Exhibit 2.1
Dated as of September 24, 2001
ASSET PURCHASE AGREEMENT
by and among
MARINER POST-ACUTE NETWORK, INC.
MARINER HEALTH GROUP, INC.
THE MPAN SELLERS IDENTIFIED ON SCHEDULE 1A
THE MHG SELLERS IDENTIFIED ON SCHEDULE 1A
and
GENESIS HEALTH VENTURES, INC.
NEIGHBORCARE PHARMACY SERVICES, INC.
TABLE OF CONTENTS
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SECTION 1 DEFINED TERMS....................................................................................2
1.1 Definitions.....................................................................................2
1.2 Certain Rules of Construction...................................................................2
SECTION 2 PURCHASE AND SALE OF ASSETS......................................................................3
2.1 Acquired and Excluded Assets....................................................................3
2.2 Purchase Price..................................................................................5
2.3 Preparation and Delivery of Financial Information; Calculation of Closing Payment
and Cash Purchase Price........................................................................10
2.4 Contract Assumption............................................................................14
2.5 Amounts Due Under Designated Contracts.........................................................15
2.6 Assumed and Excluded Liabilities...............................................................15
2.7 Allocation of Cash Purchase Price..............................................................16
2.8 Transfer Taxes.................................................................................16
2.9 Prorations.....................................................................................16
2.10 Reconciliation and Allocations.................................................................17
SECTION 3 CONDITIONS TO CLOSING...........................................................................18
3.1 Conditions Precedent to Obligations of MPAN, MHG, Sellers, GHV, and Purchaser..................18
3.2 Conditions Precedent to Obligations of MPAN, MHG, and Sellers..................................18
3.3 Conditions Precedent to the Obligations of GHV and Purchaser...................................19
SECTION 4 THE CLOSING.....................................................................................20
4.1 Closing........................................................................................20
4.2 Deliveries by MPAN, MHG, and Sellers at Closing................................................20
4.3 Deliveries by GHV and Purchaser at Closing.....................................................22
4.4 Delivery of Acquired Assets....................................................................22
SECTION 5 REPRESENTATIONS AND WARRANTIES OF MPAN, MHG, AND SELLERS........................................23
5.1 Organization, Standing and Authority...........................................................23
5.2 Transfer of Acquired Assets....................................................................23
5.3 Real Property..................................................................................24
5.4 Contracts......................................................................................24
5.5 Intellectual Property Rights...................................................................26
5.6 Brokers........................................................................................27
5.7 Employee Matters...............................................................................27
5.8 Financial Statements...........................................................................27
5.9 Licenses, Compliance with Laws.................................................................27
5.10 Institutional Pharmacy Business................................................................28
5.11 Intentionally Omitted..........................................................................28
5.12 Environmental Matters..........................................................................28
5.13 Litigation.....................................................................................29
5.14 Included Mariner Receivables...................................................................29
SECTION 6 REPRESENTATIONS AND WARRANTIES OF GHV AND PURCHASER.............................................29
6.1 Organization, Standing and Authority...........................................................29
6.2 Transfer of Acquired Assets....................................................................30
6.3 Brokers........................................................................................30
6.4 GHV's Senior Creditors' Steering Committee Approval............................................30
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SECTION 7 COVENANTS.......................................................................................30
7.1 The Mariner Bankruptcy Courts Approvals........................................................30
7.2 The Genesis Bankruptcy Court Approvals.........................................................31
7.3 Closing........................................................................................32
7.4 Conduct of Business by MPAN, MHG, and Sellers Pending the Closing..............................32
7.5 Conduct of Business by Purchaser After the Closing.............................................32
7.6 Access and Information.........................................................................32
7.7 Notification...................................................................................33
7.8 Satisfaction of Conditions.....................................................................33
7.9 Filings........................................................................................33
7.10 Employment Matters.............................................................................34
7.11 Additional Matters and Further Assurances......................................................35
7.12 Maintenance of Books and Records...............................................................36
7.13 Confidentiality................................................................................37
7.14 Further Solicitations..........................................................................38
7.15 Restriction on Use of Names....................................................................39
7.16 Purchaser's Submission to the Genesis Bankruptcy Court.........................................39
7.17 MPAN's, MHG's, and Sellers' Submissions to the Mariner Bankruptcy Courts.......................39
7.18 Restriction on Acceptance of Other Offers......................................................40
7.19 Option to Sublicense Compuaims Medicare Part B Billing Software................................40
7.20 Management Agreements..........................................................................40
7.21 Use of Service Mark............................................................................41
SECTION 8 TERMINATION.....................................................................................41
8.1 Termination....................................................................................41
8.2 Termination Payments...........................................................................43
8.3 Procedure and Effect of Termination............................................................44
SECTION 9 INDEMNIFICATION.................................................................................45
9.1 MPAN's, MHG's, and Sellers' Obligation to Indemnify............................................45
9.2 GHV's and Purchaser's Obligation to Indemnify..................................................45
9.3 Notice to Indemnifying Party...................................................................46
9.4 Time Limitations...............................................................................46
9.5 Set off as Exclusive Remedy....................................................................46
9.6 Threshold......................................................................................47
9.7 Additional Limitation Regarding Waivers of Conditions..........................................47
9.8 Remedies Exclusive.............................................................................48
SECTION 10 GENERAL PROVISIONS..............................................................................48
10.1 Notices........................................................................................48
10.2 Survival of Representations, Warranties, and Covenants.........................................50
10.3 No Implied Warranties; No Liability of Agents..................................................50
10.4 Insurance Proceeds.............................................................................50
10.5 Public Announcements...........................................................................50
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10.6 Descriptive Headings...........................................................................50
10.7 Entire Agreement; Assignment...................................................................51
10.8 Governing Law..................................................................................51
10.9 Expenses.......................................................................................52
10.10 Amendment......................................................................................52
10.11 Waiver.........................................................................................52
10.12 Counterparts; Effectiveness....................................................................52
10.13 Severability; Validity; Parties in Interest....................................................52
10.14 Court Approval.................................................................................52
10.15 Guaranty of Performance; Proportionate Liability...............................................53
10.16 Representation by Counsel......................................................................53
10.17 Successors and Assigns.........................................................................53
10.18 References to Knowledge........................................................................53
10.19 Certain Terminations of Services Contracts.....................................................53
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Annex A Definitions A-1
Schedule 1A MPAN Sellers and MHG Sellers S-1A
Schedule 2.1(a) Selling Affiliates and Additional Assets S-2.1(a)
Schedule 2.1(a)(iv) Rebate Accounts Receivable S-2.1(a)(iv)
Schedule 2.1(b)(vii) Additional Excluded Assets S-2.1(b)(vii)
Schedule 2.1(b)(viii) Designated Contracts Not Assignable Without
Consent under Bankruptcy Code S-2.1(b)(viii)
Schedule 2.2(b)(i)(B) Retail Pharmacies S-2.2(b)(i)(B)
Schedule 2.3(a)(i) Inventory Procedures S-2.3(a)(i)
Schedule 2.4(a) Designated Contracts S-2.4(a)
Schedule 2.7 Allocation of Cash Purchase Price S-2.7
Schedule 2.9 Accounts Payable Procedures S-2.9
Schedule 3.3(c) Acceptable Title Insurance Exceptions S-3.3(c)
Schedule 3.3(f) Required Consents S-3.3(f)
Schedule 3.3(h) Form of Non-Compete Agreements S-3.3(h)
Schedule 4.2(a) Form of Bill of Sale S-4.2(a)
Schedule 4.2(e) Form of Vesting Deed S-4.2(e)
Schedule 4.2(f) Form of Assignment and Assumption Agreements S-4.2(f)
Schedule 5.1 Exceptions to Good Standing S-5.1
Schedule 5.2 Permitted Liens S-5.2
Schedule 5.3(a) Owned Real Property S-5.3(a)
Schedule 5.3(c) Other Occupants S-5.3(c)
Schedule 5.4(a) Real Property Leases S-5.4(a)
Schedule 5.4(b)(i) Independent Facility Contracts S-5.4(b)(i)
Schedule 5.4(b)(ii) Independent Facility Arrangements S-5.4(b)(ii)
Schedule 5.4(c) Services Contracts S-5.4(c)
Schedule 5.4(d) Other Contracts S-5.4(d)
Schedule 5.5 Intellectual Property S-5.5
Schedule 5.7 Acquired Business Employees S-5.7
Schedule 5.8 March Financial Statements S-5.8
Schedule 5.9(a) Sellers' Licenses S-5.9(a)
Schedule 5.9(b) Sellers' License Violations S-5.9(b)
Schedule 5.10 Institutional Pharmacy Business S-5.10
Schedule 5.12(e) Underground Storage Tanks S-5.12(e)
Schedule 5.13 Litigation S-5.13
Schedule 7.1(a)(i) Form of Bidding Procedures Order S-7.1(a)(i)
Schedule 7.1(a)(ii) Form of Sellers' Approval Order S-7.1(a)(ii)
Schedule 7.2(a) Form of Purchaser's Approval Order S-7.2(a)
Schedule 7.10(a) Excluded Employees S-7.10(a)
Schedule 7.20 Form of Management Agreement S-7.20
Schedule 7.21 Service Mark S-7.21
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of September 24, 2001
("Agreement"), is made and entered into by and among Mariner Post-Acute Network,
Inc., a Delaware corporation ("MPAN"), Mariner Health Group, Inc., a Delaware
corporation ("MHG"), the corporate entities related to MPAN identified in
Schedule 1A hereto (the "MPAN Sellers"), the corporate entities related to MHG
identified in Schedule 1A hereto (the "MHG Sellers") (the MPAN Sellers and the
MHG Sellers being hereinafter collectively referred to as the "Sellers"),
Genesis Health Ventures, Inc., a Pennsylvania corporation ("GHV"), and
NeighborCare Pharmacy Services, Inc., a Delaware corporation which is a
wholly-owned subsidiary of GHV ("Purchaser").
RECITALS
WHEREAS, MPAN, the MPAN Sellers, and certain other related business
entities are debtors under those cases which are jointly administered and
consolidated for procedural purposes only (the "MPAN Bankruptcy Cases") filed
with the United States Bankruptcy Court for the District of Delaware (the "MPAN
Bankruptcy Court") on January 18, 2000, captioned "In Re: Mariner Post-Acute
Network, Inc., a Delaware corporation, and affiliates, Debtors" Case No. 00-113
(MFW) (Jointly Administered Case Nos. 00-113 (MFW) through 00-214 (MFW),
inclusive);
WHEREAS, MHG, the MHG Sellers, and certain other related business
entities are debtors under those cases which are jointly administered and
consolidated for procedural purposes only (the "MHG Bankruptcy Cases") filed
with the United States Bankruptcy Court for the District of Delaware (the "MHG
Bankruptcy Court") on January 18, 2000, captioned "In Re: Mariner Health Group,
Inc., a Delaware corporation, and affiliates, Debtors" Case No. 00-215 (MFW)
(Jointly Administered Case Nos. 00-215 (MFW) through 00-301 (MFW), inclusive);
WHEREAS, the MPAN Bankruptcy Cases and the MHG Bankruptcy Cases are
collectively referred to herein as the "Mariner Bankruptcy Cases", and when the
MPAN Bankruptcy Court and the MHG Bankruptcy Court are referred to herein with
regard to the Mariner Bankruptcy Cases, together they are referred to as the
"Mariner Bankruptcy Courts";
WHEREAS, MPAN, MHG, and Sellers continue to operate their businesses as
debtors-in-possession;
WHEREAS, when the United States Bankruptcy Court for the District of
Delaware is generally referred to without reference to any given case or cases,
it is referred to as the "Bankruptcy Court";
WHEREAS, GHV, Purchaser, and certain of their related business entities
are debtors under those cases which are jointly administered and consolidated
for procedural purposes only (the "Genesis Bankruptcy Cases") filed with the
Bankruptcy Court on June 22, 2000, captioned "In re Genesis Health Ventures,
Inc., et al., Debtors" Case No. 00-2692 (JHW) (Jointly Administered Case Nos.
00-2691 through 00-2836);
WHEREAS, when the Bankruptcy Court is referred to herein with regard to
the Genesis Bankruptcy Cases it is referred to as the "Genesis Bankruptcy
Court";
WHEREAS, GHV and Purchaser continue to operate their businesses as
debtors-in-possession;
WHEREAS, Purchaser desires to purchase from Sellers the Acquired Assets
(as defined below) and to assume certain liabilities from Sellers in connection
therewith, and Sellers desire to sell, convey, assign, and transfer to Purchaser
the Acquired Assets concurrently with Purchaser's assumption of certain
obligations and liabilities relating thereto, pursuant to the terms and
conditions of this Agreement; and
WHEREAS, subject to the provision for higher and better offers from
third parties, the Acquired Assets are intended to be sold pursuant to the terms
of this Agreement and an order or orders of (i) the Mariner Bankruptcy Courts
approving such sale under section 363 of the Bankruptcy Code and the assumption
of certain executory and unexpired contracts and leases and of liabilities under
section 365 of the Bankruptcy Code (collectively, the "Sellers' Approval
Orders") and (ii) the Genesis Bankruptcy Court (x) approving an increase in
GHV's debtor-in-possession line of credit, (y) approving the use of such
increased line of credit by Purchaser to consummate the transactions
contemplated hereby, and (z) authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(collectively, all as more fully set forth in the form attached hereto as
Schedule 7.2(a), the "Purchaser's Approval Order");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, and
intending to be legally bound, subject to the approval of their respective
Bankruptcy Courts, the Parties hereto agree as follows:
SECTION 1
DEFINED TERMS
1.1 Definitions. Unless the context otherwise requires, capitalized
terms used in this Agreement shall have the meanings set forth in Annex A
hereto.
1.2 Certain Rules of Construction.
(a) Any term defined herein in the singular form shall have a
comparable meaning when used in the plural form, and vice versa.
(b) When used herein, the words "hereof," "herein" and "hereunder"
and words of similar import shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. References to the Preamble,
Recitals, Sections, Schedules or Annexes shall refer respectively to the
preamble, recitals, articles, sections, schedules or exhibits of this Agreement,
unless otherwise expressly provided.
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(c) When used herein, the terms "include," "includes," and
"including" are not limiting.
(d) Unless the context requires otherwise, derivative forms of any
term defined herein shall have a comparable meaning to that of such term.
(e) When a Party's consent is required hereunder, such Party's
consent may be granted or withheld in such Party's sole discretion, unless
otherwise specified.
