SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 200549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Secuirities and Exchange Act of 1934
Date of Report (Date of earliest event reported) January 29, 1997
INTEGRATED LIVING COMMUNITIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-2163 52-01967027
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
24850 Old 41 Road, Suite 10, Bonita Springs, FL 34135
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 947-7200
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On January 29, 1997, Integrated Living Communities purchased four
assisted living facilities (the bullock facilities) consisting of a total of 170
beds in Virginia. The facilities are located in Portsmouth, Norfolk, Virginia
Beach, and Gloucester Virginia. The four facilities were organized as limited
partnerships with the Bullock corporation as the general partner. The facilities
were managed by American Retirement Homes. Integrated Living Communities
purchased the four facilities from the limited partnerships and the related
management contracts from American Retirement Homes for $15,750,000.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements of Businesses Acquired.
1. It is impracticable for the Company to provide the required
combined balance sheets of the "Bullock Facilities" and related
combined statements of operations, changes in partnership deficit
and cash flows for the year ended December 31, 1996 on the date
this report is being filed. The Company intends to file these
required financial statements under cover of Form 8-K/A as soon
as practicable, but not later than 60 days after the date this
report must have been filed.
b. Pro Forma Financial Information.
It is impracticable for the company to provide the required pro forma
financial information on the date this report is being filed. The
Company intends to file the required financial statements on Form
8-K/A as soon as practicable, but not later than 60 days after this
report must have been filed.
c. Exhibits.
2.1 Asset Purchase Agreement dated January 24, 1997, by and among
Integrated Living Communiities of Portsmouth, Inc. and Retirement
Home of Portsmouth Limited Partnership as Seller and Bullock
Corporation as general partner.
2.2 Asset Purchase Agreement dated January 24, 1997 by and among
Integrated Living Communities of Redgate, Inc., and Ghent Arms
Limited Partnership as Seller and Bullock Corporation as general
partner.
2.3 Asset Purchase Agreement dated January 24, 1997 by and among
Integrated Living Communities of Gloucester, Inc. and American
Retirement Homes as Seller and Bullock Corporation as successor
and former general partner of Retirement Homes of Gloucester
Limited Partnership.
2.4 Asset Purchase Agreement dated January 24, 1997 by and among
Integrated Living Communities of Virginia Beach, Inc. and
Retirement Homes of Virginia Beach Limited Partnership as Seller
and Bullock Corporation as general partner.
2.5 Management Agreements Acquisition Agreement dated January 24,
1997 by and among Integrated Living Communities of Redgate,
Integrated Living Communities of Virginia Beach, Integrated
Living Communities of Gloucester, Integrated Living Communities
of Portsmouth as buyers and American Retirement Homes, Inc. as
seller.
ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF PORTSMOUTH, INC.,
as Buyer
and
RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP
as Seller
and
BULLOCK CORPORATION
as General Partner
Dated as of January 24, 1997
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF PORTSMOUTH, INC., a Delaware
corporation ("Buyer"), RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP, a
Virginia limited partnership ("Seller") and BULLOCK CORPORATION, a Virginia
corporation ("General Partner" or "Bullock Corporation" and, together with
Seller, collectively, the "Operators" and individually, an "Operator").
RECITALS
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility (as hereinafter defined), the Business (as hereinafter defined) and
substantially all of the other assets of Seller used in connection with the
Facility and the Business, upon the terms and conditions hereinafter set forth;
WHEREAS, General Partner is the sole general partner under the
Partnership Agreement (as hereinafter defined) of Seller and Manager manages the
Facility and the Business for Seller pursuant to the Existing Management
Agreement (as hereinafter defined); and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
A. Definitions. The following capitalized terms used in
this Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control"
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(including the correlative meanings of the terms "controlled by" and "under
common control with"), used with respect to any Person, shall mean the
possession, directly or indirectly, whether by contract or otherwise, of the
power to direct or cause the direction of the management and policies of such
Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Bullock Development Corporation, a Virginia corporation.
Bill of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller, in
conjunction with the Manager, of owning, planning, developing, using for the
Intended Purpose, operating and maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
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Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner or the Manager for the
benefit of Seller pursuant to authority granted under the Partnership Agreement,
the Existing Management Agreement or otherwise or (iii) any of the Acquisition
Assets are bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner or the
Manager is a party thereto under a Contract for the benefit of Seller pursuant
to authority granted under the Partnership Agreement, the Existing Management
Agreement or otherwise, such other Operator Affiliate will assign to Buyer at
Closing including, without limitation, the Option Contract, and, upon such
assignment, those Contracts under which Buyer will assume the obligations
arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition, equitable interest, option, pledge, voting trust,
right of first refusal, or restriction of any kind, including any restriction on
use, voting or dividends (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership) or other thing commonly
known as an encumbrance; and "Encumber" means the creation of any Encumbrance.
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Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup"), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
as the same may be amended from time to time, or any successor law and the rules
and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%) percent of the Purchase Price shall be held in escrow by the
Escrow Agent as security for Seller's indemnification obligations under this
Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
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Existing Management Agreement: The Management Agreement dated June 4,
1987 between Seller and Manager pursuant to which Manager has been managing the
Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"Churchland House", and comprised of an assisted-living facility, containing 48
licensed beds and approximately 18,775 square feet and the related amenities.
Financing Source: Any Person which provides financing for the
transactions contemplated by this Agreement, including any Person which may
acquire the Facility (and/or any of the other Acquisition Assets) and
concurrently lease the same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
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Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Seller, BDC, Bullock Corporation as successor to
Retirement Home of Gloucester Limited Partnership, Ghent Arms Limited
Partnership, Retirement Home of Virginia Beach Limited Partnership, Bullock
Corporation and its principal shareholder, the Manager and its principal
shareholder, Buyer and the other Affiliates of Integrated Living Communities,
Inc., which are "Buyers" under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
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Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "Churchland House" and all derivations
and variations thereof, and any other trade names, service mark, logo, symbol,
trade dress, design, or representation or expression of any thereof, or
registration or application for registration thereof, or any invention, trade
secret, technical information, know-how, proprietary right (including
Resident/Patient lists, supplier lists and operating manuals) or intellectual
property used by an Operator Affiliate in connection with the operation of, or
otherwise pertaining to, the Property or the Business but specifically excluding
software and computer programs licensed by a third party to an Operator
Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
City of Portsmouth, State of Virginia, consisting of approximately 1.7164 acres
and more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: American Retirement Homes, Inc., a Virginia corporation.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
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Operator Affiliates: Collectively, Seller, General Partner, Manager and
each of the principal shareholders of each of General Partner and Manager,
respectively.
Option Contract: That certain Option Agreement, dated May 7, 1996,
amended and extended on December 4, 1996 and further amended on January 14,
1997, between Bullock Corporation as successor to Seller, as optionee, and Carl
E. Bowers and Rose M. Bowers, as optionors, pursuant to which Bullock
Corporation has the right and option to purchase the Option Land for a purchase
price of $65,000.
Option Land: That certain parcel or contiguous parcels of land located
in the City of Portsmouth, State of Virginia covered by and more particularly
described in the Option Contract.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and James Moore, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
a) all equipment, machinery, furniture and furnishings, Inventory,
vehicles and other tangible personal property (including all components
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thereof) (whether or not set forth on Exhibit B), now or on the Closing Date
located in, on or used in connection with (A) the Facility (and whether or not
affixed to the facility) or (B) the Business, including all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air cooling and air conditioning systems, apparatus, sprinkler systems, fire and
theft protection equipment, built-in oxygen and vacuum systems, tools, repair
parts, appliances and communications equipment, to the extent any of the
foregoing items are not Fixtures and are not conveyed to Buyer as part of the
Facility pursuant to the Deed, and those specific items of tangible personal
property (including any vehicles which are used for the Business) described on
Exhibit B; and
a) all Resident and/or Patient Agreements and other Designated
Contracts, telephone numbers and Resident/Patient records and invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property,
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inventory, occupancy, withholding, payroll, gift, estate or inheritance tax),
levy, assessment, tariff, impost, imposition, toll, duty (including any customs
duty), deficiency or fee, and any related charge or amount (including any fine,
penalty or interest), imposed, assessed or collected by or for any authority or
payable (including pursuant to any tax-sharing agreement or pursuant to any
agreement, arrangement or understanding relating to the sharing or payment of
any such tax, levy, assessment, tariff, impost, imposition, toll, duty,
deficiency or fee).
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Bill of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Seller, BDC, Bullock Corporation as successor to Retirement
Home of Gloucester Limited Partnership, Ghent Arms Limited Partnership,
Retirement Home of Virginia Beach Limited Partnership, and Bullock Corporation,
each as sellers of assisted living facilities and the related business, Buyer
and other Affiliates of Integrated Living Communities, Inc. which are purchasing
such facilities and businesses pursuant to this Agreement and the other
Acquisition Agreements, and the Manager.
Year End Financial Statements: As defined in Section 6.3.
A. Construction of Certain Terms. For all purposes of this
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, (i) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(ii) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP, as at the time applicable; (iii) all
references in this Agreement to designated "Articles," "Sections", "Schedules",
"Exhibits" and other subdivisions are to the designated Articles, Sections,
Schedules and Exhibits and other subdivisions of this Agreement; (iv) the word
"including" shall have the same meaning as the phrase "including, without
limitation," and other phrases of similar import; (v) the words "herein, "
"hereof " and "hereunder' and
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other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and (vi) all references to
this Agreement shall include all Schedules and Exhibits attached hereto.
A. Disclosure Letter. The disclosures in the Disclosure
Letter, and those in any supplement thereto, relate only to the representations
and warranties in the Section of this Agreement to which they expressly relate
and not to any other representation or warranty in this Agreement. In the event
of any inconsistency between the statements in the body of this Agreement and
those in the Disclosure Letter (other than an exception expressly set forth as
such in the Disclosure Letter with respect to a specifically identified
representation or warranty in a specific Section of this Agreement), the
statements in the body of this Agreement will control.
A. Parties' Intent. The parties intend that the assets to be
conveyed to Buyer pursuant to Section 2.1 include all of the assets employed in
and necessary to operate the Facility and the Business in substantially the
manner as the Business has heretofore been operated.
A. Knowledge. Wherever a representation is made in this
Agreement based upon the knowledge of an Operator (whether or not expressly
after due inquiry), it shall be deemed to have been made by such Operator after
due inquiry of the Manager of the Facility and each of the principal
shareholders of the General Partner and the Manager.
I. ARTICLE
TERMS OF THE SALE AND PURCHASE
A. Assets to Be Sold. Subject to the terms and conditions of
this Agreement, at Closing, Seller (and the other Operator Affiliates to the
extent such assets are owned by them) will sell, convey, assign, transfer and
deliver to Buyer and/or Buyer's designee or assignee as provided in Section
13.11, and Buyer and/or Buyer's designee or assignee, will purchase and acquire,
as a going concern, the Facility and all of the assets, properties (real or
personal, tangible or intangible), rights, prepaid expense items and business
goodwill used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
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A. Excluded Assets. Notwithstanding Section 2.1, the
Acquisition Assets do not include: (1) claims for refunds of Taxes and other
governmental charges of whatever nature for periods prior to the Closing Date;
(2) Accounts Receivable; (3) the minute books, stock records and corporate seal
of Seller or, subject to Buyer's right to review and obtain copies of same as
provided in Section 13.8, Seller's financial books and records (whether in paper
or computer format), provided, however, Resident/Patient records are Acquisition
Assets; (4) Contracts other than the Designated Contracts; (5) Seller's bank
accounts, cash and cash equivalents and securities (except that deposits and
trust funds held for Residents/Patients shall be transferred to Buyer (or trust
accounts designated by Buyer for such Residents/Patients); (6) the Purchase
Price and rights under this Agreement; (7) personal property located at the
Facility which is owned by the Residents/Patients; and (8) the assets,
properties, and rights listed in Schedule 2.2 (collectively, the "Excluded
Assets").
1. Purchase Price. The purchase price for the Acquisition
Assets will be Two Million Two Hundred Ninety Thousand Dollars ($2,290,000.00),
subject to upward or downward adjustment as hereinafter provided (as adjusted,
the "Purchase Price").
1. The Purchase Price (without giving effect to any
post-Closing adjustments) shall be paid by Buyer to Seller
as follows:
(i) One Hundred Sixty-Eight Thousand Nine Hundred
Fifty-Eight and 17/100 Dollars ($168,958.17) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
A. Prorations and Purchase Price Adjustments. (a) On the
Closing Date, the following shall be apportioned and prorated as of the Closing
Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets
(including charges for sewer, water,
<PAGE>
drainage or other services) assessed for the tax year in
which the Closing Date occurs;
(ii) personal property taxes attributable to the
Personal Property for the tax year in which the Closing Date
occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final bill or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of current
utility and fuel bills. If the Closing shall occur before the tax rate is fixed,
the apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding tax year applied to the latest assessed valuation, and
<PAGE>
shall be subject to adjustment upon receipt by Buyer of notice of the tax rate
for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
A. Allocation of Purchase Price. After the Closing, the
parties agree to make consistent use of the allocation, fair market value and
useful life of the Purchase Price in any and all filings, declarations and
reports with the Internal Revenue Service in respect thereof, including the
reports required to be filed under Section 1060 of the Code, if applicable.
Buyer shall prepare and deliver IRS Form 8594 to Seller within forty-five (45)
days after the Closing Date.
A. Assumption of Liabilities. (a) Subject to the terms and
conditions of this Agreement, at Closing, Buyer shall assume and thereafter in
due course fully satisfy those obligations arising under the Designated
Contracts which are assignable and are assigned by Seller to Buyer, with respect
to, and only with respect to, performance of obligations (including payments to
be made on account of services) to be rendered thereunder after the Closing
Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
<PAGE>
A. Consents to Assignments. (a) The Operators will use their
best efforts and shall diligently proceed to obtain all Consents of all Persons
necessary to permit the assignment of the Designated Contracts or to assign or
transfer any of the other Acquisition Assets. In the event that any of the
Acquisition Assets are not assignable, or the Person(s) from whom a Consent to
any such assignment or transfer, fail(s) or refuse(s) to Consent thereto before
the Closing Date, Buyer shall have no obligation to assume and will not assume
any such Designated Contract and shall have no obligation to purchase any such
Acquisition Asset. In addition, this Agreement shall not constitute an agreement
to assign or transfer any such Acquisition Asset or part thereof or any right or
benefit arising thereunder or resulting therefrom if an attempted assignment or
transfer thereof, without the Consent of such Person, would constitute a breach
thereof or in any way affect the rights of Buyer or Seller thereunder.
Notwithstanding the foregoing, all references in this Agreement or any other
Transaction Document (other than the Deed, any Bill of Sale and Assignment and
any other instrument or document conveying title to any Acquisition Assets) to
"Acquisition Asset" or "Acquisition Assets" shall continue to have the meaning
set forth in Section 2.1 without giving effect to this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
<PAGE>
I. ARTICLE
CLOSING
1. Closing. The purchase and sale of the Acquisition Assets
provided for in this Agreement (the "Closing") shall take place on January 27,
1997 (the "Originally Scheduled Closing Date") at the offices of Buyer's
financing source (or counsel therefor), or at such other place, time or date as
Seller and Buyer may mutually agree to. The Originally Scheduled Closing Date,
any other such date as Seller and Buyer may mutually agree to as the date on
which the Closing shall occur, and any other date to which the same may be
extended by Seller or Buyer as hereinafter provided, are each herein referred to
as a "Scheduled Closing Date" and the latest of such Scheduled Closing Dates is
herein referred to as the "Closing Date".
2. If, prior to or by the Originally Scheduled Closing Date,
any Governmental Authority with jurisdiction over the licensing of the Facility
has not issued to Buyer a license to operate the Facility (including as proposed
to be expanded following acquisition of the Option Land) immediately upon
Buyer's acquisition of the Acquisition Assets, then, in such event, provided (i)
Buyer shall have furnished to such Governmental Authority all information
requested by such Governmental Authority as of such date in connection with its
application for the issuance of such license, (ii) this Agreement, the other
Acquisition Agreements and the Unification Agreement shall have been executed by
all of the parties thereto and (iii) First American Title Insurance Company of
New York, as escrow agent under the Deposit Escrow Agreement shall have been
authorized by the parties thereto to release the Escrow Deposit to the General
Partner, then Buyer shall be entitled to extend the Closing Date for a period of
up to ninety (90) days (the "Extension Period").
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of
<PAGE>
this Agreement by Buyer pursuant to this Section 3.1(c), however, shall release
or relieve any Operator or other Operator Affiliate of any liability that they
may have for any breach of any representation, warranty, covenant or obligation
of an Operator in this Agreement or of any Operator Affiliate in any Transaction
Document.
1. In the event that the Closing is to take place
through an escrow or sub-escrow, the Operator Affiliates and Buyer shall
mutually execute and deliver to Title Insurer, as escrow holder, joint escrow
and/or recording instructions consistent with this Agreement on or prior to the
Closing Date. In the event of any conflict between the provisions of this
Agreement and any such escrow and/or recording instructions and/or any general
instructions required by Title Insurer to be executed by Buyer and Seller, or
any other Operator Affiliate in connection therewith, the provisions of this
Agreement and the Unification Agreement shall control.
1. Items to Be Delivered by Seller at Closing. At the Closing,
subject to the terms and conditions of this Agreement, Seller shall deliver, or
cause to be delivered to Buyer or, if the Closing is to take place in escrow, to
Title Insurer in escrow, such instruments as shall be necessary to convey to
Buyer or its designee or assignee good and marketable title to the Acquisition
Assets, free and clear of all Encumbrances (except for Permitted Encumbrances).
Among other things, Seller will deliver to Buyer or, if applicable, Title
Insurer in escrow:
a) A full warranty deed (the "Deed") in the form of
Exhibit C, which Deed shall be duly executed, acknowledged and in
recordable form. The Deed shall include (if applicable) the appropriate
state, county and local real estate transfer tax declaration of real
estate value or other affidavit as to the tax due upon the sale.
a) One or more Bills of Sale and Assignments in the
form of Exhibit B, duly executed and acknowledged by each of the
Operators.
a) "FIRPTA" affidavit or certificate in form and
substance satisfactory to Buyer and in conformance with Section
1445(b)(2) of the Code, to the effect that Seller is not a foreign
person and such other affidavits or certificates as may be reasonably
required by Buyer to the effect that Buyer is not required to withhold
taxes from the payment of sale proceeds to Seller under any other
applicable Law.
a) Uniform Commercial Code Form 3s in favor of
Seller, for filing with the appropriate state and local authorities,
for the release of any Encumbrance (other than a Permitted Encumbrance)
covering any of the Acquisition Assets as to which Uniform Commercial
Code Form 1s have been filed.
<PAGE>
a) If the Closing shall not occur on the date hereof,
a certificate executed by each Operator wherein the Operators represent
and warrant to Buyer that, except as otherwise stated in such
certificate, each of the Operators' representations and warranties in
this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if
made on the Closing Date (giving full effect to any supplements to the
Disclosure Letter that were delivered by Seller to Buyer prior to the
Closing Date).
a) A certificate of the General Partner certifying
true and correct copies of Seller's Partnership Agreement and other
Organizational Documents, if any, which certificate and Organizational
Documents shall be in form and substance reasonably satisfactory to
Buyer.
a) A certificate of the Secretary of General Partner
certifying true and correct copies of General Partner's Organizational
Documents, which certificate and the accompanying Organizational
Documents shall be in form and substance reasonably satisfactory to
Buyer.
a) Opinion of Seller's and General Partner's Counsel
opining as to the matters set forth on Exhibit E and otherwise in form
and substance satisfactory to Buyer.
b) The Escrow Agreement duly executed and
acknowledged by Seller, General Partner and each other Operator
Affiliate and Escrow Agent.
a) The originals of all Designated Contracts, title
instruments in the Operators' or the Manager's possession pertaining to
the Acquisition Assets and the original Governmental Authorizations.
a) All other Transaction Documents to which Seller or
any other Operator Affiliate is a party duly executed and delivered by
each such party.
a) All other proper instruments required for the
conveyance of good and marketable title to the Acquisition Assets or
required by Title Insurer for the issuance of the Title Policy.
1. In addition, at the Closing, Seller shall deliver
or cause to be delivered possession of the Facility and other Acquisition Assets
(including keys and combinations for obtaining entry or access thereto).
A. Items to Be Delivered by Buyer at Closing. Among other
things, Buyer will deliver to the Escrow Agent:
<PAGE>
a) The Assumption of Designated Contracts Agreement,
executed by Buyer.
a) A certificate executed by Buyer representing and
warranting to Seller that, except as otherwise stated in such
certificate, each of Buyer's representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement
and is accurate in all respects as of the Closing Date as if made on
the Closing Date.
a) A certificate of the Secretary of Buyer certifying
true and correct copies of resolutions adopted by Buyer's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents to be executed by Buyer
and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in
furtherance of this Agreement.
a) The Escrow Agreement duly executed and
acknowledged by Buyer and the Escrow Agent.
a) All other Transaction Documents to which Buyer is
a party duly executed and delivered by Buyer.
A. Other Closing Documents. Each party shall execute
and deliver such other instruments and take such other actions as either party
or the Title Insurer or Buyer's Financing Source may reasonably request in order
to effectuate the purposes of this Agreement.
I. ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
A. Performance. Each of the Operators shall have performed
each and all of the covenants and obligations required to be performed by it
under this Agreement on or prior to the Closing.
<PAGE>
A. Representations and Warranties. Each and all of the
representations and warranties of the Operators hereunder shall be true and
correct on and as of the Closing Date, as if made as of the Closing Date.
A. Closing Documents. Seller shall have delivered (or caused
to have been delivered) to Buyer each of the items to be delivered by Seller or
an Operator Affiliate at Closing pursuant to Sections 3.2 and 3.4. Seller shall
have paid or shall have made arrangements for the payment of those costs and
expenses required to be paid by Seller pursuant to Section 13.2.
A. Title Insurance. Buyer shall have received, at Buyer's
expense, a commitment from Title Insurer satisfactory to Buyer for the issuance,
at standard rates, of an ALTA extended coverage (but without exception for
creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
A. Survey. Buyer shall have received, at Buyer's expense, and
approved either (a) a final "as-built" ALTA survey of the Facility completed in
accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, with additional Title A survey requirements, jointly established
and adopted by ALTA and ACSM in 1992 that meets the requirements of a Class A
Survey as defined therein, certified within thirty (30) days of the Closing Date
or (b) such other form of property survey which is in form, substance and all
other respects satisfactory to Buyer and its Financing Source in their sole
discretion. Such survey shall (i) be certified to Buyer, Title Insurer, and
Buyer's Financing Source, if any, as being true and accurate, and such
certification shall include the acreage of the Land and a statement that the
Land is not located in a Flood Hazard Area; (ii) identify thereon all telephone,
water, sewage, electricity, gas and other utility facilities to the points of
connection; and (iii) show no encroachments onto or conflicts with any adjacent
property other than pursuant to easements appurtenant to the Facility or such
other agreements with the affected landowner approved by Buyer and which are, in
turn, insured under the Title Policy.
A. Entitlements. Buyer shall have received and approved with
respect to the Facility copies of (a) the applicable zoning ordinances and map
marked to show the location of such Facility and certified by an appropriate
Governmental Authority to be complete and accurate; (b) evidence that such
zoning ordinances and the general plans/specific plans and all other land use
regulations of the applicable municipal jurisdictions and all Encumbrances, if
any, affecting the Facility permit the transfer of the Facility and use thereof
for its Intended Use (and reconstruction and resumption of use in the event of
damage, destruction, or cessation of use) as a matter of right for an unlimited
<PAGE>
time period and not merely as a legal nonconforming use; (c) all licenses,
certificates, approvals and authorizations, including plot plan and subdivision
approvals, zoning variances, sewer, building, foundation, grading and other
permits and all other authorizations required by Governmental Authorities or by
any applicable covenants, conditions and restrictions for the use and operation
of the Facility for its Intended Use, in each instance in accordance with all
applicable Legal Requirements; and (d) evidence satisfactory to it that (i) the
Facility holds all Governmental Authorizations required for the operation
thereof for its Intended Use, including from the Virginia Department of Social
Services; and (ii) the Facility is not subject to, or threatened with, any hold
on admissions or other sanction and there are no outstanding, or threatened,
notices of deficiency resulting from any survey of the Facility which have not
been fully responded to with an acceptable plan of correction with which the
Facility is being operated in compliance.
A. No Material Adverse Change. Since the date of the Interim
Financial Statements, there has not been any material adverse change in the
business, results of operations, assets, liabilities, condition (financial or
otherwise), operations or prospects of Seller, or the Business or the Facility,
and no event has occurred or circumstance exists that may result in such a
material adverse change, and Buyer shall have received evidence satisfactory to
it to that effect.
A. Consents. The Consents of all Persons necessary for the
consummation of the transactions contemplated hereby and for Buyer to conduct
the Business shall have been obtained, including Consents required, if any,
under the Designated Contracts, all Governmental Authorizations, any tax
clearance or similar Consent, the Consent of Buyer's (or its parent company's)
lenders to the extent required, if any. None of the Consents (i) shall have been
conditioned upon the modification, cancellation or termination of any Designated
Contract, easement, right or other Consent with respect to the Facility, or (ii)
shall impose on the Buyer any material condition or provision or requirement
with respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
A. Completion of Other Transactions. Each of the transactions
contemplated by this Agreement, the other Acquisition Agreements and the
Unification Agreement shall have been consummated contemporaneously.
<PAGE>
I. ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
A. Performance. Buyer shall have performed each and all of the
covenants and obligations required to be performed by it on or prior to the
Closing;
A. Representations and Warranties. Each and all of the
representations and warranties of Buyer hereunder shall be true and correct on
and as of the Closing Date, as if made as of the Closing Date; and
A. Consents. Seller shall have received a certificate of the
Secretary or other officer of Buyer certifying a copy of the resolutions of the
Board of Directors of Buyer authorizing Buyer's execution, delivery and
performance of this Agreement and the other Transaction Documents to be executed
by Buyer and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in furtherance of
this Agreement.
A. Closing Documents. Buyer shall have delivered (or caused to
have been delivered) to Seller each of the items to be delivered by Buyer at
Closing pursuant to Sections 3.3 and 3.4.
A. Completion of Other Transactions and Entering Into of Other
Agreements. Each of the transactions contemplated by the Unification Agreement
shall have been consummated contemporaneously with the consummation of the
transactions contemplated by this Agreement and Buyer shall have entered into
each of the other agreements contemplated to be entered into by Buyer pursuant
to the Unification Agreement.
I. ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
<PAGE>
A. Organization and Good Standing.
1. (i) Seller (A) is duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia as
a limited partnership and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Seller conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Seller has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
(iii) General Partner is the sole General Partner
of Seller.
1. (i) General Partner (A) is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
General Partner conducts no activities and neither owns nor uses properties in
any other jurisdiction which requires it, under the laws of such jurisdiction,
to qualify to do business as a foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true
and complete copies of its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement)
is the sole shareholder of General Partner.
1. (i) Manager (A) is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Manager conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Manager has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
<PAGE>
(iii) B (as defined in the Indemnification
Agreement) is the sole shareholder of Manager.
A. Authority; No Conflict; Consents.
1. This Agreement constitutes and, when
executed and delivered, the other Transaction Documents to which an Operator is
or is to become a party will constitute, legal, valid and binding obligations of
each of Seller and General Partner, respectively, enforceable against such
Person in accordance with their respective terms. Each of the Operators have the
absolute and unrestricted right, power, authority and legal capacity to execute
and deliver this Agreement and such other Transaction Documents to which such
Person is or is to become a party is and to perform their respective obligations
hereunder and thereunder.
1. Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the transactions
contemplated by this Agreement by Seller, General Partner, Manager or the
Bullocks will, directly or indirectly (with or without notice or lapse of time):
a) contravene, conflict with or result
in a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any of the Organizational
Documents of such party or any Contract or any agreement to which such party
(whether or not Seller is a party thereto) or any Acquisition Assets may be
subject;
a) contravene, conflict with, or result
in a violation of any applicable Law to which such party or any Acquisition
Assets may be subject or give any Governmental Authority or other Person the
right to challenge any of the transactions contemplated by this Agreement or to
exercise any remedy or obtain any relief under any Law to which such party or
any of the Acquisition Assets may be subject;
a) contravene, conflict with, or result
in a violation of any of the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by Seller or that otherwise relates
to the Business, the Facility or any other the Acquisition Assets;
a) cause Buyer to become subject to, or
to become liable for the payment of, any Tax for the Business's operations prior
to the Closing;
a) cause any of the Acquisition Assets
to be reassessed or revalued by any Governmental Authority (except to the extent
that any of the same
<PAGE>
would customarily be reassessed or revalued by such Governmental Authority upon
a sale of such asset); or
a) result in the imposition or creation
of any Encumbrance (except a Permitted Encumbrance) upon or with respect to any
Acquisition Assets.
1. Except for those Governmental Authorizations
and Consents under Designated Contracts indicated, respectively, in Section 6.17
and Section 6.11(c) of the Disclosure Letter, no notices to, or Consents from,
any Person are required in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Operators'
obligations under this Agreement, including the transfer and assignment of any
Governmental Authorization or other Acquisition Asset necessary or desirable for
Buyer to conduct the Business.
A. Financial and Operating Statements.
Seller has delivered to Buyer: (a) audited balance sheets and
related statements of profits and losses for the Facility and the Business as at
and for each of the calendar years ended December 31, 1994 and 1995, together
with the audit reports thereon of Goodman & Company, LLC, independent public
accountants (the "Year End Financial Statements"), (b) an unaudited balance
sheet and the related statement of profits and losses for the Facility and the
Business as at and for the ten (10) months ended October 31, 1996 (the "Interim
Financial Statement"), including, in each case, with the notes thereto. All such
financial statements and notes fairly present the financial condition and the
results of operations for the Facility and the Business as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP subject to normal, immaterial changes resulting from
year-end audit adjustments. The financial statements referred to in this Section
6.3 reflect the consistent application of such accounting principles throughout
the periods involved, except as disclosed in the notes to such financial
statements. No financial statements of any Person other than Seller would be
required by GAAP to be included in the consolidated financial statements of
Seller. Seller has also delivered to Buyer a report of net operating income
adjustments detailing all adjustments to revenue and expenses at the Facility
level that represent obligations that will not be assumed by Buyer hereunder for
the calendar years ended December 31, 1994 and December 31, 1995 and for the ten
(10) months ended October 31, 1996. Such report is true, correct and complete
and is based on assumptions that were true, correct and reasonable when made but
was not prepared in accordance with GAAP. All such financial statements and
reports have been prepared from and in accordance with the books and records of
Seller.
A. Books and Records. The books of account and other records
of Seller (including any such books and records kept by the General Partner or
the Manager on behalf of Seller) pertaining to the Facility or other Acquisition
Assets, all of which have been made available to Buyer, are complete and correct
in all material respects,
<PAGE>
reflect in all material respects all transactions affecting the Business, the
Facility and the other Acquisition Assets and have been kept and maintained in
accordance with sound business practices.
B. No Undisclosed Liabilities or Material Adverse Change.
1. Except as set forth in Section 6.5(a) of the Disclosure
Letter, Seller has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Interim
Financial Statement and current liabilities incurred in the ordinary course of
business of Seller since the respective dates thereof.
1. Since the date of the Interim Financial Statements, there
has not been any material adverse change in the business, results of operations,
assets, liabilities or the condition (financial or otherwise), or prospects of
the Business or the Facility, or any damage or destruction of the Facility by
fire or other casualty, whether or not covered by Insurance, and the Operators
and the Manager have, and until the Closing, will have, operated the Facility
only in the normal course. The Operator Affiliates have identified and
communicated to Buyer all material information with respect to any fact or
condition that might adversely affect the future prospects (financial, licensure
status or otherwise) of the Business or the Facility.
A. Taxes; FIRPTA.
1. Seller has filed all Tax Returns that are required to have
been filed in any jurisdiction, has paid all Taxes shown to be due and payable
on such Tax Returns and, before they have become delinquent, has paid all other
Taxes levied upon Seller or its properties, assets (including the Acquisition
Assets), income or franchises, to the extent such Taxes have become due and
payable, except for any Taxes (i) as set forth in Section 6.6 of the Disclosure
Letter or (ii) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
Seller has established adequate reserves in accordance with GAAP in the Interim
Financial Statements. The Operator Affiliates know of no basis for any other Tax
or assessment that could be assessed against Seller. The charges, accruals and
reserves on the Interim Financial Statements in respect of Taxes for all fiscal
periods are adequate. Seller's income tax returns have never been audited.
1. Buyer is not required to withhold taxes from the payment of
sale proceeds to Seller under the Code or any applicable state, commonwealth or
local tax Laws. Seller is not a foreign person for purposes of Section 1445 of
the Code.
<PAGE>
A. Title, Condition and Sufficiency of the Facility.
1. Seller has delivered or made available to Buyer copies of
all title insurance policies, opinions, abstracts, and surveys in the possession
of Seller and relating to the Facility. Seller owns good indefeasible and
marketable fee simple title to the Facility, free and clear of all Encumbrances
other than the Permitted Encumbrances. All of the Improvements located on the
Land are situated solely within the boundaries of the Land and do not encroach
upon the property of, or otherwise conflict with the property rights of, any
other Person.
2. No exception to title to or other Encumbrance and no
interest in the Facility will interfere with the use of the Facility for its
Intended Use or cause the value of the Facility to be materially less than the
portion of the Purchase Price allocated thereto.
1. There are no leases or other agreements granting any Person
(other than Seller) the right to use or occupy any part of the Facility other
than the Resident and/or Patient Agreements set forth in Section 6.7(c) of the
Disclosure Letter, and no Person has any ownership interest (other than Seller)
or option or right of first refusal to acquire any ownership interest in the
Facility or any part thereof.
1. The Facility is structurally sound, is in good operating
condition and repair (normal wear and tear excepted) and is not in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The Improvements (including the heating,
ventilating and air conditioning, plumbing, electrical, mechanical and drainage
systems, and roof) are in good operating condition, repair and working order,
and have passed all previous safety and/or licensing inspections, the last such
inspection being on the date set forth in the Disclosure Letter, and such
systems are adequate for the use of the Facility for its Intended Use.
1. Except as set forth in Section 6.7(e) of the Disclosure
Letter, the Improvements (including all roads, parking areas, curbs, sidewalks,
sewers and other utilities) have been completed and installed in accordance the
Plans and Specifications which were approved by the appropriate Governmental
Authorities. Permanent certificates of occupancy and all other Governmental
Authorizations which were required to be issued for the Improvements have been
issued and are in full force and effect; and the requisite annual fire safety
and life safety inspections as were required to be conducted for the
Improvements, have been conducted.
1. The maintenance, operations and use of the Improvements
comply with (i) all Legal Requirements, (ii) any certificate of occupancy or
other Governmental Authorizations issued for the Facility and (iii) all
restrictive covenants and other Permitted Encumbrances. No Operator Affiliate
has received or is aware of the
<PAGE>
issuance of any notice of noncompliance or violation from any Governmental
Authority regarding the Facility or any part thereof or the use thereof.
1. Current local zoning ordinances, general plans and other
applicable land use regulations and all private covenants, conditions and
restrictions, if any, affecting the Property, permit the transfer of the
Facility and the use of the Facility for its Intended Use (and reconstruction
and resumption of such use in the event of damage, destruction or cessation of
use) as a matter of right for an unlimited time period and not merely as a legal
non-conforming use.
1. To the best knowledge of the Operators, (i) there is no
plan, study or effort by any Governmental Authority which in any way affects or
would affect the present use or zoning of the Facility or any part thereof; (ii)
there is no existing, proposed or contemplated plan to widen, modify or realign
any street or highway or existing, proposed or contemplated Condemnation
proceedings that would affect the Facility in any way whatsoever; and (iii) no
subdivision plan or plans (preliminary or otherwise) have been filed with
respect to the Land.
1. The Land is adjacent to and has direct access to each
abutting street. All streets adjoining or traversing the Land have been
dedicated to and accepted by the local municipal authorities and the means of
ingress and egress, parking, access to public streets and drainage facilities
are adequate for the use of the Facility for its Intended Use. There are no
easements traversing or contiguous to the Land which are not disclosed in
Section 6.7(i) of the Disclosure Letter or which interfere with the use and
operation of the Facility for its Intended Use.
1. All public utilities, including telephone, gas, electric
power, sanitary and storm sewer and water, required for the operation of the
Facility either enter the Facility through adjoining public streets, or if they
pass through adjoining private land, do so in accordance with valid recorded
easements held by Seller. Such utilities are adequate for use of the Facility
for its Intended Use.
1. The Facility is not located within an area of special risk
with respect to natural or man-made disasters or hazards, including any Flood
Hazard Area.
1. There are no adverse geological or soil conditions
affecting the Facility.
1. The Facility is a legal lot or parcel which for all
purposes may be mortgaged, conveyed and otherwise dealt with as separate parcels
and is not taxed together with any other property.
1. There is no proceeding pending to which a Operator
Affiliate is a party relating to the assessed valuation of the Facility and no
assessment for
<PAGE>
public improvements have been made against the Facility that remain unpaid. All
public improvements ordered, commenced or completed prior to the date of this
Agreement or prior to the Closing Date shall be paid for in full by the Seller
prior to the Closing.
1. Except as set forth in Section 6.7(o) of the Disclosure
Letter: (i) Seller and the Facility are, and at all times prior to the date
hereof have been, in full compliance with, and have not been and are not in
violation of or liable under, any Environmental Law, (ii) there are no
underground storage tanks or Hazardous Materials currently located in or on the
Facility, and to the best of the Operators' knowledge (after due inquiry) no
such tanks have ever been located on the Facility and no such Hazardous
Materials have ever been present, used, stored, generated, treated or Released
from or on or disposed of or on or transported to or from the Facility; (iii) no
Environmental Claims have been made or, to the best of the Operators' knowledge
(after due inquiry), threatened by any Person against Seller or the Facility;
and (iv) to the best of the Operators' knowledge (after due inquiry), there are
no current, and have been no, businesses engaged in the storage, treatment or
disposal of Hazardous Materials on any property adjacent to the Land.
1. Section 6.7(p) of the Disclosure Letter lists all reports
received during the last five (5) years from any Governmental Authority with
respect to the Facility, true and complete copies of such reports to Buyer.
1. Seller has obtained all zoning and site plan approvals
(true and correct copies of which have been provided by Seller to Buyer)
necessary in connection with the construction of the additional facility
proposed to be constructed by Seller (and Buyer following the Closing) on the
Land and the Option Land as an addition to the building on the Facility.
A. Title, Condition And Sufficiency of the Personal Property.
1. Except for the security interest(s) listed and described in
Section 6.8(a) of the Disclosure Letter, Seller has good and marketable title to
the Personal Property, including, but not limited to, the motor vehicle set
forth on Schedule 2.1 hereto, subject to no Encumbrance or restraint on transfer
whatsoever. No other person has any right to the use or possession of any of the
Personal Property and, except as set forth in Section 6.8(a) of the Disclosure
Letter, no currently effective financing statement with respect to the Personal
Property has been filed in any jurisdiction, and Seller has not signed any such
financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement. Except as set forth in Section
6.8(a) of the Disclosure Letter, none of the Personal Property is subject to a
conditional sale, lease, security interest or similar arrangement. During last
five (5) years, Seller has conducted its business activities only under its
partnership name of Retirement Home of Portsmouth Limited Partnership and/or
trade name "Churchland House"
<PAGE>
1. All of the tangible Personal Property is in good operating
condition and repair, is not in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost and is functioning in the manner and for the purpose for which it was
intended. All of the Personal Property is in material compliance with all Legal
Requirements, and is sufficient and suitable to enable the Buyer to operate the
Facility and the Business in a normal and efficient manner.
A. Inventory.
1. All food, beverages, pharmaceuticals and medical supplies
comprising Inventory on supply at the Facility are fit for the purposes for
which they are intended, meet all governmental standards therefor and are of
merchantable quality. All linens, clothing and similar items comprising the
Inventory located at the Facility are in good condition, reasonable wear and
tear excepted.
1. On the Closing Date, there will be in supply at the
Facility Inventory (to be included as part of the Acquisition Assets) which are
in a quantity and condition customary and sufficient to meet Buyer's needs in
operating the Business and the Facility in a manner similar to that in which the
Business and the Facility have been operated by Seller prior to the Closing
Date.
2. Section 6.9(c) of the Disclosure Letter contains a list of
all suppliers of Inventory to Seller. No Operator and, to the best of such
Operator's knowledge (after due inquiry), no other Operator Affiliate has
received any notice, or has any reason to believe, that any significant supplier
will cease selling Inventory to Seller or to Buyer at any time after the Closing
Date on terms and conditions not substantially similar to the terms and
conditions on which such Inventory are currently being sold to Seller.
A. Intellectual Property.
1. Section 6.10(a) of the Disclosure Letter sets forth a
complete and accurate list of all Intellectual Property owned by, or (even if
not included in the Acquisition Assets) licensed to, Seller or (even though not
an Acquisition Asset) General Partner or the Manager, and sets forth separately
which are owned by, and which are licensed to, Seller, General Partner and the
Manager. Such Intellectual Property is sufficient to conduct the Business being
conducted at the Facility.
1. No proceeding is pending (or, to the best of the Operators'
knowledge, after due inquiry, threatened) against any Operator that alleges that
any Operator or other Operator Affiliate is infringing upon any intellectual
property asset (including the name Churchland) of any Person or that challenges,
or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any Operator Affiliate's (or Buyer's, to the extent
an Acquisition Asset, upon consummation of the transactions contemplated by this
Agreement) use of the Intellectual Property. No event
<PAGE>
has occurred or circumstance exists that may give rise to or serve as a basis
for the commencement of any such proceeding.
1. No Person has been granted the right, or been permitted, to
use any Intellectual Property owned by, or licensed to, Seller. To the best
knowledge (after due inquiry) of each Operator, no Person is believed to be
infringing upon the Intellectual Property.
A. Contracts.
1. Section 6.11(a) of the Disclosure Letter contains a
complete and accurate list, including its term and summary of financial terms,
of each Contract, other than the Resident and/or Patient Agreements set forth in
Section 6.11(b) of the Disclosure Letter, to which Seller is subject or bound
that is in existence and which pertains to the Business of the Facility or to
which any of the Acquisition Assets are subject. Seller has delivered to Buyer
true and complete copies of each such Contract.
1. Section 6.11(b) of the Disclosure Letter sets forth a
listing, as of the date of this Agreement, of the names of all
Residents/Patients at the Facility, the date of admission of each such
Resident/Patient and the rental amounts payable and the term of each related
Resident and/or Patient Agreement and a material variation in such Resident
and/or Patient Agreement from the Seller's standard form thereof (in addition to
the rental amount and term indicated in Section 6.11(b) of the Disclosure
Letter).
