication by
such party to any Governmental Authority relating thereto and shall provide each
other with copies of all correspondence, filings or communications between such
party or any of its Representatives, on the one hand, and any Governmental
Authority or members of its staff, on the other hand relating thereto; provided,
however, that Purchaser or Sellers, as applicable, may redact from such
correspondence, filings and communications any confidential competitive
information of Purchaser, Sellers or their respective Affiliates, as the case
may be.
(c) The parties hereto shall use their reasonable best efforts to
obtain any other consents and approvals and to make any other notifications that
may be required in connection with the transactions contemplated by this
Agreement; provided, however, that none of Sellers or Purchaser shall be
required to compensate any third party, commence or participate in litigation or
offer or grant any accommodation (financial or otherwise) to any third party to
obtain any such consent or approval.
Section 5.06 Submission for Bankruptcy Court Approval.
(a) On the timetables set forth below, Seller shall (i) file with
the Bankruptcy Court one or more motions and proposed orders, each in form and
substance reasonably satisfactory to Purchaser, for the purpose set forth below
in this SECTION 5.06, (ii) notify, as required by the Bankruptcy Code and the
Bankruptcy Rules, all parties
40
entitled to notice of such motions and orders (including all relevant Taxing
Authorities), as modified by orders in respect of notice which have been or may
be issued at any time and from time to time by the Bankruptcy Court, and such
additional parties as Purchaser may request, and (iii) subject to the provisions
of this Agreement, including the provisions of ARTICLE VIII, use commercially
reasonable efforts to obtain Bankruptcy Court approval of such orders without
any stay, modification, reversal or amendment adverse or unacceptable to
Purchaser.
(i) Bidding Procedures Order. As promptly as possible, but in
no event later than five (5) Business Days after the date of this
Agreement, Sellers shall file a motion (the "BIDDING PROCEDURES MOTION")
and a proposed order, which shall be in form and substance reasonably
satisfactory to counsel for Purchaser (the "BIDDING PROCEDURES ORDER"),
with the Bankruptcy Court seeking approval of a process for the sale of
the Acquired Assets consistent with the Bidding Procedures set forth in
EXHIBIT A. Sellers shall use commercially reasonable efforts to cause the
Bankruptcy Court to enter the Bidding Procedures Order, which will contain
the following provisions (it being understood that certain of such
provisions may be contained in either the findings of fact or conclusions
of law to be made by the Bankruptcy Court as part of the Bidding
Procedures Order): provisions (A) authorizing and scheduling an auction at
which Sellers will receive bids, (B) approving the Break-Up Fee and
Expense Reimbursement (each as defined in SECTION 5.09) provisions of this
Agreement and authorizing the observance and performance of the terms and
obligations thereunder by Sellers and Purchaser during the pendency of the
Bankruptcy Cases, (C) scheduling with the Bankruptcy Court a hearing (the
"SALE HEARING") to consider approval of the Sale Order (as defined in
SECTION 5.06(a)(ii)) under, inter alia, sections 105, 363, 365 and 1146 of
the Bankruptcy Code, and (C) approving the form and manner of notice
required under the Bankruptcy Code and the Bankruptcy Rules in connection
with the foregoing and the transactions related thereto. In addition,
Purchaser shall be a Qualified Bidder and this Agreement shall constitute
a bid pursuant to the Bidding Procedures Order. Purchaser shall be bound
by and required to comply with the provisions of the Bidding Procedures
Order; provided, however, that (1) Purchaser shall not be required to make
a deposit in addition to the Good Faith Deposit provided hereby unless
Purchaser is the Successful Bidder (as defined in EXHIBIT A hereto), in
which case Purchaser shall be required to supplement its Good Faith
Deposit within one Business Day following the conclusion of the Auction
(as defined in EXHIBIT A hereto) to the extent necessary to ensure that
such deposit is equal to at least 10% of the consideration (exclusive of
Assumed Liabilities and covenants under this Agreement) to be paid
pursuant to the Successful Bid; (2) shall not be required to purchase the
Acquired Assets or assume the Assumed Liabilities on terms other than the
terms provided hereby unless agreed by Purchaser and its bid for the
Acquired Assets, and (3) shall not be required to maintain its bid in
effect for any period after, but shall be irrevocable until, the date on
which this Agreement may be terminated in accordance with SECTION 8.01
(which, if Sellers
41
receive and accept a Qualified Bid (as defined in EXHIBIT A hereto) other
than that of Purchaser, and provided that the Bankruptcy Court shall have
approved the provisions herein relating to the Break-Up Fee, shall extend
until the 60th day after Bankruptcy Court approval of another Qualified
Bid unless Purchaser is otherwise permitted to terminate this Agreement
under SECTION 8.01).
(ii) Sale Order. As promptly as possible, but in no event
later than six (6) Business Days after the date of this Agreement, Sellers
shall file one or more motions (collectively, the "SALE MOTION") and a
proposed order, which shall be in form and substance reasonably
satisfactory to the counsel for the Purchaser (the "SALE ORDER"), with the
Bankruptcy Court seeking the approval of the Bankruptcy Court pursuant to
sections 105, 363, 365 and 1146 of the Bankruptcy Code of the transfers of
the Acquired Assets and the assumption by Sellers and assignment to
Purchaser of the Assumed Liabilities. The Bidding Procedures Motion and
the Sale Motion may be brought in a single motion.
(b) Prior to the Closing, the sale of all of the Acquired Assets to
Purchaser to be sold pursuant to this Agreement and in the Contemplated
Transactions shall have been approved by order of the Bankruptcy Court pursuant
to sections 105, 363, 365 and 1146 of the Bankruptcy Code, pursuant to the Sale
Order. Purchaser and Sellers agree to use their commercially reasonable efforts
to cause the Bankruptcy Court to enter the a sale order that contains, among
other provisions reasonably requested by Purchaser, the following provisions (it
being understood that certain of such provisions may be contained in either the
findings of fact or conclusions of law to be made by the Bankruptcy Court as
part of the Sale Order):
(i) the transfers of the Acquired Assets and the assignment of
the Assumed Liabilities by Sellers to Purchaser (A) are or will be legal,
valid and effective transfers, (B) vest or will vest Purchaser with all
right, title and interest of Sellers in and to the Acquired Assets
pursuant to section 363(f) of the Bankruptcy Code free and clear of all
Encumbrances (other than Surviving Permitted Encumbrances and Encumbrances
created by Purchaser), whether known or unknown, including Encumbrances of
any of Sellers' creditors, vendors, suppliers, governmental authorities,
employees, lessors or any other third party (collectively, the "POTENTIAL
CLAIMANTS") and that neither Purchaser nor any of Purchaser's Affiliates
or agents shall be liable in any way (as successor entity, derivatively or
otherwise) for any claims that any of the Potential Claimants may have
against any of Sellers, their Affiliates, the Business and the Acquired
Assets, and that the Potential Claimants shall be permanently enjoined and
restrained from the assertion and prosecution of any claims against
Purchaser, Purchaser's Affiliates or any agent of the foregoing relating
to the ownership, use and operation of the Acquired Assets, other than
claims on the account of Assumed Liabilities, and (C) constitute transfers
for reasonably equivalent value and fair consideration under the
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act and similar state laws; provided, however, that,
notwithstanding anything to the contrary in the foregoing
42
provisions of this paragraph of this Order or in the Agreement, nothing in
this Order or the Agreement (1) releases or nullifies any liability to any
governmental environmental regulatory authority under statutes or
regulations to which an entity would be subject as the owner or operator
of any property transferred pursuant to the Agreement after the date of
this Order, just as if such transfer had taken place independent of any
Chapter 11 case or (2) impairs or restricts any governmental environmental
regulatory authority's ability to pursue all of its rights and remedies in
state court against any entity which is the owner or operator of such
property after the date of entry of this Order;
(ii) this Agreement and the Contemplated Transactions may be
specifically enforced against and binding upon, and not subject to
rejection or avoidance by, Sellers or any chapter 7 or chapter 11 trustee
of Sellers;
(iii) all amounts to be paid to Purchaser pursuant to SECTION
5.09(a), SECTION 5.09(b) and SECTION 8.02 constitute administrative
expenses under sections 503(b) and 507(a)(1) of the Bankruptcy Code, with
priority in any subsequent or superseding bankruptcy case (including any
chapter 7 case) and are immediately payable if and when the obligations of
Sellers arise under this Agreement, without any further order of the
Bankruptcy Court;
(iv) all Persons are enjoined from taking any action against
Purchaser, Purchaser's Affiliates or any agent of the foregoing to recover
any claim which such Person has solely against Sellers or any of Sellers'
Affiliates;
(v) except in respect of any claim or matter in dispute
referred to in SECTIONS 1.02(l) OR 5.14 and asserted by a Seller, as to
which jurisdiction shall be as determined in accordance with applicable
Law, the Bankruptcy Court retains exclusive jurisdiction to interpret,
construe and enforce the provisions of this Agreement, the Bidding
Procedures Order and the Sale Order in all respects and further to hear
and determine any and all disputes between Sellers and/or Purchaser, as
the case may be, and any non-Seller party to, among other things, any
Assumed Contracts, concerning, inter alia, Sellers' assignment thereof to
Purchaser under this Agreement and any non-Seller's claims arising under
any agreements relating to Excluded Liabilities; provided, however, that
in the event the Bankruptcy Court abstains from exercising or declines to
exercise jurisdiction with respect to any matter provided for in this
clause (iii) or is without jurisdiction, such abstention, refusal or lack
of jurisdiction shall have no effect upon and shall not control, prohibit
or limit the exercise of jurisdiction of any other court having competent
jurisdiction with respect to any such matter;
(vi) the provisions of the Sale Order are non-severable and
mutually dependent;
(vii) the Contemplated Transactions are undertaken by
Purchaser and Sellers at arm's length, without collusion and in good faith
within
43
the meaning of section 363(m) of the Bankruptcy Code, and such parties are
entitled to the protections of section 363(m) of the Bankruptcy Code;
provided, however, that nothing in this clause (iv) shall be deemed a
release, discharge or satisfaction of any claim or cause of action which
any of the Sellers may have against Purchaser;
(viii) a determination that approval of the terms and
conditions of this Agreement and the Contemplated Transactions are fair
and reasonable;
(ix) a determination that the Sale Order and consummation of
the Contemplated Transactions are in the best interests of Sellers, their
creditors and their bankruptcy estates and not selling the Acquired Assets
free and clear of Encumbrances other than Surviving Permitted Encumbrances
would adversely affect Sellers' bankruptcy estates;
(x) a determination that a sale of the Acquired Assets other
than one free and clear of Encumbrances other than Surviving Permitted
Encumbrances would be of substantially less benefit to the estates of
Sellers;
(xi) to the extent provided in this Agreement, Sellers shall
assign and transfer to Purchaser all of Sellers' right, title and interest
(including common law rights) in and to all of the Acquired Assets;
(xii) approves Sellers' assignment of the Assumed Contracts
pursuant to sections 363 and 365 of the Bankruptcy Code notwithstanding
any restrictions contained therein that would purport to restrict such
assignment or use by Purchaser;
(xiii) that any stay of orders authorizing the use, sale or
lease of property, or the assignment of an executory contract or unexpired
lease as provided for in Bankruptcy Rules 6004(g) or 6006(d) shall not
apply to the Sale Order and that the Sale Order is immediately effective
and enforceable;
(xiv) that none of Purchaser or its Affiliates shall be
liable, either directly or indirectly, as successor, transferee or
otherwise, for any liabilities of Sellers or any of their Affiliates
(whether under federal or state law or otherwise (including COBRA)) as a
result of the sale of the Acquired Assets or the assumption and assignment
of the Assumed Liabilities, in each case to the fullest extent permitted
by Applicable Laws;
(xv) that none of Purchaser or its Affiliates shall assume
liabilities of Sellers or their Affiliates other than the Assumed
Liabilities; and that, upon the assumption and assignment of the Residency
Agreements, the Purchaser and its Affiliates shall not be bound by the
terms of the May 6th Order and the Sellers and its Affiliates shall be
relieved of all obligations under the May 6th Order after the date of the
above mentioned assumption and assignment;
44
(xvi) that neither Purchaser nor its Affiliates shall be
liable, either directly or indirectly, as a successor, transferee or
otherwise, for Sellers' Taxes;
(xvii) that adequate assurance of future performance has been
demonstrated by or on behalf of Purchaser with respect to the Assumed
Contracts;
(xviii) that the Assumed Contracts, upon assignment to
Purchaser, shall still be deemed valid and binding, in full force and
effect in accordance with their terms;
(xix) that any party that may have had the right to consent to
the assumption or assignment of the Assumed Contracts is deemed to have
consented to such assumption and assignment as required by section 365(c)
of the Bankruptcy Code if it fails to object to such assumption or
assignment;
(xx) a determination of amounts necessary to "cure" (within
the meaning of section 365(b)(1) of the Bankruptcy Code) all "defaults"
(within the meaning of section 365(b) of the Bankruptcy Code) under the
Assumed Contracts and a directive that Sellers and Purchaser, as
applicable, pay the related Cure Amounts to the extent required under
SECTION 1.04(h);
(xxi) that there shall be no rent accelerations, assignment
fees, increases or any other fees charged to Purchaser or its Affiliates
as a result of Sellers' assumption or assignment to Purchaser of the
Assumed Contracts, and that the validity of such assumption or assignment
shall not be affected by any dispute between Sellers' or any of their
Affiliates and any counterparty to any Assumed Contract;
(xxii) that pursuant to section 1146(c) of the Bankruptcy
Code, the transactions contemplated herein shall be exempt from certain
Taxes; provided, however, that, notwithstanding anything to the contrary
in this Agreement, if the Bankruptcy Court concludes that section 1146(c)
of the Bankruptcy Code is not applicable to the Sale (as defined below),
Purchaser shall nonetheless be bound in all respects by this Agreement and
shall be obligated to pay 50% of any and all Transfer Taxes incurred as a
result of the Sale; and
(xxiii) compliance with all so-called "bulk-sale" laws shall
be waived in all necessary jurisdictions.