SECTION 2
PURCHASE AND SALE OF ASSETS
2.1 Acquired and Excluded Assets.
(a) Acquired Assets. Subject to the terms and conditions herein
set forth, at the Closing, Sellers shall sell, assign, transfer, convey, and
deliver to Purchaser free and clear of all Liens (other than the Permitted
Liens), and Purchaser shall purchase and accept from Sellers, free and clear of
all Liens (other than the Permitted Liens), all of Sellers' right, title, and
interest in, to, and under the following, as the same shall exist on the Closing
Date (collectively, the "Acquired Assets"): except as provided in Section 2.1(b)
below, all assets owned by Sellers, wherever located, whether real, personal, or
mixed, tangible or intangible, which shall also include Sellers' (i) interests
in joint ventures and other ownership interests or business arrangements (to the
extent any required written consent(s) or approval(s) of the other joint venture
members, partners, or other parties thereto are obtained), (ii) prepaid items in
respect of the Acquired Assets, (iii) Inventory, (iv) rebate accounts
receivable, including such rebate accounts receivable listed on Schedule
2.1(a)(iv) hereto (such Schedule to include the name of each payor and the
corresponding amount owed with respect to such rebate), (v) Government Payment
Program Proceeds, (vi) if any, the Included Mariner Receivables (as defined in
Section 2.3(a)(iv) below), (vii) right, title and interest in and to all of the
names of Sellers and any variations thereof (including "American Pharmaceutical
Services," "APS," and all corporate names, fictitious names, product names and
service names) (subject to Section 7.15 hereof), and (viii) Medicare Part B
Business and Assets as it relates only to the provision of Medicare Part B
Products and Services to Independent Facilities (the "Acquired Medicare Part B
Business and Assets").
MPAN and MHG, respectively, shall cause the Affiliate or
Affiliates of MPAN or MHG as identified in Schedule 2.1(a) (collectively, all
such Affiliates of MPAN or MHG identified in Schedule 2.1(a) are herein referred
to as the "Selling Affiliates") to sell, assign, transfer, convey, and deliver
to Purchaser at Closing free and clear of all Liens (other than the Permitted
Liens), and Purchaser shall purchase and accept from such Selling Affiliate(s)
free and clear of all Liens (other than the Permitted Liens), all of such
Selling Affiliates' right, title, and interest in, to, and under the assets
identified in Schedule 2.1(a) hereto which are not owned by any Seller but which
are used in the Acquired Business, as the same shall exist on the Closing Date
(collectively, the "Additional Assets"). It is hereby understood and agreed that
only the Additional Assets owned by the applicable Selling Affiliate identified
in Schedule 2.1(a) hereto may be acquired pursuant to this Agreement, and no
other assets of such Selling Affiliate whatsoever, whether real, personal, or
mixed, tangible or intangible, shall be acquired by Purchaser hereunder.
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(b) Excluded Assets. Only the Acquired Assets and the Additional
Assets shall be conveyed by Sellers and the Selling Affiliates and purchased by
Purchaser pursuant to this Agreement, and the following assets, rights, and
properties of Sellers (collectively, the "Excluded Assets") are not being sold,
assigned, transferred, conveyed, or delivered to Purchaser pursuant to this
Agreement:
(i) Sellers' cash, cash equivalents, inter-company accounts
receivable (including all accounts receivable from MPAN and MHG, except the
Included Mariner Receivables (if any)), inter-company notes, securities
(including securities representing stock in any of Sellers' subsidiaries)
(except for the interests in the joint ventures identified in Section 2.1(a)
above) or like assets of Sellers;
(ii) Sellers' right, title, and interest in, and to, causes
of action arising under Chapter 5 of the Bankruptcy Code;
(iii) Sellers' bank or deposit accounts, insurance policies,
and insurance proceeds or awards except as specifically provided in Section 10.4
hereof;
(iv) Sellers' right, title, and interest in, and to, any loss
recapture benefits to which Sellers may be eligible at any time under any
agreement or applicable Law, including any Law pertaining to Taxes or any Law
pertaining to Medicare, Medicaid, or any Governmental Authority having
jurisdiction over Sellers and their business;
(v) Sellers' rights and claims (other than those related to
any Acquired Assets) against Medicare, Medicaid, CHAMPUS, the Veteran's Affairs
program, or any other governmental health care payor (each, a "Government
Payment Program" and, collectively, the "Government Payment Programs"), or
against any health insurer, any health maintenance organization, or any other
non-governmental health care payor;
(vi) Sellers' right, title, and interest in, and to, the
following assets used exclusively for the provision of Medicare Part B Products
and Services to Facilities owned, managed or operated by MPAN, MHG, or any of
their respective Affiliates (collectively, the "Mariner Facilities") (which
assets shall collectively be referred to herein as the "Excluded Medicare Part B
Business and Assets"): Inventory on consignment at Mariner Facilities, equipment
at Mariner Facilities, and books and records;
(vii) the assets, rights, and properties set forth in
Schedule 2.1(b)(vii) hereto;
(viii) any Designated Contract (A)(1) set forth in Schedule
2.1(b)(viii) hereto which may not be assigned to Purchaser under applicable
provisions of the Bankruptcy Code without the consent or approval of the other
party thereto (such as, without limitation, contracts with Governmental
Authorities, personal services contracts, and non-exclusive licenses), or (2)
which based upon the objection of a party to a Designated Contract other than a
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Seller or Sellers or any of their Affiliates, the Mariner Bankruptcy Courts have
determined shall not be assigned to Purchaser under applicable provisions of the
Bankruptcy Code without the consent or approval of the other party thereto (such
as, without limitation, contracts with Governmental Authorities, personal
services contracts, and non-exclusive licenses), and (B) with respect to which
the written consent or approval to the assignment of such Designated Contract to
Purchaser hereunder has not been provided by the other party thereto as of the
Closing;
(ix) Sellers' right, title and interest in, and to, Sellers'
accounts receivable from Government Payment Programs (it being understood that
the Government Payment Program Proceeds are included in the Acquired Assets and
are not Excluded Assets);
(x) intentionally omitted;
(xi) all Contracts other than Designated Contracts.
The Parties expressly agree and understand that Sellers shall not
sell, assign, transfer, convey, or deliver to Purchaser any of the Excluded
Assets. The Parties also expressly agree and understand that Purchaser is not
hereunder acquiring any assets, rights, or properties, whether real, personal or
mixed, tangible or intangible, of MPAN or MHG, whatsoever, except to the extent
that they may be owners of the Additional Assets.
2.2 Purchase Price.
(a) Closing Payment. In consideration for the transfer of the
Acquired Assets and the Additional Assets, Purchaser shall pay, by wire transfer
of immediately available funds, to Sellers, or as directed by Sellers, (i) the
amount of $42,000,000 less the Current Assets Holdback (as calculated pursuant
to Section 2.3(a)(iv) below), at the Closing (the "Closing Payment"), and (ii)
the Earnout Payments (in accordance with and subject to the conditions set forth
in Section 2.2(b) below) ($42,000,000, as adjusted in accordance with Section
2.3(e), being hereinafter sometimes referred to as the "Cash Purchase Price,"
and such Cash Purchase Price along with the Earnout Payments being hereinafter
collectively referred to as the "Purchase Price").
(b) Earnout Payments.
(i) Certain Definitions. For the purposes of this Section
2.2(b) and the other provisions of this Agreement, the following terms shall
have the meanings ascribed to them:
(A) "Average Monthly Revenues" means an amount equal to
the average of the monthly Accrued Revenues during the 3 full calendar month
period (for which Revenue figures are available) immediately preceding an
applicable anniversary of the Closing Date.
(B) "Accrued Revenues" means the Revenues accrued by
Purchaser or any of its Affiliates in consideration for Services provided from
and after the Closing pursuant to (1) all Independent Facility Contracts and (2)
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all Independent Facility Arrangements for the Line(s) of Business any Seller
historically provided to each such Independent Facility; provided, however, that
for the purposes of this Section 2.2(b), all Revenues accrued by Purchaser or
any of its Affiliates in respect of all products and services sold or provided
from and after the Closing by the retail pharmacies identified at Schedule
2.2(b)(i)(B) shall be deemed Accrued Revenues.
(C) "Independent Facility" means a long-term care
facility (including an assisted living facility, nursing facility, skilled
nursing facility, long-term care hospital, subacute care facility, independent
living facility, continuing care retirement community, and any combination of
the foregoing, including any such facilities which may be otherwise designated
under applicable state law (individually, a "Facility" and collectively, the
"Facilities")) which meets all the following requirements:
1. Neither any Seller nor any of its Affiliates has
any ownership, management, or leasehold interest in the Facility or in any
Person which owns or participates in the management or leasing of the Facility
(collectively, the "Facility Persons");
2. Neither any Seller nor any of its Affiliates,
officers, directors, or management level employees are in a position to
influence any Facility Person with respect to the Facility's continued use of
the Acquired Business as a source of any Services for the Facility and its
residents; and
3. Neither any Seller nor any of its Affiliates has
directly or indirectly offered to pay, or promised to pay, any remuneration to
any Facility Person, or to any Person in a position to influence any Facility
Person, with respect to the Facility's continued use of the Acquired Business as
a source of Services for the Facility and its residents.
(D) "Independent Facility Contract" means a Designated
Contract with an Independent Facility to which any Seller is a party and
pursuant to which such Seller provides any Services to the Independent Facility
or to patients resident in such Facility that is identified on Schedule
5.4(b)(i) as an Independent Facility Contract and is in effect at Closing.
(E) "Independent Facility Arrangements" means all
understandings and arrangements (other than the Independent Facility Contracts)
with Independent Facilities identified on Schedule 5.4(b)(ii) as such Schedule
is updated prior to Closing pursuant to Section 5.4(b) (which Schedule shall
include a list of the Independent Facilities that have provided Revenues to
Sellers within the 12 month period immediately prior to the Closing Date for
Services provided by Sellers, the Services (identified by the respective Line(s)
of Business) provided thereto, and the Revenues for such 12 month period.
(F) "Revenues" means net revenues determined in
accordance with Sellers' Accounting Policies.
(G) "Services" means dispensing and/or distributing all
or any of the following to Facilities or to patients resident at such
Facilities: (i) pharmaceutical products, pharmaceutical services provided or
customarily provided to a Facility by an institutional pharmacy, consultant
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pharmacy services, infusion therapy products and services, (ii) oxygen and other
respiratory supplies and equipment, or (iii) parenteral or enteral nutrition
products, patient specific wound care products, ostomy and urological supplies.
Each of clauses (i), (ii), and (iii) above is individually a "Line of Business".
(ii) Calculation and Payment of Earnout Payments.
(A) The amounts set forth below, subject to reduction in
accordance with the provisions of this Section 2.2(b) (the "Earnout Payments"),
shall be paid by Purchaser to Sellers, in accordance with the following:
1. The amount of $6,000,000 not later than 30 days
following the date that is the first anniversary of the Closing Date, subject to
downward adjustment as described below in Section 2.2(b)(ii)(B) below if the
Average Monthly Revenues are less than $10,500,000;
2. The amount of $6,000,000 not later than 30 days
following the date that is the second anniversary of the Closing Date, subject
to downward adjustment as described below in Section 2.2(b)(ii)(B) below if the
Average Monthly Revenues are less than $9,900,000; and
3. The amount of $6,000,000 not later than 30 days
following the date that is the third anniversary of the Closing Date, subject to
downward adjustment as described below in Section 2.2(b)(ii)(B) below if the
Average Monthly Revenues are less than $9,400,000.
(B) Each Earnout Payment described in Section
2.2(b)(ii)(A)1, 2, and 3 above shall be reduced proportionately to the extent
that the Average Monthly Revenues utilized in the calculation of such Earnout
Payment are less than the stated threshold amount of Average Monthly Revenues
required for the payment of the full amount of such Earnout Payment. For
example, if with respect to Section 2.2(b)(ii)(A)1 above the Average Monthly
Revenues are $5,250,000, then the Earnout Payment would be $3,000,000 (i.e.,
$6,000,000 multiplied by $5,250,000 divided by $10,500,000).
(C) For the purposes of calculating the amount of each
Earnout Payment, (i) an Independent Facility shall no longer be taken into
account in calculating an Earnout Payment as of such date that Purchaser or any
of its Affiliates cease providing (1) all Services which are covered by an
Independent Facility Contract, or (2) Services in the Line(s) of Business
historically provided by a Seller to an Independent Facility or its patients or
residents pursuant to an Independent Facility Arrangement, for any reason
whatsoever other than the termination of the Independent Facility Contract or
the Independent Facility Arrangement with such Independent Facility as a result
of Purchaser's or any of its Affiliates' breach of or default under such
contract or arrangement, and (ii) Revenues accrued by Purchaser or any of its
Affiliates for Services provided to a Facility which is an Independent Facility
as of the Closing but which later ceases to qualify as an Independent Facility
will not be considered Accrued Revenues from and after such date the Facility in
question no longer qualifies as an Independent Facility, and such Revenues shall
not be taken into account in calculating an Earnout Payment, and (iii) Revenues
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accrued by Purchaser or any of its Affiliates for Services (1) which are not
covered under an existing Independent Facility Contract, or (2) which are not in
the Line(s) of Business historically provided under an Independent Facility
Arrangement, will not be considered Accrued Revenues, and such Revenues shall
not be taken into account in calculating an Earnout Payment (provided, however,
that for the purposes of this clause (iii) Revenues accrued by Purchaser or any
of its Affiliates for the provision of consultant pharmacy services to
Independent Facilities to which a Seller provided Services covered by an
Independent Facility Contract in the Line of Business described in Section
2.2(b)(i)(G)(i) under a new or amended Independent Facility Contract shall be
taken into account in calculating an Earnout Payment). Notwithstanding the
foregoing, if any Independent Facility Contract or Independent Facility
Arrangement expires or is terminated for any reason whatsoever, and such
Independent Facility Contract or Independent Facility Arrangement is renewed or
Purchaser or any of its Affiliates and the Independent Facility in question
enter into a new or amended Services Contract or Independent Facility
Arrangement, then such renewed, new or amended Services Contract or Independent
Facility Arrangement shall be deemed either (1) an Independent Facility
Contract, to the extent the Line(s) of Business covered by such Services
Contract were covered under the terminated or expired Independent Facility
Contract or (2) an Independent Facility Arrangement, to the extent the Line(s)
of Business covered by such arrangement were historically provided under the
terminated or expired Independent Facility Arrangement, as the case may be, and
in each instance, the Accrued Revenues thereunder shall be included in the
calculation of Average Monthly Revenues. In the event of the termination of an
Independent Facility Contract as a result of Purchaser's or any of its
Affiliates' breach of or default under such contract, an amount equal to the
Accrued Revenues that would have been generated through the term of such
contract had it not been so terminated (and which such Accrued Revenues shall be
calculated based upon the average monthly Accrued Revenues under such contract
calculated using the 3 full calendar month period immediately preceding such
contract's termination) will be considered Accrued Revenues and will be taken
into account in calculating an Earnout Payment. In the event of the (y)
termination of an Independent Facility Contract by any party thereto that does
not result from the breach or default by Purchaser or any of its Affiliates of
such contract's terms, or (z) expiration of an Independent Facility Contract
pursuant to its terms and such contract is not renewed, then no Revenues with
respect to such contracts following such termination or expiration shall be
taken into account in calculating an Earnout Payment.
