<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
----------------------------------
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 31, 1997
-----------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-11656 22-1807533
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(State or other jurisdiction) (Commission File Number) (I.R.S. EIN)
Two Nationwide Plaza, Suite 760, Columbus, Ohio 43215
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 221-6000
--------------
NO CHANGE
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(Former name or former address, if changed since last report)
<PAGE> 2
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 8-K CURRENT REPORT
DECEMBER 31, 1997
Item 2. Acquisition or Disposition of Assets
- ------- ------------------------------------
On December 31, 1997, The Wendt-Bristol Health Services Corporation
closed two simultaneous and inter-dependent transactions to sell two of
its nursing homes in Columbus, Ohio.
In one transaction, 72 Ventures, Ltd., an Ohio limited liability
company ("Buyer") entered into an asset purchase agreement with
American Care Center, Inc., (ACC) an Ohio corporation (subsidiary of
Registrant) to purchase a 147-bed long term health care facility known
as Bristol House Columbus (BHC). Terms of the sale provided for a
purchase price of $6,080,000, payable with cash of $600,000 at closing,
assumption of a mortgage (approximately $2,934,000) real estate taxes
(approximately $47,000) and the issuance of cognovit promissory notes
by the Buyer for the balance. Such notes (approximately $2,499,000) are
personally guaranteed by the principals of the Buyer, secured by the
assets sold and are payable to ACC, with interest at 8% per annum,
within 180 days (approximately $1,499,000) and in 24 months
(approximately $1,000,000).
In the other transaction, 54 Realty, Ltd., an Ohio limited liability
company ("Buyer") entered into an asset purchase agreement with Health
America, Inc., (HA) an Ohio corporation (majority-owned subsidiary of
Registrant) to purchase a 75-bed long term health care facility known
as The Wendt-Bristol Alzheimer's Center. Terms of the sale provided for
a purchase price of $3,800,000, payable with cash of $150,000 at
closing, assumption of a mortgage (approximately $3,179,000) real
estate taxes (approximately $46,000) and the issuance of a cognovit
promissory note by the Buyer for the balance. Such note (approximately
$425,000) is personally guaranteed by the principals of the Buyer,
secured by the assets sold and is payable to HA, with interest at 8%
per annum, within 180 days.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro-Forma Financial Information
The following unaudited Pro-Forma Financial Statements are filed with
this report:
<TABLE>
<S> <C>
Pro-Forma Consolidated Balance Sheet as at September 30, 1997................Page F-1, 2
Pro-Forma Consolidated Statements of Operations:
Year Ended December 31, 1996 .......................................Page F-3
Nine Months Ended September 30, 1997 ...............................Page F-4
</TABLE>
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<PAGE> 3
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 8-K CURRENT REPORT
DECEMBER 31, 1997
The Unaudited Pro Forma Consolidated Balance Sheet of Registrant as at
September 30, 1997 reflects the financial position of Registrant and
its subsidiaries after giving effect to the disposition of the assets
including the assumption of the liabilities discussed in Item 2 and
assumes the disposition took place on September 30, 1997. The Pro Forma
Consolidated Statements of Operations for the fiscal year ended
December 31, 1996 and the nine months ended September 30, 1997 assume
that the disposition occurred on January 1, 1996 and are based on the
operations of Registrant and its subsidiaries for the year ended
December 31, 1996 and the nine months ended September 30, 1997. A
combined gain of approximately $1,500,000 has not been reflected in
these Pro Forma Statements of Operations.
The unaudited pro forma consolidated financial statements have been
prepared by Registrant based upon assumptions deemed appropriate by its
Management. The unaudited pro forma consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future
results of operations of Registrant, or of the financial position or
results of operations of Registrant that would have actually occurred
had the transaction been in effect as of the date or for the periods
presented. In addition, it should be noted that Registrant's financial
statements will reflect the disposition based upon the actual closing
date.
The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements and
related notes of Registrant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
The Wendt-Bristol Health Services Corporation
Dated January 14, 1998 By:/s/ SHELDON A. GOLD
------------------------------
Sheldon A. Gold, its President
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<PAGE> 4
PRO FORMA FINANCIAL INFORMATION
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1997
ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
---------------------------------
Historical BHC & HA (a) Other (b) Pro Forma
------------- -------------- -------------- --------------
Current assets:
<S> <C> <C> <C> <C>
Cash $ 316,380 $ $ 545,000 (c) $ 861,380
------------- -------------- -------------- --------------
Restricted cash 524,829 524,829
------------- -------------- -------------- --------------
Receivables:
Trade, net of allowance for doubtful
accounts of $173,000 3,062,346 3,062,346
Notes receivable 308,847 1,924,000 2,232,847
Miscellaneous 972,180 (48,000) 924,180
------------- -------------- -------------- --------------
4,343,373 1,876,000 6,219,373
------------- -------------- -------------- --------------
Inventories 342,580 342,580
Prepaid expenses and other 214,942 (87,000) 127,942
------------- -------------- -------------- --------------
Total current assets 5,742,104 2,334,000 8,076,104
------------- -------------- -------------- --------------
Property, plant and equipment, at cost 21,499,814 8,717,000 12,782,814
Less: Accumulated depreciation and
amortization (6,560,352) (1,786,000) (4,774,352)
------------- -------------- -------------- --------------
14,939,462 6,931,000 0 8,008,462
------------- -------------- -------------- --------------
Investments and other assets:
Notes and other receivables, net of current portion 332,116 1,000,000 1,332,116
Notes receivable from officers, employees and
related parties, net of amounts payable 942,631 942,631
Life insurance premiums receivable 949,546 949,546
Investment in unconsolidated affiliates 667,187 667,187
Excess of cost over assets of businesses
and subsidiaries acquired, less amortization 575,368 (190,000) 385,368
Deferred charges 1,007,115 (392,000) 615,115
Other assets 381,939 (2,000) 379,939
------------- -------------- -------------- --------------
Total investments and other assets 4,855,902 0 416,000 5,271,902
------------- -------------- -------------- --------------
25,537,468 6,931,000 2,750,000 21,356,468
============= ============== ============== ==============
(Continued)
</TABLE>
(a) To eliminate assets and liabilities disposed per the sale agreements.
(b) To reflect sale proceeds net of mortgages assumed by buyer, writeoff of
certain prepaid expenses and deferred charges, accrual of sale expenses
and unrealized gain on sale.
(c) Cash received at closing is reduced by $205,000 used to payoff equipment
loans.
F-1
<PAGE> 5
PRO FORMA FINANCIAL INFORMATION
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (Continued)
AS AT SEPTEMBER 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
------------------------------------
Historical BHC & HA (a) Other (b) Pro Forma
--------------------- --------------- ---------------- ------------------
Current liabilities:
<S> <C> <C> <C> <C>
Accounts payable $ 2,952,576 $ $ $ 2,952,576
Accrued expenses and other liabilities:
Salaries and wages 455,440 455,440
Workers' compensation 80,782 80,782
Taxes, other than federal income taxes 326,393 (93,000) 233,393
Interest 160,692 45,000 115,692
Other 246,974 730,000 976,974
Long-term obligations classified as current 844,471 32,000 (55,000)(c) 757,471
--------------------- ---------------- ---------------- ----------------
Total current liabilities 5,067,328 77,000 582,000 5,572,328
--------------------- ---------------- ---------------- ----------------
Long-term obligations, less amounts classified
as current 15,398,135 6,036,000 (150,000)(c) 9,212,135
--------------------- ---------------- ---------------- ----------------
Total liabilities 20,465,463 6,113,000 432,000 14,784,463
--------------------- ---------------- ---------------- ----------------
Unrealized gain on sale 1,500,000 1,500,000
------------------- ---------------- ---------------- ----------------
Minority interests 165,951 165,951
--------------------- ---------------- ---------------- ----------------
Stockholders' equity:
Common stock: $.01 par;
authorized: 12,000,000 shares
issued: 8,248,480 shares 82,485 82,485
Capital in excess of par 10,244,805 10,244,805
Retained earnings (deficit) (2,899,491) (2,899,491)
--------------------- ---------------- ---------------- ----------------
7,427,799 -- -- 7,427,799
Treasury stock, at cost, 2,051,154 shares (2,521,745) (2,521,745)
--------------------- ---------------- ---------------- ----------------
Total stockholders' equity 4,906,054 -- -- 4,906,054
--------------------- ---------------- ---------------- ----------------
$ 25,537,468 $ 6,113,000 $ 1,932,000 $ 21,356,468
===================== ================ ================ ================
</TABLE>
(a) To eliminate assets and liabilities disposed per the sale agreements.
(b) To reflect sale proceeds net of mortgages assumed by buyer, writeoff of
certain prepaid expenses and deferred charges, accrual of sale expenses
and unrealized gain on sale.
(c) Cash received at closing is reduced by $205,000 used to payoff equipment
loans.
F-2
<PAGE> 6
PRO FORMA FINANCIAL INFORMATION
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
--------------------------------------
Historical BHC & HA (a) Other Pro Forma
---------------------- ------------------- ---------------- ------------------
Revenues:
<S> <C> <C> <C> <C>
Net sales $ 2,816,386 $ $ $ 2,816,386
Service income 18,524,816 9,254,000 9,270,816
---------------------- ------------------- ---------------- ------------------
21,341,202 9,254,000 -- 12,087,202
---------------------- ------------------- ---------------- ------------------
Costs and expenses:
Cost of sales 2,071,596 2,071,596
Selling, general and administrative
expenses, net 17,518,394 8,479,000 9,039,394
---------------------- ------------------- ---------------- ------------------
19,589,990 8,479,000 -- 11,110,990
---------------------- ------------------- ---------------- ------------------
Operating income before depreciation 1,751,212 775,000 -- 976,212
Depreciation 964,715 325,000 639,715
---------------------- ------------------- ---------------- ------------------
Operating income 786,497 450,000 -- 336,497
---------------------- ------------------- ---------------- ------------------
Other income (expense):
Minority interests in (earnings) losses, net (76,860) (3,000)(b) (79,860)
Interest expense (1,104,278) (615,000) (489,278)
Other, net 109,254 6,000 103,254
---------------------- ------------------- ---------------- ------------------
(1,071,884) (609,000) (3,000) (465,884)
---------------------- ------------------- ---------------- ------------------
Income (loss) before income taxes (285,387) (159,000) (3,000) (129,387)
Income tax benefit (expense) 39,109 (5,000) 44,109
---------------------- ------------------- ---------------- ------------------
Net income (loss) $ (246,278) $ (164,000) $ (3,000) $ (85,278)
====================== =================== ================ ==================
Income (loss) per common share $ (0.04) $ (0.01)
====================== ==================
Weighted average shares outstanding 5,825,686 5,825,686
====================== ==================
</TABLE>
(a) To eliminate the operations of BHC & HA for the year.
(b) Minority interest in HA.
F-3
<PAGE> 7
PRO FORMA FINANCIAL INFORMATION
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
--------------------------------------
Historical BHC & A (a) Other Pro Forma
---------------------- ------------------- ---------------- ---------------------
Revenues:
<S> <C> <C> <C> <C>
Net sales $ 1,924,713 $ $ 1,924,713
Service income 13,722,299 $ 6,873,000 6,849,299
---------------------- ------------------- ----------------- ---------------------
15,647,012 6,873,000 -- 8,774,012
---------------------- ------------------- ----------------- --------------------
Costs and expenses:
Cost of sales 1,479,636 1,479,636
Selling, general and administrative
expenses, net 12,569,941 6,121,000 6,448,941
---------------------- ------------------- ----------------- ---------------------
14,049,577 6,121,000 -- 7,928,577
---------------------- ------------------- ----------------- ---------------------
Operating income before depreciation 1,597,435 752,000 -- 845,435
Depreciation 789,809 245,000 544,809
---------------------- ------------------- ----------------- ---------------------
Operating income 807,626 507,000 -- 300,626
Equity in earnings of unconsolidated
affiliates, net of minority interests in
consolidated affiliates 179,122 40,000 (b) 219,122
---------------------- ------------------- ----------------- ---------------------
986,748 507,000 40,000 519,748
Other income (expense):
Interest expense (926,480) (459,000) (467,480)
Other, net 176,737 3,000 173,737
---------------------- ------------------- ----------------- --------------------
(749,743) (456,000) -- (293,743)
---------------------- ------------------- ----------------- ---------------------
Income before income taxes 237,005 51,000 40,000 226,005
Income tax expense (17,400) (5,000) (12,400)
---------------------- ------------------- ----------------- ---------------------
Net income $ 219,605 $ 46,000 $ 40,000 $ 213,605
====================== =================== ================= =====================
Income per common share $ 0.04 $ 0.03
====================== =====================
Weighted average shares outstanding 6,237,303 6,237,303
====================== =====================
</TABLE>
(a) To eliminate the operations of BHC & HA for the nine months.
(b) Minority interest in HA.
F-4
<PAGE> 8
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
FORM 8-K CURRENT REPORT
DECEMBER 31, 1997
EXHIBIT INDEX
-------------
EXHIBIT
1 Asset Purchase Agreement effective as of and closed on
December 31, 1997 for Bristol House by and between American
Care Center, Inc. and 72 Ventures, Ltd.
2 Asset Purchase Agreement effective as of and closed on
December 31, 1997 for the Wendt-Bristol Alzheimer's Center by
and between Health America, Inc. and 54 Realty, Ltd.
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<PAGE> 1
BRISTOL HOUSE
-------------
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of December __,
1997, is by and among 72 VENTURES, LTD., an Ohio limited liability company
(hereinafter referred to as the "Buyer"), and AMERICAN CARE CENTER, INC., an
Ohio corporation (hereinafter referred to as the "Seller"). Certain terms used
herein have the meanings specified in Section 15 of this Agreement.
WITNESSETH:
-----------
WHEREAS, Seller is the operator of the long term health care facility
known as the Bristol House located at 1169 Bryden Road, Columbus, Ohio, which
has one hundred forty- seven (147) licensed long-term care beds, some of which
are certified for both Medicare and all of which are certified for Medicaid
participation (the "Facility");
WHEREAS, Seller owns all the real property and improvements in and on
which the business of the Facility is conducted and Seller owns or leases all
the personal property used in connection with the Facility;
WHEREAS, Seller desires to sell, transfer and convey to Buyer, and
Buyer desires to purchase from Seller, the Facility together with all assets
(real and personal) utilized in connection with the operation of the Facility;
and
WHEREAS, simultaneously with the execution of this Agreement and as
additional consideration for entering into this Agreement, an affiliate of
Buyer, 54 Realty, Ltd., an Ohio limited liability company (the "Companion
Buyer"), and an affiliate of Seller, Health America, Inc., an Ohio corporation
(the "Companion Seller"), have entered into a certain Wendt-Bristol Alzheimer's
Center Asset Purchase Agreement of even date herewith (the "Companion
Agreement") for the purchase and sale of a facility known as Wendt-Bristol
Alzheimer's Center located at 2841 E. Dublin-Granville Road, Columbus, Ohio (the
"Companion Facility").
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. SALE AND PURCHASE OF ASSETS, ASSUMPTION OF LIABILITIES.
-------------------------------------------------------
1.1 ASSETS TO BE SOLD.
(a) On the terms and subject to the conditions set forth in
this Agreement, Seller hereby agrees to sell, assign, transfer and
convey to Buyer at the Closing (as hereinafter defined) free and clear
of all Liens (as hereinafter defined) except those assumed by Buyer,
and Buyer agree to purchase, the Facility and, except for the Excluded
Assets set forth in
<PAGE> 2
Section 1.1(b), all of the real property, fixtures, personal property
and other assets owned by Seller and used or held in connection with
the Facility (collectively, the "Assets"), including, but not limited
to all of Seller's rights, title and interest, if any, in and to:
(i) all real property identified in Schedule
1.1(a)(i), together with all buildings, improvements, fixtures
(including, without limitation, all heating, plumbing, air
conditioning, ventilation and electrical equipment), rights of
way, easements and appurtenances thereto (collectively, the
"Real Property");
(ii) all furnishings, furniture, machinery,
equipment, supplies, inventory, linens, medicine, foodstuffs,
consumable and other personal property of any type or
description, including, without limitation, all beds, chairs,
sofas, wheelchairs, tables, kitchen and laundry equipment
(collectively, the "Tangible Property"), including, without
limitation, the Tangible Property identified in Schedule
1.1(a)(ii);
(iii) all licenses, permits, certificates, consents,
approvals, waivers and other authorizations (including,
without limitation, any authorizations to participate in any
state or federal reimbursement program such as Medicaid or
Medicare), whether issued or granted by any Governmental
Authority or by any other Person, to the extent the same are
transferable, and all operating, license and certification
rights with respect to the One Hundred Forty-Seven (147)
licensed beds which are included in Seller's Certificate of
Need for the Facility (collectively, the "Licenses"),
including, without limitation, the Licenses identified in
Schedule 1.1(a)(iii);
(iv) all books of account, records, files, invoices,
customer lists, supplier lists, consultants' reports, budgets
and projections and other similar data located at the Facility
and all medical records of patients and residents of the
Facility;
(v) all telephone numbers, telephone listings, yellow
page ads, sales literature, promotional literature and other
selling materials relating to the Facility;
(vi) all rights under any assumed contracts
(collectively, the "Assumed Contracts"), including, without
limitation, the Assumed Contracts identified in Schedule
1.1(a)(vi) and specifically including the assumption of the
indebtedness in the original principal amount of Two Million
Nine Hundred Ninety-Eight Thousand Eight Hundred Dollars
($2,998,800.00) in favor of JP Mortgage Co., which
indebtedness is secured by a certain Mortgage Deed and
Regulatory Agreement, all dated May 1, 1992 (the "HUD
Mortgage"); and
(vii) all other assets of Seller of the foregoing
nature purchased or acquired by Seller between the date hereof
and the Closing Date (as hereinafter defined).
2
<PAGE> 3
(b) Notwithstanding the provisions of Section 1.1(a), Seller
shall not sell, assign, transfer or convey to Buyer the following items
(collectively, the "Excluded Assets"):
(i) any cash or cash equivalents including without
limitation the HUD Replacement Reserve Account and any other
mortgage escrow balances;
(ii) any accounts receivable or other amounts due or
owing to Seller from any party with respect to, or arising out
of the operation of, the Facility prior to the Closing Date
(collectively, the "Existing Accounts Receivable");
(iii) any minute books or stock records of Seller;
and
(iv) any rights of Seller under any contract or lease
to which Seller is a party (collectively, the "Excluded
Contracts"), including but not limited to, those listed on
Schedule 1.1(b)(iv), other than the Assumed Contracts.
1.2 ASSUMPTION OF LIABILITIES. Except for the liabilities and
obligations of Seller under the Assumed Contracts, but only to the extent (i)
accruing and relating solely to the period from and after the Effective Time (as
hereinafter defined) and (ii) the corresponding, benefits relating thereto are
validly assigned to and received by Buyer (collectively, the "ASSUMED
LIABILITIES"), Buyer shall not assume, and Seller shall remain responsible for
any and all liabilities and obligations of Seller or any of its Affiliates
(collectively, the "RETAINED LIABILITIES"). Without limiting the generality of
the foregoing, Buyer shall not assume any liabilities or obligations of Seller
to the Ohio Department of Human Services ("ODHS") for Medicaid or Medicare
settlements and/or any other amounts due to ODHS or Medicare by Seller. Buyer
shall have the right to cause any tenant or operator that is engaged by Buyer to
assume any of Buyer's obligations under this Section 1.2; provided however,
Buyer shall not be released from any obligations to Seller incurred herein.
2. PURCHASE PRICE.
---------------
2.1 TOTAL PRICE. In consideration for the sale, transfer, assignment
and conveyance of the Facility and the Assets to Buyer, Buyer hereby agrees to
pay Seller the purchase price of Six Million Eighty Thousand Dollars and No
Cents ($6,080,000.00) (the "Purchase Price"), together with an amount mutually
agreeable by Buyer and Seller as a credit for cost of inventory on hand at time
of Closing, subject to adjustment as hereinafter provided, as follows:
(a) in immediately available funds to Seller the sum of Six Hundred
Thousand Dollars ($600,000.00) (the "Cash Amount");
(b) the assumption of the unpaid principal balance of the HUD Mortgage,
together with any accrued interest thereon, which is Two Million Nine
Hundred Thirty-Three Thousand Nine Hundred and Ninety-Eight Dollars
($2,933,998.00) as of the Effective Date (as hereinafter defined) (the
"HUD Mortgage Assumption Amount");
3
<PAGE> 4
(c) the execution and delivery of a Cognovit Promissory Note in the
principal amount of One Million Dollars ($1,000,000.00) at an interest
rate of 8% per annum, with quarterly payments of interest and being due
and payable on or before December 31, 1999 (the "$1,000,000 Note") in
the form of Exhibit 2.1(c) hereto; and
(d) the remainder of the Purchase Price, plus the inventory adjustment,
shall be paid by the execution and delivery of a Cognovit Promissory
Note at an interest rate of 8% per annum, with quarterly payments of
interest and being due and payable in one hundred eighty (180) days
after the Closing Date (the "Balance Note") in the form of Exhibit
2.1(d) hereto. The payment of the $1,000,000 Note and the Balance Note
shall be guaranteed by Harold Sosna and Raymond Schneider personally in
the form a Continuing Guaranty attached hereto as Exhibit 2.1(d)-2 (the
"Guaranty").
