EXHIBIT 2.1
1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of the 28th day of June,
1996 by and among (i) CASA DEL MAR, INC. ("CDM Inc."), a Florida corporation,
(ii) CASA DEL MAR PARTICIPATION CORPORATION ("CDMP Corp."), a District of
Columbia corporation, (iii) HAMILTON HOUSE, INC. ("HH Inc."), a Florida
corporation, (iv) HAMILTON HOUSE FUNDING LIMITED PARTNERSHIP ("HHF LP"), a
Florida limited partnership, (v) PREFERRED RETIREMENT COMMUNITIES, INC. ("PRC
Inc."), a Florida corporation, (vi) PREFERRED HOME HEALTH, INC. ("PHH Inc."), a
Florida corporation, (vii) PREFERRED HOME HEALTH LIMITED PARTNERSHIP ("PHH
LP"), a Florida limited partnership, (viii) STEPHEN A. GOLDBERG, (ix) DAVID H.
MAINGUY, (x) ROBERT H. MAINGUY, (xi) DIANA L. GOLDBERG (all of the foregoing
hereinafter jointly and severally referred to as "Seller"), (xii) HAMILTON
HOUSE ASSOCIATES LIMITED PARTNERSHIP ("HHA LP"), a Florida limited partnership,
(xiii) CASA DEL MAR ASSOCIATES LIMITED PARTNERSHIP ("CDMA LP"), a Florida
limited partnership (both of the foregoing hereinafter jointly and severally
referred to as "Owner"), and (xiv) NHP INCORPORATED, a Delaware corporation
("Buyer").
RECITALS
A. PRC Inc. is engaged in the residential real property management and rental
services business (the "Management Business"), and has the exclusive right to
provide residential real property management and rental services to properties
known as Hamilton House, of Plantation, Florida ("Hamilton House"), and Casa
Del Mar, of Boca Raton, Florida ("Casa Del Mar"); and PRC Inc. wishes to assign
such rights to Buyer.
B. PHH LP is engaged in the home health care business (the "Healthcare
Business"), and provides home health care services to, among others, residents
of Hamilton House and Casa Del Mar.
C. Stephen A. Goldberg (the "HH Inc. Stockholder") is the legal and
beneficial owners of all of the issued and outstanding capital stock of HH
Inc., which is the sole general partner of HHA LP; and the HH Inc. Stockholder
wishes to sell all of their HH Inc. stock to Buyer.
D. Stephen A. Goldberg (the "CDM Inc. Stockholder") is the legal and
beneficial owner of all of the issued and outstanding capital stock of CDM
Inc., which is the sole general partner of CDMA LP; and the CDM Inc.
Stockholder wishes to sell all of their CDM Inc. stock to Buyer.
E. David H. Mainguy and Robert H. Mainguy (the "PHH Inc. Stockholders") are
the legal and beneficial owners of all of the issued and outstanding capital
stock of PHH Inc., which is the sole general partner of PHH LP; and the PHH
Inc. Stockholders wish to sell all of their PHH Inc. stock to Buyer.
2
F. Diana L. Goldberg is the sole Limited Partner of PHH LP; and she wishes to
sell all of her PHH LP limited partnership interest to Buyer.
G. HHF LP has made loans to HHA LP with an aggregate balance of principal and
interest as of July 12, 1996 (the "Reference Date") of approximately Twelve
Million Seven Hundred Twenty-Eight Thousand Dollars ($12,728,000), as set forth
in Schedule 0.G (the foregoing loans hereinafter referred to in the aggregate
as the "HHF LP Loans"); and Buyer wishes to purchase the HHF LP Loans following
their restructuring as set forth in Section 4.3 hereof.
H. Stephen A. Goldberg has made loans to HHA LP with an aggregate balance of
principal and interest as of the Reference Date of approximately Seven Million
Eight Hundred Seventeen Thousand Dollars ($7,817,000), as set forth in Schedule
0.H (the foregoing loans hereinafter referred to in the aggregate as the
"Goldberg HH Loans"); and Buyer wishes to purchase the Goldberg HH Loans as set
forth in Section 4.2 hereof.
I. Stephen A. Goldberg has made loans to CDMA LP with an aggregate balance of
principal and interest as of the Reference Date of approximately Five Million
Two Hundred Ten Thousand Dollars ($5,210,000), as set forth in Schedule 0.I
(the foregoing loans hereinafter referred to in the aggregate as the "Goldberg
CDM Loans"); and Buyer wishes to purchase the Goldberg CDM Loans as set forth
in Section 4.4 hereof.
J. CDMP Corp. has made loans to CDMA LP with an aggregate balance of
principal and interest as of the Reference Date of approximately One Million
Seven Hundred Eighty-Six Thousand Dollars ($1,786,000), as set forth in
Schedule 0.J (the foregoing loans hereinafter referred to in the aggregate as
the "CDMP Corp. Loans"); and the CDMP Corp. Loans are to be restructured as set
forth in Section 4.5 hereof.
K. Seller wishes to sell, convey and assign, and Buyer wishes to purchase,
accept and assume, all of the foregoing rights, loans, and ownership interests
described above (the "Rights"), on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the matters set forth above, of the mutual
promises hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree as follows:
1. PURCHASE AND SALE
1.1 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter
defined), the following shall occur:
A. The HH Inc. Stockholder shall sell and assign to Buyer all of
the issued and outstanding shares of capital stock of HH Inc., consisting of
five hundred fifty-
- 2 -
3
six (556) shares of Common Stock, par value One Dollar ($1.00) per share (the
"HH Inc. Shares").
B. The CDM Inc. Stockholder shall sell and assign to Buyer all of
the issued and outstanding shares of capital stock of CDM Inc., consisting of
four hundred fifty (450) shares of Common Stock, par value One Dollar ($1.00)
per share (the "CDM Inc. Shares").
C. The PHH Inc. Stockholders shall sell and assign to Buyer all of
the issued and outstanding shares of capital stock of PHH Inc., consisting of
two hundred twenty-two (222) shares of Common Stock, par value One Dollar
($1.00) per share (the "PHH Inc. Shares").
D. HHF LP shall sell and assign to Buyer all of its rights with
respect to the HHF LP Loans, as restructured prior to Closing in accordance
with Section 4.3 hereof.
E. Stephen A. Goldberg shall sell and assign to Buyer all of his
rights with respect to the Goldberg HH Loans, as restructured prior to Closing
in accordance with Section 4.2 hereof.
F. Stephen A. Goldberg shall sell and assign to Buyer all of his
rights with respect to the Goldberg CDM Loans, as restructured prior to Closing
in accordance with Section 4.4 hereof.
G. Diana L. Goldberg shall sell and assign to Buyer all of her
rights with respect to the PHH LP limited partnership interests.
H. PRC Inc. shall sell and assign to Buyer all of its rights with
respect to the New CDM Management Agreement (as hereinafter defined) and the
New HH Management Agreement (as hereinafter defined).
1.2 PURCHASE PRICE.
A. Upon the terms and subject to the conditions set forth in this
Agreement, in reliance upon the representations and warranties of Seller
contained herein and in consideration of the rights and interests being
conveyed to Buyer herein and the other covenants of Seller contained herein,
Buyer agrees to pay to Seller the sum of Nineteen Million Five Hundred Fifty
Thousand Dollars ($19,550,000) (the "Purchase Price") as follows: (i) Fifteen
Million Five Hundred Fifty Thousand Dollars ($15,550,000) (the "Closing
Amount") to be paid at Closing, and (ii) a total of Four Million Dollars
($4,000,000) (the "Deferred Amount"), to accrue interest at nine and one-half
percent (9.5%) per annum, and to be paid, commencing October 1, 1996, in
quarterly installments (consisting of payments of interest only on the Deferred
Amount), and in a single final payment, on the tenth (10th) anniversary of the
Closing, of the outstanding principal of the Deferred Amount and unpaid
interest thereon. The Deferred Amount shall be paid in up to five (5) separate
promissory notes in the form set forth in Exhibit 1.2.A and payable to the
individuals, and in the amounts, as set forth in Schedule 1.2.A. The Deferred
Amount
- 3 -
4
may be prepaid at any time by Buyer without penalty. Buyer has previously paid
Seller an earnest money deposit (the "Deposit") of Two Hundred Fifty Thousand
Dollars ($250,000) which shall be applied to the Purchase Price at Closing and
shall reduce the cash portion of the Closing Amount accordingly.
B. All parties constituting Seller shall designate in writing, on
or prior to Closing, an agent for receipt of all payments of the Purchase Price
by Buyer ("Seller's Agent"), and shall mutually agree upon the distribution of
the Purchase Price among them. Buyer shall make all payments of the Purchase
Price hereunder to Seller's Agent for distribution to the parties constituting
Seller. Each party constituting Seller hereby releases Buyer and agrees to
hold Buyer harmless from and against any claim or liability arising from the
actions or inactions of Seller's Agent. Buyer's obligation to make any payment
of the Purchase Price hereunder shall be discharged upon the payment of such
amount to Seller's Agent.
1.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the various assets purchased as described in Schedule 1.3.
1.4 ADJUSTMENTS TO PURCHASE PRICE.
A. Within fifteen (15) days after the Closing Date, PHH Inc. shall
produce and deliver to Robert H. Mainguy, David H. Mainguy and Diana L.
Goldberg (the "Former PHH Owners") a report of all accounts receivable (the
"Closing Receivables") and accounts payable (the "Closing Payables") which
existed in the PHH Business on the Closing Date. Ninety (90) days after the
Closing Date, PHH Inc. shall produce and deliver to the Former PHH Owners (i) a
report of the collection status of the Closing Receivables as of such date;
(ii) if the aggregate amounts collected from the Closing Receivables as of such
date exceed the aggregate amount of the Closing Payables, a check, payable to
the order of Seller's Agent, in an amount equal to such excess; and (iii)
assignments of any then uncollected Closing Receivables to an assignee
designated by the Former PHH Owners acting jointly, together with any contracts
and billing records reasonably requested by such assignee to assist it in
collecting such receivables. In the event that the foregoing 90-day report
discloses that the aggregate amounts collected from the Closing Receivables as
of such date do not exceed the aggregate amount of the Closing Payables, the
Former PHH Owners shall pay Buyer an amount equal to such deficiency. For
purposes of this Agreement, the term "PHH Business" means any business
conducted by PHH Inc. and/or PHH LP as of the Closing Date. For purposes of
this Section 1.4.A, the term "accounts receivable" means receivables due from
customers as a result of the operation in the ordinary course of the PHH
Business; and the term "accounts payable" means trade payables and payroll
liabilities accrued in connection with the operation in the ordinary course of
the PHH Business.
B. In the event that the consent of the HHF LP limited partners
cannot be obtained and Buyer elects to waive the condition to closing set forth
in Section 5.1.H, then, as a consequence of Buyer's inability to purchase the
HHF LP Loans, (i) the Purchase Price shall be reduced by Two Million Two
Hundred Seventy-Three Hundred Thousand Dollars ($2,273,000) in the aggregate,
resulting in a reduction of the Closing Amount to Thirteen Million Two Hundred
Seventy-Seven Hundred Thousand Dollars
- 4 -
5
($13,277,000); and (ii) the provisions of Sections 1.1.D, 2.6, 4.3, 5.1.H and
6.2.C shall terminate and be of no further force or effect; provided, however,
that in the event that, within twelve (12) months after the Closing Date,
Seller succeeds in obtaining such consent of the HHF Limited Partners, NHP
shall, within thirty (30) days of notice thereof, purchase the HHF LP Loans,
and the foregoing Sections shall again be applicable.
2. REPRESENTATIONS AND WARRANTIES OF SELLER.
2.1 REGARDING CDM INC. CDM Inc. (for purposes of this Section 2.1, the
"Entity") and the CDM Inc. Stockholder (for purposes of this Section 2.1, the
"Stockholder") hereby makes the representations and warranties set forth in
Attachment A solely as they apply to CDM Inc.
2.2 REGARDING CDMA LP. CDMA LP (for purposes of this Section 2.2, the
"Entity"), CDM Inc. and the CDM Inc. Stockholder (for purposes of this Section
2.2, the "Stockholder") hereby makes the representations and warranties set
forth in Attachment B solely as they apply to CDMA LP.
2.3 REGARDING CDMP CORP. CDMP Corp. (for purposes of this Section 2.3,
the "Entity") hereby makes the representations and warranties set forth in
Attachment D solely as they apply to CDMP Corp.
2.4 REGARDING HH INC. HH Inc. (for purposes of this Section 2.4, the
"Entity") and the HH Inc. Stockholder (for purposes of this Section 2.4, the
"Stockholder") hereby make the representations and warranties set forth in
Attachment A solely as they apply to HH Inc.
2.5 REGARDING HHA LP. HHA LP (for purposes of this Section 2.5, the
"Entity"), HH Inc. and the HH Inc. Stockholder (for purposes of this Section
2.5, the "Stockholder") hereby make the representations and warranties set
forth in Attachment B solely as they apply to HHA LP.
2.6 REGARDING HHF LP. HHF LP (for purposes of this Section 2.6, the
"Entity") hereby makes the representations and warranties set forth in
Attachment E solely as they apply to HHF LP.
2.7 REGARDING PRC INC. PRC Inc. (for purposes of this Section 2.7, the
"Entity") hereby makes the representations and warranties set forth in
Attachment G solely as they apply to PRC Inc.
2.8 REGARDING PHH INC. PHH Inc. (for purposes of this Section 2.8, the
"Entity") and the PHH Inc. Stockholders (for purposes of this Section 2.8, the
"Stockholders") hereby make the representations and warranties set forth in
Attachment A solely as they apply to PHH Inc.
2.9 REGARDING PHH LP. PHH LP (for purposes of this Section 2.9, the
"Entity"), PHH Inc. and the PHH Inc. Stockholders and Diana L. Goldberg (for
purposes of
- 5 -
6
this Section 2.9, the "Stockholders") hereby make the representations and
warranties set forth in Attachment B solely as they apply to PHH LP.
2.10 REGARDING STEPHEN A. GOLDBERG. Stephen A. Goldberg (for purposes of
this Section 2.10, the "Creditor"), hereby makes the further representations
and warranties set forth in Attachment F.
2.11 REGARDING THE HH INC. STOCKHOLDER. The HH Inc. Stockholder (for
purposes of this Section 2.11, the "Stockholder") hereby makes the
representations and warranties set forth in Attachment C solely as they apply
to HH Inc. (for purposes of this Section 2.11, the "Entity").
2.12 REGARDING THE CDM INC. STOCKHOLDER. The CDM Inc. Stockholder (for
purposes of this Section 2.12, the "Stockholder") hereby makes the
representations and warranties set forth in Attachment C solely as they apply
to CDM Inc. (for purposes of this Section 2.12, the "Entity").
2.13 REGARDING THE PHH INC. STOCKHOLDERS. Each PHH Inc. Stockholder (for
purposes of this Section 2.13, the "Stockholder") hereby makes the
representations and warranties set forth in Attachment C solely as they apply
to PHH Inc. (for purposes of this Section 2.13, the "Entity").
2.14 REGARDING THE PHH LP LIMITED PARTNER. Diana L. Goldberg (for
purposes of this Section 2.14, the "Partner") hereby makes the representations
and warranties set forth in Attachment H.
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
3.1. EXISTENCE; CORPORATE AUTHORITY; COMPLIANCE WITH LAW. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, its jurisdiction of incorporation. Buyer is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the properties owned or leased
by it therein or in which the transaction of its business makes such
qualification necessary. Buyer has all requisite corporate power and authority
to own, lease or otherwise hold its properties and carry on its business as now
conducted. Buyer has all licenses, permits and other authorizations and has
taken all actions required by applicable provision of any federal, state or
local law, code or ordinance or any rule or regulation (each, a "Law" and,
collectively, "Laws") promulgated by any court or any domestic, state, local or
foreign government or any subdivision, agency, authority or instrumentality
thereof (each, a "Governmental Authority") in connection with its business as
now conducted, and is not in violation of any Laws or regulations to which it
is subject.
3.2. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement
and the other documents and instruments contemplated hereby (the "Ancillary
Documents") to which it is or shall be a party, and to consummate the
transactions contemplated by this
- 6 -
7
Agreement and the Ancillary Documents (the "Transactions"). The execution and
delivery by Buyer of this Agreement or the Ancillary Documents to which Buyer
is or shall be a party and the consummation by Buyer of the Transactions have
been duly authorized by all necessary corporate action on the part of Buyer.
This Agreement and the Ancillary Documents to which Buyer is or shall be a
party have been, or shall be, as the case may be, duly executed and delivered
by Buyer and are or shall be, as the case may be, enforceable against Buyer in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization and other similar Laws
affecting the enforcement of creditors' rights generally. The consummation of
the Transactions shall not require the consent of any third party not obtained,
and, except as set forth on Schedule 3.2, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to Buyer in
connection with the execution and delivery by Buyer of this Agreement or the
Ancillary Documents to which Buyer is or shall be a party, or the consummation
by it of the Transactions.
3.3 SOLVENCY. Buyer is solvent and currently has the ability to pay its
debts when due, and the value of its current assets exceeds the aggregate
amount of its current liabilities. Neither Buyer nor any creditor has
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to Buyer. No creditor of Buyer has applied for a receiver,
trustee or similar officer with respect to any of the property of Buyer, and
neither Buyer nor its creditors have instituted by petition, application,
answer, consent or otherwise any bankruptcy, insolvency, reorganization
arrangement, readjustment of debts, liquidation, dissolution or similar
proceeding relating to Buyer.
3.4 TRANSACTIONS NOT A BREACH. Except as set forth on Schedule 3.4,
neither the execution, delivery or performance by Buyer of this Agreement and
the Ancillary Documents to which Buyer is a party nor the consummation of the
Transactions shall:
A. Violate or conflict with or result in a breach of any Law,
order, permit, judgment, injunction, decree or other decision of any court or
other tribunal or any Governmental Authority binding on Buyer; or
B. Violate or conflict with any provision of the bylaws or
certificate of incorporation of Buyer.
4. PRE-CLOSING COVENANTS.
4.1 NO SHOP. Seller covenants and agrees that, from and after the date
hereof, unless this Agreement is terminated pursuant to Article 9, neither
Seller nor any officer, employee, director, affiliate, agent, partner or
representative of Seller shall solicit, discuss, entertain or consider any
offer by any person or entity other than Buyer to purchase or acquire the
rights.
4.2 GOLDBERG HH LOANS. Effective immediately prior to Closing, Goldberg
shall restructure the Goldberg HH Loans' terms (a) to reduce the interest rate
thereon to nine and 75/100 percent (9.75%) per annum, compounded monthly; (b)
to provide that monthly
- 7 -
8
payments of interest and principal shall be made solely from available cash
flow; (c) to extend the maturity date to 10 years from Closing; (d) to provide
that the absence or lack of cash flow shall not be a default thereunder; and
(e) to forgive as much of the principal balance of the Goldberg HH Loans as is
required so that the aggregate outstanding balance of principal and interest
thereof as of the Closing Date is not more than Seven Million Four Hundred
Thirty-Seven Thousand Dollars ($7,437,000).