(D) Each Earnout Payment that is less than $6,000,000
shall be accompanied by (and if no Earnout Payment is made, then MPAN, MHG, and
Sellers shall be provided) a written statement prepared by Purchaser (the
"Earnout Payment Statement"). Each such Earnout Payment Statement shall set
forth in reasonable detail the information and data used in the calculation of
the Earnout Payment (or the absence thereof) in question, including a listing of
all Independent Facilities used in such calculation of the amount of Accrued
Revenues and the amount of Accrued Revenues attributable to each such
Independent Facility.
(E) After the later of (i) Sellers' receipt of each
Earnout Payment that is less than $6,000,000, or (ii) Sellers' receipt of the
Earnout Payment Statement if no Earnout Payment is received (such date being
herein referred to as the "Payment Date"), Sellers shall have 20 Business Days
to deliver written notice (the "Earnout Payment Objection Notice") to Purchaser
stating that they object to the amount or calculation of the Earnout Payment. If
8
the Earnout Payment Objection Notice is not received by Purchaser on or prior to
the 20th Business Day after the Payment Date, Sellers shall be deemed to have
accepted and agreed to the amount and calculation of the Earnout Payment unless
such failure to provide an Earnout Payment Objection Notice is a result of
Purchaser's and/or GHV's failure to timely provide or make available to MPAN,
MHG, and Sellers all information and documentation reasonably requested by them
pursuant to Section 2.2(b)(ii)(F) below, in which case such Earnout Payment
Objection Notice shall be provided to Purchaser no later than the date that is
30 Business Days after the Payment Date (the "Extended Earnout Payment Objection
Notice Date"). If, however, Sellers provide an Earnout Payment Objection Notice
to Purchaser on or prior to the 20th Business Day or the Extended Earnout
Payment Objection Notice Date, as the case may be, after the Payment Date, the
Parties shall in good faith attempt to resolve their differences with respect to
all objections set forth therein within 30 Business Days (or such longer period
as all Parties may agree in writing) following Purchaser's receipt of such
Earnout Payment Objection Notice (the "Earnout Payment Resolution Period"), and
any resolution agreed upon by the Parties in writing as to any such objections
shall, subject to the provisions of the Bankruptcy Code, be final, binding, and
conclusive on all Parties. In so doing, the Parties may, but shall not be
obligated to, engage a mutually agreed upon independent accounting firm
experienced in audit projects to assist in such resolution by acting as a
non-binding mediator. Sellers shall not object to any method, principle,
practice, or policy employed in the calculation of the applicable Earnout
Payment if such method, principle, practice, or policy is consistent in all
material respects with Sellers' Accounting Policies, provided, however, that the
foregoing shall not be construed to prohibit Sellers from objecting to the fact
that any method, principle, practice, or policy employed in the calculation of
the applicable Earnout Payment was or may have been applied in a manner that was
not materially consistent with Sellers' Accounting Policies. All objections
relating to the amount or calculation of an Earnout Payment remaining in dispute
at the conclusion of the Earnout Payment Resolution Period shall be promptly
submitted to the MPAN Bankruptcy Court for determination, and the determination
of the MPAN Bankruptcy Court in such dispute shall be final, binding, and
conclusive on all Parties. Each Party shall bear its own costs related to the
review, investigation, and resolution of all objections raised by Sellers to the
amount or calculation of any Earnout Payment. Any amount finally determined to
be owed by Purchaser to Sellers in accordance with this Section 2.2(b)(ii)(E)
(the "Earnout Deficiency Amount") shall accrue simple interest on the full
amount thereof for the period commencing on the date such Earnout Deficiency
Amount should have been paid by Purchaser to Sellers and ending on the date such
Earnout Deficiency Amount is actually paid to Sellers, and such simple interest
shall accrue at the rate of 8% per annum.
(F) MPAN, MHG, and Sellers, together with their financial
advisors, legal counsel, accountants, consultants, and other authorized
representatives, shall have the right to review, and shall, upon reasonable
advance notice to GHV and Purchaser and during normal business hours, have the
right to conduct an audit or audits (the "Earnout Audit") to confirm the
information and calculations provided or performed, as the case may be, by GHV
and Purchaser hereunder with respect to the amount and calculation of each
Earnout Payment to the extent that such Earnout Payment is less than $6,000,000
or no Earnout Payment is made. If less than $6,000,000 is paid to Sellers in
respect of any of the 3 Earnout Payments on the applicable Payment Date, or if
no Earnout Payment is made on such Payment Date, then, throughout the period
commencing on the applicable Payment Date and ending on the last day of the
9
applicable Earnout Payment Resolution Period, GHV and Purchaser shall afford to
MPAN, MHG, and their financial advisors, legal counsel, accountants,
consultants, and other authorized representatives reasonable access during
normal business hours to all books, records, properties, and personnel of GHV
and Purchaser that pertain to the calculation of the Earnout Payments (including
the work papers of GHV, Purchaser and their respective accountants utilized in
preparing such Earnout Payment Statement) and, during such period, shall furnish
as promptly as practicable to MPAN, MHG, and Sellers any and all such
information and documentation as MPAN, MHG, and Sellers may reasonably request
pertaining to the calculation of the Earnout Payments (provided that such right
of access with respect to an applicable Earnout Payment shall terminate if an
Earnout Payment Objection Notice with respect to such applicable Earnout Payment
is not delivered to Purchaser in accordance with this Agreement).
2.3 Preparation and Delivery of Financial Information; Calculation of
Closing Payment and Cash Purchase Price.
(a) Prior to Closing, Sellers shall prepare and deliver to
Purchaser:
(i) (A) not later than July 30, 2001, a balance sheet of
Sellers as of June 30, 2001 which shall include therein the Additional Assets
(the "June Balance Sheet"). The June Balance Sheet shall be prepared by Sellers
in good faith on a basis consistent in all material respects with the Sellers'
combined, consolidated financial statements previously delivered by Sellers to
Purchaser and GHV and attached hereto as Schedule 5.8 (the "March Financial
Statements"), which March Financial Statements were prepared as of March 31,
2001 in accordance with (1) GAAP, and (2) the methods, principles, practices and
policies employed by Sellers historically in the preparation and presentation of
their financial information consistently applied ((1) and (2) being herein
collectively referred to as the "Sellers' Accounting Policies"). As part of the
procedures used to prepare the June Balance Sheet, and in accordance with the
provisions set forth in Schedule 2.3(a)(i) hereto, (i) an independent inventory
counting service, arranged and paid for by Sellers, conducted a physical count
of all Inventory (excluding Inventory included in Excluded Medicare Part B
Business and Assets) at all of Sellers' locations on or about June 30, 2001 and
(ii) employees of Sellers conducted a physical count of all Inventory included
in the Acquired Medicare Part B Business and Assets (which included such
Inventory at Sellers' locations and on consignment at the locations of Sellers'
third party customers) on or about May 31, 2001 (the inventory count described
in parts (i) and (ii) above being collectively referred to as the "June
Inventory"). Sellers and their representatives (including their outside
auditors) and GHV, Purchaser, and their representatives (including their outside
auditors) were allowed to monitor the June Inventory at such locations as
Sellers and their representatives, in their sole discretion, and GHV, Purchaser,
and their representatives, in their sole discretion, deemed necessary.
(B) at least 20 Business Days prior to Closing, a balance
sheet of Sellers (the "Pre-Closing Balance Sheet") as of a date that is the last
day of a calendar month and not more than 60 days prior to Closing (the
"Pre-Closing Balance Sheet Date"). The Pre-Closing Balance Sheet shall be
prepared by Sellers in good faith on a basis consistent in all material respects
with the Sellers' Accounting Policies. As part of the procedures used to prepare
the Pre-Closing Balance Sheet, Sellers shall roll-forward the June Inventory to
the Pre-Closing Balance Sheet Date (the "Pre-Closing Inventory").
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(ii) at least 20 Business Days prior to the Closing, a
statement of Net Current Assets as of the Pre-Closing Balance Sheet Date (the
"Pre-Closing Statement of Net Current Assets"), derived from the Pre-Closing
Balance Sheet. The Pre-Closing Statement of Net Current Assets shall be prepared
by Sellers in good faith on a basis consistent in all material respects with
Sellers' Accounting Policies, and shall set forth (1) the amount of Net Current
Assets as of the Pre-Closing Balance Sheet Date (it being understood that no
Mariner Receivables are included in the definition of Net Current Assets set
forth in Annex A) (the "Pre-Closing Net Current Assets"), and (2) a reasonably
detailed calculation of the Pre-Closing Net Current Assets showing each separate
component of such calculation, including the type and amount of accounts
receivable, rebate accounts receivable, Inventory, and prepaid expenses. For the
purposes of calculating the Pre-Closing Net Current Assets (A) no inventory
reserve shall be used as an offset against Net Current Assets and (B) the value
of the assets of APS-Summit Care Pharmacy, LLC (the "Austin Joint Venture") as
stated in the Pre-Closing Balance Sheet shall be reduced by an amount equal to
50% of the value of the Austin Joint Venture's Inventory, accounts receivable,
rebate accounts receivable (if any), prepaid expenses and cash in depository
accounts.
(iii) at least 15 Business Days prior to the Closing, an
estimated statement of the Assumed Reserved Liabilities as of the Closing Date
(the "Statement of Estimated Assumed Reserved Liabilities"). Purchaser shall
review such statement and prepare and deliver to Sellers, not later than 5
Business days following Purchaser's receipt of the Statement of Estimated
Assumed Reserved Liabilities, a statement setting forth some, all, or none of
the liabilities in the Statement of Estimated Assumed Reserved Liabilities that,
in Purchaser's sole and absolute discretion, it agrees to assume upon Closing
(the "Statement of Assumed Reserved Liabilities"). The liabilities set forth in
the Statement of Assumed Reserved Liabilities delivered to Sellers shall be the
"Assumed Reserved Liabilities".
(iv) at least 3 Business Days prior to Closing, a statement
(the "Sellers' Calculation of the Current Assets Holdback"). The Sellers'
Calculation of the Current Assets Holdback shall set forth (1) the Pre-Closing
Net Current Assets, (2) a reasonably detailed listing of the individual and
aggregate amounts of all Mariner Receivables that MPAN, MHG, and Sellers,
respectively, decide, in their respective sole and absolute discretion, to
include as part of the Acquired Assets (the "Included Mariner Receivables"), and
(3) the "Current Assets Holdback", which shall equal the amount, if any, by
which $44,500,000 exceeds the result of the following calculation: Pre-Closing
Net Current Assets plus Included Mariner Receivables less Assumed Reserved
Liabilities.
(b) As of the Closing Date, and in accordance with the provisions
set forth in Schedule 2.3(a)(i) hereto, (i) an independent inventory counting
service, arranged for by Sellers and paid for by Purchaser, shall conduct a
physical count of all Inventory (excluding Inventory included in Sellers'
Medicare Part B Business and Assets) at all of Sellers' locations and (ii)
employees of Sellers shall conduct a physical count of all Inventory included in
the Acquired Medicare Part B Business and Assets (which shall include such
Inventory at Sellers' locations and on consignment at the locations of Sellers'
third party customers) (the inventory count described in parts (i) and (ii)
above being collectively referred to as the "Closing Inventory"). Sellers and
11
their representatives (including their outside auditors) and GHV, Purchaser, and
their representatives (including their outside auditors) shall be allowed to
monitor the Closing Inventory at such locations as Sellers and their
representatives, in their sole discretion, and GHV, Purchaser, and their
representatives, in their sole discretion, deem necessary. The Closing Inventory
shall be used by Purchaser in its preparation of the Closing Balance Sheet (as
defined below in Section 2.3(c)).
(c) Within 120 days after the Closing Date, Purchaser shall
prepare and deliver to Sellers:
(i) a balance sheet of Sellers as of the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet shall be prepared by
Purchaser in good faith on a basis consistent in all material respects with
Sellers' Accounting Policies.
(ii) a statement of Net Current Assets as of the Closing Date
(the "Closing Statement of Net Current Assets"), derived from the Closing
Balance Sheet. The Closing Statement of Net Current Assets shall be prepared by
Purchaser in good faith on a basis consistent in all material respects with
Sellers' Accounting Policies, and shall set forth (1) the amount of Net Current
Assets as of the Closing Date (it being understood that no Mariner Receivables
are included in the definition of Net Current Assets set forth in Annex A) (the
"Closing Net Current Assets"), and (2) a reasonably detailed calculation of the
Closing Net Current Assets showing each separate component of such calculation,
including the type and amount of accounts receivable, rebates accounts
receivable, Inventory, and prepaid expenses. For the purposes of calculating the
Closing Net Current Assets (A) no inventory reserve shall be used as an offset
against Net Current Assets, and (B) the value of the assets of the Austin Joint
Venture as stated in the Closing Balance Sheet shall be reduced by an amount
equal to 50% of the value of the Austin Joint Venture's Inventory, accounts
receivable, rebate accounts receivable (if any), prepaid expenses and cash in
depository accounts.
(iii) a statement as of the Closing Date (the "Purchaser's
Calculation of the Current Assets Reduction"). The Purchaser's Calculation of
the Current Assets Reduction shall set forth (1) the Closing Net Current Assets,
(2) an amount equal to the amount of the Included Mariner Receivables actually
paid to and received by Purchaser as of the date on which the Closing Balance
Sheet is delivered (the "Paid Included Mariner Receivables"), and (3) the
"Current Assets Reduction", which shall equal the amount, if any, by which
$44,500,000 exceeds the result of the following calculation: Closing Net Current
Assets, plus Paid Included Mariner Receivables, less Assumed Reserved
Liabilities.