The Cash Amount, the HUD Assumption amount, $1,000,000 Note amount and the
Balance Note amount shall hereinafter collectively be referred to as the "Total
Price."
2.2 PRORATION OF EXPENSES.
2.2.1 All expenses arising from the conduct of the business of the
Facility in the ordinary course, including all real estate and personal property
taxes, amounts owed under the Assumed Contracts, trade payables, telephone
expenses and utility charges shall be apportioned between Buyer and Seller as of
the Effective Time, in accordance with the principle that Seller shall be
entitled to and shall be responsible for all revenues, expenses and obligations
arising from the operation of the Facility prior to the Effective Time, and
Buyer shall be entitled to and responsible for all revenues, expenses and
obligations arising from the operation of the Facility after the Effective Time.
Seller shall supply all title evidence, engineering, and environmental reports
it has in its possession to Buyer. Buyer shall pay for the cost of appraisal, a
title policy, environmental reports and survey.
2.2.2 Seller has delivered or shall deliver to Buyer at least seven
days prior to the Closing Date, a schedule (the "Proration Schedule"), setting
forth all ongoing expenses associated with the operation of the Facility, such
as payroll, food service, taxes, etc., including expenses which have been
prepaid by Seller and expenses for goods or services received by or rendered to
the Facility which have not been paid by Seller as of the Effective Time,
detailing each such expense in an itemized manner, with estimates for any
expenses as to which definitive amounts are unavailable or incalculable at such
time. The sum of all prepaid expenses listed on the Proration Schedule shall be
deducted from the sum of all accrued but unpaid expenses listed on such schedule
(or vice versa, if the amount of the prepayments is greater), and the difference
owed to Buyer or Seller, as the case may be, shall be settled on the Closing
Date by adding or subtracting such amount to the Closing payment. If any
estimate of any expense on the Proration Schedule proves to be incorrect, then
within sixty (60) days after the Closing Date, Seller or Buyer, as the case may
be, shall reimburse the other party promptly after receipt of definitive bills,
to the extent such estimate was incorrect. Notwithstanding the foregoing, Seller
shall endeavor to eliminate all prepaid expenses prior to
4
<PAGE> 5
Closing Date. This Section 2.2 shall survive the Closing and the recording of
the Deed (as hereinafter defined) and shall not be merged thereby.
2.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price for the Assets
shall be allocated among the Assets in accordance with a schedule to be prepared
by Buyer in good faith and delivered to Seller ten (10) days following execution
of this Agreement. If Seller does not concur, the parties will mutually use
their best effort to reach an agreed upon allocation of the Purchase Price.
Seller and Buyer agrees to prepare and file all federal, state and local income
Tax Returns and other filings reflecting the transactions contemplated hereunder
on a basis consistent with such allocation, and to cooperate with each other in
good faith in preparing any and all statements required to be included in the
Tax Returns, reflecting such allocation.
2.4 CHANGE OF OWNERSHIP NOTICE PENALTY. If the Ohio Department of Human
Services assesses a penalty due to the late filing of a notice of change of
ownership, such penalty shall be the obligation of Seller. This Section 2.4
shall survive the Closing and the recording of the Deed and shall not be merged
thereby.
3. THE CLOSING: CLOSING DELIVERIES.
--------------------------------
3.1 THE CLOSING. The closing of the transactions contemplated hereby
(the "Closing") shall occur at the offices of Geoffrey E. Webster, 17 South High
Street, Ste. 600, Columbus, Ohio, on the first business day following the date
on which all of the conditions set forth in Articles 4 and 5 shall have been
satisfied or waived, or on such other date as both parties may agree in writing
(the "Closing Date") but in no event later than December 31, 1997.
3.2 EFFECTIVE TIME. The Closing shall be deemed effective (the
"Effective Time") for all purposes as of 11:59:59 p.m. on December 31, 1997 for
Seller and 12:00:01 a.m. on January 1, 1998 for the Buyer.
3.3 DELIVERIES AT THE CLOSING.
3.3.1 At the Closing, Seller shall deliver or cause to be delivered to
Buyer the following:
(a) a certificate of the secretary of Seller certifying copies
of (i) the Articles of Incorporation of Seller; (ii) all requisite
resolutions or actions of Seller approving the execution and delivery
of this Agreement and the consummation of the transactions contemplated
herein and therein; and (iii) the identification and signature of each
officer of Seller;
(b) a general warranty deed (the "Deed") in the form of
Exhibit 3.3.1(b) hereto in recordable form conveying marketable and
insurable title to the Real Property, subject only to the Permitted
Encumbrances (as hereinafter defined) applicable thereto, duly executed
by Seller;
5
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(c) an affidavit of title in the usual form attesting to the
absence of any Liens (other than Permitted Encumbrances) on the Real
Property, and satisfactory in form and substance to Buyer and its title
company insuring marketable title to the Real Property and in a form
sufficient to remove the "printed exceptions" from the title
commitment, duly executed by Seller;
(d) a bill of sale for the Assets being conveyed hereunder in
the form of Exhibit 3.3.1(d) hereto (the "Bill of Sale"), duly executed
by Seller;
(e) separate assignments conveying the interest of Seller in
and to (i) the Assumed Contracts, all warranties, guarantees and
assurances (if any) given by third parties with respect to any of the
Assets and all Licenses relating to the Facility (to the extent such
Licenses are transferable), the form of which assignment shall be
negotiated in good faith between Buyer and Seller within thirty (30)
days of execution of this Agreement (the "General Assignment"), duly
executed by Seller;
(f) an assignment of all amounts held by Seller in trust for
the benefit of Residents in the form which shall be negotiated in good
faith between Buyer and Seller within thirty (30) days of execution of
this Agreement (the "Patients' Trust Funds Assignment"), including
patients occupying the nursing home beds at the Facility, and a
certificate of Seller itemizing all such amounts and for whom they are
held and certifying that: (i) such amounts represent all amounts so
held by Seller; and (ii) no person has or may have any claim against
Seller with respect to its custody, management or application of any
such amounts, provided, however, Buyer shall thereby assume
responsibility for said Patient Trust Funds and agree to indemnify
Seller for any claims, losses, damages or other expenses (including
attorney's fees) of or made against, Seller for such Patient Trust
Funds. Seller will indemnify Buyer for any pre-closing claim and Buyer
will indemnify Seller for any post-closing claim;
(g) a nonforeign affidavit certifying that Seller is not a
"foreign person" under the Code and such other information as may be
required under the applicable provisions of the Code, duly executed by
Seller;
(h) an opinion of counsel to Seller dated as of the Closing
Date in the form which shall be negotiated in good faith between Buyer
and Seller within ten (10) days of execution of this Agreement; and
(i) Seller shall provide such information and documents
necessary to enable Buyer to comply with OAC Rule 5101:3-3-24(E).
3.3.2 At the Closing, Buyer shall deliver or cause to be delivered the
following:
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(a) the Cash Amount in immediately available funds;
(b) the $1,000,000 Note;
(c) the Balance Note;
(d) the Guaranty; and
(e) an assumption by Buyer of the Assumed Liabilities,
including, but not limited to, the HUD Mortgage, and an indemnification
of Seller from and against any and all losses, liabilities, damages,
injuries, costs, expenses and claims of any and every kind whatsoever,
paid, incurred or suffered by, or asserted against either of Seller
which relate to or arise in connection with the operation of the
Facility from and after the Effective Date.
4. CONDITIONS TO BUYER'S OBLIGATIONS.
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The obligation of Buyer to consummate the transactions contemplated by
this Agreement is conditioned upon the satisfaction, or waiver by Buyer, on or
before the Closing Date, of the following conditions:
4.1 DUE DILIGENCE. Buyer has completed its due diligence review of the
Facility and its operations and is satisfied with the results thereof; provided,
however, the waiver of this contingency at Closing shall not in any way reduce
or waive Buyer's rights under Section 10.2 that survive the Closing.
4.2 REPRESENTATIONS AND WARRANTIES. The material representations and
warranties of Seller contained in this Agreement, the Schedules or Exhibits
hereto or in any certificate or document delivered by Seller to Buyer in
connection with the transactions contemplated hereby shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties were made on such date.
4.3 PERFORMANCE OF COVENANTS. Seller shall have performed and complied
with all of the agreements, covenants and conditions required by this Agreement
to be performed or complied with by them prior to or on the Closing Date.
4.4 ADVERSE CHANGES. There shall not have been any materially adverse
change in the assets, properties, condition (financial or otherwise), prospects
or results of operations of the Facility from the date hereof to the Closing
Date, nor shall there exist any condition which could reasonably be expected to
result in such a materially adverse change.
4.5 TITLE AND SURVEY. Buyer shall have received an owner's title
insurance commitment acceptable to it, at Buyer's expense and dated within 10
days of this Agreement insuring that upon the Closing Buyer will own good and
marketable fee simple title to the Real Property, free and clear
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of all Liens other than Permitted Encumbrances. Within 5 days following the
execution and delivery of this Agreement, Seller shall deliver to Buyer copies
of all title policies and surveys with respect to the Real Property which are in
its possession. Seller, at Buyer's expense, shall promptly order an examination
of title to the Real Property from a title company licensed to do business in
Ohio, which title report shall be delivered to Buyer within ten (10) days of
this Agreement. Buyer shall deliver to Seller a copy of such report together
with a written statement identifying any defects, encumbrances or objections to
title. Seller shall have 10 days from its receipt of such statement to remove
such defects, encumbrances or objections to title, provided that all mortgages,
liens, judgments or defects representing security for the payment of monetary
obligations except those assumed by Buyer shall be paid or satisfied by Seller
at or prior to the Closing. If Seller shall fail, or is unable, to remove any of
such defects, encumbrances or objections to title, Buyer may, at its option,
either (i) waive such defects, encumbrances or objections to title and proceed
to Closing or (ii) terminate this Agreement, whereupon neither party shall have
any further liability or obligation hereunder.
4.6 CONSUMMATION OF THE COMPANION AGREEMENT; CROSS DEFAULT.
Simultaneously with the execution of this Agreement, the Companion Seller has
executed the Companion Agreement with the Companion Buyer. The failure of the
Companion Seller to perform its obligations thereunder shall relieve Buyer of
any obligation under this Agreement. The parties to the Companion Agreement
shall have consummated the transactions contemplated by the Companion Agreement
for the purchase and sale of the Companion Facility.
4.7 SUBSTANTIAL COMPLIANCE WITH MEDICARE AND MEDICAID PROGRAM
PARTICIPATION REQUIREMENTS. Seller shall have the Facility be in substantial
compliance with Medicare and Medicaid program participation requirements for
nursing facilities with no outstanding proposals of sanctions or remedies by the
Ohio Department of Health or the Health Care Financing Administration.
5. CONDITIONS TO SELLER'S OBLIGATIONS.
-----------------------------------
Seller's obligation to consummate the transactions contemplated by this
Agreement is conditioned upon the satisfaction, or waiver by Seller, on or
before the Closing Date, of all of the following conditions:
5.1 TOTAL PRICE. Seller shall have received the Total Price.
5.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer contained in this Agreement, the Schedules or Exhibits hereto or in any
certificate or document delivered by Buyer to Seller in connection with the
transactions contemplated hereby shall be true on and as of the Closing Date
with the same effect as though such representations and warranties were made on
such date.
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5.3 CONSUMMATION OF THE COMPANION AGREEMENT; CROSS DEFAULT.
Simultaneously with the execution of this Agreement, the Companion Seller has
executed the Companion Agreement with the Companion Buyer. The failure of the
Companion Buyer to perform its obligations thereunder shall relieve Seller of
any obligation under this Agreement. The parties to the Companion Agreement
shall have consummated the transactions contemplated by the Companion Agreement
for the purchase and sale of the Companion Facility.
6. SELLER'S REPRESENTATIONS AND WARRANTIES.
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Seller makes the following warranties to Buyer:
6.1 ORGANIZATION AND AUTHORITY: NO CONFLICT.
6.1.1 Seller is a corporation duly organized, validly existing and in
good standing under the laws of state of Ohio. Seller is qualified or licensed
to do business in Ohio and in each other jurisdiction where the character of the
Assets or the nature of the business of the Facility makes such qualification or
licensing necessary. Seller has all requisite power to own, operate and lease
the Facility and the Assets and to carry on the business of the Facility as now
being conducted. Seller has full power and authority to enter into this
Agreement and to perform its obligations hereunder. This Agreement, and each
other agreement or document to be delivered by Seller in connection herewith,
has been duly authorized and approved by all necessary action of Seller, has
been duly executed and delivered by Seller and is a valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms.
6.1.2 The execution, delivery, and performance of this Agreement, and
each other agreement and document to be delivered by Seller in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the transfer of the Facility and the
Assets to Buyer), will not (i) violate any agreement, document or instrument
concerning Seller; (ii) require Seller to obtain any consent, approval, or
action of, or make any filing with or give any notice to, any Governmental
Authority or any other Person other than the Ohio Department of Health, the Ohio
Department of Human Services and the Health Care Financing Administration
regarding the change of ownership of an Ohio licensed nursing home with Medicare
and Medicaid certification; (iii) violate, conflict with, or result in the
breach of any of the terms of, result in a material modification of, or
otherwise cause the termination of or give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both constitute)
a default under, any agreement, lease, commitment or other binding arrangement
to which Seller is a party or by or to which Seller or the Facility or any of
the Assets is bound; (iv) violate any order or decree of any Governmental
Authority against or binding upon Seller or the Facility or the Assets; (v)
violate any law or regulation of any Governmental Authority; or (vi) violate or
result in the revocation or suspension of any License.
6.2 TITLE. Except for the permitted encumbrances, Seller has good and
marketable title to the Facility and the Assets, free and clear of all Liens. At
the Closing, Seller will transfer to
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Buyer good and marketable title to the Facility and the Assets, free and clear
of all Liens, except for Permitted Encumbrances. No Person has any option or any
right capable of becoming an option for the purchase of the Facility or the
Assets.
6.3 FINANCIAL STATEMENTS. Seller has delivered or will deliver to Buyer
cost reports relating to the operations of the Facility for the fiscal years
ended December 31, 1994, 1995 and 1996. In the event Seller prepares any
monthly, quarterly or other financial statement, Seller agrees to deliver to
Buyer such internally produced financial statements up to the Closing Date, in
each case as soon as the same are available. All of the foregoing cost reports
fairly present, and will fairly present, the financial condition and results of
operations of the Facility on the dates and for the financial periods then
ended, and are, and will be, true and correct, in all material respects.
6.4 LITIGATION. Except as set forth in Schedule 6.4, there are no
actions, suits or legal, administrative, arbitration or other proceedings or
Governmental investigations pending or threatened against Seller or the Facility
before or by any Governmental Authority, and no basis exists for any such
action. Seller is not a party to or subject to any judgment, order, writ,
injunction, decree or award of any Governmental Authority.
6.5 COMPLIANCE WITH LAWS AND LICENSURE.
6.5.1 The Facility is (i) operating and functioning as a nursing or
long-term health care facility, (ii) licensed by the Ohio Department of Health,
Division of Licensing, and the Ohio Department of Human Services, for the number
and categories of beds set forth in Schedule 6.7 hereto, and (iii) certified as
eligible for participation under the Medicaid and Medicare programs as stated in
Schedule 6.7. The Facility is not subject to any "fast track" or other license
or certification actions and or to any ban on admission and no such actions are
threatened or pending against Seller or the Facility.
6.5.2 To the best of Seller's actual knowledge, Seller is not, in
connection with its ownership or operation of the Facility or the Assets, in
violation of any law, regulation, order or decree of any Governmental Authority
and Seller is not aware of any notice of violation or alleged violation of any
such law, regulation order or decree, or any pending proceeding, action or
investigation with respect thereto except as to waivers in full force and
effect. To the best of Seller's actual knowledge, the Facility and the Assets
are in compliance with all applicable legal requirements, including, without
limitation, all life safety codes. Attached hereto as Schedule 6.5.2 are copies
of the last three inspection reports with respect to the Facility from the State
of Ohio Department of Health, Division of Licensing, setting forth the findings
of such inspections and any recommendations or requirements for alteration
contained therein. In addition, attached hereto as Schedule 6.5.2 are copies of
any certifications or waivers issued by the United States Department of Health
and Human Services with respect to the Facility and copies of the latest surveys
upon which such certifications or waivers were issued. Except as set forth in
Schedule 6.5.2, Seller has no knowledge of any facts or conditions which could
have a materially adverse effect upon the licensure or certification of the
Facility.
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6.5.3 Seller has obtained all Licenses that are necessary for the
operation of the Facility. All such Licenses are listed in Schedule 1.1(a)(iii)
to the best of Seller's knowledge and are in full force and effect. Seller has
no knowledge that any violation has been recorded or alleged in respect of any
such License. Except with respect to the Ohio Departments of Human Services and
Health, the transfer of the Facility and the Assets to Buyer and the operation
of the Facility by Buyer after the Closing in the manner in which it is
currently operated will not require the transfer of any License that may not be
transferred to Buyer without the consent or approval of any Governmental
Authority or other Person.
6.5.4 Any and all patient trust funds held, maintained or administered
by or on behalf of Seller or the Facility have been, and presently are, held,
maintained or administered in full compliance with all applicable laws, rules
and regulations. The books and records of the Facility relating to patient trust
fund accounts are true and correct. At the Closing, Seller shall execute and
deliver the Patients' Trust Funds Assignment and transfer the trust funds and
the records pertaining thereto to Buyer; it being understood that Buyer shall
take no responsibility nor assume any obligation for any patient trust fund with
a negative balance. It is understood by the parties that the funds in the trust
accounts are not the property of Seller, and are not included in the Purchase
Price. A list of the account balances for each patient's trust fund to be
updated at the Closing is attached hereto as Schedule 6.5.4. Buyer agrees to and
shall indemnify Seller for any claims, losses, damages, or other expense made
against Seller for such funds as are listed in said Schedule 6.5.4 as is further
set forth in Section 12.3 hereunder, which claim is made for any period after
the Closing Date.
6.6 SURVEYS; COST REPORTS.
6.6.1 Seller has delivered to Buyer complete and accurate copies of all
of the survey or inspection reports made with respect to the Facility during the
calendar years 1995, 1996 and 1997 and will deliver complete and accurate copies
of such reports made with respect to the Facility through the Closing Date by
any Governmental Authority promptly upon receipt. To the best of Seller's
knowledge, all exceptions, deficiencies, violations or other indications of lack
of compliance in such reports have been or will be, by Closing, fully corrected
and there are or will be, by Closing, no bans on admission or licensure,
curtailments outstanding or threatened as a result of any such inspections.
6.6.2 To the best of Seller's knowledge, Seller has filed all required
cost reports with respect to Medicaid and Medicare. Seller has delivered to
Buyer all such cost reports for Medicaid and Medicare and all other rate
compensation and reimbursement reports, audits and schedules prepared or issued
by, or filed with, any Governmental Authority or private payer with respect to
the operations of the Facility for the last 3 years and each such report is
complete and accurate in all respects.
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6.7 LICENSED BED AND CURRENT RATE SCHEDULE. Schedule 6.7 sets forth (i)
the number of licensed long-term care beds at the Facility, (ii) the current
rates charged by the Facility to its residents including the assisted living
and/or independent living beds, (iii) the number of beds or units presently
occupied in, and the occupancy percentage at, the Facility, including the
current rates charged by the Facility for each such occupied bed or unit, and
(iv) the name of each resident at the Facility which is a "private pay" patient
or who receives reimbursement from, or is a participant in, any federal or state
Medicare or Medicaid program (whether pending or otherwise) or any other third
party payer arrangement. As used herein, the term "private pay" shall mean a
resident (i) for whom payment is not made by Medicare or Medicaid (and not
including any "pending" patient), and (ii) who is not more than 60 days in
arrears (based upon monthly billing having not more than 30 day terms).
6.8 ENVIRONMENTAL MATTERS.
6.8.1 To the best of Seller's actual knowledge: Seller's ownership and
operation of the Facility and the Assets are and have been in compliance with
all Environmental Laws, and Seller has obtained all Licenses necessary or
required under all applicable Environmental Laws for the ownership and operation
of the Facility and the Assets. All such approvals are in effect, no action to
revoke or modify any of such approvals is pending and the ownership and
operation of the Facility and the Assets is and has been in compliance with all
terms and conditions thereof. Seller has no actual knowledge that there is now
pending or threatened any claim or investigation by any Governmental Authority
or any other Person concerning Seller's potential liability under Environmental
Laws in connection with its ownership or operation of the Facility or the
Assets.