4.3 HHF LP LOANS. Effective immediately prior to Closing, HHF LP
(through its general partner, HHF Inc.) shall restructure the terms of the HHF
LP Loans (a) to forgive as much of the principal balance of the HHF LP Loans as
is required so that the aggregate outstanding balance of principal and interest
thereof as of the Closing Date is not more than Seven Million Five Hundred
Sixty-Three Thousand Dollars ($7,563,000); (b) to reduce the interest rate
thereon to nine and 75/100 percent (9.75%) per annum, compounded annually; (c)
to provide that monthly payments of interest and principal shall be made solely
from available cash flow; (d) to extend the maturity date to ten (10) years
from Closing; (e) to provide that the absence or lack of cash flow shall not be
a default thereunder; (f) to subordinate payment of the HHF LP Loans to payment
of the Goldberg HH Loans; and (g) to eliminate any "Additional Interest"
payment obligation upon the sale or refinancing of the HHA LP property.
4.4 GOLDBERG CDM LOANS. Effective immediately prior to Closing, Goldberg
shall restructure the Goldberg CDM Loans' terms (a) to forgive as much of the
principal balance of the Goldberg CDM Loans as is required so that the
aggregate outstanding balance of principal and interest thereof as of the
Closing Date is not more than Five Million One Hundred Eight Thousand Dollars
($5,108,000); (b) to provide that monthly payments of interest and principal
shall be made solely from available cash flow; (c) to extend the maturity date
to ten (10) years from Closing; (d) to provide that the absence or lack of cash
flow shall not be a default thereunder; and (e) to set the interest rate at
nine percent (9%) per annum, compounded annually.
4.5 CDMP CORP. LOANS. Effective immediately prior to Closing, CDMP Corp.
shall cause the CDMP Corp. Loans to be restructured so as (a) to forgive as
much of the principal balance of the CDMP Corp. Loans as is required so that
the aggregate outstanding balance of principal and interest thereof as of the
Closing Date is not more than One Million Four Hundred Twenty Eight Thousand
Dollars ($1,428,000); (b) to provide that monthly payments of interest and
principal shall be made solely from available cash flow; (c) to extend the
maturity date to ten (10) years from Closing; (d) to provide that the absence
or lack of cash flow shall not be a default thereunder; (e) to provide that no
part of any management fee due to Preferred Retirement Communities, Inc. or its
assigns shall be subordinate to payment of interest or principal of the CDMP
Corp. Loans; (f) to reduce the interest rate to nine percent (9%) per annum,
compounded annually; and (g) to provide that the CDMP Corp. Loans shall be
subordinated to the Goldberg CDM Loans, and that no payment shall be made on
the CDMP Corp. Loans until the Goldberg CDM Loans are paid in full.
4.6 CONDUCT OF HAMILTON HOUSE BUSINESS. HHA LP shall pay and discharge
when due all of its mortgage, trade payable and other obligations in accordance
with the terms by which HHA LP is bound under agreements with such obligees,
and in any event
- 8 -
9
within thirty (30) days of invoice date; pay and discharge when due all lawful
taxes, assessments, and governmental charges or levies imposed upon the income,
profits, property, or business of the Company or any subsidiary; and keep its
properties in good repair, working order, and condition, reasonable wear and
tear excepted, and from time to time make all needful and proper repairs,
renewals, replacements, additions, and improvements thereto. All operating
reserve funds relating to Hamilton House shall be maintained at historical
levels. No expenditures exceeding Twenty-Five Thousand Dollars ($25,000) in
the aggregate shall be made by HH Inc. or HHA LP without Buyer's prior written
approval.
4.7 CONDUCT OF CASA DEL MAR BUSINESS. CDMA LP shall pay and discharge
when due all of its mortgage, trade payable and other obligations in accordance
with the terms by which CDMA LP is bound under agreements with such obligees,
and in any event within thirty (30) days of invoice date; pay and discharge
when due all lawful taxes, assessments, and governmental charges or levies
imposed upon the income, profits, property, or business of the Company or any
subsidiary; and keep its properties in good repair, working order, and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions, and improvements
thereto. All operating reserve funds relating to Casa Del Mar shall be
maintained at historical levels. No expenditures exceeding Twenty-Five
Thousand Dollars ($25,000) in the aggregate shall be made by CDM Inc. or CDMA
LP without Buyer's prior written approval.
4.8 CONDUCT OF PHH LP BUSINESS. PHH LP shall pay and discharge when due
all of its mortgage, trade payable and other obligations in accordance with the
terms by which PHH LP is bound under agreements with such obligees, and in any
event within thirty (30) days of invoice date; pay and discharge when due all
lawful taxes, assessments, and governmental charges or levies imposed upon the
income, profits, property, or business of the Company or any subsidiary; and
keep its properties in good repair, working order, and condition, reasonable
wear and tear excepted, and from time to time make all needful and proper
repairs, renewals, replacements, additions, and improvements thereto. No
contracts, agreements or accounts receivable of PHH LP shall be assigned,
transferred, encumbered or sold, and no substantial expenditures shall be made,
by PHH LP or PHH Inc. without Buyer's prior written approval.
4.9 HAMILTON HOUSE MANAGEMENT AGREEMENT. Effective immediately prior to
Closing, HHA LP and PRC Inc. shall enter into a new property management
agreement that is economically substantially the same as the agreement
presently existing between such parties and in form and substance acceptable to
Buyer and HHA LP.
4.10 CASA DEL MAR MANAGEMENT AGREEMENT. Effective immediately prior to
Closing, CDMA LP and PRC Inc. shall enter into a new property management
agreement that is economically substantially the same as the agreement
presently existing between such parties and in form and substance acceptable to
Buyer and CDMA LP.
4.11 PREFERRED RETIREMENT SERVICES, INC. Seller shall have obtained the
agreement of Preferred Retirement Services, Inc., a Florida corporation ("PRS
Inc."), to
- 9 -
10
enter into an agreement between Buyer and PRS Inc. permitting Buyer to hire
some or all of PRS Inc.'s employees, contractors and/or consultants at or after
Closing.
4.12 HHF LP CONSENT. Prior to Closing, Seller shall obtain the written
consent of the HHF LP general and limited partners, in accordance with HHF LP's
organizational and governance documents, to the restructuring of the HHF LP
Loans as set forth in Section 4.4 hereof and the sale and assignment of such
loans to Buyer as set forth in Sections 1.1.D and 6.2.C. If such consent shall
not have been obtained by July 12, 1996, Buyer may, in the thirty (30) days
following July 12, 1996, communicate directly with such partners for purposes
of obtaining such consent, and Seller shall, upon the request of Buyer,
execute, acknowledge and deliver all such documents and take all such actions,
at Buyer's expense (but at no charge by Seller), as may be necessary to obtain
such consent. Seller shall have the right to review and approve any proposed
correspondence to such partners; provided, however, that such approval shall
not unreasonably be withheld.
4.13 SCHEDULES; EXHIBITS. The parties acknowledge that not all of the
Schedules and Exhibits referenced in this Agreement have been attached at the
time of execution hereof, but that, nevertheless, the parties intend that this
Agreement shall be a complete and binding agreement, enforceable according to
its terms, subject to the termination right set forth in Section 5.1.D. Seller
and Owner shall create and provide to Buyer, as soon as possible after the
execution hereof but in no event later than Noon Tuesday, July 9, 1996, a
complete set of Schedules containing (i) any information provided to Buyer or
Buyer's counsel prior to the date hereof as part of Seller's and Owner's due
diligence compliance, and (ii) any information not provided to Buyer or Buyer's
counsel prior to the date hereof as part of Seller's and Owner's due diligence
compliance, provided that such information shall be clearly indicated in such
Schedules as new.
5. CONDITIONS OF CLOSING.
5.1 BUYER'S CONDITIONS OF CLOSING. The obligation of Buyer to purchase
the Rights shall be subject to and conditioned upon the satisfaction at or
before the Closing of each of the following conditions, or the express waiver
thereof by Buyer:
A. All representations and warranties of Seller contained in this
Agreement and the Schedules hereto shall be true and correct at and as of the
Closing Date and Seller shall have performed all agreements and covenants and
satisfied all conditions on its part to be performed or satisfied by the
Closing Date pursuant to the terms of this Agreement.
B. There shall have been no material adverse change since the date
of the Interim Balance Sheet (as defined in the Representations and Warranties)
in the business or financial condition of HH Inc., HHA LP, CDM Inc., CDMA LP,
PHH Inc., PHH LP (the "Target Entities") or PRC Inc.
C. Neither any Target Entity nor PRC Inc. shall have suffered any
material loss (whether or not insured) by reason of physical damage caused by
fire,
- 10 -
11
earthquake, accident, act of God or other calamity which substantially affects
the value of its assets, properties or business.
D. Neither the investigation of the Target Entities and PRC Inc. by
Buyer nor the Schedules attached hereto nor any other document delivered to
Buyer as contemplated by this Agreement shall have revealed, after the date
hereof, any facts or circumstances which, in the reasonable judgment of Buyer,
reflect in a materially adverse way on any of the Target Entities or PRC Inc.
or its financial condition, assets, liabilities, reserves, business, operations
or prospects.
E. Each necessary Governmental Authority shall have authorized,
approved or otherwise consented to the Transactions, or, if no such consent is
required, the proper filing or notice shall have been made or given on or prior
to the Closing Date.
F. The Target Entities and PRC Inc. shall have obtained all other
authorizations, consents, waivers and approvals as may be required in
connection with the assignment of those contracts, agreements, licenses,
leases, sales orders, purchase orders and other commitments to be assigned to
Buyer pursuant to this Agreement.
G. No suit, action, investigation, inquiry or other proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the Transactions, and there shall be no effective injunction, writ,
restraining order or other order of any nature issued by a court of competent
jurisdiction directing that the Transactions or any of them not be consummated
as so provided or imposing any conditions on the consummation of the
Transactions.
H. Seller shall have obtained and delivered to Buyer the consent of
the HHF LP partners referred to in Section 4.12.
I. Seller shall have executed and delivered each of the other
deliverables of Buyer specified in Section 6.2.
5.2 SELLER'S CONDITIONS OF CLOSING. The obligation of Seller to sell the
Rights to Buyer shall be subject to and conditioned upon the satisfaction at or
before the Closing of each of the following conditions:
A. All representations and warranties of Buyer contained in this
Agreement shall be true and correct at and as of the Closing Date and Buyer
shall have performed all agreements and covenants and satisfied all conditions
on its part to be performed or satisfied by the Closing Date pursuant to the
terms of this Agreement.
B. Buyer shall have effected payment of the Closing Amount in
accordance with the prior written instructions of Seller.
C. Each necessary Governmental Authority shall have authorized,
approved or otherwise consented to the Transactions, or, if no such consent is
required, the proper filing or notice shall have been made or given on or prior
to the Closing Date.
- 11 -
12
D. No suit, action, investigation, inquiry or other proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the Transactions, and there shall be no effective injunction, writ,
restraining order or other order of any nature issued by a court of competent
jurisdiction directing that the Transactions or any of them not be consummated
as so provided or imposing any conditions on the consummation of the
Transactions.
E. Buyer shall have executed and delivered each of the other
deliverables of Buyer specified in Section 6.3.
6. THE CLOSING.
6.1 THE CLOSING. The consummation of the purchase and sale hereunder
(the "Closing") shall take place at the offices of Tucker, Flyer & Lewis, 1615
L Street, N.W., Suite 400, Washington, D.C. 20036 at 10:00 a.m., July 12, 1996;
provided, however, that such closing date (the "Closing Date") shall be
postponed and rescheduled to the extent (and only to the extent) that the
conditions of Closing set forth in Sections 5.1 and 5.2 are not satisfied or
waived, subject to the termination rights of the parties set forth in Section
9.1.
6.2 DELIVERIES OF SELLER. At the Closing, Seller shall deliver to Buyer
the following:
A. For HH Inc., CDM Inc. and PHH Inc., certificates and other
instruments representing all shares issued and outstanding as of the Closing
Date, duly endorsed for transfer or accompanied by appropriate stock powers (in
either case executed in blank or in favor of Buyer), together with all other
documents necessary or appropriate validly to transfer such shares to Buyer
free and clear of all security interests, liens, encumbrances, restrictions and
adverse claims.
B. For HH Inc., CDM Inc. and PHH Inc., a Form 8023, executed by all
Stockholders of the respective corporations, making an election under Section
338(h)(10) with respect to the sale of the stock of each of the corporations.
C. An Assignment, in substantially the form set forth as Exhibit
6.2.C, to Buyer all of HHF LP's rights with respect to the HHF LP Loans, as
restructured prior to Closing in accordance with Section 4.3 hereof.
D. An Assignment, in substantially the form set forth as Exhibit
6.2.D, to Buyer all of Stephen A. Goldberg's rights with respect to the
Goldberg HH Loans, as restructured prior to Closing in accordance with Section
4.2 hereof.
E. An Assignment, in substantially the form set forth as Exhibit
6.2.E, to Buyer all of Stephen A. Goldberg's rights with respect to the
Goldberg CDM Loans, as restructured prior to Closing in accordance with Section
4.4 hereof. Each of the Assignments to be delivered pursuant to Sections
6.2.C, D and E shall be assignments
- 12 -
13
without recourse to the assignor with respect to payment of the promissory
notes assigned thereby.
F. An Assignment and Assumption Agreement, in substantially the
form set forth as Exhibit 6.2.F, in which PRC Inc. assigns to Buyer all of its
rights with respect to the New CDM Management Agreement (as hereinafter
defined) and the New HH Management Agreement (as hereinafter defined).
G. For each Target Entity and PRC Inc.:
i. A long form good standing certificate for tax and corporate
matters issued by the Secretary of State of Florida as of a date reasonably
close to the Closing Date, stating that it has filed all required reports, paid
all required fees and taxes, and is, as of such date, in good standing and
authorized to transact business in such State;
ii. In the case of a Corporation, a copy of its Charter (as
amended and restated) certified by the Secretary of State of Florida and a true
and complete copy of its Bylaws (as amended and restated);
iii. a Certificate of the state corporation or partnership
authority of each state other than Florida in which it does business certifying
as of a date reasonably close to the Closing Date that it has filed all
required reports, paid all required fees and taxes, and is, as of such date, in
good standing and authorized to transact business as a foreign entity in such
jurisdiction; and
iv. In the case of the Target Entities, all minute books, stock
books, partnership records and other corporate, partnership, financial and
other business records relating thereto.
H. Resignations effective as of the Closing Date of all directors
and officers.
I. Consulting Agreements between each Target Entity and the
following individuals, in substantially the form set forth in Exhibit 6.2.I:
i. David H. Mainguy; and
ii. Robert H. Mainguy.
J. An opinion of counsel for owners of Seller, dated as of the
Closing Date, addressing the matters set forth on Exhibit 6.2.J.
K. A certificate from an executive officer of each Target Entity,
dated the Closing Date, stating the information required pursuant to Section
6.2.G(i), (ii) and (iii).
- 13 -
14
L. A copy of resolutions of the Board of Directors of each
corporate Target Entity and PRC Inc., certified by the Secretary thereof as
duly adopted and in full force and effect, authorizing execution and delivery
of this Agreement and the Ancillary Documents to which such entity is a party
and performance by such entity of the Transactions.
M. A copy of the approval of each noncorporate Target Entity to the
extent that it is necessary, authorizing execution and delivery of this
Agreement and the Ancillary Documents to which such entity is a party and
performance by such entity of the Transactions.
N. A complete and detailed list of the accounts receivable and
accounts payable of PHH LP as of the Closing Date.
O. An agreement between Buyer and PRS Inc., in form and content
reasonably satisfactory to Buyer, permitting Buyer to hire some or all of PRS
Inc.'s employees, contractors and/or consultants.
P. The written consent of the HHF LP partners, as described in
Section 4.12.
Q. Such other documents and instruments as Buyer or its counsel may
reasonably deem necessary to consummate the Transactions.
6.3 DELIVERIES OF BUYER. At the Closing, Buyer shall deliver to Seller
the following:
A. The Purchase Price, paid in the manner specified in Section 1.2.
B. An Agreement of Assumption and Release, in substantially the
form set forth in Exhibit 6.3.B, of all of Stephen A. Goldberg's obligations
under that certain promissory note dated November 11, 1987, in the original
principal amount of Seven Hundred Forty-One Thousand Dollars ($741,000), made
by Stephen A. Goldberg to HH Inc.
C. An Agreement of Assumption and Release, in substantially the
form set forth in Exhibit 6.3.C, of all of Stephen A. Goldberg's obligations
under that certain promissory note dated October 2, 1988, in the original
principal amount of Seven Hundred Forty-One Thousand Dollars ($741,000), made
by Stephen A. Goldberg to CDM Inc.
D. A copy of resolutions of the Board of Directors of Buyer,
certified by the Secretary thereof as duly adopted and in full force and
effect, authorizing execution and delivery of this Agreement and the Ancillary
Documents to which Buyer is a party and performance by Buyer of the
Transactions.
E. Such other documents and instruments as Seller or its counsel
may reasonably deem necessary to consummate the Transactions.
- 14 -
15
6.4 TRANSITION. Notwithstanding any other provision of this Agreement,
to the extent that the assignment by Seller of any Right hereunder is not
permitted by any Governmental Authority or creditor of the Owner or any Target
Entity (a "Creditor") prior to the approval of, or the filing of notice with,
such Governmental Authority or Creditor, this Agreement shall not be deemed to
effectuate the assignment of such Right unless and until such approval has been
obtained and/or such notice period has elapsed, at which time (the "Transition
Date") such Right shall be deemed to have been assigned to Buyer automatically
and without further action on the part of Seller or Buyer. Attached hereto as
Schedule 6.4 is a complete list of Rights affected by the foregoing provisions
of this Section 6.4. In order to preserve such Rights to the satisfaction of
Buyer during such transition period, the holders of such Rights shall execute
and deliver to Buyer an Irrevocable Proxy in form and content acceptable to
Buyer which shall govern the voting and disposition of such Rights through the
Transition Date, which Irrevocable Proxy shall restrict Buyer from voting or
disposing of such rights in any manner which is violative of any mortgage held
by Fannie Mae in connection with the properties of Owner.
7. POST-CLOSING MATTERS. In the event that the Closing occurs, Buyer and
Seller agree as follows:
7.1 ASSISTANCE. Seller shall, from and after the date hereof, upon the
request of Buyer, execute, acknowledge and deliver all such documents and take
all such actions, at Buyer's expense (but at no charge by Seller), as may be
necessary to (i) effectuate the designation of Buyer as a licensee or
permittee, under all applicable Laws, to conduct the businesses of the Target
Entities, and (ii) obtain the approval or consent of any necessary Governmental
Agency or Creditor to the consummation of the Transactions.