(d) After receipt of the Closing Balance Sheet, the Closing
Statement of Net Current Assets, and the Purchaser's Calculation of the Current
Assets Reduction (collectively, the "Closing Statements"), Sellers (including
their advisors), shall have 60 days to review them together with all work papers
of GHV, Purchaser, their respective accountants, and the independent inventory
counting service used in the preparation thereof, and GHV and Purchaser shall,
immediately upon Sellers' request, provide to Sellers copies of all such work
papers of GHV, Purchaser, their respective accountants, and the independent
inventory counting service utilized in preparing such Closing Statements. Unless
Sellers deliver written notice (the "Closing Statements Objection Notice") to
GHV and Purchaser on or prior to the 60th day after Sellers' receipt of the
Closing Statements stating that they object thereto, Sellers shall be deemed to
12
have accepted and agreed to the Closing Statements. If, however, Sellers provide
a Closing Statements Objection Notice to GHV and Purchaser on or prior to the
60th day after Sellers' receipt of the Closing Statements, all Parties shall in
good faith attempt to resolve their differences with respect to all objections
set forth therein within 30 Business Days (or such longer period as all Parties
may agree upon in writing) following GHV's and Purchaser's receipt of such
Closing Statements Objection Notice (the "Resolution Period"), and any
resolution by all Parties in writing as to any such objections shall, subject to
the provisions of the Bankruptcy Code, be final, binding, and conclusive on all
Parties. In so doing, the Parties may, but shall not be obligated to, engage a
mutually agreed upon independent accounting firm experienced in audit projects
to assist in such resolution by acting as a non-binding mediator. Sellers shall
not object to any method, principle, practice, or policy employed in the
preparation of the Closing Statements if such method, principle, practice, or
policy is consistent in all material respects with Sellers' Accounting Policies
and this Agreement, provided, however, that the foregoing shall not be construed
to prohibit Sellers from objecting to the fact that any method, principle,
practice, or policy employed in the preparation of the Closing Statements was or
may have been applied in a manner that was not materially consistent with
Sellers' Accounting Policies and this Agreement. All objections relating to any
current assets and other accounts set forth in the Closing Statements remaining
in dispute at the conclusion of the Resolution Period shall be promptly
submitted to the MPAN Bankruptcy Court for determination, and the determination
of the MPAN Bankruptcy Court in such dispute shall be final, binding, and
conclusive on all Parties, all of whom hereby waive their right to appeal in
respect of any such determination. Each Party shall bear its own costs related
to the review, investigation, and resolution of all objections raised by Sellers
to the Closing Statements.
(e) Once the Closing Statements have been finalized in
accordance with Section 2.3(d) (as so finalized therein, the Current Assets
Reduction shall be the "Final Current Assets Reduction"), the "Cash Purchase
Price" shall be determined by subtracting from $42,000,000 the Final Current
Assets Reduction.
(f) If the Cash Purchase Price is less than the Closing
Payment, Sellers, jointly and severally, shall promptly pay Purchaser an amount
of cash equal to the difference obtained by subtracting the Cash Purchase Price
from the Closing Payment. If the Cash Purchase Price exceeds the Closing
Payment, Purchaser shall promptly pay Sellers an amount of cash equal to the
difference obtained by subtracting the Closing Payment from the Cash Purchase
Price; it being understood that, in no event shall the aggregate payments made
by Purchaser in respect of the Closing Payment and this Section 2.3(f) exceed
$42,000,000.
(g) During the preparation of the June Balance Sheet, the
Pre-Closing Balance Sheet, the Pre-Closing Statement of Net Current Assets, the
Statement of Estimated Assumed Reserved Liabilities, the Statement of Assumed
Reserved Liabilities, the Sellers' Calculation of the Current Assets Holdback,
and the Closing Statements and the period of any review or dispute within the
contemplation of this Section 2.3, each of the Parties shall (i) provide the
other and their authorized representatives (including their respective auditors)
with reasonable access at reasonable times, and in a manner so as not to
interfere in any material respect with normal business operations, to all
relevant books, records, work papers, information and employees, and (ii)
cooperate fully in the preparation, calculation, and reviews, as appropriate, of
13
the June Balance Sheet, the Pre-Closing Balance Sheet, the Pre-Closing Statement
of Net Current Assets, the Statement of Estimated Assumed Reserved Liabilities,
the Statement of Assumed Reserved Liabilities, the Sellers' Calculation of the
Current Assets Holdback, and the Closing Statements or for the resolution of any
dispute relating thereto.
2.4 Contract Assumption.
(a) Schedule 2.4(a) hereto sets forth a list of all executory and
unexpired contracts and leases to which Sellers are party and which are included
in the Acquired Assets ("Designated Contracts"). Purchaser, at its sole and
absolute discretion, may revise Schedule 2.4(a) until the date and time of the
hearing held by the Mariner Bankruptcy Courts on the Bidding Procedures Order by
adding or deleting from Schedule 2.4(a) any one or more of the Contracts set
forth on Schedule 5.4(a) or Schedule 5.4(d); provided however, that Purchaser
shall be obligated to pay 50% of any additional Cure Costs arising directly from
Purchaser's addition to Schedule 2.4(a) after the date hereof of any Contract
set forth on Schedule 5.4(d) on this date. In addition, until the date and time
of the hearing held by the Mariner Bankruptcy Courts on the Bidding Procedures
Order, Purchaser may revise Schedule 2.4(a) with respect to the description of
Independent Facility Contracts in order to conform the description of such
Contracts with the updated description to be provided by Sellers on Schedule
5.4(b)(i) following the date hereof in accordance with Section 5.4(b) hereof.
Other than at the written election of Purchaser, Designated Contracts do not
include any vendor Contract (i) that is not material to the Acquired Business,
and (ii) with respect to which vendor Contract (a) payments from a Seller or
Sellers during the 12-month period prior to the Closing Date do not exceed
$50,000 in amount or (b) any party thereto may cancel or terminate such Contract
at will or on notice of 30 days or less. For purposes of this Section 2.4(a), a
vendor Contract material to the Acquired Business is a vendor Contract which
involves payments of greater than $250,000. At the Closing, subject to the
approval of the Mariner Bankruptcy Courts, and except to the extent any such
Designated Contracts are deemed Excluded Assets by virtue of Section
2.1(b)(viii) above, Sellers shall assume and then assign to Purchaser, and
Purchaser shall assume from Sellers, the Designated Contracts. Except to the
extent otherwise set forth above in this Section 2.4(a), Sellers shall make
provision for the payment of, and be responsible for and bear the cure and
reinstatement costs and expenses for services rendered before the Closing Date
(collectively, the "Cure Costs") and relating to the assumption and assignment
of the Designated Contracts. Purchaser shall provide such support for and
evidence of adequate assurance of future performance as may be reasonably
requested by Sellers in connection with any hearing before the Mariner
Bankruptcy Courts in connection with the approval by the Mariner Bankruptcy
Courts of the assumption and assignment of the Designated Contracts.
(b) If after the date hereof, but prior to the Closing, any Party
becomes aware of any executory and unexpired contract or lease to which any
Seller is a party which (i) is related to the Acquired Business, (ii) has not
been previously rejected, and (iii) has not been previously disclosed to GHV and
Purchaser ("Undisclosed Contract"), the discovering Party shall promptly notify
the other Parties of such Undisclosed Contract, and, subject to the approval of
the Mariner Bankruptcy Courts, GHV and Purchaser may direct Sellers, no later
than the date of the first hearing with respect to the disclosure statement
filed in connection with a plan proposed by the MHG Seller or the MPAN Seller
who is a party to such Undisclosed Contract (the "Undisclosed Contract
Designation Date"), to assume and assign to Purchaser such Undisclosed Contract
in which event it shall at that time be deemed a Designated Contract.
14
(c) With respect to Contracts set forth in Schedule 5.4(a) hereto
which are not Designated Contracts and which constitute pharmacy premises which
are the subject of non-residential real property leases which are not being
assumed and assigned under this Agreement ("Excluded Leases"), the Parties agree
that the Sellers' Approval Orders shall contain a provision (which is
incorporated by reference herein) (the "Temporary Occupancy Provision") seeking
to authorize Purchaser to occupy the subject premises of each Excluded Lease on
a temporary basis for a period of up to 6 months following Closing, or such
additional time as the Mariner Bankruptcy Courts shall approve upon notice to
the lessors in question and a hearing. Notwithstanding anything to the contrary
in this Agreement, GHV and Purchaser hereby acknowledge and agree that neither
the denial of such Temporary Occupancy Provision by the Mariner Bankruptcy
Courts nor any change or modification to the Temporary Occupancy Provision shall
entitle GHV or Purchaser to terminate this Agreement, subject MHG, MPAN or any
Seller to any liability whatsoever or claim that any condition to Closing under
Section 3 of this Agreement has not been satisfied. During any period of
occupancy of the subject premises under any Excluded Lease by Purchaser
following the Closing Date, MPAN, MHG, Sellers and GHV and Purchaser shall
comply with all provisions of Bankruptcy Code section 365(d)(3), and MPAN, MHG,
Sellers, GHV and Purchaser shall be responsible for all costs of use and
occupancy and for the acts of GHV and Purchaser, provided, however, that GHV and
Purchaser shall indemnify and hold harmless MPAN, MHG and Sellers for use and
occupancy costs and any injury or damages caused by GHV's or Purchaser's
occupancy. Nothing in this Agreement shall in any way affect the Sellers'
further rights to assume, assume and assign or reject non-residential real
property leases, other than as expressly set forth in this Section 2.4(c). In
addition, MPAN, MHG and Sellers agree not to file a motion to reject any
Excluded Lease prior to the Closing Date (unless MPAN, MHG or Sellers believe in
their sole and absolute discretion, that Sellers or any of them, is required to
assume or reject any such Excluded Lease pursuant to an order of a Mariner
Bankruptcy Court) or otherwise under the Bankruptcy Code. If GHV and Purchaser
so request at any time prior to the Closing Date, MPAN, MHG and Sellers shall
use commercially reasonable efforts to assume and assign any Excluded Lease to
Purchaser and GHV and Purchaser shall cooperate with and use commercially
reasonable best efforts to support such efforts .
2.5 Amounts Due Under Designated Contracts. Purchaser shall be
obligated to pay all amounts for services rendered by a third party under the
Designated Contracts from and after the Closing in accordance with the terms and
conditions of all such Designated Contracts. Any amounts for services rendered
by a third party under the Designated Contracts during the period until the
Closing shall not be a Liability of GHV or Purchaser (unless included in (i) the
Assumed Reserved Liabilities to be assumed by Purchaser or (ii) the Cure Costs
specifically required to be paid by Purchaser pursuant to Section 2.4(a)) and
shall be a retained liability of Sellers' in an amount determined by the Mariner
Bankruptcy Courts to the extent not included as an Assumed Reserved Liability.
2.6 Assumed and Excluded Liabilities. Subject to the terms and
conditions set forth herein, including approval of the Bankruptcy Court, at the
15
Closing, Purchaser shall assume from Sellers and thereafter pay, perform, and/or
discharge in accordance with their respective terms, all (i) of Purchaser's
share of prorated liabilities of Sellers pursuant to Section 2.9 hereof (to the
extent not otherwise addressed through the determination of the Final Current
Assets Reduction), (ii) duties, responsibilities, and obligations that arise or
which by their terms are to be observed, paid, discharged, or performed, as the
case may be, from and after the Closing under the Designated Contracts, (iii)
liabilities and obligations with respect to Transferred Employees arising from
and after the Closing as set forth in Section 7.10 hereof, and (iv) Assumed
Reserved Liabilities. The liabilities to be assumed pursuant to the preceding
sentence shall be referred to herein as the "Assumed Liabilities" and all other
liabilities of MPAN, MHG, and Sellers shall be referred to herein as the
"Excluded Liabilities". Notwithstanding anything contained in this Agreement to
the contrary, neither GHV nor Purchaser assumes or agrees to pay, satisfy,
discharge, or perform, and shall not be deemed by virtue of the execution and
delivery of this Agreement, to have assumed, or to have agreed to pay, satisfy,
discharge, or perform, any liability, obligation, or indebtedness of MPAN, MHG,
or any Seller, whether primary or secondary, direct or indirect, other than the
Assumed Liabilities; provided, however, that if an item is included in the
Assumed Reserved Liabilities, then Purchaser shall remain solely responsible for
its satisfaction and discharge.
2.7 Allocation of Cash Purchase Price. The Cash Purchase Price shall be
allocated among the Acquired Assets and Assumed Liabilities for tax purposes in
accordance with the allocation schedule to be agreed upon in writing by all
Parties at or prior to Closing and attached as Schedule 2.7. The allocation, as
shall be set forth on Schedule 2.7 at Closing, shall be binding for tax purposes
on all Parties. All Parties hereby agree to timely file IRS Form 8594 based on
the allocations set forth in Schedule 2.7.
2.8 Transfer Taxes. Any sales, use, transfer, or recordation Taxes with
respect to real or personal property due as a result of the transactions
provided for herein shall be paid by Sellers. The Parties will reasonably
cooperate to minimize such Taxes.