(c) If the Sale Order or any other order of the Bankruptcy Court
relating to this Agreement shall be appealed by any Person (or a petition for
certiorari or motion for rehearing, reargument or stay shall be filed with
respect thereto), Sellers agree to, and to cause its Affiliates to, take all
steps as may be reasonable and appropriate to defend against such appeal,
petition or motion, and Purchaser agrees to cooperate in such efforts; provided,
however, that nothing herein shall preclude the parties hereto from
45
consummating the Contemplated Transactions if the Sale Order shall have been
entered and shall not have been stayed.
Section 5.07 Consultation; Notification; No Conflict. Sellers shall,
and shall cause its Affiliates to, (a) consult with Purchaser, prior to its
submission to the Bankruptcy Court, on the form and substance of the Bidding
Procedures Order, the Sale Order, the motions and all court submissions by
Sellers relating to this Agreement, (b) promptly deliver to Purchaser copies of
any and all pleadings, motions, notices, statements, schedules, applications,
reports, proposed orders and other documents filed by Sellers or related to the
Bankruptcy Cases, including any objections to this Agreement, any of the
pleadings filed with the Bankruptcy Court in connection with this Agreement, or
the transfer, assumption or assignment of any Acquired Assets or the Assumed
Liabilities, and (c) use their commercially reasonable efforts to cooperate with
Purchaser and its representatives in connection with the Sale Order and the
bankruptcy proceedings in connection therewith. Such cooperation shall include
consulting with Purchaser at Purchaser's reasonable request concerning the
status of such proceedings. Sellers further covenant and agree that, to the
extent that the Sale Order is entered approving this Agreement and the
transactions contemplated hereby, the terms of any plan of reorganization or
liquidation submitted by Sellers or its Affiliates to the Bankruptcy Court for
confirmation shall not conflict with, supersede, abrogate, nullify, modify or
restrict the terms of this Agreement and the rights of Purchaser or its
Affiliates hereunder, or in any way prevent or interfere with the consummation
or performance of the transactions contemplated hereby, including any
transaction that is contemplated by or approved pursuant to the Bidding
Procedures Order or any other Order.
Section 5.08 Bidding Procedures. Sellers acknowledge that this
Agreement is the culmination of an extensive process undertaken by Sellers to
identify and negotiate a transaction with a bidder prepared to pay the highest
or otherwise best purchase price for the Acquired Assets while assuming or
otherwise satisfying certain liabilities in order to maximize the value for
Sellers and their estates. Annexed hereto at EXHIBIT A are the bidding
procedures (the "BIDDING PROCEDURES") to be employed with respect to Sellers
proposed sale of all or substantially all of its assets, including the sale of
the Acquired Assets of Seller to Purchaser pursuant to this Agreement (the
"SALE"). The Sale is subject to competitive bidding only as set forth in the
Bidding Procedures Order and approval by the Bankruptcy Court of the Sale Order.
The overbid provisions and related bid protections set forth in EXHIBIT A hereto
are designed to compensate Purchaser for its efforts and agreements to date and
to facilitate a full and fair process designed to maximize the value of the
Acquired Assets for the benefit of Sellers and their creditors and stakeholders.
Section 5.09 Break-Up Fee and Expense Reimbursement.
(a) Sellers hereby agree, in the event that Sellers (i) accept a
bid, for any of the Acquired Assets, other than that of Purchaser, as the
highest or otherwise best offer (an "AUCTION TRANSACTION") or (ii) sell,
transfer, leases or otherwise dispose, directly or indirectly, to one or more
third parties other than Purchaser (i.e., not as part of
46
a standalone restructuring) including through an asset sale, stock sale, merger,
reorganization or other similar transaction (by Sellers or their Affiliates or
otherwise), all or a substantial portion of the Acquired Assets (or agree to do
any of the foregoing) in a transaction or series of transactions (including in
any such transaction or series of transactions sponsored by one or more third
parties) within six (6) months from the completion of the auction contemplated
by the Bidding Procedures (any of clause (i) or (ii) being, an "ALTERNATIVE
TRANSACTION"), to pay to Purchaser, upon the closing of the Alternative
Transaction, a break-up fee (the "BREAK-UP FEE") (or if such Alternative
Transaction does not close and the applicable transaction agreement(s) is
terminated, Sellers shall pay to Purchaser the Break-Up Fee in an amount equal
to the lesser of $5,000,000 and the amount of any deposit made by the
prospective party to the Alternative Transaction that is retained by Sellers in
connection with such termination) in the amount of $5,000,000 to compensate
Purchaser for the time and expense dedicated to this transaction and the value
added by Purchaser in (1) establishing a bid standard or minimum for other
bidders with respect to the Acquired Assets, (2) placing the Acquired Assets in
a sales configuration mode attracting other bidders to the Auction and (3) for
serving, by its name and its expressed interest, as a catalyst for other
potential or actual bidders for the Acquired Assets; provided, however, that in
the event the Bankruptcy Court does not approve the provisions in this Agreement
relating to the Break-Up Fee, the Purchase Price pursuant to SECTION 2.03 shall
be reduced to $206,300,000 and the provisions set forth in SECTION 5.09(b) shall
apply. Sellers further agree that any Break-Up Fee will constitute an
administrative priority claim against Sellers' estate under sections 503(b) and
507(a)(1) of the Bankruptcy Code.
(b) In the event the Bankruptcy Court does not approve the
provisions in this Agreement relating to the Break-Up Fee, Sellers hereby agree
that, in the event that (i) Sellers withdraw or determine not to prosecute the
Sale Motion with respect to the Acquired Assets or an Alternative Transaction is
entered into by Sellers or approved by the Bankruptcy Court or (ii) a plan of
reorganization or liquidation is filed by Sellers or any of their affiliates
with the Bankruptcy Court which, if approved by the Bankruptcy Court, would be
inconsistent with the transfer and assignment of the Acquired Assets to
Purchaser as contemplated by this Agreement, to pay to Purchaser an amount equal
to the actual out-of-pocket costs and expenses (including expenses of counsel,
fees and expenses related to proposed financings to be entered into by
Purchaser, expenses of financial advisors and expenses of other consultants and
the HSR Act filing fee) incurred by Purchaser or its Affiliates in connection
with this Agreement and the transactions contemplated hereby, but in no event
more than $2,000,000 (the "EXPENSE REIMBURSEMENT"); provided, however, that in
no event shall the Expense Reimbursement be payable to Purchaser (x) if
Purchaser terminates this Agreement (other than in the event of an Alternative
Transaction) for any reason other than the willful breach by Sellers of any
representation, warranty, covenant or agreement set forth in this Agreement or
(y) if this Agreement is terminated by Sellers pursuant to SECTION 8.01(a),
SECTION 8.01(b) or 8.01(e)(i). Sellers further agree that the Expense
Reimbursement will constitute an administrative priority claim against Sellers'
estates under sections 503(b) and 507(a)(1) of the Bankruptcy Code and will be
paid
47
immediately, without further order of the Bankruptcy Court, upon the earlier to
occur of (A) either of the events referred to in clause (i) of this SECTION
5.09(b) or (B) the earlier of (1) entry by the Bankruptcy Court of an order
confirming, and the effective date of, the plan referred to in clause (ii) of
this SECTION 5.09(b) or (2) entry by the Bankruptcy Court of an order
authorizing payment of administrative expenses at any time after entry by the
Bankruptcy Court of an order confirming the plan referred to in clause (ii) of
this SECTION 5.09(b).
Section 5.10 Other Assets and Agreements. Upon the discovery by
Sellers or any of their Affiliates of any item included within the definition of
Acquired Assets but not transferred, conveyed or assigned to Purchaser, Sellers
will, and will cause their Affiliates to, (i) deliver written notice to
Purchaser of the existence and non-transfer, non-conveyance or non-assumption of
such item and provide Purchaser with all the information in Sellers' possession
about and with access to such item as Purchaser may reasonably request, and (ii)
if requested by Purchaser, shall use commercially reasonable efforts to
transfer, convey or assign to Purchaser such item in the manner and on the terms
and conditions as if it were an Acquired Asset under this Agreement, subject to
Applicable Laws and the terms of this Agreement. The provisions of this SECTION
5.10 shall survive the Closing.
Section 5.11 Notice of Certain Events. Each party hereto shall
promptly notify the other parties hereto of any of the following events: (a) the
occurrence or non-occurrence of any event which would be reasonably likely to
cause (i) any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect (including if such
party receives a notice of violation relating to any Hazardous Material, becomes
aware that it is not in compliance with all Environmental Laws in all material
respects, receives written notice from any tenant that such party is in default
under any lease or becomes aware of any material default by a tenant under any
lease) or (ii) any covenant, condition or agreement of such party contained in
this Agreement not to be complied with or satisfied; and (b) any failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided that the delivery of any
notice pursuant to this SECTION 5.11 shall not limit or otherwise affect the
remedies available to the party receiving such notice.
Section 5.12 Employment and Employee Benefits.
(a) Not less than two (2) Business Days after such time (if any) as
Purchaser shall become the Successful Bidder (as defined in Exhibit A),
Purchaser or Manager shall deliver, in writing, an offer of employment to each
of the employees (full or part time) of the Business (other than employees of
the Company but including the so-called "CHIEF EXECUTIVE OFFICERS" of the
Facilities), who are active employees of any Seller immediately prior to the
Closing, to commence employment with Manager immediately following the Closing
(it being agreed that Seller staffing levels shall not be increased between the
date hereof and the Closing in any material respect), which offer shall be
conditioned on the Closing and the applicable employee's continued employment
48
as an active employee of any Seller as of the Closing. Each such offer of
employment shall be at substantively the same salary or hourly wage rate and
position in effect immediately prior to the Closing and shall include
participation in employee welfare benefit plans of the Manager, including health
insurance, comparable to those provided to existing employees of the Manager
having like positions and on a basis consistent with paragraph (e) of this
Section. Such individuals who accept such offers by the Closing Date are
hereinafter referred as the "TRANSFERRED EMPLOYEES". In addition, each other
employee of the Business who, as of the Closing, is on vacation, holiday, jury
duty or on an approved leave of absence (including military leave, bereavement
leave, disability leave and workers compensation leave), and who, within the
shorter of the period ending three (3) months following the Closing or the
period ending seven (7) days following such vacation, holiday, jury duty or
approved leave of absence, presents himself or herself to the Manager as ready,
willing and able (to the Manager's reasonable satisfaction) to commence the same
active employment with the Manager, shall be deemed to be a Transferred Employee
as of the time of such commencement. It is the present intent of Purchaser to
continue the employment of a substantial number of the Transferred Employees for
at least one year following the Closing; provided, however, that such
Transferred Employees will be at-will employees of Purchaser or Manager and
Purchaser or Manager, as the case may be, will retain the right to terminate the
employment of any or all of the Transferred Employees with or without cause and
with or without reason at any time following the Closing and to change any or
all of the terms and conditions of employment at any time following the Closing.