6.8.2 Seller has (i) provided to Buyer all information, data, test
results, records, notices, disclosures, reports and history in Seller possession
or control with respect to the Real Property, including all correspondence with
any Governmental Authority, concerning any and all past and/or present health,
safety and/or environmental issues or concerns, and (ii) to the best of Seller's
actual knowledge, made all disclosures, including notice of a release or
threatened release of a Hazardous Substance into the environment, required under
any Environmental Law.
6.8.3 Seller is unaware of any circumstances or conditions that exist
that have a reasonable likelihood of resulting in any Damages (as hereinafter
defined) arising under any Environmental Law.
6.9 TANGIBLE PROPERTY. To the best of Seller's actual knowledge, the
Tangible Property is, in all material respects, in good and usable working
condition, and is suitable for the purposes for which it is used. No material
portion of Tangible Property has been removed from the Facility since December
1, 1997, except for inventory and supplies consumed in the ordinary course of
business. A sufficient amount of supplies are on hand at the Facility to meet
all requirements of any Governmental Authority and since December 1, 1997, there
has been no continuing reduction in the levels of supplies stocked at the
Facility.
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6.10 REAL PROPERTY.
6.10.1 Seller will at the Closing convey to Buyer good and marketable
title to all of the Real Property, free and clear of all Liens other than (i)
municipal and zoning ordinances; (ii) recorded easements for public utilities
serving the Real Property, and (iii) Liens for Taxes not yet due and payable,
none of which interfere with the use or occupancy of any of the Real Property
and, (iv) easements, conditions and restrictions of record which do not
adversely affect the use of the Real Property as a long-term care facility, and
(v) the HUD Mortgage (collectively, the "Permitted Encumbrances"). All of the
Real Property is occupied by Seller and not by any tenants or other occupants
(other than Facility residents). No part of the Real Property is subject to any
lease or sublease.
6.10.2 Seller has no actual knowledge that there are any planned or
commenced public improvements, including, without limitation, any roadwork or
road change, which may result in special assessments or otherwise affect any of
the Real Property. Seller has no knowledge that any condemnation proceeding
affecting any of the Real Property or any portion thereof nor any sale or other
disposition of any of the Real Property or any portion thereof in lieu of
condemnation is pending, threatened or contemplated. All Liens held by any
architect, contractor, subcontractor or materialman for labor or materials
performed, rendered or supplied to or in connection with the Facility or any
Asset shall upon the Closing attach to the proceeds of the sale contemplated
hereby or to the Assets or the Facility. The Facility has direct access to a
public street adjoining the parcel of land on which the Facility is situated.
Neither the Facility nor any portion thereof is dependent for its access,
operation or utility on any land, building or other improvement not included in
the Real Property.
6.10.3 Seller has no actual knowledge that there is any order or
violation notice from any Governmental Authority requiring repair, alteration or
correction of any existing condition or any of the Real Property. Seller is
unaware of any structural or mechanical defect adversely affecting the Facility,
including, without limitation, inadequacy for normal use of electrical or
mechanical systems, sanitary disposal systems and wells or unsafe drinking water
according to standards established by any Governmental Authority.
6.10.4 Attached hereto as Schedule 6.10.4 are true and correct copies
of the most recent real estate Tax bills for the Facility. To Seller's
knowledge, no proceedings have been instituted contesting the assessed value of
the Facility. Seller has no knowledge of any pending or contemplated
reassessment of the Facility or any portion thereof except the prior contest
which has been disclosed in writing to Buyer.
6.10.5 Seller has had no boundary or water drainage disputes with the
owners of any property adjacent to the Real Property and has no knowledge of any
such dispute involving former owners of the Real Property.
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6.10.6 The buildings are located entirely within the boundaries of the
land and in no way encroach upon any other property; nor do any improvements on
any other property encroach upon the land.
6.10.7 The Facility (including, without limitation, all gas and
electric systems, lighting, heating, ventilating, and air conditioning equipment
and systems, elevators, radiators, incinerators, furnaces, hot water heaters,
water, sewage, and plumbing systems, and fire protection and security systems)
is in good operating order and repair without structural defect.
6.10.8 The Real Property is zoned "I" by the City of Columbus.
6.10.9 Each building has been constructed in conformity with the plans
and specifications.
6.10.10 If the land is composed of more than one parcel, the parcels
are contiguous along their entire apparent common boundaries, except for the
staff parking lot across the street, and there are no strips or gores between
them.
6.10.11 No gas or other wells, whether capped or uncapped, are located
on or about the Real Property.
6.10.12 All roads abutting the land have been paved, duly dedicated for
public use, and accepted for maintenance by the municipality in which the Real
Property is located.
6.10.13 All public utilities required for the operation of the Real
Property enter the Real Property through adjoining public streets or, if they
pass through private land, they do so in accordance with valid, perpetual,
recorded public easements. All utility lines situated on the Real Property have
been properly dedicated to, and are serviced and maintained by, the appropriate
public or quasi-public entity and will be available for use by Buyer upon
transfer of title to the Real Property. All utility facilities presently serving
the Real Property are adequate to service the Facility.
6.11 ASSUMED CONTRACTS. Schedule 1.1(a)(vi) lists all contracts,
agreements and instruments, including all modifications, amendments and waivers
thereto, to which Seller is a party or by which the Facility or any of the
Assets are bound and which Buyer has agreed to assume (collectively, the
"Assumed Contracts"), complete copies of which have been delivered to Buyer.
Other than the Assumed Contracts and the Excluded Contracts, there are no other
contracts, agreements and instruments to which Seller is a party. Except as set
forth in Schedule 1.1 (a)(vi), (a) all Assumed Contracts are in full force and
effect and are valid and enforceable in accordance with their respective written
terms; (b) Seller is not, to the best of Seller's knowledge, nor is any other
party thereto, in default under any such Assumed Contract and no event,
occurrence, condition or act now exists or, upon the consummation of the
transactions contemplated by this Agreement will exist which, with the giving of
notice or the lapse of time or both, would give rise to a default thereunder on
the part of Seller or any other party thereto or would give rise to the right of
any party
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or parties thereto to cancel or terminate thereunder, (c) Seller has no
knowledge that there are any anticipated cancellations or terminations of any
such Assumed Contract and there are any outstanding disputes thereunder; (d) no
consent or approval of any party or parties thereto is required for the
consummation of the transactions contemplated by this Agreement; and (e) no
officer, director, stockholder, subsidiary or Affiliate of Seller has any
financial interest, whether direct or indirect, in any such Assumed Contracts.
Seller has no agreements with any patients or prospective patients which
obligate or would obligate Seller to provide skilled nursing services at rates
below Seller's current and standard rates for similar services or which are for
terms longer than one month. Notwithstanding anything to the contrary contained
herein, Buyer shall have the right to cause Seller to terminate any contract not
being assumed by Buyer under this Agreement.
6.12 BOOKS AND RECORDS. The books and records of the Facility made
available to the Buyer set forth in all respects all transactions affecting the
Facility, and such books and records have been properly kept and maintained in a
manner consistent with sound business practice and are complete and correct to
the best of knowledge of the Seller, in all material respects.
6.13 TAXES. To the best of Seller's knowledge, no state of facts exists
or has existed which would constitute grounds for the assessment against Buyer,
whether by reason of transferee liability or otherwise, of any liability for any
Taxes attributable to periods prior to the Closing Date by any taxing authority
with regard to Seller's income or operations, Seller's properties or assets or
any of the transactions contemplated by this Agreement.
6.14 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 1, 1997,
Seller has not:
(a) sold or committed to sell or assigned, transferred or
leased any of the Assets materials to the operation of the Facility;
(b) made or suffered any material amendment or termination of
any agreement, or contract, including, without limitation, any Assumed
Contract, commitment, lease or plan to which it is a party or by which
it is bound and which relates to the operations of the Facility,
whether any such amendment resulted from written agreement, course of
dealing, or operation of law;
(c) suffered any damage, destruction or loss, not fully
covered by insurance, which materially adversely affects the business,
operations, assets or properties of the Facility;
(d) received notice or otherwise had knowledge of any actual
or potential labor trouble, strike or other occurrence, event or
condition of any similar character which has had or might have a
material adverse effect on the operations of the Facility;
(e) made or granted any increase with respect to any wages,
salaries or other compensation, or entered into any employment contract
or agreement with any administrator,
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supervisor or employee in connection with the operations of the
Facility, except for employment arrangements which, by their terms,
will not continue past the Closing Date or are terminable by either
party, without penalty, upon no more than 30 days prior notice;
(f) entered into any transaction other than in the ordinary
course of business consistent with past practice; or
(g) experienced any materially adverse change in its financial
condition, results of operations, business, assets or prospects.
6.15 EMPLOYEE BENEFITS.
6.15.1 For purposes of this Agreement: (i) "Benefit Plan" shall mean
each employee benefit plan, contract and arrangement, including without
limitation, each employee benefit plan within the meaning of Section 3(3) of
ERISA, as to which Seller has any direct or indirect, actual or continent
liability; (ii) "Business Benefit Plan" shall mean any Benefit Plan which
provides benefits with respect to employees or former employees of Seller
employed in connection with the Facility; and (iii) "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
promulgated thereunder.
6.15.2 Schedule 6.15.2 sets forth a list of all Business Benefit Plans.
Seller has, with respect to each such plan, delivered to Buyer true and complete
copies of (i) all plan texts and agreements; (ii) all summary plan descriptions
and material employee communications; (iii) the most recent annual report
(including all schedules thereto); (iv) the most recent actuarial valuation; and
(v) if the plan is intended to quality under section 401 (a) or 403(a) of the
Code, the most recent determination letter received from the Internal Revenue
Service.
6.15.3 With respect to each Benefit Plan, Seller has no direct or
indirect, actual or contingent liability, other than to make payments for
contributions, premiums or benefits when due in the ordinary course, all of
which payments that are due have been made. Neither the Facility nor any Assets
are subject to any Lien under ERISA or the Code.
6.16 LABOR RELATIONS. There is no pending or threatened strike,
picketing, work stoppage or work slowdown affecting the Facility. No union is
certified by the National Labor Relations Board as collective bargaining agent
for any employees of the Facility. No written demand is pending for recognition,
no election for certification is scheduled, and no such demand is threatened.
Seller will terminate all employees at the time of the Closing Date and Buyer
shall be free to rehire such of said employees as Buyer desires in his sole
discretion.
6.17 INSURANCE. The Facility maintains, and has maintained, without
interruption, during the past three years, adequate and sufficient policies or
binders of insurance covering such risks and events, including personal injury,
property damage and general liability, as are maintained by similar facilities
in the ordinary course of business and as required by the holder of the HUD
Mortgage. All
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of such policies and binders, a complete and accurate list of which is set forth
in Schedule 6.17 and true and correct copies of which have been delivered to
Buyer, are in full force and effect, and there is no default with respect to any
provision contained in any such policy or binder, nor has there been any failure
to give any notice or present any claim under any liability policy or binder in
a timely fashion or in the manner or detail required by such liability policy or
binder. There are no past due premiums or claims, and there are no provisions
for retroactive or retrospective premium adjustments with respect to any of such
policies or binders, and no notice of cancellation or nonrenewable with respect
to, or disallowance of any claim under, any such policy or binder has been
received by Seller. Seller has no actual knowledge of any state of facts that
exists or any event which could occur which reasonably might form the basis of
any claim against or relating to the Facility or its business or operations or
any of its assets or properties which are not covered by any of such policies or
binders.
6.18 CAPITAL PROJECTS. There are no capital projects committed for or
authorized by Seller for the Facility involving the expenditure of $25,000 or
more.
6.19 BROKERS AND FINDERS. Geoffrey E. Webster, Esq., has acted as
counsel to Seller and has provided services as a finder or intermediary for the
sale of the business the subject of this Agreement. Seller agrees to indemnify
Buyer and hold Buyer harmless from all claims, demands, charges and costs,
including reasonable attorney's fees, for any claims or demands for such fees or
commissions arising out of this transaction which are generated by the actions
of Seller.
6.20 ENTIRE BUSINESS. To the best of Seller's knowledge, all material
Assets transferred constitute all of the properties, rights, interests and
business of Seller relating to the Facility, other than the Excluded Assets.
Upon the transfer of the Assets to Buyer at the Closing, Buyer will own all of
the properties, rights, interests and business (other than the Excluded Assets)
utilized in or necessary or useful to the operation of the Facility in the
manner in which the Facility has been operated up to and including the date
hereof and as the Facility will be operated until the Closing Date.
6.21 FULL DISCLOSURE. To the best of Seller's knowledge, all material
documents and other papers delivered by or on behalf of Seller in connection
with this Agreement and the transactions contemplated hereby are true, complete
and authentic. To the best of Seller's actual knowledge, the information
furnished by or on behalf of Seller to Buyer in connection with this Agreement
and the transactions contemplated hereby does not contain any untrue statement
of a material fact and does not omit to state any material fact necessary to
make the statements made, in the context in which made, not false or misleading.
There is no fact which Seller has not disclosed to Buyer in writing which
materially adversely affects, or will materially adversely affect, either the
Facility, the Assets or the business or condition (financial or otherwise) of
Seller or the ability of Seller to perform this Agreement.
6.22 NO ADVERSE CHANGE. Since December 1, 1997, there has been no
materially adverse change in the assets, properties, business or condition,
financial or otherwise, of Seller, nor is any
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such change threatened, nor has there been any damage, destruction or loss
materially affecting the assets, properties, business or condition of Seller,
whether or not covered by insurance.
6.23 UNDISCLOSED LIABILITIES. Seller has no actual knowledge of any
liabilities or obligations of Seller, either accrued, absolute, contingent or
otherwise, except (a) those reflected or otherwise provided for in the balance
sheet of Seller at September 30, 1997 and (b) those arising since September 30,
1997 in the ordinary course of business and which in the aggregate, are not
material to Seller (except to the extent consistent with past practice), and
except as provided in Schedule 5.3.
6.24 HUD MORTGAGE. As of December 31, 1997, the unpaid principal
balance of the HUD Mortgage, together with accrued interest, is Two Million Nine
Hundred Thirty- Three Thousand Nine Hundred Ninety-Eight Dollars
($2,933,998.00).
6.25 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Seller set forth in this Agreement and in any agreement,
certificate, document or other paper delivered or given to Buyer by Seller
pursuant to this Agreement will be materially true and correct to the best of
knowledge of the Seller, as of the Closing Date with the same force and effect
as if made on such date.
7. BUYER'S REPRESENTATIONS AND WARRANTEES.
---------------------------------------
Buyer represents and warrants to Seller as follows:
7.1 DUE ORGANIZATION AND AUTHORITY. The corporate Buyer is a limited
liability company duly organized and validly existing under the laws of the
State of Ohio and is authorized to do business in the State of Ohio. Buyer has
full power and authority to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly authorized and approved by
all necessary action of the members of Buyer, has been duly and validly executed
and delivered by Buyer and is a valid and legally binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
7.2 BROKERS AND FINDERS. No broker, finder, agent or similar
intermediary has acted on Buyer's behalf in connection with this Agreement or
the transactions contemplated hereby, and there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with Buyer or any action
taken by Buyer. Buyer agrees to indemnify Seller and hold the Seller harmless
from all claims, demands, charges and costs including reasonable attorneys fees,
for any claims or demands for such fees or commissions arising out of this
transaction which are generated by the actions of Buyer.
8. SELLER'S COVENANTS.
-------------------
Seller covenants as follows:
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8.1 OPERATION IN ORDINARY COURSE. From the date of this Agreement
through the Closing Date, Seller shall (i) continue to conduct the business of
the Facility in the ordinary course of business consistent with past practice,
(ii) preserve intact the condition of the Facility, ordinary wear and tear
excluded, (iii) utilize good faith efforts to keep available the services of its
present employees and preserve the good will of its suppliers and private pay
patients, (iv) not take any action referenced in Section 6.14, (v) maintain or
cause to be maintained all Licenses, (vi) perform all maintenance and repairs
reasonably necessary to maintain the Facility and the Assets, (vii) maintain or
cause to be maintained adequate insurance upon the Assets and the Facility in
amounts required by the HUD Mortgage and sufficient to prevent Seller from being
a co-insurer, (viii) take no action which shall cause any of the representations
or warranties of Seller set forth in this Agreement to be untrue, (ix) pay the
HUD Mortgage, and (x) make all contributions to each Benefit Plan that are
required under each such plan with respect to any period prior to the Closing,
without regard to whether such contributions are due on or before the Closing
Date.
8.2 RATES; PRIVATE PAY. Seller shall maintain the rate schedule
currently in effect with respect to the Facility and shall use their good faith
efforts to maintain its percentage of occupancy in the Facility at not less than
the occupancy percentage at the Facility on the date hereof and its percentage
of private pay patients in the Facility at not less than the percentage of
private pay patients in the Facility on the date hereof, as set forth on
Schedule 6.7.
8.3 ENVIRONMENTAL TRANSFER LAWS. Seller shall, at Seller's sole
expense, comply in a timely fashion with the requirements of all Environmental
Laws applicable to the transfer of the Facility and the Assets, if any. Seller
shall complete all necessary disclosure statements required by Environmental
Laws, if any, applicable to the transfer of the Facility and the Assets and
provide the statements to Buyer prior to the Closing all in proper form for
appropriate recordation and filing.
8.4 SALES OR TRANSFER TAXES. All transfer, documentary, gross receipts,
sales, use and property gains Taxes, and liabilities similar in nature, imposed
or payable in connection with the sale or transfer of the Facility or the Assets
to Buyer pursuant to this Agreement or the consummation of any of the
transactions contemplated hereby, shall be paid by Seller. Seller shall timely
file all required transfer Tax Returns and/or notices of the transfer of the
Facility and the Assets with the appropriate Tax authorities. Buyer agrees to
pay all other closing costs. Each party shall pay their own attorneys' fees.
8.5 NOTICE OF BREACH: DISCLOSURE. Seller shall promptly notify Buyer of
(i) any event, condition or circumstance occurring from the date hereof to the
Closing Date that would constitute a violation or breach of this Agreement or,
if the same were to continue to exist as of the Closing Date, would constitute
the non-satisfaction of any of the conditions set forth in Article 4, and (ii)
any event, occurrence, transaction or other item which would have been required
to have been disclosed on any schedule or statement delivered hereunder had such
event, occurrence, transaction or item existed as of the date hereof.
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8.6 COST REPORTS. Seller shall prepare and timely file all Medicaid and
Medicare cost reports, terminating cost reports and HUD audit for 1997 required
to be filed in respect of the Facility, including all cost reports and
terminating cost reports for 1996 and/or 1997. Seller shall provide Buyer with
drafts of each such cost report not less than (5) business days in advance of
each such filing, or copies of reports already filed as of the date of this
Agreement. Buyer shall have the right to examine and, if appropriate, comment
upon the cost reports prior to their filing by Seller, insofar as such cost
reports may affect Buyer's operation of the Facility after the Closing Date,
including reimbursement basis.
8.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 13, Seller shall not solicit or entertain offers
from, negotiate with, or in any manner discuss, encourage, recommend or agree to
any proposal of, any other potential buyer or buyers of the Assets or the
Facility.
8.8 EMPLOYEE MATTERS.
8.8.1 EMPLOYEES. Pending the Closing, Seller shall use good faith
efforts to retain the services of Seller's employees. Buyer or its tenant shall
offer employment, on such terms and conditions as shall be determined by Buyer
or its tenant, in their respective sole discretion, to those employees of Seller
as Buyer or its tenant, in their respective sole discretion, shall determine but
Buyer or its tenant shall not be required to offer employment to any or all of
Seller's employees. Buyer's present intention is, however, to offer employment
to substantially all of the employees of Seller actively involved in the
operations of the Facility as of the Closing. The employment by Buyer or its
tenant of any employee of Seller who accepts the terms of employment offered by
Buyer will commence at the Effective Time. Seller agrees in this regard after
waiver of contingencies to cooperate with Buyer by permitting Buyer or its
prospective tenant throughout the period prior to the Closing to meet with
Seller's employees at such times as shall be approved by Seller and to
distribute to Seller's employees such forms and other documents relating to
employment by Buyer or its tenant after the Closing as Buyer shall reasonably
request. Seller shall pay the cost of any compensation, severance or other
benefits which may be payable to Seller's employees or to such other persons as
shall claim compensation, severance or other benefits in connection with the
termination of their employment by Seller. Nothing in this Section shall be
deemed to require Buyer to retain any of the employees it hires for any period
of time or at any particular compensation rate or in any particular position.
Seller shall pay to Seller's employees on or prior to the Closing Date the
amount of all accrued wages payable to them through the Closing Date and shall
reserve an amount estimated to pay the final payroll due after Closing.