2.9 Prorations. To the extent not included in the Assumed Reserved
Liabilities, (i) Sellers shall bear all personal property and ad valorem Tax
liability with respect to the Acquired Assets to the extent such Tax relates to
periods prior to the Closing, and (ii) Purchaser shall bear all personal
property and ad valorem Tax liability with respect to the Acquired Assets to the
extent such Tax relates to periods from and after the Closing, in each instance
irrespective of the reporting and payment dates of such Taxes. To the extent not
included in the Assumed Reserved Liabilities, (i) Sellers shall bear all
salaries and other compensation payable to employees or officers who are
Transferred Employees, and other recurring payments under Contracts that are
Designated Contracts with respect to the Acquired Assets to the extent such
salaries and compensation and recurring payments relate to periods prior to the
Closing, and (ii) Purchaser shall bear all salaries and other compensation
payable to employees or officers who are Transferred Employees and other
recurring payments under Contracts that are Designated Contracts with respect to
the Acquired Assets, to the extent such salaries and compensation and recurring
payments relate to periods from and after the Closing. To the extent not
included in the Assumed Reserved Liabilities, all other property Taxes, ad
valorem Taxes, and similar recurring Taxes and fees on the Acquired Assets, and
all salaries and other compensation payable to employees or officers who are
Transferred Employees, and other recurring payments under Contracts that are
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Designated Contracts, shall be pro rated for the applicable period between
Purchaser and the applicable Seller as of 12:01 a.m. local time on the Closing
Date. All payments to be made by Purchaser or any Seller in accordance with this
Section 2.9 shall be made, to the extent then determinable within 5 Business
Days of the determination of the Final Closing Net Current Assets, or to the
extent not determinable as of the determination of the Final Closing Net Current
Assets, promptly following the determination thereof, with such payments paid to
the appropriate Party when due. Each Party shall have the right of reasonable
review and approval of the other's property Tax Returns and assessments for
which any other Party bears any economic responsibility. The Parties shall
reasonably cooperate with respect to any review, contest, or challenge of any
Tax Return or assessment. The Parties shall undertake a reconciliation and
allocation procedure using the mechanism set out above for the reconciliation
and allocation of payroll expenses and costs, and other recurring payments under
Contracts that are Designated Contracts; it being understood that the processing
and payment of vendor invoices shall be performed in accordance with the
procedures set forth in Schedule 2.9 hereto.
2.10 Reconciliation and Allocations.
(a) Beginning on the Closing Date, all payments received by MPAN,
MHG, and each Seller, respectively, on account of the accounts receivable
(including the accounts receivable underlying the Government Payment Program
Proceeds that Purchaser may not, by law, collect directly) and all other
payments received by each of them, respectively, which are included in the
Acquired Assets, shall be held in trust for Purchaser and shall be paid to
Purchaser within 10 Business Days. For purposes of the Government Payment
Program Proceeds included in the Acquired Assets, MHG, MPAN and Sellers hereby
agree to act as agent for Purchaser for purposes of collecting the accounts
receivable underlying such proceeds, and shall collect such accounts receivable
diligently and in good faith and promptly pay such collected proceeds thereof to
Purchaser. At the Closing and, thereafter, on the last day of each month during
the 6 month period beginning on the Closing Date, MPAN, MHG, and each Seller
shall report to Purchaser the amounts of such payments held by each of them,
respectively, and the amounts held by MPAN, MHG, and each Seller shall be paid
by MPAN, MHG, and such Seller to Purchaser within 10 Business Days. After such 6
month period, MPAN, MHG, and each Seller shall cooperate with Purchaser to
allocate and remit to Purchaser any accounts receivable and Government Payment
Program Proceeds collected by MPAN, MHG, and each Seller, and shall continue to
hold such payments in trust for Purchaser and remit such payments so held
periodically as received.
(b) Beginning on the Closing Date, all payments received by GHV
and Purchaser, respectively, on account of, or which are included in, the
Excluded Assets shall be held in trust for Sellers and shall be paid to Sellers
within 10 Business Days. At the Closing and, thereafter, on the last day of each
month during the 6 month period beginning on the Closing Date, GHV and Purchaser
shall report to MPAN, MHG, and Sellers the amounts of such payments held by GHV
and Purchaser, and the amounts held by them shall be paid by GHV and Purchaser
to Sellers within 10 Business Days. After such 6 month period, GHV and Purchaser
shall cooperate with Sellers to allocate and remit to Sellers all payments
received by GHV and Purchaser on account of, or which are included within, the
Excluded Assets, and shall continue to hold such payments in trust for Sellers
and remit them to the appropriate Seller periodically as received.
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SECTION 3
CONDITIONS TO CLOSING
3.1 Conditions Precedent to Obligations of MPAN, MHG, Sellers, GHV,
and Purchaser. The respective obligations of each Party to consummate the
transactions contemplated by this Agreement shall be subject to satisfaction or
waiver at or prior to the Closing Date of the following conditions precedent:
(a) the Sellers' Approval Orders and the Purchaser's Approval
Order, in the forms attached at Schedule 7.1(a)(ii) and Schedule 7.2(a)(i)
hereto, respectively, or in such other forms as shall have been agreed upon by
all Parties in writing in their reasonable discretion, shall have each been
entered by the Mariner Bankruptcy Courts and the Genesis Bankruptcy Court,
respectively, and shall have each become a Final Order in accordance with this
Agreement;
(b) the waiting period, if any, under the HSR Act shall have
expired, and no condition or requirement unacceptable to any Party, in its
reasonable opinion, shall be imposed on or required of any Party or any of its
Affiliates as a result of or as a condition to the foregoing;
(c) no action, suit, or proceeding (including any proceeding over
which the Bankruptcy Court has jurisdiction under 28 U.S.C. ss. 157(b) and (c))
shall be pending by any Governmental Authority to enjoin, restrain, prohibit, or
obtain substantial damages or significant equitable relief in respect of or
related to the transactions contemplated by this Agreement, or that would be
reasonably likely to prevent or make illegal the consummation of the
transactions contemplated by this Agreement or that, if adversely determined,
would constitute a Material Adverse Effect with respect to the Acquired
Business;
(d) there shall not be in effect any Law of any Governmental
Authority of competent jurisdiction restraining, enjoining, or otherwise
preventing consummation of the transactions contemplated by this Agreement; and
(e) the Bidding Procedures Order in the form attached at Schedule
7.1(a)(i) hereto, or in such other form as shall have been agreed upon by all
Parties in writing in their reasonable discretion, shall have been entered by
the Mariner Bankruptcy Courts and shall have become a Final Order in accordance
with this Agreement.
3.2 Conditions Precedent to Obligations of MPAN, MHG, and Sellers. The
obligation of MPAN, MHG, and Sellers to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction or waiver of the
following conditions precedent at or prior to the Closing Date (or, with respect
to Section 3.2(c) below, as of the date expressly provided therein):
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(a) the representations and warranties of GHV and Purchaser
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date as if made on such date, and at the Closing GHV and
Purchaser shall have delivered to MPAN, MHG, and Sellers a certificate to such
effect signed by a duly authorized officer of each of GHV and Purchaser;
(b) GHV and Purchaser shall have performed in all material
respects their respective obligations under this Agreement required to be
performed by them on or prior to the Closing Date, including payment of the
Closing Payment, and at the Closing GHV and Purchaser shall have delivered to
MPAN, MHG, and Sellers a certificate to such effect signed by a duly authorized
officer of each of GHV and Purchaser; and
(c) prior to or contemporaneously with the entry of the Bidding
Procedures Order, the written consent to the transfer of the Acquired Assets
free and clear of Liens of the MPAN Bank Group and the MHG Bank Group shall have
been obtained from the MPAN Bank Group and the MHG Bank Group.
3.3 Conditions Precedent to the Obligations of GHV and Purchaser. The
obligation of GHV and Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction or waiver of the following
conditions precedent at or prior to the Closing Date (or, with respect to
Section 3.3(i) below, as of the date expressly provided therein):
(a) the representations and warranties of MPAN, MHG, and Sellers
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date as if made on such date, and at the Closing MPAN, MHG,
and each Seller shall have delivered to GHV and Purchaser a certificate to such
effect signed by a duly authorized officer of MPAN, MHG, and each Seller;
(b) MPAN, MHG, and each Seller shall have performed in all
material respects their respective obligations under this Agreement required to
be performed by them at or prior to the Closing Date, and at the Closing MPAN,
MHG, and Sellers shall have delivered to GHV and Purchaser a certificate to such
effect signed by a duly authorized officer of MPAN, MHG, and each Seller;
(c) Purchaser, at its sole cost and expense, shall have obtained
an owner's title insurance policy commitment issued by a national title
insurance company containing standard endorsements reasonably acceptable to
Purchaser insuring the Owned Real Property, subject only to those matters set
forth on Schedule 3.3(c), in an amount reasonably acceptable to Purchaser,
naming Purchaser as the insured owner, and in addition, the Owned Real Property
must be delivered free and clear of all leases;
(d) since the signing date hereof, no Material Adverse Effect with
respect to the Acquired Business shall have occurred;
(e) intentionally omitted;
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(f) all material third party consents and approvals necessary for
Purchaser's operation of the Acquired Business from and after the Closing as set
forth at Schedule 3.3(f) (the "Required Consents") shall have been obtained in
form and substance reasonably satisfactory to GHV and Purchaser;
(g) intentionally omitted;
(h) MPAN, MHG, and each Seller shall have executed and delivered
to Purchaser the Non-Compete Agreements in the form attached at Schedule 3.3(h);
(i) prior to or contemporaneously with the entry of the Bidding
Procedures Order, the written consent to the transfer of the Acquired Assets
free and clear of Liens of the MPAN Bank Group and the MHG Bank Group shall have
been obtained from the MPAN Bank Group and the MHG Bank Group;
(j) intentionally omitted; and
(k) MPAN, MHG, and each Seller shall cause the Selling Affiliates
to execute and deliver to Purchaser any other documents reasonably requested by
Purchaser so as to convey to Purchaser title, free and clear of all Liens (other
than Permitted Liens), to the Additional Assets.
SECTION 4
THE CLOSING
4.1 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Blank Rome Comisky
& McCauley LLP, One Logan Square, Philadelphia, Pennsylvania 19103 at 10:00 a.m.
local time on (i) a date as shall be agreed upon by all Parties in writing after
all the conditions to Closing set forth in Section 3 have been met or waived,
but not less than 45 days nor more than 60 days (subject to extension as
contemplated by Section 7.3 below) following the entry of the Sellers' Approval
Orders or (ii) such other time, date, and place as shall be agreed upon by all
Parties in writing (the date of the Closing being herein referred to as the
"Closing Date"). The Closing shall be effective as of 12:01 a.m. on the Closing
Date.
4.2 Deliveries by MPAN, MHG, and Sellers at Closing. At the Closing,
MPAN, MHG, and Sellers, as the case may be, shall deliver to Purchaser, or in
the case of Sections 4.2(g) and (h) below, make available to Purchaser:
(a) a bill of sale duly executed by each Seller and each Selling
Affiliate, in the applicable form attached at Schedule 4.2(a) hereto (the "Bill
of Sale"), with respect to the Acquired Assets and the Additional Assets other
than real estate to be conveyed by Sellers and the Selling Affiliates at the
Closing, and any other documents reasonably requested by Purchaser so as to
convey to Purchaser title, free and clear of all Liens (other than Permitted
Liens), to all of Sellers' and the Selling Affiliates' right, title and interest
in and to the Acquired Assets and the Additional Assets (other than Owned Real
Property) to be conveyed at Closing, each executed by the applicable Seller
and/or Selling Affiliate;
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(b) a certificate, dated the Closing Date, of the Secretary of
MPAN, MHG, and each Seller as to the incumbency and signatures of the officer(s)
of each such entity executing this Agreement;
(c) copies of the resolutions duly adopted by the board of
directors of MPAN, MHG, and each Seller authorizing each such entity to enter
into and perform this Agreement, certified by proper officers of each such
entity as in full force and effect on and as of the Closing Date;
(d) good standing certificates for MPAN, MHG, and each Seller
(except Pinnacle Pharmaceutical Services, Inc.), dated no earlier than 30 days
before the Closing Date, from their respective jurisdictions of incorporation,
and from each other jurisdiction in which each such entity is qualified or
registered to do business as a foreign corporation;
(e) a vesting deed in the form attached at Schedule 4.2(e) hereto
with respect to the Owned Real Property;
(f) an assignment and assumption agreement duly executed by each
Seller and each Selling Affiliate assigning its interest in each Designated
Contract to which it is a party to Purchaser, in the applicable form attached at
Schedule 4.2(f) hereto (the "Assignment and Assumption Agreement"), with respect
to Sellers' and/or the applicable Selling Affiliates' assignment to Purchaser,
and Purchaser's assumption from Sellers and the applicable Selling Affiliates,
of each Seller's and each Selling Affiliate's right, title, and interest in and
to the Designated Contracts and the respective performance obligations relating
thereto;
(g) keys, security codes, and pass cards to the Owned Real
Property and Leased Real Property, and every lock thereon in MPAN's, MHG's and
Sellers' possession;
(h) all of Sellers' books and records, accounting systems,
databases, customer files and related business records pertaining to the
Acquired Assets and the Acquired Business, the originals of all Designated
Contracts in Sellers' possession, the originals of all Licenses and warranties,
and copies of all maintenance records and operating manuals in Sellers'
possession pertaining to the personal property or any portion of the Owned Real
Property or Leased Real Property included in the Acquired Assets;
(i) a FIRPTA Non-Foreign Transferor Certificate in accordance with
Section 1445 of the Internal Revenue Code, and any similar state required
documents;
(j) Management Agreements and powers of attorney to the extent
required under Section 7.20 below;
(k) the Non-Compete Agreements, duly executed by MPAN, MHG, and
each Seller, in the form attached at Schedule 3.3(h) hereto;
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(l) certificates pursuant to and in accordance with Sections
3.3(a) and 3.3(b), dated the Closing Date, in form and substance reasonably
satisfactory to GHV and Purchaser;
(m) intentionally omitted; and
(n) all other documents, certificates, instruments, or writings
reasonably requested by GHV, Purchaser or their counsel in connection herewith.
4.3 Deliveries by GHV and Purchaser at Closing. At the Closing, GHV and
Purchaser, as the case may be, shall deliver to Sellers:
(a) a certificate, dated the Closing Date, of the Secretary of
each of GHV and Purchaser as to the incumbency and signatures of the officer(s)
of GHV and Purchaser executing this Agreement;
(b) copies of the resolutions duly adopted by the board of
directors of each of GHV and Purchaser authorizing GHV and Purchaser,
respectively, to enter into and perform this Agreement, certified by proper
officers of each such entity as in full force and effect on and as of the
Closing Date;
(c) good standing certificates for GHV and Purchaser, dated no
earlier than 30 days before the Closing Date, from their respective
jurisdictions of incorporation, and from each other jurisdiction in which
Purchaser will operate the Acquired Business on and after the Closing Date;
(d) the Closing Payment in accordance with Section 2.2(a) by wire
transfer of immediately available funds to an account or accounts designated by
Sellers;
(e) the Assignment and Assumption Agreement duly executed by
Purchaser;
(f) Management Agreements to the extent required under Section
7.20 below;
(g) certificates pursuant to and in accordance with Sections
3.2(a) and 3.2(b), dated the Closing Date, in form and substance reasonably
satisfactory to MPAN, MHG, and Sellers; and
(h) all other documents, instruments, or certificates required to
be delivered in connection with GHV's and Purchaser's obligations under this
Agreement, or as MPAN, MHG, or Sellers or their counsel may reasonably request.