2. Each Designated Contract is in full force and effect, is
valid and enforceable in accordance with its terms and is (except as noted in
Section 6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost
or modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
1. Seller has not given to or received from any other Person,
at any time since January 1, 1996, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible or potential violation
or breach of, or default under, any Designated Contract, which individually or
in the aggregate would constitute a material violation or breach of or default
under any such Designated Contract. Section 6.11(d) of the Disclosure Letter
sets forth the names of Residents/Patients from or to whom Seller has received
or given (whether or not written) any such notice or communication (whether or
not of a material nature) on a chronic or repeat basis. The parties to the
Designated Contracts (other than the Seller) are not, to the best of the
Operators' knowledge, in default of their respective obligations under any of
such Designated Contracts, and there has not occurred any event which, with the
passage of
<PAGE>
time or giving of notice (or both), would constitute such a default or breach
under any of such Designated Contracts.
1. There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable by or to
Seller under, any Designated Contracts.
1. Except as described in Section 6.11(f) of the Disclosure
Letter, each Designated Contract has been entered into in the ordinary course of
business on an arm's-length basis with an unaffiliated third party and has been
entered into without the commission of any act, alone or in concert with any
other Person, or any consideration having been paid or promised, that is or
would be in violation of any applicable Law.
A. Insurance. Section 6.12 of the Disclosure Letter contains a
complete and correct list of all forms of Insurance held or owned by Seller or
(even though not an Acquisition Asset) the General Partner or the Manager
pertaining in any way to the Facility or other Acquisition Assets, or to the
Operators or the Manager which, although not specifically covering the Facility
or other Acquisition Assets would cover activities conducted at or in connection
with the Facility or other Acquisition Assets or liability arising therefrom,
including a description of the name of the insurer and the insured, the amount
of coverage, the type of insurance included under each such policy and a brief
description of any claims made thereunder during the past five (5) years and in
the case of any bond or agreement, a description thereof and the name of the
surety or indemnifying party. All such Insurance is in full force and effect,
all premiums due on such policies have been paid, and no Operator nor, to the
best of its knowledge (after due inquiry), any other Operator Affiliate has been
advised by any Insurance carriers of an intention to terminate or modify any
such Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
A. Employees.
1. Section 6.13(a) of the Disclosure Letter contains a
complete and accurate list of the following information for each employee
(separately indicating any who are not Business Employees, as defined in Section
9.1), director, independent contractor, consultant and agent of Seller,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable regularly scheduled hours of employment;
and all payroll-related liabilities or obligations of Seller.
1. To the best knowledge (after due inquiry) of the Operators,
no current employee of Seller is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition, or
proprietary rights agreement that (i) was breached or violated by employment
with, or services performed for, Seller or (ii) will adversely affect the
ability of such employee to perform his or her duties with Buyer.
<PAGE>
A. Labor Matters.
1. Except as disclosed in Section 6.14(a) of the Disclosure
Letter, Seller has not been, and is not now, a party to nor bound by or subject
to any collective bargaining agreement or other labor Contract. During the last
five (5) years, there has not been or, to the Operators' knowledge, threatened
strike, slowdown, picketing, lockout or work stoppage, or any labor arbitration
or proceeding in respect of the grievance of any employee, application or
complaint filed by an employee, employee group or union with the National Labor
Relation Board or any other Governmental Authority, organizational activity, or
other labor dispute against or affecting the Business or the Facility. No
application for certification of a collective bargaining unit is pending or, to
the Operators' knowledge, is threatened against Seller or the Facility. To the
best of the Operators' knowledge, after due inquiry, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. Seller and the Manager have complied in all respects with all
applicable Legal Requirements (including, if applicable, the Worker Adjustment
and Retraining Notification Act) relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, social security and similar Taxes, occupational safety and health,
and plant closing (including, if applicable, with respect to the transactions
contemplated by this Agreement) of employees at the Facility. Seller is not
liable for the payment of any taxes, fines, penalties, or other amounts
(including sums related to EEOC or employment discrimination charges, complaints
or settlements), however designated, for failure to comply with any of the
foregoing Legal Requirements.
1. Section 6.14(b) of the Disclosure Letter sets forth a
complete and accurate list of all judicial or agency determinations, settlements
or conciliations of complaints, claims, charges or citations against Seller or
the Manager since January 1, 1991, arising under the National Labor Relations
Act, the Fair Labor Standards Act, the Immigration Reform and Control Act, the
Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Americans with Disability
Act of 1990, 42 U.S.C. ss. 1981, and any other Law, relating to employment
discrimination, occupational safety and health, employee benefits, or wages and
hours of employees.
A. Benefit Plans.
1. Seller has not established, maintained, sponsored,
contributed to (including any Multiemployer Plan as defined in Section
4001(a)(3) of ERISA), been required to contribute to, or otherwise participated
in any employee benefit plan, program, agreement or arrangement under which any
present or past employee of Seller or any ERISA Affiliate of Seller may be
entitled to any benefits (including death, health, medical, deferred
compensation, bonus or other arrangements), whether written or oral, whether
formal or informal, whether or not insured, and whether legally binding or
<PAGE>
not, other than Seller's sick and vacation pay policies, neither of which is
subject to ERISA and true and correct copies of which have heretofore been
delivered by Seller to Buyer.
1. Except as set forth in Section 6.15(b) of the Disclosure
Letter, all payments required to have been made by Seller or Manager under such
sick pay and vacation pay policies have been made.
A. Compliance with Laws; Deficiencies. Except as set forth in
Section 6.16 of the Disclosure Letter:
1. No Operator nor, to the best of its knowledge (after due
inquiry), no other Operator Affiliate has received, at any time since January 1,
1991, any notice or other communication (whether oral or written) from any
Governmental Authority or any other Person regarding (A) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement pertaining to the Facility, the use thereof or the Business
conducted thereat, or (B) any actual, alleged, possible, or potential obligation
on the part of Seller to undertake, or to bear all or any portion of the cost
of, any Cleanup or other corrective, remedial, mitigation, response or other
action of any nature (including any investigation, study, sampling, monitoring
or testing) with respect to the Facility;
1. Except as described in Section 6.16(b) of the Disclosure
Letter, there is no pending nor, to the best knowledge of the Operators (after
due inquiry) is there any threatened or contemplated, investigation or inquiry,
proceeding, suit, claim (including any Environmental Claim), action or
litigation, or administrative, arbitration or other proceeding or governmental
investigation or inquiry against Seller or any of the Acquisition Assets. The
Operators have delivered to Buyer copies of all pleadings, correspondence and
other documents relating to each matter listed in Section 6.16(b) of the
Disclosure Letter. The matters listed in Section 16(b) of the Disclosure Letter
(either individually or in the aggregate) will not have a Material Adverse
Effect on the business, operations, assets (including the Acquisition Assets) or
prospects of Seller, the Facility or the Business. There is no pending, nor, to
the best knowledge of the Operators (after due inquiry) threatened, proceeding
against the Operators or any other Operator Affiliate that challenges or may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated by this Agreement.
1. There has occurred no event nor does any circumstance exist
that (with or without notice or lapse of time) may constitute or result in a
violation or a failure on the part of the Operators or, to the best of knowledge
of the Operators (after due inquiry), on the part of any other Operator
Affiliate to comply with, any Legal Requirement pertaining to the Facility, the
use thereof or the Business.
1. Except as set forth in Section 6.16(d) of the Disclosure
Letter, no Operator nor any of the assets (including the Acquisition Assets)
owned or
<PAGE>
used by Seller in connection with the Business or the Facility nor, to the best
of its knowledge (after due inquiry), any other Operator Affiliate, is, or
during the past five years was, subject to any judgment, decree, injunction or
order of any Governmental Authority.
1. Section 6.16(e) of the Disclosure Letter sets forth a true
and complete list of all violations and deficiencies found or alleged by any
Governmental Authority with respect to the Facility or Seller within the past
three (3) years. All such violations and deficiencies have been fully withdrawn
by the applicable Governmental Authority or remedied. No violations or
deficiencies found or alleged by any Governmental Authority with respect to the
Facility or Seller (whether or not listed in said Section 6.16(e) of the
Disclosure Letter) will result in any adverse effect upon Buyer in its operation
of the Facility or conduct of the Business or upon any of the transactions
contemplated herein (including any adverse effect upon any application by Buyer
for any Governmental Authorization required for Buyer's operation of the
Facility) or otherwise have any Material Adverse Effect.
1. No Operator, nor to the best knowledge of the Operators,
any other Person associated with or acting for or on behalf of an Operator, has
directly or indirectly in connection with the conduct of the Business (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Seller.
A. Governmental Authorizations. Seller has (in good standing)
all requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
<PAGE>
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization.
A. Affiliated Relationships. Except as disclosed in Section
6.18 of the Disclosure Letter, neither Seller, General Partner or the Manager,
nor any partner, shareholder, director or officer thereof , or any member of
such Person's immediate family, has, or at any time within the last two (2)
years has had, a material ownership interest in any business that is or was a
party to any business relationships or arrangement of any kind relating to the
operation of the Facility or the Business.
A. Residents/Patients; Licensed Beds And Fees.
1. Seller has cared for the Residents/Patients located at any
time at the Facility in accordance with recognized standards pertaining to
assisted living facilities. Seller does not have any agreement with any of its
Residents/Patients which have been prepaid for more than one month.
1. Section 6.19(b) of the Disclosure Letter sets forth a true
and correct list of: (i) the maximum number of permitted licensed assisted
living care beds at the Facility; (ii) the number of beds or units presently
occupied at the Facility; (iii) the current standard rates and other fees and
amounts charged by Seller to Residents/Patients at the Facility; (iv) any
Residents/Patients having special rates or fee arrangements, together with a
list of such special rates or description of such special arrangements.
A. Brokers or Finders. No Operator Affiliate has dealt with
any broker or agent in connection with the sale of the Acquisition Assets and no
Operator has any knowledge of any Person who would be entitled to a brokerage or
finder's fee or agent's commission or other similar payment in connection with
the sale of the Acquisition Assets or the transactions contemplated hereby as a
result of Seller's dealings.
A. Disclosure.
1. No representation or warranty or other statement made by
any Operator or any other Operator Affiliate in this Agreement, in the
Disclosure Letter or in any document, certificate or instrument furnished or to
be furnished by any Operator Affiliate to Buyer and no financial or operating
statement furnished or to be furnished by any Operator Affiliate to Buyer is or
will be false or misleading as to any material fact, or omits or will omit to
state a material fact necessary to make the statements contained therein or, in
light of the circumstances in which they were made, not misleading. The Operator
Affiliates have provided to Buyer all material information related to the
Acquisition Assets and the Business.
1. The Operators have no knowledge of any fact (other than
general economic or industry conditions) that would have, or as far as the
Operators can reasonably foresee could have, a Material Adverse Effect.
<PAGE>
A. Bankruptcy. No insolvency proceeding of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors (including any assignment for the benefit of creditors),
voluntary or involuntary, affecting Seller, General Partner or any other
Operator Affiliate (other than as a creditor) or the Acquisition Assets, is
pending or is being contemplated, or to the Operators' best knowledge (after due
inquiry) is being threatened, against Seller, General Partner or any other
Operator Affiliate by any other Person, and neither Seller nor any other
Operator Affiliate has made any assignment for the benefit of creditors or taken
any action in contemplation of, or which would constitute the basis for, the
institution of any such insolvency proceedings.
A. Third Party Provider Liabilities.
1. Except as set forth in Section 6.23 of the Disclosure
Letter, no services provided by Seller at the Facility have ever been reimbursed
by Medicaid or Medicare or, since January 1, 1995, any other third party
provider (including any managed care organization). Since January 1, 1995,
Seller has not received any notice of recoupment from and has no liability for
reimbursements of any third party reimbursement source (inclusive of managed
care organizations) and Seller is not aware of any basis for the assertion of
any such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
A. Due Diligence Information. Seller has delivered or caused
to be delivered or furnished to Buyer for its review true and complete copies of
all of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
I. ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
A. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and, to the extent applicable, in good standing
under the laws of the State of Delaware; is, or will be on the Closing Date,
duly qualified and authorized to do business in the Commonwealth of Virginia;
and has full power, authority and legal right to execute and deliver and
(subject to obtaining requisite Governmental Authorizations) to acquire and
operate the Facility and the Business and to perform and observe the provisions
of this Agreement, and all other Transaction Documents to which
<PAGE>
it is or is to become a party and otherwise to carry out the transactions
contemplated hereunder.
A. Authority. This Agreement constitutes and, when executed
and delivered, all the other Transaction Documents to which Buyer is or is to
become a party will constitute, the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power and authority to execute
and deliver this Agreement and such other Transaction Documents to which it is
or is to become a party and to perform its obligations hereunder and thereunder.
A. Certain Proceedings. There is no pending proceeding that
has been commenced, nor, to the knowledge of Buyer, threatened against Buyer
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
A. Brokers or Finders. Buyer has not dealt with any broker or
agent in connection with the purchase of the Acquisition Assets or the
transactions contemplated hereby as a result of Buyer's dealings and Buyer knows
of no Person who would be entitled to a brokerage or finder's fees or agent's
commissions or other similar payment.
A. Due Diligence Review. Buyer acknowledges that Seller has
delivered or furnished to Buyer information, documents, reports and records
which Buyer requested in connection with its due diligence review of the
Facility and other Acquisition Assets and that Buyer has been afforded the
opportunity to inspect the Facility. The foregoing notwithstanding, such review
and/or inspection is not intended to diminish or impair the representations and
warranties made by Seller, General Partner or any other Operator Affiliate
hereunder or under any other Transaction Document.
<PAGE>
I. ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
A. Access and Investigation. Between the date of this
Agreement and the Closing Date, Seller will (and the General Partner will cause
Seller to): (a) afford Buyer and its representatives and prospective Financing
Sources and their representatives (collectively, "Buyer's Advisors") full and
free access to Seller's personnel, properties, Contracts, books and records,
financial and operating data and other information and documents pertaining to
the Acquisition Assets and the Business, (b) furnish Buyer and Buyer's Advisors
with copies of all such Contracts, books and records, and other existing
documents and data as Buyer may reasonably request, (c) furnish Buyer and
Buyer's Advisors with such additional financial, operating and other relevant
data and information as Buyer may reasonably request, and (d) otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer's
investigation of the properties, assets and financial condition of Seller, the
Acquisition Assets and the Business. Seller shall cause its accountants to
cooperate with Buyer and to disclose the results of audits and financial
statement reviews relating to Seller and/or to the Facility and to produce the
work papers relating thereto. No such investigation by Buyer or its
representatives shall affect any of the Seller's representations and warranties
in this Agreement or Buyer's right to rely thereon. Buyer shall conduct its
investigation hereunder in such manner as will not cause any unreasonable
disruption to the business of the Facility.
A. Maps, Plans, Surveys, Etc. Seller shall deliver, or cause
to be delivered, to the Buyer all existing plans, maps, surveys, descriptions,
and title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
A. Operation of Seller's Business. Between the date of this
Agreement and the Closing Date, Seller will (and the General Partner will cause
Seller to):
1. conduct the Business of Seller only in the ordinary course
of business;
1. use their best efforts to preserve intact Seller's current
business organization, keep available the services of the current officers,
employees and agents of Seller, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with Seller;
<PAGE>
1. confer with Buyer concerning operational matters of a
material nature;
1. otherwise report periodically to Buyer concerning the
status of the Business, including its operations and financial condition,
including delivering to Buyer monthly operating statements for the Facility and
the Business within thirty (30) days after the end of each calendar month
between the date of this Agreement and the Closing;;
1. make no material changes in management personnel without
prior notice to Buyer;
1. maintain the Acquisition Assets in a state of repair and
condition consistent with the requirements of this Agreement and normal conduct
of the Business, not dispose of or Encumber or permit the disposition or
Encumbrance of the Acquisition Assets;
1. use their best efforts to keep in full force and effect and
not amend, or waive or permit to be amended or waived, Insurance covering
Seller, the Facility or the other Acquisition Assets or any other material
rights relating primarily or exclusively to the Business or the Acquisition
Assets;
1. maintain all books and records relating to the Business in
the usual, regular and ordinary manner;
(i) maintain Inventory at least at current levels and in any
event at levels that are customary and sufficient to operate the Facility for
its Intended Use;
(j) not amend or permit to be amended any Contract related to
the Acquisition Assets or the Business except in the ordinary and usual practice
of the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances
upon the Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or
assumed any Contract related to the Acquisition Assets or the Business except in
the ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach
of any Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to
the Facility without the written approval of Buyer, other than (i) renovations
and repairs to the
<PAGE>
Facility which have been disclosed to Buyer and which are to be completed prior
to the Closing Date and (ii) those required by or in order to retain or maintain
in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by
Law for the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly
with any and all Legal Requirements affecting the Acquisition Assets and all
orders of any board of fire underwriters or other similar bodies, and promptly,
and in no event later than twenty-four (24) hours from the time of its receipt
of any notice of non-compliance, notify Buyer of any failure of Seller to comply
with the same;
(q) not, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within their control,
which would cause any of Seller's and the General Partner's' representations and
warranties contained in this Agreement to be untrue; and
(r) take all actions and timely make all payments required in
order to keep the Option Contract in full force and effect and not amend or
permit to be amended the Option Contract.
A. Required Consents. As promptly as practicable after the
date of this Agreement, Seller will make all filings required to be made by it
in order to consummate the transactions contemplated by this Agreement. Between
the date of this Agreement and the Closing Date, Seller and the General Partner
will: (a) cooperate with Buyer with respect to all filings and provide all
information that Buyer elects to make or provide or is required to make or
provide in order to consummate the transactions contemplated by this Agreement
(including, with potential Financing Sources), and (b) cooperate with Buyer in
obtaining all Consents which Buyer considers necessary or appropriate in order
to consummate the transactions contemplated hereby.
A. Notification; Supplements to Disclosure Letter. Prior to
the Closing, the Operators will promptly notify Buyer in writing of (i) all
events, circumstances, facts, conditions or occurrences arising subsequent to
the date of this Agreement which could result in any of Seller's or General
Partner's representations becoming untrue or incorrect in any respect and (ii)
all other material developments affecting the Acquisition Assets or the Business
or the prospects thereof. Should any such event, circumstance, fact, condition
or occurrence require any change in the Disclosure Letter (if the Disclosure
Letter were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
A. No Negotiation. Until such time, if any, as this Agreement
is terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage
<PAGE>
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the Business or the Acquisition Assets or the partnership
interests in Seller or merger of Seller or a similar transaction involving
Seller.
A. Best Efforts. Between the date of this Agreement and the
Closing Date, the Operators will use their best efforts to cause the conditions
in Section 4 to be satisfied.
I. ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
A. Information on Business Employees. On and prior to the
Closing Date, Buyer will be given reasonable access to the personnel records
(including performance appraisals, disciplinary actions, grievances) of all
Business Employees.
A. Employment of Business Employees by Buyer.
1. Effective as of 11:00 pm on the date of the Closing, Seller
will terminate the employment of all Business Employees and Buyer shall offer
employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
1. No Operator Affiliate, directly or indirectly, shall
solicit the employment of any Business Employee.
1. It is understood and agreed that accepted employment with
Buyer will be on an "at will" basis and may be terminated by Buyer or by an
employee at any time for any reason and with or without notice (subject to any
written agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her
<PAGE>
accrued and unpaid vacation and sick employer paid leave as of the Closing. In
the event that any such Rehired Employee uses any of such vacation or sick leave
during said 180-day period while it is an employee of Buyer or otherwise becomes
entitled to be paid for the same during said period, Seller agrees to pay to
Buyer promptly after demand setting forth reasonable detail therefor the amount
of accrued vacation or sick leave pay paid to such Rehired Employees during said
period.
1. Seller shall be responsible for the payment of all wages
and other remuneration due to employees of Seller with respect to their services
prior to 11:00 pm on the date of the Closing and, if and to the extent
applicable, the payment of any termination or severance payments due to, and
will comply with all Legal Requirements relating to, any employee who did not
accept Buyer's offer of employment.
1. Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all Rehired Employees, except for such employees as
Seller shall warrant are exempt from such requirement.
1. Buyer shall not have any responsibility, liability or
obligation, whether to Business Employees, former employees, their beneficiaries
or to any other Person with respect to, and the Operators shall, jointly and
severally, indemnify and hold Buyer harmless with respect to, any unlawful
employment, labor or immigration practice arising from, or as a consequence of,
the Operators' or the Manager's conduct of the Business prior to the Closing, or
any employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
1. Notwithstanding anything contained in this Section, the
provisions of this Section are not intended to, and shall not in any way be
construed to, confer upon any Person other than the parties hereto any rights or
remedies hereunder.
<PAGE>
I. ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
A. Damage and Destruction. Seller shall have the risk of loss
or damage to the Property and liability arising out of the Business or the
Acquisition Assets from any cause whatsoever prior to the Closing Date. In the
event of any loss or damage to the Property, the following procedure shall be
used, Buyer may: (a) elect to extend the Closing Date for a period up to one
hundred eighty (180) days and require Seller to repair or replace such damaged
or destroyed Property, and, in which event Seller shall be entitled to retain
the Insurance proceeds and shall promptly proceed, at Seller's expense, to
repair or replace such damaged or destroyed Property; the Purchase Price shall
not be affected or adjusted in any way provided such damage or destruction is
fully repaired or replaced; (b) elect to proceed with the transaction
contemplated herein, and have the Insurance proceeds concerning the loss
assigned at Closing to Buyer, and if all or part of the loss is not covered by
Insurance, reduce the Purchase Price payable at the Closing by an amount equal
to the uninsured loss in which event Seller shall not be obligated to repair or
replace such damaged or destroyed Property; or (c) if the aggregate loss or
damage to the Property (from one or more events) at or prior to the Closing
exceeds ten (10%) percent of the Purchase Price, or would take longer than
thirty (30) days to repair or replace, elect to terminate this Agreement, in
which event neither Seller nor Buyer shall have any further rights or
obligations to the other hereunder.
A. Condemnation. In the event that prior to the Closing all or
any portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
I. ARTICLE
INDEMNIFICATION
A. Indemnification Agreement. The Operators indemnification
and reimbursement obligations arising from or in connection with any breach of
any representation, warranty or covenant made by them or another Operator
Affiliate in this Agreement and the Buyer's indemnification and reimbursement
obligations arising from or in connection with any breach of any representation,
warranty or covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
<PAGE>
A. Independent Investigation. The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
I. ARTICLE
MISCELLANEOUS COVENANTS
A. Confidentiality. Between the date of this Agreement and the
Closing Date, the parties to this Agreement will maintain in confidence, and
will cause their respective directors, officers, partners, employees, agents and
advisors to maintain in confidence, and not use to the detriment of another
party any written, oral, or other information obtained in confidence from
another party in connection with this Agreement or the transactions contemplated
by this Agreement, unless (a) such information is in the "public domain" or
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication.
If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy (as determined in writing by the
other party) as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, the Operators waive
any cause of action, right, or claim arising out of the access of Buyer or its
representatives to any trade secrets or other confidential information except
for the intentional competitive misuse by Buyer of such trade secrets or
confidential information (including forms, manuals, policies and other
Intellectual Property).
A. Public Announcements. Any general public announcements or
similar media publicity with respect to this Agreement or the transactions
contemplated herein shall be at such time and in such manner as Buyer shall
determine; provided that nothing herein shall prevent either party, upon notice
to the other, from making such
<PAGE>
written notices as such party's counsel may consider advisable in order to
satisfy the party's legal and contractual obligations in such regard.
A. Non-Competition. (a) Seller shall not engage or participate
in any effort or act to induce any of the suppliers, associates, employees,
independent contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no
Operator Affiliate shall, directly or indirectly, for or on behalf of itself or
any other person, firm, entity or other enterprises, have a proprietary interest
in, be employed by, be a director or manager of, act as a consultant for, be a
partner in, give advice to, loan money to or otherwise associate with, any
person, enterprise, partnership, association, corporation, joint venture or
other entity which directly or indirectly engages in the business of owning,
operating or managing any facility of any type, licensed or unlicensed, which is
engaged in or provides assisted living care, nursing home care, senior housing,
adult day care, retirement housing, Alzheimer care living facility or adult
congregate living care anywhere within a twenty (20) mile radius of the
Facility, except that (i) any Operator Affiliate may operate any of the above
types of facilities for low income residents (defined as a facility with a base
rate of less than $1,250 per month, to be adjusted annually for changes in the
Consumer Price Index from January 1, 1997 using as the Consumer Price Index for
all Urban Wage Earners and Clerical Workers, 1982 -84 = 100, All Items for
Washington, D.C., Maryland and Virginia as published by the United States Bureau
of Labor Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained
in this Article 12 are reasonable and necessary to protect the legitimate
business interests of Buyer and that any violation thereof would result in
irreparable harm to Buyer for which the remedy at law would be inadequate.
Accordingly, the Operators agree that upon the violation by them of any of the
restrictions contained in this Article 12, Buyer shall be entitled to obtain
from any court of competent jurisdiction a preliminary and permanent injunction,
as well as any other relief provided at law or equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted in such a manner
or for such a time (or both) as is adjudged to be reasonable.
<PAGE>
I. ARTICLE
GENERAL PROVISIONS
A. Survival. All covenants, representations and warranties
made by Seller and Buyer hereunder or in any certificates or other instruments
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and Closing.
A. Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In
addition, the following expenses will be paid by the following respective
parties:
1. Seller will pay:
a) any and all state, municipal or
other documentary, transfer, stamp, sales, use or similar taxes payable in
connection with the delivery of any instrument or document provided in or
contemplated by this Agreement, or the transactions contemplated hereby,
together with interest and penalties, if any, thereon;
a) any and all broker's fees or similar
fees claimed by any Person acting by or on behalf of Seller in connection with
the transactions contemplated hereby.
1. Buyer will pay
a) all expenses of or related to the
issuance of the title insurance commitment and policy (including the costs of
any survey required by Buyer and the Title Insurer), chain of title reports, and
all closer escrow fees and charges;
a) the cost of any environmental report,
market and feasibility study and appraisal prepared for Buyer at Buyer's
request, and the expenses of or related to Buyer's Due Diligence Review;
a) the charges for or in connection with
the recording and/or filing of any instrument or document provided for herein or
contemplated by this Agreement or any agreement or document described or
referred to herein; and
<PAGE>
a) any and all broker's fees or similar
fees claimed by any Person acting by or on behalf of Buyer in connection with
the transactions contemplated hereby.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
A. Arbitration. The parties hereto shall submit to arbitration
any dispute, controversy or claim arising out of or relating to this Agreement
or any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
A. Notices. Any notice, consent, approval, demand or other
communication required or permitted to be given under this Agreement or any
other Transaction Document (a "notice") shall be in writing, shall be delivered
to the addressee at the address set forth below (or at such other address as
shall be designated hereunder by notice to the other parties) personally, by
FedEx (or other equivalent national overnight courier) for next Business Day
delivery or by registered or certified United States mail, return receipt
requested, in each case with the cost of delivery prepaid or for the account of
the sender and shall be deemed to have been given (a) when delivered, if
delivered in person, (b) on the next Business Day, if sent by FedEx (or other
equivalent national overnight courier) or (c) five (5) Business Days after
mailing, if mailed by
<PAGE>
registered or certified United States mail. The respective addresses of the
parties for notice are as follows:
If to Buyer: Integrated Living Communities of
Portsmouth, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
with a copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Phone: (212) 704-6000
Fax: (212) 704-6288
Attn: Andrea Paretts Ascher, Esq.
If to Operator
Affiliates: Bullock Corporation
125 Riverbend Drive, Suite A
Charlottesville, Virginia 22901
Phone: (804) 293-7037
Fax: (804) 293-8346
Attn: Mr. James L. Bullock
with a copy to: Michie, Hamlett, Lowry, Rasmussen & Tweel, P.C.
500 Court Square, Suite 300
Charlottesville, Virginia 22902-0298
Phone: (804) 980-9507
Fax: (804) 295-0681
Attn: Denise Yvette Lunsford, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
A. Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
A. Financial Statement Audits. The Operators shall use their
best efforts to cause Seller's Auditors to deliver to Buyer at Buyer's expense,
within sixty (60)
<PAGE>
days following the Closing Date, such audited financial statements of Seller
necessary to comply with Rule 3-05 of Regulation S-X promulgated by the
Securities and Exchange Commission for filing by Integrated Living Communities,
Inc. with a Current Report on Form 8-K regarding the transactions contemplated
herein, and to cause Seller's Auditors to cooperate with Buyer's Auditors in
preparing the required pro forma financial statements for filing therewith.
Notwithstanding the level of review of the Facility's financial statements by
Buyer pursuant to Section 8.1 above, Seller shall cooperate with Buyer and its
independent certified public accountants, if Buyer deems it necessary or
desirable, to audit the balance sheets, statements of operations and statements
of cash flow of Seller for up to three (3) calendar years ended prior to
Closing. Without limiting the foregoing, the Operators shall make available all
information requested by Buyer or its auditors, and the Operators (and their
chief executive and chief financial officers) shall execute and deliver to the
auditors all representation letters requested by Buyer's auditors. Such audits
shall be conducted at Buyer's expense.
A. Intentionally omitted.
A. Copies of Books and Records. The Operators shall, for a
period of five (5) years after the Closing Date, provide to Buyer copies,
whether in paper or computer format, as may be reasonably requested from time to
time by Buyer, of Seller's financial and tax books and records and Manager's
financial records insofar as they relate to the operation of the Facility and
the Business prior to the Closing.
A. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. No delay in exercising any right
or remedy shall constitute a waiver thereof, and no waiver by Buyer or any
Operator of any covenant of this Agreement shall be construed as a waiver of any
preceding or succeeding breach of the same or any other covenant or condition of
this Agreement.
A. Entire Agreement and Modification. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter (including the Letter of Intent) and constitutes (along with the
Transaction Documents, including the Unification Agreement, referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by each of the parties.
<PAGE>
A. Assignments, Successors and Third Party Beneficiaries.
1. No party may assign any of its rights under
this Agreement without the prior consent of the other party which will not be
unreasonably withheld, except that Buyer may assign all or certain of its
rights, duties and obligations hereunder to one or more Affiliates of Buyer, or,
in connection with the financing or refinancing of Buyer's purchase of the
Acquisitions Assets, to a real estate investment trust or other Financing Source
or its Affiliate, without the prior written consent of Seller, provided that in
the instance of any such assignment Buyer shall not be released from any of, and
remain responsible for its obligations under, this Agreement.
1. This Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
1. Except as otherwise expressly provided in
this Section, this Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and permitted assigns and nothing in this Agreement will be construed
to give any Person other than the parties to this Agreement or their respective
successors and assigns any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement. B.
Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
A. Section Headings. The headings of Articles and Sections in
this Agreement are provided for convenience only and will not affect the
construction or interpretation of this Agreement.
A. Governing Law. This Agreement will be governed by and
construed under the laws of the Commonwealth of Virginia without regard to
conflicts of laws principles.
A. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF PORTSMOUTH, INC.
By: ______________________________________
John Poole, Chief Financial Officer
RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP
By: BULLOCK CORPORATION,
General Partner
By: __________________________________
James L. Bullock, President
BULLOCK CORPORATION
By: ______________________________________
James L. Bullock, President
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 11
TERMS OF THE SALE AND PURCHASE 11
2.1 Assets to Be Sold 11
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 12
2.5 Allocation of Purchase Price 13
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 14
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 16
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 18
ARTICLE 4 18
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 18
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 19
4.7 No Material Adverse Change19
4.8 Consents 19
4.9 Completion of Other Transactions 20
ARTICLE 5 20
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 20
5.1 Performance 20
5.2 Representations and Warranties 20
5.3 Consents 20
<PAGE>
TABLE OF CONTENTS (cont'd)
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into of Other Agreements 20
ARTICLE 6 21
REPRESENTATIONS AND WARRANTIESOF OPERATORS 21
6.1 Organization and Good Standing 21
6.2 Authority; No Conflict; Consents 22
6.3 Financial and Operating Statements 23
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 24
6.6 Taxes; FIRPTA 24
6.7 Title, Condition and Sufficiency of the Facility. 24
6.8 Title, Condition And Sufficiency of the Personal Property 27
6.9 Inventory 27
6.10 Intellectual Property 28
6.11 Contracts 28
6.12 Insurance 29
6.13 Employees 30
6.14 Labor Matters 30
6.15 Benefit Plans 31
6.16 Compliance with Laws; Deficiencies 31
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 33
6.19 Residents/Patients; Licensed Beds And Fees 33
6.20 Brokers or Finders 33
6.21 Disclosure 33
6.22 Bankruptcy 34
6.23 Third Party Provider Liabilities 34
6.24 Due Diligence Information 34
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 35
7.2 Authority 35
7.3 Certain Proceedings 35
7.4 Brokers or Finders 35
7.5 Due Diligence Review 35
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc.36
8.3 Operation of Seller's Business 36
8.4 Required Consents 38
<PAGE>
TABLE OF CONTENTS (cont'd)
8.5 Notification 38
8.6 No Negotiation 38
8.7 Best Efforts 38
ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 39
ARTICLE 10 40
DAMAGE, DESTRUCTION OR CONDEMNATION 40
10.1 Damage and Destruction 40
10.2 Condemnation 40
ARTICLE 11 41
INDEMNIFICATION 41
11.1 Indemnification Agreement 41
11.2 Independent Investigation 41
ARTICLE 12 41
MISCELLANEOUS COVENANTS 41
12.1 Confidentiality 41
12.2 Public Announcements 42
12.3 Non-Competition 42
ARTICLE 13 43
GENERAL PROVISIONS 43
13.1 Survival 43
13.2 Expenses 43
13.3 Arbitration 44
13.4 Notices 44
13.5 Further Assurances 45
13.6 Financial Statement Audits 45
13.7 Intentionally omitted 46
13.8 Copies of Books and Records 46
13.9 Waiver 46
13.10 Entire Agreement and Modification 46
13.11 Assignments, Successors and Third Party Beneficiaries 46
13.12 Severability 47
13.13 Section Headings 47
13.14 Governing Law 47
13.15 Counterparts 47
</TABLE>
EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Bill of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's and General Partner's
Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF REDGATE, INC.,
as Buyer
and
GHENT ARMS LIMITED PARTNERSHIP
as Seller
and
BULLOCK CORPORATION
as General Partner
Dated as of January 24, 1997
<PAGE>
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF REDGATE, INC., a Delaware
corporation ("Buyer"), GHENT ARMS LIMITED PARTNERSHIP, a Virginia limited
partnership ("Seller") and BULLOCK CORPORATION, a Virginia corporation ("General
Partner" or "Bullock Corporation" and, together with Seller, collectively, the
"Operators" and individually, an "Operator").
RECITALS
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility (as hereinafter defined), the Business (as hereinafter defined) and
substantially all of the other assets of Seller used in connection with the
Facility and the Business, upon the terms and conditions hereinafter set forth;
WHEREAS, General Partner is the sole general partner under the
Partnership Agreement (as hereinafter defined) of Seller and Manager manages the
Facility and the Business for Seller pursuant to the Existing Management
Agreement (as hereinafter defined); and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
Definitions . The following capitalized terms used
in this Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), used with respect to any
Person, shall mean the possession, directly or indirectly, whether by contract
or otherwise, of the power to direct or cause the direction of the management
and policies of such Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Bullock Development Corporation, a Virginia corporation.
Bill of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller, in
conjunction with the Manager, of owning, planning, developing, using for the
Intended Purpose, operating and maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner or the Manager for the
benefit of Seller pursuant to authority granted under the Partnership Agreement,
the Existing Management Agreement or otherwise or (iii) any of the Acquisition
Assets are bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
DEQ: As defined in Section 11.3.
DEQ Letter: As defined in Section 11.3.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner or the
Manager is a party thereto under a Contract for the benefit of Seller pursuant
to authority granted under the Partnership Agreement, the Existing Management
Agreement or otherwise, such other Operator Affiliate will assign to Buyer at
Closing and, upon such assignment, those Contracts under which Buyer will assume
the obligations arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition, equitable interest, option, pledge, voting trust,
right of first refusal, or restriction of any kind, including any restriction on
use, voting or dividends (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership) or other thing commonly
known as an encumbrance; and "Encumber" means the creation of any Encumbrance.
Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup"), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as the same may be amended from time to time, or any successor law and the
rules and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%) percent of the Purchase Price shall be held in escrow by the
Escrow Agent as security for Seller's indemnification obligations under this
Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
Existing Management Agreement: The Management Agreement dated December
30, 1987 between Seller and Manager pursuant to which Manager has been managing
the Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"Ghent Arms", and comprised of an assisted-living facility, containing 48
licensed beds and approximately 22,839 square feet and the related amenities.
Financing Source: Any Person which provides financing for the
transactions contemplated by this Agreement, including any Person which may
acquire the Facility (and/or any of the other Acquisition Assets) and
concurrently lease the same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Bullock Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Seller, Retirement Home of Virginia Beach Limited Partnership,
Bullock Corporation and its principal shareholder, the Manager and its principal
shareholder, Buyer and the other Affiliates of Integrated Living Communities,
Inc., which are "Buyers" under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "Ghent Arms" and all derivations and
variations thereof, and any other trade names, service mark, logo, symbol, trade
dress, design, or representation or expression of any thereof, or registration
or application for registration thereof, or any invention, trade secret,
technical information, know-how, proprietary right (including Resident/Patient
lists, supplier lists and operating manuals) or intellectual property used by an
Operator Affiliate in connection with the operation of, or otherwise pertaining
to, the Property or the Business but specifically excluding software and
computer programs licensed by a third party to an Operator Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
City of Norfolk, State of Virginia, consisting of approximately 0.5538 acres and
more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: American Retirement Homes, Inc., a Virginia corporation.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
Operator Affiliates: Collectively, Seller, General Partner, Manager and
each of the principal shareholders of each of General Partner and Manager,
respectively.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and James Moore, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
all equipment, machinery, furniture and
furnishings, Inventory, vehicles and other tangible personal property (including
all components thereof) (whether or not
set forth on Exhibit B), now or on the Closing Date located in, on or used in
connection with (A) the Facility (and whether or not affixed to the facility) or
(B) the Business, including all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air cooling and
air conditioning systems, apparatus, sprinkler systems, fire and theft
protection equipment, built-in oxygen and vacuum systems, tools, repair parts,
appliances and communications equipment, to the extent any of the foregoing
items are not Fixtures and are not conveyed to Buyer as part of the Facility
pursuant to the Deed, and those specific items of tangible personal property
(including any vehicles which are used for the Business) described on Exhibit B;
and
all Resident and/or Patient Agreements and
other Designated Contracts, telephone numbers and Resident/Patient records and
invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
Phase I Environmental Report: As defined in Section 11.3.
Phase II Lab Results: As defined in Section 11.3.
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property, inventory, occupancy, withholding, payroll, gift,
estate or inheritance tax), levy, assessment, tariff, impost, imposition, toll,
duty (including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or for any authority or payable (including pursuant to any tax-sharing
agreement or pursuant to any agreement, arrangement or understanding relating to
the sharing or payment of any such tax, levy, assessment, tariff, impost,
imposition, toll, duty, deficiency or fee).
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Bill of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Bullock Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Seller, Retirement Home of Virginia Beach Limited Partnership, and
Bullock Corporation, each as sellers of assisted living facilities and the
related business, Buyer and other Affiliates of Integrated Living Communities,
Inc. which are purchasing such facilities and businesses pursuant to this
Agreement and the other Acquisition Agreements, and the Manager.
UST: As defined in Section 11.3.
Year End Financial Statements: As defined in Section 6.3.
Construction of Certain Terms . For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, (i) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; (ii) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP, as at the time applicable; (iii) all references in this
Agreement to designated "Articles," "Sections", "Schedules", "Exhibits" and
other subdivisions are to the designated Articles, Sections, Schedules and
Exhibits and other subdivisions of this Agreement; (iv) the word "including"
shall have the same meaning as the phrase "including, without limitation," and
other phrases of similar import; (v) the words "herein, " "hereof " and
"hereunder' and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision; and (vi) all
references to this Agreement shall include all Schedules and Exhibits attached
hereto.
Disclosure Letter . The disclosures in the Disclosure Letter, and those
in any supplement thereto, relate only to the representations and warranties in
the Section of this Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty in a specific Section of this Agreement), the statements in the body
of this Agreement will control.
Parties' Intent . The parties intend that the assets to be conveyed to
Buyer pursuant to Section 2.1 include all of the assets employed in and
necessary to operate the Facility and the Business in substantially the manner
as the Business has heretofore been operated.
Knowledge . Wherever a representation is made in this Agreement based
upon the knowledge of an Operator (whether or not expressly after due inquiry),
it shall be deemed to have been made by such Operator after due inquiry of the
Manager of the Facility and each of the principal shareholders of the General
Partner and the Manager.
ARTICLE
TERMS OF THE SALE AND PURCHASE
Assets to Be Sold . Subject to the terms and conditions of this
Agreement, at Closing, Seller (and the other Operator Affiliates to the extent
such assets are owned by them) will sell, convey, assign, transfer and deliver
to Buyer and/or Buyer's designee or assignee as provided in Section 13.11, and
Buyer and/or Buyer's designee or assignee, will purchase and acquire, as a going
concern, the Facility and all of the assets, properties (real or personal,
tangible or intangible), rights, prepaid expense items and business goodwill
used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
Excluded Assets . Notwithstanding Section 2.1, the Acquisition Assets
do not include: (1) claims for refunds of Taxes and other governmental charges
of whatever nature for periods prior to the Closing Date; (2) Accounts
Receivable; (3) the minute books, stock records and corporate seal of Seller or,
subject to Buyer's right to review and obtain copies of same as provided in
Section 13.8, Seller's financial books and records (whether in paper or computer
format), provided, however, Resident/Patient records are Acquisition Assets; (4)
Contracts other than the Designated Contracts; (5) Seller's bank accounts, cash
and cash equivalents and securities (except that deposits and trust funds held
for Residents/Patients shall be transferred to Buyer (or trust accounts
designated by Buyer for such Residents/Patients); (6) the Purchase Price and
rights under this Agreement; (7) personal property located at the Facility which
is owned by the Residents/Patients; and (8) the assets, properties, and rights
listed in Schedule 2.2 (collectively, the "Excluded Assets").
Purchase Price . The purchase price for the Acquisition Assets will be
One Million Eight Hundred Eighty-Two Thousand Dollars ($1,882,000.00), subject
to upward or downward adjustment as hereinafter provided (as adjusted, the
"Purchase Price").