7.2 CDM INC. CAPITALIZATION. Buyer shall not, after Closing, reduce the
capitalization of CDM, Inc. below the amount of capitalization which exists at
Closing if such reduction would adversely affect the tax status of CDMA LP as a
partnership for federal income tax purposes.
7.3 HH INC. CAPITALIZATION. Buyer shall not, after Closing, reduce the
capitalization of HH, Inc. below the amount of capitalization which exists at
Closing if such reduction would adversely affect the tax status of HHA LP as a
partnership for federal income tax purposes.
7.4 PERSONNEL MATTERS.
A. Buyer shall maintain on behalf of all employees employed by
Buyer on and after the Closing Date ("Employees") such employee benefit plans
as it may determine in its sole discretion and, except as provided in Section
7.4.B of this Agreement, such Employees shall participate in such employee
benefit plans in accordance with the terms of such plans. For purposes of this
Section 7.4, the term "employee benefit plan" means each payroll practice,
employee bonus, pension, profit sharing, stock option, stock appreciation,
stock purchase, incentive, deferred compensation, hospitalization, medical,
dental, vision, life and other health and disability (whether provided by
insurance or otherwise) and other plan, program, arrangement, policy or payroll
practice which provides employee benefits, including without limitation each
employee benefit plan as defined in
- 15 -
16
Section 3(3) of ERISA, other than a Multiemployer Plan, maintained by Buyer or
its affiliates, or to which Buyer or any of its affiliates contributes, for the
benefit of Buyer's employees.
B. With respect to each Employee who was employed by a Target
Entity or PRC Inc. immediately prior to the Closing Date and who is employed by
a corporate Target Entity or Buyer immediately following the Closing Date, the
parties hereto agree as follows:
i. Buyer agrees to credit each Employee for Employee's service
with a Target Entity or PRC Inc. (as previously credited by such party) for
purposes of eligibility and benefit service under Buyer's vacation leave and
sick leave policies. Furthermore, Buyer agrees to permit each Employee to
carry over vacation leave that such Employee has accrued but not used through
the Closing Date, not to exceed one hundred sixty (160) hours, and to permit
each Employee to carry over sick leave that such Employee has accrued but not
used through the Closing Date, to be carried forward on a basis consistent with
the limitations imposed by Buyer on its own employees. A list of such vacation
and sick leave to be carried over is set forth, by employee, on Schedule 7.4.B.
ii. Buyer agrees to credit each Employee for Employee's service
with a Target Entity or PRC Inc. for purposes of eligibility under Buyer's
other employee benefit plans other than Buyer's pension and retirement plans.
With respect to any employee benefit plans that provide welfare benefits, such
plans shall waive any exclusions with respect to preexisting conditions and
shall provide that any expenses incurred on or prior to the Closing Date by any
Employee under any Employee Plan of a Target Entity or PRC Inc. shall be taken
into account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions under such employee benefit plans of Buyer.
iii. Any amounts payable to any Employee who was employed by any
Target Entity or PRC Inc. immediately prior to the Closing Date and who is not
employed by any Target Entity or Buyer after the Closing Date shall be the sole
responsibility of Stephen A. Goldberg, in the case of PRC Inc., CDM Inc., CDMA
LP, HH Inc. and HHA LP Employees, and the Former PHH Owners, in the case of PHH
Inc. and PHH LP employees.
7.5 PROVISION OF AUDITED FINANCIALS. After the Closing, Seller shall, at
the request and sole expense of Buyer, cause its independent accountants to
prepare any audited or unaudited financial statements for any Target Entity (or
any subgroup or segment thereof) and any other financial reports requested by
Buyer for periods to be specified by Buyer, cooperate fully with such
independent accountants in such endeavor (including the delivery of any items
customarily provided by management to independent accountants in connection
with audits to be included in securities law filings), and provide copies of
all work products of such accountants and internal auditors assisting such
accountants in connection therewith, including, without limitation, the final
audited or unaudited financial statements, to Buyer. In addition, Seller shall
make all of its personnel reasonably available to Buyer and its representatives
and to take any and all other actions
- 16 -
17
reasonably requested by Buyer in connection with any securities filing being
prepared and/or filed by Buyer.
7.6 FURTHER ASSURANCES. Each party hereto shall at any time, and from
time to time after the Closing Date, upon request of the other party, execute,
acknowledge and deliver all such further documents, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be required to
carry out the intent of this Agreement and the Ancillary Documents, to
effectuate the Transactions, and to transfer to and vest title in Buyer the
Rights, and shall take all such other actions necessary to effectuate the
foregoing; provided, however, this Agreement shall be effective regardless of
whether any such additional documents are executed or actions are taken.
7.7 SELLER'S COSTS AND EXPENSES. Buyer shall pay or reimburse Seller, at
Closing after being invoiced therefor, for Two Hundred Thousand Dollars
($200,000) of Seller's costs and expenses associated with the negotiation,
execution and Closing of this Agreement and the consummation of the
Transactions, including, without limitation, the negotiation of those certain
letters of intent (the "LOIs") dated May 22, 1996 among Buyer and various of
the parties constituting Seller, the performance of due diligence compliance,
and the fees and expenses of legal counsel and other advisors, but excluding
any tax liabilities arising hereunder.
7.8 TAX MATTERS.
A. Seller shall assume and pay any and all sales or other state,
county or municipal taxes (if any) on the transfer to Buyer of the Rights
hereunder.
B. Seller shall execute the requisite elections under 338(h)(10)
of the Internal Revenue Code so that Buyer may treat all parts of the
transaction as an acquisition of assets.
C. Buyer shall prepare and timely file at its own expense tax
returns of CDM Inc. for which the due date (without regard to any extension) is
after the Closing.
D. Buyer shall prepare and timely file at its own expense tax
returns of HH Inc. for which the due date (without regard to any extension) is
after the Closing.
E. Buyer shall prepare and timely file at its own expense tax
returns of PHH Inc. for which the due date (without regard to any extension) is
after the Closing.
F. Seller shall permit Buyer, or its designated representative, to
have access at any reasonable time and from time to time, after the Closing, to
all relevant tax returns and supporting papers therefor of any Target Entity in
respect of periods ending on or before the Closing, wherever located, and shall
furnish, and request that the accountants of the Target Entities furnish, to
Buyer, such additional tax and other information and documents with respect to
tax returns filed or required to be filed in respect of periods beginning
before the Closing, as Buyer may from time to time reasonably request. Seller
shall provide Buyer with such cooperation, assistance and
- 17 -
18
information as Buyer may request with respect to the filing of any tax return
requiring information relating to periods through the Closing.
7.9 COMMISSIONS. Buyer shall be solely responsible for payment of Five
Hundred Fifty Thousand Dollars ($550,000) as commission due to Barnes, Morris,
Pardoe & Foster. Except as set forth in the foregoing sentence, neither Buyer
nor Seller has entered into any contract, arrangement or understanding with any
person or firm which may result in an obligation to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
execution of this Agreement or the consummation of the Transactions; neither
Buyer nor Seller is aware of any claim or basis for any claim for payment of
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the execution of this Agreement or the consummation of the
Transactions; and each party hereto shall indemnify and hold the others
harmless against any claim by any third party that such third party was
retained or hired by such party and is entitled to any finder's fee, brokerage
or agent's commission or other like payment in connection with the execution of
this Agreement or the consummation of the Transactions.
7.10 NONCOMPETITION.
A. Each of the Former PHH Owners covenants and agrees that neither
such person nor any officer, employee, director, affiliate, agent or
representative of such person, on behalf of such person or any affiliate of
such person, shall:
i. During the period ending three (3) years after the Closing
Date, engage in or carry on, directly or indirectly, either for himself or
herself or as a member of a partnership or limited liability company or as a
stockholder of or investor in a corporation, or as an agent, associate or
consultant of any person, partnership, limited liability company, corporation
or other entity, any business in competition with the PHH Business, within a
one (1) mile radius of each of Hamilton House and Casa del Mar.
Notwithstanding the foregoing provisions of this Section 7.10, nothing
contained in this Section 7.10.A(i) shall prevent the Former PHH Owners from
purchasing an existing health care business whose existing clients include
customers in the areas set forth in Sections 7.10.A(i). Should the Former PHH
Owners purchase such a business, however, they will refrain, for three (3)
years after Closing, from seeking or servicing additional customers in the
areas set forth in 7.10.A(i).
ii. During the period ending eighteen (18) months after the
Closing Date, except with Buyer's consent, recruit, hire, engage, assist others
in recruiting, hiring or engaging, discuss employment with or refer to others
concerning employment, any person who is, or within the six (6)-month period
immediately prior to the Closing Date was, an employee of or consultant or
contractor to PHH Inc. or PHH LP or who was otherwise employed at either
Hamilton House or Casa Del Mar, except for Hazel Mainguy and Yvonne Lammer; or
iii. During the period ending three (3) years after the Closing
Date, solicit or service residents of Hamilton House or Casa Del Mar for any
purpose, except as set forth in Section 7.10.A(i).
- 18 -
19
B. Seller agrees that the remedy at law for any breach by it of
Section 7.10.A would be inadequate and that Buyer and any Target Entity shall
be entitled to temporary and permanent injunctive relief. The term of the
covenants contained in Section 7.10.A shall be tolled for the period commencing
on the date any successful action is filed for injunctive relief or damages
arising out of a breach by any Seller of Section 7.10.A and ending upon final
adjudication (including appeals) of such action.
C. If, in any judicial proceeding, the court shall refuse to
enforce all of the separate covenants contained in Section 7.10.A because the
time limit is too long, it is expressly understood and agreed between the
parties hereto that, for purposes of such proceeding, such time limitation
shall be deemed reduced to the extent necessary to permit enforcement of such
covenants. If, in any judicial proceeding, the court shall refuse to enforce
all of the separate covenants contained in Section 7.10.A because such
covenants are more extensive (whether as to geographic area, scope of business
or otherwise) than necessary to protect the business and goodwill of Buyer and
any Target Entity, it is expressly understood and agreed between the parties
hereto that, for purposes of such proceeding, the geographic area, scope of
business or other aspect shall be deemed reduced to the extent necessary to
permit enforcement of such covenants.
8. INDEMNIFICATION.
8.1 INDEMNIFICATION BY SELLER. Each of the Former PHH Owners (but only
with respect to matters relating to PHH Inc. and PHH LP) and Stephen A.
Goldberg, jointly and severally, agrees to indemnify and hold Buyer, HH Inc.,
HHA LP, CDM Inc., CDMA LP, PHH Inc. and PHH LP (for purposes of this Section
8.1, the "Indemnified Parties") harmless against, and shall reimburse each of
them on demand for, any payment, loss, cost or expense (including reasonable
attorneys' and paralegals' fees and reasonable costs of investigation incurred
in defending against such payment, loss, cost or expense or claim therefor)
made or incurred by or asserted against the Indemnified Parties at any time
after the Closing Date in respect of:
A. any and all liabilities of the Indemnified Parties of any
nature, arising out of the conduct of the business of the Target Entities,
whether absolute, contingent or otherwise, existing at the date of the Balance
Sheets, to the extent not reflected or reserved against in the Balance Sheets
or set forth in the Schedules hereto;
B. any and all liabilities of or claims against the Indemnified
Parties arising out of the conduct of the business of the Target Entities
between May 31, 1996 and the Closing Date, whether absolute, contingent or
otherwise, other than in the ordinary course of business thereof, as set forth
in the Schedules hereto, or as consented to by Buyer, to the extent and in the
amount that such payments, losses, costs or expenses are not reimbursed or paid
to the Indemnified Parties under insurance policies held by them or taken into
account pursuant to Section 1.4;
C. any and all damage or deficiency resulting from any material
omission, misrepresentation, breach of warranty or nonfulfillment of any term,
provision, covenant or agreement on the part of Seller contained in this
Agreement, or from any
- 19 -
20
misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished to Buyer pursuant to this Agreement;
D. any and all taxes and tax deficiencies in respect of Federal,
state, local and foreign taxes of any nature incurred or payable by any Target
Entity, including all interest and penalties thereon and costs and expense
(including reasonable attorneys' and paralegals' fees and reasonable costs of
investigation incurred in defending against such claim or levy or removing any
lien) with respect to the taxable year ended December 31, 1995 and all prior
taxable years;
E. any and all taxes, interest, penalties, costs and expenses
(including reasonable attorneys' and paralegals' fees and reasonable costs of
investigation) with respect to the period from January 1, 1996 up to and
including the Closing Date to the extent that such deficiencies, taxes,
interest, penalties, costs and expenses exceed, in the aggregate, the amount of
the aggregate reserves for such taxes maintained by the Indemnified Parties;
F. any and all liabilities of or claims relating to any action or
inaction by Seller's Agent, or otherwise as set forth in Section 1.2.B hereof;
and
G. in the event that Buyer exercises its right, as set forth in
Section 1.4B, to proceed with the Transactions without purchasing the HHF LP
Loans, any and all liabilities of and claims against the Indemnified Parties
brought by the holder of the HHF LP Loans with respect to priority of payment
issues.
8.2 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold Stephen
A. Goldberg, Martin J. Kirsch, Terry Peay, Robert H. Mainguy, David H. Mainguy
and Diana L. Goldberg (for purposes of this Section 8.2, the "Indemnified
Parties") harmless against, and shall reimburse the Indemnified Parties on
demand for, any payment, loss, cost or expense (including reasonable attorneys'
and paralegals' fees and reasonable costs of investigation incurred in
defending against such payment, loss, cost or expense or claim therefor) made
or incurred by or asserted against the Indemnified Parties at any time after
the Closing Date in respect of (a) any omission, misrepresentation, breach of
warranty, or nonfulfillment of any term, provision, covenant or agreement on
the part of Buyer contained in this Agreement, or from any misrepresentation
in, or omission from, any certificate or other instrument furnished or to be
furnished to Seller pursuant to this Agreement, and (b) any and all liabilities
of or claims against the Indemnified Parties of any nature arising out of the
conduct of the business of the Target Entities after Closing, whether absolute,
contingent or otherwise.
8.3 PROCEDURE RE INDEMNIFICATION. With respect to any actual or
potential claim, and the commencement of any action, or the occurrence of any
other event which involves any matter or related series of matters (a "Claim")
against which a party hereto is indemnified (for purposes of this Section 8.3,
the "Indemnified Party") by the other party (the "Indemnifying Party") under
Section 8.1 or 8.2 hereof:
A. Within a reasonable period of time after the Indemnified Party
first receives written documents pertaining to the Claim or, if such Claim does
not involve a
- 20 -
21
third party Claim, within a reasonable period of time after the Indemnified
Party first has actual knowledge of such Claim, the Indemnified Party shall
give notice to the Indemnifying Party of such Claim in reasonable detail and
stating the amount involved, if known, together with copies of any such written
documents.
B. If the Claim involves a third party Claim, then the Indemnifying
Party shall have the sole right, at its sole cost, expense and ultimate
liability, regardless of the outcome, and through counsel of its choice, which
counsel shall be reasonably satisfactory to the Indemnified Party, to defend
and settle such Claim at the Indemnifying Party's expense. With respect to any
Claim, the Indemnifying Party shall not, without the prior written consent of
the Indemnified Party or any of its subsidiaries, affiliates, directors,
officers or employees against whom a Claim is asserted, settle or compromise
any claim or consent to entry of any judgment relating to any such Claim, which
settlement, compromise or judgment does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party,
or its subsidiaries, affiliates, directors, officers or employees, against whom
a Claim is asserted, a release from all liabilities in respect of such Claim.
In any event, Buyer and Seller shall fully cooperate with each other and their
respective counsel in connection with any such Claim and the litigation,
defense, settlement or other attempted resolution thereof.
9. TERMINATION.
9.1 TERMINATION. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the
Closing:
A. By the mutual written consent of Seller (acting unanimously) and
Buyer;
B. By Buyer if (i) the consent of the HHF partners referred to in
Section 4.12 shall not have been obtained within the time period set forth
therein; (ii) Seller shall not have fulfilled all of Seller's pre-Closing
covenants on or before July 31, 1996; (iii) all of Buyer's Conditions of
Closing enumerated in Section 5.1 shall not have been fulfilled on or before
July 31, 1996; or (iv) the Closing shall not have occurred on or before August
31, 1996.
C. By Seller (acting unanimously) if (i) all of Seller's conditions
to Closing enumerated in Section 5.2 shall not have been fulfilled on or before
August 31, 1996; or (ii) the Closing shall not have occurred on or before
August 31, 1996.
9.2 REIMBURSEMENT OF EXPENSES. In the event that the consent of the HHF
LP partners is not obtained in accordance with the provisions of Section 4.12,
Stephen A. Goldberg shall, within thirty (30) days after being invoiced
therefor, reimburse Buyer for up to Fifty Thousand Dollars ($50,000) of Buyer's
out-of-pocket costs and expenses incurred in connection with the negotiation,
execution and Closing of this Agreement and the consummation of the
Transactions, including, without limitation, the negotiation of the LOIs, the
performance of due diligence review, and the fees and expenses of legal counsel
and other advisors.
- 21 -
22
9.3 RELEASE OF DEPOSIT. In the event that the Closing does not occur for
any reason except for breach of this Agreement by Buyer, Seller shall, within
ten (10) days after demand therefor, return to Buyer the Deposit, in full,
without deduction or offset.
9.4 SURVIVAL. The provisions of all sections in Article 8 of this
Agreement shall survive the termination of this agreement for any reason.
10. MISCELLANEOUS.
10.1 NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or delivered by
express delivery service or facsimile (if evidence of receipt is produced),
addressed as follows:
If to Buyer: NHP Incorporated
8065 Leesburg Pike, Suite 400
Vienna, Virginia 22182
Facsimile: (703) 394-2970
Attention: Senior Executive of Asset Management;
Senior Executive of Acquisitions;
General Counsel; and Secretary
Copy to: Tucker, Flyer & Lewis
1615 L Street, N.W., Suite 400
Washington, D.C. 20036
Facsimile: (202) 429-3231
Attention: Thomas J. Knox, Esq.
If to Seller: As set forth in Schedule 10.1
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so personally
delivered, received or mailed.
10.2 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Buyer may assign or delegate any or all of
its rights or obligations under this Agreement to one or more affiliated
entities; provided, however, that Buyer may not assign its obligation to make
any promissory note under Section 1.2.A of this Agreement.
10.3 ENTIRE AGREEMENT. This Agreement, together with the Attachments,
Exhibits, Schedules and other documents contemplated hereby, constitute the
final written expression of all of the agreements among the parties, and is a
complete and exclusive statement of those terms and all prior expressions
thereof (including, without limitation, the LOIs) are hereby revoked. This
Agreement supersedes all understandings and negotiations concerning the matters
specified herein and any representations, promises, warranties or statements
made by either party that differ in any way from the terms of this Agreement
and the Attachments, Exhibits, Schedules and other documents contemplated
hereby shall be given no force or effect. The parties specifically represent,
each to the other, that there
- 22 -
23
are no additional or supplemental agreements between them related in any way to
the matters herein contained unless specifically included or referred to
herein. No addition to or modification of any provision of this Agreement
shall be binding upon either party unless made in writing and signed by both
parties hereto.