4.4 Delivery of Acquired Assets. At the Closing, Sellers shall deliver
to Purchaser possession of the Acquired Assets, provided, that Purchaser, MPAN,
MHG and Sellers agree to use their commercially reasonable efforts to coordinate
such delivery in a mutually agreeable manner in order to minimize, to the
greatest extent possible, any Taxes.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF MPAN, MHG, AND SELLERS
MPAN and the MPAN Sellers jointly and severally with respect to
MPAN and the MPAN Sellers, and MHG and the MHG Sellers jointly and severally
with respect to MHG and the MHG Sellers, make the following representations and
warranties to GHV and Purchaser:
5.1 Organization, Standing and Authority. Each of MPAN, MHG, and,
except as set forth in Schedule 5.1, each Seller is a corporation duly
organized, validly existing, and in good standing under the Laws of its
jurisdiction of incorporation. Subject to compliance with applicable provisions
of the Bankruptcy Code and orders of the Mariner Bankruptcy Courts, each of
MPAN, MHG, and each Seller has all requisite corporate power and authority to
own, lease, and operate its properties, and to carry on its business as it is
now being conducted. Subject to compliance with applicable provisions of the
Bankruptcy Code and the entry by the Mariner Bankruptcy Courts of the Sellers'
Approval Orders and the Bidding Procedures Order; the enforceability of which
are not stayed (i) MPAN, MHG, and each Seller has all requisite corporate power
and authority to enter into the transactions contemplated hereby, (ii) the
execution, delivery, and performance of this Agreement by MPAN, MHG, and each
Seller and the consummation by each of them of the transactions contemplated
hereby have been duly authorized by all requisite corporate actions, (iii) this
Agreement has been duly and validly executed and delivered by MPAN, MHG, and
each Seller, and (iv) (assuming this Agreement constitutes a valid and binding
obligation of GHV and Purchaser) this Agreement constitutes a valid and binding
obligation of MPAN, MHG, and each Seller enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and other Laws affecting creditors' rights generally
from time to time in effect. Each Seller is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the Acquired Business.
5.2 Transfer of Acquired Assets. At the Closing, and subject to entry
of the Sellers' Approval Orders and the Bidding Procedures Order by the Mariner
Bankruptcy Courts, the enforceability of which are not stayed, Sellers shall
have the power and the right to sell, convey, transfer, assign, and deliver to
Purchaser the Acquired Assets, and on the Closing Date shall sell, convey,
transfer, assign and deliver the Acquired Assets free and clear of all Liens,
claims, encumbrances and security interests, except for and subject to the
Assumed Liabilities and Permitted Liens. The Acquired Assets constitute all
assets, real, personal and mixed, tangible and intangible owned by Sellers and
used in the conduct of the Acquired Business, other than the Excluded Assets,
and the Additional Assets constitute all material assets, real, personal and
mixed, tangible and intangible used in the conduct of the Acquired Business
which are not owned by a Seller. The Acquired Assets and the Additional Assets
include (i) all material assets necessary to operate the Acquired Business as it
is operated currently, other than the Excluded Assets and (ii) substantially all
of the assets, other than the Excluded Assets, identified in the March Financial
Statements.
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5.3 Real Property.
(a) Schedule 5.3(a) hereto sets forth a true and complete list of
the Owned Real Property. At the Closing, and subject to the entry of Sellers'
Approval Orders and the Bidding Procedures Order by the Mariner Bankruptcy
Courts, Sellers shall have the power and the right to sell, convey, transfer,
assign, and deliver to Purchaser the Owned Real Property free and clear of all
Liens other than Liens set forth on Schedule 5.3(a), and shall convey to
Purchaser insurable title to the Owned Real Property. There is no condemnation
or casualty with respect to any such Owned Real Property.
(b) No Seller has received written notice of any pending or
threatened proceedings which, if adversely decided, could have a Material
Adverse Effect with respect to the current zoning or use of the Owned Real
Property by Purchaser in the Acquired Business after the Closing. The Owned Real
Property is presently zoned for its current uses, and the improvements thereon
comply with the particular zoning classification and zoning requirements. There
are no offsite parking facilities used in connection with the operation of the
Owned Real Property.
(c) The Seller identified on Schedule 5.3(a) is the sole occupant
of the Owned Real Property. No Person has any right or option to acquire the
Owned Real Property or any portion thereof or lease or occupy any space in the
Owned Real Property, except as specified in Schedule 5.3(c) hereto.
(d) There are no real property interests (whether fee or leasehold
interests), buildings, structures or other improvements that are used by Sellers
to conduct the Acquired Business that are not included in the Owned Real
Property or Real Property Leases, other than leases that have been rejected
prior to the date hereof or leases that are not Designated Contracts. There is
no location at which any of the Acquired Business is operating except for the
Owned Real Property and locations for which Sellers have in effect a Real
Property Lease.
5.4 Contracts.
(a) Schedule 5.4(a) hereto sets forth a complete and accurate list
of all Real Property Leases in effect as of the date hereof, including all
modifications, alterations, and amendments thereto. True and complete copies or
descriptions (as to oral contracts) of such Real Property Leases have heretofore
been delivered or made available by MPAN, MHG, and Sellers to GHV and Purchaser.
Except as specified in Schedule 5.4(a) hereto and except as specifically
provided in any such Real Property Lease as modified, altered or amended, (i)
the Sellers identified on Schedule 5.4(a) are the sole occupants of their
respective Leased Real Property, (ii) no Person has any right or option to
acquire the Leased Real Property or any portion thereof, (iii) no Person has the
right to lease or occupy any space in the Leased Real Property, (iv) no tenant
has the right to cancel or terminate its lease, and (v) to the knowledge of
Sellers, no material default by any landlord has occurred and is continuing
under any of the Real Property Leases. Except for such Real Property Leases that
have expired pursuant to their terms, and subject to the entry of the Sellers'
Approval Orders and the Bidding Procedures Order by the Mariner Bankruptcy
Courts, upon Sellers' assignment of such Real Property Leases to Purchaser at
the Closing and the payment by Sellers of the applicable Cure Costs, each such
24
assumed Real Property Lease will be a valid and binding obligation of Purchaser
and, to the knowledge of Sellers, the other parties thereto, in full force and
effect against Purchaser and, to the knowledge of Sellers, such other parties in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization, or
similar Laws of general application relating to or affecting creditor's rights.
Upon entry of the Sellers' Approval Orders, none of such Real Property Leases
included in the Designated Contracts will require the consent of any party to
its assignment in connection with the transactions contemplated hereby. To the
knowledge of Sellers, no property subject to the Real Property Leases has
suffered a casualty loss and no condemnation proceedings in respect of any such
property is pending or has been threatened in writing.
(b) To Sellers' knowledge (i) Schedule 5.4(b)(i) hereto sets forth
a list which is complete and accurate in all material respects of all
Independent Facility Contracts in effect as of the date hereof (which Schedule
shall be revised to identify (1) the name or the title of the Contract, (2) the
date of the Contract, (3) the names of the parties to the Contract, and (iv)
modifications, alterations and amendments to such Contract, and which Schedule
as revised in accordance with the foregoing shall be provided to Purchaser in
writing no later than 10 days prior to the date of the hearing held by the
Mariner Bankruptcy Courts on the Bidding Procedures Order), and (ii) Schedule
5.4(b)(ii) hereto sets forth a list which is complete and accurate in all
material respects of all Independent Facilities with which Sellers have
understandings or arrangements (other than Independent Facility Contracts) as of
the date hereof (which Schedule includes a list of the Independent Facilities
that have provided Revenues to Sellers within the 12 month period immediately
prior to the date hereof for Services provided by Sellers, the Services provided
thereto, and the Revenues for such 12 month period. No later than 15 days prior
to the Closing, Sellers shall provide to Purchaser in writing an updated
Schedule 5.4(b)(ii) which shall be complete and accurate in all material
respects as of the Closing Date and which Schedule shall include a list of the
Independent Facilities that have provided Revenues to Sellers within the 12
month period immediately prior to the Closing Date for Services provided by
Sellers, the Services (identified by the respective Line(s) of Business)
provided thereto, and the Revenues for such 12 month period. True and correct
copies or descriptions (as to oral contracts) of such Independent Facility
Contracts and Independent Facility Arrangements have been delivered or made
available to GHV and Purchaser. Except for such Independent Facility Contracts
that have expired pursuant to their terms, and subject to the entry of the
Sellers' Approval Orders and the Bidding Procedures Order by the Mariner
Bankruptcy Courts, upon Sellers' assignment of such Independent Facility
Contracts to Purchaser at the Closing and the payment by Sellers of the
applicable Cure Costs, each such Independent Facility Contract will be a valid
and binding obligation of Purchaser and, to the knowledge of Sellers, the other
parties thereto, in full force and effect against Purchaser and, to the
knowledge of Sellers, such other parties in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization, or similar Laws of general application
relating to or affecting creditor's rights. Upon entry of the Sellers' Approval
Orders, none of such Independent Facility Contracts included in the Designated
Contracts will require the consent of any party to its assignment in connection
with the transactions contemplated hereby.
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(c) To Sellers' knowledge, Schedule 5.4(c) hereto sets forth a
list which is complete and accurate in all material respects of all Contracts
pursuant to which any Seller provides Services to Facilities which are not
Independent Facilities and to patients resident in such Facilities ("Services
Contracts") and in effect as of the date hereof. True and complete copies or
descriptions (as to oral contracts) of such Services Contracts have been
delivered or made available to GHV and Purchaser. Except for such Services
Contracts that have expired pursuant to their terms, and subject to the entry of
the Sellers' Approval Orders and the Bidding Procedures Order by the Mariner
Bankruptcy Courts, upon Sellers' assignment of such Services Contracts to
Purchaser at the Closing and the payment of the applicable Cure Costs, each such
Services Contract will be a valid and binding obligation of Purchaser and, to
the knowledge of Sellers, the other parties thereto, in full force and effect
against Purchaser and, to the knowledge of Sellers, such other parties in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization, or
similar Laws of general application relating to or affecting creditor's rights.
Upon entry of the Sellers' Approval Orders, none of such Services Contracts
included in the Designated Contracts will require the consent of any party to
its assignment in connection with the transactions contemplated hereby.
(d) To Sellers' knowledge, Schedule 5.4(d) hereto sets forth a
list which is complete and accurate in all material respects of all Contracts in
effect as of the date hereof other than the Real Property Leases, Independent
Facility Contracts and the Services Contracts identified in Schedules 5.4(a),
(b), and (c); provided, however, that it is hereby acknowledged and agreed by
all Parties that, other than at the written election of Purchaser, the Contracts
listed at Schedule 5.4(d) do not include any vendor Contract (i) that is not
material to the Acquired Business, and (ii) with respect to which vendor
Contract (a) payments from a Seller or Sellers during the 12-month period prior
to the date of this Agreement do not exceed $50,000 in amount, or (b) any party
thereto may cancel or terminate such Contract at will or on notice of 30 days or
less. For purposes of this Section 5.4(d), a vendor Contract material to the
Acquired Business is a vendor Contract which involves payments of greater than
$250,000. True and complete copies or descriptions (as to oral contracts) of the
Contracts listed at Schedule 5.4(d) hereto have been delivered or made available
to GHV and Purchaser. Except for such Contracts that have expired pursuant to
their terms, and subject to the entry of the Sellers' Approval Orders and the
Bidding Procedures Order by the Mariner Bankruptcy Courts, upon Sellers'
assignment of such Contracts included in the Designated Contracts to Purchaser
at the Closing and the payment by Sellers (and Purchaser, to the limited extent
required pursuant to Section 2.4(a)) of the applicable Cure Costs, each such
Designated Contract will be a valid and binding obligation of Purchaser and, to
the knowledge of Sellers, the other parties thereto, in full force and effect
against Purchaser and, to the knowledge of Sellers, such other parties in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or
similar Laws of general application relating to or affecting creditor's rights.
Upon entry of the Sellers' Approval Orders, none of such Contracts included in
the Designated Contracts will require the consent of any party to its assignment
in connection with the transactions contemplated hereby.
5.5 Intellectual Property Rights. Schedule 5.5 hereto contains a list
of all patents, trade names, registered and unregistered copyrights, trademarks,
26
and service marks and applications for the foregoing owned or used in the
Acquired Business by Sellers. True and complete copies of all material listed in
Schedule 5.5 hereto have been delivered or made available to Purchaser and GHV.
No Seller has received any written notice of any material claims or assertions
made by others that any Seller has infringed any Intellectual Property Rights of
others.
5.6 Brokers. No Person other than Conway, Del Genio, Gries & Co. is
entitled to any brokerage, financial advisory, finder's, or similar fee or
commission payable by MPAN, MHG, or Sellers in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
MPAN, MHG, or Sellers.
5.7 Employee Matters. Schedule 5.7 hereto sets forth a list which is
true and complete in all material respects of the current employees of Sellers
in respect of the Acquired Business ("Acquired Business Employees"), their
current respective positions or job classifications and their current respective
wage scales or salaries, as the case may be. Sellers are, in respect of the
Acquired Business, in compliance in all material respects with all applicable
Laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice.
5.8 Financial Statements. Copies of the March Financial Statements,
including all schedules and notes thereto, have previously been delivered to GHV
and Purchaser and are attached at Schedule 5.8 hereto. The March Financial
Statements have been prepared in accordance with Sellers' Accounting Policies,
consistently applied, and fairly present, in all material respects, the
financial condition, results of operations and cash flows of Sellers for the
dates and periods set forth therein. The Pre-Closing Balance Sheet shall be
prepared in accordance with Seller's Accounting Policies, consistently applied,
and shall present, in all material respects, the financial position of Sellers
as of the Pre-Closing Balance Sheet Date.