8.8.2 BENEFITS. Seller shall (i) be responsible for providing the
appropriate notices to the employees of Seller pursuant to COBRA, (ii) continue
to be responsible after the Closing Date for any benefit claims incurred by any
employees of Seller (or their eligible dependents) prior to the Effective Time
which become payable under the terms of any medical, hospitalization,
disability, workers' compensation, or life insurance plan, coverage, obligation,
practice, arrangement or any other plan that is a welfare benefit plan (as
defined in Section 3(l) of ERISA) affecting such
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employees maintained by Seller, (iii) continue to be responsible for the cost of
extended insurance coverage, if any, for any employees of Seller until such
time, if any, that such employees become employed by Buyer, and (iv) continue to
be responsible for liabilities, if any, arising prior to the Effective Time in
connection with retiree health and other non-pension benefits payable to any
employees of Seller.
8.8.3 NO RIGHTS TO EMPLOYEES. Nothing in this Section 8.8 or elsewhere
in this Agreement is intended to confer upon any past, present or future
employee of Seller or his or her legal representatives any rights as a third
party beneficiary or otherwise or any other rights or remedies of any nature of
kind whatsoever under or by reason of this Agreement or the transactions
contemplated hereby. Nothing contained in this Agreement shall restrict in any
way Buyer's right, in its sole discretion, to establish, amend or terminate any
employee benefit plan, arrangement, program, practice, policy or procedure.
8.8.4 UNION CONTRACT. Prior to Closing, Seller shall notify in writing
the Service Employees International Union, Local 47 of the change in ownership
contemplated by this Agreement. Buyer will simultaneous with the Closing lease
the Facility to a third party, who will be the true employer of any employees
covered by the collective bargaining agreement.
8.9 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Anything contained in this
Agreement or in any transfer document to the contrary notwithstanding, this
Agreement and the transfer documents to be delivered hereunder shall not
constitute an agreement to assign any contract or any claim or any right or
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way affect the rights of Buyer thereunder, except for the HUD
Mortgage. Buyer shall within fifteen (15) days of the execution of this
Agreement advise Seller of those contracts which Buyer desires to assume. Seller
shall reasonably assist in securing such assignments, but make no representation
or warranty regarding such agreements or their assignment.
8.10 ADDITIONAL FILINGS. Seller shall timely prepare and file any other
filings, reports or accounting that may be required by any lender of Seller,
Governmental Authority or other entity in connection with operation and/or
transfer of the Facility.
8.11 SURVIVAL. The covenants contained in this Section 8 shall survive
the Closing and the recording of the Deed and shall not be merged thereby.
9. BUYER'S COVENANTS.
------------------
9.1 Buyer shall promptly notify Seller of (i) any event, condition or
circumstance occurring from the date hereof to the Closing Date that would
constitute a violation or breach of this Agreement or, if the same were to
continue to exist as of the Closing Date, would constitute the non-satisfaction
of any of the conditions set forth in Article 5, and (ii) any event, occurrence,
transaction or other item which would have been required to have been disclosed
on any schedule
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or exhibit or other document to be delivered hereunder had such event,
occurrence, transaction or item existed as of the date hereof.
9.2 Buyer shall, beginning with the January 1998 payment, in a prompt
and timely manner pay and perform the obligations due on the HUD Mortgage
without demand by Seller and shall furnish proof of payment to Seller. This
covenant shall survive the Closing Date until such time as Seller is released
from any obligation and/or liability on the HUD Mortgage or until the HUD
Mortgage is satisfied through Buyer's conventional financing.
10. MUTUAL COVENANTS.
-----------------
10.1 ACCESS. From the date hereof through the Closing Date, Seller
shall provide Buyer or his tenant or operator and their authorized employees,
agents, officers and representatives with access to the properties, books,
records, Tax Returns, contracts, information, documents and personnel of Seller
as they relate to the Facility and to the Assets during regular business hours,
for the purpose of making such investigation of the Assets and the business,
properties, financial condition and results of operations of the Facility as
Buyer or its tenant or operator may desire.
10.1.1 Following the Closing Date, (a) Seller shall give Buyer or its
tenant or operator and their authorized employees, agents, officers,
representatives and successors-in-interest, access to its books and records (and
permit Buyer or its tenant or operator to make copies thereof) to the extent
relating to the Facility, as Buyer or its tenant or operator may request, and
(b) Buyer or its tenant or operator shall give Seller and their authorized
employees, agents, officers, representatives and successors-in-interest, access
to the books and records of the Facility (and permit Seller to make copies
thereof, at Seller's cost and expense) to the extent relating to periods prior
to the Closing Date as Seller may reasonably request and at reasonable times for
purposes of preparing Tax Returns and conducting proceedings relating to Taxes
or other governmental inquires or reports including any audit requirement of the
HUD mortgage.
10.1.2 Following the Closing Date and for a period of six (6) years
thereafter, the Parties shall each notify the other at least sixty (60) days
prior to destruction or disposal of any books, records, Tax Returns, contracts,
information or documents relating to the Facility and shall permit the other to
remove or copy the same within such sixty (60) day period. No investigation by
Buyer or its tenant or operator shall diminish or obviate in any way any of the
representations, warranties, covenants or agreements of Seller contained in this
Agreement or in the Exhibits or Schedules hereto, or in any other agreement,
certificate or document delivered or given to Buyer or its tenant or operator by
Seller pursuant to this Agreement.
10.2 PHYSICAL INSPECTION; REPAIRS. Within sixty (60) days after the
Closing Date, Buyer shall have the right, at its expense, to obtain an
inspection of the Facility to determine if there are any structural defects
deficiencies or deterioration in any building or improvements thereof or
operating system therein, including compliance with applicable building, or fire
codes, rules or regulations (collectively, "Defects"). Buyer shall be
responsible for the first Thirty-five Thousand
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Dollars ($35,000.00), in the aggregate, to remedy any Defects. Seller shall be
responsible for the cost of Defects that are, in the aggregate, in excess of
Thirty-five Thousand Dollars ($35,000.00). Buyer shall provide Seller with a
written statement of the item(s) it claims are Defects within five (5) business
days of the sixtieth day. Seller shall determine whether such items are Defects
and, if so, contract for the repair or replacement of same in a prompt and
diligent manner. Buyer shall have the right to approve the contractor and
materials for such repair or replacement, which approval shall not be
unreasonably withheld or delayed.
10.3 REQUIREMENTS. Upon Buyer's receipt of a Change of Ownership
Information Package and Application from the Ohio Department of Health, Buyer
shall complete and return all required documents to the Ohio Department of
Health within fifteen (15) business days. Seller has provided notice of intent
to change ownership and Buyer shall request a Medicaid Certification and
Participation Application Package to the Ohio Department of Human Services, for
the issuance of a Medicare/Medicaid provider agreement in the name of the Buyer
or its tenant or operator. The forms must be completed and submitted to the Ohio
Department of Human Services no more than thirty (30) days following the Closing
Date.
10.4 EXISTING ACCOUNTS RECEIVABLE. The following procedure shall be
followed for a period of six (6) months following the Closing Date with respect
to the Existing Accounts Receivable:
10.4.1 The Seller shall directly invoice and collect any and all of its
accounts receivable following the Closing Date. However, any amounts received by
Buyer after the Closing Date and expressly designated by the payer thereof as
being in payment of an Existing Account Receivable shall be remitted by Buyer to
Seller in the manner hereinafter provided. Nothing in this Section shall be
deemed to in any way limit Seller's right to directly recover from account
debtors any Existing Accounts Receivable or to exercise any remedies available
to it against such account debtors.
10.4.2 Buyer shall have no obligation to collect or pursue collection
of any of Seller's accounts receivable in the absence of a separate contract
regarding such collection. Buyer shall forward to Seller any funds received by
Buyer which represent payment of an account receivable of Seller; provided,
however, Buyer may offset any amount owed by Seller to Buyer pursuant to Section
2.2.2 against any funds received by Buyer and Buyer shall give Seller notice of
such offset.
10.4.3 Buyer shall make available to Seller books, papers and records
necessary for Seller to complete final settlements pending with third party
payors, including Medicare and Medicaid. Section 10.4 shall survive the Closing
and recording of the Deed and shall be merged thereby.
10.5 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, each party will maintain in confidence, and cause its directors,
officers, employees, agents and advisors to maintain in confidence, all written,
oral or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated hereby,
including, without limitation, patient lists, sources of supply, costs, pricing
practices, trade secrets, financial
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information, business plans, budgets and projections and other proprietary
information (collectively the "Confidential Information"), unless (i) such
information is already known to such party or to others not bound by a duty of
confidentiality, (ii) such information becomes publicly available through no
fault of such party, (iii) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions contemplated hereby or (iv) the
furnishing or use of such information is required by or necessary or appropriate
in connection with legal proceedings. If the transactions contemplated by this
Agreement are not consummated, each party receiving another party's Confidential
Information will return or, at the disclosing party's option, destroy all of
such Confidential Information, including, but not limited to, all copies thereof
and extracts therefrom and shall not use such Confidential Information in any
manner which may be detrimental to the disclosing party or its Affiliates.
10.6 EXPENSES. Except as expressly otherwise provided herein, each
party to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel and accountants.
10.7 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby shall be
issued, if at all, at such time and in such manner as Buyer shall determine.
Unless consented to by each party prior to the Closing, the parties shall keep
the provisions of this Agreement strictly confidential and make no disclosure
thereof to any Person, other than such party' s respective legal and financial
advisors and to such public agencies as may require notice and information
including, as an example only, the Ohio Department of Human Services, and the
Securities and Exchange Commission.
10.8 CONSENTS AND APPROVALS. Buyer and Seller shall make all filings
required in connection with the consummation of the transactions contemplated
hereby and shall use their respective best efforts to obtain prior to the
Closing Date all required consents and the transfer of all Licenses and to
satisfy all other conditions set forth in Articles 3 and 4.
10.9 SURVIVAL. The covenants contained in this Section 10 shall survive
the Closing and the recording of the Deed and shall not be merged thereby for
the time periods set forth herein or if no time period is set forth, then for a
period not to exceed nine (9) months from the satisfaction of the Note.
11. RISK OF LOSS.
-------------
11.1 RISK OF LOSS. The risk of loss or damage to the Facility, by fire
or otherwise, or by condemnation or any governmental taking, shall be upon
Seller until the Closing of the transactions contemplated hereby.
11.2 CASUALTY. If at any time prior to the Closing, the Facility or any
"material part" (as hereinafter defined) of the Facility is damaged or destroyed
by fire or other casualty, Seller shall
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immediately notify Buyer by written notice and Buyer shall have the right,
within thirty (30) days after receiving such notice, to terminate this
Agreement, whereupon neither party hereto shall have any further liability or
obligation hereunder. If Buyer does not elect to terminate this Agreement, then
the Closing shall take place as provided in this Agreement, and Seller will
assign and transfer to Buyer at the Closing (by written instrument satisfactory
to Buyer and acknowledged by the applicable insurer) all of Seller's right,
title and interest in and to all insurance proceeds which are thereafter payable
to Seller on account of such fire or casualty, and the Closing Payment shall be
reduced by the amount of any insurance proceeds previously received by Seller
and by the amount of any "deductible" under the insurance policy.
11.3 CONDEMNATION. If at any time prior to the Closing, title to or the
use of the Facility, or any part of the Facility, is taken or threatened to be
taken by condemnation, eminent domain or other similar governmental taking (a
"Condemnation"), Seller shall immediately notify Buyer by written notice and
Buyer shall have the right, within thirty (30) days after receiving such notice,
to terminate this Agreement, whereupon neither party hereto shall have any
further liability or obligation hereunder. If Buyer does not elect to terminate
this Agreement, then the Closing shall take place as provided in this Agreement,
and Seller shall assign and transfer to Buyer at the Closing (by written
instrument reasonably satisfactory to Buyer) all of Seller's right, title and
interest in and to any awards or other amounts (the "Condemnation Proceeds")
which may be payable by any Governmental Authority as the result of such
Condemnation and the Closing Payment shall be reduced by the amount of any
Condemnation Proceeds previously received by Seller. Prior to the Closing, Buyer
shall have the right to participate in any hearings or proceedings with respect
to any Condemnation.
11.4 MATERIAL PART. For purposes of Section 11, a "material part" of
the Facility shall mean any part which the Buyer reasonably determines would
materially adversely affect the operations of the Facility if damaged, destroyed
or taken by Condemnation. To be "material" the loss must render the Premises
unfit for use and occupancy as a nursing home.
12. INDEMNIFICATION; REMEDIES.
--------------------------
12.1 SURVIVAL. All representations, warranties and agreements contained
in this Agreement or in any certificate, document or other paper delivered
pursuant to this Agreement shall survive the Closing for the time periods set
forth herein or if no time period is set forth, then for a period not to exceed
nine (9) months from the satisfaction of the Note, notwithstanding any
investigation conducted with respect thereto or any knowledge acquired as to the
accuracy or inaccuracy of any such representation or warranty; provided, that if
the Closing occurs, Seller shall have no liability (for indemnification or
otherwise) with respect to any representation or warranty unless, on or before
nine (9) months after the satisfaction of the Note, Seller is given notice
asserting a claim with respect thereto and specifying the factual basis of that
claim in reasonable to detail to the extent then known by Buyer, provided,
however that a claim with respect to Sections 6.1 or 6.2 may be made at any
time. Buyer shall have no liability (for indemnification or otherwise) with
respect to any representation or warranty unless on or before nine (9) months
after the satisfaction of the Note,
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Buyer are given notice of a claim with respect thereto and specifying the
factual basis of that claim in reasonable detail to the extent known by Seller.
The covenants contained in this Section 12 of this Agreement shall survive the
Closing and the recording of the Deed and shall not be merged thereby.
12.2 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Buyer and his respective agents, representatives, employees, members,
officers, directors, stockholders, controlling persons and Affiliates
(collectively, the "Buyer's Indemnities"), and shall reimburse the Buyer's
Indemnities for, any loss, liability, claim, damage, expense (including, but not
limited to, costs of investigation and defense and attorneys' fees), whether or
not involving a third party claim (collectively, "Damages"), arising from or in
connection with (a) any material inaccuracy in any of the representations and
warranties of Seller in this Agreement or in any certificate, document or other
paper delivered by Seller pursuant to this Agreement, (b) any failure of Seller
to perform or comply with any agreement to be performed or complied with by it
in this Agreement, (c) any Retained Liability or Excluded Asset (including,
without limitation, any Damages resulting from or relating to any audit by any
Governmental Authority concerning the operation of the Facility by Seller prior
to the Closing Date), (d) any matters pertaining to operations of the Facility
on or before the Effective Date, and (e) the default under the HUD Mortgage as a
result of the consummation of the transactions contemplated by this Agreement.
12.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless
Seller and its respective agents, representatives, employees, officers,
directors and stockholders (collectively, the "Seller's Indemnities") and shall
reimburse the Seller's Indemnities for any Damages arising from or in connection
with (a) any material inaccuracy in any of the representations and warranties of
Buyer in this Agreement or in any certificate or other document delivered by
Buyer pursuant to this Agreement, (b) any failure by Buyer to perform or comply
with any agreement to be performed or complied with by Buyer in this Agreement,
(c) the Assumed Liabilities, (d) the transfer of the Trust Account Funds to
Buyer as set forth in Section 6.5.4 herein above, and (e) any matters pertaining
to operations of the Facility after the Effective Date.
12.4 COMPANION AGREEMENT INDEMNIFICATION. Seller shall indemnify and
hold harmless the Companion Buyer and his respective agents, representatives,
employees, members, officers, directors, stockholders, controlling persons and
Affiliates (collectively, the "Companion Buyer's Indemnities"), and shall
reimburse the Buyer's Indemnities for Damages, arising from or in connection
with any matter indemnified in Section 12.2 of the Companion Agreement. Buyer
shall indemnify and hold harmless the Companion Seller and its respective
agents, representatives, employees, officers, directors and stockholders
(collectively, the "Companion Seller's Indemnities") and shall reimburse the
Companion Seller's Indemnities for any Damages arising from or in connection
with any matter indemnified in Section 12.3 of the Companion Agreement.
12.5 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS. Promptly
after receipt by an indemnified party under Section 12.2, 12.3 or 12.4 of oral
or written notice of a claim or the commencement of any proceeding against it,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such Section, give notice to the
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indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such proceeding
shall be brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish (unless
the indemnifying party is also a party to such proceeding and the indemnified
party determines in good faith that joint-representation would be
inappropriate), to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such Section for any fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each case subsequently incurred by
such indemnified party in connection with the defense thereof. If an
indemnifying party assumes the defense of such proceeding, (a) no compromise or
settlement thereof may be effected by the indemnifying party without the
indemnified party' s consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any Person and there is no
effect on any other claims that may be made against the indemnified party and
(ii) there sole relief provided is monetary damages that are paid in full by the
indemnifying party and (b) the indemnified party shall have no liability with
respect to any compromise or settlement effected without its consent. If notice
is given to an indemnifying party of the commencement of any proceeding and it
does not, within ten (10) days after the indemnified party's notice is given,
waive notice to the indemnified party of its election to assume the defense
thereof, the indemnifying party shall be bound by any determination made in such
action or any compromise or settlement effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines in good faith
that there is a reasonable probability that a proceeding may adversely affect it
or its Affiliates other than as a result of monetary damages, such indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such proceeding, but the indemnifying party shall
not be bound by any determination of a proceeding so defended or any compromise
or settlement thereof effected without its consent (which shall not be
unreasonably withheld).
13. TERMINATION.
------------
13.1 TERMINATION EVENTS. Subject to the provisions of Section 13.2,
this Agreement may, by written notice given at or prior to the Closing in the
manner hereinafter provided, be terminated.
(a) by either Buyer or Seller if a material default or breach
shall be made by the other party with respect to the due and timely
performance of any of its covenants and agreements contained herein, or
with respect to the due compliance with any of its representations or
warranties, and such default has not been cured within fifteen (15)
days after the other party has provided such party with written notice
thereof and has not been waived;
27
<PAGE> 28
(b) by Buyer if the satisfaction of any of the conditions set
forth in Article 4 is or becomes impossible, other than through failure
of Buyer to fully comply with his obligations thereunder, and shall not
have been waived by Seller on or before such date; or
(c) by Seller, if the satisfaction of any of the conditions
set forth in Article 5 is or becomes impossible, other than through
failure of Seller to fully comply with its obligations thereunder, and
shall not have been waived by Buyer on or before such date;
(d) by either Buyer or Seller if the Closing shall not have
occurred on or before December 31, 1997 or such later date as may be
agreed upon in writing by the parties, provided, however, that a party
may not terminate this Agreement under this Section 13.1 (d) if the
Closing has not occurred as a result of such party's breach or willful
failure to fulfill its obligation hereunder.
(e) pursuant to Sections 11.2 or 11.3 or
(f) by mutual consent of Buyer and Seller.
13.2 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 13.1, all further obligations of the parties hereunder shall
terminate. Each party's right of termination hereunder is in addition to any
other rights it may have hereunder or otherwise and the exercise of a right of
termination shall not be an election of remedies.
14. HUD MORTGAGE; REFINANCING.
--------------------------
14.1 ACKNOWLEDGMENT. Seller and Buyer understand that the terms and
conditions of the HUD Mortgage require certain acts that may not be satisfied
prior to the Closing Date and they have therefore structured this Agreement to
accomplish the desires of the parties with as minimal effect as foreseeable to
the Seller's credit history. Notwithstanding the Closing, Buyer shall make good
faith efforts to obtain all requisite approvals, consents and authorizations
from any necessary party to the HUD Mortgage, or in the alternative, Buyer shall
obtain conventional financing to refinance the HUD Mortgage. If Buyer assumes
the HUD Mortgage, Buyer shall obtain the full release of Seller and any and all
other signors, guarantors, makers or others from the HUD Mortgage and Buyer
shall fund any replacement reserves and escrows and such existing reserves and
escrows shall be returned to Seller.
14.2 HUD MORTGAGE PREPAYMENT PENALTY. At such time that the HUD
Mortgage is paid off and there is a prepayment penalty, fee or charge assessed
by HUD, Seller agrees to pay such prepayment penalty, fee or charge assessed.
14.3 REMEDY FOR BUYER'S INABILITY TO PERFORM. In the event Buyer is
unable to obtain a release of Seller from any obligation of the HUD Mortgage or
obtain conventional financing within one hundred eighty (180) days after the
Closing Date and Buyer demonstrates good faith pursuit of
28
<PAGE> 29
such financing Seller shall consent to the extension of the Note given as
partial payment of the Total Price for an additional ninety (90) days. If upon
the expiration of the extended period Buyer has not obtained its financing,
Seller may declare this Agreement and the Companion Agreement void and retain as
its liquidated damages the Cash Amount and Buyer and Seller shall have no
further liability hereunder. In such event Buyer shall give a general warranty
deed and bill of sale returning to Seller all assets transferred by Seller to
Buyer and any replacement(s) of any assets transferred to Buyer under this
Agreement. Buyer and its agents, employees, contractors and any others having or
claiming to have any right, title or interest in the property shall surrender
possession of same to Seller and cooperate in the return to Seller of its full
right title and interest in the Assets subject of this Agreement.