The Purchase Price (without giving effect to any post-Closing
adjustments) shall be paid by Buyer to Seller as follows:
(i) One Hundred Thirty-Eight Thousand Eight Hundred
Fifty-Five and 57/100 Dollars ($138,855.57) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
Prorations and Purchase Price Adjustments . (a) On the Closing Date,
the following shall be apportioned and prorated as of the Closing Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets (including
charges for sewer, water, drainage or other services) assessed
for the tax year in which the Closing Date occurs;
(ii) personal property taxes attributable to the
Personal Property for the tax year in which the Closing Date
occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final bill or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of current
utility and fuel bills. If the Closing shall occur before the tax rate is fixed,
the apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding tax year applied to the latest assessed valuation, and
shall be subject to adjustment upon receipt by Buyer of notice of the tax rate
for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
Allocation of Purchase Price . After the Closing, the parties agree to
make consistent use of the allocation, fair market value and useful life of the
Purchase Price in any and all filings, declarations and reports with the
Internal Revenue Service in respect thereof, including the reports required to
be filed under Section 1060 of the Code, if applicable. Buyer shall prepare and
deliver IRS Form 8594 to Seller within forty-five (45) days after the Closing
Date.
Assumption of Liabilities . (a) Subject to the terms and conditions of
this Agreement, at Closing, Buyer shall assume and thereafter in due course
fully satisfy those obligations arising under the Designated Contracts which are
assignable and are assigned by Seller to Buyer, with respect to, and only with
respect to, performance of obligations (including payments to be made on account
of services) to be rendered thereunder after the Closing Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
Consents to Assignments . (a) The Operators will use their best efforts
and shall diligently proceed to obtain all Consents of all Persons necessary to
permit the assignment of the Designated Contracts or to assign or transfer any
of the other Acquisition Assets. In the event that any of the Acquisition Assets
are not assignable, or the Person(s) from whom a Consent to any such assignment
or transfer, fail(s) or refuse(s) to Consent thereto before the Closing Date,
Buyer shall have no obligation to assume and will not assume any such Designated
Contract and shall have no obligation to purchase any such Acquisition Asset. In
addition, this Agreement shall not constitute an agreement to assign or transfer
any such Acquisition Asset or part thereof or any right or benefit arising
thereunder or resulting therefrom if an attempted assignment or transfer
thereof, without the Consent of such Person, would constitute a breach thereof
or in any way affect the rights of Buyer or Seller thereunder. Notwithstanding
the foregoing, all references in this Agreement or any other Transaction
Document (other than the Deed, any Bill of Sale and Assignment and any other
instrument or document conveying title to any Acquisition Assets) to
"Acquisition Asset" or "Acquisition Assets" shall continue to have the meaning
set forth in Section 2.1 without giving effect to this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
ARTICLE
CLOSING
Closing . The purchase and sale of the Acquisition Assets provided for
in this Agreement (the "Closing") shall take place on January 27, 1997 (the
"Originally Scheduled Closing Date") at the offices of Buyer's financing source
(or counsel therefor), or at such other place, time or date as Seller and Buyer
may mutually agree to. The Originally Scheduled Closing Date, any other such
date as Seller and Buyer may mutually agree to as the date on which the Closing
shall occur, and any other date to which the same may be extended by Seller or
Buyer as hereinafter provided, are each herein referred to as a "Scheduled
Closing Date" and the latest of such Scheduled Closing Dates is herein referred
to as the "Closing Date".
If, prior to or by the Originally Scheduled Closing Date, any
Governmental Authority with jurisdiction over the licensing of the Facility has
not issued to Buyer a license to operate the Facility immediately upon Buyer's
acquisition of the Acquisition Assets, then, in such event, provided (i) Buyer
shall have furnished to such Governmental Authority all information requested by
such Governmental Authority as of such date in connection with its application
for the issuance of such license, (ii) this Agreement, the other Acquisition
Agreements and the Unification Agreement shall have been executed by all of the
parties thereto and (iii) First American Title Insurance Company of New York, as
escrow agent under the Deposit Escrow Agreement shall have been authorized by
the parties thereto to release the Escrow Deposit to the General Partner, then
Buyer shall be entitled to extend the Closing Date for a period of up to ninety
(90) days (the "Extension Period").
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of this Agreement by Buyer pursuant to
this Section 3.1(c), however, shall release or relieve any Operator or other
Operator Affiliate of any liability that they may have for any breach of any
representation, warranty, covenant or obligation of an Operator in this
Agreement or of any Operator Affiliate in any Transaction Document.
In the event that the Closing is to take place through an escrow or
sub-escrow, the Operator Affiliates and Buyer shall mutually execute and deliver
to Title Insurer, as escrow holder, joint escrow and/or recording instructions
consistent with this Agreement on or prior to the Closing Date. In the event of
any conflict between the provisions of this Agreement and any such escrow and/or
recording instructions and/or any general instructions required by Title Insurer
to be executed by Buyer and Seller, or any other Operator Affiliate in
connection therewith, the provisions of this Agreement and the Unification
Agreement shall control.
Items to Be Delivered by Seller at Closing . At the Closing, subject to
the terms and conditions of this Agreement, Seller shall deliver, or cause to be
delivered to Buyer or, if the Closing is to take place in escrow, to Title
Insurer in escrow, such instruments as shall be necessary to convey to Buyer or
its designee or assignee good and marketable title to the Acquisition Assets,
free and clear of all Encumbrances (except for Permitted Encumbrances). Among
other things, Seller will deliver to Buyer or, if applicable, Title Insurer in
escrow:
A full warranty deed (the "Deed") in the form of Exhibit C, which Deed
shall be duly executed, acknowledged and in recordable form. The Deed shall
include (if applicable) the appropriate state, county and local real estate
transfer tax declaration of real estate value or other affidavit as to the tax
due upon the sale.
One or more Bills of Sale and Assignments in the form of Exhibit B,
duly executed and acknowledged by each of the Operators.
"FIRPTA" affidavit or certificate in form and substance satisfactory to
Buyer and in conformance with Section 1445(b)(2) of the Code, to the effect that
Seller is not a foreign person and such other affidavits or certificates as may
be reasonably required by Buyer to the effect that Buyer is not required to
withhold taxes from the payment of sale proceeds to Seller under any other
applicable Law.
Uniform Commercial Code Form 3s in favor of Seller, for filing with the
appropriate state and local authorities, for the release of any Encumbrance
(other than a Permitted Encumbrance) covering any of the Acquisition Assets as
to which Uniform Commercial Code Form 1s have been filed.
If the Closing shall not occur on the date hereof, a certificate
executed by each Operator wherein the Operators represent and warrant to Buyer
that, except as otherwise stated in such certificate, each of the Operators'
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date (giving full effect to any supplements to
the Disclosure Letter that were delivered by Seller to Buyer prior to the
Closing Date).
A certificate of the General Partner certifying true and correct copies
of Seller's Partnership Agreement and other Organizational Documents, if any,
which certificate and Organizational Documents shall be in form and substance
reasonably satisfactory to Buyer.
A certificate of the Secretary of General Partner certifying true and
correct copies of General Partner's Organizational Documents, which certificate
and the accompanying Organizational Documents shall be in form and substance
reasonably satisfactory to Buyer.
Opinion of Seller's and General Partner's Counsel opining as to the
matters set forth on Exhibit E and otherwise in form and substance satisfactory
to Buyer.
The Escrow Agreement duly executed and acknowledged by Seller, General
Partner and each other Operator Affiliate and Escrow Agent.
The originals of all Designated Contracts, title instruments in the
Operators' or the Manager's possession pertaining to the Acquisition Assets and
the original Governmental Authorizations.
All other Transaction Documents to which Seller or any other Operator
Affiliate is a party duly executed and delivered by each such party.
<PAGE>
All other proper instruments required for the conveyance of good and
marketable title to the Acquisition Assets or required by Title Insurer for the
issuance of the Title Policy.
In addition, at the Closing, Seller shall deliver or cause to be
delivered possession of the Facility and other Acquisition Assets (including
keys and combinations for obtaining entry or access thereto).
Items to Be Delivered by Buyer at Closing . Among other things, Buyer
will deliver to the Escrow Agent:
The Assumption of Designated Contracts Agreement, executed by Buyer.
A certificate executed by Buyer representing and warranting to Seller
that, except as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date.
A certificate of the Secretary of Buyer certifying true and correct
copies of resolutions adopted by Buyer's Board of Directors authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents to be executed by Buyer and the incumbency of the officers of Buyer
authorized by such resolutions to execute this Agreement and take other actions
in furtherance of this Agreement.
The Escrow Agreement duly executed and acknowledged by Buyer and the
Escrow Agent.
All other Transaction Documents to which Buyer is a party duly executed
and delivered by Buyer.
Other Closing Documents . Each party shall execute and deliver such
other instruments and take such other actions as either party or the Title
Insurer or Buyer's Financing Source may reasonably request in order to
effectuate the purposes of this Agreement.
ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
Performance . Each of the Operators shall have performed each and all
of the covenants and obligations required to be performed by it under this
Agreement on or prior to the Closing.
Representations and Warranties . Each and all of the representations
and warranties of the Operators hereunder shall be true and correct on and as of
the Closing Date, as if made as of the Closing Date.
Closing Documents . Seller shall have delivered (or caused to have been
delivered) to Buyer each of the items to be delivered by Seller or an Operator
Affiliate at Closing pursuant to Sections 3.2 and 3.4. Seller shall have paid or
shall have made arrangements for the payment of those costs and expenses
required to be paid by Seller pursuant to Section 13.2.
Title Insurance . Buyer shall have received, at Buyer's expense, a
commitment from Title Insurer satisfactory to Buyer for the issuance, at
standard rates, of an ALTA extended coverage (but without exception for
creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
Survey. Buyer shall have received, at Buyer's expense, and approved
either (a) a final "as-built" ALTA survey of the Facility completed in
accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, with additional Title A survey requirements, jointly established
and adopted by ALTA and ACSM in 1992 that meets the requirements of a Class A
Survey as defined therein, certified within thirty (30) days of the Closing Date
or (b) such other form of property survey which is in form, substance and all
other respects satisfactory to Buyer and its Financing Source in their sole
discretion. Such survey shall (i) be certified to Buyer, Title Insurer, and
Buyer's Financing Source, if any, as being true and accurate, and such
certification shall include the acreage of the Land and a statement that the
Land is not located in a Flood Hazard Area; (ii) identify thereon all telephone,
water, sewage, electricity, gas and other utility facilities to the points of
connection; and (iii) show no encroachments onto or conflicts with any adjacent
property other than pursuant to easements appurtenant to the Facility or such
other agreements with the affected landowner approved by Buyer and which are, in
turn, insured under the Title Policy.
Entitlements. Buyer shall have received and approved with respect to
the Facility copies of (a) the applicable zoning ordinances and map marked to
show the location of such Facility and certified by an appropriate Governmental
Authority to be complete and accurate; (b) evidence that such zoning ordinances
and the general plans/specific plans and all other land use regulations of the
applicable municipal jurisdictions and all Encumbrances, if any, affecting the
Facility permit the transfer of the Facility and use thereof for its Intended
Use (and reconstruction and resumption of use in the event of damage,
destruction, or cessation of use) as a matter of right for an unlimited time
period and not merely as a legal nonconforming use; (c) all licenses,
certificates, approvals and authorizations, including plot plan and subdivision
approvals, zoning variances, sewer, building, foundation, grading and other
permits and all other authorizations required by Governmental Authorities or by
any applicable covenants, conditions and restrictions for the use and operation
of the Facility for its Intended Use, in each instance in accordance with all
applicable Legal Requirements; and (d) evidence satisfactory to it that (i) the
Facility holds all Governmental Authorizations required for the operation
thereof for its Intended Use, including from the Virginia Department of Social
Services; and (ii) the Facility is not subject to, or threatened with, any hold
on admissions or other sanction and there are no outstanding, or threatened,
notices of deficiency resulting from any survey of the Facility which have not
been fully responded to with an acceptable plan of correction with which the
Facility is being operated in compliance.
No Material Adverse Change . Since the date of the Interim Financial
Statements, there has not been any material adverse change in the business,
results of operations, assets, liabilities, condition (financial or otherwise),
operations or prospects of Seller, or the Business or the Facility, and no event
has occurred or circumstance exists that may result in such a material adverse
change, and Buyer shall have received evidence satisfactory to it to that
effect.
Consents . The Consents of all Persons necessary for the consummation
of the transactions contemplated hereby and for Buyer to conduct the Business
shall have been obtained, including Consents required, if any, under the
Designated Contracts, all Governmental Authorizations, any tax clearance or
similar Consent, the Consent of Buyer's (or its parent company's) lenders to the
extent required, if any. None of the Consents (i) shall have been conditioned
upon the modification, cancellation or termination of any Designated Contract,
easement, right or other Consent with respect to the Facility, or (ii) shall
impose on the Buyer any material condition or provision or requirement with
respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
Completion of Other Transactions . Each of the transactions
contemplated by this Agreement, the other Acquisition Agreements and the
Unification Agreement shall have been consummated contemporaneously.
ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
Performance . Buyer shall have performed each and all of the covenants
and obligations required to be performed by it on or prior to the Closing;
Representations and Warranties . Each and all of the representations
and warranties of Buyer hereunder shall be true and correct on and as of the
Closing Date, as if made as of the Closing Date; and
Consents . Seller shall have received a certificate of the Secretary or
other officer of Buyer certifying a copy of the resolutions of the Board of
Directors of Buyer authorizing Buyer's execution, delivery and performance of
this Agreement and the other Transaction Documents to be executed by Buyer and
the incumbency of the officers of Buyer authorized by such resolutions to
execute this Agreement and take other actions in furtherance of this Agreement.
Closing Documents . Buyer shall have delivered (or caused to have been
delivered) to Seller each of the items to be delivered by Buyer at Closing
pursuant to Sections 3.3 and 3.4.
Completion of Other Transactions and Entering Into of Other Agreements
. Each of the transactions contemplated by the Unification Agreement shall have
been consummated contemporaneously with the consummation of the transactions
contemplated by this Agreement and Buyer shall have entered into each of the
other agreements contemplated to be entered into by Buyer pursuant to the
Unification Agreement.
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
Organization and Good Standing .
(i) Seller (A) is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia as a limited partnership and (B)
has full power, authority and legal right to execute and deliver and to perform
and observe the provisions of this Agreement and the other Transaction Documents
to which it is or is to become a party, and otherwise carry out the transactions
contemplated hereunder and thereunder. Seller conducts no activities and neither
owns nor uses properties in any other jurisdiction which requires it, under the
laws of such jurisdiction, to qualify to do business as a foreign corporation in
such jurisdiction.
(ii) Seller has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect.
(iii) General Partner is the sole General Partner of Seller.
(i) General Partner (A) is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia and
(B) has full power, authority and legal right to execute and deliver and to
perform and observe the provisions of this Agreement and the other Transaction
Documents to which it is or is to become a party, and otherwise carry out the
transactions contemplated hereunder and thereunder. General Partner conducts no
activities and neither owns nor uses properties in any other jurisdiction which
requires it, under the laws of such jurisdiction, to qualify to do business as a
foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true and complete copies of
its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement) is the sole
shareholder of General Partner.
(i) Manager (A) is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia and (B) has full
power, authority and legal right to execute and deliver and to perform and
observe the provisions of this Agreement and the other Transaction Documents to
which it is or is to become a party, and otherwise carry out the transactions
contemplated hereunder and thereunder. Manager conducts no activities and
neither owns nor uses properties in any other jurisdiction which requires it,
under the laws of such jurisdiction, to qualify to do business as a foreign
corporation in such jurisdiction.
(ii) Manager has delivered to Buyer true and complete copies of its
Organizational Documents, as currently in effect.
(iii) B (as defined in the Indemnification Agreement) is the sole
shareholder of Manager.
Authority; No Conflict; Consents .
This Agreement constitutes and, when executed and delivered, the other
Transaction Documents to which an Operator is or is to become a party will
constitute, legal, valid and binding obligations of each of Seller and General
Partner, respectively, enforceable against such Person in accordance with their
respective terms. Each of the Operators have the absolute and unrestricted
right, power, authority and legal capacity to execute and deliver this Agreement
and such other Transaction Documents to which such Person is or is to become a
party is and to perform their respective obligations hereunder and thereunder.
Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated by this
Agreement by Seller, General Partner, Manager or the Bullocks will, directly or
indirectly (with or without notice or lapse of time):
contravene, conflict with or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any of the Organizational Documents of such party or any
Contract or any agreement to which such party (whether or not Seller is a party
thereto) or any Acquisition Assets may be subject;
contravene, conflict with, or result in a violation of any applicable
Law to which such party or any Acquisition Assets may be subject or give any
Governmental Authority or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under any Law to which such party or any of the Acquisition Assets
may be subject;
contravene, conflict with, or result in a violation of any of the terms
or requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Seller or that otherwise relates to the Business, the Facility
or any other the Acquisition Assets;
cause Buyer to become subject to, or to become liable for the payment
of, any Tax for the Business's operations prior to the Closing;
cause any of the Acquisition Assets to be reassessed or revalued by any
Governmental Authority (except to the extent that any of the same would
customarily be reassessed or revalued by such Governmental Authority upon a sale
of such asset); or
result in the imposition or creation of any Encumbrance (except a
Permitted Encumbrance) upon or with respect to any Acquisition Assets.
Except for those Governmental Authorizations and Consents under
Designated Contracts indicated, respectively, in Section 6.17 and Section
6.11(c) of the Disclosure Letter, no notices to, or Consents from, any Person
are required in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Operators' obligations under this
Agreement, including the transfer and assignment of any Governmental
Authorization or other Acquisition Asset necessary or desirable for Buyer to
conduct the Business.
Financial and Operating Statements .
Seller has delivered to Buyer: (a) unaudited balance sheets and related
statements of profits and losses for the Facility and the Business as at and for
each of the calendar years ended December 31, 1994 and 1995, together with the
review reports thereon of Goodman & Company, LLC, independent public accountants
(the "Year End Financial Statements"), (b) an unaudited balance sheet and the
related statement of profits and losses for the Facility and the Business as at
and for the ten (10) months ended October 31, 1996 (the "Interim Financial
Statement"), including, in each case, with the notes thereto. All such financial
statements and notes fairly present the financial condition and the results of
operations for the Facility and the Business as at the respective dates of and
for the periods referred to in such financial statements, all in accordance with
GAAP subject to normal, immaterial changes resulting from year-end adjustments.
The financial statements referred to in this Section 6.3 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than Seller would be required by GAAP to be
included in the consolidated financial statements of Seller. Seller has also
delivered to Buyer a report of net operating income adjustments detailing all
adjustments to revenue and expenses at the Facility level that represent
obligations that will not be assumed by Buyer hereunder for the calendar years
ended December 31, 1994 and December 31, 1995 and for the ten (10) months ended
October 31, 1996. Such report is true, correct and complete and is based on
assumptions that were true, correct and reasonable when made but was not
prepared in accordance with GAAP. All such financial statements and reports have
been prepared from and in accordance with the books and records of Seller.
Books and Records . The books of account and other records of Seller
(including any such books and records kept by the General Partner or the Manager
on behalf of Seller) pertaining to the Facility or other Acquisition Assets, all
of which have been made available to Buyer, are complete and correct in all
material respects, reflect in all material respects all transactions affecting
the Business, the Facility and the other Acquisition Assets and have been kept
and maintained in accordance with sound business practices.
No Undisclosed Liabilities or Material Adverse Change .
Except as set forth in Section 6.5(a) of the Disclosure Letter, Seller
has no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Interim Financial Statement and
current liabilities incurred in the ordinary course of business of Seller since
the respective dates thereof.
Since the date of the Interim Financial Statements, there has not been
any material adverse change in the business, results of operations, assets,
liabilities or the condition (financial or otherwise), or prospects of the
Business or the Facility, or any damage or destruction of the Facility by fire
or other casualty, whether or not covered by Insurance, and the Operators and
the Manager have, and until the Closing, will have, operated the Facility only
in the normal course. The Operator Affiliates have identified and communicated
to Buyer all material information with respect to any fact or condition that
might adversely affect the future prospects (financial, licensure status or
otherwise) of the Business or the Facility.
Taxes; FIRPTA .
Seller has filed all Tax Returns that are required to have been filed
in any jurisdiction, has paid all Taxes shown to be due and payable on such Tax
Returns and, before they have become delinquent, has paid all other Taxes levied
upon Seller or its properties, assets (including the Acquisition Assets), income
or franchises, to the extent such Taxes have become due and payable, except for
any Taxes (i) as set forth in Section 6.6 of the Disclosure Letter or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which Seller has
established adequate reserves in accordance with GAAP in the Interim Financial
Statements. The Operator Affiliates know of no basis for any other Tax or
assessment that could be assessed against Seller. The charges, accruals and
reserves on the Interim Financial Statements in respect of Taxes for all fiscal
periods are adequate. Seller's income tax returns have never been audited.
Buyer is not required to withhold taxes from the payment of sale
proceeds to Seller under the Code or any applicable state, commonwealth or local
tax Laws. Seller is not a foreign person for purposes of Section 1445 of the
Code.
Title, Condition and Sufficiency of the Facility.
Seller has delivered or made available to Buyer copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of Seller
and relating to the Facility. Seller owns good indefeasible and marketable fee
simple title to the Facility, free and clear of all Encumbrances other than the
Permitted Encumbrances. All of the Improvements located on the Land are situated
solely within the boundaries of the Land and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other Person.
No exception to title to or other Encumbrance and no interest in the
Facility will interfere with the use of the Facility for its Intended Use or
cause the value of the Facility to be materially less than the portion of the
Purchase Price allocated thereto.
There are no leases or other agreements granting any Person (other than
Seller) the right to use or occupy any part of the Facility other than the
Resident and/or Patient Agreements set forth in Section 6.7(c) of the Disclosure
Letter, and no Person has any ownership interest (other than Seller) or option
or right of first refusal to acquire any ownership interest in the Facility or
any part thereof.
The Facility is structurally sound, is in good operating condition and
repair (normal wear and tear excepted) and is not in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The Improvements (including the heating, ventilating
and air conditioning, plumbing, electrical, mechanical and drainage systems, and
roof) are in good operating condition, repair and working order, and have passed
all previous safety and/or licensing inspections, the last such inspection being
on the date set forth in the Disclosure Letter, and such systems are adequate
for the use of the Facility for its Intended Use.
Except as set forth in Section 6.7(e) of the Disclosure Letter, the
Improvements (including all roads, parking areas, curbs, sidewalks, sewers and
other utilities) have been completed and installed in accordance the Plans and
Specifications which were approved by the appropriate Governmental Authorities.
Permanent certificates of occupancy and all other Governmental Authorizations
which were required to be issued for the Improvements have been issued and are
in full force and effect; and the requisite annual fire safety and life safety
inspections as were required to be conducted for the Improvements, have been
conducted.
The maintenance, operations and use of the Improvements comply with (i)
all Legal Requirements, (ii) any certificate of occupancy or other Governmental
Authorizations issued for the Facility and (iii) all restrictive covenants and
other Permitted Encumbrances. No Operator Affiliate has received or is aware of
the issuance of any notice of noncompliance or violation from any Governmental
Authority regarding the Facility or any part thereof or the use thereof.
Current local zoning ordinances, general plans and other applicable
land use regulations and all private covenants, conditions and restrictions, if
any, affecting the Property, permit the transfer of the Facility and the use of
the Facility for its Intended Use (and reconstruction and resumption of such use
in the event of damage, destruction or cessation of use) as a matter of right
for an unlimited time period and not merely as a legal non-conforming use.
To the best knowledge of the Operators, (i) there is no plan, study or
effort by any Governmental Authority which in any way affects or would affect
the present use or zoning of the Facility or any part thereof; (ii) there is no
existing, proposed or contemplated plan to widen, modify or realign any street
or highway or existing, proposed or contemplated Condemnation proceedings that
would affect the Facility in any way whatsoever; and (iii) no subdivision plan
or plans (preliminary or otherwise) have been filed with respect to the Land.
The Land is adjacent to and has direct access to each abutting street.
All streets adjoining or traversing the Land have been dedicated to and accepted
by the local municipal authorities and the means of ingress and egress, parking,
access to public streets and drainage facilities are adequate for the use of the
Facility for its Intended Use. There are no easements traversing or contiguous
to the Land which are not disclosed in Section 6.7(i) of the Disclosure Letter
or which interfere with the use and operation of the Facility for its Intended
Use.
All public utilities, including telephone, gas, electric power,
sanitary and storm sewer and water, required for the operation of the Facility
either enter the Facility through adjoining public streets, or if they pass
through adjoining private land, do so in accordance with valid recorded
easements held by Seller. Such utilities are adequate for use of the Facility
for its Intended Use.
The Facility is not located within an area of special risk with respect
to natural or man-made disasters or hazards, including any Flood Hazard Area.
There are no adverse geological or soil conditions affecting the
Facility.
The Facility is a legal lot or parcel which for all purposes may be
mortgaged, conveyed and otherwise dealt with as separate parcels and is not
taxed together with any other property.
There is no proceeding pending to which a Operator Affiliate is a party
relating to the assessed valuation of the Facility and no assessment for public
improvements have been made against the Facility that remain unpaid. All public
improvements ordered, commenced or completed prior to the date of this Agreement
or prior to the Closing Date shall be paid for in full by the Seller prior to
the Closing.
Except as set forth in Section 6.7(o) of the Disclosure Letter: (i)
Seller and the Facility are, and at all times prior to the date hereof have
been, in full compliance with, and have not been and are not in violation of or
liable under, any Environmental Law, (ii) there are no underground storage tanks
or Hazardous Materials currently located in or on the Facility, and to the best
of the Operators' knowledge (after due inquiry) no such tanks have ever been
located on the Facility and no such Hazardous Materials have ever been present,
used, stored, generated, treated or Released from or on or disposed of or on or
transported to or from the Facility; (iii) no Environmental Claims have been
made or, to the best of the Operators' knowledge (after due inquiry), threatened
by any Person against Seller or the Facility; and (iv) to the best of the
Operators' knowledge (after due inquiry), there are no current, and have been
no, businesses engaged in the storage, treatment or disposal of Hazardous
Materials on any property adjacent to the Land.
Section 6.7(p) of the Disclosure Letter lists all reports received
during the last five (5) years from any Governmental Authority with respect to
the Facility, true and complete copies of such reports to Buyer.
Title, Condition And Sufficiency of the Personal Property .
Except for the security interest(s) listed and described in Section
6.8(a) of the Disclosure Letter, Seller has good and marketable title to the
Personal Property, including, but not limited to, the motor vehicle set forth on
Schedule 2.1 hereto, subject to no Encumbrance or restraint on transfer
whatsoever. No other person has any right to the use or possession of any of the
Personal Property and, except as set forth in Section 6.8(a) of the Disclosure
Letter, no currently effective financing statement with respect to the Personal
Property has been filed in any jurisdiction, and Seller has not signed any such
financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement. Except as set forth in Section
6.8(a) of the Disclosure Letter, none of the Personal Property is subject to a
conditional sale, lease, security interest or similar arrangement. During last
five (5) years, Seller has conducted its business activities only under its
partnership name of Ghent Arms Limited Partnership and/or trade name "Ghent
Arms."
All of the tangible Personal Property is in good operating condition
and repair, is not in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in nature or cost and is
functioning in the manner and for the purpose for which it was intended. All of
the Personal Property is in material compliance with all Legal Requirements, and
is sufficient and suitable to enable the Buyer to operate the Facility and the
Business in a normal and efficient manner.
Inventory .
All food, beverages, pharmaceuticals and medical supplies comprising
Inventory on supply at the Facility are fit for the purposes for which they are
intended, meet all governmental standards therefor and are of merchantable
quality. All linens, clothing and similar items comprising the Inventory located
at the Facility are in good condition, reasonable wear and tear excepted.
On the Closing Date, there will be in supply at the Facility Inventory
(to be included as part of the Acquisition Assets) which are in a quantity and
condition customary and sufficient to meet Buyer's needs in operating the
Business and the Facility in a manner similar to that in which the Business and
the Facility have been operated by Seller prior to the Closing Date.
Section 6.9(c) of the Disclosure Letter contains a list of all
suppliers of Inventory to Seller. No Operator and, to the best of such
Operator's knowledge (after due inquiry), no other Operator Affiliate has
received any notice, or has any reason to believe, that any significant supplier
will cease selling Inventory to Seller or to Buyer at any time after the Closing
Date on terms and conditions not substantially similar to the terms and
conditions on which such Inventory are currently being sold to Seller.
Intellectual Property .
Section 6.10(a) of the Disclosure Letter sets forth a complete and
accurate list of all Intellectual Property owned by, or (even if not included in
the Acquisition Assets) licensed to, Seller or (even though not an Acquisition
Asset) General Partner or the Manager, and sets forth separately which are owned
by, and which are licensed to, Seller, General Partner and the Manager. Such
Intellectual Property is sufficient to conduct the Business being conducted at
the Facility.
No proceeding is pending (or, to the best of the Operators' knowledge,
after due inquiry, threatened) against any Operator that alleges that any
Operator or other Operator Affiliate is infringing upon any intellectual
property asset (including the name Ghent Arms) of any Person or that challenges,
or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any Operator Affiliate's (or Buyer's, to the extent
an Acquisition Asset, upon consummation of the transactions contemplated by this
Agreement) use of the Intellectual Property. No event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such proceeding.
No Person has been granted the right, or been permitted, to use any
Intellectual Property owned by, or licensed to, Seller. To the best knowledge
(after due inquiry) of each Operator, no Person is believed to be infringing
upon the Intellectual Property.
Contracts .
Section 6.11(a) of the Disclosure Letter contains a complete and
accurate list, including its term and summary of financial terms, of each
Contract, other than the Resident and/or Patient Agreements set forth in Section
6.11(b) of the Disclosure Letter, to which Seller is subject or bound that is in
existence and which pertains to the Business of the Facility or to which any of
the Acquisition Assets are subject. Seller has delivered to Buyer true and
complete copies of each such Contract.
Section 6.11(b) of the Disclosure Letter sets forth a listing, as of
the date of this Agreement, of the names of all Residents/Patients at the
Facility, the date of admission of each such Resident/Patient and the rental
amounts payable and the term of each related Resident and/or Patient Agreement
and a material variation in such Resident and/or Patient Agreement from the
Seller's standard form thereof (in addition to the rental amount and term
indicated in Section 6.11(b) of the Disclosure Letter).
Each Designated Contract is in full force and effect, is valid and
enforceable in accordance with its terms and is (except as noted in Section
6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost or
modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
Seller has not given to or received from any other Person, at any time
since January 1, 1996, any notice or other communication (whether oral or
written) regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Designated Contract, which individually or in
the aggregate would constitute a material violation or breach of or default
under any such Designated Contract. Section 6.11(d) of the Disclosure Letter
sets forth the names of Residents/Patients from or to whom Seller has received
or given (whether or not written) any such notice or communication (whether or
not of a material nature) on a chronic or repeat basis. The parties to the
Designated Contracts (other than the Seller) are not, to the best of the
Operators' knowledge, in default of their respective obligations under any of
such Designated Contracts, and there has not occurred any event which, with the
passage of time or giving of notice (or both), would constitute such a default
or breach under any of such Designated Contracts.
There are no renegotiations of, attempts to renegotiate, or outstanding
rights to renegotiate any material amounts paid or payable by or to Seller
under, any Designated Contracts.
Except as described in Section 6.11(f) of the Disclosure Letter, each
Designated Contract has been entered into in the ordinary course of business on
an arm's-length basis with an unaffiliated third party and has been entered into
without the commission of any act, alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in violation
of any applicable Law.
Insurance . Section 6.12 of the Disclosure Letter contains a complete
and correct list of all forms of Insurance held or owned by Seller or (even
though not an Acquisition Asset) the General Partner or the Manager pertaining
in any way to the Facility or other Acquisition Assets, or to the Operators or
the Manager which, although not specifically covering the Facility or other
Acquisition Assets would cover activities conducted at or in connection with the
Facility or other Acquisition Assets or liability arising therefrom, including a
description of the name of the insurer and the insured, the amount of coverage,
the type of insurance included under each such policy and a brief description of
any claims made thereunder during the past five (5) years and in the case of any
bond or agreement, a description thereof and the name of the surety or
indemnifying party. All such Insurance is in full force and effect, all premiums
due on such policies have been paid, and no Operator nor, to the best of its
knowledge (after due inquiry), any other Operator Affiliate has been advised by
any Insurance carriers of an intention to terminate or modify any such
Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
Employees .
Section 6.13(a) of the Disclosure Letter contains a complete and
accurate list of the following information for each employee (separately
indicating any who are not Business Employees, as defined in Section 9.1),
director, independent contractor, consultant and agent of Seller, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable regularly scheduled hours of employment; and all
payroll-related liabilities or obligations of Seller.
To the best knowledge (after due inquiry) of the Operators, no current
employee of Seller is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, non-competition, or proprietary
rights agreement that (i) was breached or violated by employment with, or
services performed for, Seller or (ii) will adversely affect the ability of such
employee to perform his or her duties with Buyer.
Labor Matters .
Except as disclosed in Section 6.14(a) of the Disclosure Letter, Seller
has not been, and is not now, a party to nor bound by or subject to any
collective bargaining agreement or other labor Contract. During the last five
(5) years, there has not been or, to the Operators' knowledge, threatened
strike, slowdown, picketing, lockout or work stoppage, or any labor arbitration
or proceeding in respect of the grievance of any employee, application or
complaint filed by an employee, employee group or union with the National Labor
Relation Board or any other Governmental Authority, organizational activity, or
other labor dispute against or affecting the Business or the Facility. No
application for certification of a collective bargaining unit is pending or, to
the Operators' knowledge, is threatened against Seller or the Facility. To the
best of the Operators' knowledge, after due inquiry, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. Seller and the Manager have complied in all respects with all
applicable Legal Requirements (including, if applicable, the Worker Adjustment
and Retraining Notification Act) relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, social security and similar Taxes, occupational safety and health,
and plant closing (including, if applicable, with respect to the transactions
contemplated by this Agreement) of employees at the Facility. Seller is not
liable for the payment of any taxes, fines, penalties, or other amounts
(including sums related to EEOC or employment discrimination charges, complaints
or settlements), however designated, for failure to comply with any of the
foregoing Legal Requirements.
Section 6.14(b) of the Disclosure Letter sets forth a complete and
accurate list of all judicial or agency determinations, settlements or
conciliations of complaints, claims, charges or citations against Seller or the
Manager since January 1, 1991, arising under the National Labor Relations Act,
the Fair Labor Standards Act, the Immigration Reform and Control Act, the
Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Americans with Disability
Act of 1990, 42 U.S.C. ss. 1981, and any other Law, relating to employment
discrimination, occupational safety and health, employee benefits, or wages and
hours of employees.
Benefit Plans .
Seller has not established, maintained, sponsored, contributed to
(including any Multiemployer Plan as defined in Section 4001(a)(3) of ERISA),
been required to contribute to, or otherwise participated in any employee
benefit plan, program, agreement or arrangement under which any present or past
employee of Seller or any ERISA Affiliate of Seller may be entitled to any
benefits (including death, health, medical, deferred compensation, bonus or
other arrangements), whether written or oral, whether formal or informal,
whether or not insured, and whether legally binding or not, other than Seller's
sick and vacation pay policies, neither of which is subject to ERISA and true
and correct copies of which have heretofore been delivered by Seller to Buyer.
Except as set forth in Section 6.15(b) of the Disclosure Letter, all
payments required to have been made by Seller or Manager under such sick pay and
vacation pay policies have been made.
Compliance with Laws; Deficiencies . Except as set forth in Section
6.16 of the Disclosure Letter:
Except as described in Section 11.3, no Operator nor, to the best of
its knowledge (after due inquiry), no other Operator Affiliate has received, at
any time since January 1, 1991, any notice or other communication (whether oral
or written) from any Governmental Authority or any other Person regarding (A)
any actual, alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement pertaining to the Facility, the use thereof or the
Business conducted thereat, or (B) any actual, alleged, possible, or potential
obligation on the part of Seller to undertake, or to bear all or any portion of
the cost of, any Cleanup or other corrective, remedial, mitigation, response or
other action of any nature (including any investigation, study, sampling,
monitoring or testing) with respect to the Facility;
Except as described in Section 6.16(b) of the Disclosure Letter, there
is no pending nor, to the best knowledge of the Operators (after due inquiry) is
there any threatened or contemplated, investigation or inquiry, proceeding,
suit, claim (including any Environmental Claim), action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry against Seller or any of the Acquisition Assets. The Operators have
delivered to Buyer copies of all pleadings, correspondence and other documents
relating to each matter listed in Section 6.16(b) of the Disclosure Letter. The
matters listed in Section 16(b) of the Disclosure Letter (either individually or
in the aggregate) will not have a Material Adverse Effect on the business,
operations, assets (including the Acquisition Assets) or prospects of Seller,
the Facility or the Business. There is no pending, nor, to the best knowledge of
the Operators (after due inquiry) threatened, proceeding against the Operators
or any other Operator Affiliate that challenges or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement.
There has occurred no event nor does any circumstance exist that (with
or without notice or lapse of time) may constitute or result in a violation or a
failure on the part of the Operators or, to the best of knowledge of the
Operators (after due inquiry), on the part of any other Operator Affiliate to
comply with, any Legal Requirement pertaining to the Facility, the use thereof
or the Business.
Except as set forth in Section 6.16(d) of the Disclosure Letter, no
Operator nor any of the assets (including the Acquisition Assets) owned or used
by Seller in connection with the Business or the Facility nor, to the best of
its knowledge (after due inquiry), any other Operator Affiliate, is, or during
the past five years was, subject to any judgment, decree, injunction or order of
any Governmental Authority.
Section 6.16(e) of the Disclosure Letter sets forth a true and complete
list of all violations and deficiencies found or alleged by any Governmental
Authority with respect to the Facility or Seller within the past three (3)
years. All such violations and deficiencies have been fully withdrawn by the
applicable Governmental Authority or remedied. No violations or deficiencies
found or alleged by any Governmental Authority with respect to the Facility or
Seller (whether or not listed in said Section 6.16(e) of the Disclosure Letter)
will result in any adverse effect upon Buyer in its operation of the Facility or
conduct of the Business or upon any of the transactions contemplated herein
(including any adverse effect upon any application by Buyer for any Governmental
Authorization required for Buyer's operation of the Facility) or otherwise have
any Material Adverse Effect.
No Operator, nor to the best knowledge of the Operators, any other
Person associated with or acting for or on behalf of an Operator, has directly
or indirectly in connection with the conduct of the Business (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, or (iii) to obtain
special concessions or for special concessions already obtained or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Seller.
Governmental Authorizations . Seller has (in good standing) all
requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization. Affiliated
Relationships . Except as disclosed in Section 6.18 of the Disclosure Letter,
neither Seller, General Partner or the Manager, nor any partner, shareholder,
director or officer thereof , or any member of such Person's immediate family,
has, or at any time within the last two (2) years has had, a material ownership
interest in any business that is or was a party to any business relationships or
arrangement of any kind relating to the operation of the Facility or the
Business.
Residents/Patients; Licensed Beds And Fees .
Seller has cared for the Residents/Patients located at any time at the
Facility in accordance with recognized standards pertaining to assisted living
facilities. Seller does not have any agreement with any of its
Residents/Patients which have been prepaid for more than one month.
Section 6.19(b) of the Disclosure Letter sets forth a true and correct
list of: (i) the maximum number of permitted licensed assisted living care beds
at the Facility; (ii) the number of beds or units presently occupied at the
Facility; (iii) the current standard rates and other fees and amounts charged by
Seller to Residents/Patients at the Facility; (iv) any Residents/Patients having
special rates or fee arrangements, together with a list of such special rates or
description of such special arrangements.
Brokers or Finders . No Operator Affiliate has dealt with any broker or
agent in connection with the sale of the Acquisition Assets and no Operator has
any knowledge of any Person who would be entitled to a brokerage or finder's fee
or agent's commission or other similar payment in connection with the sale of
the Acquisition Assets or the transactions contemplated hereby as a result of
Seller's dealings.
Disclosure .
No representation or warranty or other statement made by any Operator
or any other Operator Affiliate in this Agreement, in the Disclosure Letter or
in any document, certificate or instrument furnished or to be furnished by any
Operator Affiliate to Buyer and no financial or operating statement furnished or
to be furnished by any Operator Affiliate to Buyer is or will be false or
misleading as to any material fact, or omits or will omit to state a material
fact necessary to make the statements contained therein or, in light of the
circumstances in which they were made, not misleading. The Operator Affiliates
have provided to Buyer all material information related to the Acquisition
Assets and the Business.
The Operators have no knowledge of any fact (other than general
economic or industry conditions) that would have, or as far as the Operators can
reasonably foresee could have, a Material Adverse Effect.
Bankruptcy . No insolvency proceeding of any character, including
bankruptcy, receivership, reorganization, composition or arrangement with
creditors (including any assignment for the benefit of creditors), voluntary or
involuntary, affecting Seller, General Partner or any other Operator Affiliate
(other than as a creditor) or the Acquisition Assets, is pending or is being
contemplated, or to the Operators' best knowledge (after due inquiry) is being
threatened, against Seller, General Partner or any other Operator Affiliate by
any other Person, and neither Seller nor any other Operator Affiliate has made
any assignment for the benefit of creditors or taken any action in contemplation
of, or which would constitute the basis for, the institution of any such
insolvency proceedings.
Third Party Provider Liabilities .
Except as set forth in Section 6.23 of the Disclosure Letter, no
services provided by Seller at the Facility have ever been reimbursed by
Medicaid or Medicare or, since January 1, 1995, any other third party provider
(including any managed care organization). Since January 1, 1995, Seller has not
received any notice of recoupment from and has no liability for reimbursements
of any third party reimbursement source (inclusive of managed care
organizations) and Seller is not aware of any basis for the assertion of any
such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
Due Diligence Information . Seller has delivered or caused to be
delivered or furnished to Buyer for its review true and complete copies of all
of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Organization and Good Standing . Buyer is a corporation duly organized,
validly existing and, to the extent applicable, in good standing under the laws
of the State of Delaware; is, or will be on the Closing Date, duly qualified and
authorized to do business in the Commonwealth of Virginia; and has full power,
authority and legal right to execute and deliver and (subject to obtaining
requisite Governmental Authorizations) to acquire and operate the Facility and
the Business and to perform and observe the provisions of this Agreement, and
all other Transaction Documents to which it is or is to become a party and
otherwise to carry out the transactions contemplated hereunder.
Authority . This Agreement constitutes and, when executed and
delivered, all the other Transaction Documents to which Buyer is or is to become
a party will constitute, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms. Buyer has
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and such other Transaction Documents to which it is or is to
become a party and to perform its obligations hereunder and thereunder.