As of the day before the Closing Date, Sellers shall terminate their employment
of all employees of the Business who are employed as of such date (other than
the officers referred to above), except any who have rejected the offer of
employment of Purchaser or Manager; provided that the foregoing shall not (i)
limit or restrict the ability of Sellers to terminate an employee of the
Business prior to such time or (ii) create any obligation on the part of any
Seller to continue the employment or offer any new employment position to any
such employee who has rejected such offer. Sellers will be responsible for all
liabilities and claims relating to any current or former employee of the Sellers
or their Affiliates arising on or prior to the time such Person becomes a
Transferred Employee (including any liabilities arising under any Benefit Plan
or other compensation program, arrangement or agreement of the Sellers). Sellers
will retain liability for all Benefit Plans maintained by the Sellers or their
Affiliates and no such Benefit Plans (or any liabilities thereunder) will be
assumed by or transferred to the Purchaser. The Manager will provide any
employee benefits for Transferred Employees contemplated by this SECTION 5.12
through benefit plans established or maintained by the Manager. Sellers shall
make the employees of the Business available to the Purchaser, at reasonable
times and in a manner intended not to disrupt ongoing operations, for the
purpose of making employment offers to such employees. Purchaser or Manager will
recognize the accrued and unused vacation, sick days, personal days and similar
fringe benefits which were accrued by the Transferred Employee as of the Closing
Date (the "ACCRUED FRINGE BENEFITS"). Sellers shall reimburse Purchaser for all
cash payments made with respect to Accrued Fringe Benefits prior to March 31,
2006 (including any regularly provided wage or salary payments made during such
fringe benefit period). For this purpose, the Purchaser shall within 15 days
49
following the end of each month that ends within the period following the
Closing and extending through March 2006 furnish the Sellers with a written
summary of the costs incurred by Manager during such month with respect to the
Accrued Fringe Benefits. Sellers shall remit the amount of such costs to
Purchaser within 10 days following the receipt of each such statement.
(b) The Sellers will retain all liability for any failure of the
Sellers or of their Affiliates to comply with any of the requirements of WARN,
including applicable notice requirements related to any "plant closing" or "mass
layoff" (each as defined under WARN). On or before the Closing, Sellers shall
provide Purchaser a list of the name and site of employment of any and all
employees of the Business who have experienced, or will experience, an
employment loss or layoff (as defined under WARN) within ninety (90) days prior
to the Closing. Seller shall update this list up to and including the Closing.
(c) Seller will be responsible for COBRA, under a group health plan
maintained by Seller (or a successor) (if necessary, exclusively for such
purpose) to all Transferred Employees, and the qualified beneficiaries under
COBRA with respect to such employees, who have a COBRA qualifying event (due to
termination of employment with such Seller or otherwise) prior to the
Contemplated Transactions or in connection with the termination of employment by
any Seller described in SECTION 5.12(a).
(d) No provision of this Agreement will create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of a Seller in respect of continued employment
(or resumed employment) with either the Business, the Purchaser or any of its
Affiliates, and no provision of this Agreement will create any such rights in
any such Persons in respect of any benefits that may be provided, directly or
indirectly, under any plans of the Sellers and their Affiliates or any plan or
arrangement which may be established or maintained by the Purchaser or any of
its Affiliates. No provision of this Agreement will constitute a limitation on
rights to amend, modify or terminate any employee benefit plan or arrangement of
Purchaser or Manager or any of their Affiliates. The rights of Transferred
Employees as employees of Purchaser or Manager shall be determined solely by the
terms of their employment by Purchaser or Manager, including any benefit plans
or program thereof.
(e) Purchaser shall take all necessary actions to provide that, with
respect to any welfare benefits provided to Transferred Employees on or after
the Closing Date, service accrued by Transferred Employees during employment
with the Sellers prior to the Closing Date shall be recognized for purposes of
eligibility for and vesting of benefits to the extent such service was
recognized under comparable Benefit Plans, provided, however, that nothing in
this SECTION 5.12(e) shall require the payment of duplicative benefits and
Purchaser shall provide for all Transferred Employees to be immediately eligible
for such welfare benefits.
50
(f) To the extent any provision of this Agreement is inconsistent
with the provisions of this SECTION 5.12, the provisions of this SECTION 5.12
will control.
(g) Any action required to be taken under this SECTION 5.12 by the
Sellers may be taken by an Affiliate of the Sellers and any action required to
be taken under this SECTION 5.12 by the Purchaser may be taken by an Affiliate
of the Purchaser (including the Manager).
Section 5.13 Public Announcements. Neither Sellers nor Purchaser
shall issue any press release or public announcement concerning this Agreement
or the Contemplated Transactions without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless, in the sole judgment of Purchaser or Sellers, disclosure is
otherwise required by applicable Law or by the Bankruptcy Court with respect to
filings to be made with the Bankruptcy Court in connection with this Agreement
or by the applicable rules of any stock exchange on which Purchaser or Sellers
lists securities, provided that the party intending to make such release shall
use its best efforts consistent with such applicable Law or Bankruptcy Court
requirement to consult with the other party with respect to the text thereof.
Section 5.14 No Waiver. Notwithstanding any other provision of this
Agreement, nothing in this Agreement shall constitute a waiver of or release of,
or in any way prohibit or restrict the assertion by any Seller of, any right,
claim, demand or cause of action, at law or in equity, or any remedy therefor,
of any of the Sellers against Purchaser or Guarantor, or against any lender,
creditor, issuer of any letter of credit, participating bank in any letter of
credit, secured party under any security agreement or similar agreement,
bondholder, trustee under any indenture relating to any bond, or against any
Affiliate or any officer, director, employee, agent, representative or advisor
of any of the foregoing, or against any other Person who acted or acts in
concert with any of them, in respect of any act or omission in relation to any
of the Sellers, whether or not any of the foregoing Persons held such status
before, during or after the time of any act or omission in relation to any of
the Sellers, or whether or not such right, claim, demand, or cause of action
arose before or after the date hereof, or was or is asserted before or after the
date hereof, including any right, claim, demand or cause of action with respect
to a continuation of such activity after the date hereof and any damages
sustained therefrom before or after the date hereof. Notwithstanding any other
provision of this Agreement, the assertion or prosecution by any Seller of any
such right, claim, demand, or cause of action shall not constitute a breach by
any Seller of any representation, warranty, covenant, agreement or other
provision of this Agreement. The foregoing provisions shall survive both the
Closing contemplated by this Agreement and any termination of this Agreement.
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ARTICLE VI
ADDITIONAL POST-CLOSING COVENANTS
Section 6.01 Further Assurances. In addition to the provisions of
this Agreement, from time to time after the Closing Date, Sellers and Purchaser
will use all commercially reasonable efforts to execute and deliver such other
instruments of conveyance, transfer, or assumption, as the case may be, and take
such other action as may be reasonably requested to implement more effectively
the Contemplated Transactions. If it turns out that an Affiliate of Sellers owns
any of the Acquired Assets and such Affiliate is not a party to this Agreement,
Sellers shall take and shall cause such subsidiary to take (or use commercially
reasonable efforts to cause any other Affiliate to take) all reasonable actions
to assign such assets, properties, rights or claims to Purchaser and to give
full effect to the Contemplated Transactions. The provisions of this SECTION
6.01 shall survive the Closing. Notwithstanding the foregoing provisions of this
SECTION 6.01, SECTION 5.05 or any other provision of this Agreement, nothing
contained herein is intended to, or shall have the effect, of limiting,
restricting or otherwise affecting the ability of Sellers to pursue any right,
claim, cause of action or remedy referred to in SECTIONS 1.02(l) OR 5.14, or the
obligation of Purchaser to satisfy an obligation or liability resulting
therefrom.
Section 6.02 Books and Records; Personnel. Purchaser shall allow
Sellers and any of their Representatives (collectively, the "SELLER
REPRESENTATIVES") access to all business records and files of Sellers or the
Business that are transferred to Purchaser in connection herewith, that are
reasonably required by such Seller Representatives in the administration of the
Bankruptcy Cases or in anticipation of, or preparation for, any existing or
future Legal Proceeding involving a Seller, Tax Return preparation, litigation,
or an Excluded Liability, during regular business hours and upon reasonable
notice at Purchaser's principal place of business or at any location where such
records are stored, and Seller Representatives shall have the right to make
copies of any such records and files; provided, however, that any such access or
copying shall be had or done in such a manner so as not to unreasonably
interfere with the normal conduct of Purchaser's business or operations.
Section 6.03 Undisclosed Contracts; Contested Cure Amount Contracts.
Notwithstanding anything to the contrary in SECTION 1.02(b), if, after Closing,
Sellers or Purchaser discover any Contract to which any Seller is a party and
that is related to the Business but was not disclosed to Purchaser prior to
Closing as required by this Agreement, then Sellers shall notify Purchaser of
the existence of such Contract, and at Purchaser's request, Sellers shall take
such steps as are necessary to cause such Contract to be assumed by, and
assigned to, Purchaser, with any Cure Amounts associated therewith to be borne
by Sellers. The provisions of this SECTION 6.03 shall survive the Closing.
52
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01 Conditions Precedent to Obligations of Purchaser and
Sellers. The respective obligations of Purchaser and Sellers to consummate the
Contemplated Transactions are subject to the fulfillment, on or prior to the
Closing Date, of each of the following conditions (any or all of which may be
waived by Purchaser and Sellers in whole or in part to the extent permitted by
applicable Law):
(a) there shall not be in effect any Order by a Governmental
Authority of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the Contemplated Transactions;
(b) the Bankruptcy Court shall have entered the Bidding Procedures
Order, in form and substance reasonably acceptable to Seller and Purchaser;
(c) the Bankruptcy Court shall have entered the Sale Order and the
Sale Order shall not have been stayed or any stay period applicable to the Sale
Order shall have expired or shall have been waived by the parties;
(d) if any filing under the HSR Act or other antitrust Laws is
required, the waiting period applicable to the Contemplated Transactions under
the HSR Act or such other antitrust Laws shall have expired or early termination
shall have been granted with respect thereto;
(e) each of Seller Required Governmental Approvals and Purchaser
Required Governmental Approvals shall have been received and shall be in full
force and effect, including any involving the approval of the appropriate state
agency responsible for reviewing and approving the change of ownership of the
subject Facilities and the receipt by Purchaser of any appropriate licenses to
legally operate the Facilities as required by applicable state Law.