15. DEFINITIONS.
------------
15.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" shall mean, with respect to any natural
person, corporation, partnership or other entity, a natural person or
entity that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
person or entity.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Environmental Laws" shall mean any state, federal or
local laws, ordinances, codes or regulations relating to pollution,
natural resources, protection of the environment, or public health and
safety, including, without limitation, laws and regulations relating to
the handling and disposal of medical and biological waste.
(d) "Governmental Authority" shall mean any government or
political subdivision thereof, whether federal, state, local or
foreign, or any agency or instrumentality of any such government or
political subdivision, or any court or arbitration body.
(e) "Hazardous Substances" shall mean (i) any hazardous or
toxic waste, substance, or material defined as such in (or for the
purposes of) any Environmental Law, (ii) asbestos-containing material,
(iii) medical and biological waste, (iv) polychlorinated biphenyl's,
(v) petroleum products, including gasoline, fuel oil, crude oil and
other various constituents of such products, and (vi) any other
chemicals, materials or substances, exposure to which is prohibited,
limited or regulated by any Environmental Laws.
(f) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
29
<PAGE> 30
(g) "Lien" shall mean any lien, pledge, mortgage, deed of
trust, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, encroachment or other survey defect,
transfer restriction or other encumbrance of any nature whatsoever.
(h) "Person" shall mean any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, or other organization, whether or
not a legal entity, and any Governmental Authority.
(i) "Tax" or "Taxes" shall mean:
(i) Any tax, duty, impost, fee or charge of any kind
or nature whatsoever imposed by any Governmental Authority,
including, without limitation, any income, sales, transfer,
transfer gains or use taxes, excise, franchise, business and
occupation taxes, real or personal property taxes, and gross
receipt, unemployment, FICA, FUTA, and other payroll taxes,
and
(ii) Interest, additions and penalties (civil or
criminal) imposed in connection with any such tax and any
interest in respect of any such additions or penalties, and
professional fees incurred in connection with the defense,
determination or litigation of any such tax liability.
(j) "Tax Returns" shall mean all federal, state, local, and
foreign returns (including information returns), reports and
declarations of any kind required to be filed by or on behalf of Seller
with respect to Taxes, including, without limitation, Internal Revenue
Service Form 990 (and any comparable form required to be filed under
state or local law) and, if applicable, consolidated or combined
federal, state or local income tax returns of the general and limited
partners of Seller for Code purposes and any returns required with
respect to the Taxes described in Section 6.13.
15.2 The words "hereof," "herein," "hereby" and "hereunder," and words
of like import, refer to this Agreement as a whole and not to any particular
Section hereof. References herein to any Section, Schedule or Exhibit refer to
such Section of, or such Schedule or Exhibit to, this Agreement, unless the
context otherwise requires. All pronouns and any variations thereof refer to the
masculine, feminine or neuter gender, singular or plural, as the context may
require.
16. MISCELLANEOUS.
--------------
16.1 SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
16.2 FURTHER ASSURANCES. Each of the parties agrees that it will, from
time to time after the date of this Agreement, execute and deliver such other
certificates, documents and instruments and
30
<PAGE> 31
take such other action as may be reasonably requested by the other party to
carry out the transactions contemplated by this Agreement.
16.3 WAIVER. Any provision of this Agreement may be waived at any time
by the party which is entitled to the benefits thereof, and this Agreement may
be amended or supplemented at any time. No such waiver, amendment, or supplement
shall be effective unless in writing and signed by Seller and Buyer.
16.4 ENTIRE AGREEMENT. This Agreement (together with the certificates,
agreements, Exhibits, Schedules, instruments and other documents referred to
herein) constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, both written and
oral, with respect to such subject matter.
16.5 GOVERNING LAW: CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio
applicable to agreements made and to be performed entirely within such state.
Any action or proceeding brought by a party against any other party in
connection with this Agreement may be commenced in any federal or state court
located in Franklin County, Ohio, and all objections to personal jurisdiction
and venue in any action or proceeding so commenced are hereby waived. As long as
service of process is by notice as provided in this Agreement or as required by
any such court, all objections to improper service of process are hereby waived.
16.6 ASSIGNMENT. Neither Buyer nor Seller may assign this Agreement to
any other Person without the prior written consent of the other party provided,
however, that (i) Buyer may assign its rights hereunder to one or more
Affiliates of Buyer and (ii) Buyer or its permitted assigns may assign for
collateral their rights hereunder to any Person who is providing financing for
the Facility or the acquisition thereof but such assignment if permitted by
Seller, shall not relieve the Buyer from performance of all of the terms and
conditions of this Agreement. Buyer may assign its interest in this Agreement to
a limited partnership or to such other entity as Buyer may desire; provided
however, Buyer shall at all times remain the principal partner in the entity so
that Seller shall be entitled to continue to conduct the closing of this
transaction with Buyer.
16.7 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (a) when delivered
personally, (b) when transmitted by telecopy (receipt confirmed), (c) on the
fifth business day following mailing by registered or certified mail (return
receipt requested), or (d) on the next business day following deposit with an
overnight delivery service of national reputation, to the parties at the
following addresses and telecopy numbers (or at such other address or telecopy
number for a party as may be specified by like notice):
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<PAGE> 32
If to Seller, to:
Marvin D. Kantor, Chairman
Wendt-Bristol Health Services Corp.
2 Nationwide, Suite 760
280 N. High Street
Columbus, Ohio 43215
Fax (614) 221-6168
and a copy to
Mr. Geoffrey E. Webster, Esq.
17 South High St., Ste. 600
Columbus, Ohio 43215
Fax (614) 461-7168
If to Buyer, to:
Harold Sosna
7 Hickory Hollow
Cincinnati, Ohio 45241
and a copy to Benesch, Friedlander, Coplan & Aronoff
88 East Broad Street, Suite 900
Columbus, Ohio 43215
Attn: Janet K. Feldkamp, Esq.
Fax (614) 223-9330
16.8 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16.9 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
16.10 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this
Agreement are incorporated by reference herein and are made a part hereof as if
they were fully set forth herein.
16.11 SEVERABILITY. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
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<PAGE> 33
16.12 NO THIRD PARTY BENEFICIARIES. There are no third party
beneficiaries of this Agreement or of the transactions contemplated hereby and
nothing contained herein shall be deemed to confer upon any one other than the
parties hereto (and their permitted successors and assigns) any right to insist
upon or to enforce the performance of any of the obligations contained herein.
16.13 TIME OF THE ESSENCE. The Parties hereto agree that timing is of
the essence with respect to all actions required by the Seller and Buyer
hereunder.
{Text continues on the next page}
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<PAGE> 34
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"SELLER"
AMERICAN CARE CENTER, INC., an
Ohio corporation
By: \s\ Marvin D. Kantor
---------------------------------
Its: Chairman
--------------------------------
Dated: December 19, 1997
"BUYER"
72 VENTURES, LTD., an Ohio limited
liability company
By: \s\ Raymond Schneider
-----------------------------------
Raymond Schneider, member
By: \s\ Harold Sosna
-----------------------------------
Harold Sosna, member
Dated: December 19, 1997
Executed by the undersigned with respect to Section 2.1(d):
\s\ Raymond Schneider
-----------------------------------
Raymond Schneider
\s\Harold Sosna
-----------------------------------
Harold Sosna
34
<PAGE> 1
WENDT-BRISTOL ALZHEIMER'S CENTER
--------------------------------
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of December __,
1997, is by and among 54 REALTY, LTD., an Ohio limited liability company
(hereinafter referred to as the "Buyer"), and HEALTH AMERICA, INC., an Ohio
corporation (hereinafter referred to as the "Seller"). Certain terms used herein
have the meanings specified in Section 15 of this Agreement.
WITNESSETH:
-----------
WHEREAS, Seller is the operator of the long term health care facility
known as the Wendt-Bristol Alzheimer's Center located at 2841 E. Dublin
Granville Road, Columbus, Ohio, which has Seventy-Five (75) licensed long-term
care beds, some of which are certified for both Medicare and all of which are
certified for Medicaid participation (the "Facility");
WHEREAS, Seller owns all the real property and improvements in and on
which the business of the Facility is conducted and Seller owns or leases all
the personal property used in connection with the Facility;
WHEREAS, Seller desires to sell, transfer and convey to Buyer, and
Buyer desires to purchase from Seller, the Facility together with all assets
(real and personal) utilized in connection with the operation of the Facility;
and
WHEREAS, simultaneously with the execution of this Agreement and as
additional consideration for entering into this Agreement, an affiliate of
Buyer, 72 Ventures, Ltd., an Ohio limited liability company (the "Companion
Buyer"), and an affiliate of Seller, American Health Care Center, Inc., an Ohio
corporation (the "Companion Seller"), have entered into a certain Bristol House
Asset Purchase Agreement of even date herewith (the "Companion Agreement") for
the purchase and sale of a facility known as Bristol House located at 1169
Bryden Road, Columbus, Ohio 43205 (the "Companion Facility").
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. SALE AND PURCHASE OF ASSETS, ASSUMPTION OF LIABILITIES.
-------------------------------------------------------
1.1 ASSETS TO BE SOLD.
(a) On the terms and subject to the conditions set forth in
this Agreement, Seller hereby agrees to sell, assign, transfer and
convey to Buyer at the Closing (as hereinafter defined) free and clear
of all Liens (as hereinafter defined) except those assumed by Buyer,
and Buyer agree to purchase, the Facility and, except for the
Excluded Assets set forth in Section 1.1(b), all of the real property,
fixtures, personal property and other assets owned by
<PAGE> 2
Seller and used or held in connection with the Facility (collectively,
the "Assets"), including, but not limited to all of Seller's rights,
title and interest, if any, in and to:
(i) all real property identified in Schedule
1.1(a)(i), together with all buildings, improvements, fixtures
(including, without limitation, all heating, plumbing, air
conditioning, ventilation and electrical equipment), rights of
way, easements and appurtenances thereto (collectively, the
"Real Property");
(ii) all furnishings, furniture, machinery,
equipment, supplies, inventory, linens, medicine, foodstuffs,
consumable and other personal property of any type or
description, including, without limitation, all beds, chairs,
sofas, wheelchairs, tables, kitchen and laundry equipment
(collectively, the "Tangible Property"), including, without
limitation, the Tangible Property identified in Schedule
1.1(a)(ii);
(iii) all licenses, permits, certificates, consents,
approvals, waivers and other authorizations (including,
without limitation, any authorizations to participate in any
state or federal reimbursement program such as Medicaid or
Medicare), whether issued or granted by any Governmental
Authority or by any other Person, to the extent the same are
transferable, and all operating, license and certification
rights with respect to the Seventy-Five (75) licensed beds
which are included in Seller's Certificate of Need for the
Facility (collectively, the "Licenses"), including, without
limitation, the Licenses identified in Schedule 1.1(a)(iii);
(iv) all books of account, records, files, invoices,
customer lists, supplier lists, consultants' reports, budgets
and projections and other similar data located at the Facility
and all medical records of patients and residents of the
Facility;
(v) all telephone numbers, telephone listings, yellow
page ads, sales literature, promotional literature and other
selling materials relating to the Facility;
(vi) all rights under any assumed contracts
(collectively, the "Assumed Contracts"), including, without
limitation, the Assumed Contracts identified in Schedule
1.1(a)(vi) and specifically including the assumption of the
indebtedness in the original principal amount of Three Million
One Hundred Eighty-four Thousand Nine Hundred Dollars
($3,184,900.00) in favor of LPC Mortgage Company and assigned
to Chemical Mortgage Company, which indebtedness is secured by
a certain Mortgage Deed and Regulatory Agreement, all dated
April 7, 1993 (the "HUD Mortgage"); and
(vii) all other assets of Seller of the foregoing
nature purchased or acquired by Seller between the date hereof
and the Closing Date (as hereinafter defined).
2
<PAGE> 3
(b) Notwithstanding the provisions of Section 1.1(a), Seller
shall not sell, assign, transfer or convey to Buyer the following items
(collectively, the "Excluded Assets"):
(i) any cash or cash equivalents including without
limitation the HUD Replacement Reserve Account and any other
mortgage escrow balances;
(ii) any accounts receivable or other amounts due or
owing to Seller from any party with respect to, or arising out
of the operation of, the Facility prior to the Closing Date
(collectively, the "Existing Accounts Receivable");
(iii) any minute books or stock records of Seller;
and
(iv) any rights of Seller under any contract or lease
to which Seller is a party (collectively, the "Excluded
Contracts"), including but not limited to, those listed on
Schedule 1.1(b)(iv), other than the Assumed Contracts.
1.2 ASSUMPTION OF LIABILITIES. Except for the liabilities and
obligations of Seller under the Assumed Contracts, but only to the extent (i)
accruing and relating solely to the period from and after the Effective Time (as
hereinafter defined) and (ii) the corresponding, benefits relating thereto are
validly assigned to and received by Buyer (collectively, the "ASSUMED
LIABILITIES"), Buyer shall not assume, and Seller shall remain responsible for
any and all liabilities and obligations of Seller or any of its Affiliates
(collectively, the "RETAINED LIABILITIES"). Without limiting the generality of
the foregoing, Buyer shall not assume any liabilities or obligations of Seller
to the Ohio Department of Human Services ("ODHS") for Medicaid or Medicare
settlements and/or any other amounts due to ODHS or Medicare by Seller. Buyer
shall have the right to cause any tenant or operator that is engaged by Buyer to
assume any of Buyer's obligations under this Section 1.2; provided however,
Buyer shall not be released from any obligations to Seller incurred herein.
2. PURCHASE PRICE.
---------------
2.1 TOTAL PRICE. In consideration for the sale, transfer, assignment
and conveyance of the Facility and the Assets to Buyer, Buyer hereby agrees to
pay Seller the purchase price of Three Million Eight Hundred Thousand Dollars
and No Cents ($3,800,000.00) (the "Purchase Price"), together with an amount
mutually agreeable by Buyer and Seller as a credit for cost of inventory on hand
at time of Closing, subject to adjustment as hereinafter provided, as follows:
(a) in immediately available funds to Seller the sum of One Hundred
Fifty Thousand Dollars ($150,000.00) (the "Cash Amount");
(b) the assumption of the unpaid principal balance of the HUD Mortgage,
together with any accrued interest thereon, which is Three Million One
Hundred Seventy-nine Thousand Two Hundred Forty Dollars ($3,179,240.00)
as of the Effective Date (as hereinafter defined) (the "HUD Mortgage
Assumption Amount"); and
3
<PAGE> 4
(c) the remainder of the Purchase Price, plus the inventory adjustment,
shall be paid by the execution and delivery of a Cognovit Promissory
Note at an interest rate of 8% per annum, with quarterly payments of
interest and being due and payable in one hundred eighty (180) days
after the Closing Date (the "Note") in the form of Exhibit 2.1(c)-1
hereto. The payment of the Note shall be guaranteed by Harold Sosna and
Raymond Schneider personally in the form a Continuing Guaranty attached
hereto as Exhibit 2.1(c)-2 (the "Guaranty").
The Cash Amount, the HUD Assumption amount and the Note amount shall hereinafter
collectively be referred to as the "Total Price."
2.2 PRORATION OF EXPENSES.
2.2.1 All expenses arising from the conduct of the business of the
Facility in the ordinary course, including all real estate and personal property
taxes, amounts owed under the Assumed Contracts, trade payables, telephone
expenses and utility charges shall be apportioned between Buyer and Seller as of
the Effective Time, in accordance with the principle that Seller shall be
entitled to and shall be responsible for all revenues, expenses and obligations
arising from the operation of the Facility prior to the Effective Time, and
Buyer shall be entitled to and responsible for all revenues, expenses and
obligations arising from the operation of the Facility after the Effective Time.
Seller shall supply all title evidence, engineering, and environmental reports
it has in its possession to Buyer. Buyer shall pay for the cost of appraisal, a
title policy, environmental reports and survey.
2.2.2 Seller has delivered or shall deliver to Buyer at least seven
days prior to the Closing Date, a schedule (the "Proration Schedule"), setting
forth all ongoing expenses associated with the operation of the Facility, such
as payroll, food service, taxes, etc., including expenses which have been
prepaid by Seller and expenses for goods or services received by or rendered to
the Facility which have not been paid by Seller as of the Effective Time,
detailing each such expense in an itemized manner, with estimates for any
expenses as to which definitive amounts are unavailable or incalculable at such
time. The sum of all prepaid expenses listed on the Proration Schedule shall be
deducted from the sum of all accrued but unpaid expenses listed on such schedule
(or vice versa, if the amount of the prepayments is greater), and the difference
owed to Buyer or Seller, as the case may be, shall be settled on the Closing
Date by adding or subtracting such amount to the Closing payment. If any
estimate of any expense on the Proration Schedule proves to be incorrect, then
within sixty (60) days after the Closing Date, Seller or Buyer, as the case may
be, shall reimburse the other party promptly after receipt of definitive bills,
to the extent such estimate was incorrect. Notwithstanding the foregoing, Seller
shall endeavor to eliminate all prepaid expenses prior to Closing Date. This
Section 2.2 shall survive the Closing and the recording of the Deed (as
hereinafter defined) and shall not be merged thereby.
2.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price for the Assets
shall be allocated among the Assets in accordance with a schedule to be prepared
by Buyer in good faith and delivered
4
<PAGE> 5
to Seller ten (10) days following execution of this Agreement. If Seller does
not concur, the parties will mutually use their best effort to reach an agreed
upon allocation of the Purchase Price. Seller and Buyer agrees to prepare and
file all federal, state and local income Tax Returns and other filings
reflecting the transactions contemplated hereunder on a basis consistent with
such allocation, and to cooperate with each other in good faith in preparing any
and all statements required to be included in the Tax Returns, reflecting such
allocation.
2.4 CHANGE OF OWNERSHIP NOTICE PENALTY. If the Ohio Department of Human
Services assesses a penalty due to the late filing of a notice of change of
ownership, such penalty shall be the obligation of Seller. This Section 2.4
shall survive the Closing and the recording of the Deed and shall not be merged
thereby.
3. THE CLOSING: CLOSING DELIVERIES.
--------------------------------
3.1 THE CLOSING. The closing of the transactions contemplated hereby
(the "Closing") shall occur at the offices of Geoffrey E. Webster, 17 South High
Street, Ste. 600, Columbus, Ohio, on the first business day following the date
on which all of the conditions set forth in Articles 4 and 5 shall have been
satisfied or waived, or on such other date as both parties may agree in writing
(the "Closing Date") but in no event later than December 31, 1997.
3.2 EFFECTIVE TIME. The Closing shall be deemed effective (the
"Effective Time") for all purposes as of 11:59:59 p.m. on December 31, 1997 for
Seller and 12:00:01 a.m. on January 1, 1998 for the Buyer.
3.3 DELIVERIES AT THE CLOSING.
--------------------------
3.3.1 At the Closing, Seller shall deliver or cause to be delivered to
Buyer the following:
(a) a certificate of the secretary of Seller certifying copies
of (i) the Articles of Incorporation of Seller; (ii) all requisite
resolutions or actions of Seller approving the execution and delivery
of this Agreement and the consummation of the transactions contemplated
herein and therein; and (iii) the identification and signature of each
officer of Seller;
(b) a general warranty deed (the "Deed") in the form of
Exhibit 3.3.1(b) hereto in recordable form conveying marketable and
insurable title to the Real Property, subject only to the Permitted
Encumbrances (as hereinafter defined) applicable thereto, duly executed
by Seller;
(c) an affidavit of title in the usual form attesting to the
absence of any Liens (other than Permitted Encumbrances) on the Real
Property, and satisfactory in form and substance to Buyer and its title
company insuring marketable title to the Real Property and
5
<PAGE> 6
in a form sufficient to remove the "printed exceptions" from the title
commitment, duly executed by Seller;
(d) a bill of sale for the Assets being conveyed hereunder in
the form of Exhibit 3.3.1(d) hereto (the "Bill of Sale"), duly executed
by Seller;
(e) separate assignments conveying the interest of Seller in
and to (i) the Assumed Contracts, all warranties, guarantees and
assurances (if any) given by third parties with respect to any of the
Assets and all Licenses relating to the Facility (to the extent such
Licenses are transferable), the form of which assignment shall be
negotiated in good faith between Buyer and Seller within thirty (30)
days of execution of this Agreement (the "General Assignment"), duly
executed by Seller;
(f) an assignment of all amounts held by Seller in trust for
the benefit of Residents in the form which shall be negotiated in good
faith between Buyer and Seller within thirty (30) days of execution of
this Agreement (the "Patients' Trust Funds Assignment"), including
patients occupying the nursing home beds at the Facility, and a
certificate of Seller itemizing all such amounts and for whom they are
held and certifying that: (i) such amounts represent all amounts so
held by Seller; and (ii) no person has or may have any claim against
Seller with respect to its custody, management or application of any
such amounts, provided, however, Buyer shall thereby assume
responsibility for said Patient Trust Funds and agree to indemnify
Seller for any claims, losses, damages or other expenses (including
attorney's fees) of or made against, Seller for such Patient Trust
Funds. Seller will indemnify Buyer for any pre-closing claim and Buyer
will indemnify Seller for any post-closing claim;
(g) a nonforeign affidavit certifying that Seller is not a
"foreign person" under the Code and such other information as may be
required under the applicable provisions of the Code, duly executed by
Seller;
(h) an opinion of counsel to Seller dated as of the Closing
Date in the form which shall be negotiated in good faith between Buyer
and Seller within ten (10) days of execution of this Agreement; and
(i) Seller shall provide such information and documents
necessary to enable Buyer to comply with OAC Rule 5101:3-3-24(E).