10.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the District of Columbia, exclusive of
the conflict of laws provisions thereof.
10.5 EXPENSES. Except as otherwise expressly provided herein, and whether
or not a Closing shall occur, each of the parties shall pay all expenses
incurred by it in connection with or incident to the negotiation and
preparation of this Agreement.
10.6 SURVIVAL. All of the terms, conditions, covenants, warranties and
representations contained in this Agreement shall survive, in accordance with
their terms, delivery by Buyer of the consideration to be given by it hereunder
and delivery by Seller of the consideration to be given by it hereunder, and
shall survive the execution hereof and the Closing hereunder.
10.7 CONFIDENTIALITY.
A. Any confidential information provided by any party to any other
shall be treated as confidential by the other and shall not be disclosed by
such party, its agents, representatives, employees or legal or financial
advisers to any person or in any manner without the prior written consent of
the party furnishing such information; provided, however, that the party
receiving such information may disclose such information to those employees and
financial and legal advisors having a need to know such information, provided
that such persons agree to hold such information confidential and not to
disclose it to others.
B. Seller and Buyer shall mutually agree in advance on the content
and timing of each press release or other public disclosure to be made
concerning this Agreement, the Ancillary Documents and/or the Transactions,
subject to the disclosure requirements of the Securities and Exchange
Commission and other regulatory bodies. Unless required by Law, neither Seller
nor Buyer shall otherwise disclose or discuss this Agreement, the Ancillary
Documents or the Transactions to or with third parties (other than advisors to
or agents of Seller and Buyer who are obligated to maintain the confidentiality
of such information) without the prior written consent of the other.
10.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
10.9 HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
- 23 -
24
10.10. WAIVERS. Either Buyer or Seller may, by express written notice
to the other, (a) extend the time for the performance of any of the obligations
or other actions of the other under this Agreement; (b) waive any inaccuracies
in the representations or warranties of the other contained in this Agreement
or in any document delivered pursuant to this Agreement; (c) waive compliance
with any of the conditions or covenants of the other contained in this
Agreement; or (d) waive performance of any of the obligations of the other
under this Agreement. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
10.11 INCORPORATION OF RECITALS. The recitals to this Agreement are
hereby incorporated into this Agreement and made a part hereof for all
purposes.
10.12 SEVERABILITY. If for any reason whatsoever, any one or more of
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision
invalid in any other case or of rendering any of the other provisions of this
Agreement inoperative, unenforceable or invalid.
10.13 REFUSAL TO CONSUMMATE. Notwithstanding any other provision of
this Agreement, no party may refuse to consummate the Transactions, by reason
of a failure of a condition of closing hereunder or otherwise, if such failure
or other basis for refusal is, directly or indirectly, the result of such
party's deliberate act or omission. In addition to any other remedies which
may be available to a non-refusing party hereunder, and in view of the
uniqueness of the Rights and the fact that a failure to consummate the
Transactions would result in irreparable harm to such party, the remedies of
injunctive relief and specific performance shall be available to such party to
enforce the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year hereinabove
first set forth.
[Signatures commence on next page]
- 24-
25
BUYER:
WITNESS: NHP INCORPORATED,
a Delaware corporation
By:
- ------------------------- -------------------------
Linda Davenport,
Executive Vice President
CDM INC.:
CASA DEL MAR, INC., a Florida
corporation
By:
- ------------------------- -------------------------
Terry Peay, President
CDMA LP:
CASA DEL MAR ASSOCIATES
LIMITED PARTNERSHIP, a
Florida limited partnership
By: CASA DEL MAR INC., a
Florida corporation,
General Partner
By:
- ------------------------- -------------------------
Terry Peay, President
CDMP CORP.:
CASA DEL MAR PARTICIPATION
CORPORATION, a Florida
corporation
By:
- ------------------------- -------------------------
Martin J. Kirsch, President
HH INC.:
HAMILTON HOUSE, INC., a
Florida corporation
By:
- ------------------------- -------------------------
Terry Peay, President
[Signatures continued on following page]
- 25 -
26
WITNESS: HHA LP:
HAMILTON HOUSE ASSOCIATES
LIMITED PARTNERSHIP, a
Florida limited
partnership
By: HAMILTON HOUSE INC., a
Florida, corporation,
General Partner
By:
- ------------------------- -------------------------
Terry Peay, President
HHF LP:
HAMILTON HOUSE FUNDING
LIMITED PARTNERSHIP
By: HAMILTON HOUSE FUNDING,
INC., a Florida
corporation, General
Partner
By:
- ------------------------- -------------------------
Terry Peay, President
PRC INC.:
PREFERRED RETIREMENT
COMMUNITIES, INC., a
Florida corporation
By:
- ------------------------- -------------------------
Terry Peay, President
PHH INC.:
PREFERRED HOME HEALTH, INC.,
a Florida corporation
By:
- ------------------------- -------------------------
David H. Mainguy, President
[Signatures continued on following page]
- 26 -
27
WITNESS: PHH LP:
PREFERRED HOME HEALTH LIMITED
PARTNERSHIP, a Florida
limited partnership
By: PREFERRED HOME HEALTH,
INC., a Florida
corporation, General
Partner
By:
- ------------------------- -------------------------
David H. Mainguy, President
By:
- ------------------------- -------------------------
Stephen A. Goldberg
By:
- ------------------------- -------------------------
David H. Mainguy
By:
- ------------------------- -------------------------
Robert H. Mainguy
By:
- ------------------------- -------------------------
Diana L. Goldberg
[Signatures continued from previous page]
- 27 -
28
ATTACHMENTS
A Representations and Warranties Regarding the Corporate Target Entities:
HH Inc., CDM Inc. and PHH Inc.
B Representations and Warranties Regarding the Limited Partnership Target
Entities: HHA LP, CDMA LP and PHH LP
C Representations and Warranties Regarding the Stockholders of the
Corporate Target Entities: HH Inc., CDM Inc. and PHH Inc.
D Representations and Warranties Regarding the Corporate Creditors: CDMP
Corp.
E Representations and Warranties Regarding the Limited Partnership
Creditor: HHF LP
F Representations and Warranties Regarding the Individual Creditor:
Stephen A. Goldberg
G Representations and Warranties Regarding the Management Company: PRC
Inc.
H Representations and Warranties Regarding the Limited Partner of PHH LP:
Diana L. Goldberg
- 28 -
29
EXHIBITS
NUMBER DESCRIPTION
1.2.A Form of Purchase Money Promissory Note
6.2.C Form of Assignment Regarding HHF LP Loans
6.2.D Form of Assignment Regarding Goldberg HH Loans
6.2.E Form of Assignment Regarding Goldberg CDM Loans
6.2.F Form of Assignment Regarding New CDM Management Agreement and
New
HH Management Agreement
6.2.I Form of Consulting Agreement
6.2.J Opinion of Counsel
6.3.B Form of Assumption and Release of November 11, 1987 Goldberg
Promissory Note to HH Inc.
6.3.C Form of Assumption and Release of October 2, 1988 Goldberg
Promissory Note to CDM Inc.
- 29 -
30
SCHEDULES
NUMBER DESCRIPTION
0.G HHF LP Loans
0.H Goldberg HH Loans
0.I Goldberg to CDM Loans
0.J CDMP Corp. Loans
1.2.A Payees
1.3 Allocation of Purchase Price
3.2 Required Governmental Consents
3.4 Violations of Laws, etc. or Charter
6.4 Rights Affected By Consent Requirements
7.4.B Carried Over Vacation and Sick Leave
10.1 Notice Addresses
A-3 Required Governmental Consents
A-6 Officers and Directors, Bank Accounts, Powers of Attorney, Bonds
and Sureties, Outstanding Debts, Interfering Powers of Attorney,
and Insurance Policies
A-7 Subsidiaries and Affiliates
A-8 Financial Statements
A-10 Violations of Law, etc. or Charter
A-11 Contractual Transfers of Rights/Contract Amendments
A-13 Stockholders
A-17 Lease Agreements
A-18 Contracts/Breaches or Defaults
A-20 Business Property Rights
- 30 -
31
A-20 ERISA/Other Labor Matters
A-21 Litigation, Arbitration or Administrative Proceedings
A-22 Government Audits
B-3 Required Governmental Consents
B-5 Capitalization
B-7 Bank Accounts, Powers of Attorney, Bonds and Sureties, Outstanding
Debts and Insurance
B-8 Subsidiaries and Affiliates
B-9 Financial Statements
B-11 Violations of Law, etc., Partnership Agreement, Lease
B-12 Interim Changes
B-17 Real Estate and Improvements
B-18 Contracts/Breaches or Defaults
B-19 Business Property Rights
B-20 ERISA/Other Labor Matters
B-21 Litigation, Arbitration, or Administrative Proceedings
B-22 Government Audits
C-5 Loans, Advances, and Borrowings
D-2 Qualifications and Limitations as a Foreign Corporation
D-3 Required Governmental Consents
D-5 Violations of Law, etc. or Charter or Lease
D-6 Litigation, Arbitration or Administrative Proceedings
E-3 Required Governmental Consents
E-5 Violations of Law, Partnership Agreement, Lease
E-6 Litigation, Arbitration or Administrative Proceedings
- 31 -
32
F-3 Required Governmental Consents
F-5 Violations of Law or Lease
F-6 Litigation, Arbitration or Administrative Proceedings
G-3 Required Governmental Consents
G-5 Violations of Law or Lease
G-6 Litigation, Arbitration or Administrative Proceedings
- 32 -
33
ATTACHMENT A
REPRESENTATIONS AND WARRANTIES REGARDING EACH OF
THE CORPORATE TARGET ENTITIES:
HH INC., CDM INC. AND PHH INC.
1. OBLIGATIONS. Except as set forth on Schedule A-1, the Entity has
outstanding no loan, borrowing, advance, indebtedness, obligation or liability
to any other Seller, nor does any other Seller possess, hold or claim any
mortgage, lien, security interest, claim, charge or encumbrance (each, a "Lien"
and, collectively, "Liens") on or against the Entity or any assets thereof.
2. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW.
The Entity is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Florida, its jurisdiction of
incorporation. There is no other jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary. The Entity has all requisite
corporate power and authority to own, lease or otherwise hold its properties
and carry on its business as now conducted. The Entity has all licenses,
permits and other authorizations and has taken all actions required by
applicable Laws in connection with its business as now conducted, and is not in
violation of any Laws to which it is subject.
3. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS. The Entity has
all requisite corporate power and authority to execute and deliver this
Agreement and all of the other agreements, certificates and other documents
delivered or to be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby (the "Ancillary
Documents") to which it is or shall be a party, and to consummate such
transactions (collectively, the "Transactions"). The execution and delivery by
the Entity of this Agreement or the Ancillary Documents to which the Entity is
or shall be a party and the consummation by the Entity of the Transactions have
been duly authorized by all necessary corporate action on the part of the
Entity. This Agreement and the Ancillary Documents to which the Entity is or
shall be a party have been, or shall be, as the case may be, duly executed and
delivered by the Entity and are or shall be, as the case may be, enforceable
against the Entity in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the enforcement of creditors'
rights generally. Except as set forth on Schedule A-3, the consummation of the
transactions contemplated hereby does not require the consent of any third
party not obtained, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court or any domestic, state,
local or foreign government or any subdivision, agency, authority or
instrumentality thereof (each, a "Governmental Authority") is required to be
obtained or made by or with respect to the Entity in connection with the
execution and delivery of this Agreement or the
34
Ancillary Documents to which the Entity is or shall be a party, or the
consummation by it of the Transactions.
4. SOLVENCY. The Entity is solvent and currently has the ability to pay
its debts when due, and the value of its current assets exceeds the aggregate
amount of its current liabilities. Neither the Entity nor any creditor has
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to the Entity. No creditor of the Entity has applied for a
receiver, trustee or similar officer with respect to any of the property of the
Entity, and neither the Entity nor its creditors have instituted by petition,
application, answer, consent or otherwise any bankruptcy, insolvency,
reorganization arrangement, readjustment of debts, liquidation, dissolution or
similar proceeding relating to the Entity.
5. RECORDS. The corporate minute books of the Entity to be delivered to
Buyer at the Closing contain true and complete copies of the certificate of
incorporation of the Entity, as amended to the Closing Date (the "Charter"),
the bylaws of the Entity, as amended to the Closing Date (the "Bylaws"), and
the minutes of all meetings of directors and stockholders, and certificates
reflecting actions taken by the directors or the stockholders without a
meeting, from the date of incorporation of the Entity to the Closing Date. All
files, records and information which pertain to the business of the Entity are
intact in all material respects and in usable form and format. True and
complete copies of the Charter and Bylaws, each as amended through the date
hereof, have previously been provided to Buyer.
6. OFFICERS AND DIRECTORS; BANK ACCOUNTS; POWERS OF ATTORNEY; INSURANCE.
The officers and directors of the Entity (immediately prior to the
effectiveness of resignations required at the Closing) are as set forth on
Schedule A-6, which also sets forth (a) the name of each bank, savings
institution or other person or entity with which the Entity has an account or
safe deposit box and the names and identification of all persons authorized to
draw thereon or to have access thereto, (b) the names of all persons, if any,
holding powers of attorney from the Entity and a statement of the terms
thereof, (c) a complete list of all outstanding bonds or surety arrangements
issued or entered into in connection with the business of the Entity, (d) a
list of any debt, liability or obligation of any person or entity guaranteed as
to payment or performance in whole or in part, by the Entity and (e) a complete
list of all insurance policies owned by the Entity or for which it is
responsible (for fire, liability, casualty, use and occupancy, life, disability
or other coverage). Copies of all such policies and amendments thereto have
been provided to Buyer.
7. SUBSIDIARIES; AFFILIATES. The Entity has no subsidiaries (as that
term is defined in Rule 405 promulgated under the Securities Act of 1933).
Schedule A-7 lists all of the affiliates (as that term is defined in Rule 405
promulgated under the Securities Act of 1933) of the Entity which conduct part
of the Business. Except as set forth on Schedule A-7, the Entity does not own,
directly or indirectly, any interest in any entity or other business
organization or association which is also engaged in the Business or any part
of the Business. Except as set forth on Schedule A-7, the Entity has no debt,
equity or other investment or interest in any corporation, business trust,
limited liability company, partnership, joint venture or other entity or any
strategic alliance with any other entity.
- 2 -
35
8. FINANCIAL STATEMENTS. Attached hereto as Schedule A-8, to the extent
provided by the Entity, are any or all of the following: (i) a balance sheet of
the Entity as of the end of the last fiscal year (the "1995 Balance Sheet"),
(ii) an unaudited statement of operations of the Entity for the last fiscal
year, (iii) a 1995 balance sheet of the Entity as of December 31, 1995 (the
"Interim Balance Sheet"), and (iv) a current statement of operations of the
Entity (collectively, the "Financial Statements"). The 1995 Balance Sheet and
the Interim Balance Sheet are hereinafter collectively referred to as the
"Balance Sheets". The Financial Statements fully and fairly set forth the
financial condition of the Entity as of the dates indicated, and the results of
its operations for the periods indicated, in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated therein
and in the related reports of independent accountants.
9. UNDISCLOSED LIABILITIES. The Entity has no liabilities or
obligations whatsoever, either accrued, absolute, contingent or otherwise,
which are not reflected or provided for in the Financial Statements except (a)
those arising after the date of the Interim Balance Sheet which are in the
ordinary course of business, in each case in normal amounts and none of which
is materially adverse, and (b) as and to the extent specifically described in
the Schedules hereto.
10. TRANSACTIONS NOT A BREACH. Neither the execution, delivery or
performance by the Entity of this Agreement and the Ancillary Documents to
which the Entity is a party nor the consummation of the Transactions shall:
A. Violate or conflict with or result in a breach of any provision
of any federal, state or local law, code or ordinance or any rule or regulation
promulgated by any Governmental Authority thereunder (each, a "Law" and,
collectively, "Laws"), order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority binding
on the Entity;
B. Violate or conflict with any provision of the bylaws or
certificate of incorporation of the Entity;
C. Constitute an event permitting any party to a Lien, lease,
agreement, contract, instrument, order or decree or other document to
accelerate any obligation, liability or debt of the Entity or terminate or
modify such Lien, lease, agreement, contract, instrument, order or decree or
other document, or any obligation, right or interest thereunder;
D. Result in the creation or imposition of any Lien upon the
Entity's capital stock or assets; or
E. Result in, create or cause a breach or default in or under any
contract, agreement, commitment, indenture, Lien, note, bond, lease, license or
other instrument or obligation to which the Entity is a party or by which it is
bound.
11. ABSENCE OF CERTAIN CHANGES OR EVENTS SINCE THE DATE OF THE INTERIM
BALANCE SHEET. Except as set forth in Schedule A-11, since the date of the
Interim Balance Sheet, the Entity has not:
- 3 -
36
A. Suffered any material adverse change in the financial condition,
business or prospects of the Entity;
B. Incurred any obligation or liability (fixed or contingent),
except normal trade or business obligations incurred in the ordinary course of
business and consistent with past practice, none of which is materially
adverse;
C. Discharged or satisfied any lien, security interest or
encumbrance or paid any obligation or liability (fixed or contingent), other
than in the ordinary course of business and consistent with past practice;
D. Mortgaged, pledged or subjected to any lien, security interest
or other encumbrance any of its assets or properties (other than mechanic's,
materialman's and similar statutory liens arising in the ordinary course of
business and purchase money security interests arising as a matter of law
between the date of delivery and payment);
E. Transferred, leased or otherwise disposed of any of its assets
or properties except for a fair consideration in the ordinary course of
business and consistent with past practice or acquired any material amount of
assets or properties except in the ordinary course of business and consistent
with past practice;
F. Canceled or compromised any debt or claim, except in the
ordinary course of business and consistent with past practice;
G. Waived or released any rights, claims or debts (other than by
satisfaction thereof);
H. Transferred or granted any rights under any concessions, leases,
licenses, agreements, patents, inventions, trademarks, trade names, service
marks or copyrights or with respect to any know-how;
I. Made or granted any wage or salary increase applicable to any
group or classification of employees, paid or agreed to pay any bonus, entered
into any employment contract or made any loan to or entered into any material
transaction of any other nature with any director, officer, stockholder or
employee of the Entity;
J. Entered into any transaction, contract, lease, guarantee or
commitment or entered into or agreed to any material amendment or premature
termination of any agreement, contract, commitment, lease or plan to which the
Entity was a party or by which it was bound;
K. Suffered any casualty loss or damage (whether or not such loss
or damage shall have been covered by insurance);
L. Made any material agreement or commitment for capital
expenditures, capital additions or leasehold improvements;
- 4 -
37
M. Purchased, repurchased, redeemed or otherwise acquired or
disposed of any capital stock or other securities, declared or paid any
dividends or other distribution to its stockholders or authorized or affected
any amendment or restatement of its Charter or Bylaws; or
N. Made any change in accounting practices or procedures.
12. TAXES.
A. The Entity (a) has duly and timely filed or caused to be filed
all Federal, state, local and foreign tax returns required to be filed by it
prior to the date of this Agreement which relate to the Entity or with respect
to which the Entity or the assets or properties of the Entity are liable or
otherwise in any way subject and has included therein all material required
data, information or other matters, which are true and correct in all material
respects, (b) has paid or fully accrued for all taxes shown to be due and
payable on such returns (which taxes are all the taxes due and payable under
the Laws pursuant to which such returns were filed) and (c) has properly
accrued for all such taxes accrued in respect of the Entity or the assets and
properties of the Entity for periods subsequent to the periods covered by such
returns. No deficiency in any payment of taxes for any period has been
asserted by any taxing body and remains unsettled at the date of this
Agreement. Copies of all Federal and state income, sales, use, employment,
excise, property, franchise or any other tax returns of the Entity have been
made available for inspection by Buyer. There are no pending or threatened
audits or investigations relating to any taxes for which the Entity may become
liable, and no deficiencies for any taxes have been asserted, assessed or
prepared against the Entity. No income tax returns of the Entity have been
audited for prior periods through and including 1995. The Entity has not given
or been requested to give any waiver of any statute of limitation relating to
the payment of any taxes by the Entity.