Section 7.02 Conditions Precedent to Obligations of Purchaser. The
obligation of Purchaser to consummate the Contemplated Transactions is subject
to the fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by Purchaser in whole or in part
to the extent permitted by applicable Law):
(a) the representations and warranties of each Seller set forth in
this Agreement qualified as to materiality or Material Adverse Effect shall be
true and correct in all respects, and those not so qualified shall be true and
correct in all material respects, at and as of the Closing, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality or
Material Adverse Effect shall be true and correct in all respects, and those not
so qualified shall be true and correct in all material respects, in
53
each case, on and as of such earlier date); provided, however, that in the event
of a breach of a representation or warranty other than a representation or
warranty qualified by Material Adverse Effect, the condition set forth in this
SECTION 7.02(a) shall be deemed satisfied unless the effect of all such breaches
of representations and warranties taken together result in a Material Adverse
Effect; and Purchaser shall have received a certificate signed by an authorized
officer of NBA, on behalf of all Sellers, dated the Closing Date, to the
foregoing effect;
(b) each Seller shall have performed and complied in all material
respects with all obligations and agreements required in this Agreement to be
performed or complied with by it on or prior to the Closing Date, and Purchaser
shall have received a certificate signed by an authorized officer of NBA, on
behalf of all Sellers, dated the Closing Date, to the forgoing effect; provided,
however, that if any one or more Assumed Contracts has been excluded from
assumption by Purchaser pursuant to SECTION 1.04(h), the exclusion of such
contract or contracts from the Assumed Contracts in accordance with such Section
shall not be considered a failure of Sellers to have performed and complied with
their obligations hereunder unless the unavailability to Purchaser of such
contract or contracts shall have a Material Adverse Effect;
(c) on or prior to the date which is five (5) Business Days prior to
the Bid Deadline, Sellers shall have obtained from the lessor under the Cypress
Village Ground Lease (the "CYPRESS VILLAGE GROUND LESSOR") and delivered to the
Purchaser evidence reasonably satisfactory to the Purchaser that the Cypress
Village Ground Lessor has either (i) agreed to (A) sell, transfer and convey to
Purchaser, at Closing all of its right, title and interest in and to the Leased
Real Property for a purchase price not in excess of an amount equal to
$1,695,000 net to the Cypress Village Ground Lessor (but in no event more than
$1,850,000) and (B) terminate the Cypress Village Ground Lease contemporaneously
with the consummation of such sale of the Leased Real Property, or (ii) agreed
to execute in favor of Purchaser (x) a commercially reasonable estoppel, dated
not earlier than 60 days prior to the Closing Date, in favor of Purchaser,
confirming that the Cypress Village Ground Lease is in full force and effect
(and attaching a true and correct copy of the Cypress Village Ground Lease), the
tenant is not in default thereunder (except to the extent there exists any
default related to the commencement of the Bankruptcy Cases), the date through
which rent has been paid and such other matters reasonably required by Purchaser
and shall agree to provide substantially similar estoppels, from time to time,
as requested by the lessee under the Cypress Village Ground Lease, and (y) an
amendment to the Cypress Village Ground Lease (or other similar agreement or
acknowledgement executed by the Cypress Village Ground Lessor) to include or
otherwise provide for, in all material respects, the Lease Financing Provisions;
and, in addition to the foregoing, at or prior to Closing, the Cypress Village
Ground Lessor has delivered to Purchaser the instruments of conveyance or other
documents referred to in the foregoing clause (i) or (ii), as applicable;
(d) Sellers shall have taken reasonable steps necessary to appoint
Purchaser or its designees as their successor with respect to the control,
governance, use or operation of any portion of the Real Property Assets or
related Equity Homes and to
54
transfer such rights of Sellers to Purchaser; and, to the extent necessary, (i)
Sellers shall have taken such steps as are necessary to remove Sellers from any
decision-making roles with respect to the Declaration and Restrictions for
Foxwood Springs (including amendments thereto) following the Closing, (ii)
Sellers shall have designated Purchaser or its designees as the "operator" under
the First Amended and Restated Indenture of Restrictions of ▇▇▇▇▇ Run Village
(including amendments thereto) and shall have executed a declaration or
amendment to said indenture, in recordable form, reasonably acceptable to
Purchaser, transferring all rights of Sellers thereunder to Purchaser, (iii)
Sellers shall have assigned to Purchaser, pursuant to an instrument in
recordable form, all of its rights under the Amended and Restated Declaration of
Covenant Conditions and Restrictions of Village at Skyline, and (iv) Sellers
shall have irrevocably designated Purchaser and its designees as the "operator"
under the Indenture of Restrictions Regarding Cypress Village (including the
amendments thereto) and shall have executed a declaration or amendment to said
indenture, in recordable form, reasonably acceptable to Purchaser, transferring
all rights of Sellers thereunder to Purchaser;
(e) there shall not have occurred since the date hereof any event or
events (including Purchaser becoming aware after the date hereof of material
information concerning the Business or the Acquired Assets existing prior the
date hereof) that, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect;
(f) Sellers shall have delivered, or caused to be delivered or be
ready, willing and able to deliver, to Purchaser at the Closing all of the
applicable items set forth in SECTION 2.05; and
(g) Purchaser has not elected not to proceed with the Closing in
accordance with SECTION 1.04(h)(i)(B).
Section 7.03 Conditions Precedent to Obligations of Sellers. The
obligations of Sellers to consummate the Contemplated Transactions are subject
to the fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by Sellers in whole or in part to
the extent permitted by applicable Law):
(a) the representations and warranties of Purchaser set forth in
this Agreement qualified as to materiality shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, at and as of the Closing, except to the extent such representations
and warranties relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, in each case, on and as of such earlier date); provided, however, that
in the event of a breach of a representation or warranty other than a
representation or warranty qualified by material adverse effect on the ability
of Purchaser to consummate the Contemplated Transactions, the condition set
forth in this SECTION 7.03(a) shall be deemed satisfied unless the effect of all
such breaches of representations and warranties
55
taken together result in a material adverse effect on the ability of Purchaser
to perform its obligations under this Agreement or to consummate the
Contemplated Transactions; and NBA shall have received a certificate signed by
an authorized officer of Purchaser, dated the Closing Date, to the foregoing
effect;
(b) Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date, and NBA
shall have received a certificate signed by an authorized officer of Purchaser,
dated the Closing Date, to the foregoing effect; and
(c) Purchaser shall have delivered, or caused to be delivered or be
ready, willing and able to deliver, to Sellers at the Closing all of the
applicable items set forth in SECTION 2.05.
Section 7.04 Frustration of Closing Conditions. Neither Sellers nor
Purchaser may rely on the failure of any condition set forth in SECTIONS 7.1,
7.2 or 7.3, as the case may be, if such failure was caused by such party's
failure to comply with any provision of this Agreement.
ARTICLE VIII
FURTHER AGREEMENTS AND TERMINATION
Section 8.01 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) by mutual consent of Sellers and Purchaser;
(b) subject to SECTION 2.10, by either of Sellers or Purchaser
(provided that such party is not then in material breach of any provision of
this Agreement), (i) if a Governmental Authority shall have issued an Order, or
taken any other action (which Order the parties hereto shall use their
commercially reasonable efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the Contemplated Transactions and such Order
or other action shall have become final and non-appealable; provided, that, if
such Order or other action relates to an immaterial portion of the Business,
Purchaser may, at its option by notice given by Purchaser to Sellers within five
(5) Business Days after the exercise by Sellers of such termination rights,
elect to forego, without any purchase price adjustment, the acquisition of the
Acquired Assets affected by such Order, or other action and, in such case,
Sellers will not have a right of termination pursuant to this SECTION 8.01(b)
and any Sellers' notice of termination pursuant to this SECTION 8.01(b) shall be
void or (ii) if responsibility for payment of all the Cure Amounts with respect
to the Residency Agreements have not been assumed by the Sellers and/or the
Purchasers in accordance with the last paragraph of SECTION 1.04 by the last
date for such assumption provided thereby;
56
(c) subject to the right of Purchaser to receive any Break-Up Fee or
Expense Reimbursement, as applicable, and the return of the Good Faith Deposit
as provided hereby, by Sellers in the event that the Bankruptcy Court approves
an Alternative Transaction, upon the day after entry of such approval order;
(d) by Purchaser (provided that Purchaser is not then in material
breach of any provision of this Agreement):
(i) if the Bidding Procedures Order in substantially the form
contemplated by this Agreement (unless Purchaser shall have agreed to all
modifications) shall not have been approved by the Bankruptcy Court on or
before October 31, 2004 and entered promptly thereafter, and, as of the
time of such termination of this Agreement, the Bidding Procedures Order
shall not have been entered by the Bankruptcy Court;
(ii) if the Sale Order in respect of the Contemplated
Transactions in substantially the form contemplated by this Agreement
(unless Purchaser shall have agreed to all substantial modifications)
shall not have been approved by the Bankruptcy Court on or before February
15, 2005 and entered promptly thereafter, and, as of the time of such
termination of this Agreement, the Sale Order shall not have been entered
by the Bankruptcy Court; provided, however, that, if Sellers have received
and accepted a Qualified Bid (as defined in Exhibit A hereto) other than
that of Purchaser before the Purchaser has terminated this Agreement
pursuant to this subparagraph (ii), and provided that the Bankruptcy Court
shall have approved the provisions herein relating to the Break-Up Fee,
Purchaser may not terminate this Agreement until the 60th day after the
Bankruptcy Court has entered an order approving another Qualified Bid;
(iii) if there shall be a breach by Sellers of any
representation or warranty, or any covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in
SECTION 7.02(a) or (b) and which breach cannot be cured or has not been
cured by the earlier of (i) twenty (20) Business Days after the giving of
written notice by Purchaser to Sellers of such breach and (ii) the
Termination Date;
(iv) in accordance with the election described in SECTION
1.04(h)(i)(B); or
(v) if the Closing shall not have occurred on or before the
later of (A) March 31, 2005 (the "TERMINATION DATE") or (B) if Sellers
have received and accepted a Qualified Bid (as defined in Exhibit A
hereto) other than that of Purchaser before the Purchaser has terminated
this Agreement pursuant to this subparagraph (v) and provided that the
Bankruptcy Court shall have approved the provisions herein relating to the
Break-Up Fee, the 60th day after the Bankruptcy Court has entered an order
approving another Qualified Bid.
57
(e) by Sellers (provided that Sellers are not then in material
breach of any provision of this Agreement):
(i) if there shall be a breach by Purchaser of any
representation or warranty, or any covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in
SECTION 7.03(a) or (b) and which breach cannot be cured or has not been
cured by the earlier of (i) 20 Business Days after the giving of written
notice by Sellers to Purchaser of such breach and (ii) the Termination
Date;
(ii) subject to the right of Purchaser to receive any Break-Up
Fee or Expense Reimbursement, as applicable, and the return of the Good
Faith Deposit pursuant to SECTION 2.02(c), if Sellers accept a Qualified
Bid at the Auction other than that of Purchaser;
(iii) if the Closing shall not have occurred on or before the
Termination Date; or
(iv) if the Sellers have elected to terminate this Agreement
pursuant to Section 2.04(d) by reason of excess Deferred Capital
Expenditures.
Section 8.02 Procedure and Effect of Termination. In the event of
termination of this Agreement pursuant to SECTION 8.01, written notice thereof
shall forthwith be given to the other parties to this Agreement and, without
further action by any of the parties hereto, this Agreement shall thereupon
terminate and the parties shall thereupon have no liability or further
obligations with respect to the Contemplated Transactions, except that (i) the
provisions of SECTION 5.13 (Public Announcements), this SECTION 8.02 (Procedure
and Effect of Termination), ARTICLE XI (General Provisions) and any applicable
provisions relating to any Break-Up Fee or Expense Reimbursement, as well as any
definitions of defined terms used therein shall remain in full force and effect
and (ii) no party waives any claim or right against a breaching party arising
prior to the termination as a result of a breach of the breaching party's
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE IX
CASUALTY AND CONDEMNATION OF THE REAL PROPERTY
Section 9.01 Casualty.
(a) If, on or prior to the date of the Closing, all or a "material
part" (as defined below) of any Facility shall be damaged or destroyed by fire
or other casualty (a "CASUALTY EVENT"), then, in any such event, Purchaser may,
at its option, either (i) elect to exclude such Facility from the transactions
contemplated by this Agreement, whereupon such Facility shall be deemed to be an
Excluded Asset, the Purchase Price shall be reduced by the Allocable Portion
relating to such Excluded Asset and the parties
58
hereto shall be released of all obligations and liabilities of whatsoever nature
in connection with such Excluded Asset, or (ii) proceed to close the
transactions contemplated by this Agreement, in which event all of the
provisions of SECTION 9.01(b)(i) and SECTION 9.01(b)(ii) shall apply. If
Purchaser shall fail to make an election pursuant to this SECTION 9.01(a) prior
to the earlier of (A) thirty (30) days after Purchaser's receipt of written
notice of the applicable casualty event from Sellers and (B) the Closing Date,
then Purchaser shall be deemed to have made an election pursuant to clause (ii)
of this SECTION 9.01(a).