Certain Proceedings . There is no pending proceeding that has been
commenced, nor, to the knowledge of Buyer, threatened against Buyer that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated by this
Agreement.
Brokers or Finders . Buyer has not dealt with any broker or agent in
connection with the purchase of the Acquisition Assets or the transactions
contemplated hereby as a result of Buyer's dealings and Buyer knows of no Person
who would be entitled to a brokerage or finder's fees or agent's commissions or
other similar payment.
Due Diligence Review . Buyer acknowledges that Seller has delivered or
furnished to Buyer information, documents, reports and records which Buyer
requested in connection with its due diligence review of the Facility and other
Acquisition Assets and that Buyer has been afforded the opportunity to inspect
the Facility. The foregoing notwithstanding, such review and/or inspection is
not intended to diminish or impair the representations and warranties made by
Seller, General Partner or any other Operator Affiliate hereunder or under any
other Transaction Document.
ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
Access and Investigation . Between the date of this Agreement and the
Closing Date, Seller will (and the General Partner will cause Seller to): (a)
afford Buyer and its representatives and prospective Financing Sources and their
representatives (collectively, "Buyer's Advisors") full and free access to
Seller's personnel, properties, Contracts, books and records, financial and
operating data and other information and documents pertaining to the Acquisition
Assets and the Business, (b) furnish Buyer and Buyer's Advisors with copies of
all such Contracts, books and records, and other existing documents and data as
Buyer may reasonably request, (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating and other relevant data and information as Buyer
may reasonably request, and (d) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the properties,
assets and financial condition of Seller, the Acquisition Assets and the
Business. Seller shall cause its accountants to cooperate with Buyer and to
disclose the results of audits and financial statement reviews relating to
Seller and/or to the Facility and to produce the work papers relating thereto.
No such investigation by Buyer or its representatives shall affect any of the
Seller's representations and warranties in this Agreement or Buyer's right to
rely thereon. Buyer shall conduct its investigation hereunder in such manner as
will not cause any unreasonable disruption to the business of the Facility.
Maps, Plans, Surveys, Etc. Seller shall deliver, or cause to be
delivered, to the Buyer all existing plans, maps, surveys, descriptions, and
title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
Operation of Seller's Business . Between the date of this Agreement and
the Closing Date, Seller will (and the General Partner will cause Seller to):
(a) conduct the Business of Seller only in the ordinary course of
business;
(b) use their best efforts to preserve intact Seller's current business
organization, keep available the services of the current officers, employees and
agents of Seller, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with Seller;
(c) confer with Buyer concerning operational matters of a material
nature;
(d) otherwise report periodically to Buyer concerning the status of the
Business, including its operations and financial condition, including delivering
to Buyer monthly operating statements for the Facility and the Business within
thirty (30) days after the end of each calendar month between the date of this
Agreement and the Closing;;
(e) make no material changes in management personnel without prior
notice to Buyer;
(f) maintain the Acquisition Assets in a state of repair and condition
consistent with the requirements of this Agreement and normal conduct of the
Business, not dispose of or Encumber or permit the disposition or Encumbrance of
the Acquisition Assets;
(g) use their best efforts to keep in full force and effect and not
amend, or waive or permit to be amended or waived, Insurance covering Seller,
the Facility or the other Acquisition Assets or any other material rights
relating primarily or exclusively to the Business or the Acquisition Assets;
(h) maintain all books and records relating to the Business in the
usual, regular and ordinary manner;
<PAGE>
(i) maintain Inventory at least at current levels and in any event at
levels that are customary and sufficient to operate the Facility for its
Intended Use;
(j) not amend or permit to be amended any Contract related to the
Acquisition Assets or the Business except in the ordinary and usual practice of
the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances upon the
Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or assumed
any Contract related to the Acquisition Assets or the Business except in the
ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach of any
Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to the
Facility without the written approval of Buyer, other than (i) renovations and
repairs to the Facility which have been disclosed to Buyer and which are to be
completed prior to the Closing Date and (ii) those required by or in order to
retain or maintain in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by Law for
the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly with any and
all Legal Requirements affecting the Acquisition Assets and all orders of any
board of fire underwriters or other similar bodies, and promptly, and in no
event later than twenty-four (24) hours from the time of its receipt of any
notice of non-compliance, notify Buyer of any failure of Seller to comply with
the same; and
(q) not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their control, which would
cause any of Seller's and the General Partner's' representations and warranties
contained in this Agreement to be untrue.
Required Consents . As promptly as practicable after the date of this
Agreement, Seller will make all filings required to be made by it in order to
consummate the transactions contemplated by this Agreement. Between the date of
this Agreement and the Closing Date, Seller and the General Partner will: (a)
cooperate with Buyer with respect to all filings and provide all information
that Buyer elects to make or provide or is required to make or provide in order
to consummate the transactions contemplated by this Agreement (including, with
potential Financing Sources), and (b) cooperate with Buyer in obtaining all
Consents which Buyer considers necessary or appropriate in order to consummate
the transactions contemplated hereby.
Notification ; Supplements to Disclosure Letter. Prior to the Closing,
the Operators will promptly notify Buyer in writing of (i) all events,
circumstances, facts, conditions or occurrences arising subsequent to the date
of this Agreement which could result in any of Seller's or General Partner's
representations becoming untrue or incorrect in any respect and (ii) all other
material developments affecting the Acquisition Assets or the Business or the
prospects thereof. Should any such event, circumstance, fact, condition or
occurrence require any change in the Disclosure Letter (if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
No Negotiation . Until such time, if any, as this Agreement is
terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the Business or the Acquisition Assets
or the partnership interests in Seller or merger of Seller or a similar
transaction involving Seller.
Best Efforts . Between the date of this Agreement and the Closing Date,
the Operators will use their best efforts to cause the conditions in Section 4
to be satisfied.
ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
Information on Business Employees . On and prior to the Closing Date,
Buyer will be given reasonable access to the personnel records (including
performance appraisals, disciplinary actions, grievances) of all Business
Employees.
Employment of Business Employees by Buyer .
Effective as of 11:00 pm on the date of the Closing, Seller will
terminate the employment of all Business Employees and Buyer shall offer
employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
No Operator Affiliate, directly or indirectly, shall solicit the
employment of any Business Employee.
It is understood and agreed that accepted employment with Buyer will be
on an "at will" basis and may be terminated by Buyer or by an employee at any
time for any reason and with or without notice (subject to any written
agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her accrued and unpaid vacation and sick employer paid
leave as of the Closing. In the event that any such Rehired Employee uses any of
such vacation or sick leave during said 180-day period while it is an employee
of Buyer or otherwise becomes entitled to be paid for the same during said
period, Seller agrees to pay to Buyer promptly after demand setting forth
reasonable detail therefor the amount of accrued vacation or sick leave pay paid
to such Rehired Employees during said period.
Seller shall be responsible for the payment of all wages and other
remuneration due to employees of Seller with respect to their services prior to
11:00 pm on the date of the Closing and, if and to the extent applicable, the
payment of any termination or severance payments due to, and will comply with
all Legal Requirements relating to, any employee who did not accept Buyer's
offer of employment.
Seller shall provide Buyer with completed I-9 forms and attachments
with respect to all Rehired Employees, except for such employees as Seller shall
warrant are exempt from such requirement.
Buyer shall not have any responsibility, liability or obligation,
whether to Business Employees, former employees, their beneficiaries or to any
other Person with respect to, and the Operators shall, jointly and severally,
indemnify and hold Buyer harmless with respect to, any unlawful employment,
labor or immigration practice arising from, or as a consequence of, the
Operators' or the Manager's conduct of the Business prior to the Closing, or any
employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
Notwithstanding anything contained in this Section, the provisions of
this Section are not intended to, and shall not in any way be construed to,
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
Damage and Destruction . Seller shall have the risk of loss or damage
to the Property and liability arising out of the Business or the Acquisition
Assets from any cause whatsoever prior to the Closing Date. In the event of any
loss or damage to the Property, the following procedure shall be used, Buyer
may: (a) elect to extend the Closing Date for a period up to one hundred eighty
(180) days and require Seller to repair or replace such damaged or destroyed
Property, and, in which event Seller shall be entitled to retain the Insurance
proceeds and shall promptly proceed, at Seller's expense, to repair or replace
such damaged or destroyed Property; the Purchase Price shall not be affected or
adjusted in any way provided such damage or destruction is fully repaired or
replaced; (b) elect to proceed with the transaction contemplated herein, and
have the Insurance proceeds concerning the loss assigned at Closing to Buyer,
and if all or part of the loss is not covered by Insurance, reduce the Purchase
Price payable at the Closing by an amount equal to the uninsured loss in which
event Seller shall not be obligated to repair or replace such damaged or
destroyed Property; or (c) if the aggregate loss or damage to the Property (from
one or more events) at or prior to the Closing exceeds ten (10%) percent of the
Purchase Price, or would take longer than thirty (30) days to repair or replace,
elect to terminate this Agreement, in which event neither Seller nor Buyer shall
have any further rights or obligations to the other hereunder.
Condemnation . In the event that prior to the Closing all or any
portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
ARTICLE
INDEMNIFICATION
Indemnification Agreement . The Operators indemnification and
reimbursement obligations arising from or in connection with any breach of any
representation, warranty or covenant made by them or another Operator Affiliate
in this Agreement and the Buyer's indemnification and reimbursement obligations
arising from or in connection with any breach of any representation, warranty or
covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
Independent Investigation . The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
Underground Storage Tank . Notwithstanding Section 11.2, the Operators
and Buyer acknowledge that each has received and reviewed a copy of the Phase I
Environmental Site Assessment Report for the Facility, prepared by Law
Engineering and Environmental Services, Inc., dated January 15, 1997 (the "Phase
I Environmental Report") and that said Report disclosed that there is an
underground storage tank system located at the Facility (the "UST"), which
contains heating oil for the Facility. A Phase II soil and groundwater sampling
analysis in the area of the UST (the "Phase II Lab Results") revealed total
petroleum hydrocarbon levels in the soil at 251 parts per million ("ppm") and in
groundwater at 16 ppm. James Bullock, the principal shareholder of General
Partner, has received a letter dated January 21, 1997 from a representative of
the Virginia Department of Environmental Quality (the "DEQ"), which indicates
that, based on the environmental site assessment information submitted to him,
the DEQ will not require any further assessment or cleanup at the Facility in
connection with the UST (the "DEQ Letter"). Based on the foregoing, the parties
agree as follows:
(a) The Operators represent and warrant to Buyer that General Partner
submitted to DEQ the Phase II Lab Results on or about January 15, 1997 (but in
any event prior to and as part of its request for the DEQ Letter), and that
attached hereto as Schedule 11.3 is a true copy of the DEQ Letter;
(b) The Operators hereby agree to pay to or reimburse Buyer for
one-half of the costs, expenses and fees (but in no event shall the aggregate
amount to be paid or reimbursed by the Operators exceed $7,500.00) associated
with the Buyer's conducting or, as appropriate, retaining a qualified
professional to conduct, the following activities:
obtain any Governmental Authorizations necessary to conduct
each of the activities set forth in this Paragraph 11.3(b);
remove existing pavement, as appropriate, in order to conduct
such activities; disconnect and cap all existing lines
associated with the UST; remove any existing product or water
from the UST; excavate and remove the UST from the Facility
(including making the tank interior inert prior to removal and
degassing/cleaning the UST after removal); properly dispose of
the UST and any and all related soils; backfill the excavated
area with suitable and appropriate fill material; and perform
appropriate site restoration work, including pouring a
suitable concrete pad over the excavation area.
(c) Seller agrees to promptly provide Buyer with copies of all written
communications, reports and other documents which Seller receives or issues
relating in any way to the UST.
(d) Seller will cooperate in good faith regarding all activities to be
conducted with regard to the UST pursuant to this Section 11.3.
ARTICLE
MISCELLANEOUS COVENANTS
Confidentiality . Between the date of this Agreement and the Closing
Date, the parties to this Agreement will maintain in confidence, and will cause
their respective directors, officers, partners, employees, agents and advisors
to maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is in the "public domain" or already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication.
If the transactions contemplated by this Agreement are not consummated,
each party will return or destroy (as determined in writing by the other party)
as much of such written information as the other party may reasonably request.
Whether or not the Closing takes place, the Operators waive any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information
(including forms, manuals, policies and other Intellectual Property).
Public Announcements . Any general public announcements or similar
media publicity with respect to this Agreement or the transactions contemplated
herein shall be at such time and in such manner as Buyer shall determine;
provided that nothing herein shall prevent either party, upon notice to the
other, from making such written notices as such party's counsel may consider
advisable in order to satisfy the party's legal and contractual obligations in
such regard.
Non-Competition . (a) Seller shall not engage or participate in any
effort or act to induce any of the suppliers, associates, employees, independent
contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no Operator
Affiliate shall, directly or indirectly, for or on behalf of itself or any other
person, firm, entity or other enterprises, have a proprietary interest in, be
employed by, be a director or manager of, act as a consultant for, be a partner
in, give advice to, loan money to or otherwise associate with, any person,
enterprise, partnership, association, corporation, joint venture or other entity
which directly or indirectly engages in the business of owning, operating or
managing any facility of any type, licensed or unlicensed, which is engaged in
or provides assisted living care, nursing home care, senior housing, adult day
care, retirement housing, Alzheimer care living facility or adult congregate
living care anywhere within a twenty (20) mile radius of the Facility, except
that (i) any Operator Affiliate may operate any of the above types of facilities
for low income residents (defined as a facility with a base rate of less than
$1,250 per month, to be adjusted annually for changes in the Consumer Price
Index from January 1, 1997 using as the Consumer Price Index for all Urban Wage
Earners and Clerical Workers, 1982 -84 = 100, All Items for Washington, D.C.,
Maryland and Virginia as published by the United States Bureau of Labor
Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained in this
Article 12 are reasonable and necessary to protect the legitimate business
interests of Buyer and that any violation thereof would result in irreparable
harm to Buyer for which the remedy at law would be inadequate. Accordingly, the
Operators agree that upon the violation by them of any of the restrictions
contained in this Article 12, Buyer shall be entitled to obtain from any court
of competent jurisdiction a preliminary and permanent injunction, as well as any
other relief provided at law or equity, under this Agreement or otherwise. In
the event any of the foregoing restrictions are adjudged unreasonable in any
proceeding, then the parties agree that the period of time or the scope of such
restrictions (or both) shall be adjusted in such a manner or for such a time (or
both) as is adjudged to be reasonable.
ARTICLE
GENERAL PROVISIONS
Survival . All covenants, representations and warranties made by Seller
and Buyer hereunder or in any certificates or other instruments delivered
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and Closing.
Expenses . Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated by this Agreement, including all fees and
expenses of agents, representatives, counsel, and accountants. In addition, the
following expenses will be paid by the following respective parties:
Seller will pay:
any and all state, municipal or other documentary, transfer, stamp,
sales, use or similar taxes payable in connection with the delivery of any
instrument or document provided in or contemplated by this Agreement, or the
transactions contemplated hereby, together with interest and penalties, if any,
thereon;
any and all broker's fees or similar fees claimed by any Person acting
by or on behalf of Seller in connection with the transactions contemplated
hereby; and
one-half of the UST cleanup costs pursuant to Section 11.3.
Buyer will pay
all expenses of or related to the issuance of the title insurance
commitment and policy (including the costs of any survey required by Buyer and
the Title Insurer), chain of title reports, and all closer escrow fees and
charges;
the cost of any environmental report, market and feasibility study and
appraisal prepared for Buyer at Buyer's request, and the expenses of or related
to Buyer's Due Diligence Review;
the charges for or in connection with the recording and/or filing of
any instrument or document provided for herein or contemplated by this Agreement
or any agreement or document described or referred to herein; and
any and all broker's fees or similar fees claimed by any Person acting
by or on behalf of Buyer in connection with the transactions contemplated
hereby.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
Arbitration . The parties hereto shall submit to arbitration any
dispute, controversy or claim arising out of or relating to this Agreement or
any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
Notices . Any notice, consent, approval, demand or other communication
required or permitted to be given under this Agreement or any other Transaction
Document (a "notice") shall be in writing, shall be delivered to the addressee
at the address set forth below (or at such other address as shall be designated
hereunder by notice to the other parties) personally, by FedEx (or other
equivalent national overnight courier) for next Business Day delivery or by
registered or certified United States mail, return receipt requested, in each
case with the cost of delivery prepaid or for the account of the sender and
shall be deemed to have been given (a) when delivered, if delivered in person,
(b) on the next Business Day, if sent by FedEx (or other equivalent national
overnight courier) or (c) five (5) Business Days after mailing, if mailed by
registered or certified United States mail. The respective addresses of the
parties for notice are as follows:
If to Buyer: Integrated Living Communities of
Redgate, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
with a copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Phone: (212) 704-6000
Fax: (212) 704-6288
Attn: Andrea Paretts Ascher, Esq.
If to Operator
Affiliates: Bullock Corporation
125 Riverbend Drive, Suite A
Charlottesville, Virginia 22901
Phone: (804) 293-7037
Fax: (804) 293-8346
Attn: Mr. James L. Bullock
with a copy to: Michie, Hamlett, Lowry, Rasmussen & Tweel, P.C.
500 Court Square, Suite 300
Charlottesville, Virginia 22902-0298
Phone: (804) 980-9507
Fax: (804) 295-0681
Attn: Denise Yvette Lunsford, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
Further Assurances . The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
Financial Statement Audits . The Operators shall use their best efforts
to cause Seller's Auditors to deliver to Buyer at Buyer's expense, within sixty
(60) days following the Closing Date, such audited financial statements of
Seller necessary to comply with Rule 3-05 of Regulation S-X promulgated by the
Securities and Exchange Commission for filing by Integrated Living Communities,
Inc. with a Current Report on Form 8-K regarding the transactions contemplated
herein, and to cause Seller's Auditors to cooperate with Buyer's Auditors in
preparing the required pro forma financial statements for filing therewith.
Notwithstanding the level of review of the Facility's financial statements by
Buyer pursuant to Section 8.1 above, Seller shall cooperate with Buyer and its
independent certified public accountants, if Buyer deems it necessary or
desirable, to audit the balance sheets, statements of operations and statements
of cash flow of Seller for up to three (3) calendar years ended prior to
Closing. Without limiting the foregoing, the Operators shall make available all
information requested by Buyer or its auditors, and the Operators (and their
chief executive and chief financial officers) shall execute and deliver to the
auditors all representation letters requested by Buyer's auditors. Such audits
shall be conducted at Buyer's expense.
Intentionally omitted .
Copies of Books and Records . The Operators shall, for a period of five
(5) years after the Closing Date, provide to Buyer copies, whether in paper or
computer format, as may be reasonably requested from time to time by Buyer, of
Seller's financial and tax books and records and Manager's financial records
insofar as they relate to the operation of the Facility and the Business prior
to the Closing.
Waiver . The rights and remedies of the parties to this Agreement are
cumulative and not alternative. No delay in exercising any right or remedy shall
constitute a waiver thereof, and no waiver by Buyer or any Operator of any
covenant of this Agreement shall be construed as a waiver of any preceding or
succeeding breach of the same or any other covenant or condition of this
Agreement.
Entire Agreement and Modification . This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including the
Letter of Intent) and constitutes (along with the Transaction Documents,
including the Unification Agreement, referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by each of the parties.
Assignments, Successors and Third Party Beneficiaries .
No party may assign any of its rights under this Agreement without the
prior consent of the other party which will not be unreasonably withheld, except
that Buyer may assign all or certain of its rights, duties and obligations
hereunder to one or more Affiliates of Buyer, or, in connection with the
financing or refinancing of Buyer's purchase of the Acquisitions Assets, to a
real estate investment trust or other Financing Source or its Affiliate, without
the prior written consent of Seller, provided that in the instance of any such
assignment Buyer shall not be released from any of, and remain responsible for
its obligations under, this Agreement.
This Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Except as otherwise expressly provided in this Section, this Agreement
and all of its provisions and conditions are for the sole and exclusive benefit
of the parties to this Agreement and their successors and permitted assigns and
nothing in this Agreement will be construed to give any Person other than the
parties to this Agreement or their respective successors and assigns any legal
or equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement.
Severability . If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section Headings . The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect the construction
or interpretation of this Agreement. Governing Law . This Agreement will be
governed by and construed under the laws of the Commonwealth of Virginia without
regard to conflicts of laws principles.
Counterparts . This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF REDGATE, INC.
By: ______________________________________
John Poole, Chief Financial Officer
GHENT ARMS LIMITED PARTNERSHIP
By: BULLOCK CORPORATION,
General Partner
By: __________________________________
James L. Bullock, President
BULLOCK CORPORATION
By: ______________________________________
James L. Bullock, President
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 11
TERMS OF THE SALE AND PURCHASE 11
2.1 Assets to Be Sold 11
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 12
2.5 Allocation of Purchase Price 13
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 13
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 15
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 17
ARTICLE 4 18
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 18
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 19
4.7 No Material Adverse Change19
4.8 Consents 19
4.9 Completion of Other Transactions 19
ARTICLE 5 20
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 20
5.1 Performance 20
5.2 Representations and Warranties 20
5.3 Consents 20
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into of Other Agreements 20
ARTICLE 6 20
REPRESENTATIONS AND WARRANTIESOF OPERATORS 20
6.1 Organization and Good Standing 21
6.2 Authority; No Conflict; Consents 22
6.3 Financial and Operating Statements 23
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 23
6.6 Taxes; FIRPTA 24
6.7 Title, Condition and Sufficiency of the Facility. 24
6.8 Title, Condition And Sufficiency of the Personal Property 26
6.9 Inventory 27
6.10 Intellectual Property 27
6.11 Contracts 28
6.12 Insurance 29
6.13 Employees 29
6.14 Labor Matters 30
6.15 Benefit Plans 30
6.16 Compliance with Laws; Deficiencies 31
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 33
6.19 Residents/Patients; Licensed Beds And Fees 33
6.20 Brokers or Finders 33
6.21 Disclosure 33
6.22 Bankruptcy 33
6.23 Third Party Provider Liabilities 34
6.24 Due Diligence Information 34
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 34
7.2 Authority 34
7.3 Certain Proceedings 35
7.4 Brokers or Finders 35
7.5 Due Diligence Review 35
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc. 36
8.3 Operation of Seller's Business 36
8.4 Required Consents 37
8.5 Notification 37
8.6 No Negotiation 38
8.7 Best Efforts 38
ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 38
ARTICLE 10 39
DAMAGE, DESTRUCTION OR CONDEMNATION 39
10.1 Damage and Destruction 39
10.2 Condemnation 40
ARTICLE 11 40
INDEMNIFICATION 40
11.1 Indemnification Agreement 40
11.2 Independent Investigation 40
11.3 Underground Storage Tank 40
ARTICLE 12 42
MISCELLANEOUS COVENANTS 42
12.1 Confidentiality 42
12.2 Public Announcements 42
12.3 Non-Competition 42
ARTICLE 13 43
GENERAL PROVISIONS 43
13.1 Survival 43
13.2 Expenses 43
13.3 Arbitration 44
13.4 Notices 45
13.5 Further Assurances 46
13.6 Financial Statement Audits 46
13.7 Intentionally omitted 46
13.8 Copies of Books and Records 46
13.9 Waiver 47
13.10 Entire Agreement and Modification 47
13.11 Assignments, Successors and Third Party Beneficiaries 47
13.12 Severability 47
13.13 Section Headings 47
13.14 Governing Law 48
13.15 Counterparts 48
EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Bill of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's and General Partner's Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
Schedule 11.3: DEQ Letter
</TABLE>
ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF GLOUCESTER, INC.,
as Buyer
and
AMERICAN RETIREMENT HOMES, INC.,
as Seller
and
BULLOCK CORPORATION
as successor and former general partner of
Retirement Home of Gloucester Limited Partnership
Dated as of January 24, 1997
<PAGE>
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF GLOUCESTER, INC., a Delaware
corporation ("Buyer"), AMERICAN RETIREMENT HOMES, INC., a Virginia corporation
("Seller" or "Manager"), and BULLOCK CORPORATION, a Virginia corporation
("General Partner" or "Bullock Corporation" and, together with Seller,
collectively, the "Operators" and individually, an "Operator") and successor to
and former general partner of Retirement Home of Gloucester Limited Partnership
formerly a Virginia limited partnership. For purposes of this Agreement, the
term "Seller" shall also include "Bullock Corporation" to the extent "Bullock
Corporation" shall on or prior to the Closing (as hereinafter defined) hold any
right, title or interest in and to the Business (as hereinafter defined), the
Facility (as hereinafter defined) or any other asset of Retirement Home of
Gloucester Limited Partnership.
RECITALS
WHEREAS, pursuant to the Addendum to Contract, dated January 23, 1997,
between Ronald M. Brunk, Shirley M. Coberly, Kathryn G. Stoltzfus, Kenneth D.
Brunk and Juanita L. Brunk, on the one hand, and Retirement Home of Gloucester
Limited Partnership, on the other hand, Bullock Corporation has assigned,
conveyed and otherwise transferred to Seller all of its right, title and
interest in and to the Facility and certain other assets, used in connection
with the Facility and the Business;
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility, the Business and substantially all of the other assets of Seller used
in connection with the Facility and the Business, upon the terms and conditions
hereinafter set forth; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
A. Definitions. The following capitalized terms used in this
Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
<PAGE>
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), used with respect to any
Person, shall mean the possession, directly or indirectly, whether by contract
or otherwise, of the power to direct or cause the direction of the management
and policies of such Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Bullock Development Corporation, a Virginia corporation.
Bill of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller of
owning, planning, developing, using for the Intended Purpose, operating and
maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
<PAGE>
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner for the benefit of Seller
pursuant to authority granted under the Partnership Agreement, the Existing
Management Agreement or otherwise or (iii) any of the Acquisition Assets are
bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner is a
party thereto under a Contract for the benefit of Seller pursuant to authority
granted under the Partnership Agreement, the Existing Management Agreement or
otherwise, such other Operator Affiliate will assign to Buyer at Closing and,
upon such assignment, those Contracts under which Buyer will assume the
obligations arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition,
<PAGE>
equitable interest, option, pledge, voting trust, right of first refusal, or
restriction of any kind, including any restriction on use, voting or dividends
(in the case of any security), transfer, receipt of income, or exercise of any
other attribute of ownership) or other thing commonly known as an encumbrance;
and "Encumber" means the creation of any Encumbrance.
Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup"), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as the same may be amended from time to time, or any successor law and the
rules and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%)
<PAGE>
percent of the Purchase Price shall be held in escrow by the Escrow Agent as
security for Seller's indemnification obligations under this Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
Existing Management Agreement: The Management Agreement dated October
1, 1994 between Seller and Manager pursuant to which Manager has been managing
the Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"Gloucester House", and comprised of an assisted-living facility, containing 48
licensed beds and approximately 15,805 square feet and the related amenities.
Financing Source: Any Person which provides financing for the
transactions contemplated by this Agreement, including any Person which may
acquire the Facility (and/or any of the other Acquisition Assets) and
concurrently lease the same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
<PAGE>
Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Retirement Home of Portsmouth Limited Partnership, Bullock
Corporation as successor to Retirement Home of Gloucester Limited Partnership,
BDC, Ghent Arms Limited Partnership, Retirement Home of Virginia Beach Limited
Partnership, Bullock Corporation and its principal shareholder, Seller and its
principal shareholder, Buyer and the other Affiliates of Integrated Living
Communities, Inc., which are "Buyers" under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
<PAGE>
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "Gloucester House" and all derivations
and variations thereof, and any other trade names, service mark, logo, symbol,
trade dress, design, or representation or expression of any thereof, or
registration or application for registration thereof, or any invention, trade
secret, technical information, know-how, proprietary right (including
Resident/Patient lists, supplier lists and operating manuals) or intellectual
property used by an Operator Affiliate in connection with the operation of, or
otherwise pertaining to, the Property or the Business but specifically excluding
software and computer programs licensed by a third party to an Operator
Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
County of Gloucester, State of Virginia, consisting of approximately 2.8497
acres and more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: As defined in the initial paragraph hereof.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
<PAGE>
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
Operator Affiliates: Collectively, Seller, General Partner, Seller and
each of the principal shareholders of each of General
Partner and Seller, respectively.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and James Moore, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
a. all equipment, machinery, furniture and furnishings, Inventory,
vehicles and other tangible personal property (including all components thereof)
(whether or not set forth on Exhibit B), now or on the Closing Date located in,
on or used in connection with (A) the Facility (and whether or not affixed to
the facility) or (B) the Business, including all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air cooling and
air conditioning systems, apparatus, sprinkler systems, fire and theft
protection equipment, built-in oxygen and vacuum systems, tools, repair parts,
appliances and communications equipment, to the extent any of the foregoing
<PAGE>
items are not Fixtures and are not conveyed to Buyer as part of the Facility
pursuant to the Deed, and those specific items of tangible personal property
(including any vehicles which are used for the Business) described on Exhibit B;
and
b. all Resident and/or Patient Agreements and other Designated Contracts,
telephone numbers and Resident/Patient records and invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property, inventory, occupancy, withholding, payroll, gift,
estate or inheritance tax), levy, assessment, tariff, impost, imposition, toll,
duty (including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or for any authority or payable (including pursuant to any tax-sharing
agreement or pursuant to any agreement, arrangement or understanding relating to
the sharing or payment of any such tax, levy, assessment, tariff, impost,
imposition, toll, duty, deficiency or fee).
<PAGE>
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Bill of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Bullock Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Ghent Arms Limited Partnership, Retirement Home of Virginia Beach
Limited Partnership, and Bullock Corporation, each as sellers of assisted living
facilities and the related business, Buyer and other Affiliates of Integrated
Living Communities, Inc. which are purchasing such facilities and businesses
pursuant to this Agreement and the other Acquisition Agreements, and Seller.
Year End Financial Statements: As defined in Section 6.3.
B. Construction of Certain Terms. For all purposes of this Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, (i) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; (ii) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP, as at the time applicable; (iii) all references in this
Agreement to designated "Articles," "Sections", "Schedules", "Exhibits" and
other subdivisions are to the designated Articles, Sections, Schedules and
Exhibits and other subdivisions of this Agreement; (iv) the word "including"
shall have the same meaning as the phrase "including, without limitation," and
other phrases of similar import; (v) the words "herein, " "hereof " and
"hereunder' and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision; and (vi) all
references to this Agreement shall include all Schedules and Exhibits attached
hereto.
C. Disclosure Letter . The disclosures in the Disclosure Letter, and
those in any supplement thereto, relate only to the representations and
warranties in the Section of this Agreement to which they expressly relate and
<PAGE>
not to any other representation or warranty in this Agreement. In the event of
any inconsistency between the statements in the body of this Agreement and those
in the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty in a specific Section of this Agreement), the statements in the body
of this Agreement will control.
D. Parties' Intent . The parties intend that the assets to be conveyed to
Buyer pursuant to Section 2.1 include all of the assets employed in and
necessary to operate the Facility and the Business in substantially the manner
as the Business has heretofore been operated.
E. Knowledge . Wherever a representation is made in this Agreement based
upon the knowledge of an Operator (whether or not expressly after due inquiry),
it shall be deemed to have been made by such Operator after due inquiry of the
Manager of the Facility and each of the principal shareholders of the General
Partner and the Manager.
I. ARTICLE
TERMS OF THE SALE AND PURCHASE
A. Assets to Be Sold. Subject to the terms and conditions of this
Agreement, at Closing, Seller (and the other Operator Affiliates to the extent
such assets are owned by them) will sell, convey, assign, transfer and deliver
to Buyer and/or Buyer's designee or assignee as provided in Section 13.11, and
Buyer and/or Buyer's designee or assignee, will purchase and acquire, as a going
concern, the Facility and all of the assets, properties (real or personal,
tangible or intangible), rights, prepaid expense items and business goodwill
used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
B. Excluded Assets. Notwithstanding Section 2.1, the Acquisition Assets
do not include: (1) claims for refunds of Taxes and other governmental charges
of whatever nature for periods prior to the Closing Date; (2) Accounts
Receivable; (3) the minute books, stock records and corporate seal of Seller or,
subject to Buyer's right to review and obtain copies of same as provided in
Section 13.8, Seller's financial books and records (whether in paper or computer
format), provided, however, Resident/Patient records are Acquisition Assets; (4)
Contracts other than the Designated Contracts; (5) Seller's bank accounts, cash
and cash equivalents and securities (except that deposits and trust funds held
<PAGE>
for Residents/Patients shall be transferred to Buyer (or trust accounts
designated by Buyer for such Residents/Patients); (6) the Purchase Price and
rights under this Agreement; (7) personal property located at the Facility which
is owned by the Residents/Patients; and (8) the assets, properties, and rights
listed in Schedule 2.2 (collectively, the "Excluded Assets").
1. Purchase Price. The purchase price for the Acquisition Assets will be
Three Million Five Hundred Seventy Thousand Dollars ($3,570,000.00), subject to
upward or downward adjustment as hereinafter provided (as adjusted, the
"Purchase Price").
2. The Purchase Price (without giving effect to any post-Closing
adjustments) shall be paid by Buyer to Seller as follows:
(i) Two Hundred Sixty-Three Thousand Three Hundred
Ninety-Seven and 67/100 Dollars ($263,397.67) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
C. Prorations and Purchase Price Adjustments. (a) On the Closing Date,
the following shall be apportioned and prorated as of the Closing Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets (including
charges for sewer, water, drainage or other services) assessed
for the tax year in which the Closing Date occurs;
(ii) personal property taxes attributable to
the Personal Property for the tax year in which the Closing
Date occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
<PAGE>
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final bill or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of current
utility and fuel bills. If the Closing shall occur before the tax rate is fixed,
the apportionment of real estate taxes shall be upon the basis of the tax rate
for the next preceding tax year applied to the latest assessed valuation, and
shall be subject to adjustment upon receipt by Buyer of notice of the tax rate
for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
<PAGE>
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
D. Allocation of Purchase Price. After the Closing, the parties
agree to make consistent use of the allocation, fair market value and useful
life of the Purchase Price in any and all filings, declarations and reports with
the Internal Revenue Service in respect thereof, including the reports required
to be filed under Section 1060 of the Code, if applicable. Buyer shall prepare
and deliver IRS Form 8594 to Seller within forty-five (45) days after the
Closing Date.
E. Assumption of Liabilities.(a) Subject to the terms and conditions
of this Agreement, at Closing, Buyer shall assume and thereafter in due course
fully satisfy those obligations arising under the Designated Contracts which are
assignable and are assigned by Seller to Buyer, with respect to, and only with
respect to, performance of obligations (including payments to be made on account
of services) to be rendered thereunder after the Closing Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
<PAGE>
F. Consents to Assignments. (a) The Operators will use their best efforts
and shall diligently proceed to obtain all Consents of all Persons necessary to
permit the assignment of the Designated Contracts or to assign or transfer any
of the other Acquisition Assets. In the event that any of the Acquisition Assets
are not assignable, or the Person(s) from whom a Consent to any such assignment
or transfer, fail(s) or refuse(s) to Consent thereto before the Closing Date,
Buyer shall have no obligation to assume and will not assume any such Designated
Contract and shall have no obligation to purchase any such Acquisition Asset. In
addition, this Agreement shall not constitute an agreement to assign or transfer
any such Acquisition Asset or part thereof or any right or benefit arising
thereunder or resulting therefrom if an attempted assignment or transfer
thereof, without the Consent of such Person, would constitute a breach thereof
or in any way affect the rights of Buyer or Seller thereunder. Notwithstanding
the foregoing, all references in this Agreement or any other Transaction
Document (other than the Deed, any Bill of Sale and Assignment and any other
instrument or document conveying title to any Acquisition Assets) to
"Acquisition Asset" or "Acquisition Assets" shall continue to have the meaning
set forth in Section 2.1 without giving effect to this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
II. ARTICLE
CLOSING
1. Closing. The purchase and sale of the Acquisition Assets provided
for in this Agreement (the "Closing") shall take place on January 27, 1997 (the
"Originally Scheduled Closing Date") at the offices of Buyer's financing source
(or counsel therefor), or at such other place, time or date as Seller and Buyer
may mutually agree to. The Originally Scheduled Closing Date, any other such
date as Seller and Buyer may mutually agree to as the date on which the Closing
shall occur, and any other date to which the same may be extended by Seller or
Buyer as hereinafter provided, are each herein referred to as a "Scheduled
Closing Date" and the latest of such Scheduled Closing Dates is herein referred
to as the "Closing Date".
2. If, prior to or by the Originally Scheduled Closing Date, any
Governmental Authority with jurisdiction over the licensing of the Facility has
not issued to Buyer a license to operate the Facility immediately upon Buyer's
acquisition of the Acquisition Assets, then, in such event, provided (i) Buyer
shall have furnished to such Governmental Authority all information requested by
<PAGE>
such Governmental Authority as of such date in connection with its application
for the issuance of such license, (ii) this Agreement, the other Acquisition
Agreements and the Unification Agreement shall have been executed by all of the
parties thereto and (iii) First American Title Insurance Company of New York, as
escrow agent under the Deposit Escrow Agreement shall have been authorized by
the parties thereto to release the Escrow Deposit to the General Partner, then
Buyer shall be entitled to extend the Closing Date for a period of up to ninety
(90) days (the "Extension Period").
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of this Agreement by Buyer pursuant to
this Section 3.1(c), however, shall release or relieve any Operator or other
Operator Affiliate of any liability that they may have for any breach of any
representation, warranty, covenant or obligation of an Operator in this
Agreement or of any Operator Affiliate in any Transaction Document.
3. In the event that the Closing is to take place through an escrow
or sub-escrow, the Operator Affiliates and Buyer shall mutually execute and
deliver to Title Insurer, as escrow holder, joint escrow and/or recording
instructions consistent with this Agreement on or prior to the Closing Date. In
the event of any conflict between the provisions of this Agreement and any such
escrow and/or recording instructions and/or any general instructions required by
Title Insurer to be executed by Buyer and Seller, or any other Operator
Affiliate in connection therewith, the provisions of this Agreement and the
Unification Agreement shall control.
4. Items to Be Delivered by Seller at Closing. At the Closing,
subject to the terms and conditions of this Agreement, Seller shall deliver, or
cause to be delivered to Buyer or, if the Closing is to take place in escrow, to
Title Insurer in escrow, such instruments as shall be necessary to convey to
Buyer or its designee or assignee good and marketable title to the Acquisition
<PAGE>
Assets, free and clear of all Encumbrances (except for Permitted Encumbrances).
Among other things, Seller will deliver to Buyer or, if applicable, Title
Insurer in escrow:
a. A full warranty deed (the "Deed") in the form of Exhibit C, which Deed
shall be duly executed, acknowledged and in recordable form. The Deed
shall include (if applicable) the appropriate state, county and local
real estate transfer tax declaration of real estate value or other
affidavit as to the tax due upon the sale.
b. One or more Bills of Sale and Assignments in the form of Exhibit B,
duly executed and acknowledged by each of the Operators.
c. "FIRPTA" affidavit or certificate in form and substance satisfactory to
Buyer and in conformance with Section 1445(b)(2) of the Code, to the
effect that Seller is not a foreign person and such other affidavits or
certificates as may be reasonably required by Buyer to the effect that
Buyer is not required to withhold taxes from the payment of sale
proceeds to Seller under any other applicable Law.
d. Uniform Commercial Code Form 3s in favor of Seller, for filing with the
appropriate state and local authorities, for the release of any
Encumbrance (other than a Permitted Encumbrance) covering any of the
Acquisition Assets as to which Uniform Commercial Code Form 1s have
been filed.
e. If the Closing shall not occur on the date hereof, a certificate
executed by each Operator wherein the Operators represent and warrant
to Buyer that, except as otherwise stated in such certificate, each of
the Operators' representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure
Letter that were delivered by Seller to Buyer prior to the Closing
Date).
f. A certificate of the Secretary of Seller certifying true and correct
copies of Seller's Organizational Documents, which certificate and the
accompanying Organizational Documents shall be in form and substance
reasonably satisfactory to Buyer.
g. Opinion of Seller's Counsel opining as to the matters set forth on
Exhibit E and otherwise in form and substance satisfactory to Buyer.
h. The Escrow Agreement duly executed and acknowledged by Seller, General
Partner and each other Operator Affiliate and Escrow Agent.
<PAGE>
i. The originals of all Designated Contracts, title instruments in the
Operators' or the Manager's possession pertaining to the Acquisition
Assets and the original Governmental Authorizations.
j. All other Transaction Documents to which Seller or any other Operator
Affiliate is a party duly executed and delivered by each such party.
k. All other proper instruments required for the conveyance of good and
marketable title to the Acquisition Assets or required by Title Insurer
for the issuance of the Title Policy.
5. In addition, at the Closing, Seller shall deliver or cause to be
delivered possession of the Facility and other Acquisition Assets (including
keys and combinations for obtaining entry or access thereto).
A. Items to Be Delivered by Buyer at Closing . Among other things, Buyer
will deliver to the Escrow Agent:
a. The Assumption of Designated Contracts Agreement, executed
by Buyer.
b. A certificate executed by Buyer representing and warranting to
Seller that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date.
c. A certificate of the Secretary of Buyer certifying true
and correct copies of resolutions adopted by Buyer's Board of Directors
authorizing the execution, delivery and performance of this Agreement
and the other Transaction Documents to be executed by Buyer and the
incumbency of the officers of Buyer authorized by such resolutions to
execute this Agreement and take other actions in furtherance of this
Agreement.
d. The Escrow Agreement duly executed and acknowledged by Buyer and
the Escrow Agent.
e. All other Transaction Documents to which Buyer is a party duly
executed and delivered by Buyer.
B. Other Closing Documents. Each party shall execute and deliver such
other instruments and take such other actions as either party or the Title
Insurer or Buyer's Financing Source may reasonably request in order to
effectuate the purposes of this Agreement.
<PAGE>
III. ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
A. Performance . Each of the Operators shall have
performed each and all of the covenants and obligations required to be performed
by it under this Agreement on or prior to the Closing.
B. Representations and Warranties . Each and all of
the representations and warranties of the Operators hereunder shall be true and
correct on and as of the Closing Date, as if made as of the Closing Date.
C. Closing Documents . Seller shall have delivered
(or caused to have been delivered) to Buyer each of the items to be delivered by
Seller or an Operator Affiliate at Closing pursuant to Sections 3.2 and 3.4.
Seller shall have paid or shall have made arrangements for the payment of those
costs and expenses required to be paid by Seller pursuant to Section 13.2.