3.3.2 At the Closing, Buyer shall deliver or cause to be delivered the
following:
(a) the Cash Amount in immediately available funds;
(b) the Note;
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(c) the Guaranty; and
(d) an assumption by Buyer of the Assumed Liabilities,
including but not limited to, the HUD Mortgage, and an indemnification
of Seller from and against any and all losses, liabilities, damages,
injuries, costs, expenses and claims of any and every kind whatsoever,
paid, incurred or suffered by, or asserted against either of Seller
which relate to or arise in connection with the operation of the
Facility from and after the Effective Date.
4. CONDITIONS TO BUYER'S OBLIGATIONS.
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The obligation of Buyer to consummate the transactions contemplated by
this Agreement is conditioned upon the satisfaction, or waiver by Buyer, on or
before the Closing Date, of the following conditions:
4.1 DUE DILIGENCE. Buyer has completed its due diligence review of the
Facility and its operations and is satisfied with the results thereof; provided,
however, the waiver of this contingency at Closing shall not in any way reduce
or waive Buyer's rights under Section 10.2 that survive the Closing.
4.2 REPRESENTATIONS AND WARRANTIES. The material representations and
warranties of Seller contained in this Agreement, the Schedules or Exhibits
hereto or in any certificate or document delivered by Seller to Buyer in
connection with the transactions contemplated hereby shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties were made on such date.
4.3 PERFORMANCE OF COVENANTS. Seller shall have performed and complied
with all of the agreements, covenants and conditions required by this Agreement
to be performed or complied with by them prior to or on the Closing Date.
4.4 ADVERSE CHANGES. There shall not have been any materially adverse
change in the assets, properties, condition (financial or otherwise), prospects
or results of operations of the Facility from the date hereof to the Closing
Date, nor shall there exist any condition which could reasonably be expected to
result in such a materially adverse change.
4.5 TITLE AND SURVEY. Buyer shall have received an owner's title
insurance commitment acceptable to it, at Buyer's expense and dated within 10
days of this Agreement insuring that upon the Closing Buyer will own good and
marketable fee simple title to the Real Property, free and clear of all Liens
other than Permitted Encumbrances. Within 5 days following the execution and
delivery of this Agreement, Seller shall deliver to Buyer copies of all title
policies and surveys with respect to the Real Property which are in its
possession. Seller, at Buyer's expense, shall promptly order an examination of
title to the Real Property from a title company licensed to do business in Ohio,
which title report shall be delivered to Buyer within ten (10) days of this
Agreement. Buyer shall deliver to Seller a copy of such report together with a
written statement identifying any defects,
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encumbrances or objections to title. Seller shall have 10 days from its receipt
of such statement to remove such defects, encumbrances or objections to title,
provided that all mortgages, liens, judgments or defects representing security
for the payment of monetary obligations except those assumed by Buyer shall be
paid or satisfied by Seller at or prior to the Closing. If Seller shall fail, or
is unable, to remove any of such defects, encumbrances or objections to title,
Buyer may, at its option, either (i) waive such defects, encumbrances or
objections to title and proceed to Closing or (ii) terminate this Agreement,
whereupon neither party shall have any further liability or obligation
hereunder.
4.6 CONSUMMATION OF THE COMPANION AGREEMENT; CROSS DEFAULT.
Simultaneously with the execution of this Agreement, the Companion Seller has
executed the Companion Agreement with the Companion Buyer. The failure of the
Companion Seller to perform its obligations thereunder shall relieve Buyer of
any obligation under this Agreement. The parties to the Companion Agreement
shall have consummated the transactions contemplated by the Companion Agreement
for the purchase and sale of the Companion Facility.
4.7 SUBSTANTIAL COMPLIANCE WITH MEDICARE AND MEDICAID PROGRAM
PARTICIPATION REQUIREMENTS. Seller shall have the Facility be in substantial
compliance with Medicare and Medicaid program participation requirements for
nursing facilities with no outstanding proposals of sanctions or remedies by the
Ohio Department of Health or the Health Care Financing Administration.
5. CONDITIONS TO SELLER'S OBLIGATIONS.
-----------------------------------
Seller's obligation to consummate the transactions contemplated by this
Agreement is conditioned upon the satisfaction, or waiver by Seller, on or
before the Closing Date, of all of the following conditions:
5.1 TOTAL PRICE. Seller shall have received the Total Price.
5.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer contained in this Agreement, the Schedules or Exhibits hereto or in any
certificate or document delivered by Buyer to Seller in connection with the
transactions contemplated hereby shall be true on and as of the Closing Date
with the same effect as though such representations and warranties were made on
such date.
5.3 CONSUMMATION OF THE COMPANION AGREEMENT; CROSS DEFAULT.
Simultaneously with the execution of this Agreement, the Companion Seller has
executed the Companion Agreement with the Companion Buyer. The failure of the
Companion Buyer to perform its obligations thereunder shall relieve Seller of
any obligation under this Agreement. The parties to the Companion Agreement
shall have consummated the transactions contemplated by the Companion Agreement
for the purchase and sale of the Companion Facility.
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6. SELLER'S REPRESENTATIONS AND WARRANTIES.
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Seller makes the following warranties to Buyer:
6.1 ORGANIZATION AND AUTHORITY: NO CONFLICT.
6.1.1 Seller is a corporation duly organized, validly existing and in
good standing under the laws of state of Ohio. Seller is qualified or licensed
to do business in Ohio and in each other jurisdiction where the character of the
Assets or the nature of the business of the Facility makes such qualification or
licensing necessary. Seller has all requisite power to own, operate and lease
the Facility and the Assets and to carry on the business of the Facility as now
being conducted. Seller has full power and authority to enter into this
Agreement and to perform its obligations hereunder. This Agreement, and each
other agreement or document to be delivered by Seller in connection herewith,
has been duly authorized and approved by all necessary action of Seller, has
been duly executed and delivered by Seller and is a valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms.
6.1.2 The execution, delivery, and performance of this Agreement, and
each other agreement and document to be delivered by Seller in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the transfer of the Facility and the
Assets to Buyer), will not (i) violate any agreement, document or instrument
concerning Seller; (ii) require Seller to obtain any consent, approval, or
action of, or make any filing with or give any notice to, any Governmental
Authority or any other Person other than the Ohio Department of Health, the Ohio
Department of Human Services and the Health Care Financing Administration
regarding the change of ownership of an Ohio licensed nursing home with Medicare
and Medicaid certification; (iii) violate, conflict with, or result in the
breach of any of the terms of, result in a material modification of, or
otherwise cause the termination of or give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both constitute)
a default under, any agreement, lease, commitment or other binding arrangement
to which Seller is a party or by or to which Seller or the Facility or any of
the Assets is bound; (iv) violate any order or decree of any Governmental
Authority against or binding upon Seller or the Facility or the Assets; (v)
violate any law or regulation of any Governmental Authority; or (vi) violate or
result in the revocation or suspension of any License.
6.2 TITLE. Except for the permitted encumbrances, Seller has good and
marketable title to the Facility and the Assets, free and clear of all Liens. At
the Closing, Seller will transfer to Buyer good and marketable title to the
Facility and the Assets, free and clear of all Liens, except for Permitted
Encumbrances. No Person has any option or any right capable of becoming an
option for the purchase of the Facility or the Assets.
6.3 FINANCIAL STATEMENTS. Seller has delivered or will deliver to Buyer
cost reports relating to the operations of the Facility for the fiscal years
ended December 31, 1994, 1995 and 1996. In the event Seller prepares any
monthly, quarterly or other financial statement, Seller agrees
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to deliver to Buyer such internally produced financial statements up to the
Closing Date, in each case as soon as the same are available. All of the
foregoing cost reports fairly present, and will fairly present, the financial
condition and results of operations of the Facility on the dates and for the
financial periods then ended, and are, and will be, true and correct, in all
material respects.
6.4 LITIGATION. Except as set forth in Schedule 6.4, there are no
actions, suits or legal, administrative, arbitration or other proceedings or
Governmental investigations pending or threatened against Seller or the Facility
before or by any Governmental Authority, and no basis exists for any such
action. Seller is not a party to or subject to any judgment, order, writ,
injunction, decree or award of any Governmental Authority.
6.5 COMPLIANCE WITH LAWS AND LICENSURE.
6.5.1 The Facility is (i) operating and functioning as a nursing or
long-term health care facility, (ii) licensed by the Ohio Department of Health,
Division of Licensing, and the Ohio Department of Human Services, for the number
and categories of beds set forth in Schedule 6.7 hereto, and (iii) certified as
eligible for participation under the Medicaid and Medicare programs as stated in
Schedule 6.7. The Facility is not subject to any "fast track" or other license
or certification actions and or to any ban on admission and no such actions are
threatened or pending against Seller or the Facility.
6.5.2 To the best of Seller's actual knowledge, Seller is not, in
connection with its ownership or operation of the Facility or the Assets, in
violation of any law, regulation, order or decree of any Governmental Authority
and Seller is not aware of any notice of violation or alleged violation of any
such law, regulation order or decree, or any pending proceeding, action or
investigation with respect thereto except as to waivers in full force and
effect. To the best of Seller's actual knowledge, the Facility and the Assets
are in compliance with all applicable legal requirements, including, without
limitation, all life safety codes. Attached hereto as Schedule 6.5.2 are copies
of the last three inspection reports with respect to the Facility from the State
of Ohio Department of Health, Division of Licensing, setting forth the findings
of such inspections and any recommendations or requirements for alteration
contained therein. In addition, attached hereto as Schedule 6.5.2 are copies of
any certifications or waivers issued by the United States Department of Health
and Human Services with respect to the Facility and copies of the latest surveys
upon which such certifications or waivers were issued. Except as set forth in
Schedule 6.5.2, Seller has no knowledge of any facts or conditions which could
have a materially adverse effect upon the licensure or certification of the
Facility.
6.5.3 Seller has obtained all Licenses that are necessary for the
operation of the Facility. All such Licenses are listed in Schedule 1.1(a)(iii)
to the best of Seller's knowledge and are in full force and effect. Seller has
no knowledge that any violation has been recorded or alleged in respect of any
such License. Except with respect to the Ohio Departments of Human Services and
Health, the transfer of the Facility and the Assets to Buyer and the operation
of the Facility by Buyer after the Closing in the manner in which it is
currently operated will not require the transfer of any
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License that may not be transferred to Buyer without the consent or approval of
any Governmental Authority or other Person.
6.5.4 Any and all patient trust funds held, maintained or administered
by or on behalf of Seller or the Facility have been, and presently are, held,
maintained or administered in full compliance with all applicable laws, rules
and regulations. The books and records of the Facility relating to patient trust
fund accounts are true and correct. At the Closing, Seller shall execute and
deliver the Patients' Trust Funds Assignment and transfer the trust funds and
the records pertaining thereto to Buyer; it being understood that Buyer shall
take no responsibility nor assume any obligation for any patient trust fund with
a negative balance. It is understood by the parties that the funds in the trust
accounts are not the property of Seller, and are not included in the Purchase
Price. A list of the account balances for each patient's trust fund to be
updated at the Closing is attached hereto as Schedule 6.5.4. Buyer agrees to and
shall indemnify Seller for any claims, losses, damages, or other expense made
against Seller for such funds as are listed in said Schedule 6.5.4 as is further
set forth in Section 12.3 hereunder, which claim is made for any period after
the Closing Date.
6.6 SURVEYS; COST REPORTS.
6.6.1 Seller has delivered to Buyer complete and accurate copies of all
of the survey or inspection reports made with respect to the Facility during the
calendar years 1995, 1996 and 1997 and will deliver complete and accurate copies
of such reports made with respect to the Facility through the Closing Date by
any Governmental Authority promptly upon receipt. To the best of Seller's
knowledge, all exceptions, deficiencies, violations or other indications of lack
of compliance in such reports have been or will be, by Closing, fully corrected
and there are or will be, by Closing, no bans on admission or licensure,
curtailments outstanding or threatened as a result of any such inspections.
6.6.2 To the best of Seller's knowledge, Seller has filed all required
cost reports with respect to Medicaid and Medicare. Seller has delivered to
Buyer all such cost reports for Medicaid and Medicare and all other rate
compensation and reimbursement reports, audits and schedules prepared or issued
by, or filed with, any Governmental Authority or private payer with respect to
the operations of the Facility for the last 3 years and each such report is
complete and accurate in all respects.
6.7 LICENSED BED AND CURRENT RATE SCHEDULE. Schedule 6.7 sets forth (i)
the number of licensed long-term care beds at the Facility, (ii) the current
rates charged by the Facility to its residents including the assisted living
and/or independent living beds, (iii) the number of beds or units presently
occupied in, and the occupancy percentage at, the Facility, including the
current rates charged by the Facility for each such occupied bed or unit, and
(iv) the name of each resident at the Facility which is a "private pay" patient
or who receives reimbursement from, or is a participant in, any federal or state
Medicare or Medicaid program (whether pending or otherwise) or any other third
party payer arrangement. As used herein, the term "private pay" shall mean a
resident (i) for whom
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payment is not made by Medicare or Medicaid (and not including any "pending"
patient), and (ii) who is not more than 60 days in arrears (based upon monthly
billing having not more than 30 day terms).
6.8 ENVIRONMENTAL MATTERS.
6.8.1 To the best of Seller's actual knowledge: Seller's ownership and
operation of the Facility and the Assets are and have been in compliance with
all Environmental Laws, and Seller has obtained all Licenses necessary or
required under all applicable Environmental Laws for the ownership and operation
of the Facility and the Assets. All such approvals are in effect, no action to
revoke or modify any of such approvals is pending and the ownership and
operation of the Facility and the Assets is and has been in compliance with all
terms and conditions thereof. Seller has no actual knowledge that there is now
pending or threatened any claim or investigation by any Governmental Authority
or any other Person concerning Seller's potential liability under Environmental
Laws in connection with its ownership or operation of the Facility or the
Assets.
6.8.2 Seller has (i) provided to Buyer all information, data, test
results, records, notices, disclosures, reports and history in Seller possession
or control with respect to the Real Property, including all correspondence with
any Governmental Authority, concerning any and all past and/or present health,
safety and/or environmental issues or concerns, and (ii) to the best of Seller's
actual knowledge, made all disclosures, including notice of a release or
threatened release of a Hazardous Substance into the environment, required under
any Environmental Law.
6.8.3 Seller is unaware of any circumstances or conditions that exist
that have a reasonable likelihood of resulting in any Damages (as hereinafter
defined) arising under any Environmental Law.
6.9 TANGIBLE PROPERTY. To the best of Seller's actual knowledge, the
Tangible Property is, in all material respects, in good and usable working
condition, and is suitable for the purposes for which it is used. No material
portion of Tangible Property has been removed from the Facility since December
1, 1997, except for inventory and supplies consumed in the ordinary course of
business. A sufficient amount of supplies are on hand at the Facility to meet
all requirements of any Governmental Authority and since December 1, 1997, there
has been no continuing reduction in the levels of supplies stocked at the
Facility.
6.10 REAL PROPERTY.
6.10.1 Seller will at the Closing convey to Buyer good and marketable
title to all of the Real Property, free and clear of all Liens other than (i)
municipal and zoning ordinances; (ii) recorded easements for public utilities
serving the Real Property, and (iii) Liens for Taxes not yet due and payable,
none of which interfere with the use or occupancy of any of the Real Property
and, (iv) easements, conditions and restrictions of record which do not
adversely affect the use of the Real Property as a long-term care facility, and
(v) the HUD Mortgage (collectively, the "Permitted
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Encumbrances"). All of the Real Property is occupied by Seller and not by any
tenants or other occupants (other than Facility residents). No part of the Real
Property is subject to any lease or sublease.
6.10.2 Seller has no actual knowledge that there are any planned or
commenced public improvements, including, without limitation, any roadwork or
road change, which may result in special assessments or otherwise affect any of
the Real Property. Seller has no knowledge that any condemnation proceeding
affecting any of the Real Property or any portion thereof nor any sale or other
disposition of any of the Real Property or any portion thereof in lieu of
condemnation is pending, threatened or contemplated. All Liens held by any
architect, contractor, subcontractor or materialman for labor or materials
performed, rendered or supplied to or in connection with the Facility or any
Asset shall upon the Closing attach to the proceeds of the sale contemplated
hereby or to the Assets or the Facility. The Facility has direct access to a
public street adjoining the parcel of land on which the Facility is situated.
Neither the Facility nor any portion thereof is dependent for its access,
operation or utility on any land, building or other improvement not included in
the Real Property.
6.10.3 Seller has no actual knowledge that there is any order or
violation notice from any Governmental Authority requiring repair, alteration or
correction of any existing condition or any of the Real Property. Seller is
unaware of any structural or mechanical defect adversely affecting the Facility,
including, without limitation, inadequacy for normal use of electrical or
mechanical systems, sanitary disposal systems and wells or unsafe drinking water
according to standards established by any Governmental Authority.
6.10.4 Attached hereto as Schedule 6.10.4 are true and correct copies
of the most recent real estate Tax bills for the Facility. To Seller's
knowledge, no proceedings have been instituted contesting the assessed value of
the Facility. Seller has no knowledge of any pending or contemplated
reassessment of the Facility or any portion thereof except the prior contest
which has been disclosed in writing to Buyer.
6.10.5 Seller has had no boundary or water drainage disputes with the
owners of any property adjacent to the Real Property and has no knowledge of any
such dispute involving former owners of the Real Property.
6.10.6 The buildings are located entirely within the boundaries of the
land and in no way encroach upon any other property; nor do any improvements on
any other property encroach upon the land.
6.10.7 The Facility (including, without limitation, all gas and
electric systems, lighting, heating, ventilating, and air conditioning equipment
and systems, elevators, radiators, incinerators, furnaces, hot water heaters,
water, sewage, and plumbing systems, and fire protection and security systems)
is in good operating order and repair without structural defect.
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6.10.8 The Real Property is zoned L-I by the City of Columbus.
6.10.9 Each building has been constructed in conformity with the plans
and specifications.
6.10.10 If the land is composed of more than one parcel, the parcels
are contiguous along their entire apparent common boundaries and there are no
strips or gores between them.
6.10.11 No gas or other wells, whether capped or uncapped, are located
on or about the Real Property.
6.10.12 All roads abutting the land have been paved, duly dedicated for
public use, and accepted for maintenance by the municipality in which the Real
Property is located.
6.10.13 All public utilities required for the operation of the Real
Property enter the Real Property through adjoining public streets or, if they
pass through private land, they do so in accordance with valid, perpetual,
recorded public easements. All utility lines situated on the Real Property have
been properly dedicated to, and are serviced and maintained by, the appropriate
public or quasi-public entity and will be available for use by Buyer upon
transfer of title to the Real Property. All utility facilities presently serving
the Real Property are adequate to service the Facility.
6.11 ASSUMED CONTRACTS. Schedule 1.1(a)(vi) lists all contracts,
agreements and instruments, including all modifications, amendments and waivers
thereto, to which Seller is a party or by which the Facility or any of the
Assets are bound and which Buyer has agreed to assume (collectively, the
"Assumed Contracts"), complete copies of which have been delivered to Buyer.
Other than the Assumed Contracts and the Excluded Contracts, there are no other
contracts, agreements and instruments to which Seller is a party. Except as set
forth in Schedule 1.1 (a)(vi), (a) all Assumed Contracts are in full force and
effect and are valid and enforceable in accordance with their respective written
terms; (b) Seller is not, to the best of Seller's knowledge, nor is any other
party thereto, in default under any such Assumed Contract and no event,
occurrence, condition or act now exists or, upon the consummation of the
transactions contemplated by this Agreement will exist which, with the giving of
notice or the lapse of time or both, would give rise to a default thereunder on
the part of Seller or any other party thereto or would give rise to the right of
any party or parties thereto to cancel or terminate thereunder, (c) Seller has
no knowledge that there are any anticipated cancellations or terminations of any
such Assumed Contract and there are any outstanding disputes thereunder; (d) no
consent or approval of any party or parties thereto is required for the
consummation of the transactions contemplated by this Agreement; and (e) no
officer, director, stockholder, subsidiary or Affiliate of Seller has any
financial interest, whether direct or indirect, in any such Assumed Contracts.
Seller has no agreements with any patients or prospective patients which
obligate or would obligate Seller to provide skilled nursing services at rates
below Seller's current and standard rates for similar services or which are for
terms longer than one month. Notwithstanding anything to the contrary contained
herein, Buyer shall have the right to cause Seller to terminate any contract not
being assumed by Buyer under this Agreement.