(b) If, on or prior to the Closing Date, less than a material part
of any Real Property Asset shall be damaged or destroyed by a casualty event,
Purchaser shall nevertheless consummate the transactions contemplated herein
pursuant to all the terms and conditions of this Agreement (without any
adjustment to the Purchase Price except as otherwise set forth herein) with
respect to such damaged Real Property Asset, subject to the following: (i)
Sellers shall not (x) adjust and settle any insurance claims with respect to
such damaged Real Property Asset, or (y) enter into any construction or other
contract for the repair or restoration of such damaged Real Property Asset, in
each case, without Purchaser's prior written consent (except no such consent
shall be necessary to repair or restore any emergency or hazardous condition at
such damaged Real Property Asset), which consent shall not be unreasonably
withheld or delayed, and (ii) at the Closing, Sellers shall (1) pay over to
Purchaser the amount of any insurance proceeds, to the extent collected by
Sellers in connection with such casualty event, less the amount of the actual
and reasonable unreimbursed expenses incurred by Sellers in connection with
collecting such proceeds and making any repairs to the applicable Real Property
Asset occasioned by such casualty event pursuant to any contract (provided that
such contract was reasonably approved by Purchaser if required by this Section)
and (2) assign to Purchaser in form reasonably satisfactory to Purchaser all of
the applicable Sellers' right, title and interest in and to any insurance
proceeds that are uncollected at the time of the Closing and that may be paid in
respect of such casualty event. Sellers shall reasonably cooperate with
Purchaser in the collection of such proceeds, which obligation shall survive the
Closing. Notwithstanding the foregoing, the benefit of any insurance proceeds in
relation to "business interruption" damages based upon lost profits or business
opportunities in respect of the period prior to the Closing Date and insurance
proceeds in relation to such damages to the extent attributable to any property
replaced or restored before the Closing Date or otherwise used for such purposes
will inure to the benefit of and be payable to the Sellers and Purchaser will
not be entitled to receive or retain such proceeds.
For the purpose of this Section, the phrase a "material part" of a
Facility Asset shall mean a portion of such Facility the cost of repair or
restoration of such portion is estimated by a reputable contractor selected by
Sellers and reasonably satisfactory to Purchaser, to be in excess of five
percent (5%) of the Allocable Portion relating to such Facility.
(c) If, prior to the Closing Date, any Facility or any portion
thereof shall be materially damaged or destroyed by a casualty event, Sellers
shall promptly give
59
Purchaser written notice of such event, including information in reasonable
detail regarding the extent of the damage to such Facility or portion thereof.
Section 9.02 Condemnation Pending Closing. If, prior to the Closing
Date, condemnation or eminent domain proceedings shall be commenced by any
competent public authority against any Facility or any portion thereof, Sellers
shall promptly give Purchaser written notice thereof. After notice of the
commencement of any such proceedings (from Sellers or otherwise) and in the
event that the taking of such Facility pursuant to such proceedings would
constitute a "Material Taking" (hereinafter defined), Purchaser shall have the
right (i) to accept title to such Facility subject to such proceedings,
whereupon any award payable to Sellers shall be paid to Purchaser and Sellers
shall deliver to Purchaser at the Closing all assignments and other documents
reasonably requested by Purchaser to vest such award in Purchaser, or (ii) elect
to exclude such Facility from the transactions contemplated by this Agreement,
whereupon such Facility shall be deemed to be an Facility, the Purchase Price
shall be reduced by the Allocable Portion relating to such Excluded Asset and
the parties hereto shall be released of all obligations and liabilities of
whatsoever nature in connection with such Excluded Asset. For the purposes of
this SECTION 9.02, a taking shall be deemed to be a "MATERIAL TAKING" with
respect to any Facility if such taking materially and adversely affects access
to such Facility, or leaves a remaining balance of such Facility which may not
be economically operated for the purpose for which the Facility was operated
prior to such taking, or if in the reasonable estimation of an appraiser
selected by Sellers, subject to Purchaser's reasonable approval, the taking
would result in a claim for condemnation proceeds equal to or in excess of five
percent (5%) of the Allocable Portion of the Purchase Price with respect to such
Facility. If a Facility is elected to be treated as an Excluded Asset pursuant
to clause (ii) of this SECTION 9.02, then Sellers shall use all reasonable
commercial efforts to cause such Excluded Asset to be transferred from the
Company or the related Company Subsidiary to the applicable public authority
prior to the Closing Date. If Purchaser shall fail to make an election pursuant
to this SECTION 9.02 prior to the earlier of (A) thirty (30) days after
Purchaser's receipt of written notice of the applicable proceedings from Sellers
and (B) the Closing Date, then Purchaser shall be deemed to have made an
election pursuant to clause (i) of this SECTION 9.02.
ARTICLE X
INDEMNIFICATION
Section 10.01 Survival.
(a) Subject to SECTIONS 10.01(b) and (c) (which shall survive the
Closing), all of the representations and warranties of Sellers and Purchasers
contained in this Agreement or in any certificate delivered by Sellers or
Purchasers pursuant to this Agreement shall not survive the Closing.
(b) Sellers shall indemnify, defend and hold harmless Purchaser and
its Affiliates, and the directors, managers, members, equity holders, trustees,
officers,
60
employees and agents thereof, from and against any and all Damages resulting
from or arising out of any Excluded Liability or any claim by a Third Party for
payment of an Excluded Liability.
(c) Purchaser shall indemnify, defend and hold harmless Sellers and
their Affiliates, and the directors, managers, members, equity holders,
trustees, officers, employees and agents thereof, from and against any and all
Damages resulting from or arising out of any Assumed Liability or any claim by a
Third Party for payment of an Assumed Liability.
Section 10.02 Matters Involving Third Parties.
(a) If a Third Party notifies any party hereto (the "INDEMNIFIED
PARTY") with respect to any matter which may give rise to a claim for
indemnification against the other party hereto (the "INDEMNIFYING PARTY") under
this ARTICLE X, then the Indemnified Party shall use reasonable efforts to
notify the Indemnifying Party thereof promptly and in any event within ten (10)
days after receiving any written notice from a third party; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless,
and solely to the extent that, the Indemnifying Party is actually and
substantially prejudiced thereby.
(b) Once the Indemnified Party has given notice of the matter to the
Indemnifying Party, the Indemnified Party may, subject to the Indemnifying
Party's rights to assume the defense of such matter pursuant to paragraph (c)
below, defend against the matter in any reasonable manner it deems appropriate.
The Indemnified Party shall keep the Indemnifying Party informed as to the
status of such actions.
(c) The Indemnifying Party may at any point in time choose to assume
the defense of all of such matter if the Indemnifying Party provides evidence
reasonably satisfactory to the Indemnified Party of its ability to provide the
indemnification required pursuant to this ARTICLE X.
(d) Upon assumption of the defense by the Indemnifying Party:
(i) the Indemnifying Party shall defend the Indemnified Party
against the matter with counsel of its choice reasonably satisfactory to
the Indemnified Party;
(ii) the Indemnified Party may retain separate counsel at its
sole cost and expense (except that the Indemnifying Party shall be
responsible for the fees and expenses of one separate co-counsel for all
Indemnified Parties to the extent the Indemnified Party is advised, in
writing by its outside counsel, that either (x) the counsel the
Indemnifying Party has selected has a conflict of interest, or (y) there
are legal defenses available to the Indemnified Party that are different
from or additional to those available to the Indemnifying Party); and
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(iii) the Indemnified Party shall make available to the
Indemnifying Party and its attorneys and accountants all books and records
of the Indemnified Party relating to such proceedings or litigation and
the parties agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and
adequate defense of any such action or proceeding.
(e) Assumption of the defense of any matter by the Indemnifying
Party shall without further action constitute an irrevocable waiver by the
Indemnifying Party of its right to claim at a later date that such third party
action for which the defense was assumed is not a proper matter for
indemnification pursuant to this ARTICLE X.
(f) The Indemnified Party shall not consent to the entry of a
judgment or enter into any settlement with respect to any matter which may give
rise to a claim for indemnification without the written consent of the
Indemnifying Party, which consent may not be unreasonably withheld or delayed.
(g) The Indemnifying Party shall not consent to the entry of a
judgment with respect to any matter which may give rise to a claim for
indemnification or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the written consent of the
Indemnified Party (not to be unreasonably withheld or delayed).
Section 10.03 Certain Additional Provisions Relating to
Indemnification.
(a) The indemnification provisions set forth in this ARTICLE X shall
only apply after the Closing Date, and after the Closing Date shall constitute
the sole and exclusive recourse and remedy available to the parties hereto with
respect to any monetary damages resulting from any breach of any representation,
warranty, covenant or agreement contained in this Agreement or in any
certificate delivered pursuant to this Agreement pertaining to any Excluded
Liability or Assumed Liability in respect of which indemnification is provided,
except in a case involving actual fraud.
(b) No indemnification shall be available to Purchaser for breach of
any covenant or agreement by Sellers to the extent such breach results in an
adjustment to the Purchase Price.
(c) Pursuant to Bankruptcy Code sections 503(b) and 507(a)(1), the
indemnification obligations of Sellers pursuant to this ARTICLE X shall receive
administrative claim status.
(d) All payments by an Indemnifying Party under ARTICLE X shall be
treated as an adjustment to the Purchase Price for all foreign, federal, state
and local income Tax purposes.
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ARTICLE XI
GENERAL PROVISIONS
Section 11.01 Notices. All notices, claims, demands, and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (c) the expiration of
three (3) Business Days after the day when mailed by registered or certified
mail (postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as shall
be specified by like notice):
(a) If to Purchaser, to:
Fortress NBA Acquisition LLC
c/o Fortress Investment Group LLC
1251 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(b) If to Sellers, to:
The National Benevolent Association
of the Christian Church (Disciples of ▇▇▇▇▇▇)
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy (which shall not constitute notice) to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
63
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Section 11.02 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.03 Entire Agreement; Assignment. This Agreement
(including the Schedules and Exhibits attached hereto and the other documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
between the parties, with respect to the subject matter hereof. This Agreement
and the rights and obligations hereunder may not be assigned by any party
hereto, including by operation of law or otherwise except (i) with the written
consent of the other parties hereto, or (ii) by Purchaser to one or more of its
direct or indirect subsidiaries or other Affiliates, which assignment shall not
relieve Purchaser of any of its obligations hereunder.
Section 11.04 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York without regard to
the rules of conflict of laws of the State of New York.
Section 11.05 Venue and Retention of Jurisdiction. All actions
brought, arising out of, or related to the Contemplated Transactions shall be
brought in the Bankruptcy Court, and the Bankruptcy Court shall retain
jurisdiction to determine any and all such actions.
Section 11.06 Expenses. Except as otherwise provided herein, whether
or not the actions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the Contemplated
Transactions shall be paid by the party incurring such expenses.
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Section 11.07 Amendment. Except as otherwise expressly provided
herein, this Agreement (including the Schedules and Exhibits hereto) may not be
amended except by an instrument in writing signed on behalf of the parties
hereto.
Section 11.08 Waiver. At any time prior to the Closing Date, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 11.09 Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by all the other parties hereto.
Section 11.10 Severability; Validity; Parties in Interest. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Nothing in this Agreement, express or implied, is
intended to confer upon any person not a party to this Agreement (including any
employee or former employee of a Seller, creditor or interest holder) any rights
or remedies of any nature whatsoever under or by reason of this Agreement,
except as otherwise explicitly provided by ARTICLE X.
Section 11.11 Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
all other remedies available at law or in equity.
Section 11.12 No Other Representation. THE PURCHASER ACKNOWLEDGES
AND AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
ACQUIRED ASSETS SHALL BE CONVEYED AND TRANSFERRED TO THE PURCHASER "AS IS, WHERE
IS, AND WITH ANY AND ALL FAULTS AND PATENT AND LATENT DEFECTS," AND SELLERS HAVE
NOT MADE, DO NOT MAKE, AND SPECIFICALLY DISCLAIM ANY REPRESENTATION, PROMISE,
COVENANT, AGREEMENT, GUARANTY OR WARRANTY OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, OR ARISING BY OPERATION OF LAW, AS TO THE MERCHANTABILITY, QUANTITY,
QUALITY, CONDITION, SUITABILITY, HABITABILITY, OR FITNESS OF ANY OF THE ACQUIRED
ASSETS FOR ANY
65
PURPOSE WHATSOEVER, INCLUDING ANY REPRESENTATION REGARDING SOIL CONDITIONS,
AVAILABILITY OF UTILITIES, DRAINAGE, ZONING LAWS, ENVIRONMENTAL LAWS, OR ANY
OTHER FEDERAL, STATE OR LOCAL STATUTES, CODES, REGULATIONS OR ORDINANCES. THE
PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT THE PROVISIONS IN THIS AGREEMENT FOR
THE PURCHASER'S INSPECTION AND INVESTIGATION OF THE ACQUIRED ASSETS ARE ADEQUATE
TO ENABLE THE PURCHASER TO MAKE THE PURCHASER'S OWN DETERMINATION WITH RESPECT
TO THE SUITABILITY OR FITNESS OF THE LAND, INCLUDING WITH RESPECT TO SOIL
CONDITIONS, AVAILABILITY OF UTILITIES, DRAINAGE, ZONING LAWS, ENVIRONMENTAL
LAWS, AND ANY OTHER FEDERAL, STATE OR LOCAL STATUTES, CODES REGULATIONS OR
ORDINANCES. THE PURCHASER ACKNOWLEDGES THAT THE DISCLAIMERS, AGREEMENTS AND
OTHER STATEMENTS SET FORTH IN THIS PARAGRAPH ARE AN INTEGRAL PORTION OF THIS
AGREEMENT.