B. The Entity has withheld or collected for each payment or
distribution made to each of its employees or stockholders the amount of all
taxes required to be withheld or collected therefrom and has duly and timely
paid the same to the appropriate governmental agencies to the extent required
to do so. The Entity has collected from each of its customers the amount of
all sales, use, excise and similar taxes required to be collected and has duly
and timely remitted the same to the appropriate governmental agencies to the
extent required to do so.
13. TITLE TO THE ENTITY'S CAPITAL STOCK. The issued and outstanding
capital stock of the Entity (the "Entity Shares") are (i) duly authorized,
validly issued, fully paid and nonassessable and are owned by the persons
listed in Schedule A-13 (the "Entity Stockholders") free and clear of all
liens, encumbrances, charges, proxies, assessments and adverse claims, and (ii)
subject to no restrictions (except as provided in applicable state and Federal
securities laws) with respect to transferability, whether to Buyer in
accordance with the terms of this Agreement or otherwise. Upon transfer of the
Entity Shares by the Entity Stockholders, Buyer shall, as a result, receive
good and marketable title to all of the Entity Shares, free and clear of all
security interests, liens, encumbrances, claims, charges, proxies, assessments,
restrictions and adverse claims. There are no outstanding rights, warrants,
options, conversion rights, subscriptions, agreements or
- 5 -
38
commitments (written or oral) giving anyone any right to acquire, directly or
indirectly, any capital stock or other securities of the Entity.
14. TITLE TO PROPERTY AND ASSETS. The Entity has good and marketable
title to all of the properties and assets used by it in the conduct of its
business (including, without limitation, the properties and assets reflected in
the Balance Sheets, except any properties or assets since disposed of for fair
consideration in the ordinary course of business), and none of such properties
or assets is, except as disclosed in the Balance Sheets or the Schedules
hereto, subject to any contract of sale not in the ordinary course of business
or subject to any Liens.
15. ACCOUNTS RECEIVABLE. The Entity's accounts receivable have arisen in
the ordinary course of its business, consistent with past practices, for goods
sold or services performed.
16. CONDITION OF PERSONAL PROPERTY. All tangible personal property,
equipment, fixtures and inventories included within the assets of the Entity or
required to be used in the ordinary course of business shall be in the same
location and condition at Closing as on the execution date hereof, other than
replacements made in the ordinary course of business.
17. REAL ESTATE. The Entity owns no interest in any real estate other
than leasehold interests or improvements. The Entity has provided Buyer with a
true and complete copy of each and every lease agreement or an accurate summary
of the significant rental terms (including rents, termination dates and renewal
conditions), and each lease agreement is listed on Schedule A-17. The
improvements upon such properties and use thereof by the Entity conform to all
applicable lease restrictions, zoning and other local ordinances.
18. LIST OF CONTRACTS AND OTHER DATA. Schedule A-18 hereto sets forth
the following:
A. All employment and consulting agreements, collective bargaining
and other labor agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension or retirement plans, employee stock
purchase and stock option plans, group life insurance, hospitalization
insurance or other plans or arrangements providing for benefits to employees of
the Entity;
B. All Contracts under which the Entity is a lessee or lessor of
real or personal property with annual rental exceeding $6,000 per lease;
C. All Contracts between the Entity and its vendors, suppliers,
distributors, resellers, agents and employees;
D. All Contracts of the Entity relating to leasing, brokerage,
consulting or other services; environmental liabilities; capital expenditures;
acquisitions; joint ventures or partnerships; licenses; purchases or sales of
materials, supplies, equipment or other property; the lending or borrowing of
money (including, without limitation, Liens, loan
- 6 -
39
agreements, notes and guarantees); or Liens on any assets used in the conduct
of the Business;
E. All Contracts between the Entity and any other Seller or any
affiliate thereof; and
F. All Contracts to which the Entity is a party, or to which it or
any of its assets or properties are subject and which are not specifically
referred to in paragraph A, B, C, D or E above.
True and complete copies of all documents and complete descriptions of all oral
understandings, if any, referred to on Schedule A-18 have been provided or made
available to Buyer and its counsel.
G. EFFECT. Except as set forth on Schedule A-18, all of the
Contracts listed on Schedule A-18 are in full force and effect and neither the
Entity nor, to the knowledge of the Entity, any other party thereto is (with or
without notice or lapse of time or both) in breach or default in any respect
thereunder. The Entity is not in default under any contract to which it is a
party or by which it is bound, nor has any event occurred which, after the
giving of notice or the passage of time or both, would constitute a default
under any such contract. The Entity has no reason to believe that the parties
to such contracts shall not fulfill their obligations under such contracts in
all material respects or are threatened with insolvency. The Entity is not a
party to or bound by any Lien, lease, agreement, instrument, order, judgment or
decree which would prohibit the execution of this Agreement or prohibit the
consummation of any of the transactions provided for in this Agreement.
19. BUSINESS PROPERTY RIGHTS. Schedule A-19 describes all computer
software, patents, trademarks and trade names, trademark and trade name
registrations, service mark registrations, copyrights and copyright
registrations, which are unexpired as of the date hereof, reasonably necessary
to or used in connection with the operation of the Entity's business, as well
as all applications pending on such date for patents or for trademark, trade
name, service mark or copyright registrations, and all other proprietary
rights, owned or held by the Entity, or licensed or otherwise provided to the
Entity. The foregoing property, together with (a) all designs, methods,
inventions and know-how related thereto, and (b) all trademarks, trade names,
service marks and copyrights claimed or used by the Entity that have not been
registered (collectively, the "Business Property Rights"), constitute all such
proprietary rights reasonably necessary to, or used primarily in, the conduct
of the business of the Entity. The Entity owns or has valid rights to use all
such Business Property Rights without conflict with the rights of others.
Except as set forth on Schedule A-19, no person or entity has made or
threatened to make any claim that the operation of the business of the Entity
is in violation of or infringes any Business Property Rights or any other
proprietary or trade rights of any third party. All such designs, methods,
inventions and know-how constitute trade secrets of the Entity within the
meaning of all applicable Laws, and the Entity has taken all necessary steps
required by Law to protect those trade secrets as such. To the best knowledge
of the Entity, no third party is in violation of, or is infringing upon, any
Business Property Rights of the Entity.
- 7 -
40
20. EMPLOYEE AND LABOR MATTERS.
A. Except as specified in Schedule A-20, at no time in the past
five (5) years has the Entity sponsored, maintained, supported, contributed to
or otherwise been a party to or been in default under, or had any obligations
under any "employee pension benefit plan," as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (a
"Pension Plan"), any "employee welfare benefit plan," as defined in Section
3(1) of ERISA (a "Welfare Plan"), any bonus, stock option, stock purchase,
deferred compensation plans or arrangements, other employee fringe benefits
plans or employee benefit plans within the meaning of Section 3(3) of ERISA
(all of the foregoing being referred to as a "Benefit Plan"). The Entity has
delivered to Buyer true and complete copies of any Benefit Plan (or, if
unwritten, a description thereof), all related investment agreements, insurance
policies, annuity contracts, trust agreements or other funding arrangements
relating to such Benefit Plans, the three (3) most recent Forms 5500 filed with
the Internal Revenue Service ("IRS") with respect to each Benefit Plan, the
most recent summary plan description for any Benefit Plan (if required), the
most recent actuarial report or financial statements (if applicable), and the
I.R.S. determination letter (if applicable) with respect to each such Benefit
Plan. The Entity hereby makes the following representations and warranties,
each of which is true and accurate as of the date hereof:
(1) All contributions to a Benefit Plan that may have been
required in accordance with the terms of such Benefit Plan, and/or pursuant to
the requirements of Sections 302 of ERISA and Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"), have been timely made as of the
date hereof. There has been no application for, or waiver of, the minimum
funding standards of Section 412 of the Code. There is no "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code or Section 302 of
ERISA as of the most recent plan year, and there were no "unfunded benefit
liabilities," as defined in Section 4001(a)(18) of ERISA. For each Benefit
Plan, the liabilities do not exceed the assets, and no material adverse change
has occurred with respect to the funded status of each Benefit Plan that is not
reflected on the Entity's financial statements.
(2) With respect to any Benefit Plan that is a Pension Plan and
is intended to qualify under Section 401(a) of the Code, a favorable
determination letter has been received from the Internal Revenue Service that
such Plan satisfies the qualification requirements of the Code, which
determination takes into account all legal requirements in effect as of the
date hereof. No action or failure to act has occurred since the date of such
determination that would result in any loss of such qualification, and such
Pension Plan has not been amended subsequent to the date of such determination.
(3) The Entity does not now, and has not at any time in the
past, sponsored, adopted, contributed to, maintained or been obligated to
contribute to a plan that is a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, or that is subject to the provisions of Title IV of
ERISA. The Entity does not now, and has not at any time in the past, have any
accrued liability under Section 4201 of ERISA for any complete or partial
withdrawal liability from a multiemployer plan.
- 8 -
41
(4) No "reportable event" (as described in Section 4043 of
ERISA) has occurred. There exists no condition or set of circumstances as of
the date hereof which presents a risk of the termination of any Benefit Plan
that could result in any liability of the Entity to the Pension Benefit
Guaranty Corporation.
(5) Neither the Entity, nor any Benefit Plan, nor any trustee
of a Benefit Plan, has engaged in a "prohibited transaction", within the
meaning of Section 4975 of the Code or Section 406 of ERISA, or has incurred
any liability or penalty under Section 4975 of the Code or Section 502(i) of
ERISA.
(6) There are no pending or anticipated claims against or
otherwise involving any of the Benefit Plans, and no suit, action or other
litigation has been brought against or with respect to any Benefit Plan, other
than routine claims for benefits incurred in the ordinary course of Benefit
Plan activities.
(7) Except as set forth on Schedule A-20, no personnel of the
Entity are entitled to any unfunded benefits, or to any benefits that are
payable after the date hereof under any employment, vacation, sick leave,
seniority, severance or termination agreement or policy (whether written or
unwritten).
B. Any Benefit Plan or employee benefit arrangement which otherwise
provides benefits or compensation for services to any employees, dependents or
beneficiaries has been maintained and administered at all times in full
compliance with the terms thereof and with all applicable Laws including,
without limitation, the Code, ERISA, the Age Discrimination in Employment Act,
as amended, Title VII of the Civil Rights Act of 1964, as amended, and Title X
of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
C. Except as may be required by COBRA, the Entity has not, within
the past three (3) years, provided or been obligated to provide any post-
retirement medical or other benefits to any present or former employees, and
the Entity does not have any contingent liability under any Benefit Plant to
provide any post-retirement medical benefits at any time in the future. Except
as provided on Schedule A-20, each employee, former employee, "qualified
beneficiary" (as defined in COBRA) or other individual for whom a "qualifying
event" (as defined in COBRA) occurred on or after January 1, 1990, received
notice of his or her right to elect to continue health care coverage, in
accordance with the requirements of COBRA, and elected not to continue such
health care coverage.
D. The Entity has not and is not engaged in any unfair labor
practice or violation of the Fair Labor Standards Act or Service Contract Act.
E. Except as specified on Schedule A-20, the Entity is not a party
to any collective bargaining agreement; there are no controversies between the
Entity and any of its employees which might reasonably be expected to adversely
affect the conduct of its business, or any unresolved grievances or unfair
labor practice or labor arbitration proceedings pending or threatened relating
to the Entity's business; and to the best knowledge of the Entity there are not
any organizational efforts presently being made or threatened involving any of
the Entity's employees.
- 9 -
42
F. Except as specified on Schedule A-20, the Entity has not
received notice of any claim (i) that it has not complied with any Laws
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining, the payment of social security and
similar taxes, equal employment opportunity, employment discrimination and
employment safety, (ii) that it is liable for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing or (iii) that any
employee or former employee has alleged wrongful termination, failure to hire,
harassment or discrimination by reason of race, age, sex, handicap or veteran's
status.
21. LITIGATION. Except as set forth on Schedule A-21, there are no
actions, suits, proceedings (including arbitration or administrative
proceedings), claims, demands or investigations with respect to the Entity
involving claims by or against the Entity pending or, to the best knowledge of
the Entity or any Stockholder of the Entity, threatened or contemplated at law,
in equity or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality. No basis for
any such action, suit or proceeding exists, and there are no orders, judgments,
injunctions or decrees of any court or governmental agency with respect to
which the Entity has been named or is a party which apply, in whole or in part,
to the business of Entity or to any of the assets or properties of the Entity
or the Entity Shares or which would result in any adverse change in the
business or prospects of the Entity.
22. GOVERNMENT CONTRACTS. For purposes hereof, "Government" includes any
agency or instrumentality of the United States of America, any state, city,
territory or subdivision thereof, any foreign nation or subdivision thereof or
any agency or instrumentality of any of them.
A. During the past five (5) years, the Entity has not been
suspended or debarred from bidding on contracts or subcontracts for, or
supplying goods or services to, the Government nor has any such suspension or
debarment action been threatened or commenced. There is no valid basis, nor
specific circumstances which with the passage of time would become a basis, for
the Entity's suspension or debarment from bidding on contracts or subcontracts
with or for the Government.
B. Except for contract audits of a routine nature, and except as
set forth on Schedule A-22, during the past five (5) years, (i) the Entity has
not been audited or investigated by the U.S. Department of Housing and Urban
Development ("HUD"), the Florida Department of Health and Rehabilitative
Services, the Florida Agency for Health Care Administration or any other agency
of the Government or the inspector general or auditor general or similar
functionary of any agency of the Government, and no such audit has been
threatened and (ii) the Entity has not received any "flags," advisories or
other notices advising the Entity that it was in default or would, if it failed
to take remedial action, be (a) in violation of Laws, (b) in default under a
contract or subcontract with the Government or (c) in violation of any
requirement for participation in any Government program.
C. There is no current dispute to which the Entity is a party
pending before a contracting officer of, nor a current formal claim by the
Entity pending against, the Government. There exists no basis for a claim of
any liability by the Entity as a result of
- 10 -
43
cost or pricing data submitted to the Government within the past five (5)
years. No employee, agent, consultant or representative of the Entity is in
receipt or possession of any competitor or Government proprietary or
procurement sensitive information under circumstances where such receipt or
possession is unlawful or unauthorized.
D. The Entity and its officers, directors, agents, employees or
representatives have not (i) used any Entity funds for unlawful contributions,
payments, gifts or entertainment with respect to the Government, (ii) made
unlawful expenditures or contributions relating to political activity to
Government officials or others or (iii) accepted or received any unlawful
contributions, payments, gifts or entertainment.
E. All contracts, subcontracts and procurement arrangements between
the Entity and the Government are valid, effective and binding obligations of
the parties thereto in accordance with their terms, and none of them is in
default, or would, with notice or the passage of time, be in default. No
consent of the Government is required to continue all contracts, subcontracts,
procurement arrangements or participation by the Entity in programs of the
Government as a result of the execution of this Agreement or consummation of
the Transactions.
23. ENVIRONMENTAL MATTERS.
A. As used herein, (i) "Environmental Laws" includes, without
limitation, any Law, policy, permit or order pertaining to the emission,
release, spill, leakage or other discharge of Hazardous Materials into the air,
surface water, groundwater, soil, substrata or other aspect of the environment
or the manufacturing, processing, sale, generation, treatment, transportation,
storage, disposal or labeling of any Hazardous Materials; and (ii) "Hazardous
Materials" includes, without limitation, any substances regulated by
Environmental Laws, defined, classified or listed in any applicable Laws as a
hazardous, toxic, pathogenic or infectious material or substance or which is
regulated due to its ignitability, corrosivity, reactivity, radioactivity,
carcinogenicity, toxicity or similar characteristics.
B. With respect to the period prior to the purchase by the Entity
of any real property that it holds or has held, to the best knowledge of the
Entity and the Stockholders, except as set forth in the June 1995 Phase I
Environmental Report provided to Buyer, (i) the previous owners of such
property were in compliance with all applicable Environmental Laws and obtained
all permits and other authorizations from, and submitted all necessary
materials and payments to, the appropriate person or governmental authority
needed or required to operate any facilities in compliance with applicable
Environmental Laws; (ii) the previous owners of the property did not violate
any applicable Environmental Laws, including through direct or indirect on-site
generation, treatment, processing, storage or disposal of Hazardous Materials,
off-site transportation, treatment, processing, storage and disposal of
Hazardous Materials, release, emission, spill, leakage or other discharge of
Hazardous Materials into any aspect of the environment, in connection with the
conduct of the owner's business; (iii) no asbestos, polychlorinated biphenyl or
other Hazardous Materials or underground storage tanks are contained in or
located at any facility or property owned, leased or controlled by the Entity,
and no Hazardous Materials were handled or dealt with in any way in connection
with the business of the previous owner;
- 11 -
44
and (iv) previous owners of the property did not receive any "flags,"
advisories or other notices of non-compliance with Environmental Laws with
respect to the property.