D. Title Insurance . Buyer shall have received, at
Buyer's expense, a commitment from Title Insurer satisfactory to Buyer for the
issuance, at standard rates, of an ALTA extended coverage (but without exception
for creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
E. Survey . Buyer shall have received, at Buyer's
expense, and approved either (a) a final "as-built" ALTA survey of the Facility
completed in accordance with the Minimum Standard Detail requirements for
ALTA/ACSM Land Title Surveys, with additional Title A survey requirements,
jointly established and adopted by ALTA and ACSM in 1992 that meets the
requirements of a Class A Survey as defined therein, certified within thirty
(30) days of the Closing Date or (b) such other form of property survey which is
in form, substance and all other respects satisfactory to Buyer and its
Financing Source in their sole discretion. Such survey shall (i) be certified to
Buyer, Title Insurer, and Buyer's Financing Source, if any, as being true and
accurate, and such certification shall include the acreage of the Land and a
statement that the Land is not located in a Flood Hazard Area; (ii) identify
thereon all telephone, water, sewage, electricity, gas and other utility
<PAGE>
facilities to the points of connection; and (iii) show no encroachments onto or
conflicts with any adjacent property other than pursuant to easements
appurtenant to the Facility or such other agreements with the affected landowner
approved by Buyer and which are, in turn, insured under the Title Policy.
F. Entitlements . Buyer shall have received and
approved with respect to the Facility copies of (a) the applicable zoning
ordinances and map marked to show the location of such Facility and certified by
an appropriate Governmental Authority to be complete and accurate; (b) evidence
that such zoning ordinances and the general plans/specific plans and all other
land use regulations of the applicable municipal jurisdictions and all
Encumbrances, if any, affecting the Facility permit the transfer of the Facility
and use thereof for its Intended Use (and reconstruction and resumption of use
in the event of damage, destruction, or cessation of use) as a matter of right
for an unlimited time period and not merely as a legal nonconforming use; (c)
all licenses, certificates, approvals and authorizations, including plot plan
and subdivision approvals, zoning variances, sewer, building, foundation,
grading and other permits and all other authorizations required by Governmental
Authorities or by any applicable covenants, conditions and restrictions for the
use and operation of the Facility for its Intended Use, in each instance in
accordance with all applicable Legal Requirements; and (d) evidence satisfactory
to it that (i) the Facility holds all Governmental Authorizations required for
the operation thereof for its Intended Use, including from the Virginia
Department of Social Services; and (ii) the Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding, or threatened, notices of deficiency resulting from any survey of
the Facility which have not been fully responded to with an acceptable plan of
correction with which the Facility is being operated in compliance.
G. No Material Adverse Change . Since the date of the
Interim Financial Statements, there has not been any material adverse change in
the business, results of operations, assets, liabilities, condition (financial
or otherwise), operations or prospects of Seller, or the Business or the
Facility, and no event has occurred or circumstance exists that may result in
such a material adverse change, and Buyer shall have received evidence
satisfactory to it to that effect.
H. Consents . The Consents of all Persons necessary
for the consummation of the transactions contemplated hereby and for Buyer to
conduct the Business shall have been obtained, including Consents required, if
any, under the Designated Contracts, all Governmental Authorizations, any tax
clearance or similar Consent, the Consent of Buyer's (or its parent company's)
lenders to the extent required, if any. None of the Consents (i) shall have been
conditioned upon the modification, cancellation or termination of any Designated
Contract, easement, right or other Consent with respect to the Facility, or (ii)
shall impose on the Buyer any material condition or provision or requirement
with respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
<PAGE>
I. Completion of Other Transactions . Each of the
transactions contemplated by this Agreement, the other Acquisition Agreements
and the Unification Agreement shall have been consummated contemporaneously.
ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
Performance . Buyer shall have performed each and all
of the covenants and obligations required to be performed by it on or prior to
the Closing;
Representations and Warranties . Each and all of the
representations and warranties of Buyer hereunder shall be true and correct on
and as of the Closing Date, as if made as of the Closing Date; and
Consents . Seller shall have received a certificate
of the Secretary or other officer of Buyer certifying a copy of the resolutions
of the Board of Directors of Buyer authorizing Buyer's execution, delivery and
performance of this Agreement and the other Transaction Documents to be executed
by Buyer and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in furtherance of
this Agreement.
Closing Documents . Buyer shall have delivered (or
caused to have been delivered) to Seller each of the items to be delivered by
Buyer at Closing pursuant to Sections 3.3 and 3.4.
Completion of Other Transactions and Entering Into of
Other Agreements . Each of the transactions contemplated by the Unification
Agreement shall have been consummated contemporaneously with the consummation of
the transactions contemplated by this Agreement and Buyer shall have entered
into each of the other agreements contemplated to be entered into by Buyer
pursuant to the Unification Agreement.
<PAGE>
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
Organization and Good Standing .
(i) Seller (A) is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and (B) has full power, authority and legal right to execute and
deliver and to perform and observe the provisions of this Agreement and the
other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Seller conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Seller has delivered to Buyer true and complete
copies of its Organizational Documents, as currently in effect.
(iii) B (as defined in the Indemnification Agreement)
is the sole shareholder of Seller.
(i) General Partner (A) is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
General Partner conducts no activities and neither owns nor uses properties in
any other jurisdiction which requires it, under the laws of such jurisdiction,
to qualify to do business as a foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement)
is the sole shareholder of General Partner.
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Authority; No Conflict; Consents .
This Agreement constitutes and, when executed and
delivered, the other Transaction Documents to which an Operator is or is to
become a party will constitute, legal, valid and binding obligations of each of
Seller and General Partner, respectively, enforceable against such Person in
accordance with their respective terms. Each of the Operators have the absolute
and unrestricted right, power, authority and legal capacity to execute and
deliver this Agreement and such other Transaction Documents to which such Person
is or is to become a party is and to perform their respective obligations
hereunder and thereunder.
Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the transactions contemplated by
this Agreement by Seller, General Partner, Manager or the Bullocks will,
directly or indirectly (with or without notice or lapse of time):
contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify, any of the Organizational Documents of such
party or any Contract or any agreement to which such party (whether or not
Seller is a party thereto) or any Acquisition Assets may be subject;
contravene, conflict with, or result in a violation
of any applicable Law to which such party or any Acquisition Assets may be
subject or give any Governmental Authority or other Person the right to
challenge any of the transactions contemplated by this Agreement or to exercise
any remedy or obtain any relief under any Law to which such party or any of the
Acquisition Assets may be subject;
contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Authority the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Seller or that otherwise relates to
the Business, the Facility or any other the Acquisition Assets;
cause Buyer to become subject to, or to become liable
for the payment of, any Tax for the Business's operations prior to the Closing;
cause any of the Acquisition Assets to be reassessed
or revalued by any Governmental Authority (except to the extent that any of the
same would customarily be reassessed or revalued by such Governmental Authority
upon a sale of such asset); or
<PAGE>
result in the imposition or creation of any
Encumbrance (except a Permitted Encumbrance) upon or with respect to any
Acquisition Assets.
Except for those Governmental Authorizations and
Consents under Designated Contracts indicated, respectively, in Section 6.17 and
Section 6.11(c) of the Disclosure Letter, no notices to, or Consents from, any
Person are required in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Operators'
obligations under this Agreement, including the transfer and assignment of any
Governmental Authorization or other Acquisition Asset necessary or desirable for
Buyer to conduct the Business.
Financial and Operating Statements.
Seller has delivered to Buyer: (a) unaudited balance sheets
and related statements of profits and losses for the Facility and the Business
as at and for each of the calendar years ended December 31, 1994 and 1995,
together with the review reports thereon of Goodman & Company, LLC, independent
public accountants (the "Year End Financial Statements"), (b) an unaudited
balance sheet and the related statement of profits and losses for the Facility
and the Business as at and for the ten (10) months ended October 31, 1996 (the
"Interim Financial Statement"), including, in each case, with the notes thereto.
All such financial statements and notes fairly present the financial condition
and the results of operations for the Facility and the Business as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP subject to normal, immaterial changes
resulting from year-end adjustments. The financial statements referred to in
this Section 6.3 reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in the notes to
such financial statements. No financial statements of any Person other than
Seller would be required by GAAP to be included in the consolidated financial
statements of Seller. Seller has also delivered to Buyer a report of net
operating income adjustments detailing all adjustments to revenue and expenses
at the Facility level that represent obligations that will not be assumed by
Buyer hereunder for the calendar years ended December 31, 1994 and December 31,
1995 and for the ten (10) months ended October 31, 1996. Such report is true,
correct and complete and is based on assumptions that were true, correct and
reasonable when made but was not prepared in accordance with GAAP. All such
financial statements and reports have been prepared from and in accordance with
the books and records of Seller.
Books and Records . The books of account and other
records of Seller (including any such books and records kept by the General
Partner or the Manager on behalf of Seller) pertaining to the Facility or other
Acquisition Assets, all of which have been made available to Buyer, are complete
and correct in all material respects, reflect in all material respects all
transactions affecting the Business, the Facility and the other Acquisition
Assets and have been kept and maintained in accordance with sound business
practices.
<PAGE>
No Undisclosed Liabilities or Material Adverse Change .
Except as set forth in Section 6.5(a) of the
Disclosure Letter, Seller has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Interim Financial Statement and current liabilities incurred in the
ordinary course of business of Seller since the respective dates thereof.
Since the date of the Interim Financial Statements,
there has not been any material adverse change in the business, results of
operations, assets, liabilities or the condition (financial or otherwise), or
prospects of the Business or the Facility, or any damage or destruction of the
Facility by fire or other casualty, whether or not covered by Insurance, and the
Operators and the Manager have, and until the Closing, will have, operated the
Facility only in the normal course. The Operator Affiliates have identified and
communicated to Buyer all material information with respect to any fact or
condition that might adversely affect the future prospects (financial, licensure
status or otherwise) of the Business or the Facility.
Taxes; FIRPTA .
Seller has filed all Tax Returns that are required to
have been filed in any jurisdiction, has paid all Taxes shown to be due and
payable on such Tax Returns and, before they have become delinquent, has paid
all other Taxes levied upon Seller or its properties, assets (including the
Acquisition Assets), income or franchises, to the extent such Taxes have become
due and payable, except for any Taxes (i) as set forth in Section 6.6 of the
Disclosure Letter or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which Seller has established adequate reserves in accordance with
GAAP in the Interim Financial Statements. The Operator Affiliates know of no
basis for any other Tax or assessment that could be assessed against Seller. The
charges, accruals and reserves on the Interim Financial Statements in respect of
Taxes for all fiscal periods are adequate. Seller's income tax returns have
never been audited.
Buyer is not required to withhold taxes from the
payment of sale proceeds to Seller under the Code or any applicable state,
commonwealth or local tax Laws. Seller is not a foreign person for purposes of
Section 1445 of the Code.
<PAGE>
Title, Condition and Sufficiency of the Facility.
Seller has delivered or made available to Buyer
copies of all title insurance policies, opinions, abstracts, and surveys in the
possession of Seller and relating to the Facility. Seller owns good indefeasible
and marketable fee simple title to the Facility, free and clear of all
Encumbrances other than the Permitted Encumbrances. All of the Improvements
located on the Land are situated solely within the boundaries of the Land and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
No exception to title to or other Encumbrance and no
interest in the Facility will interfere with the use of the Facility for its
Intended Use or cause the value of the Facility to be materially less than the
portion of the Purchase Price allocated thereto.
There are no leases or other agreements granting any
Person (other than Seller) the right to use or occupy any part of the Facility
other than the Resident and/or Patient Agreements set forth in Section 6.7(c) of
the Disclosure Letter, and no Person has any ownership interest (other than
Seller) or option or right of first refusal to acquire any ownership interest in
the Facility or any part thereof.
The Facility is structurally sound, is in good
operating condition and repair (normal wear and tear excepted) and is not in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The Improvements (including the
heating, ventilating and air conditioning, plumbing, electrical, mechanical and
drainage systems, and roof) are in good operating condition, repair and working
order, and have passed all previous safety and/or licensing inspections, the
last such inspection being on the date set forth in the Disclosure Letter, and
such systems are adequate for the use of the Facility for its Intended Use.
Except as set forth in Section 6.7(e) of the
Disclosure Letter, the Improvements (including all roads, parking areas, curbs,
sidewalks, sewers and other utilities) have been completed and installed in
accordance the Plans and Specifications which were approved by the appropriate
Governmental Authorities. Permanent certificates of occupancy and all other
Governmental Authorizations which were required to be issued for the
Improvements have been issued and are in full force and effect; and the
requisite annual fire safety and life safety inspections as were required to be
conducted for the Improvements, have been conducted.
The maintenance, operations and use of the
Improvements comply with (i) all Legal Requirements, (ii) any certificate of
occupancy or other Governmental Authorizations issued for the Facility and (iii)
all restrictive covenants and other Permitted Encumbrances. No Operator
<PAGE>
Affiliate has received or is aware of the issuance of any notice of
noncompliance or violation from any Governmental Authority regarding the
Facility or any part thereof or the use thereof.
Current local zoning ordinances, general plans and
other applicable land use regulations and all private covenants, conditions and
restrictions, if any, affecting the Property, permit the transfer of the
Facility and the use of the Facility for its Intended Use (and reconstruction
and resumption of such use in the event of damage, destruction or cessation of
use) as a matter of right for an unlimited time period and not merely as a legal
non-conforming use.
To the best knowledge of the Operators, (i) there is
no plan, study or effort by any Governmental Authority which in any way affects
or would affect the present use or zoning of the Facility or any part thereof;
(ii) there is no existing, proposed or contemplated plan to widen, modify or
realign any street or highway or existing, proposed or contemplated Condemnation
proceedings that would affect the Facility in any way whatsoever; and (iii) no
subdivision plan or plans (preliminary or otherwise) have been filed with
respect to the Land.
The Land is adjacent to and has direct access to each
abutting street. All streets adjoining or traversing the Land have been
dedicated to and accepted by the local municipal authorities and the means of
ingress and egress, parking, access to public streets and drainage facilities
are adequate for the use of the Facility for its Intended Use. There are no
easements traversing or contiguous to the Land which are not disclosed in
Section 6.7(i) of the Disclosure Letter or which interfere with the use and
operation of the Facility for its Intended Use.
All public utilities, including telephone, gas,
electric power, sanitary and storm sewer and water, required for the operation
of the Facility either enter the Facility through adjoining public streets, or
if they pass through adjoining private land, do so in accordance with valid
recorded easements held by Seller. Such utilities are adequate for use of the
Facility for its Intended Use.
The Facility is not located within an area of special
risk with respect to natural or man-made disasters or hazards, including any
Flood Hazard Area.
There are no adverse geological or soil conditions
affecting the Facility.
The Facility is a legal lot or parcel which for all
purposes may be mortgaged, conveyed and otherwise dealt with as separate parcels
and is not taxed together with any other property.
There is no proceeding pending to which a Operator
Affiliate is a party relating to the assessed valuation of the Facility and no
assessment for public improvements have been made against the Facility that
<PAGE>
remain unpaid. All public improvements ordered, commenced or completed prior to
the date of this Agreement or prior to the Closing Date shall be paid for in
full by the Seller prior to the Closing.
Except as set forth in Section 6.7(o) of the
Disclosure Letter: (i) Seller and the Facility are, and at all times prior to
the date hereof have been, in full compliance with, and have not been and are
not in violation of or liable under, any Environmental Law, (ii) there are no
underground storage tanks or Hazardous Materials currently located in or on the
Facility, and to the best of the Operators' knowledge (after due inquiry) no
such tanks have ever been located on the Facility and no such Hazardous
Materials have ever been present, used, stored, generated, treated or Released
from or on or disposed of or on or transported to or from the Facility; (iii) no
Environmental Claims have been made or, to the best of the Operators' knowledge
(after due inquiry), threatened by any Person against Seller or the Facility;
and (iv) to the best of the Operators' knowledge (after due inquiry), there are
no current, and have been no, businesses engaged in the storage, treatment or
disposal of Hazardous Materials on any property adjacent to the Land.
Section 6.7(p) of the Disclosure Letter lists all
reports received during the last five (5) years from any Governmental Authority
with respect to the Facility, true and complete copies of such reports to Buyer.
Title, Condition And Sufficiency of the Personal Property.
Except for the security interest(s) listed and
described in Section 6.8(a) of the Disclosure Letter, Seller has good and
marketable title to the Personal Property, including, but not limited to, the
motor vehicle set forth on Schedule 2.1 hereto, subject to no Encumbrance or
restraint on transfer whatsoever. No other person has any right to the use or
possession of any of the Personal Property and, except as set forth in Section
6.8(a) of the Disclosure Letter, no currently effective financing statement with
respect to the Personal Property has been filed in any jurisdiction, and Seller
has not signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement.
Except as set forth in Section 6.8(a) of the Disclosure Letter, none of the
Personal Property is subject to a conditional sale, lease, security interest or
similar arrangement. During the last five (5) years, the Facility and the
Business have been conducted only under the trade name "Gloucester House" and/or
the former partnership name of Retirement Home of Gloucester Limited
Partnership.
All of the tangible Personal Property is in good
operating condition and repair, is not in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature or
cost and is functioning in the manner and for the purpose for which it was
intended. All of the Personal Property is in material compliance with all Legal
Requirements, and is sufficient and suitable to enable the Buyer to operate the
Facility and the Business in a normal and efficient manner.
<PAGE>
Inventory.
All food, beverages, pharmaceuticals and medical
supplies comprising Inventory on supply at the Facility are fit for the purposes
for which they are intended, meet all governmental standards therefor and are of
merchantable quality. All linens, clothing and similar items comprising the
Inventory located at the Facility are in good condition, reasonable wear and
tear excepted.
On the Closing Date, there will be in supply at the
Facility Inventory (to be included as part of the Acquisition Assets) which are
in a quantity and condition customary and sufficient to meet Buyer's needs in
operating the Business and the Facility in a manner similar to that in which the
Business and the Facility have been operated by Seller prior to the Closing
Date.
Section 6.9(c) of the Disclosure Letter
contains a list of all suppliers of Inventory to Seller.
No Operator and, to the best of such Operator's knowledge (after due inquiry),
no other Operator Affiliate has received any notice, or has any reason to
believe, that any significant supplier will cease selling Inventory to Seller or
to Buyer at any time after the Closing Date on terms and conditions not
substantially similar to the terms and conditions on which such Inventory are
currently being sold to Seller.
Intellectual Property.
Section 6.10(a) of the Disclosure Letter sets forth a
complete and accurate list of all Intellectual Property owned by, or (even if
not included in the Acquisition Assets) licensed to, Seller or (even though not
an Acquisition Asset) General Partner or the Manager, and sets forth separately
which are owned by, and which are licensed to, Seller, General Partner and the
Manager. Such Intellectual Property is sufficient to conduct the Business being
conducted at the Facility.
No proceeding is pending (or, to the best of the
Operators' knowledge, after due inquiry, threatened) against any Operator that
alleges that any Operator or other Operator Affiliate is infringing upon any
intellectual property asset (including the name Gloucester) of any Person or
that challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any Operator Affiliate's (or Buyer's, to
the extent an Acquisition Asset, upon consummation of the transactions
contemplated by this Agreement) use of the Intellectual Property. No event has
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any such proceeding.
No Person has been granted the right, or been
permitted, to use any Intellectual Property owned by, or licensed to, Seller. To
<PAGE>
the best knowledge (after due inquiry) of each Operator, no Person is believed
to be infringing upon the Intellectual Property.
Contracts.
Section 6.11(a) of the Disclosure Letter contains a
complete and accurate list, including its term and summary of financial terms,
of each Contract, other than the Resident and/or Patient Agreements set forth in
Section 6.11(b) of the Disclosure Letter, to which Seller is subject or bound
that is in existence and which pertains to the Business of the Facility or to
which any of the Acquisition Assets are subject. Seller has delivered to Buyer
true and complete copies of each such Contract.
Section 6.11(b) of the Disclosure Letter sets forth a
listing, as of the date of this Agreement, of the names of all
Residents/Patients at the Facility, the date of admission of each such
Resident/Patient and the rental amounts payable and the term of each related
Resident and/or Patient Agreement and a material variation in such Resident
and/or Patient Agreement from the Seller's standard form thereof (in addition to
the rental amount and term indicated in Section 6.11(b) of the Disclosure
Letter).
Each Designated Contract is in full force and effect,
is valid and enforceable in accordance with its terms and is (except as noted in
Section 6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost
or modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
Seller has not given to or received from any other
Person, at any time since January 1, 1996, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Designated Contract, which
individually or in the aggregate would constitute a material violation or breach
of or default under any such Designated Contract. Section 6.11(d) of the
Disclosure Letter sets forth the names of Residents/Patients from or to whom
Seller has received or given (whether or not written) any such notice or
communication (whether or not of a material nature) on a chronic or repeat
basis. The parties to the Designated Contracts (other than the Seller) are not,
to the best of the Operators' knowledge, in default of their respective
obligations under any of such Designated Contracts, and there has not occurred
any event which, with the passage of time or giving of notice (or both), would
constitute such a default or breach under any of such Designated Contracts.
<PAGE>
There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable by or to Seller under, any Designated Contracts.
Except as described in Section 6.11(f) of the
Disclosure Letter, each Designated Contract has been entered into in the
ordinary course of business on an arm's-length basis with an unaffiliated third
party and has been entered into without the commission of any act, alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any applicable Law.
Insurance. Section 6.12 of the Disclosure Letter contains a
complete and correct list of all forms of Insurance held or owned by Seller or
(even though not an Acquisition Asset) the General Partner or the Manager
pertaining in any way to the Facility or other Acquisition Assets, or to the
Operators or the Manager which, although not specifically covering the Facility
or other Acquisition Assets would cover activities conducted at or in connection
with the Facility or other Acquisition Assets or liability arising therefrom,
including a description of the name of the insurer and the insured, the amount
of coverage, the type of insurance included under each such policy and a brief
description of any claims made thereunder during the past five (5) years and in
the case of any bond or agreement, a description thereof and the name of the
surety or indemnifying party. All such Insurance is in full force and effect,
all premiums due on such policies have been paid, and no Operator nor, to the
best of its knowledge (after due inquiry), any other Operator Affiliate has been
advised by any Insurance carriers of an intention to terminate or modify any
such Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
Employees.
Section 6.13(a) of the Disclosure Letter contains a
complete and accurate list of the following information for each employee
(separately indicating any who are not Business Employees, as defined in Section
9.1), director, independent contractor, consultant and agent of Seller,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable regularly scheduled hours of employment;
and all payroll-related liabilities or obligations of Seller.
To the best knowledge (after due inquiry) of the
Operators, no current employee of Seller is a party to, or is otherwise bound
by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement that (i) was breached or
violated by employment with, or services performed for, Seller or (ii) will
adversely affect the ability of such employee to perform his or her duties with
Buyer.
Labor Matters.
<PAGE>
Except as disclosed in Section 6.14(a) of the
Disclosure Letter, Seller has not been, and is not now, a party to nor bound by
or subject to any collective bargaining agreement or other labor Contract.
During the last five (5) years, there has not been or, to the Operators'
knowledge, threatened strike, slowdown, picketing, lockout or work stoppage, or
any labor arbitration or proceeding in respect of the grievance of any employee,
application or complaint filed by an employee, employee group or union with the
National Labor Relation Board or any other Governmental Authority,
organizational activity, or other labor dispute against or affecting the
Business or the Facility. No application for certification of a collective
bargaining unit is pending or, to the Operators' knowledge, is threatened
against Seller or the Facility. To the best of the Operators' knowledge, after
due inquiry, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. Seller and the Manager have
complied in all respects with all applicable Legal Requirements (including, if
applicable, the Worker Adjustment and Retraining Notification Act) relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, social security and similar Taxes,
occupational safety and health, and plant closing (including, if applicable,
with respect to the transactions contemplated by this Agreement) of employees at
the Facility. Seller is not liable for the payment of any taxes, fines,
penalties, or other amounts (including sums related to EEOC or employment
discrimination charges, complaints or settlements), however designated, for
failure to comply with any of the foregoing Legal Requirements.
Section 6.14(b) of the Disclosure Letter sets forth a
complete and accurate list of all judicial or agency determinations, settlements
or conciliations of complaints, claims, charges or citations against Seller or
the Manager since January 1, 1991, arising under the National Labor Relations
Act, the Fair Labor Standards Act, the Immigration Reform and Control Act, the
Occupational Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Americans with Disability
Act of 1990, 42 U.S.C. ss. 1981, and any other Law, relating to employment
discrimination, occupational safety and health, employee benefits, or wages and
hours of employees.
Benefit Plans.
Seller has not established, maintained, sponsored,
contributed to (including any Multiemployer Plan as defined in Section
4001(a)(3) of ERISA), been required to contribute to, or otherwise participated
in any employee benefit plan, program, agreement or arrangement under which any
present or past employee of Seller or any ERISA Affiliate of Seller may be
entitled to any benefits (including death, health, medical, deferred
compensation, bonus or other arrangements), whether written or oral, whether
formal or informal, whether or not insured, and whether legally binding or not,
other than Seller's sick and vacation pay policies, neither of which is subject
to ERISA and true and correct copies of which have heretofore been delivered by
Seller to Buyer.
<PAGE>
Except as set forth in Section 6.15(b) of the
Disclosure Letter, all payments required to have been made by Seller or Manager
under such sick pay and vacation pay policies have been made.
Compliance with Laws; Deficiencies. Except as set forth in Section
6.16 of the Disclosure Letter:
No Operator nor, to the best of its knowledge (after
due inquiry), no other Operator Affiliate has received, at any time since
January 1, 1991, any notice or other communication (whether oral or written)
from any Governmental Authority or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with, any
Legal Requirement pertaining to the Facility, the use thereof or the Business
conducted thereat, or (B) any actual, alleged, possible, or potential obligation
on the part of Seller to undertake, or to bear all or any portion of the cost
of, any Cleanup or other corrective, remedial, mitigation, response or other
action of any nature (including any investigation, study, sampling, monitoring
or testing) with respect to the Facility;
Except as described in Section 6.16(b) of the
Disclosure Letter, there is no pending nor, to the best knowledge of the
Operators (after due inquiry) is there any threatened or contemplated,
investigation or inquiry, proceeding, suit, claim (including any Environmental
Claim), action or litigation, or administrative, arbitration or other proceeding
or governmental investigation or inquiry against Seller or any of the
Acquisition Assets. The Operators have delivered to Buyer copies of all
pleadings, correspondence and other documents relating to each matter listed in
Section 6.16(b) of the Disclosure Letter. The matters listed in Section 16(b) of
the Disclosure Letter (either individually or in the aggregate) will not have a
Material Adverse Effect on the business, operations, assets (including the
Acquisition Assets) or prospects of Seller, the Facility or the Business. There
is no pending, nor, to the best knowledge of the Operators (after due inquiry)
threatened, proceeding against the Operators or any other Operator Affiliate
that challenges or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
There has occurred no event nor does any circumstance
exist that (with or without notice or lapse of time) may constitute or result in
a violation or a failure on the part of the Operators or, to the best of
knowledge of the Operators (after due inquiry), on the part of any other
Operator Affiliate to comply with, any Legal Requirement pertaining to the
Facility, the use thereof or the Business.
Except as set forth in Section 6.16(d) of the
Disclosure Letter, no Operator nor any of the assets (including the Acquisition
Assets) owned or used by Seller in connection with the Business or the Facility
nor, to the best of its knowledge (after due inquiry), any other Operator
Affiliate, is, or during the past five years was, subject to any judgment,
decree, injunction or order of any Governmental Authority.
<PAGE>
Section 6.16(e) of the Disclosure Letter sets forth a
true and complete list of all violations and deficiencies found or alleged by
any Governmental Authority with respect to the Facility or Seller within the
past three (3) years. All such violations and deficiencies have been fully
withdrawn by the applicable Governmental Authority or remedied. No violations or
deficiencies found or alleged by any Governmental Authority with respect to the
Facility or Seller (whether or not listed in said Section 6.16(e) of the
Disclosure Letter) will result in any adverse effect upon Buyer in its operation
of the Facility or conduct of the Business or upon any of the transactions
contemplated herein (including any adverse effect upon any application by Buyer
for any Governmental Authorization required for Buyer's operation of the
Facility) or otherwise have any Material Adverse Effect.
No Operator, nor to the best knowledge of the
Operators, any other Person associated with or acting for or on behalf of an
Operator, has directly or indirectly in connection with the conduct of the
Business (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, or (iii) to obtain special concessions or for special concessions
already obtained or (b) established or maintained any fund or asset that has not
been recorded in the books and records of Seller.
Governmental Authorizations. Seller has (in good standing) all
requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization.
Affiliated Relationships. Except as disclosed in Section 6.18 of
the Disclosure Letter, neither Seller, General Partner or the Manager, nor any
<PAGE>
partner, shareholder, director or officer thereof , or any member of such
Person's immediate family, has, or at any time within the last two (2) years has
had, a material ownership interest in any business that is or was a party to any
business relationships or arrangement of any kind relating to the operation of
the Facility or the Business.
Residents/Patients; Licensed Beds And Fees.
Seller has cared for the Residents/Patients located
at any time at the Facility in accordance with recognized standards pertaining
to assisted living facilities. Seller does not have any agreement with any of
its Residents/Patients which have been prepaid for more than one month.
Section 6.19(b) of the Disclosure Letter sets forth a
true and correct list of: (i) the maximum number of permitted licensed assisted
living care beds at the Facility; (ii) the number of beds or units presently
occupied at the Facility; (iii) the current standard rates and other fees and
amounts charged by Seller to Residents/Patients at the Facility; (iv) any
Residents/Patients having special rates or fee arrangements, together with a
list of such special rates or description of such special arrangements.
Brokers or Finders. No Operator Affiliate has dealt with any broke
or agent in connection with the sale of the Acquisition Assets and no Operator
has any knowledge of any Person who would be entitled to a brokerage or finder's
fee or agent's commission or other similar payment in connection with the sale
of the Acquisition Assets or the transactions contemplated hereby as a result of
Seller's dealings.
Disclosure.
No representation or warranty or other statement made
by any Operator or any other Operator Affiliate in this Agreement, in the
Disclosure Letter or in any document, certificate or instrument furnished or to
be furnished by any Operator Affiliate to Buyer and no financial or operating
statement furnished or to be furnished by any Operator Affiliate to Buyer is or
will be false or misleading as to any material fact, or omits or will omit to
state a material fact necessary to make the statements contained therein or, in
light of the circumstances in which they were made, not misleading. The Operator
Affiliates have provided to Buyer all material information related to the
Acquisition Assets and the Business.
The Operators have no knowledge of any fact (other
than general economic or industry conditions) that would have, or as far as the
Operators can reasonably foresee could have, a Material Adverse Effect.
Bankruptcy. No insolvency proceeding of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors (including any assignment for the benefit of creditors),
voluntary or involuntary, affecting Seller, General Partner or any other
Operator Affiliate (other than as a creditor) or the Acquisition Assets, is
pending or is being contemplated, or to the Operators' best knowledge (after due
<PAGE>
inquiry) is being threatened, against Seller, General Partner or any other
Operator Affiliate by any other Person, and neither Seller nor any other
Operator Affiliate has made any assignment for the benefit of creditors or taken
any action in contemplation of, or which would constitute the basis for, the
institution of any such insolvency proceedings.
Third Party Provider Liabilities.
Except as set forth in Section 6.23 of the Disclosure
Letter, no services provided by Seller at the Facility have ever been reimbursed
by Medicaid or Medicare or, since January 1, 1995, any other third party
provider (including any managed care organization). Since January 1, 1995,
Seller has not received any notice of recoupment from and has no liability for
reimbursements of any third party reimbursement source (inclusive of managed
care organizations) and Seller is not aware of any basis for the assertion of
any such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
Due Diligence Information. Seller has delivered or caused to be
delivered or furnished to Buyer for its review true and complete copies of all
of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and, to the extent applicable, in good standing
under the laws of the State of Delaware; is, or will be on the Closing Date,
duly qualified and authorized to do business in the Commonwealth of Virginia;
and has full power, authority and legal right to execute and deliver and
(subject to obtaining requisite Governmental Authorizations) to acquire and
operate the Facility and the Business and to perform and observe the provisions
of this Agreement, and all other Transaction Documents to which it is or is to
become a party and otherwise to carry out the transactions contemplated
hereunder.
Authority. This Agreement constitutes and, when executed an
delivered, all the other Transaction Documents to which Buyer is or is to become
a party will constitute, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms. Buyer has
<PAGE>
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and such other Transaction Documents to which it is or is to
become a party and to perform its obligations hereunder and thereunder.
Certain Proceedings. There is no pending proceeding that has been
commenced, nor, to the knowledge of Buyer, threatened against Buyer that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated by this
Agreement.
Brokers or Finders. Buyer has not dealt with any broker or agent in
connection with the purchase of the Acquisition Assets or the transactions
contemplated hereby as a result of Buyer's dealings and Buyer knows of no Person
who would be entitled to a brokerage or finder's fees or agent's commissions or
other similar payment.
Due Diligence Review. Buyer acknowledges that Seller has delivered
or furnished to Buyer information, documents, reports and records which Buyer
requested in connection with its due diligence review of the Facility and other
Acquisition Assets and that Buyer has been afforded the opportunity to inspect
the Facility. The foregoing notwithstanding, such review and/or inspection is
not intended to diminish or impair the representations and warranties made by
Seller, General Partner or any other Operator Affiliate hereunder or under any
other Transaction Document.
<PAGE>
ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
Access and Investigation. Between the date of this Agreement and
the Closing Date, Seller will (and the General Partner will cause Seller to):
(a) afford Buyer and its representatives and prospective Financing Sources and
their representatives (collectively, "Buyer's Advisors") full and free access to
Seller's personnel, properties, Contracts, books and records, financial and
operating data and other information and documents pertaining to the Acquisition
Assets and the Business, (b) furnish Buyer and Buyer's Advisors with copies of
all such Contracts, books and records, and other existing documents and data as
Buyer may reasonably request, (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating and other relevant data and information as Buyer
may reasonably request, and (d) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the properties,
assets and financial condition of Seller, the Acquisition Assets and the
Business. Seller shall cause its accountants to cooperate with Buyer and to
disclose the results of audits and financial statement reviews relating to
Seller and/or to the Facility and to produce the work papers relating thereto.
No such investigation by Buyer or its representatives shall affect any of the
Seller's representations and warranties in this Agreement or Buyer's right to
rely thereon. Buyer shall conduct its investigation hereunder in such manner as
will not cause any unreasonable disruption to the business of the Facility.
Maps, Plans, Surveys, Etc. Seller shall deliver, or cause to
be delivered, to the Buyer all existing plans, maps, surveys, descriptions, and
title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
Operation of Seller's Business. Between the date of this Agreemen
and the Closing Date, Seller will (and the General Partner will cause Seller
to):
conduct the Business of Seller only in the ordinary
course of business;
use their best efforts to preserve intact Seller's
current business organization, keep available the services of the current
officers, employees and agents of Seller, and maintain the relations and good
will with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with Seller;
confer with Buyer concerning operational matters of a
material nature;
<PAGE>
otherwise report periodically to Buyer concerning the
status of the Business, including its operations and financial
condition, including delivering to Buyer monthly operating statements
for the Facility and the Business within thirty (30) days after the end
of each calendar month between the date of this Agreement and the
Closing;;
make no material changes in management personnel
without prior notice to Buyer;
maintain the Acquisition Assets in a state of repair
and condition consistent with the requirements of this Agreement and
normal conduct of the Business, not dispose of or Encumber or permit
the disposition or Encumbrance of the Acquisition Assets;
use their best efforts to keep in full force and
effect and not amend, or waive or permit to be amended or waived,
Insurance covering Seller, the Facility or the other Acquisition Assets
or any other material rights relating primarily or exclusively to the
Business or the Acquisition Assets;
maintain all books and records relating to the
Business in the usual, regular and ordinary manner;
<PAGE>
(i) maintain Inventory at least at current levels and in any event at
levels that are customary and sufficient to operate the Facility for its
Intended Use;
(j) not amend or permit to be amended any Contract related to the
Acquisition Assets or the Business except in the ordinary and usual practice of
the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances upon the
Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or assumed
any Contract related to the Acquisition Assets or the Business except in the
ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach of any
Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to the
Facility without the written approval of Buyer, other than (i) renovations and
repairs to the Facility which have been disclosed to Buyer and which are to be
completed prior to the Closing Date and (ii) those required by or in order to
retain or maintain in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by Law for
the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly with any and
all Legal Requirements affecting the Acquisition Assets and all orders of any
board of fire underwriters or other similar bodies, and promptly, and in no
event later than twenty-four (24) hours from the time of its receipt of any
notice of non-compliance, notify Buyer of any failure of Seller to comply with
the same; and
(q) not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their control, which would
cause any of Seller's and the General Partner's' representations and warranties
contained in this Agreement to be untrue.
<PAGE>
Required Consents. As promptly as practicable after the date
of this Agreement, Seller will make all filings required to be made by it in
order to consummate the transactions contemplated by this Agreement. Between the
date of this Agreement and the Closing Date, Seller and the General Partner
will: (a) cooperate with Buyer with respect to all filings and provide all
information that Buyer elects to make or provide or is required to make or
provide in order to consummate the transactions contemplated by this Agreement
(including, with potential Financing Sources), and (b) cooperate with Buyer in
obtaining all Consents which Buyer considers necessary or appropriate in order
to consummate the transactions contemplated hereby.
Notification; Supplements to Disclosure Letter. Prior to the
Closing, the Operators will promptly notify Buyer in writing of (i) all events,
circumstances, facts, conditions or occurrences arising subsequent to the date
of this Agreement which could result in any of Seller's or General Partner's
representations becoming untrue or incorrect in any respect and (ii) all other
material developments affecting the Acquisition Assets or the Business or the
prospects thereof. Should any such event, circumstance, fact, condition or
occurrence require any change in the Disclosure Letter (if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
No Negotiation. Until such time, if any, as this Agreement is
terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the Business or the Acquisition Assets
or the partnership interests in Seller or merger of Seller or a similar
transaction involving Seller.
<PAGE>
Best Efforts. Between the date of this Agreement and the Closing
Date, the Operators will use their best efforts to cause the conditions in
Section 4 to be satisfied.
ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
Information on Business Employees. On and prior to the Closing
Date, Buyer will be given reasonable access to the personnel records (including
performance appraisals, disciplinary actions, grievances) of all Business
Employees.
Employment of Business Employees by Buyer.
Effective as of 11:00 pm on the date of the Closing,
Seller will terminate the employment of all Business Employees and Buyer shall
offer employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
No Operator Affiliate, directly or indirectly, shall
solicit the employment of any Business Employee.
It is understood and agreed that accepted employment
with Buyer will be on an "at will" basis and may be terminated by Buyer or by an
employee at any time for any reason and with or without notice (subject to any
written agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her accrued and unpaid vacation and sick employer paid
leave as of the Closing. In the event that any such Rehired Employee uses any of
such vacation or sick leave during said 180-day period while it is an employee
of Buyer or otherwise becomes entitled to be paid for the same during said
period, Seller agrees to pay to Buyer promptly after demand setting forth
reasonable detail therefor the amount of accrued vacation or sick leave pay paid
to such Rehired Employees during said period.
<PAGE>
Seller shall be responsible for the payment of all
wages and other remuneration due to employees of Seller with respect to their
services prior to 11:00 pm on the date of the Closing and, if and to the extent
applicable, the payment of any termination or severance payments due to, and
will comply with all Legal Requirements relating to, any employee who did not
accept Buyer's offer of employment. Seller shall provide Buyer with completed
I-9 forms and attachments with respect to all Rehired Employees, except for such
employees as Seller shall warrant are exempt from such requirement.
Buyer shall not have any responsibility, liability or
obligation, whether to Business Employees, former employees, their beneficiaries
or to any other Person with respect to, and the Operators shall, jointly and
severally, indemnify and hold Buyer harmless with respect to, any unlawful
employment, labor or immigration practice arising from, or as a consequence of,
the Operators' or the Manager's conduct of the Business prior to the Closing, or
any employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
Notwithstanding anything contained in this Section,
the provisions of this Section are not intended to, and shall not in any way be
construed to, confer upon any Person other than the parties hereto any rights or
remedies hereunder.
<PAGE>
ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
Damage and Destruction. Seller shall have the risk of loss or
damage to the Property and liability arising out of the Business or the
Acquisition Assets from any cause whatsoever prior to the Closing Date. In the
event of any loss or damage to the Property, the following procedure shall be
used, Buyer may: (a) elect to extend the Closing Date for a period up to one
hundred eighty (180) days and require Seller to repair or replace such damaged
or destroyed Property, and, in which event Seller shall be entitled to retain
the Insurance proceeds and shall promptly proceed, at Seller's expense, to
repair or replace such damaged or destroyed Property; the Purchase Price shall
not be affected or adjusted in any way provided such damage or destruction is
fully repaired or replaced; (b) elect to proceed with the transaction
contemplated herein, and have the Insurance proceeds concerning the loss
assigned at Closing to Buyer, and if all or part of the loss is not covered by
Insurance, reduce the Purchase Price payable at the Closing by an amount equal
to the uninsured loss in which event Seller shall not be obligated to repair or
replace such damaged or destroyed Property; or (c) if the aggregate loss or
damage to the Property (from one or more events) at or prior to the Closing
exceeds ten (10%) percent of the Purchase Price, or would take longer than
thirty (30) days to repair or replace, elect to terminate this Agreement, in
which event neither Seller nor Buyer shall have any further rights or
obligations to the other hereunder.
Condemnation. In the event that prior to the Closing all or
any portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
ARTICLE
INDEMNIFICATION
Indemnification Agreement. The Operators indemnification and
reimbursement obligations arising from or in connection with any breach of any
representation, warranty or covenant made by them or another Operator Affiliate
in this Agreement and the Buyer's indemnification and reimbursement obligations
arising from or in connection with any breach of any representation, warranty or
covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
<PAGE>
Independent Investigation. The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
ARTICLE
MISCELLANEOUS COVENANTS
Confidentiality. Between the date of this Agreement and the Closing
Date, the parties to this Agreement will maintain in confidence, and will cause
their respective directors, officers, partners, employees, agents and advisors
to maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is in the "public domain" or already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication. If the transactions
contemplated by this Agreement are not consummated, each party will return or
destroy (as determined in writing by the other party) as much of such written
information as the other party may reasonably request. Whether or not the
Closing takes place, the Operators waive any cause of action, right, or claim
arising out of the access of Buyer or its representatives to any trade secrets
or other confidential information except for the intentional competitive misuse
by Buyer of such trade secrets or confidential information (including forms,
manuals, policies and other Intellectual Property).