5.9 Licenses, Compliance with Laws.
(a) The certificates, permits, licenses, registrations,
franchises, consents, approvals, orders, clearances, and authorizations issued
by any Governmental Authority (collectively "Licenses") to each Seller with
respect to its current operation of the Acquired Business and ownership of the
Acquired Assets are listed on Schedule 5.9(a) hereto, and all such Licenses
issued to Sellers are all the material Licenses necessary to own, lease, conduct
or operate the Acquired Business as presently conducted, and all such Licenses
are valid and in full force and effect. Copies of all of Sellers' material
Licenses have been provided or made available to GHV and Purchaser. Except to
the extent set forth in Schedule 5.9(a), each Seller is in material compliance
with its obligations under the Licenses listed on Schedule 5.9(a), and, to
Sellers' knowledge, no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination of such Licenses. Except to the
extent set forth in Schedule 5.9(a), no Seller has knowledge of any facts or
circumstances that could reasonably be expected to result in the denial of the
issuance of a state pharmacy License or DEA registration (each such License or
registration referred to herein as a "Pharmacy License"). For purposes of the
preceding sentence only, a Seller shall be deemed to have knowledge of any facts
or circumstances that could reasonably be expected to result in the denial of
the issuance of a Pharmacy License to Purchaser only to the extent such Seller
has information from any member, representative or employee of a Governmental
Authority having authority to issue a Pharmacy License.
27
(b) Except as otherwise disclosed on Schedule 5.9(b), to Sellers'
knowledge, no Seller has violated or failed to comply in any material respect
with any Law (including the Medicare and Medicaid fraud and abuse provisions of
the Social Security Act and the Civil Monetary Penalty Law of the Social
Security Act, the applicable recordkeeping, inventory, and other requirements
and regulations of the FDA, the DEA, and state pharmacy boards in jurisdictions
in which any such Seller conducts business), or any judgment, decree, or order
of any court, applicable to its business or operations, except for any such
violations or failures to comply that, individually or in the aggregate, would
not constitute a Material Adverse Effect on the Acquired Business from and after
the Closing.
5.10 Institutional Pharmacy Business. Each Seller is duly licensed to
provide the Services and the other similar products and services which it
provides in the states listed in Schedule 5.10 hereto, and is also a provider
under the Medicare program and the Medicaid programs of such states except as
otherwise disclosed in Schedule 5.10.
5.11 Intentionally Omitted.
5.12 Environmental Matters.
(a) To Sellers' knowledge, (i) no Seller has caused or permitted
any Hazardous Substances to have been stored, used, generated, manufactured,
refined, treated, discharged, disposed of, deposited, transported, handled,
released, or otherwise present on any of the Owned Real Property or Leased Real
Property in material violation of any Environmental Law, and (ii) no Hazardous
Substances currently are stored, used, generated, transported, handled, or
otherwise present thereon, in material violation of any Environmental Law and in
excess of (A) any concentrations or quantities that occur naturally thereon or
that are present in construction materials, office equipment, or other office
furnishings used in the existing improvements thereon, and (B) normal quantities
of those Hazardous Substances customarily used in the conduct of the business of
supplying Services, general administrative and executive office activities, and
use and maintenance of computer systems (e.g., copier fluids and cleaning
supplies).
(b) To Sellers' knowledge, (i) no Seller has received any written
notice that any part of the Owned Real Property or Leased Real Property or the
operations thereon, including with respect to off-site waste disposal, is the
subject of any proceeding or judgment relating to environmental matters, and
(ii) no part of the Owned Real Property, Leased Real Property, or the operations
thereon is the subject of any proceeding or judgment relating to environmental
matters. No Seller has received any written notice from any Governmental
Authority regarding a material violation of any Environmental Law.
(c) To Sellers' knowledge, Sellers have made available or
delivered to Purchaser copies of any and all applications, correspondence and
studies, including any and all material environmental engineering studies, any
material tests or testing performed on, the Owned Real Property or Leased Real
Property in their possession and relating to the Owned Real Property. To
Sellers' knowledge, there is no sinkhole, coastal zone, flood plain, flood
hazard area or wetlands in or on the Owned Real Property, which would restrict
any use of the Owned Real Property as an office, warehouse, storage facility or
other facility used by, in or for the Acquired Business.
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(d) To Sellers' knowledge, no information request has been issued
to any Seller pursuant to section 104 of the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq. or
any other Environmental Laws with regard to the Owned Real Property or Leased
Real Property or any activities conducted thereon, including off-site waste
disposal.
(e) To Sellers' knowledge, and except as set forth at Schedule
5.12(e) hereto, no underground storage tanks are or have been located at the
Owned Real Property.
5.13 Litigation. To Sellers' knowledge, and except as set forth at
Schedule 5.13 hereto, there are no judicial or administrative actions,
proceedings, or investigations pending or threatened against any Seller in
connection with any part of the Acquired Business other than the Mariner
Bankruptcy Cases, except for such judicial or administrative actions,
proceedings, or investigations pending or threatened against any Seller that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Acquired Business from and after the Closing. To Sellers' knowledge, and
except as set forth in Schedule 5.13 hereto, no Seller is subject to or in
default in any material respect with respect to any final judgment, writs,
injunctions, or decrees of any Governmental Authority, except for such
violations and defaults that, individually or in the aggregate, would not have a
Material Adverse Effect on the Acquired Business from and after the Closing.
5.14 Included Mariner Receivables. The Included Mariner Receivables, if
any, shall not be subject to recoupment and shall be collectible by Purchaser in
full within the period(s) of time specified by the agreements giving rise to
such accounts receivable (without any counterclaim or rights of set off). There
are no refunds, discounts, rights of set off, assignments, or defenses affecting
the Included Mariner Receivables.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF GHV AND PURCHASER
GHV and Purchaser, jointly and severally, make the following
representations and warranties to MPAN, MHG and Sellers:
6.1 Organization, Standing and Authority. Each of GHV and Purchaser is
a corporation duly organized, validly existing, and in good standing under the
Laws of its jurisdiction of incorporation. Subject to compliance with applicable
provisions of the Bankruptcy Code, each of GHV and Purchaser has all requisite
corporate power and authority to own, lease, and operate its properties, and to
carry on its business as it is now being conducted. Subject to compliance with
applicable provisions of the Bankruptcy Code and the entry by the Genesis
Bankruptcy Court of the Purchaser's Approval Order, the enforceability of which
is not stayed (i) each of GHV and Purchaser has all requisite corporate power
29
and authority to enter into the transactions contemplated hereby, (ii) the
execution, delivery, and performance of this Agreement by each of GHV and
Purchaser and the consummation by each of them of the transactions contemplated
hereby have been duly authorized by all requisite corporate actions, (iii) this
Agreement has been duly and validly executed and delivered by GHV and Purchaser,
and (iv) (assuming this Agreement constitutes a valid and binding obligation of
MPAN, MHG and Sellers) this Agreement constitutes a valid and binding obligation
of each of GHV and Purchaser enforceable against each of them in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium, and other Laws affecting creditors' rights generally from time to
time in effect. Each of GHV and Purchaser is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the nature of its activities make such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on its
business.
6.2 Transfer of Acquired Assets. At the Closing, and subject to the
entry of the Purchaser's Approval Order by the Genesis Bankruptcy Court, the
enforceability of which is not stayed, Purchaser shall have (i) the cash or cash
equivalents unconditionally available from depositories or other financing
sources to purchase, accept, and assume from Sellers the Acquired Assets and
(ii) the corporate power, right, and authority to fully and timely perform all
duties, responsibilities, and obligations required to be performed by it under
this Agreement at, from, and after the Closing.
6.3 Brokers. No Person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by either GHV or
Purchaser in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of either GHV or Purchaser.
6.4 GHV's Senior Creditors' Steering Committee Approval. GHV has
obtained its Senior Creditors' Steering Committee approval to enter into this
Agreement and carry out its obligations hereunder.
SECTION 7
COVENANTS
7.1 The Mariner Bankruptcy Courts Approvals.
(a) In no event later than the dates required by Sections 7.17(a)
and 7.17(b) hereof, as applicable, MPAN, MHG, and Sellers will file a motion or
motions with the Mariner Bankruptcy Courts requesting the entry by such courts
of (i) the "Bidding Procedures Order" substantially in the form attached at
Schedule 7.1(a)(i) hereto (with such material changes thereto as all Parties
shall approve in writing in their reasonable discretion) and (ii) the Sellers'
Approval Orders substantially in the form attached at Schedule 7.1(a)(ii) hereto
(with such material changes thereto as all Parties shall approve in writing in
their reasonable discretion).
(b) If the Sellers' Approval Orders, the Bidding Procedures Order
or any other orders of the Mariner Bankruptcy Courts relating to this Agreement
shall be appealed by any Person (or a petition for certiorari or motion for
30
rehearing, reconsideration or reargument shall be filed with respect thereto),
MPAN, MHG, and Sellers agree to take all steps as may be commercially reasonable
and appropriate to defend against such appeal, petition, or motion, and GHV and
Purchaser each agrees to cooperate in such efforts. Each Party hereto agrees to
use its commercially reasonable efforts to obtain an expedited resolution of
such appeal, provided that nothing herein shall preclude the Parties hereto from
consummating the transactions contemplated herein if the Bidding Procedures
Order or the Sellers' Approval Orders shall have been entered and not stayed and
Purchaser has waived in writing the requirement that the Sellers' Approval
Orders be Final Orders.
(c) MPAN, MHG, and Sellers shall cooperate reasonably with GHV and
Purchaser and their representatives in connection with the Bidding Procedures
Order, the Sellers' Approval Orders, and the Purchasers' Approval Order. Such
cooperation shall include consulting with GHV and Purchaser at GHV's or
Purchaser's reasonable request concerning the status of such proceedings and
providing GHV and Purchaser with copies of requested pleadings, notices,
proposed orders, and other documents relating to such proceedings as soon as
reasonably practicable in connection with any submission thereof to the Genesis
Bankruptcy Court, Mariner Bankruptcy Courts, the MPAN Bankruptcy Court, or the
MHG Bankruptcy Court, as the case may be.
7.2 The Genesis Bankruptcy Court Approvals.
(a) Subject to the provisions of Section 7.16 hereof, GHV and
Purchaser will file a motion or motions with the Genesis Bankruptcy Court
requesting the entry by such court of the Purchaser's Approval Order
substantially in the form attached at Schedule 7.2(a) hereto (with such material
changes thereto as all Parties shall approve in writing in their reasonable
discretion).
(b) If the Purchaser's Approval Order or any other orders of the
Genesis Bankruptcy Court relating to this Agreement shall be appealed by any
Person (or a petition for certiorari or motion for rehearing, reconsideration,
or reargument shall be filed with respect thereto), GHV and Purchaser each
agrees to take all steps as may be commercially reasonable and appropriate to
defend against such appeal, petition, or motion, and MPAN, MHG, and Sellers
agree to cooperate in such efforts. Each Party hereto agrees to use its
commercially reasonable efforts to obtain an expedited resolution of such
appeal, provided that nothing herein shall preclude the Parties hereto from
consummating the transactions contemplated herein if the Purchaser's Approval
Order shall have been entered and has not been stayed.
(c) GHV and Purchaser shall cooperate reasonably with MPAN, MHG,
and Sellers and their representatives in connection with the Bidding Procedures
Order, the Sellers' Approval Orders, and the Purchaser's Approval Order. Such
cooperation shall include consulting with MPAN, MHG, and Sellers at MPAN's,
MHG's, and Sellers' reasonable request concerning the status of such proceedings
and providing MPAN, MHG, and Sellers with copies of requested pleadings,
notices, proposed orders, and other documents relating to such proceedings as
soon as reasonably practicable in connection with any submission thereof to the
Genesis Bankruptcy Court or the Mariner Bankruptcy Courts, as the case may be.
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7.3 Closing. The Parties shall use commercially reasonable efforts to
consummate the transactions contemplated under this Agreement on the date that
is the last day of the calendar month following the date on which the conditions
precedent to Closing have been satisfied or waived or such other date as the
Parties may agree in writing. In the event of any inconsistency between the
provisions of this Section 7.3 and those of Section 4.1(i) with regard to the
date of Closing, the provisions of this Section 7.3 shall govern.
7.4 Conduct of Business by MPAN, MHG, and Sellers Pending the Closing.
From the date hereof until the Closing, no Seller in respect of the Acquired
Assets shall, other than in the ordinary course of business as currently
conducted under and/or in accordance with the Mariner Bankruptcy Cases (i) enter
into any material customer contract with respect to the Acquired Business which
would have a Material Adverse Effect on the Acquired Business; (ii) sell,
transfer, or otherwise dispose of any material tangible or intangible asset
included in the Acquired Assets; (iii) grant any increase in the compensation or
benefits of any employee who is employed primarily for the conduct of the
Acquired Business; (iv) commit or enter into any agreement to do any of the
foregoing, save, in all cases, with the prior written consent of Purchaser,
which such consent shall not be unreasonably withheld; or (v) without consulting
Purchaser, assign, modify, cancel, reject, fail to exercise a right of renewal
or extension under, or otherwise impair or permit to lapse any Designated
Contract.
7.5 Conduct of Business by Purchaser After the Closing. From and after
the Closing Date and until all Earnout Payments have been paid, and all
objections or issues related thereto have been finally resolved in accordance
with the provisions of Section 2.2(b) of this Agreement, Purchaser will use
commercially reasonable efforts to perform its material obligations under the
Independent Facility Contracts; provided, however, that the foregoing shall not
be construed to limit (i) the ability of Purchaser to terminate any Independent
Facility Contract or Independent Facility Arrangement, or permit any such
contract or arrangement to expire, in each instance in accordance with the terms
and conditions of such contract or arrangement, or (ii) the discretion or right
of Purchaser to make business decisions of any kind with regard to the operation
of the Acquired Business, including the decision to terminate or otherwise cease
operations of the Acquired Business in any location (regardless of whether such
location is subject to one or more Independent Facility Contracts or Independent
Facility Arrangements). Notwithstanding anything to the contrary contained
elsewhere in this Agreement, the sole and exclusive remedy of the Sellers, MPAN
or MHG with regard to a breach of this Section 7.5 by Purchaser, shall be the
remedy in respect of the payment of the Earnout Payments contemplated by Section
2.2(b)(ii)(C) under circumstances where an Independent Facility Contract has
been terminated as a result of a breach of, or default under, such contract by
Purchaser. However, none of Sellers, MPAN or MHG shall be entitled to any
damages or other remedy of any kind as a consequence of a breach of the
provisions of this Section 7.5, unless the conduct constituting a breach of this
Section 7.5 likewise has resulted in the termination of an Independent Facility
Contract due to a breach of, or default under, such contract by Purchaser. This
Section 7.5 shall not restrict the right of MPAN or MHG to pursue remedies for
the breach of any contract between Purchaser or GHV and any MPAN or MHG Facility
or Affiliate thereof.