Section 11.13 No Personal Liability. In entering into this
Agreement, the parties understand, agree and acknowledge that no director,
trustee, officer, manager, member, employee, shareholder, attorney, accountant,
advisor or agent of any of the parties hereto shall be personally liable or
responsible to any other party or its Affiliates, directors, trustees, officers,
managers, members, employees, shareholders, attorneys, accountants, advisors or
agents for the performance of any obligation under this Agreement of any party
to this Agreement or the truth, completeness or accuracy of any representation
or warranty contained in, or statement made in, this Agreement or any document
prepared pursuant hereto and that all obligations hereunder are those of the
named parties only (but nothing contained herein shall limit the liability of
any person for his or her fraudulent acts).
Section 11.14 Schedules. Sellers may, at their option, include in
the Schedules items that are not material in order to avoid any
misunderstanding, and such inclusion, or any references to dollar amounts, shall
not be deemed to be an acknowledgement or representation that such items are
material, to establish any standard of materiality or to define further the
meaning of such terms for purposes of this Agreement. Information disclosed in
the Schedules shall constitute a disclosure for all purposes under this
Agreement notwithstanding any reference to a specific section.
Section 11.15 Drafting. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and, in the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as jointly drafted by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.
Section 11.16 Bulk Sales Laws. Purchaser hereby waives compliance by
Sellers with the requirements and provisions of any "bulk-transfer" Laws of any
jurisdiction that may otherwise be applicable with respect to the sale and
transfer of any or all of the Acquired Assets to Purchaser.
66
Section 11.17 Guaranty. The Guarantor hereby guarantees the
performance by Purchaser of its obligations under this Agreement (on the terms
and subject to the conditions set forth in this Agreement). The Guarantor hereby
waives: (i) diligence, presentment, protest, acceleration and dishonor; (ii)
filing of claims with a court in the event of insolvency or bankruptcy of
Purchaser; (iii) all defenses based on laws of suretyship; (iv) all demands
whatsoever, except to the extent required to be made upon Purchaser; and (v) any
right to require a proceeding first against Purchaser. No amendment,
modification or waiver of any of the terms, covenants or conditions of this
Agreement shall operate to discharge Guarantor from any of its obligations under
this SECTION 11.17. Guarantor's guaranty under this SECTION 11.17 (i) will not
be discharged except upon satisfaction by Purchaser of its obligations hereunder
and (ii) is a guaranty of payment and not collection.
ARTICLE XII
DEFINITIONS
Section 12.01 Certain Defined Terms. As used herein, those terms
that are defined in other Sections of this Agreement shall have the meanings
given to them in those Sections and the terms below shall have the following
meanings.
"AFFILIATE" means, with respect to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person. For purposes hereof, the term "Affiliate" as it relates to
Purchaser shall include Fortress Investment Trust, Fortress Brookdale
Acquisition LLC, FIT NBAS LLC, and Brookdale Living Communities, Inc.
"APPLICABLE LAW" means any law, statute, order, rule, ordinance or
regulation in any jurisdiction where the Business is conducted.
"ACTION OR PROCEEDING" means all actions, suits, proceedings,
pleadings, charges, complaints, claims or demands.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Western District of Texas.
"BUSINESS" means the business of Sellers involving the ownership and
operation of the senior living communities and facilities located on the Real
Property Assets identified on SCHEDULE I, including the provision thereat of
independent living, assisted living, intermediate care and skilled nursing care
services, as well as the rental, sale and maintenance of independent residences
to senior citizens and the elderly. The term "Business" does not mean, nor shall
it include, the business of any of the Sellers involving (i) the ownership,
operation or provision of any children's or special care services (as provided
at other locations) (other than to senior citizens or the elderly as described
above) or any management services with respect to any business or facility not
otherwise located on the Real Property Assets, or the ownership or operation of
related
67
facilities or the management of low and moderate income housing facilities, (ii)
Sellers' charitable fund-raising or other charitable endeavors or (iii) any
business of Sellers which is not conducted on or with respect to the Real
Property Assets.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which banking institutions in New York, New York are authorized or
required by law or executive order to close.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIAL LEASE" means each commercial lease, sublease, license,
occupancy or other agreement for the present or future lease, rental, use or
occupancy of any space in or on any of the Real Property Assets, in respect of
which a Seller holds the interest of the lessor, sublessor or licensor
thereunder, as the case may be, and all guaranties or other documents relating
thereto. For the sake of clarity, any Person who has a right to use or occupy
any space at any Real Property Asset, who is not listed as a tenant under a
Residency Agreement, shall be deemed to be a tenant under a Commercial Lease.
"CONFIDENTIALITY AGREEMENT" means the letter agreement between
Seller and Purchaser regarding confidential treatment of certain information
concerning Seller and their Affiliates.
"CONTRACT" means each contract (including, without limitation, an
Equity Home Servicing Agreement), commitment, lease of personal property,
license, purchase order and any other legally binding arrangement, oral or
written, to which a Seller is a party or to which a Seller or any of the
Acquired Assets is subject and which relate to the Business, but excludes any
Property Agreements.
"CURE AMOUNTS" means the cure amounts payable in order to cure any
defaults or otherwise effectuate, pursuant to the Bankruptcy Code, the
assumption by a Seller or Sellers and assignment to and assumption by Purchaser
of Assumed Contracts or Residency Agreements to be assigned to Purchaser in
accordance herewith; provided, however, that, if the Bankruptcy Court has
estimated and authorized a Seller to reserve an amount on account of a claim for
a Cure Amount that has not been resolved, the amount so estimated shall be the
Cure Amount with respect to an Assumed Contract or Residency Agreement.
"DAMAGES" means any and all losses, damages, claims, demands, causes
of action, suits or judgments of any nature, costs and expenses (including
reasonable fees and expenses of attorneys).
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"ENVIRONMENTAL LAWS" means any and all Laws relating to pollution or
protection of the environment in effect in any and all jurisdictions in which
Seller is conducting or at any time has conducted business or where the Acquired
Assets are or were located, including Laws relating to Hazardous Materials, or
exposure to Hazardous Materials.
"ENVIRONMENTAL PERMITS" means any Permits required by Environmental
Laws for the conduct of the Business.
"EQUITY HOME SERVICING AGREEMENTS" means all agreements between
Sellers and the owners of the Equity Homes.
"ESCROW AGENT" means Citibank, N.A., the escrow agent under the
Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement that Sellers and
Purchaser agree to negotiate in good faith and enter into within two (2)
Business Days following the filing by Sellers of the Bidding Procedures Motion
with the Bankruptcy Court, as the same may be amended, modified, or supplemented
from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"FACILITIES" shall have the meaning provided by SECTION 3.04(a).
"GAAP" means generally accepted accounting principles in the United
States as of the date hereof.
"GOVERNMENTAL AUTHORITY" means any domestic or foreign
national, regional, state, provincial or local court, governmental or
quasi-governmental regulatory or other agency, authority, commission, board or
other authority with jurisdiction over the Business (including the Bankruptcy
Court).
"HAZARDOUS MATERIALS" means: (i) any "waste," "hazardous waste,"
"industrial waste," "solid waste," "hazardous material, "hazardous substance,"
"toxic substance," "hazardous material," "pollutant," or "contaminant" as those
or similar terms are defined, identified, or regulated under any Environmental
Laws; (ii) any asbestos, polychlorinated biphenyls, or radon; (iii) any
petroleum, petroleum hydrocarbons, petroleum products, crude oil and any
components, fractions, or derivatives thereof; and (iv) any substance that,
whether by its nature or its use, is subject to regulation under any
Environmental Law or results in any Governmental Authority requiring any
environmental investigation, remediation, or monitoring thereof.
"INCLUDE" and "INCLUDING" mean including without limitation.
"INSTITUTIONAL MORTGAGEE" means a savings bank, a savings and loan
association, a commercial bank or trust company (whether acting individually, as
agent
69
for others, as a trustee, as a servicing agent or in a fiduciary capacity), an
insurance company, a commercial credit corporation, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or
similar financing companies, an investment bank or an Affiliate thereof
regularly engaged in the business of making commercial loans, a real estate
investment trust, real estate fund, a loan conduit program or other similar
investment entity, or any other Person regularly engaged in the business of
making commercial real estate loans.
"INTELLECTUAL PROPERTY" means all of the following as they exist in
all jurisdictions throughout the world, in each case, owned or used by Sellers
and related to the conduct of the Business (except as provided in SECTION 1.07):
(i) trademarks, service marks, trade dress, trade names, brand
names, Internet domain names, designs, logos, or corporate names, whether
registered or unregistered, and all registrations and applications for
registration thereof;
(ii) copyright registrations and applications for registration
thereof and un-registered copyrights; and
(iii) all licenses in respect of any of the items identified
in clauses (i) and (ii) of this definition.
"KNOWLEDGE" with respect to Seller means the actual, direct and
personal knowledge of any of the representatives of Seller identified on
SCHEDULE XII, with respect to Purchaser means the actual, direct and personal
knowledge of the representatives of the Purchaser (including of the Manager)
identified on SCHEDULE XII and with respect to any individual, or any other
Person, as the case may be, such individual's actual, direct and personal
knowledge, in each case after reasonable inquiry.
"LAW" means any federal, state, local or foreign law, statute, code,
ordinance, Order, rule or regulation.
"LEASE FINANCING PROVISIONS" means provisions pursuant to which: (i)
the tenant has the right, without the landlord's consent, to grant a mortgage or
security interest with respect to the tenant's leasehold interest under the
Cypress Village Ground Lease to an Institutional Mortgagee and such
Institutional Mortgagee or its designee may succeed to the tenant's interest
under the Cypress Village Ground Lease whether by foreclosure, or assignment of
the tenant's interest in the ground lease in lieu of foreclosure, without the
consent of the Cypress Village Ground Lessor; (ii) the landlord agrees to
provide the Institutional Mortgagee with notice of any default by the tenant
under the Cypress Village Ground Lease and a reasonable opportunity to cure such
default prior to the exercise by the landlord of its right to terminate the
Cypress Village Ground Lease; (iii) the landlord agrees to not enter into any
amendment or modification of the Cypress Village Ground Lease without the prior
written consent of the Institutional Mortgagee (provided that the Institutional
Mortgagee has provided to landlord current notice information); (iv) to the
extent permitted by applicable law, the landlord agrees that in a condemnation
proceeding with respect to any property subject to the Cypress
70
Village Ground Lease, each of landlord and tenant may seek a separate
condemnation award based on their respective interests in the property subject
to condemnation; (v) the landlord agrees that if the Cypress Village Ground
Lease is terminated for any reason (including as a result of the rejection of
the lease in a bankruptcy proceeding), the Institutional Mortgagee shall have
the right, within thirty (30) days following the date of such termination or
rejection, to enter into a new ground lease with the landlord on substantially
the same terms as the Cypress Village Ground Lease for the remaining term
thereof (including with respect to the tenant's purchase option contained
therein); and (vi) the landlord agrees that if the Institutional Mortgagee
succeeds to the interest of tenant under the Cypress Village Ground Lease, the
Institutional Mortgagee shall not be liable for any defaults of the prior tenant
which, by their nature, cannot be cured by the Institutional Mortgagee (such
incurable defaults shall not include the payment of rent or other amounts to the
landlord).
"LEASED REAL PROPERTY" means that certain parcel of land consisting
of approximately 19.55 acres and described as the "Leased Premises" under the
Cypress Village Ground Lease.