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6.12 BOOKS AND RECORDS. The books and records of the Facility made
available to the Buyer set forth in all respects all transactions affecting the
Facility, and such books and records have been properly kept and maintained in a
manner consistent with sound business practice and are complete and correct to
the best of knowledge of the Seller, in all material respects.
6.13 TAXES. To the best of Seller's knowledge, no state of facts exists
or has existed which would constitute grounds for the assessment against Buyer,
whether by reason of transferee liability or otherwise, of any liability for any
Taxes attributable to periods prior to the Closing Date by any taxing authority
with regard to Seller's income or operations, Seller's properties or assets or
any of the transactions contemplated by this Agreement.
6.14 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 1, 1997,
Seller has not:
(a) sold or committed to sell or assigned, transferred or
leased any of the Assets materials to the operation of the Facility;
(b) made or suffered any material amendment or termination of
any agreement, or contract, including, without limitation, any Assumed
Contract, commitment, lease or plan to which it is a party or by which
it is bound and which relates to the operations of the Facility,
whether any such amendment resulted from written agreement, course of
dealing, or operation of law;
(c) suffered any damage, destruction or loss, not fully
covered by insurance, which materially adversely affects the business,
operations, assets or properties of the Facility;
(d) received notice or otherwise had knowledge of any actual
or potential labor trouble, strike or other occurrence, event or
condition of any similar character which has had or might have a
material adverse effect on the operations of the Facility;
(e) made or granted any increase with respect to any wages,
salaries or other compensation, or entered into any employment contract
or agreement with any administrator, supervisor or employee in
connection with the operations of the Facility, except for employment
arrangements which, by their terms, will not continue past the Closing
Date or are terminable by either party, without penalty, upon no more
than 30 days prior notice;
(f) entered into any transaction other than in the ordinary
course of business consistent with past practice; or
(g) experienced any materially adverse change in its financial
condition, results of operations, business, assets or prospects.
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6.15 EMPLOYEE BENEFITS.
6.15.1 For purposes of this Agreement: (i) "Benefit Plan" shall mean
each employee benefit plan, contract and arrangement, including without
limitation, each employee benefit plan within the meaning of Section 3(3) of
ERISA, as to which Seller has any direct or indirect, actual or continent
liability; (ii) "Business Benefit Plan" shall mean any Benefit Plan which
provides benefits with respect to employees or former employees of Seller
employed in connection with the Facility; and (iii) "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
promulgated thereunder.
6.15.2 Schedule 6.15.2 sets forth a list of all Business Benefit Plans.
Seller has, with respect to each such plan, delivered to Buyer true and complete
copies of (i) all plan texts and agreements; (ii) all summary plan descriptions
and material employee communications; (iii) the most recent annual report
(including all schedules thereto); (iv) the most recent actuarial valuation; and
(v) if the plan is intended to quality under section 401 (a) or 403(a) of the
Code, the most recent determination letter received from the Internal Revenue
Service.
6.15.3 With respect to each Benefit Plan, Seller has no direct or
indirect, actual or contingent liability, other than to make payments for
contributions, premiums or benefits when due in the ordinary course, all of
which payments that are due have been made. Neither the Facility nor any Assets
are subject to any Lien under ERISA or the Code.
6.16 LABOR RELATIONS. There is no pending or threatened strike,
picketing, work stoppage or work slowdown affecting the Facility. No union is
certified by the National Labor Relations Board as collective bargaining agent
for any employees of the Facility. No written demand is pending for recognition,
no election for certification is scheduled, and no such demand is threatened.
Seller will terminate all employees at the time of the Closing Date and Buyer
shall be free to rehire such of said employees as Buyer desires in his sole
discretion.
6.17 INSURANCE. The Facility maintains, and has maintained, without
interruption, during the past three years, adequate and sufficient policies or
binders of insurance covering such risks and events, including personal injury,
property damage and general liability, as are maintained by similar facilities
in the ordinary course of business and as required by the holder of the HUD
Mortgage. All of such policies and binders, a complete and accurate list of
which is set forth in Schedule 6.17 and true and correct copies of which have
been delivered to Buyer, are in full force and effect, and there is no default
with respect to any provision contained in any such policy or binder, nor has
there been any failure to give any notice or present any claim under any
liability policy or binder in a timely fashion or in the manner or detail
required by such liability policy or binder. There are no past due premiums or
claims, and there are no provisions for retroactive or retrospective premium
adjustments with respect to any of such policies or binders, and no notice of
cancellation or nonrenewable with respect to, or disallowance of any claim
under, any such policy or binder has been received by Seller. Seller has no
actual knowledge of any state of facts that exists or any event which could
occur which reasonably might form the basis of any claim against or relating to
the
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Facility or its business or operations or any of its assets or properties which
are not covered by any of such policies or binders.
6.18 CAPITAL PROJECTS. There are no capital projects committed for or
authorized by Seller for the Facility involving the expenditure of $25,000 or
more.
6.19 BROKERS AND FINDERS. Geoffrey E. Webster, Esq., has acted as
counsel to Seller and has provided services as a finder or intermediary for the
sale of the business the subject of this Agreement. Seller agrees to indemnify
Buyer and hold Buyer harmless from all claims, demands, charges and costs,
including reasonable attorney's fees, for any claims or demands for such fees or
commissions arising out of this transaction which are generated by the actions
of Seller.
6.20 ENTIRE BUSINESS. To the best of Seller's knowledge, all material
Assets transferred constitute all of the properties, rights, interests and
business of Seller relating to the Facility, other than the Excluded Assets.
Upon the transfer of the Assets to Buyer at the Closing, Buyer will own all of
the properties, rights, interests and business (other than the Excluded Assets)
utilized in or necessary or useful to the operation of the Facility in the
manner in which the Facility has been operated up to and including the date
hereof and as the Facility will be operated until the Closing Date.
6.21 FULL DISCLOSURE. To the best of Seller's knowledge, all material
documents and other papers delivered by or on behalf of Seller in connection
with this Agreement and the transactions contemplated hereby are true, complete
and authentic. To the best of Seller's actual knowledge, the information
furnished by or on behalf of Seller to Buyer in connection with this Agreement
and the transactions contemplated hereby does not contain any untrue statement
of a material fact and does not omit to state any material fact necessary to
make the statements made, in the context in which made, not false or misleading.
There is no fact which Seller has not disclosed to Buyer in writing which
materially adversely affects, or will materially adversely affect, either the
Facility, the Assets or the business or condition (financial or otherwise) of
Seller or the ability of Seller to perform this Agreement.
6.22 NO ADVERSE CHANGE. Since December 1, 1997, there has been no
materially adverse change in the assets, properties, business or condition,
financial or otherwise, of Seller, nor is any such change threatened, nor has
there been any damage, destruction or loss materially affecting the assets,
properties, business or condition of Seller, whether or not covered by
insurance.
6.23 UNDISCLOSED LIABILITIES. Seller has no actual knowledge of any
liabilities or obligations of Seller, either accrued, absolute, contingent or
otherwise, except (a) those reflected or otherwise provided for in the balance
sheet of Seller at September 30, 1997 and (b) those arising since September 30,
1997 in the ordinary course of business and which in the aggregate, are not
material to Seller (except to the extent consistent with past practice), and
except as provided in Schedule 5.3.
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6.24 HUD MORTGAGE. As of December 31, 1997, the unpaid principal
balance of the HUD Mortgage, together with accrued interest, is Three Million
One Hundred Seventy-nine Thousand Two Hundred Forty Dollars ($3,179,240.00).
6.25 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Seller set forth in this Agreement and in any agreement,
certificate, document or other paper delivered or given to Buyer by Seller
pursuant to this Agreement will be materially true and correct to the best of
knowledge of the Seller, as of the Closing Date with the same force and effect
as if made on such date.
7. BUYER'S REPRESENTATIONS AND WARRANTEES.
---------------------------------------
Buyer represents and warrants to Seller as follows:
7.1 DUE ORGANIZATION AND AUTHORITY. The corporate Buyer is a limited
liability company duly organized and validly existing under the laws of the
State of Ohio and is authorized to do business in the State of Ohio. Buyer has
full power and authority to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly authorized and approved by
all necessary action of the members of Buyer, has been duly and validly executed
and delivered by Buyer and is a valid and legally binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
7.2 BROKERS AND FINDERS. No broker, finder, agent or similar
intermediary has acted on Buyer's behalf in connection with this Agreement or
the transactions contemplated hereby, and there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with Buyer or any action
taken by Buyer. Buyer agrees to indemnify Seller and hold the Seller harmless
from all claims, demands, charges and costs including reasonable attorneys fees,
for any claims or demands for such fees or commissions arising out of this
transaction which are generated by the actions of Buyer.
8. SELLER'S COVENANTS.
-------------------
Seller covenants as follows:
8.1 OPERATION IN ORDINARY COURSE. From the date of this Agreement
through the Closing Date, Seller shall (i) continue to conduct the business of
the Facility in the ordinary course of business consistent with past practice,
(ii) preserve intact the condition of the Facility, ordinary wear and tear
excluded, (iii) utilize good faith efforts to keep available the services of its
present employees and preserve the good will of its suppliers and private pay
patients, (iv) not take any action referenced in Section 6.14, (v) maintain or
cause to be maintained all Licenses, (vi) perform all maintenance and repairs
reasonably necessary to maintain the Facility and the Assets, (vii) maintain or
cause to be maintained adequate insurance upon the Assets and the Facility in
amounts required by the HUD Mortgage and sufficient to prevent Seller from being
a co-insurer,
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(viii) take no action which shall cause any of the representations or warranties
of Seller set forth in this Agreement to be untrue, (ix) pay the HUD Mortgage,
and (x) make all contributions to each Benefit Plan that are required under each
such plan with respect to any period prior to the Closing, without regard to
whether such contributions are due on or before the Closing Date.
8.2 RATES; PRIVATE PAY. Seller shall maintain the rate schedule
currently in effect with respect to the Facility and shall use their good faith
efforts to maintain its percentage of occupancy in the Facility at not less than
the occupancy percentage at the Facility on the date hereof and its percentage
of private pay patients in the Facility at not less than the percentage of
private pay patients in the Facility on the date hereof, as set forth on
Schedule 6.7.
8.3 ENVIRONMENTAL TRANSFER LAWS. Seller shall, at Seller's sole
expense, comply in a timely fashion with the requirements of all Environmental
Laws applicable to the transfer of the Facility and the Assets, if any. Seller
shall complete all necessary disclosure statements required by Environmental
Laws, if any, applicable to the transfer of the Facility and the Assets and
provide the statements to Buyer prior to the Closing all in proper form for
appropriate recordation and filing.
8.4 SALES OR TRANSFER TAXES. All transfer, documentary, gross receipts,
sales, use and property gains Taxes, and liabilities similar in nature, imposed
or payable in connection with the sale or transfer of the Facility or the Assets
to Buyer pursuant to this Agreement or the consummation of any of the
transactions contemplated hereby, shall be paid by Seller. Seller shall timely
file all required transfer Tax Returns and/or notices of the transfer of the
Facility and the Assets with the appropriate Tax authorities. Buyer agrees to
pay all other closing costs. Each party shall pay their own attorneys' fees.
8.5 NOTICE OF BREACH: DISCLOSURE. Seller shall promptly notify Buyer of
(i) any event, condition or circumstance occurring from the date hereof to the
Closing Date that would constitute a violation or breach of this Agreement or,
if the same were to continue to exist as of the Closing Date, would constitute
the non-satisfaction of any of the conditions set forth in Article 4, and (ii)
any event, occurrence, transaction or other item which would have been required
to have been disclosed on any schedule or statement delivered hereunder had such
event, occurrence, transaction or item existed as of the date hereof.
8.6 COST REPORTS. Seller shall prepare and timely file all Medicaid and
Medicare cost reports, terminating cost reports and HUD audit for 1997 required
to be filed in respect of the Facility, including all cost reports and
terminating cost reports for 1996 and/or 1997. Seller shall provide Buyer with
drafts of each such cost report not less than (5) business days in advance of
each such filing, or copies of reports already filed as of the date of this
Agreement. Buyer shall have the right to examine and, if appropriate, comment
upon the cost reports prior to their filing by Seller, insofar as such cost
reports may affect Buyer's operation of the Facility after the Closing Date,
including reimbursement basis.
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8.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 13, Seller shall not solicit or entertain offers
from, negotiate with, or in any manner discuss, encourage, recommend or agree to
any proposal of, any other potential buyer or buyers of the Assets or the
Facility.
8.8 EMPLOYEE MATTERS.
8.8.1 EMPLOYEES. Pending the Closing, Seller shall use good faith
efforts to retain the services of Seller's employees. Buyer or its tenant shall
offer employment, on such terms and conditions as shall be determined by Buyer
or its tenant, in their respective sole discretion, to those employees of Seller
as Buyer or its tenant, in their respective sole discretion, shall determine but
Buyer or its tenant shall not be required to offer employment to any or all of
Seller's employees. Buyer's present intention is, however, to offer employment
to substantially all of the employees of Seller actively involved in the
operations of the Facility as of the Closing. The employment by Buyer or its
tenant of any employee of Seller who accepts the terms of employment offered by
Buyer will commence at the Effective Time. Seller agrees in this regard after
waiver of contingencies to cooperate with Buyer by permitting Buyer or its
prospective tenant throughout the period prior to the Closing to meet with
Seller's employees at such times as shall be approved by Seller and to
distribute to Seller's employees such forms and other documents relating to
employment by Buyer or its tenant after the Closing as Buyer shall reasonably
request. Seller shall pay the cost of any compensation, severance or other
benefits which may be payable to Seller's employees or to such other persons as
shall claim compensation, severance or other benefits in connection with the
termination of their employment by Seller. Nothing in this Section shall be
deemed to require Buyer to retain any of the employees it hires for any period
of time or at any particular compensation rate or in any particular position.
Seller shall pay to Seller's employees on or prior to the Closing Date the
amount of all wages payable to them through the Closing Date and shall reserve
an amount estimated to pay the final payroll due after Closing.
8.8.2 BENEFITS. Seller shall (i) be responsible for providing the
appropriate notices to the employees of Seller pursuant to COBRA, (ii) continue
to be responsible after the Closing Date for any benefit claims incurred by any
employees of Seller (or their eligible dependents) prior to the Effective Time
which become payable under the terms of any medical, hospitalization,
disability, workers' compensation, or life insurance plan, coverage, obligation,
practice, arrangement or any other plan that is a welfare benefit plan (as
defined in Section 3(l) of ERISA) affecting such employees maintained by Seller,
(iii) continue to be responsible for the cost of extended insurance coverage, if
any, for any employees of Seller until such time, if any, that such employees
become employed by Buyer, and (iv) continue to be responsible for liabilities,
if any, arising prior to the Effective Time in connection with retiree health
and other non-pension benefits payable to any employees of Seller.
8.8.3 NO RIGHTS TO EMPLOYEES. Nothing in this Section 8.8 or elsewhere
in this Agreement is intended to confer upon any past, present or future
employee of Seller or his or her legal representatives any rights as a third
party beneficiary or otherwise or any other rights or remedies
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of any nature of kind whatsoever under or by reason of this Agreement or the
transactions contemplated hereby. Nothing contained in this Agreement shall
restrict in any way Buyer's right, in its sole discretion, to establish, amend
or terminate any employee benefit plan, arrangement, program, practice, policy
or procedure.
8.9 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Anything contained in this
Agreement or in any transfer document to the contrary notwithstanding, this
Agreement and the transfer documents to be delivered hereunder shall not
constitute an agreement to assign any contract or any claim or any right or
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way affect the rights of Buyer thereunder, except for the HUD
Mortgage. Buyer shall within fifteen (15) days of the execution of this
Agreement advise Seller of those contracts which Buyer desires to assume. Seller
shall reasonably assist in securing such assignments, but make no representation
or warranty regarding such agreements or their assignment.
8.10 ADDITIONAL FILINGS. Seller shall timely prepare and file any other
filings, reports or accounting that may be required by any lender of Seller,
Governmental Authority or other entity in connection with operation and/or
transfer of the Facility.
8.11 SURVIVAL. The covenants contained in this Section 8 shall survive
the Closing and the recording of the Deed and shall not be merged thereby.
9. BUYER'S COVENANTS.
------------------
9.1 Buyer shall promptly notify Seller of (i) any event, condition or
circumstance occurring from the date hereof to the Closing Date that would
constitute a violation or breach of this Agreement or, if the same were to
continue to exist as of the Closing Date, would constitute the non-satisfaction
of any of the conditions set forth in Article 5, and (ii) any event, occurrence,
transaction or other item which would have been required to have been disclosed
on any schedule or exhibit or other document to be delivered hereunder had such
event, occurrence, transaction or item existed as of the date hereof.
9.2 Buyer shall, beginning with the January 1998 payment, in a prompt
and timely manner pay and perform the obligations due on the HUD Mortgage
without demand by Seller and shall furnish proof of payment to Seller. This
covenant shall survive the Closing Date until such time as Seller is released
from any obligation and/or liability on the HUD Mortgage or until the HUD
Mortgage is satisfied through Buyer's conventional financing.
10. MUTUAL COVENANTS.
-----------------
10.1 ACCESS. From the date hereof through the Closing Date, Seller
shall provide Buyer or his tenant or operator and their authorized employees,
agents, officers and representatives with access to the properties, books,
records, Tax Returns, contracts, information, documents and
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personnel of Seller as they relate to the Facility and to the Assets during
regular business hours, for the purpose of making such investigation of the
Assets and the business, properties, financial condition and results of
operations of the Facility as Buyer or its tenant or operator may desire.
10.1.1 Following the Closing Date, (a) Seller shall give Buyer or its
tenant or operator and their authorized employees, agents, officers,
representatives and successors-in-interest, access to its books and records (and
permit Buyer or its tenant or operator to make copies thereof) to the extent
relating to the Facility, as Buyer or its tenant or operator may request, and
(b) Buyer or its tenant or operator shall give Seller and their authorized
employees, agents, officers, representatives and successors-in-interest, access
to the books and records of the Facility (and permit Seller to make copies
thereof, at Seller's cost and expense) to the extent relating to periods prior
to the Closing Date as Seller may reasonably request and at reasonable times for
purposes of preparing Tax Returns and conducting proceedings relating to Taxes
or other governmental inquires or reports including any audit requirement of the
HUD mortgage.
10.1.2 Following the Closing Date and for a period of six (6) years
thereafter, the Parties shall each notify the other at least sixty (60) days
prior to destruction or disposal of any books, records, Tax Returns, contracts,
information or documents relating to the Facility and shall permit the other to
remove or copy the same within such sixty (60) day period. No investigation by
Buyer or its tenant or operator shall diminish or obviate in any way any of the
representations, warranties, covenants or agreements of Seller contained in this
Agreement or in the Exhibits or Schedules hereto, or in any other agreement,
certificate or document delivered or given to Buyer or its tenant or operator by
Seller pursuant to this Agreement.
10.2 PHYSICAL INSPECTION; REPAIRS. Within sixty (60) days after the
Closing Date, Buyer shall have the right, at its expense, to obtain an
inspection of the Facility to determine if there are any structural defects
deficiencies or deterioration in any building or improvements thereof or
operating system therein, including compliance with applicable building, or fire
codes, rules or regulations (collectively, "Defects"). Buyer shall be
responsible for the first Thirty-five Thousand Dollars ($35,000.00), in the
aggregate, to remedy any Defects. Seller shall be responsible for the cost of
Defects that are, in the aggregate, in excess of Thirty-five Thousand Dollars
($35,000.00). Buyer shall provide Seller with a written statement of the item(s)
it claims are Defects within five (5) business days of the sixtieth day. Seller
shall determine whether such items are Defects and, if so, contract for the
repair or replacement of same in a prompt and diligent manner. Buyer shall have
the right to approve the contractor and materials for such repair or
replacement, which approval shall not be unreasonably withheld or delayed.
10.3 REQUIREMENTS. Upon Buyer's receipt of a Change of Ownership
Information Package and Application from the Ohio Department of Health, Buyer
shall complete and
return all required documents to the Ohio Department of Health within fifteen
(15) business days. Seller has provided notice of intent to change ownership and
Buyer shall request a Medicaid Certification and Participation Application
Package to the Ohio Department of Human Services, for the issuance of a
Medicare/Medicaid provider agreement in the name of the Buyer or its tenant or
operator. The
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forms must be completed and submitted to the Ohio Department of Human Services
no more than thirty (30) days following the Closing Date.
10.4 EXISTING ACCOUNTS RECEIVABLE. The following procedure shall be
followed for a period of six (6) months following the Closing Date with respect
to the Existing Accounts Receivable:
10.4.1 The Seller shall directly invoice and collect any and all of its
accounts receivable following the Closing Date. However, any amounts received by
Buyer after the Closing Date and expressly designated by the payer thereof as
being in payment of an Existing Account Receivable shall be remitted by Buyer to
Seller in the manner hereinafter provided. Nothing in this Section shall be
deemed to in any way limit Seller's right to directly recover from account
debtors any Existing Accounts Receivable or to exercise any remedies available
to it against such account debtors.