Public Announcements. Any general public announcements or similar
media publicity with respect to this Agreement or the transactions contemplated
herein shall be at such time and in such manner as Buyer shall determine;
provided that nothing herein shall prevent either party, upon notice to the
<PAGE>
other, from making such written notices as such party's counsel may consider
advisable in order to satisfy the party's legal and contractual obligations in
such regard.
Non-Competition. (a) Seller shall not engage or participate in any
effort or act to induce any of the suppliers, associates, employees, independent
contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no
Operator Affiliate shall, directly or indirectly, for or on behalf of itself or
any other person, firm, entity or other enterprises, have a proprietary interest
in, be employed by, be a director or manager of, act as a consultant for, be a
partner in, give advice to, loan money to or otherwise associate with, any
person, enterprise, partnership, association, corporation, joint venture or
other entity which directly or indirectly engages in the business of owning,
operating or managing any facility of any type, licensed or unlicensed, which is
engaged in or provides assisted living care, nursing home care, senior housing,
adult day care, retirement housing, Alzheimer care living facility or adult
congregate living care anywhere within a twenty (20) mile radius of the
Facility, except that (i) any Operator Affiliate may operate any of the above
types of facilities for low income residents (defined as a facility with a base
rate of less than $1,250 per month, to be adjusted annually for changes in the
Consumer Price Index from January 1, 1997 using as the Consumer Price Index for
all Urban Wage Earners and Clerical Workers, 1982 -84 = 100, All Items for
Washington, D.C., Maryland and Virginia as published by the United States Bureau
of Labor Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained
in this Article 12 are reasonable and necessary to protect the legitimate
business interests of Buyer and that any violation thereof would result in
irreparable harm to Buyer for which the remedy at law would be inadequate.
Accordingly, the Operators agree that upon the violation by them of any of the
restrictions contained in this Article 12, Buyer shall be entitled to obtain
from any court of competent jurisdiction a preliminary and permanent injunction,
as well as any other relief provided at law or equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted in such a manner
or for such a time (or both) as is adjudged to be reasonable.
<PAGE>
ARTICLE
GENERAL PROVISIONS
Survival. All covenants, representations and warranties made
by Seller and Buyer hereunder or in any certificates or other instruments
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and Closing.
Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In
addition, the following expenses will be paid by the following respective
parties:
Seller will pay:
any and all state, municipal or other documentary,
transfer, stamp, sales, use or similar taxes payable in connection with the
delivery of any instrument or document provided in or contemplated by this
Agreement, or the transactions contemplated hereby, together with interest and
penalties, if any, thereon;
any and all broker's fees or similar fees claimed by
any Person acting by or on behalf of Seller in connection with the transactions
contemplated hereby.
Buyer will pay
all expenses of or related to the issuance of the
title insurance commitment and policy (including the costs of any survey
required by Buyer and the Title Insurer), chain of title reports, and all closer
escrow fees and charges;
the cost of any environmental report, market and
feasibility study and appraisal prepared for Buyer at Buyer's request, and the
expenses of or related to Buyer's Due Diligence Review;
the charges for or in connection with the recording
and/or filing of any instrument or document provided for herein or contemplated
by this Agreement or any agreement or document described or referred to herein;
and
any and all broker's fees or similar fees claimed by
any Person acting by or on behalf of Buyer in connection with the transactions
contemplated hereby.
<PAGE>
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
breach of this Agreement by another party.
Arbitration. The parties hereto shall submit to arbitration any
dispute, controversy or claim arising out of or relating to this Agreement or
any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
Notices. Any notice, consent, approval, demand or other
communication required or permitted to be given under this Agreement or any
other Transaction Document (a "notice") shall be in writing, shall be delivered
to the addressee at the address set forth below (or at such other address as
shall be designated hereunder by notice to the other parties) personally, by
FedEx (or other equivalent national overnight courier) for next Business Day
delivery or by registered or certified United States mail, return receipt
requested, in each case with the cost of delivery prepaid or for the account of
the sender and shall be deemed to have been given (a) when delivered, if
delivered in person, (b) on the next Business Day, if sent by FedEx (or other
equivalent national overnight courier) or (c) five (5) Business Days after
mailing, if mailed by registered or certified United States mail. The respective
addresses of the parties for notice are as follows:
<PAGE>
If to Buyer: Integrated Living Communities of
Gloucester, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
with a copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Phone: (212) 704-6000
Fax: (212) 704-6288
Attn: Andrea Paretts Ascher, Esq.
If to Operator
Affiliates: Bullock Corporation
125 Riverbend Drive, Suite A
Charlottesville, Virginia 22901
Phone: (804) 293-7037
Fax: (804) 293-8346
Attn: Mr. James L. Bullock
with a copy to: Michie, Hamlett, Lowry, Rasmussen & Tweel, P.C.
500 Court Square, Suite 300
Charlottesville, Virginia 22902-0298
Phone: (804) 980-9507
Fax: (804) 295-0681
Attn: Denise Yvette Lunsford, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
Financial Statement Audits. The Operators shall use their best
efforts to cause Seller's Auditors to deliver to Buyer at Buyer's expense,
within sixty (60) days following the Closing Date, such audited financial
statements of Seller necessary to comply with Rule 3-05 of Regulation S-X
promulgated by the Securities and Exchange Commission for filing by Integrated
Living Communities, Inc. with a Current Report on Form 8-K regarding the
<PAGE>
transactions contemplated herein, and to cause Seller's Auditors to cooperate
with Buyer's Auditors in preparing the required pro forma financial statements
for filing therewith. Notwithstanding the level of review of the Facility's
financial statements by Buyer pursuant to Section 8.1 above, Seller shall
cooperate with Buyer and its independent certified public accountants, if Buyer
deems it necessary or desirable, to audit the balance sheets, statements of
operations and statements of cash flow of Seller for up to three (3) calendar
years ended prior to Closing. Without limiting the foregoing, the Operators
shall make available all information requested by Buyer or its auditors, and the
Operators (and their chief executive and chief financial officers) shall execute
and deliver to the auditors all representation letters requested by Buyer's
auditors. Such audits shall be conducted at Buyer's expense.
Intentionally omitted.
Copies of Books and Records. The Operators shall, for a period of
five (5) years after the Closing Date, provide to Buyer copies, whether in paper
or computer format, as may be reasonably requested from time to time by Buyer,
of Seller's financial and tax books and records and Manager's financial records
insofar as they relate to the operation of the Facility and the Business prior
to the Closing.
Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. No delay in exercising any right or remedy
shall constitute a waiver thereof, and no waiver by Buyer or any Operator of any
covenant of this Agreement shall be construed as a waiver of any preceding or
succeeding breach of the same or any other covenant or condition of this
Agreement.
Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Letter of Intent) and constitutes (along with the Transaction
Documents, including the Unification Agreement, referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by each of the parties.
Assignments, Successors and Third Party Beneficiaries.
No party may assign any of its rights under this
Agreement without the prior consent of the other party which will not be
unreasonably withheld, except that Buyer may assign all or certain of its
rights, duties and obligations hereunder to one or more Affiliates of Buyer, or,
in connection with the financing or refinancing of Buyer's purchase of the
Acquisitions Assets, to a real estate investment trust or other Financing Source
or its Affiliate, without the prior written consent of Seller, provided that in
the instance of any such assignment Buyer shall not be released from any of, and
remain responsible for its obligations under, this Agreement.
<PAGE>
This Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties.
Except as otherwise expressly provided in this
Section, this Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns and nothing in this Agreement will be construed to give
any Person other than the parties to this Agreement or their respective
successors and assigns any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement.
Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section Headings. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect the construction
or interpretation of this Agreement.
Governing Law. This Agreement will be governed by and construe
under the laws of the Commonwealth of Virginia without regard to conflicts of
laws principles.
Counterparts. This Agreement may be executed in one or mor
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF GLOUCESTER, INC.
By: ______________________________________
John Poole, Chief Financial Officer
AMERICAN RETIREMENT HOMES, INC.
By: ______________________________________
Elizabeth J. Bullock, President
BULLOCK CORPORATION
By: ______________________________________
James L. Bullock, President
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 11
TERMS OF THE SALE AND PURCHASE 11
2.1 Assets to Be Sold 11
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 12
2.5 Allocation of Purchase Price 13
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 13
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 15
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 17
ARTICLE 4 17
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 17
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 18
4.7 No Material Adverse Change 19
4.8 Consents 19
4.9 Completion of Other Transactions 19
ARTICLE 5 19
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 19
5.1 Performance 20
5.2 Representations and Warranties 20
5.3 Consents 20
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into
of Other Agreements 20
<PAGE>
Page
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ARTICLE 6 20
REPRESENTATIONS AND WARRANTIESOF OPERATORS 20
6.1 Organization and Good Standing 20
6.2 Authority; No Conflict; Consents 21
6.3 Financial and Operating Statements 22
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 23
6.6 Taxes; FIRPTA 23
6.7 Title, Condition and Sufficiency of the Facility 24
6.8 Title, Condition And Sufficiency of the Personal Property 26
6.9 Inventory 26
6.10 Intellectual Property 27
6.11 Contracts 27
6.12 Insurance 28
6.13 Employees 29
6.14 Labor Matters 29
6.15 Benefit Plans 30
6.16 Compliance with Laws; Deficiencies 30
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 32
6.19 Residents/Patients; Licensed Beds And Fees 32
6.20 Brokers or Finders 32
6.21 Disclosure 33
6.22 Bankruptcy 33
6.23 Third Party Provider Liabilities 33
6.24 Due Diligence Information 33
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 34
7.2 Authority 34
7.3 Certain Proceedings 34
7.4 Brokers or Finders 34
7.5 Due Diligence Review 34
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc. 35
8.3 Operation of Seller's Business 35
8.4 Required Consents 37
8.5 Notification 37
8.6 No Negotiation 37
8.7 Best Efforts 37
<PAGE>
Page
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ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 38
ARTICLE 10 39
DAMAGE, DESTRUCTION OR CONDEMNATION 39
10.1 Damage and Destruction 39
10.2 Condemnation 39
ARTICLE 11 40
INDEMNIFICATION 40
11.1 Indemnification Agreement 40
11.2 Independent Investigation 40
ARTICLE 12 40
MISCELLANEOUS COVENANTS 40
12.1 Confidentiality 40
12.2 Public Announcements 41
12.3 Non-Competition 41
ARTICLE 13 42
GENERAL PROVISIONS 42
13.1 Survival 42
13.2 Expenses 42
13.3 Arbitration 43
13.4 Notices 43
13.5 Further Assurances 44
13.6 Financial Statement Audits 44
13.7 Intentionally omitted 45
13.8 Copies of Books and Records 45
13.9 Waiver 45
13.10 Entire Agreement and Modification 45
13.11 Assignments, Successors and Third Party Beneficiaries 45
13.12 Severability 46
13.13 Section Headings 46
13.14 Governing Law 46
13.15 Counterparts 46
<PAGE>
Page
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EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Bill of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
ASSET PURCHASE AGREEMENT
among
INTEGRATED LIVING COMMUNITIES OF VIRGINIA BEACH, INC.,
as Buyer
and
RETIREMENT HOME OF VIRGINIA BEACH LIMITED PARTNERSHIP
as Seller
and
BULLOCK CORPORATION
as General Partner
Dated as of January 24, 1997
<PAGE>
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of January
24, 1997 among INTEGRATED LIVING COMMUNITIES OF VIRGINIA BEACH, INC., a Delaware
corporation ("Buyer"), RETIREMENT HOME OF VIRGINIA BEACH LIMITED PARTNERSHIP, a
Virginia limited partnership ("Seller") and BULLOCK CORPORATION, a Virginia
corporation ("General Partner" or "Bullock Corporation" and, together with
Seller, collectively, the "Operators" and individually, an "Operator").
RECITALS
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Facility (as hereinafter defined), the Business (as hereinafter defined) and
substantially all of the other assets of Seller used in connection with the
Facility and the Business, upon the terms and conditions hereinafter set forth;
WHEREAS, General Partner is the sole general partner under the
Partnership Agreement (as hereinafter defined) of Seller and Manager manages the
Facility and the Business for Seller pursuant to the Existing Management
Agreement (as hereinafter defined); and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions upon which Buyer will purchase, and Seller will sell,
the Acquisition Assets (as hereinafter defined).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
DEFINITIONS AND
RULES OF CONSTRUCTION
A. Definitions. The following capitalized terms used in this
Agreement have the respective meanings set forth below:
Acquisition Agreements: As defined in the Unification Agreement.
Acquisition Assets: As defined in Section 2.1.
Additional Extension Period: As defined in Section 3.1.
Affiliate: Any Person which, directly or indirectly, controls or is
controlled by or is under common control with any other Person. For purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), used with respect to any
Person, shall mean the possession, directly or indirectly,
<PAGE>
whether by contract or otherwise, of the power to direct or cause the direction
of the management and policies of such Person.
AmeriCare: AmeriCare Plus, LLC, a Virginia limited liability company.
BDC: Bullock Development Corporation, a Virginia corporation.
Bill of Sale and Assignment: One or more bills of sale, general
assignments and assumption agreements, each substantially in the form attached
hereto as Exhibit B conveying the Personal Property included in the Acquisition
Assets to Buyer.
Business: The ongoing business currently being conducted by Seller, in
conjunction with the Manager, of owning, planning, developing, using for the
Intended Purpose, operating and maintaining the Facility.
Business Day: Any day other than a Saturday or Sunday or a day on which
national banks in the City of New York, New York are authorized or obligated, by
law or executive order, to close.
Business Employees: Except as provided in Section 1.1 of the Disclosure
Letter, all full and part time employees employed by Seller on site at the
Facility on the Closing Date.
Buyer: As defined in the first paragraph of this Agreement and where
applicable and appropriate, its assignee and/or designee.
Buyer's Advisors: As defined in Section 8.1.
Cleanup: As defined within the definition of Environmental Claims.
Closing: As defined in Section 3.1.
Closing Date: As defined in Section 3.1.
Code: The Internal Revenue Code of 1986, as amended, and as the same
may be amended from time to time, or any successor law, and the rules and
regulations promulgated thereunder.
Condemnation: The exercise by any Governmental Authority, whether by
legal proceedings or otherwise, including a voluntary sale or transfer by Seller
to any Person, either under threat of condemnation or taking or while legal
proceedings for condemnation or taking are pending.
<PAGE>
Consent: Any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
Contracts: All agreements, contracts, obligations, understandings,
promises, undertakings, commitments (whether written or oral and whether express
or implied) to which (i) Seller, (ii) General Partner or the Manager for the
benefit of Seller pursuant to authority granted under the Partnership Agreement,
the Existing Management Agreement or otherwise or (iii) any of the Acquisition
Assets are bound or subject.
Damages: As defined in Section 11.1.
Deed: As defined in Section 3.2.
Deposit: The $320,000 good faith deposit made by Integrated Living
Communities, Inc. on behalf of Buyer and the buyers under this Agreement and the
other Acquisition Agreements referred to in the Unification Agreement to First
American Title Insurance Company of New York, as escrow agent pursuant to the
Deposit Escrow Agreement.
Deposit Escrow Agreement: As defined in the Unification Agreement.
Designated Contracts: The Resident and/or Patient Agreements set forth
in Section 6.11(b) of the Disclosure Letter, as well as such of the other
Contracts, if any, listed in Section 6.11(a) of the Disclosure Letter and
identified by asterisk, which Seller or, to the extent General Partner or the
Manager is a party thereto under a Contract for the benefit of Seller pursuant
to authority granted under the Partnership Agreement, the Existing Management
Agreement or otherwise, such other Operator Affiliate will assign to Buyer at
Closing and, upon such assignment, those Contracts under which Buyer will assume
the obligations arising after the Closing.
Disclosure Letter: The disclosure letter executed and delivered by
Seller and General Partner to Buyer concurrently with the execution and delivery
of this Agreement.
Encumbrances: Any mortgage, easement, right of way, pledge, negative
pledge, security interest, hypothecation, lien, possibility of reversion, lease
or other occupancy agreement, charge, restrictive covenant or claim, community
property interest, condition, equitable interest, option, pledge, voting trust,
right of first refusal, or restriction of any kind, including any restriction on
use, voting or dividends (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership) or other thing commonly
known as an encumbrance; and "Encumber" means the creation of any Encumbrance.
Environmental Claims: Any and all administrative, regulatory or
judicial actions, suits, obligations, liabilities, losses, proceedings, decrees,
judgments, penalties, fees, fines, demands, orders, directives, claims, liens,
notices of non-compliance or violation, or legal fees or costs of investigations
<PAGE>
or proceedings, expenses or other responsibility (financial or otherwise)
arising from or under or relating in any way to any Environmental Law or any
Governmental Authorization issued under any such Environmental Law, or arising
from the presence or Release (or alleged presence or Release) into the
environment of any Hazardous Materials (hereinafter "Claims"), including any and
all Claims by any Governmental Authority or by any other Person for cleanup
costs or corrective action, including any cleanup, removal, containment, or
other remediation or response actions ("Cleanup "), enforcement or other actions
or damages, contribution, indemnification, cost recovery, compensation or
injunctive relief pursuant to any Environmental Law or any alleged injury or
threat of injury to human health, safety or the environment.
Environmental Laws: All federal, state, municipal and local laws,
statutes, ordinances, rules, regulations, guidances, policies, orders, decrees,
directives, Governmental Authorizations, criteria, guidelines, and judgments,
whether statutory or common law, as amended from time to time, now or hereafter
in effect, or promulgated, pertaining to the environment, public health and
safety and industrial hygiene, including the use, generation, manufacture,
production, storage, Release, handling, treatment, removal, decontamination,
cleanup, transportation or regulation of any Hazardous Material, including the
Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and
Health Act.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and as the same may be amended from time to time, or any successor law and the
rules and regulations promulgated thereunder or any successor law.
ERISA Affiliate: As used and defined in ERISA.
Escrow Agent: Crestar Bank, Norfolk, Virginia.
Escrow Agreement: A cash escrow agreement to be entered into among
Seller, Buyer and Escrow Agent at Closing in the form of Exhibit D pursuant to
which five (5%) percent of the Purchase Price shall be held in escrow by the
Escrow Agent as security for Seller's indemnification obligations under this
Agreement.
Escrow Deposit: As defined in the Unification Agreement.
Excluded Assets: As defined in Section 2.2.
Existing Management Agreement: The Management Agreement dated April 1,
1987 between Seller and Manager pursuant to which Manager has been managing the
Facility and the Business on behalf of Seller, as same has been amended,
supplemented or modified.
<PAGE>
Extension Period: As defined in Section 3.1.
Facility: The Land and the Improvements situated thereon, known as
"King's Grant House", and comprised of an assisted-living facility, containing
54 licensed beds and approximately 22,738 square feet and the related amenities.
Financing Source: Any Person which provides financing for the transactions
contemplated by this Agreement, including any Person which may acquire the
Facility (and/or any of the other Acquisition Assets) and concurrently lease the
same to Buyer or any Affiliate of Buyer.
Fixtures: All permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, built-in vacuum, cable
transmission, oxygen and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto.
Flood Hazard Area: An area designated by the Federal Emergency
Management Agency and/or Secretary of Housing and Urban Development as having
special flood hazards.
GAAP: Generally accepted accounting principles consistently applied.
Governmental Authorization: All approvals, consents, licenses
(including Certificates of Occupancy, Certificates of Need, Medicare and
Medicaid provider contracts), permits, entitlements, waivers or other
authorizations issued, granted, given, or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Law, required in
connection with the ownership, planning, development, construction, use,
operation and/or maintenance of the Facility or the conduct of the Business, and
all amendments, modifications, supplements, general conditions and addenda
thereto.
Governmental Authority: The United States, the state or commonwealth,
county, parish, city and political subdivisions in which any of the Acquisition
Assets are located or which exercise jurisdiction over any of the Acquisition
Assets, or the use of the Facility, and any court, administrator, agency,
department, commission, board, bureau or instrumentality, including any utility
service provider (whether or not public, quasi-public or private), which
exercises jurisdiction over any of the Acquisition Assets or the construction or
use of the Facility.
<PAGE>
Hazardous Materials: Any substance, including asbestos or any substance
containing asbestos, which is deemed hazardous under any Environmental Law,
polychlorinated biphenyls, flammable explosives, lead, radon gas, urea,
formaldehyde foam insulation, radioactive materials, medical waste, petroleum
and petroleum products, fuel oil, chemicals, pollutants, effluents,
contaminants, emissions or related materials and items included in the
definition of hazardous or toxic wastes, materials or substances under, or
regulated pursuant to, any Environmental Law.
Improvements: All buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including all alleyways, connecting tunnels, crosswalks, sidewalks, landscaping,
parking lots and structures, roads, drainage and all above-ground and
underground utility structures, equipment systems that constitute Fixtures and
other so-called "infrastructure" improvements.
Indemnification Agreement: That certain indemnification agreement dated
the date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Bullock Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Ghent Arms Limited Partnership, Seller, Bullock Corporation and its
principal shareholder, the Manager and its principal shareholder, Buyer and the
other Affiliates of Integrated Living Communities, Inc., which are "Buyers"
under the other Acquisition Agreements.
Indemnified Person: As defined in the Indemnification Agreement.
Indemnifying Person: As defined in Indemnification Agreement.
Insurance: All policies of fire, liability and other forms of insurance
held or owned by Seller or otherwise in force and providing coverage for, or
with respect to, the Acquisition Assets or the Business; and all bonds,
indemnity agreements and other agreements of suretyship made for or held by any
Operator or the Manager or otherwise in force and relating to the Acquisition
Assets or the Business.
Intangible Property: All intangible property or any interest therein
now or on the Closing Date owned or held by any Operator Affiliate in connection
with any of the Acquisition Assets or the Business, including all Governmental
Authorizations, Intellectual Property, Insurance, Designated Contracts, Plans
and Specifications, claims, contract rights, agreements, water rights and
reservations, zoning rights, warranties and guaranties (including those relating
to construction and/or fabrication) and Seller's business goodwill related to
the Facility or any of the other Acquisition Assets.
Intellectual Property: The name "King's Grant House" and all
derivations and variations thereof, and any other trade names, service mark,
logo, symbol, trade dress, design, or representation or expression of any
thereof, or registration or application for registration thereof, or any
<PAGE>
invention, trade secret, technical information, know-how, proprietary right
(including Resident/Patient lists, supplier lists and operating manuals) or
intellectual property used by an Operator Affiliate in connection with the
operation of, or otherwise pertaining to, the Property or the Business but
specifically excluding software and computer programs licensed by a third party
to an Operator Affiliate.
Intended Use: An assisted-living facility and such other uses necessary
or incidental to such use, as well as any other current use of the Facility.
Interim Financial Statements: As defined in Section 6.3.
Inventory: All goods and supplies, including inventories of food,
beverages, pharmaceuticals, medical supplies, linens, clothing or similar items.
IRS: Internal Revenue Service.
Land: That certain parcel or contiguous parcels of land located in the
City of Virginia Beach, State of Virginia, consisting of approximately 0.9652
acres and more particularly described on Exhibit A.
Laws: All federal, state and local laws, statutes, rules, regulations,
ordinances, orders, moratoria, initiatives, standards, judicial or
administrative determinations, decrees or similar edicts or requirements of any
Governmental Authority, including Environmental Laws.
Letter of Intent: That certain letter dated November 8, 1996 from
Integrated Living Communities, Inc. to the General Partner, signed and
countersigned by the General Partner and the Manager.
Legal Requirement: Any requirement of any Law.
Manager: American Retirement Homes, Inc., a Virginia corporation.
Material Adverse Effect: Any material and adverse effect, whether
individually or in the aggregate, upon (a) the condition, financial or
otherwise, operations, properties, assets or prospects of Seller, the Facility,
the other Acquisition Assets or the Business or (b) the ability of the Operator
Affiliates to timely perform as and when due all or any part of their
obligations under this Agreement or under any document entered into or to be
entered into by any of them in connection herewith.
Operator Affiliates: Collectively, Seller, General Partner, Manager and
each of the principal shareholders of each of General Partner and Manager,
respectively.
Organizational Documents: In respect of any Person (other than an
individual), to the extent applicable, the articles or certificate of
incorporation, certificate of limited partnership, by-laws, partnership
<PAGE>
agreement, statement of partnership, fictitious business name filings and all
other organizational documents relating to the creation, formation and/or
existence of such Person, together with resolutions of the board of directors or
consents or agreements of the partners, incumbency certificates and all other
documents or instruments approving or authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents by such
Person.
Originally Scheduled Closing Date: As defined in Section 3.1.
Partnership Agreement: The Certificate and Agreement of Limited
Partnership of Seller, dated as of April 23, 1987, among the General Partner, as
sole general partner, and James Moore, as the sole limited partner, as the same
has been amended, supplemented or modified.
Permitted Encumbrances: Collectively, (i) liens for taxes and
assessments not yet past due and payable or delinquent and (ii) such other title
exceptions or defects as Buyer may approve, in its sole and absolute discretion,
in writing.
Person: Includes any manner of association, business trust, company,
corporation, estate, governmental or other authority, joint venture, natural
person, partnership, trust or other entity.
Personal Property: All tangible personal property and Intangible
Property of every kind and nature located at, upon or about, or affixed or
attached to, or installed in the Facility or used or to be used in connection
with or otherwise relating to the Facility or the Business, including the
following:
all equipment, machinery, furniture and
furnishings, Inventory, vehicles and other tangible personal property (including
all components thereof) (whether or not set forth on Exhibit B), now or on the
Closing Date located in, on or used in connection with (A) the
Facility (and whether or not affixed to the facility) or (B) the Business,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air cooling and air conditioning systems,
apparatus, sprinkler systems, fire and theft protection equipment, built-in
oxygen and vacuum systems, tools, repair parts, appliances and communications
equipment, to the extent any of the foregoing items are not Fixtures and are not
conveyed to Buyer as part of the Facility pursuant to the Deed, and those
specific items of tangible personal property (including any vehicles which are
used for the Business) described on Exhibit B; and
all Resident and/or Patient Agreements and
other Designated Contracts, telephone numbers and Resident/Patient records and
invoices.
Notwithstanding the foregoing, Personal Property shall not include the Excluded
Assets.
<PAGE>
Plans and Specifications: All existing drawings (including final and
complete "as-built"), plans, specifications, blueprints, maps, studies,
structural reviews, surveys (including "as-built") and engineering, soil,
seismic, geologic, architectural and other reports relating to the Facility.
Property: The Facility together with the tangible Personal Property.
Purchase Price: As defined in Section 2.3.
Release: The release, deposit, disposal or leakage of any Hazardous
Material at, into, upon or under any land, water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
Rehired Employees: As defined in Section 9.2.
Resident/Patient: Any Person residing (on a permanent or temporary
basis) or under permanent or temporary treatment for an illness or condition at
the Facility.
Resident and/or Patient Agreements: Any and all leases, rental and
occupancy agreements, lease commitments, admission and payment documents,
reservation agreements and concessions, all deposits made thereunder, and any
and all Resident/Patient trust accounts, in each case with respect to the
Acquisition Assets.
Retained Liabilities: As defined in Section 2.6(b).
Tax: Any tax (including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added, surtax, excise, ad valorem, transfer,
stamp, sales, use, property, inventory, occupancy, withholding, payroll, gift,
estate or inheritance tax), levy, assessment, tariff, impost, imposition, toll,
duty (including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or for any authority or payable (including pursuant to any tax-sharing
agreement or pursuant to any agreement, arrangement or understanding relating to
the sharing or payment of any such tax, levy, assessment, tariff, impost,
imposition, toll, duty, deficiency or fee).
Tax Return: Any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of, or compliance with, any Legal Requirement relating to any Tax.
Title Insurer: First American Title Insurance Company.
<PAGE>
Title Policy: As defined in Section 4.4.
Transaction Documents: Collectively, this Agreement, the other
Acquisition Agreement, the Unification Agreement, the Indemnification Agreement,
the Deed, the Bill of Sale and Assignment, and any other documents executed or
required to be executed by any of the parties hereto in connection with or
pursuant to this Agreement or the Unification Agreement or which are necessary
to consummate the transactions contemplated hereby.
Unification Agreement: That certain unification agreement dated the
date hereof among Retirement Home of Portsmouth Limited Partnership, BDC,
Bullock Corporation as successor to Retirement Home of Gloucester Limited
Partnership, Ghent Arms Limited Partnership, Seller, and Bullock Corporation,
each as sellers of assisted living facilities and the related business, Buyer
and other Affiliates of Integrated Living Communities, Inc. which are purchasing
such facilities and businesses pursuant to this Agreement and the other
Acquisition Agreements, and the Manager.
Year End Financial Statements: As defined in Section 6.3.
Construction of Certain Terms. For all purposes of this
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, (i) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(ii) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP, as at the time applicable; (iii) all
references in this Agreement to designated "Articles," "Sections", "Schedules",
"Exhibits" and other subdivisions are to the designated Articles, Sections,
Schedules and Exhibits and other subdivisions of this Agreement; (iv) the word
"including" shall have the same meaning as the phrase "including, without
limitation," and other phrases of similar import; (v) the words "herein, "
"hereof " and "hereunder' and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision; and (vi) all references to this Agreement shall include all
Schedules and Exhibits attached hereto.
Disclosure Letter. The disclosures in the Disclosure Letter,
and those in any supplement thereto, relate only to the representations and
warranties in the Section of this Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement. In the event of
any inconsistency between the statements in the body of this Agreement and those
in the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty in a specific Section of this Agreement), the statements in the body
of this Agreement will control.
Parties' Intent. The parties intend that the assets to be
conveyed to Buyer pursuant to Section 2.1 include all of the assets employed in
and necessary to operate the Facility and the Business in substantially the
manner as the Business has heretofore been operated.
<PAGE>
Knowledge. Wherever a representation is made in this Agreement
based upon the knowledge of an Operator (whether or not expressly after due
inquiry), it shall be deemed to have been made by such Operator after due
inquiry of the Manager of the Facility and each of the principal shareholders of
the General Partner and the Manager.
ARTICLE
TERMS OF THE SALE AND PURCHASE
Assets to Be Sold. Subject to the terms and conditions of this
Agreement, at Closing, Seller (and the other Operator Affiliates to the extent
such assets are owned by them) will sell, convey, assign, transfer and deliver
to Buyer and/or Buyer's designee or assignee as provided in Section 13.11, and
Buyer and/or Buyer's designee or assignee, will purchase and acquire, as a going
concern, the Facility and all of the assets, properties (real or personal,
tangible or intangible), rights, prepaid expense items and business goodwill
used in connection with, relating to or necessary for the ownership and
operation of the Facility, and the continued conduct of the Business or which
are located at the Facility, including the Personal Property and Designated
Contracts, but excluding the Excluded Assets (the assets intended to be so
acquired are collectively referred to as the "Acquisition Assets"), in each case
free and clear of any and all Encumbrances other than the Permitted
Encumbrances. Acquisition Assets shall include the motor vehicle presently owned
by Seller used to transport Residents/Patients to and from the Facility and set
forth on Schedule 2.1 hereto.
Excluded Assets. Notwithstanding Section 2.1, the Acquisition
Assets do not include: (1) claims for refunds of Taxes and other governmental
charges of whatever nature for periods prior to the Closing Date; (2) Accounts
Receivable; (3) the minute books, stock records and corporate seal of Seller or,
subject to Buyer's right to review and obtain copies of same as provided in
Section 13.8, Seller's financial books and records (whether in paper or computer
format), provided, however, Resident/Patient records are Acquisition Assets; (4)
Contracts other than the Designated Contracts; (5) Seller's bank accounts, cash
and cash equivalents and securities (except that deposits and trust funds held
for Residents/Patients shall be transferred to Buyer (or trust accounts
designated by Buyer for such Residents/Patients); (6) the Purchase Price and
rights under this Agreement; (7) personal property located at the Facility which
is owned by the Residents/Patients; and (8) the assets, properties, and rights
listed in Schedule 2.2 (collectively, the "Excluded Assets").
Purchase Price. The purchase price for the Acquisition Assets
will be Two Million Nine Hundred Thirty-One Thousand Five Hundred Dollars
($2,931,500.00), subject to upward or downward adjustment as hereinafter
provided (as adjusted, the "Purchase Price").
<PAGE>
The Purchase Price (without giving effect to any post-Closing
adjustments) shall be paid by Buyer to Seller as follows:
(i) Two Hundred Sixteen Thousand Two Hundred
Eighty-Eight and 59/100 Dollars ($216,288.59) shall be paid by
Buyer to Escrow Agent on the Closing Date by certified check
payable to the order of the Escrow Agent or, if Buyer is given
proper instructions at least two Business Days prior to the
Closing Date, by wire transfer of immediately available funds
to an account designated by Escrow Agent, to be held in escrow
and distributed by Escrow Agent pursuant to the Escrow
Agreement; and
(ii) the balance of the Purchase Price (after
adjustments, if any, as provided in Section 2.4(c)) shall be
paid by Buyer on the Closing Date by certified check payable
to the order of Seller or, if Buyer is given proper
instructions at least two Business Days prior to the Closing
Date, by wire transfer of immediately available funds to an
account designated by Seller.
Prorations and Purchase Price Adjustments. (a) On the Closing
Date, the following shall be apportioned and prorated as of the Closing Date:
(i) real property taxes and all other public or
governmental charges against the Acquisition Assets (including
charges for sewer, water, drainage or other services) assessed
for the tax year in which the Closing Date occurs;
(ii) personal property taxes attributable to the
Personal Property for the tax year in which the Closing Date
occurs;
(iii) except as otherwise provided in Section 2.6,
all prepayments and security or other deposits made or
payments due under any (A) Designated Contracts and (B)
utilities servicing the Facility, including water, sewer,
electric, gas and telephone bills;
(iv) premiums on existing Insurance covering the
Facility, if any, to the extent such Insurance is assignable,
are designated by Seller and Buyer as Designated Contracts and
assigned to Buyer at the Closing as a Designated Contract; and
(v) all other items of income and expense, charges
and fees customarily prorated and adjusted in similar
transactions in the area in which the Facility is located,
which shall be prorated as of the Closing Date in accordance
with such custom.
<PAGE>
(b) In the event that accurate prorations cannot be made as of
the Closing Date because current bills or statements are not obtainable Seller
and Buyer shall prorate such items based upon estimates thereof and make final
prorations upon receipt of the final bill or statement. The Operators shall use
their best efforts to have all utility meters read and all fuel readings to be
taken on the Closing Date so as to accurately determine the proration of
current utility and fuel bills. If the Closing shall occur before the tax rate
is fixed, the apportionment of real estate
taxes shall be upon the basis of the tax rate for the next preceding tax year
applied to the latest assessed valuation, and shall be subject to adjustment
upon receipt by Buyer of notice of the tax rate for the then current tax year.
(c) The net amount of such prorations (to the extent
determinable on the Closing Date) shall be paid on the Closing Date, to Seller
or Buyer, as appropriate, by certified check payable to the order of such party,
provided that Buyer may elect to pay or be paid any prorations which are to be
made at Closing by an upward or downward adjustment of the Purchase Price, as
appropriate.
Allocation of Purchase Price. After the Closing, the
parties agree to make consistent use of the allocation, fair market value and
useful life of the Purchase Price in any and all filings, declarations and
reports with the Internal Revenue Service in respect thereof, including the
reports required to be filed under Section 1060 of the Code, if applicable.
Buyer shall prepare and deliver IRS Form 8594 to Seller within forty-five (45)
days after the Closing Date.
Assumption of Liabilities. (a) Subject to the terms
and conditions of this Agreement, at Closing, Buyer shall assume and thereafter
in due course fully satisfy those obligations arising under the Designated
Contracts which are assignable and are assigned by Seller to Buyer, with respect
to, and only with respect to, performance of obligations (including payments to
be made on account of services) to be rendered thereunder after the Closing
Date.
(b) Except as provided in paragraph (a) above, Buyer shall not
assume nor in any way be liable or responsible for any of the debts,
obligations, Contracts, liabilities, claims or lawsuits of Seller (or any other
Operator Affiliate) of whatsoever kind or nature, absolute or contingent, which
shall be retained, and paid, performed and/or discharged by Seller in a timely
manner in accordance with their respective terms (the "Retained Liabilities").
The Retained Liabilities include (i) all of the Operator Affiliates' liabilities
for Taxes (including deferred Taxes) that have been or may be incurred as a
result of the operation of the Business or ownership of the Acquisition Assets
before the Closing; (ii) all obligations or liabilities arising under any
Contract that is not transferred to Buyer as part of the Acquisition Assets;
(iii) all liabilities arising out of or relating to any breach or default (or an
event that, with the passing of time or the giving of notice or both, would
constitute a default) under any Designated Contract relating to periods prior to
the Closing Date; (iv) all liabilities or claims relating to any misfeasance or
omissions relating to periods prior to the Closing Date; (v) any liabilities
relating to accrued payroll, sick pay or accrued vacation pay or other employee
<PAGE>
benefits for employees and former employees of any Operator Affiliate, except
with respect to accrued sick pay and accrued vacation pay for any such employees
who become Rehired Employees such Retained Liability shall be limited to
Seller's obligation to pay for any sick or vacation pay for sick leave or
vacation days used by or paid to such Rehired Employees within 180 days
following the Closing in accordance with Section 9.2(d); (vi) all liabilities or
obligations under any employment, severance, retention or termination agreement
with any employee of any Operator Affiliate or any of their Affiliates; and
(vii) all obligations or liabilities arising out of or related to any employee
grievances commenced or relating to periods prior to the Closing whether or not
the affected employees become employees of Buyer.
Consents to Assignments. (a) The Operators will use
their best efforts and shall diligently proceed to obtain all Consents of all
Persons necessary to permit the assignment of the Designated Contracts or to
assign or transfer any of the other Acquisition Assets. In the event that any of
the Acquisition Assets are not assignable, or the Person(s) from whom a Consent
to any such assignment or transfer, fail(s) or refuse(s) to Consent thereto
before the Closing Date, Buyer shall have no obligation to assume and will not
assume any such Designated Contract and shall have no obligation to purchase any
such Acquisition Asset. In addition, this Agreement shall not constitute an
agreement to assign or transfer any such Acquisition Asset or part thereof or
any right or benefit arising thereunder or resulting therefrom if an attempted
assignment or transfer thereof, without the Consent of such Person, would
constitute a breach thereof or in any way affect the rights of Buyer or Seller
thereunder. Notwithstanding the foregoing, all references in this Agreement or
any other Transaction Document (other than the Deed, any Bill of Sale and
Assignment and any other instrument or document conveying title to any
<PAGE>
Acquisition Assets) to "Acquisition Asset" or "Acquisition Assets" shall
continue to have the meaning set forth in Section 2.1 without giving effect to
this Section 2.7.
(b) If such Consent is not obtained, or if an attempted
transfer or assignment of any Acquisition Asset would be ineffective or would
affect the rights of Seller so that Buyer would not in fact receive all such
rights, the Operators (i) shall cooperate with Buyer at its request in
endeavoring to obtain such Consent promptly at no cost to Buyer and (ii) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
designed to provide for Buyer the benefits under any such Acquisition Asset or
part thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyer of any and all rights of an
Operator Affiliate against a third party arising out of the breach or
cancellation by such third party or otherwise (except that, unless otherwise
agreed to in writing by Buyer, an appropriate Consent shall be required to be
obtained for the transfer of all Designated Contracts and other Acquisition
Assets which are material to the operation of the Business if Consent is
required for the transfer thereof to Buyer).
ARTICLE
CLOSING
Closing. The purchase and sale of the Acquisition
Assets provided for in this Agreement (the "Closing") shall take place on
January 27, 1997 (the "Originally Scheduled Closing Date") at the offices of
Buyer's financing source (or counsel therefor), or at such other place, time or
date as Seller and Buyer may mutually agree to. The Originally Scheduled Closing
Date, any other such date as Seller and Buyer may mutually agree to as the date
on which the Closing shall occur, and any other date to which the same may be
extended by Seller or Buyer as hereinafter provided, are each herein referred to
as a "Scheduled Closing Date" and the latest of such Scheduled Closing Dates is
herein referred to as the "Closing Date".
If, prior to or by the Originally Scheduled
Closing Date, any Governmental Authority with jurisdiction over the licensing of
the Facility has not issued to Buyer a license to operate the Facility
immediately upon Buyer's acquisition of the Acquisition Assets,
then, in such event, provided (i) Buyer shall have furnished to such
Governmental Authority all information requested by such Governmental Authority
as of such date in connection with its application for the issuance of such
license, (ii) this Agreement, the other Acquisition Agreements and the
Unification Agreement shall have been executed by all of the parties thereto and
(iii) First American Title Insurance Company of New York, as escrow agent under
the Deposit Escrow Agreement shall have been authorized by the parties thereto
to release the Escrow Deposit to the General Partner, then Buyer shall be
entitled to extend the Closing Date for a period of up to ninety (90) days (the
"Extension Period").
<PAGE>
If such license has not been issued due to a violation or
deficiency found or alleged by such Governmental Authority with respect to the
Facility or Seller (whether or not listed in Section 6.16(e) of the Disclosure
Letter), then, Buyer may elect, by written notice to Seller, to extend the then
Scheduled Closing Date for an additional period or periods of up to ninety (90)
days in the aggregate in order to afford Seller the opportunity to remedy such
violation or deficiency. In the event that Seller either fails to proceed
promptly and diligently to remedy such violation or deficiency or fails to
remedy the same so that any impediment to the issuance of such license is
eliminated within such additional period, then, in either such event, Buyer may
elect, by written notice to Seller, to (A) terminate this Agreement in which
event the Operators shall cause the Deposit to be repaid to Integrated Living
Communities, Inc. or (B) proceed to cure such violation or deficiency on behalf
of Seller and at Seller's expense. Buyer shall be entitled, at its election, to
receive a reduction in the Purchase Price by an amount equal to the total of all
costs and expenses incurred by Buyer for curing such violation or deficiency not
therefore reimbursed by Seller. Buyer shall have the right at any time while it
is endeavoring to cure such violation or deficiency on behalf of Seller to
abandon its efforts to cure the same and to elect, by notice to Seller, to
terminate this Agreement. No termination of this Agreement by Buyer pursuant to
this Section 3.1(c), however, shall release or relieve any Operator or other
Operator Affiliate of any liability that they may have for any breach of any
representation, warranty, covenant or obligation of an Operator in this
Agreement or of any Operator Affiliate in any Transaction Document.
In the event that the Closing is to take
place through an escrow or sub-escrow, the Operator Affiliates and Buyer shall
mutually execute and deliver to Title Insurer, as escrow holder, joint escrow
and/or recording instructions consistent with this Agreement on
or prior to the Closing Date. In the event of any conflict between the
provisions of this Agreement and any such escrow and/or recording instructions
and/or any general instructions required by Title Insurer to be executed by
Buyer and Seller, or any other Operator Affiliate in connection therewith, the
provisions of this Agreement and the Unification Agreement shall control.