C. With respect to the period beginning with and subsequent to the
purchase by the Entity of any real property that it holds or has held, except
as set forth in the June 1995 Phase I Environmental Report provided to Buyer,
(i) the Entity has always been and is in compliance with all applicable
Environmental Laws and has obtained all permits and other authorizations from,
and submitted all necessary materials and payments to, the appropriate person
or governmental authority needed or required to operate its facilities in
compliance with applicable Environmental Laws; (ii) the Entity has not in the
past violated any applicable Environmental Laws, including through direct or
indirect on-site generation, treatment, processing, storage or disposal of
Hazardous Materials, off-site transportation, treatment, processing, storage
and disposal of Hazardous Materials, release, emission, spill, leakage or other
discharge of Hazardous Materials into any aspect of the environment, in
connection with the conduct of the Entity's business or at any property or
facility of the Entity; (iii) no asbestos, polychlorinated biphenyl or other
Hazardous Materials or underground storage tanks are contained in or located at
any facility or property owned, leased or controlled by the Entity, and no
Hazardous Materials are handled or dealt with in any way in connection with the
business of the Entity or at any property or facility on or at which the Entity
has operations or provides services, and (iv) the Entity has not received any
"flags," advisories or other notices of non-compliance with Environmental Laws
with respect to the Managed Properties.
24. NO BROKERS. Except as set forth in Section 7.9 of the Agreement, the
Entity has not entered into any contract, arrangement or understanding with any
person or firm which may result in the obligation of Buyer or the Entity to pay
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby, and the Entity is not aware of any
claim or basis for any claim against Buyer or the Entity for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the Transactions.
25. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Entity in this Attachment or in any other Attachment, Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Entity pursuant hereto, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading or necessary to provide Buyer with accurate
information with respect to the Entity, the Business or the Transactions.
- 12 -
45
ATTACHMENT B
REPRESENTATIONS AND WARRANTIES REGARDING
THE LIMITED PARTNERSHIP TARGET ENTITIES:
HHA LP, CDMA LP AND PHH LP
1. OBLIGATIONS. Except as set forth in Schedule 0.G, 0.H, 0.I, or 0.J,
the Entity has outstanding no loan, borrowing, advance, indebtedness,
obligation or liability to any other Seller, nor does any other Seller possess,
hold or claim any mortgage, lien, security interest, claim, charge or
encumbrance (each, a "Lien" and, collectively, "Liens") on or against the
Entity or any assets thereof.
2. EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW. The Entity
is a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Florida. There is no other jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary. The Entity
has all requisite power and authority to own, lease or otherwise hold its
properties and carry on its business as now conducted. The Entity has all
licenses, permits and other authorizations and has taken all actions required
by applicable Laws in connection with its business as now conducted, and is not
in violation of any Laws to which it is subject.
3. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS; CONSENTS. The
Entity has all requisite power and authority to execute and deliver this
Agreement and all of the other agreements, certificates and other documents
delivered or to be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby (the "Ancillary
Documents") to which it is or shall be a party, and to consummate such
transactions (collectively, the "Transactions"). The execution and delivery by
the Entity of this Agreement or the Ancillary Documents to which the Entity is
or shall be a party and the consummation by the Entity of the Transactions have
been duly authorized by all necessary action on the part of the Entity. This
Agreement and the Ancillary Documents to which the Entity is or shall be a
party have been, or shall be, as the case may be, duly executed and delivered
by the Entity and are or shall be, as the case may be, enforceable against the
Entity in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting the enforcement of creditors' rights generally. The
consummation of the transactions contemplated hereby does not require the
consent of any third party not obtained, and, except as set forth on Schedule B-
3, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court or any domestic, state, local or foreign
government or any subdivision, agency, authority or instrumentality thereof
(each, a "Governmental Authority") is required to be obtained or made by or
with respect to the Entity in connection with the execution and delivery of
this
46
Agreement or the Ancillary Documents to which the Entity is or shall be a
party, or the consummation by it of the Transactions.
4. SOLVENCY. The Entity is solvent and currently has the ability to pay
its debts when due, and the value of its current assets exceeds the aggregate
amount of its current liabilities. Neither the Entity nor any creditor has
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to the Entity. No creditor of the Entity has applied for a
receiver, trustee or similar officer with respect to any of the property of the
Entity, and neither the Entity nor its creditors have instituted by petition,
application, answer, consent or otherwise any bankruptcy, insolvency,
reorganization arrangement, readjustment of debts, liquidation, dissolution or
similar proceeding relating to the Entity.
5. CAPITALIZATION; PARTNERS. The capitalization of the Entity is set
forth on Schedule B-5. The partners of the Entity (immediately prior to the
effectiveness of resignations required at the Closing) (the "Partners") are as
set forth on Schedule B-5. There are no other Partners of the Entity other
than those set forth on Schedule B-5. There are no outstanding subscriptions,
warrants, options, rights or other commitments obligating the Entity to issue
or sell any additional interest in the Entity and there are no claims, charges,
liens or encumbrances on, or in respect of, any existing interest in the
Entity.
6. RECORDS. The records of the Entity to be delivered to Buyer at the
Closing contain true and complete copies of the certificate of limited
partnership of the Entity, as amended to the Closing Date (the "Certificate")
and the partnership agreement, as amended to the Closing Date (the "Partnership
Agreement"). All files, records and information which pertain to the business
of the Entity are intact in all material respects and in usable form and
format. True and complete copies of the Certificate and Partnership Agreement,
each as amended through the date hereof, have previously been provided to
Buyer.
7. BANK ACCOUNTS; POWERS OF ATTORNEY; INSURANCE. Schedule B-7 sets
forth (a) the name of each bank, savings institution or other person or entity
with which the Entity has an account or safe deposit box and the names and
identification of all persons authorized to draw thereon or to have access
thereto, (b) the names of all persons, if any, holding powers of attorney from
the Entity and a statement of the terms thereof, (c) a complete list of all
outstanding bonds or surety arrangements issued or entered into in connection
with the business of the Entity, (d) a list of any debt, liability or
obligation of any person or entity guaranteed as to payment or performance in
whole or in part, by the Entity and (e) a complete list of all insurance
policies owned by the Entity or for which it is responsible (for fire,
liability, casualty, use and occupancy, life, disability or other coverage).
Copies of all such policies and amendments thereto have been provided to Buyer.
8. SUBSIDIARIES; AFFILIATES. The Entity has no subsidiaries (as that
term is defined in Rule 405 promulgated under the Securities Act of 1933).
Schedule B-8 lists all of the affiliates (as that term is defined in Rule 405
promulgated under the Securities Act of 1933) of the Entity which conduct part
of the Business. Except as set forth on Schedule B-8, the Entity does not own,
directly or indirectly, any interest in any entity or
- 2 -
47
other business organization or association which is also engaged in the
Business or any part of the Business. Except as set forth on Schedule B-8, the
Entity has no debt, equity or other investment or interest in any corporation,
business trust, limited liability company, partnership, joint venture or other
entity or any strategic alliance with any other entity.\
9. FINANCIAL STATEMENTS. Attached hereto as Schedule B-9, to the extent
provided by the Entity, are any or all of the following: (i) a balance sheet
and notes thereto of the Entity as of the end of the last fiscal year (the
"1995 Balance Sheet"), (ii) an unaudited statement of operations of the Entity
for the last fiscal year, (iii) a 1995 balance sheet of the Entity as of May
31, 1996 (the "Interim Balance Sheet"), and (iv) a current statement of
operations of the Entity (collectively, the "Financial Statements"). The 1995
Balance Sheet and the Interim Balance Sheet are hereinafter collectively
referred to as the "Balance Sheets". The Financial Statements fully and fairly
set forth the financial condition of the Entity as of the dates indicated, and
the results of its operations for the periods indicated, in accordance with
generally accepted accounting principles consistently applied, except as
otherwise stated therein and in the related reports of independent accountants.
10. UNDISCLOSED LIABILITIES. Except as set forth in Schedule B-10, the
Entity has no liabilities or obligations whatsoever, either accrued, absolute,
contingent or otherwise, which are not reflected or provided for in the
Financial Statements except (a) those arising after the date of the Interim
Balance Sheet which are in the ordinary course of business, in each case in
normal amounts and none of which is materially adverse, and (b) as and to the
extent specifically described in the Schedules hereto.
11. TRANSACTIONS NOT A BREACH. Except as set forth on Schedule B-11,
neither the execution, delivery or performance by the Entity of this Agreement
and the Ancillary Documents to which the Entity is a party nor the consummation
of the Transactions shall:
A. Violate or conflict with or result in a breach of any provision
of any federal, state or local law, code or ordinance or any rule or regulation
promulgated by any Governmental Authority thereunder (each, a "Law" and,
collectively, "Laws"), order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority binding
on the Entity;
B. Violate or conflict with any provision of the Certificate or the
Partnership Agreement;
C. Constitute an event permitting any party to a Lien, lease,
agreement, contract, instrument, order or decree or other document to
accelerate any obligation, liability or debt of the Entity or terminate or
modify such Lien, lease, agreement, contract, instrument, order or decree or
other document, or any obligation, right or interest thereunder.
D. Result in the creation or imposition of any Lien upon the
Entity's assets; or
- 3 -
48
E. Result in, create or cause a breach or default in or under any
contract, agreement, commitment, indenture, Lien, note, bond, lease, license or
other instrument or obligation to which the Entity is a party or by which it is
bound.
12. ABSENCE OF CERTAIN CHANGES OR EVENTS SINCE THE DATE OF THE INTERIM
BALANCE SHEET. Except as set forth on Schedule B-12, since the date of the
Interim Balance Sheet, the Entity has not:
A. Suffered any material adverse change in the financial condition,
business or prospects of the Entity;
B. Incurred any obligation or liability (fixed or contingent),
except normal trade or business obligations incurred in the ordinary course of
business and consistent with past practice, none of which is materially
adverse;
C. Discharged or satisfied any lien, security interest or
encumbrance or paid any obligation or liability (fixed or contingent), other
than in the ordinary course of business and consistent with past practice;
D. Mortgaged, pledged or subjected to any lien, security interest
or other encumbrance any of its assets or properties (other than mechanic's,
materialman's and similar statutory liens arising in the ordinary course of
business and purchase money security interests arising as a matter of law
between the date of delivery and payment);
E. Transferred, leased or otherwise disposed of any of its assets
or properties except for a fair consideration in the ordinary course of
business and consistent with past practice or acquired any material amount of
assets or properties except in the ordinary course of business and consistent
with past practice;
F. Canceled or compromised any debt or claim, except in the
ordinary course of business and consistent with past practice;
G. Waived or released any rights, claims or debts (other than by
satisfaction thereof);
H. Except pursuant to those contracts listed on Schedule B-12,
transferred or granted any rights under any concessions, leases, licenses,
agreements, patents, inventions, trademarks, trade names, service marks or
copyrights or with respect to any know-how;
I. Made or granted any wage or salary increase applicable to any
group or classification of employees, paid or agreed to pay any bonus, entered
into any employment contract or made any loan to or entered into any material
transaction of any other nature with any Partner or employee of the Entity;
J. Entered into any transaction, contract, lease, guarantee or
commitment (unless listed on Schedule B-12) or entered into or agreed to any
material
- 4 -
49
amendment or premature termination of any agreement, contract, commitment,
lease or plan to which the Entity was a party or by which it was bound;
K. Suffered any casualty loss or damage (whether or not such loss
or damage shall have been covered by insurance);
L. Made any material agreement or commitment for capital
expenditures, capital additions or leasehold improvements;
M. Authorized or affected any amendment or restatement of its
Certificate or Partnership Agreement; or
N. Made any change in accounting practices or procedures.
13. TAXES.
A. The Entity or each of the Partners, as applicable (a) has duly
and timely filed or caused to be filed all Federal, state, local and foreign
tax returns required to be filed by it prior to the date of this Agreement
which relate to the Entity or with respect to which the Entity or the assets or
properties of the Entity are liable or otherwise in any way subject and has
included therein all material required data, information or other matters,
which are true and correct in all material respects, (b) has paid or fully
accrued for all taxes shown to be due and payable on such returns (which taxes
are all the taxes due and payable under the Laws pursuant to which such returns
were filed) and (c) has properly accrued for all such taxes accrued in respect
of the Entity or the assets and properties of the Entity for periods subsequent
to the periods covered by such returns. No deficiency in any payment of taxes
for any period has been asserted by any taxing body and remains unsettled at
the date of this Agreement. Copies of all Federal and state income, sales,
use, employment, excise, property, franchise or any other tax returns of the
Entity have been made available for inspection by Buyer. There are no pending
or threatened audits or investigations relating to any taxes for which the
Entity may become liable, and no deficiencies for any taxes have been asserted,
assessed or prepared against the Entity. No income tax returns of the Entity
have been audited for prior periods through and including 1995. The Entity has
not given or been requested to give any waiver of any statute of limitation
relating to the payment of any taxes by the Entity.
B. The Entity has withheld or collected for each payment or
distribution made to each of its employees or Partners the amount of all taxes
required to be withheld or collected therefrom and has duly and timely paid the
same to the appropriate governmental agencies to the extent required to do so.
The Entity has collected from each of its customers the amount of all sales,
use, excise and similar taxes required to be collected and has duly and timely
remitted the same to the appropriate governmental agencies to the extent
required to do so.
14. TITLE TO PROPERTY AND ASSETS. The Entity has good and marketable
title to all of the properties and assets used by it in the conduct of its
business (including, without limitation, the properties and assets reflected in
the Balance Sheets, except any properties or assets since disposed of for fair
consideration in the ordinary course of business), and
- 5 -
50
none of such properties or assets is, except as disclosed in the Balance Sheets
or the Schedules hereto, subject to any contract of sale not in the ordinary
course of business or subject to any Liens.
15. ACCOUNTS RECEIVABLE. The Entity's accounts receivable have arisen in
the ordinary course of its business, consistent with past practices, for goods
sold or services performed.
16. CONDITION OF PERSONAL PROPERTY. All tangible personal property,
equipment, fixtures and inventories included within the assets of the Entity or
required to be used in the ordinary course of business shall be in the same
location and condition at Closing as on the execution date hereof, other than
replacements made in the ordinary course of business.
17. REAL ESTATE. The Entity owns only the real estate and improvements
thereon listed in Schedule B-17. The Entity has provided Buyer with a current
rent roll, in form and substance satisfactory to Buyer. The improvements upon
such properties and use thereof by the Entity conform to all applicable lease
restrictions, zoning and other local ordinances.
18. LIST OF CONTRACTS AND OTHER DATA. Schedule B-18 hereto sets forth
the following:
A. All employment and consulting agreements, collective bargaining
and other labor agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension or retirement plans, group life
insurance, hospitalization insurance or other plans or arrangements providing
for benefits to employees of the Entity;
B. All Contracts under which the Entity is a lessee of real or
personal property with annual rental exceeding $6,000 per lease;
C. All Contracts between the Entity and its vendors, suppliers,
distributors, resellers, agents and employees;
D. All Contracts of the Entity relating to leasing, brokerage,
consulting or other services; environmental liabilities; capital expenditures;
acquisitions; joint ventures or partnerships; licenses; purchases or sales of
materials, supplies, equipment or other property; the lending or borrowing of
money (including, without limitation, Liens, loan agreements, notes and
guarantees); or Liens on any assets used in the conduct of the Business;
E. All Contracts between the Entity and any other Seller or any
affiliate thereof; and
F. All Contracts to which the Entity is a party, or to which it or
any of its assets or properties are subject and which are not specifically
referred to in paragraph A, B, C, D or E above.
- 6 -
51
True and complete copies of all documents and complete descriptions of all oral
understandings, if any, referred to on Schedule B-18 have been provided or made
available to Buyer and its counsel.
G. EFFECT. Except as set forth on Schedule B-18, all of the
Contracts listed on Schedule B-18 are in full force and effect and neither the
Entity nor, to the knowledge of the Entity, any other party thereto is (with or
without notice or lapse of time or both) in breach or default in any respect
thereunder. Except as set forth on Schedule B-18, neither the Entity nor any
other party to any such listed Property Management Contract or other Contract
has notified the other party of its intent or desire to terminate such Property
Management Contract or other Contract or to modify it in any respect. The
Entity is not in default under any contract to which it is a party or by which
it is bound, nor has any event occurred which, after the giving of notice or
the passage of time or both, would constitute a default under any such
contract. The Entity has no reason to believe that the parties to such
contracts shall not fulfill their obligations under such contracts in all
material respects or are threatened with insolvency. The Entity is not a party
to or bound by any Lien, lease, agreement, instrument, order, judgment or
decree which would prohibit the execution of this Agreement or prohibit the
consummation of any of the transactions provided for in this Agreement.
19. BUSINESS PROPERTY RIGHTS. Schedule B-19 describes all computer
software, patents, trademarks and trade names, trademark and trade name
registrations, service mark registrations, copyrights and copyright
registrations, which are unexpired as of the date hereof, reasonably necessary
to or used in connection with the operation of the Entity's business, as well
as all applications pending on such date for patents or for trademark, trade
name, service mark or copyright registrations, and all other proprietary
rights, owned or held by the Entity, or licensed or otherwise provided to the
Entity. The foregoing property, together with (a) all designs, methods,
inventions and know-how related thereto, and (b) all trademarks, trade names,
service marks and copyrights claimed or used by the Entity that have not been
registered (collectively, the "Business Property Rights"), constitute all such
proprietary rights reasonably necessary to, or used primarily in, the conduct
of the business of the Entity. The Entity owns or has valid rights to use all
such Business Property Rights without conflict with the rights of others.
Except as set forth on Schedule B-19, no person or entity has made or
threatened to make any claim that the operation of the business of the Entity
is in violation of or infringes any Business Property Rights or any other
proprietary or trade rights of any third party. All such designs, methods,
inventions and know-how constitute trade secrets of the Entity within the
meaning of all applicable Laws, and the Entity has taken all necessary steps
required by Law to protect those trade secrets as such. To the best knowledge
of the Entity, no third party is in violation of, or is infringing upon, any
Business Property Rights of the Entity.
20. EMPLOYEE AND LABOR MATTERS.
A. Except as specified in Schedule B-20, at no time in the past
five (5) years has the Entity sponsored, maintained, supported, contributed to
or otherwise been a party to or been in default under, or had any obligations
under any "employee pension benefit plan," as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (a
"Pension Plan"), any "employee welfare benefit plan,"
- 7 -
52
as defined in Section 3(1) of ERISA (a "Welfare Plan"), any bonus, deferred
compensation plans or arrangements, other employee fringe benefits plans or
employee benefit plans within the meaning of Section 3(3) of ERISA (all of the
foregoing being referred to as a "Benefit Plan"). The Entity has delivered to
Buyer true and complete copies of any Benefit Plan (or, if unwritten, a
description thereof), all related investment agreements, insurance policies,
annuity contracts, trust agreements or other funding arrangements relating to
such Benefit Plans, the three (3) most recent Forms 5500 filed with the
Internal Revenue Service ("IRS") with respect to each Benefit Plan, the most
recent summary plan description for any Benefit Plan (if required), the most
recent actuarial report or financial statements (if applicable), and the I.R.S.
determination letter (if applicable) with respect to each such Benefit Plan.