"LEGAL PROCEEDING" means any judicial, administrative, regulatory or
arbitral proceeding, investigation or inquiry or administrative charge or
complaint pending at law or in equity before any domestic or foreign
governmental or regulatory body or authority.
"LIABILITY" means any debt, liability or obligation (whether direct
or indirect, known or unknown, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due), and including all costs
and expenses relating thereto.
"LIENS" means any pledge, option, charge, hypothecation,
easement, security interest, right of way, encroachment, mortgage, deed of
trust, or other encumbrances or restrictions on transfer and shall also have the
meaning ascribed to "lien" in section 101 of the Bankruptcy Code.
"MANAGER" means the Person or Persons engaged by Purchaser to manage
the Facilities following the Closing.
"MATERIAL ADVERSE EFFECT" means any one or more events, conditions
or circumstances which result in or would reasonably be expected to result in
(i) a material adverse effect on the properties, assets, results of operations
or condition (financial or otherwise) of the Business taken as a whole or (ii) a
material adverse effect on the ability of Sellers to perform their obligations
hereunder, in either case other than an effect resulting from (i) any change in
the United States or foreign economies or securities or financial markets in
general (including any such change resulting from any natural calamity, act of
war, hostilities or act of terrorism); (ii) any change that generally affects
the industry in which Sellers operate (including any such change resulting from
any natural calamity, act of war, hostilities or act of terrorism); (iii) any
action taken by
71
Purchaser or its Affiliates with respect to the transactions contemplated hereby
or with respect to Sellers, including its employees; and (iv) the pendency of
the Bankruptcy Cases or the proceedings relating thereto.
"MATERIAL CONTRACT" means any written or, to the Knowledge of
Sellers, oral contract, agreement, lease, license, instrument or other legally
binding and enforceable commitment to which the Company or any of the Company
Subsidiaries is a party or is otherwise subject which requires an annual payment
in excess of $100,000.
"MAY 6TH ORDER" means the Final Order and Stipulation dated May 6,
2004 Regarding the Debtors' Motion to Maintain and Honor Obligations Relating to
Entrance Fee Programs at the Debtors' Senior Care Living Facilities.
"MEDIATOR" means Judge ▇▇▇▇ ▇▇▇▇▇, as appointed as mediator in the
Bankruptcy Cases (and any successor appointee).
"NBA ASSETS" means the Acquired Assets owned by the Company other
than the Real Property Assets owned by NBA.
"NEW SURVEY" a survey of the applicable Real Property Asset
performed by a surveyor licensed in the state in which such asset is located and
certified to Purchaser as having been prepared in accordance with 1999 minimum
standard details for a land survey jointly adopted by ALTA/ACSM.
"ORDER" means any judgment, injunction, ruling, order, writ, decree
or award, including final determinations under arbitration proceedings.
"OWNED REAL PROPERTY" means the fee estate in and to those certain
plots, pieces and parcels of land owned by a Seller (including all Equity Homes
owned by a Seller), used in the Business and identified in the descriptions
referred to in SECTION 3.04 (the "Land"), together with all of the buildings and
other improvements built on or attached or appurtenant to the Land or to the
land leased to the Company under the Cypress Village Ground Lease (to the extent
of the Company fee ownership of such buildings and improvements), together with
the Sellers' right, title and interest, if any, in and to any strips and gores
adjacent to the Land and any land lying in the bed of any street, road or
avenue, opened or proposed, public or private, in front of or adjoining the
Land, to the center line thereof, and all right, title and interest, if any, of
Sellers in and to any award made or to be made in lieu thereof and in and to any
unpaid award for any taking by condemnation or damage to the Land by reason of
change of grade of any street. Consistent with SECTION 2.07, it is understood
that the actual legal description of the Land will be the legal description set
forth in the Title Commitments and New Surveys.
"PERMITS" means all permits, licenses, franchises, quality
certifications, certificates of occupancy, variances, exemptions, orders and
other governmental
72
authorizations, consents, waivers, registrations and approvals necessary to
conduct the Business as presently conducted.
"PERMITTED ENCUMBRANCES" means, with respect to or upon any Acquired
Assets, any (i) easements, encroachments, licenses, rights of way, defects or
imperfections in title, charges, restrictions, encumbrances or similar
reservations of grant or clouds on title which do not materially impair the
current use, occupancy, or value, or the marketability of title, of such
Acquired Asset and which would not individually (or in the aggregate with
others) be reasonably expected to materially interfere with the use or enjoyment
of such Acquired Asset by Purchaser in the same manner it is currently being
used or enjoyed by Seller in the Business; (ii) Liens securing the performance
of bids, tenders, leases, contracts (other than for the repayment of debt),
statutory obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of the
Business; (iii) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's, landlords', laborers', suppliers' and vendors' Liens,
incurred in good faith in the ordinary course of the Business and securing
obligations, including with respect to current Taxes, assessments or other
governmental charges, which are not yet due, (iv) Assumed Liabilities, (v)
defects, exceptions, restrictions, easements, rights of way and encumbrances
disclosed in the Title Commitments which the Sellers do not otherwise cure
pursuant to SECTION 2.07, (vi) zoning, entitlement and other land use and
environmental regulations by any Governmental Authority; (vii) extensions,
renewals and replacements of Liens referred to in (i) through (vii) of this
sentence; provided, that any such extension, renewal or replacement Lien shall
be limited to the property or assets covered by the Lien extended, renewed or
replaced and that the obligations secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the amount of the
obligations secured by the original Lien extended, renewed or replaced. For
purposes hereof, "Surviving Permitted Encumbrances" shall mean the categories of
Permitted Encumbrances described in the foregoing sentence, other than those
referred to in clause (ii), and other than extensions, renewals and replacements
referred to in clause (vii) of such item referred to in clause (ii).
"PERSON" means any natural person, firm, partnership, limited
liability company, association, corporation, trust, business trust or other
entity (including any Governmental Authority).
"PROPERTY AGREEMENTS" means collectively, the Residency Agreements
and the Commercial Leases.
"REAL PROPERTY ASSETS" means, collectively, the Owned Real Property
and the Company's leasehold interest in the Leased Real Property.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property.
73
"RENT" means any rent, payments, fees, charges or other amounts
payable by the tenant under any Property Agreement.
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, trustees, officers, employees, legal counsel, financial advisors,
representatives, accountants, and auditors.
"RESIDENCY AGREEMENT" means each lease, sublease, license, occupancy
agreement or other agreement for the present or future lease, rental, use or
occupancy of any space in or on any of the Real Property Assets with a Person
who intends to occupy the space as a residential tenant or occupant or for
purposes of any treatment or care provided by the Facilities as part of the
Business, in respect of which a Seller holds the interest of the lessor,
sublessor or licensor or any other interest thereunder, as the case may be, and
all guaranties or other documents relating thereto.
"RESIDENT LITIGATION" shall mean any and all litigation between, or
claims against, the Sellers and the Official Committee of Resident/Creditors or
any party to a Residency Agreement as to the justification and proper amounts
payable under the Residency Agreements during periods prior to Closing.
"SURVIVING PERMITTED ENCUMBRANCES" means those Permitted
Encumbrances identified as such in the definition of "Permitted Encumbrances."
"TAX" or "TAXES" means any and all federal, state, county, local,
foreign and other taxes, assessments, duties or charges of any kind whatsoever,
including payments in lieu of taxes ("PILOTS") corporate, business profits,
franchise, income, sales, use, ad valorem, gross receipts, value-added, profits,
license, minimum, alternative minimum, environmental, withholding, payroll,
employment, excise, property, customs and occupation taxes, and any interest,
fine, penalty, addition to tax and other amounts imposed with respect thereto.
"TAX REFUND" means any refunds of Taxes applicable to the
Business.
"TAX RETURNS" means all federal, state, local, and foreign tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amended Tax Returns relating to Taxes.
"THIRD PARTY" in respect of the Sellers, the Purchaser or any other
Person shall include any other Person who is not Affiliated with or a director,
trustee, officer, employee or agent of such Person.
"TRANSACTION AGREEMENTS" means this Agreement and each other
agreement, document, instrument or certificate executed by Sellers or Purchaser
in connection with the consummation of the Contemplated Transactions.
74
"WARN" means the Worker Adjustment and Retraining Act, as amended,
or any similar state or local law requiring notice to employees of a sale of
closing.
75
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on their behalf by their officers thereunto duly authorized, as of
the date first above written.
FORTRESS NBA ACQUISITION, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
FORTRESS INVESTMENT FUND II LLC,
as Guarantor
By: FORTRESS FUND ▇▇ ▇▇ LLC, its
Managing Member
By: FORTRESS INVESTMENT GROUP
LLC, its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
NATIONAL BENEVOLENT ASSOCIATION
OF THE CHRISTIAN CHURCH
(DISCIPLES OF ▇▇▇▇▇▇)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Title: NBA President
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ CHRISTIAN HOME,
an Illinois not-for-profit
corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Chairman
---------------------------
76
CALIFORNIA CHRISTIAN HOME, a
California not-for-profit
corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
CYPRESS VILLAGE, INC., a Florida
not-for-profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
FOXWOOD SPRINGS LIVING CENTER, a
Missouri not-for-profit
corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
KANSAS CHRISTIAN HOME, INC.
(DISCIPLES OF ▇▇▇▇▇▇), a Kansas
not-for-profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
LENOIR, INC., a Missouri not-for-
profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
77
OKLAHOMA CHRISTIAN HOME, INC.,
an Oklahoma not-for-profit
corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
PATRIOT HEIGHTS, INC., a Texas
not-for-profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
▇▇▇▇▇▇ HOME, an Iowa not-for-
profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
GREATER INDIANAPOLIS DISCIPLES
HOUSING INC., an Indiana not-for-
profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
VILLAGE AT SKYLINE, a Colorado
not-for-profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
78
HOMES OF CYPRESS, INC., a Florida
not-for-profit corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
79
EXHIBIT A
BIDDING PROCEDURES
Set forth below are the bidding procedures (the "Bidding
Procedures") to be employed with respect to the transactions contemplated by the
Asset Purchase Agreement by and among Fortress NBA Acquisition, LLC
("Purchaser") and The National Benevolent Association of the Christian Church
(Disciples of ▇▇▇▇▇▇) ("Seller") and its Affiliates (together with Seller, the
"Sellers"), dated as of September 3, 2004 (as amended from time to time, the
"Purchase Agreement"),1 concerning the prospective sale (the "Sale") of Sellers'
assets free and clear of all liens, claims, and encumbrances pursuant to section
363(f) of the Bankruptcy Code (as defined more specifically in the Purchase
Agreement, the "Acquired Assets"). The Sellers either have sought or will
promptly seek entry of an order by the Bankruptcy Court authorizing and
approving the Sale to one or more Qualified Bidders (as defined below). The
Sellers, as authorized by the Restructuring Committee of the Seller's Board of
Trustees (the "Restructuring Committee"), shall select the highest or otherwise
best offer for the Acquired Assets (the "Successful Bid(s)"). Such selection may
be observed by members of the ad hoc committee formed pursuant to the mediation
agreement dated June 15, 2004 (the "Ad Hoc Committee"), the Official Committee
of Unsecured Creditors, the Official Committee of Residents, and all affected
Attorneys General, together with their legal and financial advisors
(collectively, the "Constituents"). In selecting the Successful Bid(s), the
Restructuring Committee shall consider the recommendation of the Ad Hoc
Committee, as expressed by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital (the
"Transaction Broker").
THE BIDDING PROCESS
Any person or entity that desires to obtain information about the
Sale (a "Potential Bidder") shall contact the Transaction Broker at the address
provided below. Upon execution of a confidentiality agreement in form and
substance satisfactory to the Sellers, the Transaction Broker shall make
available to such person or entity certain information concerning the Sale. The
Transaction Broker shall inform the Restructuring Committee of any such inquiry
and whether such person or entity executed the above-referenced confidentiality
agreement. The Sellers, in consultation with the Transaction Broker, will (i)
determine whether any person is a Qualified Bidder , (ii) coordinate the efforts
of Qualified Bidders in conducting their respective due diligence investigations
regarding the Acquired Assets generally, (iii) receive offers from Qualified
Bidders, and (iv) negotiate any offer made to purchase the Acquired Assets
(collectively, the "Bidding Process").