Items to Be Delivered by Seller at Closing. At the Closing,
subject to the terms and conditions of this Agreement, Seller shall deliver, or
cause to be delivered to Buyer or, if the Closing is to take place in escrow, to
Title Insurer in escrow, such instruments as shall be necessary to convey to
Buyer or its designee or assignee good and marketable title to the Acquisition
Assets, free and clear of all Encumbrances (except for Permitted Encumbrances).
Among other things, Seller will deliver to Buyer or, if applicable, Title
Insurer in escrow:
A full warranty deed (the "Deed") in the form of
Exhibit C, which Deed shall be duly executed, acknowledged and in
recordable form. The Deed shall include (if applicable) the appropriate
state, county and local real estate transfer tax declaration of real
estate value or other affidavit as to the tax due upon the sale.
<PAGE>
One or more Bills of Sale and Assignments in
the form of Exhibit B, duly executed and acknowledged by each of the Operators.
"FIRPTA" affidavit or certificate in form
and substance satisfactory to Buyer and in conformance with Section 1445(b)(2)
of the Code, to the effect that Seller is not a foreign person and such other
affidavits or certificates as may be reasonably required by
Buyer to the effect that Buyer is not required to withhold taxes from
the payment of sale proceeds to Seller under any other applicable Law.
Uniform Commercial Code Form 3s in favor of
Seller, for filing with the appropriate state and local authorities, for the
release of any Encumbrance (other than a Permitted Encumbrance) covering any of
the Acquisition Assets as to which Uniform Commercial Code
Form 1s have been filed.
If the Closing shall not occur on the date
hereof, a certificate executed by each Operator wherein the Operators represent
and warrant to Buyer that, except as otherwise stated in such certificate, each
of the Operators' representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement
and is accurate in all respects as of the Closing Date as if made on the Closing
Date (giving full effect to any supplements to the Disclosure Letter that were
delivered by Seller to Buyer prior to the Closing Date).
A certificate of the General Partner
certifying true and correct copies of Seller's Partnership Agreement and other
Organizational Documents, if any, which certificate and Organizational Documents
shall be in form and substance reasonably satisfactory to Buyer.
A certificate of the Secretary of General
Partner certifying true and correct copies of General Partner's Organizational
Documents, which certificate and the accompanying Organizational Documents shall
be in form and substance reasonably satisfactory to Buyer.
Opinion of Seller's and General Partner's
Counsel opining as to the matters set forth on Exhibit E and otherwise in form
and substance satisfactory to Buyer.
The Escrow Agreement duly executed and
acknowledged by Seller, General Partner and each other Operator Affiliate and
Escrow Agent.
The originals of all Designated Contracts,
title instruments in the Operators' or the Manager's possession pertaining to
the Acquisition Assets and the original Governmental Authorizations.
<PAGE>
All other Transaction Documents to which
Seller or any other Operator Affiliate is a party duly executed and delivered by
each such party.
All other proper instruments required for the
conveyance of good and marketable title to the Acquisition Assets or
required by Title Insurer for the issuance of the Title Policy.
In addition, at the Closing, Seller shall
deliver or cause to be delivered possession of the Facility and other
Acquisition Assets (including keys and combinations for obtaining entry or
access thereto).
Items to Be Delivered by Buyer at Closing. Among other things,
Buyer will deliver to the Escrow Agent:
The Assumption of Designated Contracts Agreement,
executed by Buyer.
A certificate executed by Buyer representing and
warranting to Seller that, except as otherwise stated in such
certificate, each of Buyer's representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement
and is accurate in all respects as of the Closing Date as if made on
the Closing Date.
A certificate of the Secretary of Buyer certifying
true and correct copies of resolutions adopted by Buyer's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents to be executed by Buyer
and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in
furtherance of this Agreement.
The Escrow Agreement duly executed and acknowledged
by Buyer and the Escrow Agent.
All other Transaction Documents to which
Buyer is a party duly executed and delivered by Buyer.
Other Closing Documents. Each party shall execute and deliver
such other instruments and take such other actions as either party or the Title
Insurer or Buyer's Financing Source may reasonably request in order to
effectuate the purposes of this Agreement.
<PAGE>
ARTICLE
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Acquisition Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part).
Performance. Each of the Operators shall have performed each
and all of the covenants and obligations required to be performed by it under
this Agreement on or prior to the Closing.
Representations and Warranties. Each and all of the
representations and warranties of the Operators hereunder shall be true and
correct on and as of the Closing Date, as if made as of the Closing Date.
Closing Documents. Seller shall have delivered (or caused to
have been delivered) to Buyer each of the items to be delivered by Seller or an
Operator Affiliate at Closing pursuant to Sections 3.2 and 3.4. Seller shall
have paid or shall have made arrangements for the payment of those costs and
expenses required to be paid by Seller pursuant to Section 13.2.
Title Insurance. Buyer shall have received, at Buyer's
expense, a commitment from Title Insurer satisfactory to Buyer for the issuance,
at standard rates, of an ALTA extended coverage (but without exception for
creditors' rights) owner's policy of title insurance showing good and
indefeasible title to the Facility in fee simple vested in Buyer as of the
Closing, subject only to the Permitted Encumbrances. Such policy (the "Title
Policy"), when issued, shall be in form, substance and all other respects
reasonably satisfactory to Buyer and its Financing Source, and shall contain
such endorsements and provide such affirmative coverage as shall be available in
the state where the Facility is located and as shall be reasonably required by
Buyer and its Financing Source.
Survey. Buyer shall have received, at Buyer's expense, and
approved either (a) a final "as-built" ALTA survey of the Facility completed in
accordance with the Minimum Standard Detail requirements for ALTA/ACSM Land
Title Surveys, with additional Title A survey requirements, jointly established
and adopted by ALTA and ACSM in 1992 that meets the requirements of a Class A
Survey as defined therein, certified within thirty (30) days of the Closing Date
or (b) such other form of property survey which is in form, substance and all
other respects satisfactory to Buyer and its Financing Source in their sole
discretion. Such survey shall (i) be certified to Buyer, Title Insurer, and
Buyer's Financing Source, if any, as being true and accurate, and such
certification shall include the acreage of the Land and a statement that the
Land is not located in a Flood Hazard Area; (ii) identify thereon all telephone,
water, sewage, electricity, gas and other utility facilities to the points of
<PAGE>
connection; and (iii) show no encroachments onto or conflicts with any adjacent
property other than pursuant to easements appurtenant to the Facility or such
other agreements with the affected landowner approved by Buyer and which are, in
turn, insured under the Title Policy.
Entitlements. Buyer shall have received and approved with
respect to the Facility copies of (a) the applicable zoning ordinances and map
marked to show the location of such Facility and certified by an appropriate
Governmental Authority to be complete and accurate; (b) evidence that such
zoning ordinances and the general plans/specific plans and all other land use
regulations of the applicable municipal jurisdictions and all Encumbrances, if
any, affecting the Facility permit the transfer of the Facility and use thereof
for its Intended Use (and reconstruction and resumption of use in the event of
damage, destruction, or cessation of use) as a matter of right for an unlimited
time period and not merely as a legal nonconforming use; (c) all licenses,
certificates, approvals and authorizations, including plot plan and subdivision
approvals, zoning variances, sewer, building, foundation, grading and other
permits and all other authorizations required by Governmental Authorities or by
any applicable covenants, conditions and restrictions for the use and operation
of the Facility for its Intended Use, in each instance in accordance with all
applicable Legal Requirements; and (d) evidence satisfactory to it that (i) the
Facility holds all Governmental Authorizations required for the operation
thereof for its Intended Use, including from the Virginia Department of Social
Services; and (ii) the Facility is not subject to, or threatened with, any hold
on admissions or other sanction and there are no outstanding, or threatened,
notices of deficiency resulting from any survey of the Facility which have not
been fully responded to with an acceptable plan of correction with which the
Facility is being operated in compliance.
No Material Adverse Change. Since the date of the Interim
Financial Statements, there has not been any material adverse change in the
business, results of operations, assets, liabilities, condition (financial or
otherwise), operations or prospects of Seller, or the Business or the Facility,
and no event has occurred or circumstance exists that may result in such a
material adverse change, and Buyer shall have received evidence satisfactory to
it to that effect.
Consents. The Consents of all Persons necessary for the
consummation of the transactions contemplated hereby and for Buyer to conduct
the Business shall have been obtained, including Consents required, if any,
under the Designated Contracts, all Governmental Authorizations, any tax
clearance or similar Consent, the Consent of Buyer's (or its parent company's)
lenders to the extent required, if any. None of the Consents (i) shall have been
conditioned upon the modification, cancellation or termination of any Designated
Contract, easement, right or other Consent with respect to the Facility, or (ii)
shall impose on the Buyer any material condition or provision or requirement
with respect to the Facility, the Business or their operation that is more
restrictive than or different from the conditions imposed upon the Facility, the
Business or such operation prior to Closing.
<PAGE>
Completion of Other Transactions. Each of the transactions
contemplated by this Agreement, the other Acquisition Agreements and the
Unification Agreement shall have been consummated contemporaneously.
ARTICLE
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Acquisition Assets and to take the
other actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part).
Performance. Buyer shall have performed each and all of the
covenants and obligations required to be performed by it on or prior to the
Closing;
Representations and Warranties. Each and all of the
representations and warranties of Buyer hereunder shall be true and correct on
and as of the Closing Date, as if made as of the Closing Date; and
Consents. Seller shall have received a certificate of the
Secretary or other officer of Buyer certifying a copy of the resolutions of the
Board of Directors of Buyer authorizing Buyer's execution, delivery and
performance of this Agreement and the other Transaction Documents to be executed
by Buyer and the incumbency of the officers of Buyer authorized by such
resolutions to execute this Agreement and take other actions in furtherance of
this Agreement.
Closing Documents. Buyer shall have delivered (or caused to
have been delivered) to Seller each of the items to be delivered by Buyer at
Closing pursuant to Sections 3.3 and 3.4.
Completion of Other Transactions and Entering Into of Other
Agreements. Each of the transactions contemplated by the Unification Agreement
shall have been consummated contemporaneously with the consummation of the
transactions contemplated by this Agreement and Buyer shall have entered into
each of the other agreements contemplated to be entered into by Buyer pursuant
to the Unification Agreement.
<PAGE>
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF OPERATORS
Seller and General Partner represent and warrant, jointly and
severally, to Buyer as to each of the matters set forth in this Article 6
whether or not relating to such Person(s) or to another Operator Affiliate.
Organization and Good Standing.
(i) Seller (A) is duly organized, validly existing
and in good standing under the laws of the Commonwealth of Virginia as a limited
partnership and (B) has full power, authority and legal right to execute and
deliver and to perform and observe the provisions of this Agreement and the
other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
Seller conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Seller has delivered to Buyer true and complete
copies of its Organizational Documents, as currently in effect.
(iii) General Partner is the sole General Partner of
Seller.
(i) General Partner (A) is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
General Partner conducts no activities and neither owns nor uses properties in
any other jurisdiction which requires it, under the laws of such jurisdiction,
to qualify to do business as a foreign corporation in such jurisdiction.
(ii) General Partner has delivered to Buyer true and
complete copies of its Organizational Documents, as currently in effect.
(iii) A (as defined in the Indemnification Agreement)
is the sole shareholder of General Partner.
(i) Manager (A) is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and (B) has full power, authority and legal right to
execute and deliver and to perform and observe the provisions of this Agreement
and the other Transaction Documents to which it is or is to become a party, and
otherwise carry out the transactions contemplated hereunder and thereunder.
<PAGE>
Manager conducts no activities and neither owns nor uses properties in any other
jurisdiction which requires it, under the laws of such jurisdiction, to qualify
to do business as a foreign corporation in such jurisdiction.
(ii) Manager has delivered to Buyer true and complete
copies of its Organizational Documents, as currently in effect.
(iii) B (as defined in the Indemnification Agreement)
is the sole shareholder of Manager.
Authority; No Conflict; Consents.
This Agreement constitutes and, when
executed and delivered, the other Transaction Documents to which an Operator is
or is to become a party will constitute, legal, valid and binding obligations of
each of Seller and General Partner, respectively, enforceable against such
Person in accordance with their respective terms. Each of the Operators have the
absolute and unrestricted right, power, authority and legal capacity to execute
and deliver this Agreement and such other Transaction Documents to which such
Person is or is to become a party is and to perform their respective obligations
hereunder and thereunder.
Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the transactions
contemplated by this Agreement by Seller, General Partner, Manager or the
Bullocks will, directly or indirectly (with or without notice or lapse of
time):
contravene, conflict with or result
in a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any of
the Organizational Documents of such party or any Contract or any agreement to
which such party (whether or not Seller is a party thereto) or any Acquisition
Assets may be subject;
contravene, conflict with, or result
in a violation of any applicable Law to which such party or any Acquisition
Assets may be subject or give any Governmental Authority or other Person the
right to challenge any of the transactions contemplated by this
Agreement or to exercise any remedy or obtain any relief under any Law to which
such party or any of the Acquisition Assets may be subject;
contravene, conflict with, or result
in a violation of any of the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by Seller or that otherwise relates
to the Business, the Facility or any other the Acquisition Assets;
<PAGE>
cause Buyer to become subject to, or
to become liable for the payment of, any Tax for the Business's operations prior
to the Closing;
cause any of the Acquisition Assets
to be reassessed or revalued by any Governmental Authority (except to the extent
that any of the same would customarily be reassessed or revalued by such
Governmental Authority upon a sale of such asset); or
result in the imposition or creation
of any Encumbrance (except a Permitted Encumbrance) upon or with respect to any
Acquisition Assets.
Except for those Governmental Authorizations
and Consents under Designated Contracts indicated, respectively, in Section 6.17
and Section 6.11(c) of the Disclosure Letter, no notices to, or Consents from,
any Person are required in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Operators' obligations under this Agreement, including the transfer and
assignment of any Governmental Authorization or other Acquisition Asset
necessary or desirable for Buyer to conduct the Business.
Financial and Operating Statements.
Seller has delivered to Buyer: (a)
audited balance sheets and related statements of profits and losses for the
Facility and the Business as at and for each of the calendar years ended
December 31, 1994 and 1995, together with the audit reports thereon of Goodman &
Company, LLC, independent public accountants (the "Year End Financial
Statements"), (b) an unaudited balance sheet and the related statement of
profits and losses for the Facility and the Business as at and for the ten (10)
months ended October 31, 1996 (the "Interim Financial Statement"), including, in
each case, with the notes thereto. All such financial statements and notes
fairly present the financial condition and the results of operations for the
Facility and the Business as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP subject to
normal, immaterial changes resulting from year-end audit adjustments. The
financial statements referred to in this Section 6.3 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than Seller would be required by GAAP to be
included in the consolidated financial statements of Seller. Seller has also
delivered to Buyer a report of net operating income adjustments detailing all
adjustments to revenue and expenses at the Facility level that represent
obligations that will not be assumed by Buyer hereunder for the calendar years
ended December 31, 1994 and December 31, 1995 and for the ten (10) months ended
October 31, 1996. Such report is true, correct and complete and is based on
assumptions that were true, correct and reasonable when made but was not
prepared in accordance with GAAP. All such financial statements and reports have
been prepared from and in accordance with the books and records of Seller.
<PAGE>
Books and Records. The books of account and other records of
Seller (including any such books and records kept by the General Partner or the
Manager on behalf of Seller) pertaining to the Facility or other Acquisition
Assets, all of which have been made available to Buyer, are complete and correct
in all material respects, reflect in all material respects all transactions
affecting the Business, the Facility and the other Acquisition Assets and have
been kept and maintained in accordance with sound business practices.
No Undisclosed Liabilities or Material Adverse Change.
Except as set forth in Section 6.5(a) of the
Disclosure Letter, Seller has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Interim Financial Statement and current liabilities incurred in the
ordinary course of business of Seller since the respective dates thereof.
Since the date of the Interim Financial
Statements, there has not been any material adverse change in the business,
results of operations, assets, liabilities or the condition (financial or
otherwise), or prospects of the Business or the Facility, or any damage or
destruction of the Facility by fire or other casualty, whether or not covered by
Insurance, and the Operators and the Manager have, and until the Closing, will
have, operated the Facility only in the normal course. The Operator Affiliates
have identified and communicated to Buyer all material information with respect
to any fact or condition that might adversely affect the future prospects
(financial, licensure status or otherwise) of the Business or the Facility.
Taxes; FIRPTA.
Seller has filed all Tax Returns that are
required to have been filed in any jurisdiction, has paid all Taxes shown to be
due and payable on such Tax Returns and, before they have become delinquent, has
paid all other Taxes levied upon Seller or its properties, assets (including the
Acquisition Assets), income or franchises, to the extent such Taxes have become
due and payable, except for any Taxes (i) as set forth in Section 6.6 of the
Disclosure Letter or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which Seller has established adequate reserves in accordance with
GAAP in the Interim Financial Statements. The Operator Affiliates know of no
basis for any other Tax or assessment that could be assessed against Seller. The
charges, accruals and reserves on the Interim Financial Statements in respect of
Taxes for all fiscal periods are adequate. Seller's income tax returns have
never been audited.
<PAGE>
Buyer is not required to withhold taxes from the
payment of sale proceeds to Seller under the Code or any applicable state,
commonwealth or local tax Laws. Seller is not a foreign person for purposes of
Section 1445 of the Code.
Title, Condition and Sufficiency of the Facility..
Seller has delivered or made available to Buyer
copies of all title insurance policies, opinions, abstracts, and surveys in the
possession of Seller and relating to the Facility. Seller owns good indefeasible
and marketable fee simple title to the Facility, free and clear of all
Encumbrances other than the Permitted Encumbrances. All of the Improvements
located on the Land are situated solely within the boundaries of the Land and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
No exception to title to or other
Encumbrance and no interest in the Facility will interfere with the use of the
Facility for its Intended Use or cause the value of the Facility to be
materially less than the portion of the Purchase Price allocated thereto.
There are no leases or other agreements granting any
Person (other than Seller) the right to use or occupy any part of the Facility
other than the Resident and/or Patient Agreements set forth in Section 6.7(c) of
the Disclosure Letter, and no Person has any ownership interest (other than
Seller) or option or right of first refusal to acquire any ownership interest in
the Facility or any part thereof.
The Facility is structurally sound, is in good
operating condition and repair (normal wear and tear excepted) and is not in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The Improvements (including the
heating, ventilating and air conditioning, plumbing, electrical, mechanical and
drainage systems, and roof) are in good operating condition, repair and working
order, and have passed all previous safety and/or licensing inspections, the
last such inspection being on the date set forth in the Disclosure Letter, and
such systems are adequate for the use of the Facility for its Intended Use.
Except as set forth in Section 6.7(e) of the
Disclosure Letter, the Improvements (including all roads, parking areas, curbs,
sidewalks, sewers and other utilities) have been completed and installed in
accordance the Plans and Specifications which were approved by the appropriate
Governmental Authorities. Permanent certificates of occupancy and all other
Governmental Authorizations which were required to be issued for the
Improvements have been issued and are in full force and effect; and the
requisite annual fire safety and life safety inspections as were required to be
conducted for the Improvements, have been conducted.
The maintenance, operations and use of the
Improvements comply with (i) all Legal Requirements, (ii) any certificate of
occupancy or other Governmental Authorizations issued for the Facility and (iii)
<PAGE>
all restrictive covenants and other Permitted Encumbrances. No Operator
Affiliate has received or is aware of the issuance of any notice of
noncompliance or violation from any Governmental Authority regarding the
Facility or any part thereof or the use thereof.
Current local zoning ordinances, general plans and
other applicable land use regulations and all private covenants, conditions and
restrictions, if any, affecting the Property, permit the transfer of the
Facility and the use of the Facility for its Intended Use (and reconstruction
and resumption of such use in the event of damage, destruction or cessation of
use) as a matter of right for an unlimited time period and not merely as a legal
non-conforming use.
To the best knowledge of the Operators, (i) there is
no plan, study or effort by any Governmental Authority which in any way affects
or would affect the present use or zoning of the Facility or any part thereof;
(ii) there is no existing, proposed or contemplated plan to widen, modify or
realign any street or highway or existing, proposed or contemplated Condemnation
proceedings that would affect the Facility in any way whatsoever; and (iii) no
subdivision plan or plans (preliminary or otherwise) have been filed with
respect to the Land.
The Land is adjacent to and has direct access to each
abutting street. All streets adjoining or traversing the Land have been
dedicated to and accepted by the local municipal authorities and the means of
ingress and egress, parking, access to public streets and drainage facilities
are adequate for the use of the Facility for its Intended Use. There are no
easements traversing or contiguous to the Land which are not disclosed in
Section 6.7(i) of the Disclosure Letter or which interfere with the use and
operation of the Facility for its Intended Use.
All public utilities, including telephone, gas,
electric power, sanitary and storm sewer and water, required for the operation
of the Facility either enter the Facility through adjoining public streets, or
if they pass through adjoining private land, do so in accordance with valid
recorded easements held by Seller. Such utilities are adequate for use of the
Facility for its Intended Use.
The Facility is not located within an area of special
risk with respect to natural or man-made disasters or hazards, including any
Flood Hazard Area.
There are no adverse geological or soil conditions
affecting the Facility.
The Facility is a legal lot or parcel which for all
purposes may be mortgaged, conveyed and otherwise dealt with as separate parcels
and is not taxed together with any other property.
<PAGE>
There is no proceeding pending to which a Operator
Affiliate is a party relating to the assessed valuation of the Facility and no
assessment for public improvements have been made against the Facility that
remain unpaid. All public improvements ordered, commenced or completed prior to
the date of this Agreement or prior to the Closing Date shall be paid for in
full by the Seller prior to the Closing.
Except as set forth in Section 6.7(o) of the
Disclosure Letter: (i) Seller and the Facility are, and at all times prior to
the date hereof have been, in full compliance with, and have not been and are
not in violation of or liable under, any Environmental Law, (ii) there are no
underground storage tanks or Hazardous Materials currently located in or on the
Facility, and to the best of the Operators' knowledge (after due inquiry) no
such tanks have ever been located on the Facility and no such Hazardous
Materials have ever been present, used, stored, generated, treated or Released
from or on or disposed of or on or transported to or from the Facility; (iii) no
Environmental Claims have been made or, to the best of the Operators' knowledge
(after due inquiry), threatened by any Person against Seller or the Facility;
and (iv) to the best of the Operators' knowledge (after due inquiry), there are
no current, and have been no, businesses engaged in the storage, treatment or
disposal of Hazardous Materials on any property adjacent to the Land.
Section 6.7(p) of the Disclosure Letter lists all
reports received during the last five (5) years from any Governmental Authority
with respect to the Facility, true and complete copies of such reports to Buyer.
Title, Condition And Sufficiency of the Personal Property.
Except for the security interest(s) listed and
described in Section 6.8(a) of the Disclosure Letter, Seller has good and
marketable title to the Personal Property, including, but not limited to, the
motor vehicle set forth on Schedule 2.1 hereto, subject to no Encumbrance or
restraint on transfer whatsoever. No other person has any right to the use or
possession of any of the Personal Property and, except as set forth in Section
6.8(a) of the Disclosure Letter, no currently effective financing statement with
respect to the Personal Property has been filed in any jurisdiction, and Seller
has not signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement.
Except as set forth in Section 6.8(a) of the Disclosure Letter, none of the
Personal Property is subject to a conditional sale, lease, security interest or
similar arrangement. During last five (5) years, Seller has conducted its
business activities only under its partnership name of Retirement Home of
Virginia Beach Limited Partnership and/or trade name "King's Grant House."
All of the tangible Personal Property is in good
operating condition and repair, is not in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature or
cost and is functioning in the manner and for the purpose for which it was
<PAGE>
intended. All of the Personal Property is in material compliance with all Legal
Requirements, and is sufficient and suitable to enable the Buyer to operate the
Facility and the Business in a normal and efficient manner.
Inventory.
All food, beverages, pharmaceuticals and medical
supplies comprising Inventory on supply at the Facility are fit for the purposes
for which they are intended, meet all governmental standards therefor and are of
merchantable quality. All linens, clothing and similar items comprising the
Inventory located at the Facility are in good condition, reasonable wear and
tear excepted.
On the Closing Date, there will be in supply at the
Facility Inventory (to be included as part of the Acquisition Assets) which are
in a quantity and condition customary and sufficient to meet Buyer's needs in
operating the Business and the Facility in a manner similar to that in which the
Business and the Facility have been operated by Seller prior to the Closing
Date.
Section 6.9(c) of the Disclosure Letter contains a
list of all suppliers of Inventory to Seller. No Operator and, to the best of
such Operator's knowledge (after due inquiry), no other Operator Affiliate has
received any notice, or has any reason to believe, that any significant supplier
will cease selling Inventory to Seller or to Buyer at any time after the Closing
Date on terms and conditions not substantially similar to the terms and
conditions on which such Inventory are currently being sold to Seller.
Intellectual Property.
Section 6.10(a) of the Disclosure Letter sets forth a
complete and accurate list of all Intellectual Property owned by, or (even if
not included in the Acquisition Assets) licensed to, Seller or (even though not
an Acquisition Asset) General Partner or the Manager, and sets forth separately
which are owned by, and which are licensed to, Seller, General Partner and the
Manager. Such Intellectual Property is sufficient to conduct the Business being
conducted at the Facility.
No proceeding is pending (or, to the best of the
Operators' knowledge, after due inquiry, threatened) against any Operator that
alleges that any Operator or other Operator Affiliate is infringing upon any
intellectual property asset (including the name King's Grant House) of any
Person or that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any Operator Affiliate's (or
Buyer's, to the extent an Acquisition Asset, upon consummation of the
transactions contemplated by this Agreement) use of the Intellectual Property.
No event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such proceeding.
<PAGE>
No Person has been granted the right, or been
permitted, to use any Intellectual Property owned by, or licensed to, Seller. To
the best knowledge (after due inquiry) of each Operator, no Person is believed
to be infringing upon the Intellectual Property.
Contracts.
Section 6.11(a) of the Disclosure Letter contains a
complete and accurate list, including its term and summary of financial terms,
of each Contract, other than the Resident and/or Patient Agreements set forth in
Section 6.11(b) of the Disclosure Letter, to which Seller is subject or bound
that is in existence and which pertains to the Business of the Facility or to
which any of the Acquisition Assets are subject. Seller has delivered to Buyer
true and complete copies of each such Contract.
Section 6.11(b) of the Disclosure Letter sets forth a
listing, as of the date of this Agreement, of the names of all
Residents/Patients at the Facility, the date of admission of each such
Resident/Patient and the rental amounts payable and the term of each related
Resident and/or Patient Agreement and a material variation in such Resident
and/or Patient Agreement from the Seller's standard form thereof (in addition to
the rental amount and term indicated in Section 6.11(b) of the Disclosure
Letter).
Each Designated Contract is in full force and effect,
is valid and enforceable in accordance with its terms and is (except as noted in
Section 6.11(c) of the Disclosure Letter) fully assignable to Buyer without cost
or modification and without Consent and without notice of the assignment
(including, unless otherwise indicated in Section 6.11(b) of the Disclosure
Letter, the Agreements with Resident/Patients) or if a Consent or notice of
assignment is required stating such and the name of the Person from whom Consent
need be obtained or Person to whom such notice need be given. All amounts
payable under the Designated Contracts are and on the Closing Date will be on a
current basis.
Seller has not given to or received from any other
Person, at any time since January 1, 1996, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Designated Contract, which
individually or in the aggregate would constitute a material violation or breach
of or default under any such Designated Contract. Section 6.11(d) of the
Disclosure Letter sets forth the names of Residents/Patients from or to whom
Seller has received or given (whether or not written) any such notice or
communication (whether or not of a material nature) on a chronic or repeat
basis. The parties to the Designated Contracts (other than the Seller) are not,
to the best of the Operators' knowledge, in default of their respective
obligations under any of such Designated Contracts, and there has not occurred
any event which, with the passage of time or giving of notice (or both), would
constitute such a default or breach under any of such Designated Contracts.
<PAGE>
There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable by or to Seller under, any Designated Contracts.
Except as described in Section 6.11(f) of the
Disclosure Letter, each Designated Contract has been entered into in the
ordinary course of business on an arm's-length basis with an unaffiliated third
party and has been entered into without the commission of any act, alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any applicable Law.
Insurance. Section 6.12 of the Disclosure Letter contains a
complete and correct list of all forms of Insurance held or owned by Seller or
(even though not an Acquisition Asset) the General Partner or the Manager
pertaining in any way to the Facility or other Acquisition Assets, or to the
Operators or the Manager which, although not specifically covering the Facility
or other Acquisition Assets would cover activities conducted at or in connection
with the Facility or other Acquisition Assets or liability arising therefrom,
including a description of the name of the insurer and the insured, the amount
of coverage, the type of insurance included under each such policy and a brief
description of any claims made thereunder during the past five (5) years and in
the case of any bond or agreement, a description thereof and the name of the
surety or indemnifying party. All such Insurance is in full force and effect,
all premiums due on such policies have been paid, and no Operator nor, to the
best of its knowledge (after due inquiry), any other Operator Affiliate has been
advised by any Insurance carriers of an intention to terminate or modify any
such Insurance, nor has any Operator or, to the best of its knowledge (after due
inquiry), any other Operator Affiliate failed to comply with any of the material
conditions contained in any such Insurance.
Employees.
Section 6.13(a) of the Disclosure Letter contains a
complete and accurate list of the following information for each employee
(separately indicating any who are not Business Employees, as defined in Section
9.1), director, independent contractor, consultant and agent of Seller,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable regularly scheduled hours of employment;
and all payroll-related liabilities or obligations of Seller.
To the best knowledge (after due inquiry) of the
Operators, no current employee of Seller is a party to, or is otherwise bound
by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement that (i) was breached or
violated by employment with, or services performed for, Seller or (ii) will
adversely affect the ability of such employee to perform his or her duties with
Buyer.
Labor Matters.
<PAGE>
Except as disclosed in Section 6.14(a) of the
Disclosure Letter, Seller has not been, and is not now, a party to nor bound by
or subject to any collective bargaining agreement or other labor Contract.
During the last five (5) years, there has not been or, to the Operators'
knowledge, threatened strike, slowdown, picketing, lockout or work stoppage, or
any labor arbitration or proceeding in respect of the grievance of any employee,
application or complaint filed by an employee, employee group or union with the
National Labor Relation Board or any other Governmental Authority,
organizational activity, or other labor dispute against or affecting the
Business or the Facility. No application for certification of a collective
bargaining unit is pending or, to the Operators' knowledge, is threatened
against Seller or the Facility. To the best of the Operators' knowledge, after
due inquiry, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. Seller and the Manager have
complied in all respects with all applicable Legal Requirements (including, if
applicable, the Worker Adjustment and Retraining Notification Act) relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, social security and similar Taxes,
occupational safety and health, and plant closing (including, if applicable,
with respect to the transactions contemplated by this Agreement) of employees at
the Facility. Seller is not liable for the payment of any taxes, fines,
penalties, or other amounts (including sums related to EEOC or employment
discrimination charges, complaints or settlements), however designated, for
failure to comply with any of the foregoing Legal Requirements.
Section 6.14(b) of the Disclosure Letter
sets forth a complete and accurate list of all judicial or agency
determinations, settlements or conciliations of complaints, claims, charges or
citations against Seller or the Manager since January 1, 1991, arising under
the National Labor Relations Act, the Fair Labor Standards Act, the Immigration
Reform and Control Act, the Occupational Safety and Health Act, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the
Americans with Disability Act of 1990, 42 U.S.C. ss. 1981, and any other Law,
relating to employment discrimination, occupational safety and health, employee
benefits, or wages and hours of employees.
Benefit Plans.
Seller has not established, maintained, sponsored,
contributed to (including any Multiemployer Plan as defined in Section
4001(a)(3) of ERISA), been required to contribute to, or otherwise participated
in any employee benefit plan, program, agreement or arrangement under which any
present or past employee of Seller or any ERISA Affiliate of Seller may be
entitled to any benefits (including death, health, medical, deferred
compensation, bonus or other arrangements), whether written or oral, whether
formal or informal, whether or not insured, and whether legally binding or not,
other than Seller's sick and vacation pay policies, neither of which is subject
to ERISA and true and correct copies of which have heretofore been delivered by
Seller to Buyer.
<PAGE>
Except as set forth in Section 6.15(b) of the
Disclosure Letter, all payments required to have been made by Seller or Manager
under such sick pay and vacation pay policies have been made.
Compliance with Laws; Deficiencies. Except as set forth in
Section 6.16 of the Disclosure Letter:
No Operator nor, to the best of its
knowledge (after due inquiry), no other Operator Affiliate has received, at any
time since January 1, 1991, any notice or other communication (whether oral or
written) from any Governmental Authority or any other Person
regarding (A) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement pertaining to the Facility, the
use thereof or the Business conducted thereat, or (B) any actual, alleged,
possible, or potential obligation on the part of Seller to undertake, or to bear
all or any portion of the cost of, any Cleanup or other corrective, remedial,
mitigation, response or other action of any nature (including any investigation,
study, sampling, monitoring or testing) with respect to the Facility;
Except as described in Section 6.16(b) of the
Disclosure Letter, there is no pending nor, to the best knowledge of the
Operators (after due inquiry) is there any threatened or contemplated,
investigation or inquiry, proceeding, suit, claim (including any Environmental
Claim), action or litigation, or administrative, arbitration or other proceeding
or governmental investigation or inquiry against Seller or any of the
Acquisition Assets. The Operators have delivered to Buyer copies of all
pleadings, correspondence and other documents relating to each matter listed in
Section 6.16(b) of the Disclosure Letter. The matters listed in Section 16(b) of
the Disclosure Letter (either individually or in the aggregate) will not have a
Material Adverse Effect on the business, operations, assets (including the
Acquisition Assets) or prospects of Seller, the Facility or the Business. There
is no pending, nor, to the best knowledge of the Operators (after due inquiry)
threatened, proceeding against the Operators or any other Operator Affiliate
that challenges or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement.
There has occurred no event nor does any circumstance
exist that (with or without notice or lapse of time) may constitute or result in
a violation or a failure on the part of the Operators or, to the best of
knowledge of the Operators (after due inquiry), on the part of any other
Operator Affiliate to comply with, any Legal Requirement pertaining to the
Facility, the use thereof or the Business.
Except as set forth in Section 6.16(d) of the
Disclosure Letter, no Operator nor any of the assets (including the Acquisition
Assets) owned or used by Seller in connection with the Business or the Facility
nor, to the best of its knowledge (after due inquiry), any other Operator
Affiliate, is, or during the past five years was, subject to any judgment,
decree, injunction or order of any Governmental Authority.
<PAGE>
Section 6.16(e) of the Disclosure Letter sets forth a
true and complete list of all violations and deficiencies found or alleged by
any Governmental Authority with respect to the Facility or Seller within the
past three (3) years. All such violations and deficiencies have been fully
withdrawn by the applicable Governmental Authority or remedied. No violations or
deficiencies found or alleged by any Governmental Authority with respect to the
Facility or Seller (whether or not listed in said Section 6.16(e) of the
Disclosure Letter) will result in any adverse effect upon Buyer in its operation
of the Facility or conduct of the Business or upon any of the transactions
contemplated herein (including any adverse effect upon any application by Buyer
for any Governmental Authorization required for Buyer's operation of the
Facility) or otherwise have any Material Adverse Effect.
No Operator, nor to the best knowledge of the
Operators, any other Person associated with or acting for or on behalf of an
Operator, has directly or indirectly in connection with the conduct of the
Business (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, or (iii) to obtain special concessions or for special concessions
already obtained or (b) established or maintained any fund or asset that has not
been recorded in the books and records of Seller.
Governmental Authorizations. Seller has (in good standing) all
requisite Governmental Authorizations (including all requisite Governmental
Authorizations from the Virginia Department of Social Services) to operate the
Facility for the Intended Use with a minimum of 48 beds. Section 6.17 of the
Disclosure Letter sets forth a description of all Governmental Authorizations
(i) required in order to operate the Facility for its Intended Use and provide
the services and conduct the Business and (ii) owned or possessed by or for the
Facility or the Business, separately setting forth which are assignable, which
are not assignable and which are assignable only with Consent or notice of
assignment and in such case stating whether Consent or notice is required and
the name of the Person whose Consent or to whom notice of assignment is
required. Seller has delivered to Buyer copies of all of the Governmental
Authorizations that are now in effect, each of which Seller owns, possesses or
has the legal right to use, free and clear of all Encumbrances. Seller has
obtained and possesses (and, during all periods in which it has provided
services and conducted its Business, possessed), in good standing, all
Governmental Authorizations required in order to provide the services that are
being or in the past has been provided at the Facility, and otherwise conduct
its Business. Seller is not in default under or in violation of any Governmental
Authorization, and it has not received any notice of any default or any other
claim or proceeding relating to, any Governmental Authorization.
Affiliated Relationships. Except as disclosed in Section 6.18
of the Disclosure Letter, neither Seller, General Partner or the Manager, nor
any partner, shareholder, director or officer thereof , or any member of such
<PAGE>
Person's immediate family, has, or at any time within the last two (2) years has
had, a material ownership interest in any business that is or was a party to any
business relationships or arrangement of any kind relating to the operation of
the Facility or the Business.
Residents/Patients; Licensed Beds And Fees.
Seller has cared for the Residents/Patients located
at any time at the Facility in accordance with recognized standards pertaining
to assisted living facilities. Seller does not have any agreement with any of
its Residents/Patients which have been prepaid for more than one month.
Section 6.19(b) of the Disclosure Letter sets forth a
true and correct list of: (i) the maximum number of permitted licensed assisted
living care beds at the Facility; (ii) the number of beds or units presently
occupied at the Facility; (iii) the current standard rates and other fees and
amounts charged by Seller to Residents/Patients at the Facility; (iv) any
Residents/Patients having special rates or fee arrangements, together with a
list of such special rates or description of such special arrangements.
Brokers or Finders. No Operator Affiliate has dealt with any
broker or agent in connection with the sale of the Acquisition Assets and no
Operator has any knowledge of any Person who would be entitled to a brokerage or
finder's fee or agent's commission or other similar payment in connection with
the sale of the Acquisition Assets or the transactions contemplated hereby as a
result of Seller's dealings.
Disclosure.
No representation or warranty or other statement made
by any Operator or any other Operator Affiliate in this Agreement, in the
Disclosure Letter or in any document, certificate or instrument furnished or to
be furnished by any Operator Affiliate to Buyer and no financial or operating
statement furnished or to be furnished by any Operator Affiliate to Buyer is or
will be false or misleading as to any material fact, or omits or will omit to
state a material fact necessary to make the statements contained therein or, in
light of the circumstances in which they were made, not misleading. The Operator
Affiliates have provided to Buyer all material information related to the
Acquisition Assets and the Business.
The Operators have no knowledge of any fact (other
than general economic or industry conditions) that would have, or as far as the
Operators can reasonably foresee could have, a Material Adverse Effect.
Bankruptcy. No insolvency proceeding of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors (including any assignment for the benefit of creditors),
voluntary or involuntary, affecting Seller, General Partner or any other
Operator Affiliate (other than as a creditor) or the Acquisition Assets, is
pending or is being contemplated, or to the Operators' best knowledge (after due
<PAGE>
inquiry) is being threatened, against Seller, General Partner or any other
Operator Affiliate by any other Person, and neither Seller nor any other
Operator Affiliate has made any assignment for the benefit of creditors or taken
any action in contemplation of, or which would constitute the basis for, the
institution of any such insolvency proceedings.
Third Party Provider Liabilities.
Except as set forth in Section 6.23 of the Disclosure
Letter, no services provided by Seller at the Facility have ever been reimbursed
by Medicaid or Medicare or, since January 1, 1995, any other third party
provider (including any managed care organization). Since January 1, 1995,
Seller has not received any notice of recoupment from and has no liability for
reimbursements of any third party reimbursement source (inclusive of managed
care organizations) and Seller is not aware of any basis for the assertion of
any such recoupment claim against Seller. The Facility is not subject to, or
threatened with, any hold on admissions or other sanction and there are no
outstanding or threatened notices of deficiency resulting from any survey of the
Facility which have not been full responded to except with an acceptable plan of
correction with which the Facility is being operated in compliance.
Due Diligence Information. Seller has delivered or caused to
be delivered or furnished to Buyer for its review true and complete copies of
all of the information, documents, reports and records requested by Buyer in
connection with Buyer's due diligence review of the Facility and other
Acquisition Assets.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and, to the extent applicable, in good standing
under the laws of the State of Delaware; is, or will be on the Closing Date,
duly qualified and authorized to do business in the Commonwealth of Virginia;
and has full power, authority and legal right to execute and deliver and
(subject to obtaining requisite Governmental Authorizations) to acquire and
operate the Facility and the Business and to perform and observe the provisions
of this Agreement, and all other Transaction Documents to which it is or is to
become a party and otherwise to carry out the transactions contemplated
hereunder.
Authority. This Agreement constitutes and, when executed and
delivered, all the other Transaction Documents to which Buyer is or is to become
a party will constitute, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms. Buyer has
the absolute and unrestricted right, power and authority to execute and deliver
<PAGE>
this Agreement and such other Transaction Documents to which it is or is to
become a party and to perform its obligations hereunder and thereunder.
Certain Proceedings. There is no pending proceeding that has
been commenced, nor, to the knowledge of Buyer, threatened against Buyer that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated by this
Agreement.
Brokers or Finders. Buyer has not dealt with any broker or
agent in connection with the purchase of the Acquisition Assets or the
transactions contemplated hereby as a result of Buyer's dealings and Buyer knows
of no Person who would be entitled to a brokerage or finder's fees or agent's
commissions or other similar payment.
Due Diligence Review. Buyer acknowledges that Seller has
delivered or furnished to Buyer information, documents, reports and records
which Buyer requested in connection with its due diligence review of the
Facility and other Acquisition Assets and that Buyer has been afforded the
opportunity to inspect the Facility. The foregoing notwithstanding, such review
and/or inspection is not intended to diminish or impair the representations and
warranties made by Seller, General Partner or any other Operator Affiliate
hereunder or under any other Transaction Document.