The Entity hereby makes the following representations and warranties, each of
which is true and accurate as of the date hereof:
(1) All contributions to a Benefit Plan that may have been
required in accordance with the terms of such Benefit Plan, and/or pursuant to
the requirements of Sections 302 of ERISA and Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"), have been timely made as of the
date hereof. There has been no application for, or waiver of, the minimum
funding standards of Section 412 of the Code. There is no "accumulated funding
deficiency" within the meaning of Section 412(a) of the Code or Section 302 of
ERISA as of the most recent plan year, and there were no "unfunded benefit
liabilities," as defined in Section 4001(a)(18) of ERISA. For each Benefit
Plan, the liabilities do not exceed the assets, and no material adverse change
has occurred with respect to the funded status of each Benefit Plan that is not
reflected on the Entity's financial statements.
(2) With respect to any Benefit Plan that is a Pension Plan and
is intended to qualify under Section 401(a) of the Code, a favorable
determination letter has been received from the Internal Revenue Service that
such Plan satisfies the qualification requirements of the Code, which
determination takes into account all legal requirements in effect as of the
date hereof. No action or failure to act has occurred since the date of such
determination that would result in any loss of such qualification, and such
Pension Plan has not been amended subsequent to the date of such determination.
(3) The Entity does not now, and has not at any time in the
past, sponsored, adopted, contributed to, maintained or been obligated to
contribute to a plan that is a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, or that is subject to the provisions of Title IV of
ERISA. The Entity does not now, and has not at any time in the past, have any
accrued liability under Section 4201 of ERISA for any complete or partial
withdrawal liability from a multiemployer plan.
(4) No "reportable event" (as described in Section 4043 of
ERISA) has occurred. There exists no condition or set of circumstances as of
the date hereof which presents a risk of the termination of any Benefit Plan
that could result in any liability of the Entity to the Pension Benefit
Guaranty Corporation.
(5) Neither the Entity, nor any Benefit Plan, nor any trustee
of a Benefit Plan, has engaged in a "prohibited transaction", within the
meaning of Section
- 8 -
53
4975 of the Code or Section 406 of ERISA, or has incurred any liability or
penalty under Section 4975 of the Code or Section 502(i) of ERISA.
(6) There are no pending or anticipated claims against or
otherwise involving any of the Benefit Plans, and no suit, action or other
litigation has been brought against or with respect to any Benefit Plan, other
than routine claims for benefits incurred in the ordinary course of Benefit
Plan activities.
(7) Except as set forth on Schedule B-20, no personnel of the
Entity are entitled to any unfunded benefits, or to any benefits that are
payable after the date hereof under any employment, vacation, sick leave,
seniority, severance or termination agreement or policy (whether written or
unwritten).
B. Any Benefit Plan or employee benefit arrangement which otherwise
provides benefits or compensation for services to any employees, dependents or
beneficiaries has been maintained and administered at all times in full
compliance with the terms thereof and with all applicable Laws including,
without limitation, the Code, ERISA, the Age Discrimination in Employment Act,
as amended, Title VII of the Civil Rights Act of 1964, as amended, and Title X
of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
C. Except as may be required by COBRA, the Entity has not, within
the past three (3) years, provided or been obligated to provide any post-
retirement medical or other benefits to any present or former employees, and
the Entity does not have any contingent liability under any Benefit Plant to
provide any post-retirement medical benefits at any time in the future. Except
as provided on Schedule B-20, each employee, former employee, "qualified
beneficiary" (as defined in COBRA) or other individual for whom a "qualifying
event" (as defined in COBRA) occurred on or after January 1, 1990, received
notice of his or her right to elect to continue health care coverage, in
accordance with the requirements of COBRA, and elected not to continue such
health care coverage.
D. The Entity has not and is not engaged in any unfair labor
practice or violation of the Fair Labor Standards Act or Service Contract Act.
E. Except as specified on Schedule B-20, the Entity is not a party
to any collective bargaining agreement; there are no controversies between the
Entity and any of its employees which might reasonably be expected to adversely
affect the conduct of its business, or any unresolved grievances or unfair
labor practice or labor arbitration proceedings pending or threatened relating
to the Entity's business; and to the best knowledge of the Entity there are not
any organizational efforts presently being made or threatened involving any of
the Entity's employees.
F. Except as specified on Schedule B-20, the Entity has not
received notice of any claim (i) that it has not complied with any Laws
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining, the payment of social security and
similar taxes, equal employment opportunity, employment discrimination and
employment safety, (ii) that it is liable for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing or (iii) that any
- 9 -
54
employee or former employee has alleged wrongful termination, failure to hire,
harassment or discrimination by reason of race, age, sex, handicap or veteran's
status.
21. LITIGATION. Except as set forth on Schedule B-21, there are no
actions, suits, proceedings (including arbitration or administrative
proceedings), claims, demands or investigations with respect to the Entity
involving claims by or against the Entity pending or, to the best knowledge of
the Entity, threatened or contemplated at law, in equity or before or by any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality. No basis for any such action, suit or
proceeding exists, and there are no orders, judgments, injunctions or decrees
of any court or governmental agency with respect to which the Entity has been
named or is a party which apply, in whole or in part, to the business of Entity
or to any of the assets or properties of the Entity or the Affiliate Interests
or which would result in any adverse change in the business or prospects of the
Entity.
22. GOVERNMENT CONTRACTS. For purposes hereof, "Government" includes any
agency or instrumentality of the United States of America, any state, city,
territory or subdivision thereof, any foreign nation or subdivision thereof or
any agency or instrumentality of any of them.
A. During the past five (5) years, the Entity has not been
suspended or debarred from bidding on contracts or subcontracts for, or
supplying goods or services to, the Government nor has any such suspension or
debarment action been threatened or commenced. There is no valid basis, nor
specific circumstances which with the passage of time would become a basis, for
the Entity's suspension or debarment from bidding on contracts or subcontracts
with or for the Government.
B. Except for contract audits of a routine nature, and except as
set forth on Schedule B-22, during the past five (5) years, (i) the Entity has
not been audited or investigated by the U.S. Department of Housing and Urban
Development ("HUD"), the Florida Department of Health and Rehabilitative
Services, the Florida Agency for Health Care Administration or any other agency
of the Government or the inspector general or auditor general or similar
functionary of any agency of the Government, and no such audit has been
threatened and (ii) the Entity has not received any "flags," advisories or
other notices advising the Entity that it was in default or would, if it failed
to take remedial action, be (a) in violation of Laws, (b) in default under a
contract or subcontract with the Government or (c) in violation of any
requirement for participation in any Government program.
C. There is no current dispute to which the Entity is a party
pending before a contracting officer of, nor a current formal claim by the
Entity pending against, the Government. There exists no basis for a claim of
any liability by the Entity as a result of cost or pricing data submitted to
the Government within the past five (5) years. No employee, agent, consultant
or representative of the Entity is in receipt or possession of any competitor
or Government proprietary or procurement sensitive information under
circumstances where such receipt or possession is unlawful or unauthorized.
- 10 -
55
D. The Entity and its Partners, agents, employees or
representatives have not (i) used any Entity funds for unlawful contributions,
payments, gifts or entertainment with respect to the Government, (ii) made
unlawful expenditures or contributions relating to political activity to
Government officials or others or (iii) accepted or received any unlawful
contributions, payments, gifts or entertainment.
E. All contracts, subcontracts and procurement arrangements between
the Entity and the Government are valid, effective and binding obligations of
the parties thereto in accordance with their terms, and none of them is in
default, or would, with notice or the passage of time, be in default. No
consent of the Government is required to continue all contracts, subcontracts,
procurement arrangements or participation by the Entity in programs of the
Government as a result of the execution of this Agreement or consummation of
the Transactions.
23. ENVIRONMENTAL MATTERS.
A. As used herein, (i) "Environmental Laws" includes, without
limitation, any Law, policy, permit or order pertaining to the emission,
release, spill, leakage or other discharge of Hazardous Materials into the air,
surface water, groundwater, soil, substrata or other aspect of the environment
or the manufacturing, processing, sale, generation, treatment, transportation,
storage, disposal or labeling of any Hazardous Materials; and (ii) "Hazardous
Materials" includes, without limitation, any substances regulated by
Environmental Laws, defined, classified or listed in any applicable Laws as a
hazardous, toxic, pathogenic or infectious material or substance or which is
regulated due to its ignitability, corrosivity, reactivity, radioactivity,
carcinogenicity, toxicity or similar characteristics.
B. With respect to the period prior to the purchase by the Entity
of any real property that it holds or has held, to the best knowledge of the
Entity and the Stockholders, except as set forth in the June 1995 Phase I
Environmental Report provided to Buyer, (i) the previous owners of such
property were in compliance with all applicable Environmental Laws and obtained
all permits and other authorizations from, and submitted all necessary
materials and payments to, the appropriate person or governmental authority
needed or required to operate any facilities in compliance with applicable
Environmental Laws; (ii) the previous owners of the property did not violate
any applicable Environmental Laws, including through direct or indirect on-site
generation, treatment, processing, storage or disposal of Hazardous Materials,
off-site transportation, treatment, processing, storage and disposal of
Hazardous Materials, release, emission, spill, leakage or other discharge of
Hazardous Materials into any aspect of the environment, in connection with the
conduct of the owner's business; (iii) no asbestos, polychlorinated biphenyl or
other Hazardous Materials or underground storage tanks are contained in or
located at any facility or property owned, leased or controlled by the Entity,
and no Hazardous Materials were handled or dealt with in any way in connection
with the business of the previous owner; and (iv) previous owners of the
property did not receive any "flags," advisories or other notices of non-
compliance with Environmental Laws with respect to the property.
C. With respect to the period beginning with and subsequent to the
purchase by the Entity of any real property that it holds or has held, except
as set forth in
- 11 -
56
the June 1995 Phase I Environmental Report provided to Buyer, (i) the Entity
has always been and is in compliance with all applicable Environmental Laws and
has obtained all permits and other authorizations from, and submitted all
necessary materials and payments to, the appropriate person or governmental
authority needed or required to operate its facilities in compliance with
applicable Environmental Laws; (ii) the Entity has not in the past violated any
applicable Environmental Laws, including through direct or indirect on-site
generation, treatment, processing, storage or disposal of Hazardous Materials,
off-site transportation, treatment, processing, storage and disposal of
Hazardous Materials, release, emission, spill, leakage or other discharge of
Hazardous Materials into any aspect of the environment, in connection with the
conduct of the Entity's business or at any property or facility of the Entity;
(iii) no asbestos, polychlorinated biphenyl or other Hazardous Materials or
underground storage tanks are contained in or located at any facility or
property owned, leased or controlled by the Entity, and no Hazardous Materials
are handled or dealt with in any way in connection with the business of the
Entity or at any property or facility on or at which the Entity has operations
or provides services, and (iv) the Entity has not received any "flags,"
advisories or other notices of non-compliance with Environmental Laws with
respect to the Managed Properties.
24. NO BROKERS. Except as set forth in Section 7.9 of this Agreement,
the Entity has not entered into any contract, arrangement or understanding with
any person or firm which may result in the obligation of Buyer or the Entity to
pay any finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby, and the Entity is not
aware of any claim or basis for any claim against Buyer or the Entity for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the Transactions.
25. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Entity in this Attachment or in any other Attachment, Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Entity pursuant hereto, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading or necessary to provide Buyer with accurate
information with respect to the Entity, the Business or the Transactions.
- 12 -
57
ATTACHMENT C
REPRESENTATIONS AND WARRANTIES REGARDING
THE STOCKHOLDERS OF THE CORPORATE TARGET ENTITIES:
HH INC., CDM INC. AND PHH INC.
1. VALIDITY AND EFFECT OF AGREEMENTS. This Agreement constitutes, and
all agreements and documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid and legally
binding obligations of the Stockholder enforceable in accordance with their
terms, subject as to enforcement to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The consummation by the Stockholder of the
transactions contemplated under this Agreement (the "Transactions") does not
require the consent of any third party not obtained, will not result in the
breach of any term or provision of, or constitute a default under, any order,
judgment, injunction, decree, indenture, mortgage, lease, lien, other agreement
or instrument to which the Stockholder is a party or by which Stockholder is
bound, will not require any filing with or notification of any Federal, state
or local governmental or regulatory authority and will not constitute an event
permitting any party to a mortgage, lien, lease, agreement, instrument, order
or decree to accelerate any obligation, liability or debt of the Stockholder or
terminate or modify such agreement, instrument or document or any obligation,
right or interest thereunder.
2. SOLVENCY. The Stockholder is solvent as he currently has the ability
to pay his debts when due, and the value of his current assets exceeds the
aggregate amount of his current liabilities. Neither the Stockholder nor any
creditor has instituted by petition, application, answer, consent or otherwise
any bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to such Stockholder. No creditor of the Stockholder has
applied for a receiver, trustee or similar officer with respect to any of the
property of the Stockholder, and neither the Stockholder nor his creditors have
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, reorganization arrangement, readjustment of debts or
similar proceeding relating to the Stockholder.
3. AFFILIATED ENTITIES. Other than the interest of the Stockholder in
any of the Target Entities as set forth in Schedule C-3, the Stockholder does
not own, directly or indirectly, any interest in any entity or other business
organization or association which does or has done business with, or competes
or has in the past competed with, the Entity or any of the Target Entities.
4. S CORP. STATUS. The Entity has been an S corporation within the
meaning of IRC Section 1361(a) since its formation through the date of Closing
(disregarding for this purpose the termination of such status occurring by
reason of Buyer's purchase of the
58
stock of the Entity at Closing). The Entity will have no net unrealized built-
in gain, within the meaning of IRC Section 1374(d)(1), immediately prior to
Closing.
5. AMOUNTS PAYABLE TO OR FROM THE STOCKHOLDER. Except as set forth on
Schedule C-5, there are no loans, advances or borrowings owed by the Entity to
the Stockholder or owed by the Stockholder to the Entity.
6. TITLE TO THE SHARES. The shares of Entity capital stock to be sold
by the Stockholder to Buyer hereunder (the "Shares") are owned by the
Stockholder free and clear of all liens, encumbrances, charges, proxies,
assessments and adverse claims. The Shares are subject to no restrictions
(except as provided in applicable state and Federal securities laws) with
respect to transferability to Buyer in accordance with the terms of this
Agreement. Upon transfer of the Shares by the Stockholder, Buyer will, as a
result, receive good and marketable title to all of the Shares, free and clear
of all security interests, liens, encumbrances, claims, charges, proxies,
assessments, restrictions and adverse claims.
7. COUNSEL. The Stockholder is not relying upon Buyer, its independent
accountants, counsel, officers or directors for any advice or counsel with
respect to the negotiation or consummation of this Agreement, any Ancillary
agreement or the Transactions.
8. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Stockholder in this Attachment C or in any other Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Stockholder pursuant hereto, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained therein not misleading or necessary to provide Buyer with accurate
information with respect to the Entity or the Transactions.
- 2 -
59
ATTACHMENT D
REPRESENTATIONS AND WARRANTIES REGARDING
THE CORPORATE CREDITORS:
CDMP CORP.
1. OBLIGATIONS. Except as set forth in Schedule 0.J, no Target Entity
has outstanding any loan, borrowing, advance, indebtedness, obligation or
liability to the Entity, nor does Entity possess, hold or claim any mortgage,
lien, security interest, claim, charge or encumbrance (each, a "Lien" and,
collectively, "Liens") on or against any Target Entity or any assets thereof.
2. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW.
The Entity is a corporation duly incorporated, validly existing and in good
standing under the laws of the District of Columbia, its jurisdiction of
incorporation. There is no other jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary. The Entity has all requisite
corporate power and authority to own, lease or otherwise hold its properties
and carry on its business as now conducted. The Entity has all licenses,
permits and other authorizations and has taken all actions required by
applicable Laws in connection with its business as now conducted, and is not in
violation of any Laws to which it is subject.
3. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS. The Entity has
all requisite corporate power and authority to execute and deliver this
Agreement and all of the other agreements, certificates and other documents
delivered or to be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby (the "Ancillary
Documents") to which it is or shall be a party, and to consummate such
transactions (collectively, the "Transactions"). The execution and delivery by
the Entity of this Agreement or the Ancillary Documents to which the Entity is
or shall be a party and the consummation by the Entity of the Transactions have
been duly authorized by all necessary corporate action on the part of the
Entity. This Agreement and the Ancillary Documents to which the Entity is or
shall be a party have been, or shall be, as the case may be, duly executed and
delivered by the Entity and are or shall be, as the case may be, enforceable
against the Entity in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the enforcement of creditors'
rights generally. The consummation of the transactions contemplated hereby
does not require the consent of any third party not obtained, and, except as
set forth on Schedule D-3, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court or any domestic, state,
local or foreign government or any subdivision, agency, authority or
instrumentality thereof (each, a "Governmental Authority") is required to be
obtained or made by or with respect to the Entity in connection with the
execution and delivery of this
60
Agreement or the Ancillary Documents to which the Entity is or shall be a
party, or the consummation by it of the Transactions.
4. SOLVENCY. The Entity is solvent and currently has the ability to pay
its debts when due, and the value of its current assets exceeds the aggregate
amount of its current liabilities. Neither the Entity nor any creditor has
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to the Entity. No creditor of the Entity has applied for a
receiver, trustee or similar officer with respect to any of the property of the
Entity, and neither the Entity nor its creditors have instituted by petition,
application, answer, consent or otherwise any bankruptcy, insolvency,
reorganization arrangement, readjustment of debts, liquidation, dissolution or
similar proceeding relating to the Entity.
5. TRANSACTIONS NOT A BREACH. Neither the execution, delivery or
performance by the Entity of this Agreement and the Ancillary Documents to
which the Entity is a party nor the consummation of the Transactions shall:
A. Violate or conflict with or result in a breach of any provision
of any federal, state or local law, code or ordinance or any rule or regulation
promulgated by any Governmental Authority thereunder (each, a "Law" and,
collectively, "Laws"), order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority binding
on the Entity;
B. Violate or conflict with any provision of the bylaws or
certificate of incorporation of the Entity;
C. Constitute an event permitting any party to a Lien, lease,
agreement, contract, instrument, order or decree or other document to
accelerate any obligation, liability or debt of the Entity or terminate or
modify such Lien, lease, agreement, contract, instrument, order or decree or
other document, or any obligation, right or interest thereunder.
D. Result in the creation or imposition of any Lien upon the
Entity's capital stock or assets; or
E. Result in, create or cause a breach or default in or under any
contract, agreement, commitment, indenture, Lien, note, bond, lease, license or
other instrument or obligation to which the Entity is a party or by which it is
bound.
6. LITIGATION. Except as set forth on Schedule D-6, there are no
actions, suits, proceedings (including arbitration or administrative
proceedings), claims, demands or investigations with respect to the Entity
involving claims by or against the Entity pending or, to the best knowledge of
the Entity, threatened or contemplated at law, in equity or before or by any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality. No basis for any such action, suit or
proceeding exists, and there are no orders, judgments, injunctions or decrees
of any court or governmental agency with respect to which the Entity has been
named or is a party which apply, in whole or in part, to the business of Entity
or to any of the assets or properties of the
- 2 -
61
Entity or the Entity Shares or the Affiliate Interests or which would result in
any adverse change in the business or prospects of the Entity.
7. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Entity in this Attachment or in any other Attachment, Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Entity pursuant hereto, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading or necessary to provide Buyer with accurate
information with respect to the Entity, the Business or the Transactions.
- 3 -
62
ATTACHMENT E
REPRESENTATIONS AND WARRANTIES REGARDING
THE LIMITED PARTNERSHIP CREDITOR:
HHF LP
1. OBLIGATIONS. Except as set forth in Schedule 0.G, no Target Entity
has outstanding any loan, borrowing, advance, indebtedness, obligation or
liability to the Entity, nor does Entity possess, hold or claim any mortgage,
lien, security interest, claim, charge or encumbrance (each, a "Lien" and,
collectively, "Liens") on or against any Target Entity or any assets thereof.
2. EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW. The Entity
is a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Florida. There is no other jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary. The Entity
has all requisite power and authority to own, lease or otherwise hold its
properties and carry on its business as now conducted. The Entity has all
licenses, permits and other authorizations and has taken all actions required
by applicable Laws in connection with its business as now conducted, and is not
in violation of any Laws to which it is subject.
3. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS; CONSENTS. The
Entity has all requisite power and authority to execute and deliver this
Agreement and all of the other agreements, certificates and other documents
delivered or to be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby (the "Ancillary
Documents") to which it is or shall be a party, and to consummate such
transactions (collectively, the "Transactions"). The execution and delivery by
the Entity of this Agreement or the Ancillary Documents to which the Entity is
or shall be a party and the consummation by the Entity of the Transactions have
been duly authorized by all necessary action on the part of the Entity. This
Agreement and the Ancillary Documents to which the Entity is or shall be a
party have been, or shall be, as the case may be, duly executed and delivered
by the Entity and are or shall be, as the case may be, enforceable against the
Entity in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting the enforcement of creditors' rights generally. Except
as set forth on Schedule E-3, the consummation of the transactions contemplated
hereby does not require the consent of any third party not obtained, and no
consent, approval, order or authorization of, or registration, declaration or
filing with, any court or any domestic, state, local or foreign government or
any subdivision, agency, authority or instrumentality thereof (each, a
"Governmental Authority") is required to be obtained or made by or with respect
to the Entity in connection with the execution and delivery of this Agreement
or the
63
Ancillary Documents to which the Entity is or shall be a party, or the
consummation by it of the Transactions.
4. SOLVENCY. The Entity is solvent and currently has the ability to pay
its debts when due, and the value of its current assets exceeds the aggregate
amount of its current liabilities. Neither the Entity nor any creditor has
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to the Entity. No creditor of the Entity has applied for a
receiver, trustee or similar officer with respect to any of the property of the
Entity, and neither the Entity nor its creditors have instituted by petition,
application, answer, consent or otherwise any bankruptcy, insolvency,
reorganization arrangement, readjustment of debts, liquidation, dissolution or
similar proceeding relating to the Entity.
5. TRANSACTIONS NOT A BREACH. Neither the execution, delivery or
performance by the Entity of this Agreement and the Ancillary Documents to
which the Entity is a party nor the consummation of the Transactions shall:
A. Violate or conflict with or result in a breach of any provision
of any federal, state or local law, code or ordinance or any rule or regulation
promulgated by any Governmental Authority thereunder (each, a "Law" and,
collectively, "Laws"), order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority binding
on the Entity;
B. Violate or conflict with any provision of the Certificate or the
Partnership Agreement;
C. Constitute an event permitting any party to a Lien, lease,
agreement, contract, instrument, order or decree or other document to
accelerate any obligation, liability or debt of the Entity or terminate or
modify such Lien, lease, agreement, contract, instrument, order or decree or
other document, or any obligation, right or interest thereunder.
D. Result in the creation or imposition of a Lien upon the Entity's
assets; or
E. Result in, create or cause a breach or default in or under any
contract, agreement, commitment, indenture, Lien, note, bond, lease, license or
other instrument or obligation to which the Entity is a party or by which it is
bound.
6. LITIGATION. Except as set forth on Schedule E-6, there are no
actions, suits, proceedings (including arbitration or administrative
proceedings), claims, demands or investigations with respect to the Entity
involving claims by or against the Entity pending or, to the best knowledge of
the Entity, threatened or contemplated at law, in equity or before or by any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality. No basis for any such action, suit or
proceeding exists, and there are no orders, judgments, injunctions or decrees
of any court or governmental agency with respect to which the Entity has been
named or is a party which apply,
- 2 -
64
in whole or in part, to the business of Entity or to any of the assets or
properties of the Entity or which would result in any adverse change in the
business or prospects of the Entity.
7. No Misrepresentation or Omission. No representation or warranty by
the Entity in this Attachment or in any other Attachment, Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Entity pursuant hereto, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading or necessary to provide Buyer with accurate
information with respect to the Entity, the Business or the Transactions.
- 3 -
65
ATTACHMENT F
REPRESENTATIONS AND WARRANTIES REGARDING
THE INDIVIDUAL CREDITOR:
STEPHEN A. GOLDBERG
1. OBLIGATIONS. Except as set forth in Schedule 0.H. and O.I., no
Target Entity has outstanding any loan, borrowing, advance, indebtedness,
obligation or liability to the Creditor, nor does Entity possess, hold or claim
any mortgage, lien, security interest, claim, charge or encumbrance (each, a
"Lien" and, collectively, "Liens") on or against any Target Entity or any
assets thereof.
2. EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW. The
Creditor has all requisite power and authority to own, lease or otherwise hold
his properties and carry on his business as now conducted. The Creditor has
all licenses, permits and other authorizations and has taken all actions
required by applicable Laws in connection with his business as now conducted,
and is not in violation of any Laws to which he is subject.
3. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS; CONSENTS. The
Creditor has all requisite power and authority to execute and deliver this
Agreement and all of the other agreements, certificates and other documents
delivered or to be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby (the "Ancillary
Documents") to which he is or shall be a party, and to consummate such
transactions (collectively, the "Transactions"). This Agreement and the
Ancillary Documents to which the Creditor is or shall be a party have been, or
shall be, as the case may be, duly executed and delivered by the Creditor and
are or shall be, as the case may be, enforceable against the Creditor in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting the enforcement of creditors' rights generally. The consummation of
the transactions contemplated hereby does not require the consent of any third
party not obtained, and, except as set forth on Schedule F-3, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court or any domestic, state, local or foreign government or any
subdivision, agency, authority or instrumentality thereof (each, a
"Governmental Authority") is required to be obtained or made by or with respect
to the Creditor in connection with the execution and delivery of this Agreement
or the Ancillary Documents to which the Creditor is or shall be a party, or the
consummation by him of the Transactions.
4. SOLVENCY. The Creditor is solvent and currently has the ability to
pay his debts when due, and the value of his current assets exceeds the
aggregate amount of his current liabilities. Neither the Creditor nor any
creditor has instituted by petition, application, answer, consent or otherwise
any bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to the Creditor. No creditor of the Creditor has
66
applied for a receiver, trustee or similar officer with respect to any of the
property of the Creditor, and neither the Creditor nor his creditors have
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, reorganization arrangement, readjustment of debts,
liquidation, dissolution or similar proceeding relating to the Creditor.
5. TRANSACTIONS NOT A BREACH. Neither the execution, delivery or
performance by the Creditor of this Agreement and the Ancillary Documents to
which the Creditor is a party nor the consummation of the Transactions shall:
A. Violate or conflict with or result in a breach of any provision
of any federal, state or local law, code or ordinance or any rule or regulation
promulgated by any Governmental Authority thereunder (each, a "Law" and,
collectively, "Laws"), order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority binding
on the Creditor;
B. Violate or conflict with any provision of the Certificate or the
Partnership Agreement;
C. Constitute an event permitting any party to a Lien, lease,
agreement, contract, instrument, order or decree or other document to
accelerate any obligation, liability or debt of the Creditor or terminate or
modify such Lien, lease, agreement, contract, instrument, order or decree or
other document, or any obligation, right or interest thereunder.
D. Result in the creation or imposition of a Lien upon the
Creditor's assets; or
E. Result in, create or cause a breach or default in or under any
contract, agreement, commitment, indenture, Lien, note, bond, lease, license or
other instrument or obligation to which the Creditor is a party or by which he
is bound.
6. LITIGATION. Except as set forth on Schedule F-6, there are no
actions, suits, proceedings (including arbitration or administrative
proceedings), claims, demands or investigations with respect to the Creditor
involving claims by or against the Creditor pending or, to the best knowledge
of the Creditor, threatened or contemplated at law, in equity or before or by
any Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality. No basis for any such action, suit
or proceeding exists, and there are no orders, judgments, injunctions or
decrees of any court or governmental agency with respect to which the Creditor
has been named or is a party which apply, in whole or in part, to the business
of the Creditor or to any of the assets or properties of the Creditor or which
would result in any adverse change in the business or prospects of the
Creditor.
7. PERSONAL FINANCIAL STATEMENT. Creditor has previously delivered to
Buyer a personal financial statement (the "Statement") dated ,
199 . The Statement fully and fairly sets forth the financial condition of
Creditor as of the date indicated.
- 2 -
67
8. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Creditor in this Attachment or in any other Attachment, Schedule, Article
or Section of this Agreement, or in any certificate or other document furnished
by the Creditor pursuant hereto, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading or necessary to provide Buyer with
accurate information with respect to the Creditor, the Business or the
Transactions.
- 3 -
68
ATTACHMENT G
REPRESENTATIONS AND WARRANTIES REGARDING
THE MANAGEMENT COMPANY:
PRC INC.
1. OBLIGATIONS. No Target Entity has outstanding any loan, borrowing,
advance, indebtedness, obligation or liability to the Entity, nor does Entity
possess, hold or claim any mortgage, lien, security interest, claim, charge or
encumbrance (each, a "Lien" and, collectively, "Liens") on or against any
Target Entity or any assets thereof.
2. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW.
The Entity is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Florida, its jurisdiction of
incorporation. There is no other jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary. The Entity has all requisite
corporate power and authority to own, lease or otherwise hold its properties
and carry on its business as now conducted. The Entity has all licenses,
permits and other authorizations and has taken all actions required by
applicable Laws in connection with its business as now conducted, and is not in
violation of any Laws to which it is subject.
3. VALIDITY AND EFFECT OF AGREEMENTS AND TRANSACTIONS. The Entity has
all requisite corporate power and authority to execute and deliver this
Agreement and all of the other agreements, certificates and other documents
delivered or to be delivered on or after the date hereof and at or prior to the
Closing in connection with the transactions contemplated hereby (the "Ancillary
Documents") to which it is or shall be a party, and to consummate such
transactions (collectively, the "Transactions"). The execution and delivery by
the Entity of this Agreement or the Ancillary Documents to which the Entity is
or shall be a party and the consummation by the Entity of the Transactions have
been duly authorized by all necessary corporate action on the part of the
Entity. This Agreement and the Ancillary Documents to which the Entity is or
shall be a party have been, or shall be, as the case may be, duly executed and
delivered by the Entity and are or shall be, as the case may be, enforceable
against the Entity in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the enforcement of creditors'
rights generally. The consummation of the transactions contemplated hereby
does not require the consent of any third party not obtained, and, except as
set forth on Schedule G-3, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court or any domestic, state,
local or foreign government or any subdivision, agency, authority or
instrumentality thereof (each, a "Governmental Authority") is required to be
obtained or made by or with respect to the Entity in connection with the
execution and delivery of this Agreement or the Ancillary Documents to which
the Entity is or shall be a party, or the consummation by it of the
Transactions.
69
4. SOLVENCY. The Entity is solvent and currently has the ability to pay
its debts when due, and the value of its current assets exceeds the aggregate
amount of its current liabilities. Neither the Entity nor any creditor has
instituted by petition, application, answer, consent or otherwise any
bankruptcy, insolvency, readjustment of debts, liquidation or similar
proceeding relating to the Entity. No creditor of the Entity has applied for a
receiver, trustee or similar officer with respect to any of the property of the
Entity, and neither the Entity nor its creditors have instituted by petition,
application, answer, consent or otherwise any bankruptcy, insolvency,
reorganization arrangement, readjustment of debts, liquidation, dissolution or
similar proceeding relating to the Entity.
5. TRANSACTIONS NOT A BREACH. Neither the execution, delivery or
performance by the Entity of this Agreement and the Ancillary Documents to
which the Entity is a party nor the consummation of the Transactions shall:
A. Violate or conflict with or result in a breach of any provision
of any federal, state or local law, code or ordinance or any rule or regulation
promulgated by any Governmental Authority thereunder (each, a "Law" and,
collectively, "Laws"), order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority binding
on the Entity;
B. Violate or conflict with any provision of the bylaws or
certificate of incorporation of the Entity;
C. Constitute an event permitting any party to a Lien, lease,
agreement, contract, instrument, order or decree or other document to
accelerate any obligation, liability or debt of the Entity or terminate or
modify such Lien, lease, agreement, contract, instrument, order or decree or
other document, or any obligation, right or interest thereunder.
D. Result in the creation or imposition of any mortgage, lien,
security interest, claim, charge or encumbrance (each, a "Lien" and,
collectively, "Liens") upon the Entity's capital stock or assets; or
E. Result in, create or cause a breach or default in or under any
contract, agreement, commitment, indenture, Lien, note, bond, lease, license or
other instrument or obligation to which the Entity is a party or by which it is
bound.
6. LITIGATION. Except as set forth on Schedule G-6, there are no
actions, suits, proceedings (including arbitration or administrative
proceedings), claims, demands or investigations with respect to the Entity
involving claims by or against the Entity pending or, to the best knowledge of
the Entity, threatened or contemplated at law, in equity or before or by any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality. No basis for any such action, suit or
proceeding exists, and there are no orders, judgments, injunctions or decrees
of any court or governmental agency with respect to which the Entity has been
named or is a party which apply, in whole or in part, to the business of Entity
or to any of the assets or properties of the Entity or the Entity Shares or the
Affiliate Interests or which would result in any adverse change in the business
or prospects of the Entity.
- 2 -
70
7. EMPLOYEE AND LABOR MATTERS.
A. The Entity has not and is not engaged in any unfair labor
practice or violation of the Fair Labor Standards Act or Service Contract Act.
B. Except as specified on Schedule G-7, the Entity is not a party
to any collective bargaining agreement; there are no controversies between the
Entity and any of its employees which might reasonably be expected to adversely
affect the conduct of its business, or any unresolved grievances or unfair
labor practice or labor arbitration proceedings pending or threatened relating
to the Entity's business; and to the best knowledge of the Entity there are not
any organizational efforts presently being made or threatened involving any of
the Entity's employees.
C. Except as specified on Schedule G-7, the Entity has not received
notice of any claim (i) that it has not complied with any Laws relating to the
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination and employment safety,
(ii) that it is liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing or (iii) that any employee or
former employee has alleged wrongful termination, failure to hire, harassment
or discrimination by reason of race, age, sex, handicap or veteran's status.
8. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Entity in this Attachment or in any other Attachment, Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Entity pursuant hereto, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading or necessary to provide Buyer with accurate
information with respect to the Entity, the Business or the Transactions.
- 3 -
71
ATTACHMENT H
REPRESENTATIONS AND WARRANTIES REGARDING
THE SOLE LIMITED PARTNER OF PHH LP:
DIANA L. GOLDBERG
1. VALIDITY AND EFFECT OF AGREEMENTS. This Agreement constitutes, and
all agreements and documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid and legally
binding obligations of the Limited Partner enforceable in accordance with their
terms, subject as to enforcement to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The consummation by the Limited Partner of
the transactions contemplated under this Agreement (the "Transactions") does
not require the consent of any third party not obtained, will not result in the
breach of any term or provision of, or constitute a default under, any order,
judgment, injunction, decree, indenture, mortgage, lease, lien, other agreement
or instrument to which the Limited Partner is a party or by which Limited
Partner is bound, will not require any filing with or notification of any
Federal, state or local governmental or regulatory authority and will not
constitute an event permitting any party to a mortgage, lien, lease, agreement,
instrument, order or decree to accelerate any obligation, liability or debt of
the Limited Partner or terminate or modify such agreement, instrument or
document or any obligation, right or interest thereunder.
2. SOLVENCY. The Limited Partner is solvent and currently has the
ability to pay her debts when due, and the value of her current assets exceeds
the aggregate amount of her current liabilities. Neither the Limited Partner
nor any creditor has instituted by petition, application, answer, consent or
otherwise any bankruptcy, insolvency, readjustment of debts, liquidation or
similar proceeding relating to such Limited Partner. No creditor of the
Limited Partner has applied for a receiver, trustee or similar officer with
respect to any of the property of the Limited Partner, and neither the Limited
Partner nor her creditors have instituted by petition, application, answer,
consent or otherwise any bankruptcy, insolvency, reorganization arrangement,
readjustment of debts or similar proceeding relating to the Limited Partner.
3. AFFILIATED ENTITIES. Other than the interest of the Limited Partner
in any of the Target Entities as set forth in Schedule H-3, the Limited Partner
does not own, directly or indirectly, any interest in any entity or other
business organization or association which does or has done business with, or
competes or has in the past competed with, the Entity or any of the Target
Entities.
4. AMOUNTS PAYABLE TO OR FROM THE LIMITED PARTNER. Except as set forth
on Schedule H-4, there are no loans, advances or borrowings owed by the Entity
to the Limited Partner or owed by the Limited Partner to the Entity.
72
5. TITLE TO THE PARTNERSHIP INTEREST. The Limited Partner's partnership
interest in PHH LP to be sold by the Limited Partner to Buyer hereunder (the
"Partnership Interest") is owned by the Limited Partner free and clear of all
liens, encumbrances, charges, proxies, assessments and adverse claims. The
Partnership Interest is subject to no restrictions (except as provided in
applicable state and Federal securities laws) with respect to transferability
to Buyer in accordance with the terms of this Agreement. Upon transfer of the
Partnership Interest by the Limited Partner, Buyer will, as a result, receive
good and marketable title to the entire Partnership Interest, free and clear of
all security interests, liens, encumbrances, claims, charges, proxies,
assessments, restrictions and adverse claims.
6. COUNSEL. The Limited Partner is not relying upon Buyer, its
independent accountants, counsel, officers or directors for any advice or
counsel with respect to the negotiation or consummation of this Agreement, any
Ancillary agreement or the Transactions.
7. NO MISREPRESENTATION OR OMISSION. No representation or warranty by
the Limited Partner in this Attachment H or in any other Schedule, Article or
Section of this Agreement, or in any certificate or other document furnished by
the Limited Partner pursuant hereto, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained therein not misleading or necessary to provide Buyer with
accurate information with respect to the Entity or the Transactions.
- 2 -