10.4.2 Buyer shall have no obligation to collect or pursue collection
of any of Seller's accounts receivable in the absence of a separate contract
regarding such collection. Buyer shall forward to Seller any funds received by
Buyer which represent payment of an account receivable of Seller; provided,
however, Buyer may offset any amount owed by Seller to Buyer pursuant to Section
2.2.2 against any funds received by Buyer and Buyer shall give Seller notice of
such offset.
10.4.3 Buyer shall make available to Seller books, papers and records
necessary for Seller to complete final settlements pending with third party
payors, including Medicare and Medicaid. Section 10.4 shall survive the Closing
and recording of the Deed and shall be merged thereby.
10.5 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, each party will maintain in confidence, and cause its directors,
officers, employees, agents and advisors to maintain in confidence, all written,
oral or other information obtained in confidence from another party in
connection with this Agreement or the transactions contemplated hereby,
including, without limitation, patient lists, sources of supply, costs, pricing
practices, trade secrets, financial information, business plans, budgets and
projections and other proprietary information (collectively the "Confidential
Information"), unless (i) such information is already known to such party or to
others not bound by a duty of confidentiality, (ii) such information becomes
publicly available through no fault of such party, (iii) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated hereby or (iv) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings. If
the transactions contemplated by this Agreement are not consummated, each party
receiving another party's Confidential Information will return or, at the
disclosing party's option, destroy all of such Confidential Information,
including, but not limited to, all copies thereof and extracts therefrom and
shall not use such Confidential Information in any manner which may be
detrimental to the disclosing party or its Affiliates.
10.6 EXPENSES. Except as expressly otherwise provided herein, each
party to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution
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and performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of agents, representatives, counsel and
accountants.
10.7 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby shall be
issued, if at all, at such time and in such manner as Buyer shall determine.
Unless consented to by each party prior to the Closing, the parties shall keep
the provisions of this Agreement strictly confidential and make no disclosure
thereof to any Person, other than such party' s respective legal and financial
advisors and to such public agencies as may require notice and information
including, as an example only, the Ohio Department of Human Services, and the
Securities and Exchange Commission.
10.8 CONSENTS AND APPROVALS. Buyer and Seller shall make all filings
required in connection with the consummation of the transactions contemplated
hereby and shall use their respective best efforts to obtain prior to the
Closing Date all required consents and the transfer of all Licenses and to
satisfy all other conditions set forth in Articles 3 and 4.
10.9 SURVIVAL. The covenants contained in this Section 10 shall survive
the Closing and the recording of the Deed and shall not be merged thereby for
the time periods set forth herein or if no time period is set forth, then for a
period not to exceed nine (9) months from the satisfaction of the Note.
11. RISK OF LOSS.
-------------
11.1 RISK OF LOSS. The risk of loss or damage to the Facility, by fire
or otherwise, or by condemnation or any governmental taking, shall be upon
Seller until the Closing of the transactions contemplated hereby.
11.2 CASUALTY. If at any time prior to the Closing, the Facility or any
"material part" (as hereinafter defined) of the Facility is damaged or destroyed
by fire or other casualty, Seller shall immediately notify Buyer by written
notice and Buyer shall have the right, within thirty (30) days after receiving
such notice, to terminate this Agreement, whereupon neither party hereto shall
have any further liability or obligation hereunder. If Buyer does not elect to
terminate this Agreement, then the Closing shall take place as provided in this
Agreement, and Seller will assign and transfer to Buyer at the Closing (by
written instrument satisfactory to Buyer and acknowledged by the applicable
insurer) all of Seller's right, title and interest in and to all insurance
proceeds which are thereafter payable to Seller on account of such fire or
casualty, and the Closing Payment shall be reduced by the amount of any
insurance proceeds previously received by Seller and by the amount of any
"deductible" under the insurance policy.
11.3 CONDEMNATION. If at any time prior to the Closing, title to or the
use of the Facility, or any part of the Facility, is taken or threatened to be
taken by condemnation, eminent domain or other similar governmental taking (a
"Condemnation"), Seller shall immediately notify Buyer by written notice and
Buyer shall have the right, within thirty (30) days after receiving such notice,
to
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terminate this Agreement, whereupon neither party hereto shall have any further
liability or obligation hereunder. If Buyer does not elect to terminate this
Agreement, then the Closing shall take place as provided in this Agreement, and
Seller shall assign and transfer to Buyer at the Closing (by written instrument
reasonably satisfactory to Buyer) all of Seller's right, title and interest in
and to any awards or other amounts (the "Condemnation Proceeds") which may be
payable by any Governmental Authority as the result of such Condemnation and the
Closing Payment shall be reduced by the amount of any Condemnation Proceeds
previously received by Seller. Prior to the Closing, Buyer shall have the right
to participate in any hearings or proceedings with respect to any Condemnation.
11.4 MATERIAL PART. For purposes of Section 11, a "material part" of
the Facility shall mean any part which the Buyer reasonably determines would
materially adversely affect the operations of the Facility if damaged, destroyed
or taken by Condemnation. To be "material" the loss must render the Premises
unfit for use and occupancy as a nursing home.
12. INDEMNIFICATION; REMEDIES.
--------------------------
12.1 SURVIVAL. All representations, warranties and agreements contained
in this Agreement or in any certificate, document or other paper delivered
pursuant to this Agreement shall survive the Closing for the time periods set
forth herein or if no time period is set forth, then for a period not to exceed
nine (9) months from the satisfaction of the Note, notwithstanding any
investigation conducted with respect thereto or any knowledge acquired as to the
accuracy or inaccuracy of any such representation or warranty; provided, that if
the Closing occurs, Seller shall have no liability (for indemnification or
otherwise) with respect to any representation or warranty unless, on or before
nine (9) months after the satisfaction of the Note, Seller is given notice
asserting a claim with respect thereto and specifying the factual basis of that
claim in reasonable to detail to the extent then known by Buyer, provided,
however that a claim with respect to Sections 6.1 or 6.2 may be made at any
time. Buyer shall have no liability (for indemnification or otherwise) with
respect to any representation or warranty unless on or before nine (9) months
after the satisfaction of the Note, Buyer are given notice of a claim with
respect thereto and specifying the factual basis of that claim in reasonable
detail to the extent known by Seller. The covenants contained in this Section 12
of this Agreement shall survive the Closing and the recording of the Deed and
shall not be merged thereby.
12.2 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Buyer and his respective agents, representatives, employees, members,
officers, directors, stockholders, controlling persons and Affiliates
(collectively, the "Buyer's Indemnities"), and shall reimburse the Buyer's
Indemnities for, any loss, liability, claim, damage, expense (including, but not
limited to, costs of investigation and defense and attorneys' fees), whether or
not involving a third party claim (collectively, "Damages"), arising from or in
connection with (a) any material inaccuracy in any of the representations and
warranties of Seller in this Agreement or in any certificate, document or other
paper delivered by Seller pursuant to this Agreement, (b) any failure of Seller
to perform or comply with any agreement to be performed or complied with by it
in this Agreement, (c) any Retained Liability or Excluded Asset (including,
without limitation, any Damages resulting from or relating
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to any audit by any Governmental Authority concerning the operation of the
Facility by Seller prior to the Closing Date), (d) any matters pertaining to
operations of the Facility on or before the Effective Date, and (e) the default
under the HUD Mortgage as a result of the consummation of the transactions
contemplated by this Agreement.
12.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless
Seller and its respective agents, representatives, employees, officers,
directors and stockholders (collectively, the "Seller's Indemnities") and shall
reimburse the Seller's Indemnities for any Damages arising from or in connection
with (a) any material inaccuracy in any of the representations and warranties of
Buyer in this Agreement or in any certificate or other document delivered by
Buyer pursuant to this Agreement, (b) any failure by Buyer to perform or comply
with any agreement to be performed or complied with by Buyer in this Agreement,
(c) the Assumed Liabilities, (d) the transfer of the Trust Account Funds to
Buyer as set forth in Section 6.5.4 herein above, and (e) any matters pertaining
to operations of the Facility after the Effective Date.
12.4 COMPANION AGREEMENT INDEMNIFICATION. Seller shall indemnify and
hold harmless the Companion Buyer and his respective agents, representatives,
employees, members, officers, directors, stockholders, controlling persons and
Affiliates (collectively, the "Companion Buyer's Indemnities"), and shall
reimburse the Buyer's Indemnities for Damages, arising from or in connection
with any matter indemnified in Section 12.2 of the Companion Agreement. Buyer
shall indemnify and hold harmless the Companion Seller and its respective
agents, representatives, employees, officers, directors and stockholders
(collectively, the "Companion Seller's Indemnities") and shall reimburse the
Companion Seller's Indemnities for any Damages arising from or in connection
with any matter indemnified in Section 12.3 of the Companion Agreement.
12.5 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS. Promptly
after receipt by an indemnified party under Section 12.2, 12.3 or 12.4 of oral
or written notice of a claim or the commencement of any proceeding against it,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such proceeding
shall be brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish (unless
the indemnifying party is also a party to such proceeding and the indemnified
party determines in good faith that joint-representation would be
inappropriate), to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such Section for any fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each case subsequently incurred by
such indemnified party in connection with the defense thereof. If an
indemnifying party assumes the defense of such proceeding, (a) no compromise or
settlement thereof may be effected by the indemnifying party
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without the indemnified party' s consent unless (i) there is no finding or
admission of any violation of law or any violation of the rights of any Person
and there is no effect on any other claims that may be made against the
indemnified party and (ii) there sole relief provided is monetary damages that
are paid in full by the indemnifying party and (b) the indemnified party shall
have no liability with respect to any compromise or settlement effected without
its consent. If notice is given to an indemnifying party of the commencement of
any proceeding and it does not, within ten (10) days after the indemnified
party's notice is given, waive notice to the indemnified party of its election
to assume the defense thereof, the indemnifying party shall be bound by any
determination made in such action or any compromise or settlement effected by
the indemnified party. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages, such indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise or settle such
proceeding, but the indemnifying party shall not be bound by any determination
of a proceeding so defended or any compromise or settlement thereof effected
without its consent (which shall not be unreasonably withheld).
13. TERMINATION.
------------
13.1 TERMINATION EVENTS. Subject to the provisions of Section 13.2,
this Agreement may, by written notice given at or prior to the Closing in the
manner hereinafter provided, be terminated.
(a) by either Buyer or Seller if a material default or breach
shall be made by the other party with respect to the due and timely
performance of any of its covenants and agreements contained herein, or
with respect to the due compliance with any of its representations or
warranties, and such default has not been cured within fifteen (15)
days after the other party has provided such party with written notice
thereof and has not been waived;
(b) by Buyer if the satisfaction of any of the conditions set
forth in Article 4 is or becomes impossible, other than through failure
of Buyer to fully comply with his obligations thereunder, and shall not
have been waived by Seller on or before such date; or
(c) by Seller, if the satisfaction of any of the conditions
set forth in Article 5 is or becomes impossible, other than through
failure of Seller to fully comply with its obligations thereunder, and
shall not have been waived by Buyer on or before such date;
(d) by either Buyer or Seller if the Closing shall not have
occurred on or before December 31, 1997 or such later date as may be
agreed upon in writing by the parties, provided, however, that a party
may not terminate this Agreement under this Section 13.1 (d) if the
Closing has not occurred as a result of such party's breach or willful
failure to fulfill its obligation hereunder.
(e) pursuant to Sections 11.2 or 11.3 or
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(f) by mutual consent of Buyer and Seller.
13.2 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 13.1, all further obligations of the parties hereunder shall
terminate. Each party's right of termination hereunder is in addition to any
other rights it may have hereunder or otherwise and the exercise of a right of
termination shall not be an election of remedies.
14. HUD MORTGAGE; REFINANCING.
--------------------------
14.1 ACKNOWLEDGMENT. Seller and Buyer understand that the terms and
conditions of the HUD Mortgage require certain acts that may not be satisfied
prior to the Closing Date and they have therefore structured this Agreement to
accomplish the desires of the parties with as minimal effect as foreseeable to
the Seller's credit history. Notwithstanding the Closing, Buyer shall make good
faith efforts to obtain all requisite approvals, consents and authorizations
from any necessary party to the HUD Mortgage, or in the alternative, Buyer shall
obtain conventional financing to refinance the HUD Mortgage. If Buyer assumes
the HUD Mortgage, Buyer shall obtain the full release of Seller and any and all
other signors, guarantors, makers or others from the HUD Mortgage and Buyer
shall fund any replacement reserves and escrows and such existing reserves and
escrows shall be returned to Seller.
14.2 HUD MORTGAGE PREPAYMENT PENALTY. At such time that the HUD
Mortgage is paid off and there is a prepayment penalty, fee or charge assessed
by HUD, Seller agrees to pay one-half (1/2) of the amount assessed and Buyer
agrees to pay one-half (1/2).
14.3 REMEDY FOR BUYER'S INABILITY TO PERFORM. In the event Buyer is
unable to obtain a release of Seller from any obligation of the HUD Mortgage or
obtain conventional financing within one hundred eighty (180) days after the
Closing Date and Buyer demonstrates good faith pursuit of such financing Seller
shall consent to the extension of the Note given as partial payment of the Total
Price for an additional ninety (90) days. If upon the expiration of the extended
period Buyer has not obtained its financing, Seller may declare this Agreement
and the Companion Agreement void and retain as its liquidated damages the Cash
Amount and Buyer and Seller shall have no further liability hereunder. In such
event Buyer shall give a general warranty deed and bill of sale returning to
Seller all assets transferred by Seller to Buyer and any replacement(s) of any
assets transferred to Buyer under this Agreement. Buyer and its agents,
employees, contractors and any others having or claiming to have any right,
title or interest in the property shall surrender possession of same to Seller
and cooperate in the return to Seller of its full right title and interest in
the Assets subject of this Agreement.
15. DEFINITIONS.
------------
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15.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" shall mean, with respect to any natural
person, corporation, partnership or other entity, a natural person or
entity that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
person or entity.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Environmental Laws" shall mean any state, federal or
local laws, ordinances, codes or regulations relating to pollution,
natural resources, protection of the environment, or public health and
safety, including, without limitation, laws and regulations relating to
the handling and disposal of medical and biological waste.
(d) "Governmental Authority" shall mean any government or
political subdivision thereof, whether federal, state, local or
foreign, or any agency or instrumentality of any such government or
political subdivision, or any court or arbitration body.
(e) "Hazardous Substances" shall mean (i) any hazardous or
toxic waste, substance, or material defined as such in (or for the
purposes of) any Environmental Law, (ii) asbestos-containing material,
(iii) medical and biological waste, (iv) polychlorinated biphenyl's,
(v) petroleum products, including gasoline, fuel oil, crude oil and
other various constituents of such products, and (vi) any other
chemicals, materials or substances, exposure to which is prohibited,
limited or regulated by any Environmental Laws.
(f) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
(g) "Lien" shall mean any lien, pledge, mortgage, deed of
trust, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, encroachment or other survey defect,
transfer restriction or other encumbrance of any nature whatsoever.
(h) "Person" shall mean any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, or other organization, whether or
not a legal entity, and any Governmental Authority.
(i) "Tax" or "Taxes" shall mean:
(i) Any tax, duty, impost, fee or charge of any kind
or nature whatsoever imposed by any Governmental Authority,
including, without limitation, any income, sales, transfer,
transfer gains or use taxes, excise, franchise, business and
occupation
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taxes, real or personal property taxes, and gross receipt,
unemployment, FICA, FUTA, and other payroll taxes, and
(ii) Interest, additions and penalties (civil or
criminal) imposed in connection with any such tax and any
interest in respect of any such additions or penalties, and
professional fees incurred in connection with the defense,
determination or litigation of any such tax liability.
(j) "Tax Returns" shall mean all federal, state, local, and
foreign returns (including information returns), reports and
declarations of any kind required to be filed by or on behalf of Seller
with respect to Taxes, including, without limitation, Internal Revenue
Service Form 990 (and any comparable form required to be filed under
state or local law) and, if applicable, consolidated or combined
federal, state or local income tax returns of the general and limited
partners of Seller for Code purposes and any returns required with
respect to the Taxes described in Section 6.13.
15.2 The words "hereof," "herein," "hereby" and "hereunder," and words
of like import, refer to this Agreement as a whole and not to any particular
Section hereof. References herein to any Section, Schedule or Exhibit refer to
such Section of, or such Schedule or Exhibit to, this Agreement, unless the
context otherwise requires. All pronouns and any variations thereof refer to the
masculine, feminine or neuter gender, singular or plural, as the context may
require.
16. MISCELLANEOUS.
-------------
16.1 SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
16.2 FURTHER ASSURANCES. Each of the parties agrees that it will, from
time to time after the date of this Agreement, execute and deliver such other
certificates, documents and instruments and take such other action as may be
reasonably requested by the other party to carry out the transactions
contemplated by this Agreement.
16.3 WAIVER. Any provision of this Agreement may be waived at any time
by the party which is entitled to the benefits thereof, and this Agreement may
be amended or supplemented at any time. No such waiver, amendment, or supplement
shall be effective unless in writing and signed by Seller and Buyer.
16.4 ENTIRE AGREEMENT. This Agreement (together with the certificates,
agreements, Exhibits, Schedules, instruments and other documents referred to
herein) constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, both written and
oral, with respect to such subject matter.
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16.5 GOVERNING LAW: CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio
applicable to agreements made and to be performed entirely within such state.
Any action or proceeding brought by a party against any other party in
connection with this Agreement may be commenced in any federal or state court
located in Franklin County, Ohio, and all objections to personal jurisdiction
and venue in any action or proceeding so commenced are hereby waived. As long as
service of process is by notice as provided in this Agreement or as required by
any such court, all objections to improper service of process are hereby waived.
16.6 ASSIGNMENT. Neither Buyer nor Seller may assign this Agreement to
any other Person without the prior written consent of the other party provided,
however, that (i) Buyer may assign its rights hereunder to one or more
Affiliates of Buyer and (ii) Buyer or its permitted assigns may assign for
collateral their rights hereunder to any Person who is providing financing for
the Facility or the acquisition thereof but such assignment if permitted by
Seller, shall not relieve the Buyer from performance of all of the terms and
conditions of this Agreement. Buyer may assign its interest in this Agreement to
a limited partnership or to such other entity as Buyer may desire; provided
however, Buyer shall at all times remain the principal partner in the entity so
that Seller shall be entitled to continue to conduct the closing of this
transaction with Buyer.
16.7 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (a) when delivered
personally, (b) when transmitted by telecopy (receipt confirmed), (c) on the
fifth business day following mailing by registered or certified mail (return
receipt requested), or (d) on the next business day following deposit with an
overnight delivery service of national reputation, to the parties at the
following addresses and telecopy numbers (or at such other address or telecopy
number for a party as may be specified by like notice):
If to Seller, to:
Marvin D. Kantor, Chairman
Wendt-Bristol Health Services Corp.
2 Nationwide, Suite 760
280 N. High Street
Columbus, Ohio 43215
Fax (614) 221-6168
and a copy to
Mr. Geoffrey E. Webster, Esq.
17 South High St., Ste. 600
Columbus, Ohio 43215
Fax (614) 461-7168
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If to Buyer, to:
Harold Sosna
7 Hickory Hollow
Cincinnati, Ohio 45241
and a copy to Benesch, Friedlander, Coplan & Aronoff
88 East Broad Street, Suite 900
Columbus, Ohio 43215
Attn: Janet K. Feldkamp, Esq.
Fax (614) 223-9330
16.8 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16.9 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
16.10 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this
Agreement are incorporated by reference herein and are made a part hereof as if
they were fully set forth herein.
16.11 SEVERABILITY. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
16.12 NO THIRD PARTY BENEFICIARIES. There are no third party
beneficiaries of this Agreement or of the transactions contemplated hereby and
nothing contained herein shall be deemed to confer upon any one other than the
parties hereto (and their permitted successors and assigns) any right to insist
upon or to enforce the performance of any of the obligations contained herein.
16.13 TIME OF THE ESSENCE. The Parties hereto agree that timing is of
the essence with respect to all actions required by the Seller and Buyer
hereunder.
(text continues on the next page)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"SELLER"
HEALTH AMERICA, INC., an Ohio
corporation
By: \s\ Marvin D. Kantor
------------------------------
Its: Chairman
------------------------------
Dated: December 19, 1997
"BUYER"
54 REALTY, LTD., an Ohio limited
liability company
By: \s\ Raymond Schneider
------------------------------
Raymond Schneider, member
By: \s\ Harold Sosna
------------------------------
Harold Sosna, member
Dated: December 19, 1997
Executed by the undersigned with respect to Section 2.1(c):
\s\ Raymond Schneider
------------------------------
Raymond Schneider
\s\ Harold Sosna
------------------------------
Harold Sosna
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