ARTICLE
COVENANTS OF SELLER PRIOR TO CLOSING DATE
Access and Investigation. Between the date of this Agreement
and the Closing Date, Seller will (and the General Partner will cause Seller
to): (a) afford Buyer and its representatives and prospective Financing Sources
and their representatives (collectively, "Buyer's Advisors") full and free
access to Seller's personnel, properties, Contracts, books and records,
financial and operating data and other information and documents pertaining to
the Acquisition Assets and the Business, (b) furnish Buyer and Buyer's Advisors
with copies of all such Contracts, books and records, and other existing
documents and data as Buyer may reasonably request, (c) furnish Buyer and
Buyer's Advisors with such additional financial, operating and other relevant
data and information as Buyer may reasonably request, and (d) otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer's
investigation of the properties, assets and financial condition of Seller, the
Acquisition Assets and the Business. Seller shall cause its accountants to
cooperate with Buyer and to disclose the results of audits and financial
statement reviews relating to Seller and/or to the Facility and to produce the
work papers relating thereto. No such investigation by Buyer or its
representatives shall affect any of the Seller's representations and warranties
in this Agreement or Buyer's right to rely thereon. Buyer shall conduct its
investigation hereunder in such manner as will not cause any unreasonable
disruption to the business of the Facility.
<PAGE>
Maps, Plans, Surveys, Etc. Seller shall deliver, or cause to
be delivered, to the Buyer all existing plans, maps, surveys, descriptions, and
title reports respecting the Facility and the use and occupancy thereof in
Seller's possession that exist as of the date of this Agreement, which materials
shall be returned to Seller if this Agreement is terminated.
Operation of Seller's Business. Between the date of this
Agreement and the Closing Date, Seller will (and the General Partner will cause
Seller to):
conduct the Business of Seller only in the ordinary
course of business;
use their best efforts to preserve intact Seller's
current business organization, keep available the services of the current
officers, employees and agents of Seller, and maintain the relations and good
will with suppliers, customers, landlords, creditors, employees, agents, and
others having business relationships with Seller;
confer with Buyer concerning operational matters of a
material nature;
otherwise report periodically to Buyer concerning the
status of the Business, including its operations and financial condition,
including delivering to Buyer monthly operating statements for the Facility and
the Business within thirty (30) days after the end of each calendar month
between the date of this Agreement and the Closing;;
make no material changes in management personnel
without prior notice to Buyer;
maintain the Acquisition Assets in a state of repair
and condition consistent with the requirements of this Agreement and normal
conduct of the Business, not dispose of or Encumber or permit the disposition or
Encumbrance of the Acquisition Assets;
use their best efforts to keep in full force and
effect and not amend, or waive or permit to be amended or waived, Insurance
covering Seller, the Facility or the other Acquisition Assets or any other
material rights relating primarily or exclusively to the Business or the
Acquisition Assets;
maintain all books and records relating to the
Business in the usual, regular and ordinary manner;
(i) maintain Inventory at least at current levels and in any event at
levels that are customary and sufficient to operate the Facility for its
Intended Use;
<PAGE>
(j) not amend or permit to be amended any Contract related to the
Acquisition Assets or the Business except in the ordinary and usual practice of
the Business;
(k) timely pay or cause to be paid all Taxes and Encumbrances upon the
Acquisition Assets and the Business as they become due;
(l) not enter into or assume or permit to be entered into or assumed
any Contract related to the Acquisition Assets or the Business except in the
ordinary course of business or as contemplated herein;
(m) not do any act or omit any act which would cause a breach of any
Contract which would have a Material Adverse Effect;
(n) not make or permit to be made any material alterations to the
Facility without the written approval of Buyer, other than (i) renovations and
repairs to the Facility which have been disclosed to Buyer and which are to be
completed prior to the Closing Date and (ii) those required by or in order to
retain or maintain in good standing Governmental Authorizations;
(o) give all notices to Governmental Authorities required by Law for
the transfer of the Acquisition Assets;
(p) take all action as may be necessary to comply promptly with any and
all Legal Requirements affecting the Acquisition Assets and all orders of any
board of fire underwriters or other similar bodies, and promptly, and in no
event later than twenty-four (24) hours from the time of its receipt of any
notice of non-compliance, notify Buyer of any failure of Seller to comply with
the same; and
(q) not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their control, which would
cause any of Seller's and the General Partner's' representations and warranties
contained in this Agreement to be untrue.
Required Consents. As promptly as practicable after the date
of this Agreement, Seller will make all filings required to be made by it in
order to consummate the transactions contemplated by this Agreement. Between the
date of this Agreement and the Closing Date, Seller and the General Partner
will: (a) cooperate with Buyer with respect to all filings and provide all
information that Buyer elects to make or provide or is required to make or
provide in order to consummate the transactions contemplated by this Agreement
(including, with potential Financing Sources), and (b) cooperate with Buyer in
obtaining all Consents which Buyer considers necessary or appropriate in order
to consummate the transactions contemplated hereby.
<PAGE>
Notification; Supplements to Disclosure Letter. Prior to the
Closing, the Operators will promptly notify Buyer in writing of (i) all events,
circumstances, facts, conditions or occurrences arising subsequent to the date
of this Agreement which could result in any of Seller's or General Partner's
representations becoming untrue or incorrect in any respect and (ii) all other
material developments affecting the Acquisition Assets or the Business or the
prospects thereof. Should any such event, circumstance, fact, condition or
occurrence require any change in the Disclosure Letter (if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition), the Seller will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.
No Negotiation. Until such time, if any, as this Agreement is
terminated, no Operator Affiliate will, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the Business or the Acquisition Assets
or the partnership interests in Seller or merger of Seller or a similar
transaction involving Seller.
Best Efforts. Between the date of this Agreement and the
Closing Date, the Operators will use their best efforts to cause the conditions
in Section 4 to be satisfied.
ARTICLE
EMPLOYEES AND EMPLOYEE BENEFITS
Information on Business Employees. On and prior to the Closing
Date, Buyer will be given reasonable access to the personnel records (including
performance appraisals, disciplinary actions, grievances) of all Business
Employees.
Employment of Business Employees by Buyer.
Effective as of 11:00 pm on the date of the Closing,
Seller will terminate the employment of all Business Employees and Buyer shall
offer employment, effective on or after the Closing, which, notwithstanding the
provisions of paragraph (c) below, shall be on the same or better terms as their
current employment by Seller for at least thirty (30) days following the Closing
(subject to termination for cause in any event), to all Business Employees
(those accepting such offer being referred to as the "Rehired Employees");
No Operator Affiliate, directly or indirectly, shall
solicit the employment of any Business Employee.
<PAGE>
It is understood and agreed that accepted employment
with Buyer will be on an "at will" basis and may be terminated by Buyer or by an
employee at any time for any reason and with or without notice (subject to any
written agreements to the contrary made by Buyer directly with an employee and
applicable state and federal laws governing employment). Buyer intends to set
its own initial terms and conditions of employment for the Rehired Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by applicable Law. Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to reassign,
promote or demote any of the Rehired Employees after the Closing, or to change
favorably or adversely the title, powers, duties, responsibilities, functions,
locations, salaries, other compensation or terms or conditions of employment of
such employees. Notwithstanding the foregoing, Buyer agrees to allow each of the
Rehired Employees to carryover for a period of one hundred eighty (180) days
following the Closing his/her accrued and unpaid vacation and sick employer paid
leave as of the Closing. In the event that any such Rehired Employee uses any of
such vacation or sick leave during said 180-day period while it is an employee
of Buyer or otherwise becomes entitled to be paid for the same during said
period, Seller agrees to pay to Buyer promptly after demand setting forth
reasonable detail therefor the amount of accrued vacation or sick leave pay paid
to such Rehired Employees during said period.
Seller shall be responsible for the payment of all
wages and other remuneration due to employees of Seller with respect to their
services prior to 11:00 pm on the date of the Closing and, if and to the extent
applicable, the payment of any termination or severance payments due to, and
will comply with all Legal Requirements relating to, any employee who did not
accept Buyer's offer of employment.
Seller shall provide Buyer with completed I-9 forms
and attachments with respect to all Rehired Employees, except for such employees
as Seller shall warrant are exempt from such requirement.
Buyer shall not have any responsibility, liability or
obligation, whether to Business Employees, former employees, their beneficiaries
or to any other Person with respect to, and the Operators shall, jointly and
severally, indemnify and hold Buyer harmless with respect to, any unlawful
employment, labor or immigration practice arising from, or as a consequence of,
the Operators' or the Manager's conduct of the Business prior to the Closing, or
any employee benefits, practices, programs or arrangements (including the
establishment, operation or termination thereof) maintained prior to the Closing
by Seller.
Notwithstanding anything contained in this Section,
the provisions of this Section are not intended to, and shall not in any way be
construed to, confer upon any Person other than the parties hereto any rights or
remedies hereunder.
<PAGE>
ARTICLE
DAMAGE, DESTRUCTION OR CONDEMNATION
Damage and Destruction. Seller shall have the risk of loss or
damage to the Property and liability arising out of the Business or the
Acquisition Assets from any cause whatsoever prior to the Closing Date. In the
event of any loss or damage to the Property, the following procedure shall be
used, Buyer may: (a) elect to extend the Closing Date for a period up to one
hundred eighty (180) days and require Seller to repair or replace such damaged
or destroyed Property, and, in which event Seller shall be entitled to retain
the Insurance proceeds and shall promptly proceed, at Seller's expense, to
repair or replace such damaged or destroyed Property; the Purchase Price shall
not be affected or adjusted in any way provided such damage or destruction is
fully repaired or replaced; (b) elect to proceed with the transaction
contemplated herein, and have the Insurance proceeds concerning the loss
assigned at Closing to Buyer, and if all or part of the loss is not covered by
Insurance, reduce the Purchase Price payable at the Closing by an amount equal
to the uninsured loss in which event Seller shall not be obligated to repair or
replace such damaged or destroyed Property; or (c) if the aggregate loss or
damage to the Property (from one or more events) at or prior to the Closing
exceeds ten (10%) percent of the Purchase Price, or would take longer than
thirty (30) days to repair or replace, elect to terminate this Agreement, in
which event neither Seller nor Buyer shall have any further rights or
obligations to the other hereunder.
Condemnation. In the event that prior to the Closing all or
any portion of the Facility becomes the subject of a Condemnation by any Person
having the power of Condemnation, Seller shall immediately notify Buyer thereof
in writing and Buyer may (a) elect to proceed with the transactions contemplated
herein, in which event Buyer shall be entitled to reduce the Purchase Price by
an amount equal to any award or payment received or receivable by Seller as a
result of such Condemnation and Seller shall be entitled to retain such award;
or (b) elect to terminate this Agreement, in which event neither Seller nor
Buyer shall have any further rights or obligations hereunder with respect
thereto.
ARTICLE
INDEMNIFICATION
Indemnification Agreement. The Operators indemnification and
reimbursement obligations arising from or in connection with any breach of any
representation, warranty or covenant made by them or another Operator Affiliate
in this Agreement and the Buyer's indemnification and reimbursement obligations
arising from or in connection with any breach of any representation, warranty or
covenant made by the Buyer in this Agreement are set forth in the
Indemnification Agreement.
<PAGE>
Independent Investigation. The right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
ARTICLE
MISCELLANEOUS COVENANTS
Confidentiality. Between the date of this Agreement and the
Closing Date, the parties to this Agreement will maintain in confidence, and
will cause their respective directors, officers, partners, employees, agents and
advisors to maintain in confidence, and not use to the detriment of another
party any written, oral, or other information obtained in confidence from
another party in connection with this Agreement or the transactions contemplated
by this Agreement, unless (a) such information is in the "public domain" or
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any Consent required for the consummation of the transactions
contemplated by this Agreement, or (c) the furnishing or use of such information
is required by or necessary or appropriate in connection with legal proceedings
(the party being requested to provide such information in a legal proceeding
shall give prompt notice to the party which provided such information so that
such provider may seek an appropriate protective order). Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
Patients/Residents, suppliers and others having dealings with the Company will
be informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication.
If the transactions contemplated by this Agreement are not consummated,
each party will return or destroy (as determined in writing by the other party)
as much of such written information as the other party may reasonably request.
Whether or not the Closing takes place, the Operators waive any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information
(including forms, manuals, policies and other Intellectual Property).
Public Announcements. Any general public announcements or
similar media publicity with respect to this Agreement or the transactions
contemplated herein shall be at such time and in such manner as Buyer shall
determine; provided that nothing herein shall prevent either party, upon notice
<PAGE>
to the other, from making such written notices as such party's counsel may
consider advisable in order to satisfy the party's legal and contractual
obligations in such regard.
Non-Competition. (a) Seller shall not engage or participate in
any effort or act to induce any of the suppliers, associates, employees,
independent contractors, customers, vendors, Residents/Patients, or families of
Residents/Patients of the Facility to cease doing business, or their association
or employment, with the Facility.
(b) For a period of three (3) years after the Closing Date, no Operator
Affiliate shall, directly or indirectly, for or on behalf of itself or any other
person, firm, entity or other enterprises, have a proprietary interest in, be
employed by, be a director or manager of, act as a consultant for, be a partner
in, give advice to, loan money to or otherwise associate with, any person,
enterprise, partnership, association, corporation, joint venture or other entity
which directly or indirectly engages in the business of owning, operating or
managing any facility of any type, licensed or unlicensed, which is engaged in
or provides assisted living care, nursing home care, senior housing, adult day
care, retirement housing, Alzheimer care living facility or adult congregate
living care anywhere within a twenty (20) mile radius of the Facility, except
that (i) any Operator Affiliate may operate any of the above types of facilities
for low income residents (defined as a facility with a base rate of less than
$1,250 per month, to be adjusted annually for changes in the Consumer Price
Index from January 1, 1997 using as the Consumer Price Index for all Urban Wage
Earners and Clerical Workers, 1982 -84 = 100, All Items for Washington, D.C.,
Maryland and Virginia as published by the United States Bureau of Labor
Statistics); and (ii) AmeriCare may continue to operate its business as
currently operated directly relating to private duty nursing, home health care,
durable medical equipment and temporary staffing.
(c) The Operators acknowledge that the restrictions contained in this
Article 12 are reasonable and necessary to protect the legitimate business
interests of Buyer and that any violation thereof would result in irreparable
harm to Buyer for which the remedy at law would be inadequate. Accordingly, the
Operators agree that upon the violation by them of any of the restrictions
contained in this Article 12, Buyer shall be entitled to obtain from any court
of competent jurisdiction a preliminary and permanent injunction, as well as any
other relief provided at law or equity, under this Agreement or otherwise. In
the event any of the foregoing restrictions are adjudged unreasonable in any
proceeding, then the parties agree that the period of time or the scope of such
restrictions (or both) shall be adjusted in such a manner or for such a time (or
both) as is adjudged to be reasonable.
<PAGE>
ARTICLE
GENERAL PROVISIONS
Survival. All covenants, representations and warranties made
by Seller and Buyer hereunder or in any certificates or other instruments
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and Closing.
Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, and accountants. In
addition, the following expenses will be paid by the following respective
parties:
Seller will pay:
any and all state, municipal or
other documentary, transfer, stamp, sales, use or similar taxes payable in
connection with the delivery of any instrument or document provided in or
contemplated by this Agreement, or the transactions contemplated hereby,
together with interest and penalties, if any, thereon;
any and all broker's fees or similar
fees claimed by any Person acting by or on behalf of Seller in connection with
the transactions contemplated hereby.
Buyer will pay
all expenses of or related to the
issuance of the title insurance commitment and policy (including the costs of
any survey required by Buyer and the Title Insurer), chain of title reports, and
all closer escrow fees and charges;
the cost of any environmental
report, market and feasibility study and appraisal prepared for Buyer at Buyer's
request, and the expenses of or related to Buyer's Due Diligence Review;
the charges for or in connection
with the recording and/or filing of any instrument or document provided for
herein or contemplated by this Agreement or any agreement or document described
or referred to herein; and
any and all broker's fees or similar
fees claimed by any Person acting by or on behalf of Buyer in connection with
the transactions contemplated hereby.
<PAGE>
In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
Arbitration. The parties hereto shall submit to arbitration
any dispute, controversy or claim arising out of or relating to this Agreement
or any Transaction Document (including any claim for indemnification) that the
parties are unable to resolve; provided, however, that Buyer may (but is not
obligated to) resort to judicial proceedings to enforce the provisions of
Article 12 of this Agreement. Any such arbitration proceeding shall be conducted
in the City of Fairfax, Commonwealth of Virginia, before a panel of three (3)
arbitrators, in accordance with the then applicable rules of the American
Arbitration Association. One arbitrator shall be appointed by the Operator
Affiliates (jointly), one arbitrator shall be appointed by the Buyer and one
arbitrator shall be appointed by the other two arbitrators. In the event the two
arbitrators selected by the parties hereto are unable to agree on a third
arbitrator within ten (10) days following the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules then applicable. In making
any determination hereunder, the arbitrators shall apply Virginia law. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on the parties hereto and judgment upon the award entered by a
majority of the arbitrators may be entered in any court having jurisdiction. The
arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction. If Buyer brings a judicial proceeding to
enforce the provisions of Section 12 of this Agreement, the party prevailing in
any such action or proceeding and any appeal thereupon shall be paid all of its
reasonable costs and reasonable attorneys' fees.
Notices. Any notice, consent, approval, demand or other
communication required or permitted to be given under this Agreement or any
other Transaction Document (a "notice") shall be ------ in writing, shall be
delivered to the addressee at the address set forth below (or at such other
address as shall be designated hereunder by notice to the other parties)
personally, by FedEx (or other equivalent national overnight courier) for next
Business Day delivery or by registered or certified United States mail, return
receipt requested, in each case with the cost of delivery prepaid or for the
account of the sender and shall be deemed to have been given (a) when delivered,
if delivered in person, (b) on the next Business Day, if sent by FedEx (or other
equivalent national overnight courier) or (c) five (5) Business Days after
mailing, if mailed by registered or certified United States mail. The respective
addresses of the parties for notice are as follows:
<PAGE>
If to Buyer: Integrated Living Communities of
Virginia Beach, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
with a copy to: Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Phone: (212) 704-6000
Fax: (212) 704-6288
Attn: Andrea Paretts Ascher, Esq.
If to Operator
Affiliates: Bullock Corporation
125 Riverbend Drive, Suite A
Charlottesville, Virginia 22901
Phone: (804) 293-7037
Fax: (804) 293-8346
Attn: Mr. James L. Bullock
with a copy to: Michie, Hamlett, Lowry, Rasmussen & Tweel, P.C.
500 Court Square, Suite 300
Charlottesville, Virginia 22902-0298
Phone: (804) 980-9507
Fax: (804) 295-0681
Attn: Denise Yvette Lunsford, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
Further Assurances. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.
Financial Statement Audits. The Operators shall use
their best efforts to cause Seller's Auditors to deliver to Buyer at Buyer's
expense, within sixty (60) days following the Closing Date, such audited
financial statements of Seller necessary to comply with Rule 3-05 of Regulation
S-X promulgated by the Securities and Exchange Commission for filing by
Integrated Living Communities, Inc. with a Current Report on Form 8-K regarding
the transactions contemplated herein, and to cause Seller's Auditors to
<PAGE>
cooperate with Buyer's Auditors in preparing the required pro forma financial
statements for filing therewith. Notwithstanding the level of review of the
Facility's financial statements by Buyer pursuant to Section 8.1 above, Seller
shall cooperate with Buyer and its independent certified public accountants, if
Buyer deems it necessary or desirable, to audit the balance sheets, statements
of operations and statements of cash flow of Seller for up to three (3) calendar
years ended prior to Closing. Without limiting the foregoing, the Operators
shall make available all information requested by Buyer or its auditors, and the
Operators (and their chief executive and chief financial officers) shall execute
and deliver to the auditors all representation letters requested by Buyer's
auditors. Such audits shall be conducted at Buyer's expense.
Intentionally omitted.
Copies of Books and Records. The Operators shall, for a period
of five (5) years after the Closing Date, provide to Buyer copies, whether in
paper or computer format, as may be reasonably requested from time to time by
Buyer, of Seller's financial and tax books and records and Manager's financial
records insofar as they relate to the operation of the Facility and the Business
prior to the Closing.
Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. No delay in exercising any right
or remedy shall constitute a waiver thereof, and no waiver by Buyer or any
Operator of any covenant of this Agreement shall be construed as a waiver of any
preceding or succeeding breach of the same or any other covenant or condition of
this Agreement.
Entire Agreement and Modification. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter
(including the Letter of Intent) and constitutes (along with the Transaction
Documents, including the Unification Agreement, referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by each of the parties.
Assignments, Successors and Third Party Beneficiaries.
No party may assign any of its rights under this
Agreement without the prior consent of the other party which will not be
unreasonably withheld, except that Buyer may assign all or certain of its
rights, duties and obligations hereunder to one or more Affiliates of Buyer, or,
in connection with the financing or refinancing of Buyer's purchase of the
Acquisitions Assets, to a real estate investment trust or other Financing Source
or its Affiliate, without the prior written consent of Seller, provided that in
the instance of any such assignment Buyer shall not be released from any of, and
remain responsible for its obligations under, this Agreement.
<PAGE>
This Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties.
Except as otherwise expressly provided in this
Section, this Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns and nothing in this Agreement will be construed to give
any Person other than the parties to this Agreement or their respective
successors and assigns any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement.
Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
Section Headings. The headings of Articles and Sections in
this Agreement are provided for convenience only and will not affect the
construction or interpretation of this Agreement.
Governing Law. This Agreement will be governed by and
construed under the laws of the Commonwealth of Virginia without regard to
conflicts of laws principles.
Counterpartst. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
INTEGRATED LIVING COMMUNITIES
OF VIRGINIA BEACH, INC.
By: ______________________________________
John Poole, Chief Financial Officer
RETIREMENT HOME OF VIRGINIA
BEACH LIMITED PARTNERSHIP
By: BULLOCK CORPORATION,
General Partner
By: __________________________________
James L. Bullock, President
BULLOCK CORPORATION
By: ______________________________________
James L. Bullock, President
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1 1
DEFINITIONS ANDRULES OF CONSTRUCTION 1
1.1 Definitions 1
1.2 Construction of Certain Terms 10
1.3 Disclosure Letter 10
1.4 Parties' Intent 10
1.5 Knowledge 10
ARTICLE 2 10
TERMS OF THE SALE AND PURCHASE 10
2.1 Assets to Be Sold 10
2.2 Excluded Assets 11
2.3 Purchase Price 11
2.4 Prorations and Purchase Price Adjustments 11
2.5 Allocation of Purchase Price 12
2.6 Assumption of Liabilities 13
2.7 Consents to Assignments 13
ARTICLE 3 14
CLOSING 14
3.1 Closing 14
3.2 Items to Be Delivered by Seller at Closing 15
3.3 Items to Be Delivered by Buyer at Closing 17
3.4 Other Closing Documents 17
ARTICLE 4 17
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE 17
4.1 Performance 18
4.2 Representations and Warranties 18
4.3 Closing Documents 18
4.4 Title Insurance 18
4.5 Survey 18
4.6 Entitlements 18
4.7 No Material Adverse Change 19
4.8 Consents 19
4.9 Completion of Other Transactions 19
ARTICLE 5 19
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE 19
5.1 Performance 20
5.2 Representations and Warranties 20
<PAGE>
Page
----
5.3 Consents 20
5.4 Closing Documents 20
5.5 Completion of Other Transactions and Entering Into of
Other Agreements 20
ARTICLE 6 20
REPRESENTATIONS AND WARRANTIESOF OPERATORS 20
6.1 Organization and Good Standing 20
6.2 Authority; No Conflict; Consents 21
6.3 Financial and Operating Statements 22
6.4 Books and Records 23
6.5 No Undisclosed Liabilities or Material Adverse Change 23
6.6 Taxes; FIRPTA 24
6.7 Title, Condition and Sufficiency of the Facility. 24
6.8 Title, Condition And Sufficiency of the Personal Property 26
6.9 Inventory 27
6.10 Intellectual Property 27
6.11 Contracts 28
6.12 Insurance 29
6.13 Employees 29
6.14 Labor Matters 30
6.15 Benefit Plans 30
6.16 Compliance with Laws; Deficiencies 31
6.17 Governmental Authorizations 32
6.18 Affiliated Relationships 32
6.19 Residents/Patients; Licensed Beds And Fees 33
6.20 Brokers or Finders 33
6.21 Disclosure 33
6.22 Bankruptcy 33
6.23 Third Party Provider Liabilities 34
6.24 Due Diligence Information 34
ARTICLE 7 34
REPRESENTATIONS AND WARRANTIES OF BUYER 34
7.1 Organization and Good Standing 34
7.2 Authority 34
7.3 Certain Proceedings 34
7.4 Brokers or Finders 35
7.5 Due Diligence Review 35
ARTICLE 8 35
COVENANTS OF SELLER PRIOR TO CLOSING DATE 35
8.1 Access and Investigation 35
8.2 Maps, Plans, Surveys, Etc. 35
8.3 Operation of Seller's Business 35
8.4 Required Consents 37
<PAGE>
Page
----
8.5 Notification 37
8.6 No Negotiation 37
8.7 Best Efforts 38
ARTICLE 9 38
EMPLOYEES AND EMPLOYEE BENEFITS 38
9.1 Information on Business Employees 38
9.2 Employment of Business Employees by Buyer 38
ARTICLE 10 39
DAMAGE, DESTRUCTION OR CONDEMNATION 39
10.1 Damage and Destruction 39
10.2 Condemnation 40
ARTICLE 11 40
INDEMNIFICATION 40
11.1 Indemnification Agreement 40
11.2 Independent Investigation 40
ARTICLE 12 40
MISCELLANEOUS COVENANTS 40
12.1 Confidentiality 40
12.2 Public Announcements 41
12.3 Non-Competition 41
ARTICLE 13 42
GENERAL PROVISIONS 42
13.1 Survival 42
13.2 Expenses 42
13.3 Arbitration 43
13.4 Notices 44
13.5 Further Assurances 45
13.6 Financial Statement Audits 45
13.7 Intentionally omitted 45
13.8 Copies of Books and Records 45
13.9 Waiver 45
13.10 Entire Agreement and Modification 45
13.11 Assignments, Successors and Third Party
Beneficiaries 46
13.12 Severability 46
13.13 Section Headings 46
13.14 Governing Law 46
13.15 Counterparts 46
<PAGE>
Page
----
EXHIBITS
Exhibit A: Description of Land
Exhibit B: Form of Bill of Sale and Assignment
Exhibit C: Form of Deed
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Opinion of Seller's and General Partner's Counsel
SCHEDULES
Schedule 2.1: Motor Vehicle
Schedule 2.2: Excluded Assets
MANAGEMENT AGREEMENTS ACQUISITION AGREEMENT
-------------------------------------------
THIS MANAGEMENT AGREEMENTS ACQUISITION AGREEMENT (this "Agreement"),
dated as of January 24, 1997, by and between INTEGRATED LIVING COMMUNITIES OF
REDGATE, INC., a Delaware corporation ("Ghent Arms Buyer"), INTEGRATED LIVING
COMMUNITIES OF VIRGINIA BEACH, INC., a Delaware corporation ("King's Grant House
Buyer"), INTEGRATED LIVING COMMUNITIES OF GLOUCESTER, INC., a Delaware
corporation ("Gloucester House Buyer"), INTEGRATED LIVING COMMUNITIES OF
PORTSMOUTH, INC., a Delaware corporation ("Churchland House Buyer" and, together
with Ghent Arms Buyer, King's Grant House Buyer and Gloucester House Buyer,
collectively, the "Buyers" and individually, a "Buyer"), on the one hand, and
AMERICAN RETIREMENT HOMES, INC., a Virginia corporation (the "Seller"), on the
other hand.
RECITALS
--------
WHEREAS, Ghent Arms Buyer, Ghent Arms Limited Partnership, a
Virginia limited partnership ("Ghent Arms"), and Bullock Corporation, a Virginia
corporation ("Bullock Corporation"), are parties to that certain Asset Purchase
Agreement dated as of January 24, 1997 (the "Ghent Arms Asset Purchase
Agreement");
WHEREAS, King's Grant House Buyer, Retirement Home of Virginia
Beach Limited Partnership, a Virginia limited partnership ("King's Grant
House"), and Bullock Corporation are parties to that certain Asset Purchase
Agreement dated as of January 24, 1997 (the "King's Grant House Asset Purchase
Agreement");
WHEREAS, Gloucester House Buyer, Bullock Corporation as
successor to Retirement Home of Gloucester Limited Partnership, formerly a
Virginia limited partnership, and the Seller are parties to that certain Asset
Purchase Agreement dated as of January 24, 1997 (the "Gloucester House Asset
Purchase Agreement");
WHEREAS, Churchland House Buyer, Retirement Home of Portsmouth
Limited Partnership, a Virginia limited partnership ("Churchland House"), and
Bullock Corporation are parties to that certain Asset Purchase Agreement dated
as of January 24, 1997 (the "Churchland House Asset Purchase Agreement" and,
together with the Ghent Arms Asset Purchase Agreement, the King's Grant House
Asset Purchase Agreement and the Gloucester House Asset Purchase Agreement,
collectively, the "Asset Purchase Agreements" and individually, an "Asset
Purchase Agreement");
WHEREAS, in connection with the transactions contemplated by
the Asset Purchase Agreements, the Seller desires to convey to the Buyers, and
the Buyers desire to acquire from the Seller, on the terms and for the
consideration hereinafter provided, all of the Seller's right, title and
interest in and to each of: (i) the Management Agreement, dated December 30,
1987 (the "Ghent Arms Management Agreement"), between the Seller and Ghent Arms,
pursuant to which the Seller has provided operational, management, consulting
and advisory services (collectively, "Management Services") to Ghent Arms in
connection with the operation of the Facility (as defined in
<PAGE>
the Ghent Arms Asset Purchase Agreement); (ii) the Management Agreement, dated
April 1, 1987 (the "King's Grant House Management Agreement"), between the
Seller and King's Grant House, pursuant to which the Seller has provided
Management Services to King's Grant House in connection with the operation of
the Facility (as defined in the King's Grant House Asset Purchase Agreement);
(iii) the Management Agreement, dated October 1, 1994 (the "Gloucester House
Management Agreement"), between the Seller and Gloucester House, pursuant to
which the Seller has provided Management Services to Gloucester House in
connection with the operation of the Facility (as defined in the Gloucester
House Asset Purchase Agreement); and (iv) the Management Agreement, dated June
4, 1987 (the "Churchland House Management Agreement" and, together with the
Ghent Arms Management Agreement, the King's Grant House Management Agreement and
the Gloucester House Management Agreement, collectively, the "Management
Agreements" and, individually, a "Management Agreement"), between the Seller and
Gloucester House, pursuant to which the Seller has provided Management Services
to Churchland House in connection with the operation of the Facility (as defined
in the Churchland House Asset Purchase Agreement); and
WHEREAS, it is a condition precedent to the obligations of the
Buyers, on the one hand, and the Seller, on the other hand, under the respective
Asset Purchase Agreement and the Unification Agreement (as hereinafter defined),
that each other party, respectively, execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
I. Purchase and Sale of Interest.
------------------------------
A. The Seller hereby sells, assigns, transfers,
conveys and delivers to the Buyers, and the Buyers hereby purchases and accepts
from the Seller, for the aggregate purchase price of Five Million Seventy-Six
Thousand Five Hundred Dollars ($5,076,500) (the "Purchase Price"), all of the
Seller's right, title and interest in, to and under each Management Agreement,
free and clear of all liens, charges, claims or encumbrances of any kind
whatsoever.
A. The Purchase Price shall be payable on the
date hereof as follows:
(i) if the Closing Date (as defined in each Asset
Purchase Agreement) shall occur on or prior to January 31, 1997:
A. by delivery of a certified or official bank
check payable to the Seller in the amount of Four Million Seven
Hundred Fifty-Six Thousand Five Hundred Dollars ($4,756,500); and
<PAGE>
B. by release to the Seller of the Escrow Funds
under and as defined in the Cash Escrow Agreement, dated as of
November 25, 1996, among Bullock Corporation, the Seller,
Integrated Living Communities, Inc., a Delaware corporation
("ILC"), and First American Title Insurance Company of New York as
escrow agent, pursuant to the terms of the Unification Agreement,
dated of even date herewith (the "Unification Agreement"), among
ILC, the Buyers and the Operator Affiliates (as therein defined);
or
(ii) if the Closing Date shall occur after January
31, 1997 but on or prior to July 31, 1997:
A. by delivery of a certified or official bank
check payable to the Seller in the amount of Four Million Seven
Hundred Fifty-Six Thousand Five Hundred Dollars ($4,756,500); and
B. by application of the Escrow Funds, pursuant
to the terms of the Unification Agreement.
I. Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Buyers that, as of the Closing Date
(as defined in each Asset Purchase Agreement):
A. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia
with full corporate power and authority to own or lease its properties and to
conduct its business in the manner such business is conducted by it.
A. The Seller has full corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Seller of
this Agreement and of all other documents, instruments and agreements
contemplated hereby to be executed and delivered by the Seller do not and will
not conflict with or breach, or constitute a default under, the Seller's
Articles of Incorporation or By-laws. The execution, delivery and performance of
this Agreement and each such other document, instrument and agreement by the
Seller have been duly authorized and approved by the Seller's Board of Directors
and shareholder(s) and no further corporate action is required to authorize the
execution, delivery and performance by the Seller of this Agreement or such
other document, instrument or agreement. This Agreement and each such other
document, instrument and agreement have been duly executed and delivered by a
duly authorized officer of the Seller and constitute the legal, valid and
binding obligations of the Seller enforceable against the Seller in accordance
with their terms.
A. The execution, delivery and performance of this
Agreement and of all other documents, instruments and agreements contemplated
hereby or in connection herewith to be executed and delivered by the Seller and
the
<PAGE>
consummation of the transactions contemplated hereby and thereby do not and will
not conflict with or breach, or constitute a default under, the terms,
provisions or conditions of any contract, indenture, agreement, mortgage, or
other instrument, commitment or obligation to which the Seller is a party or by
which the Seller is bound, including, but not limited to, the Management
Agreements, or, of any statute, order, rule or regulation of any court or of any
government or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. No consent, license, approval, order or
authorization of, or registration, filing or declaration with any government
authority is required for the execution, delivery and performance by the Seller
of this Agreement and no consent of any third party is required to be obtained
by the Seller to assign to the Buyers all of the Seller's right, title and
interest in, to and under the Management Agreements.
A. Each Management Agreement constitutes the legal,
valid and binding obligations of the Seller enforceable against the Seller in
accordance with its terms.
A. No party to any Management Agreement has the right to
terminate such Management Agreement pursuant to the terms thereof. There exists
no default by either party to any Management Agreement in the observance or
performance of such party's obligations thereunder.
A. To the Seller's knowledge, no representation or
warranty or other statement made by any Operator (as defined in each Asset
Purchase Agreement) in any Asset Purchase Agreement, in the Disclosure Letter
(as defined in each Asset Purchase Agreement) or in any document, certificate or
instrument furnished or to be furnished by any Operator to any Buyer is or will
be false or misleading as to any material fact, or omits or will omit to state a
material fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading. To the Seller's
knowledge, the Operators have provided to the Buyers all material information
related to the Acquisition Assets and the Business (each as defined in each
Asset Purchase Agreement).
A. Except as set forth in Sections 4.7, 6.5(b) and
6.21(b) of the Disclosure Letter (as defined in each Asset Purchase Agreement),
there is no fact known to the Seller (other than general economic or industry
conditions) that would have, or as far as the Seller can reasonably foresee,
could have a Material Adverse Effect (as defined in each Asset Purchase
Agreement).
I. Representations and Warranties of the Buyers. Each
Buyer hereby represents and warrants to the Seller that, as of the Closing Date:
A. Each Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
corporate power and authority to own or lease its properties and to conduct its
business in the manner such business is conducted by it.
<PAGE>
A. Each Buyer has full corporate power and authority to
execute, deliver and perform this Agreement and the transactions contemplated
hereby. The execution, delivery and performance by each Buyer of this Agreement
and all other documents, instruments and agreements contemplated hereby do not
and will not conflict with or breach, or constitute a default under, such
Buyer's Certificate of Incorporation or By-Laws. The execution, delivery and
performance of this Agreement by each Buyer has been duly authorized and
approved by its Board of Directors. This Agreement constitutes the legal, valid
and binding obligations of each Buyer enforceable against such Buyer in
accordance with its terms.
A. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not conflict with or breach, or constitute a default under, the terms,
provisions or conditions of any contract, indenture, agreement, mortgage, or
other instrument, commitment or obligation to which such Buyer is a party or by
which such Buyer is bound, or, of any statute, order, rule or regulation of any
court or of any government or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign. No consent, license,
approval, order or authorization of, or registration, filing or declaration with
any government authority is required for the execution, delivery and performance
by any Buyer of this Agreement and no consent of any third party is required to
be obtained by such Buyer to acquire from the Seller all of the Seller's right,
title and interest in, to and under the Management Agreements.
I. Notices. Any notice, consent, approval, demand or
other communication required or permitted to be given under this Agreement (a
"notice") shall be in writing, shall be delivered to the addressee at the
address set forth below (or at such other address as shall be designated
hereunder by notice to the other parties) personally, by FedEx (or other
equivalent national overnight courier) or by registered or certified United
States mail, return receipt requested, in each case with the cost of delivery
prepaid or for the account of the sender and shall be deemed to have been given
(a) when delivered, if delivered in person, (b) on the next Business Day (as
defined in each of the Asset Purchase Agreements), if sent by FedEx or other
equivalent national overnight courier or (c) five Business Days after mailing,
if mailed by registered or certified United States mail return receipt
requested. The respective addresses of the parties for notice are as follows:
If to Ghent Arms Buyer:
Integrated Living Communities of Redgate, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
<PAGE>
If to King's Grant House Buyer:
Integrated Living Communities of Virginia Beach, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
If to Gloucester House Buyer:
Integrated Living Communities of Gloucester, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
If to Churchland House Buyer:
Integrated Living Communities of Portsmouth, Inc.
Bernwood Centre
24850 Old 41 Road, Suite 10
Bonita Springs, Florida 34135-7022
Phone: (941) 947-7200
Fax: (941) 495-0711
Attn: General Counsel
in each case with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Telephone: (212) 704-6000
Fax: (212) 704-6288
Attn: Andrea Paretts Ascher, Esq.
If to Seller:
American Retirement Homes, Inc.
125 Riverbend Drive, Suite A
Charlottesville, Virginia 22901
Telephone: (804) 293-7037
Fax: (804) 293-8346
Attn: Ms. Elizabeth J. Bullock, President
<PAGE>
with a copy to:
Michie, Hamlett, Lowry, Rasmussen and Tweel, P.C.
500 Court Square Building, Suite 300
Charlottesville, Virginia 22902-0298
Telephone: (804) 977-3390
Fax: (804) 295-0681
Attn: Denise Yvette Lunsford, Esq.
The failure to send a copy to any person designated to receive the same does not
affect the validity of a notice duly given to a party.
I. Successors and Assigns; Assignment. All covenants,
promises and agreements by or on behalf of the parties contained in this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, successors and assigns;
provided, however, that nothing in this Agreement, express or implied, shall
confer on the Seller the right to assign any of its rights or delegate any of
its obligations hereunder at any time, whether prior to or after the date
hereof.
I. Amendments, Supplements, Waivers. Except as otherwise
expressly provided herein, no amendment, supplement or waiver of any provision
of this Agreement shall be effective unless the same shall be in writing and
signed by each Buyer and the Seller (in the case of an amendment or supplement)
or, except as otherwise provided herein, by the waiving party (in the case of a
waiver).
I. Applicable Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the Commonwealth of
Virginia, without giving effect to choice or conflicts of law principles.
I. Arbitration. The parties hereto shall submit to
arbitration any dispute, controversy or claim arising out of or relating to this
Agreement or any agreement executed or delivered in connection herewith
(including any claim for indemnification) that the parties are unable to
resolve. Any such arbitration proceeding shall be conducted in the City of
Fairfax, Commonwealth of Virginia before a panel of three arbitrators, in
accordance with the then applicable rules of the American Arbitration
Association. One arbitrator shall be appointed by the Buyers, one arbitrator
shall be appointed by the Seller and one arbitrator shall be appointed by the
other two arbitrators. In the event the two arbitrators selected by the parties
hereto are unable to agree on a third arbitrator within 10 days following the
appointment of the second arbitrator, then the third arbitrator shall be
appointed by the American Arbitration Association in accordance with its rules
then applicable. In making any determination hereunder, the arbitrators shall
apply Virginia law. All determinations made by a majority of the arbitrators
shall be final, conclusive and binding on the parties hereto and judgment upon
the award entered by a majority of the arbitrators may be entered in any court
having jurisdiction. The
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arbitrators shall designate the respective amounts (which may be 100%) of the
expenses of the arbitration proceeding (including each party's legal and
accounting fees, if any, and the expenses of the arbitrators and the arbitration
proceeding). Any award rendered in any such arbitration proceeding shall be
final and binding upon the parties hereto, and judgment thereon may be entered
in any court of competent jurisdiction.
I. Section Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
I. Entire Agreement; Survival. This Agreement sets forth
the entire agreement of the parties hereto with regard to the subject matter
hereof and supersedes and replaces all prior agreements, understandings and
representations, oral or written, with regard to such matters. The covenants and
agreements contained in this Agreement shall survive the execution and delivery
of this Agreement.
I. Severability. If any term or provision of this
Agreement shall be held to be illegal, invalid or unenforceable under applicable
law, it shall not affect the continued legality, validity and enforceability of
each remaining term and provision hereof, each of which shall continue in full
force and effect.
I. Effectiveness of Agreement. This Agreement shall not
become effective and binding upon any of the parties hereto unless and until it
is duly executed by each of the parties set forth below.
I. Counterparts. This Agreement may be executed in one
or more counterparts and shall become effective when one or more counterparts
have been signed by each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
INTEGRATED LIVING COMMUNITIES
OF REDGATE, INC.
By:
John Poole, Chief Financial Officer
INTEGRATED LIVING COMMUNITIES
OF VIRGINIA BEACH, INC.
By:
John Poole, Chief Financial Officer
INTEGRATED LIVING COMMUNITIES
OF GLOUCESTER, INC.
By:
John Poole, Chief Financial Officer
INTEGRATED LIVING COMMUNITIES
OF PORTSMOUTH, INC.
By:
John Poole, Chief Financial Officer
AMERICAN RETIREMENT HOMES, INC.
By:
Elizabeth J. Bullock, President
<PAGE>
ACCEPTED and AGREED TO as of
the date first above written by:
GHENT ARMS LIMITED PARTNERSHIP
By: BULLOCK CORPORATION,
General Partner
By: ____________________________________
James L. Bullock, President
ACCEPTED and AGREED TO as of
the date first above written by:
RETIREMENT HOME OF VIRGINIA BEACH LIMITED PARTNERSHIP
By: BULLOCK CORPORATION,
General Partner
By: ____________________________________
James L. Bullock, President
ACCEPTED and AGREED TO as of
the date first above written by:
RETIREMENT HOME OF PORTSMOUTH LIMITED PARTNERSHIP
By: BULLOCK CORPORATION,
General Partner
By: ____________________________________
James L. Bullock, President