Only persons or entities who are expressly invited to participate in
the Auction (as defined below) and who have submitted Qualified Bids (as defined
below) shall be eligible to participate in the Auction. The Sellers, in
consultation with the Purchaser, shall have the right to adopt such other rules
and to modify certain terms related to the Bidding Process which, in their sole
judgment, will better promote the goals of the Bidding Process and which are not
inconsistent with any of the other provisions hereof or of any Bankruptcy Court
order.
BID DEADLINE
Any person or entity who desires to make a bid must deliver, to the
addressees listed below, a written copy of its bid to the Transaction Broker and
counsel for the Sellers not later than 12:00 noon (Eastern Time) on the Business
Day that is 45 days after the entry of the Bid Procedures Order (or
------------
(1)Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to them in the Purchase Agreement
A-1
the next Business Day if 45 days lapse on a non-Business Day), unless extended
by the Sellers in consultation with Transaction Broker (the "Bid Deadline").
Upon receipt, the Sellers shall immediately distribute a copy of each such bid
to the Purchaser.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
DETERMINATION OF "QUALIFIED BID" STATUS
A bid received from a person or entity will constitute a "Qualified
Bid," and such person or entity shall be deemed a "Qualified Bidder," only if
such bid includes all of the Required Bid Documents listed below and meets all
of the Bid Requirements set forth below. Notwithstanding the foregoing, the
Purchase Agreement will be deemed a Qualified Bid and the Purchaser will be
deemed a Qualified Bidder for all purposes in connection with the Auction.
Requirements for Submitting a Qualified Bid: In order to constitute
a Qualified Bid, a bid (other than the bid of the Purchaser) must satisfy the
following requirements (collectively, the "Bid Requirements"):
(a) A bidder must submit the following "Required Bid Documents" in a
form acceptable to the Sellers:
(i) A written offer stating that (x) the Qualified Bidder
offers to purchase one or more, or substantially all, of the Acquired
Assets, (y) an executed purchase and sale agreement that substantially
conforms to the Purchase Agreement or that contains terms and conditions
that are no less favorable to the Sellers than the Purchase Agreement,
together with a copy electronically marked to indicate any changes to the
Purchase Agreement, and (z) the Qualified Bidder's offer is irrevocable
until the closing of the purchase of the Acquired Assets; and
(ii) A good faith deposit (the "Good Faith Deposit") in the
form of a certified check (or other form acceptable to the Sellers in
their sole discretion) payable to the order of the Sellers (or such other
party as the Sellers may determine) in an amount equal to or greater than
10% of the Qualified Bid of the Qualified Bidder; and
(iii) A bid registration form in substantially the form
attached hereto;
(b) The bid must consist of a good faith, bona fide offer to
purchase all or a portion of the Acquired Assets for cash only and/or cash and
the assumption of all or a portion of the Sellers' liabilities;
A-2
(c) The bid is accompanied by satisfactory evidence of committed
financing or other ability to perform the acquisition of the Acquired Assets;
(d) The bid shall reference the bidder's willingness to provide
satisfactory evidence of its ability to provide adequate assurance of future
performance (within the meaning of the Bankruptcy Code) under any unexpired
lease and executory contracts to be assumed by the Sellers and assigned to the
Qualified Bidder;
(e) The bid is not conditioned upon the Bankruptcy Court's approval
of any bid protections, such as a breakup fee, termination fee, expense
reimbursement or similar type of payment;
(f) The bidder acknowledges and represents that it: (1) has had an
opportunity to conduct due diligence regarding the Acquired Assets prior to
making its offer and does not require further due diligence before being bound
by its bid (if accepted); (2) has relied solely upon its own independent review,
investigation and/or inspection of any documents and/or the Acquired Assets in
making its bid; and (3) did not rely upon any written or oral statements,
representations, promises, warranties or guaranties whatsoever, whether express,
implied, by operation of law or otherwise, regarding the Acquired Assets, or the
completeness of any information provided in connection therewith or the Auction,
except as expressly state in these Bidding Procedures; and
(g) The bid is received by the Bid Deadline.
In evaluating a Qualified Bid, the Sellers, in consultation with the
Transaction Broker, will consider, among other factors, whether or not the bid
(i) is materially more burdensome or conditional than the terms of the Purchase
Agreement and (ii) has a value greater than or equal to, when combined with any
other Qualified Bid or the value of any Acquired Assets retained by the Sellers,
the sum of (w) the amount of the Breakup Fee or Expense Reimbursement (as
applicable), plus (x) $500,000, plus (y) the consideration to the Sellers
arising out of the Purchase Agreement including the payment of the Purchase
Price and the assumption of the Assumed Liabilities. In the event that the
Sellers determine that more than one Qualified Bid should be combined to
constitute the highest or otherwise best bid for the Acquired Assets, all
references in these Bidding Procedures to a Successful Bidder or Successful Bid
shall be deemed to be a reference to such combination of bids.
AUCTION
If more than one Qualified Bid is received, the Sellers will conduct
an auction (the "Auction") with respect to the Acquired Assets. If no Qualified
Bid (other than that of the Purchaser) is received by the Bid Deadline, the
Sellers shall report the same to the Bankruptcy Court, the Purchaser's bid will
be deemed the highest or otherwise best offer for the Acquired Assets (the
"Successful Bid") and the Sellers shall proceed with the transactions
contemplated by the Purchase Agreement.
The auction, if required, will commence at 9:00 a.m. (Central Time)
on November 19, 2004, at the offices of the Transaction Broker or at such later
time or other place as agreed by the Purchaser and the Sellers, and of which the
Sellers will notify all Qualified Bidders who have submitted Qualified Bids.
At least one (1) business day prior to the Auction, the Sellers will
provide to the Purchaser and all other Qualified Bidders a copy of the highest
or otherwise best Qualified Bid received and copies of all other Qualified Bids.
In addition, the Sellers will inform the Purchaser and each Qualified Bidder who
has expressed its intent to participate in the Auction of the identity of all
Qualified
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Bidders that may participate in the Auction and will provide copies of the bids
of all such Qualified Bidders.
Only the Purchaser, the Qualified Bidders, the Restructuring
Committee on behalf of the Sellers, the Transaction Broker, and the
Constituents, together with their representatives, will be entitled to attend
the Auction, and only the Purchaser and Qualified Bidders will be entitled to
make any subsequent Qualified Bids at the Auction.
During the Auction, bidding will begin at the purchase price stated
in the highest or otherwise best Qualified Bid , and will subsequently continue
in minimum increments of at least $500,000 (the "Overbid Amount") higher than
the previous Qualified Bid. The Sellers may reduce (or increase) the Overbid
Amount at the Auction if they determine, in their discretion, that it is in the
best interests of their estates to do so. Subsequent Qualified Bids submitted by
the Purchaser will be deemed to include a credit in an amount equal to the
Breakup Fee or the maximum amount of the Expense Reimbursement, as applicable.
Bids made at the Auction shall be made in open and in public in the
presence of all other Qualified Bidders from time to time during the Auction;
provided, however, that Sellers, in consultation with the Transaction Broker,
may negotiate or otherwise discuss bids with Qualified Bidders in private during
the Auction. All Qualified Bidders shall be required to disclose at the Auction
the identity of the person or entity on whose behalf its bid is being submitted.
Bidding at the Auction will continue until such time as the highest or otherwise
best Qualified Bid is determined. Upon the conclusion of the Auction, the
Sellers, in consultation with the Transaction Broker , will (i) review each
Qualified Bid on the basis of financial and contractual terms and other factors
relevant to the Sale, including those factors affecting the speed and certainty
of consummating the Sale, and (ii) identify the highest or otherwise best offer
for the Acquired Assets (as defined above, the "Successful Bid"). The Sellers,
as authorized by the Restructuring Committee, shall select the Successful Bid.
In selecting the Successful Bid, the Restructuring Committee shall consider the
recommendation of the Ad Hoc Committee, as expressed by the Transaction Broker.
The Sellers' determinations relating to the highest or otherwise best offer for
the Acquired Assets shall, however, be subject to Bankruptcy Court approval. In
the event of any dispute concerning such selection, the Bankruptcy Court shall
have the exclusive jurisdiction to adjudicate such matter. The Successful Bidder
shall be required to supplement its Good Faith Deposit within one (1) business
day following the conclusion of the Auction to the extent necessary to ensure
that such deposit is equal to at least 10% of the consideration (including cash
and assumption of liabilities) to be paid pursuant to the Successful Bid.
ACCEPTANCE OF QUALIFIED BIDS
At the Sale Hearing, the Sellers will seek entry of an order
authorizing and approving the Sale (i) if no Qualified Bid is received (other
than that of the Purchaser), to the Purchaser pursuant to the terms and
conditions set forth in the Purchase Agreement, or (ii) if another Qualified Bid
is received by the Sellers, to the Purchaser or such other Qualified Bidder as
the Sellers, in the exercise of their business judgment, determine have made the
highest or otherwise best offer to purchase the Acquired Assets (the "Successful
Bidder"). The Sellers, in their sole discretion, in consultation with the
Transaction Broker, may adjourn or reschedule the Sale Hearing without notice by
an announcement of the adjourned date at the Sale Hearing.
Following the Sale Hearing approving the Sale of the Acquired Assets
to the Successful Bidder, if such Successful Bidder fails to consummate an
approved Sale because of a breach or failure to perform on the part of such
Successful Bidder, the next highest or otherwise best Qualified Bid, as
disclosed at the Sale Hearing, will be deemed to be the Successful Bid and the
Sellers will be authorized,
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but not required, to consummate the Sale with the Qualified Bidder submitting
such bid without further order of the Bankruptcy Court.
RETURN OF GOOD FAITH DEPOSIT
The Good Faith Deposits of all Qualified Bidders will be returned to
the Qualified Bidders within five (5) business days after the day on which the
Successful Bidder is chosen, except for (i) the next highest or otherwise best
Qualified Bidder, whose deposit shall be retained until the closing of the
purchase of the Acquired Assets and (ii) subject to the terms of Section
5.06(a)(i) of the Purchase Agreement, the Purchaser, whose deposit shall be
retained until the earlier to occur of the closing of the purchase of the
Acquired Assets and 60 days after Bankruptcy Court approval of another Qualified
Bid.
If a Successful Bidder fails to consummate an approved Sale because
of a breach or failure to perform on the part of such Successful Bidder, the
Sellers will not have any obligation to return the Good Faith Deposit deposited
by such Successful Bidder, and such Good Faith Deposit irrevocably will
immediately become property of the Sellers.
MODIFICATIONS
The Sellers may, in consultation with the Transaction Broker, (a)
determine, in their business judgment, which Qualified Bid, if any, is the
highest or otherwise best offer, and (b) reject any bid (other than the original
bid of the Purchaser set forth in the Purchase Agreement) that, in the Sellers'
sole discretion, is (i) inadequate or insufficient, (ii) not in conformity with
the requirements of the Bankruptcy Code, these Bidding Procedures, or (iii)
contrary to the best interests of the Sellers, their estates and their
creditors.
JURISDICTION
The Bankruptcy Court shall retain exclusive jurisdiction over any
matter or dispute relating to the Sale, the Bidding Process, the Sale Hearing,
the Purchase Agreement, the Auction, and/or any other matter that in any way
relates to the foregoing.
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BIDDER REGISTRATION FORM
BIDDER I.D.
Bidder:_________________________________________________________________________
Bidder's Address:_______________________________________________________________
Bidder's Contact:_______________________________________________________________
Bidder's Phone Number:__________________________________________________________
Bidder's Facsimile Number:______________________________________________________
Bidder's Tax ID Number:_________________________________________________________
ATTORNEY I.D.
Bidder's Attorney:______________________________________________________________
Bidder's Attorney's Address:____________________________________________________
Bidder's Attorney's Phone Number:_______________________________________________
Bidder's Attorney's Facsimile Number:___________________________________________
BANK REFERENCE
Bank:___________________________________________________________________________
Bank Address:___________________________________________________________________
Bank Contact:___________________________________________________________________
Bank Contact's Phone Number:____________________________________________________
Bank Contact's Facsimile Number:________________________________________________
BIDDER ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THE BIDDING
PROCEDURES APPROVED BY THE BANKRUPTCY COURT.
_________________________________
NAME:
TITLE:
PLEASE ATTACH FINANCIAL AND ADEQUATE ASSURANCE INFORMATION.
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