7.6 Access and Information. MPAN, MHG, and Sellers shall afford to GHV
and Purchaser and GHV's and Purchaser's financial advisors, legal counsel,
accountants, consultants, financing sources, and other authorized
32
representatives) reasonable access during normal business hours throughout the
period prior to the Closing Date to all books, records, properties, and
personnel of MPAN, MHG, and Sellers that pertain to the Acquired Assets and the
Acquired Business and, during such period, shall furnish as promptly as
practicable to GHV and Purchaser any and all such information as GHV and
Purchaser may reasonably request pertaining to the Acquired Assets and the
Acquired Business.
7.7 Notification.
(a) Each Party shall promptly notify the other of any litigation,
arbitration, or administrative proceeding pending or, to the relevant Party's
knowledge, threatened against such Party which challenges or, if adversely
determined, could reasonably be expected to have a Material Adverse Effect on
the Acquired Business or otherwise materially adversely affect the transactions
contemplated hereby.
(b) MPAN, MHG, and Sellers shall promptly provide written notice
to GHV and Purchaser of any material change in any of the information contained
in the representations or warranties made by MPAN, MHG, or Sellers in Section 5
or any of the Schedules attached hereto and shall promptly furnish any
information that GHV or Purchaser may reasonably request in relation to such
change, provided that such notice shall not operate to cure any breach of the
representations and warranties made by MPAN, MHG, or Sellers in Section 5 above
or in any Exhibits or Schedules referred to herein.
7.8 Satisfaction of Conditions. Prior to Closing, each of the Parties
shall use commercially reasonable efforts with due diligence and in good faith
to promptly satisfy all the conditions precedent to Closing set forth in Section
3 above in order to expedite the consummation of the transactions contemplated
hereby.
7.9 Filings. Promptly following the entry of the Bidding Procedures
Order, and to the extent permitted by applicable Law, GHV and Purchaser shall
commence making, and shall diligently pursue thereafter, all requisite filings,
notifications, applications, and requests for all Licenses and other third party
consents and approvals necessary for the consummation of the transactions
contemplated under this Agreement and Purchaser's ownership of the Acquired
Assets and operation of the Acquired Business from and after the Closing
(including all requisite filings, notifications, and applications under the HSR
Act and for participating as a provider in the Medicare, Medicaid, and other
relevant reimbursement programs). GHV and Purchaser shall pay all costs, filing
fees, and other expenses necessary to (i) make all such filings, notifications,
applications, and requests, and (ii) obtain all such Licenses and other third
party consents and approvals. Prior to, at, and after Closing, MPAN, MHG, and
Sellers shall cooperate with GHV and Purchaser (including by providing all
information reasonably requested by GHV and Purchaser) with respect to (i) the
transfer of any transferable Licenses to Purchaser, (ii) Purchaser's
applications for any Licenses not transferable to Purchaser, and (iii) otherwise
with respect to any License, consent, and approval sought or required by GHV and
Purchaser in connection with the consummation of the transactions contemplated
under this Agreement and Purchaser's ownership of the Acquired Assets and
operation of the Acquired Business from and after the Closing; provided,
however, that MPAN's, MHG's, and Sellers' obligations under this Section 7.9
33
shall not include the expenditure of out-of-pocket amounts or the waiver or
modification of any of MPAN's, MHG's, or any Seller's claims against any entity
from which consent or authorization may be sought or required for the
transaction contemplated hereunder. Notwithstanding any provision in this
Agreement to the contrary, Sellers shall have no obligation to transfer any
Medicare, Medicaid, or other provider numbers or any of Sellers' other rights
under any provider or supplier agreements with any Governmental Authority (other
than their National Council for Prescription Drug Programs ("NCPDP") provider
numbers, or rights with respect thereto, if requested by Purchaser), none of
which are to be assigned to Purchaser hereunder.
7.10 Employment Matters.
(a) Except for those employees disclosed in writing by Purchaser
prior to the execution and delivery of this Agreement and set forth on Schedule
7.10(a) which shall be attached to this Agreement on or prior to the Closing
Date (the "Excluded Employees") (it being understood that employment will not be
offered to any such Excluded Employees by Purchaser), Purchaser shall offer
employment to all of the Acquired Business Employees on terms provided by
Purchaser and with each such offer being contingent on completion of the
Closing. Purchaser's obligation to employ such Acquired Business Employees shall
be subject to such employees' compliance with the standard hiring practices of
Purchaser. Each such employee who accepts such employment as of the Closing
shall be referred to herein as a "Transferred Employee." MPAN, MHG, and Sellers
shall not, directly or indirectly, from the date hereof solicit or induce any
Acquired Business Employee (other than the Excluded Employees) to not accept or
to terminate employment with Purchaser. Sellers shall terminate all Transferred
Employees as of the Closing Date and shall pay to such Transferred Employees all
unpaid compensation, as well as all earned benefits to which they are entitled
under Sellers' employment policies and applicable Law. As of the Closing Date,
Sellers shall have paid all contributions which are due and required by the
Benefit Plans and Sellers shall otherwise be compliant in all material respects
with the terms of the Benefit Plans and with applicable Laws.
(b) Purchaser shall treat prior service with Sellers as service
with Purchaser for purposes of eligibility to participate under all employee
benefit plans covering Transferred Employees.
(c) As soon as is practical after the Closing, MPAN, MHG, and
Sellers shall (i) provide such employees an election to rollover their vested
interests to Purchaser's defined contribution retirement plan; and (ii) rollover
the full amount of the vested interests which the employees have elected to
rollover, as soon as possible but not later than 6 months after the Closing
Date, to the accounts of such employees under Purchaser's defined contribution
retirement plan. Purchaser shall have no liability for any discontinuance,
termination or other charges that may be due to any investment option or
management providers or to any plan record keeping or other agents with respect
to such termination and rollover of such employees' interests from Sellers'
retirement plan(s), as the case may be, to Purchaser's retirement plan.
(d) Sellers agree to continue to employ each Excluded Employee for
the period of time following Closing specified on Schedule 7.10(a) (subject to
each such Excluded Employee's consent), during which time Sellers shall direct
each such Excluded Employee, as his or her full-time employment duty, to assist
34
Purchaser in connection with the Acquired Business or otherwise as Purchaser may
reasonably direct. For the period of time following Closing specified on
Schedule 7.10(a), Purchaser shall reimburse Sellers for the salary and
out-of-pocket expenses authorized by Purchaser, and the Transition Support
Benefits (as specified in Schedule 7.10(a)) of each such Excluded Employee and
Sellers shall be responsible for all other employment-related costs of each such
Excluded Employee, including benefits and severance compensation (if any).
(e) Purchaser agrees to offer to each Transferred Employee (i)
employment for a period of at least 60 days (subject to termination of any
Transferred Employee by Purchaser for cause), (ii) salary that is no less than
85% of his or her current salary, and (iii) work at a primary location that is
not more than 25 miles from the Transferred Employee's current primary location
of employment (subject to work related travel). If Purchaser breaches any of its
covenants in the preceding sentence of this Section 7.10(e), and, solely as a
consequence of such breach, Sellers incur liability to any Transferred Employees
for severance pay, Purchaser and GHV shall reimburse Sellers for payments made
to any Transferred Employee in respect of such severance pay; provided, however,
that the reimbursement amount shall not exceed an amount equal to 3 months of
such Transferred Employee's salary. Notwithstanding anything to the contrary
contained elsewhere in this Agreement, the sole and exclusive remedy for a
breach by Purchaser of this Section 7.10(e) shall be the reimbursement provided
for in the preceding sentence. Nothing in this Section 7.10(e) shall, however,
create any rights in favor of any Person not a party hereto, including employees
of the Acquired Business, or constitute an employment agreement or condition of
employment for any employee of the Acquired Business who is a Transferred
Employee.
7.11 Additional Matters and Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each of
the Parties agrees to use commercially reasonable efforts to consummate the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, from and after the date hereof, MPAN, MHG, and Sellers shall use
commercially reasonable efforts to obtain all consents and approvals to the
assignment of the Designated Contracts to which any Seller is a party which may
not be assigned to Purchaser under applicable provisions of the Bankruptcy Code
without the consent or approval of the other party thereto.
(b) In addition to the provisions of this Agreement, from time to
time after the Closing Date, the Parties will use commercially reasonable
efforts to execute and deliver such other instruments of conveyance, transfer or
assumption, as the case may be, and take such other actions as may be reasonably
requested to implement more effectively, the conveyance, transfer and operation,
as applicable, of the Acquired Assets and Acquired Business to or by Purchaser.
In connection with the foregoing, for a period not to exceed 120 days following
the Closing Date, MPAN, MHG, and Sellers shall (i) to the extent permitted by
Sellers' PeopleSoft agreements, allow GHV and Purchaser reasonable access, upon
reasonable advance written notice and during normal business hours, to data and
information included within MPAN's, MHG's, and Sellers' PeopleSoft system in
order to provide for a smooth transition of the appropriate data and information
to GHV's and Purchaser's PeopleSoft system in connection with Purchaser's
acquisition of the Acquired Business and (ii) to the extent permitted by the MCI
Agreements, allow GHV and Purchaser to use the services provided under the MCI
35
Agreements in connection with the Acquired Business and reasonably cooperate
with GHV and Purchaser with respect to the segregation of the Acquired Business
from (y) the MCI WorldCom Network Service Agreement for Data Services dated
December 14, 2000 between MPAN and MCI Worldcom ("MCI"), and (z) the MCI
WorldCom Network Service Agreement for Voice Services dated December 14, 2000
between MPAN and MCI (collectively, the "MCI Agreements"); provided, however,
that in the event MPAN, MHG, or any Seller incurs any costs, expenses, or
liabilities solely for the benefit of Purchaser with respect to the foregoing,
and GHV and Purchaser are the exclusive beneficiaries of such costs, expenses
and liabilities, GHV and Purchaser shall timely reimburse MPAN, MHG, and said
Seller upon request for the full amount of all such costs, expenses, or
liabilities.
(c) As an accommodation to Sellers following the Closing, and at
no cost to Sellers, Purchaser shall direct and permit the relevant Transferred
Employees to assist Sellers in connection with the closing of their books with
respect to the last full calendar month immediately preceding the Closing.
Sellers acknowledge and agree that the closing of their books will be in
accordance with their reasonable and customary past practices. Sellers further
acknowledge and agree that, in light of Purchaser's willingness to accommodate
Sellers' needs with regard to the closing of their books, none of Purchaser, any
of its Affiliates, or any of their respective directors, officers, or employees
(including the Transferred Employees) shall have any Liability for any acts or
omissions of the Transferred Employees in connection with the services to be
provided pursuant to this Section 7.11(c).
(d) The Parties shall cooperate and take such actions as may be
reasonably requested by the other in order to effect an orderly transfer of the
Acquired Business with a minimum of disruption to the operations and employees
of the businesses of the Parties.
7.12 Maintenance of Books and Records. Sellers and Purchaser shall
preserve in accordance with the applicable record keeping requirements and
regulations of the FDA, the DEA and state pharmacy boards in jurisdictions in
which any of the Sellers and the Purchaser conduct business (or, with respect to
any Seller, until such time as such Seller is liquidated) all records possessed
by such Party relating to the Acquired Business prior to and continuing after
the Closing Date until the later of (i) the end of all applicable time periods
required by Law or (ii) the date upon which all Earnout Payments have been paid,
and all objections or issues related thereto have been finally resolved in
accordance with the provisions of Section 2.2(b) of this Agreement. After the
Closing Date, where there is a legitimate purpose and subject to compliance with
applicable Law, including patient confidentiality Laws, each Party shall provide
the other Party with access during regular business hours, upon prior reasonable
written request specifying the need therefor, to (y) the relevant officers and
employees of such Party and (z) the books of account and records of such Party.
In each case, such access shall be limited to matters relating to the Acquired
Business prior to and after the Closing Date and, if permitted by applicable
law, the Party and its representatives seeking access to such books and records
shall have the right to make copies thereof. The foregoing right of access shall
not be exercisable in such a manner as to interfere unreasonably with the normal
operations and business of the Party with possession of the records, and with
regard to such information constituting trade secrets or confidential business
information of such Party the provisions of Section 7.13 shall apply. Such
records may nevertheless be destroyed by a Party if such Party sends the other
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Party written notice of its intent to destroy records, specifying with
reasonable particularity the contents of the records to be destroyed. Such
records may then be destroyed after the 30th day following delivery of such
notice unless the other Party objects to the destruction, in which case the
Party seeking to destroy the records shall either agree to retain such records
or to deliver such records to the objecting Party. At no cost to Sellers,
Purchaser shall reasonably cooperate with Sellers, including providing access to
books and records acquired from Sellers, as needed in connection with Sellers'
reconciliation and resolution of any and all pre-Closing claims asserted by
third-party claimants against Sellers in connection with the Mariner Bankruptcy
Cases or otherwise.
7.13 Confidentiality.
(a) All information relating to MPAN, MHG, and Sellers and the
Acquired Business and Acquired Assets obtained prior to the Closing by GHV and
Purchaser and their financial advisors, legal counsel, accountants, consultants,
financing sources, and other authorized representatives or otherwise in
connection with the transactions contemplated hereby shall be kept confidential
by GHV and Purchaser for a period of 3 years following the Closing Date;
provided, however, that the foregoing shall not apply to (i) any information
generally available to the public on the date hereof or which becomes generally
available to the public through no fault of GHV or Purchaser, but only from and
after the date such information becomes so available, (ii) any information
obtained by GHV or Purchaser from a third party which GHV or Purchaser has no
reason to believe is violating any obligation of confidentiality to MPAN, MHG,
or any Seller, (iii) any information not first given to GHV or Purchaser by
MPAN, MHG, or any Seller, or their agents, that was known to GHV or Purchaser as
of the date of this Agreement or developed independently by them after the date
hereof, or (iv) any information GHV or Purchaser is required by law to disclose;
and provided, further, that GHV and Purchaser shall have no obligation with
respect to, or be restricted in its use of, any such information after the
Closing with respect to the Acquired Business and the Acquired Assets. In the
event no Closing occurs and this Agreement shall have terminated or expired by
its terms, upon the request of MPAN, MHG, or any Seller, GHV and Purchaser shall
promptly return all such written information, and all copies thereof, to MPAN,
MHG, and Sellers, and destroy all summaries and analyses prepared by GHV and
Purchaser containing any such information and provide to MPAN, MHG, and Sellers
written certification of such destruction. Notwithstanding the foregoing, this
Section 7.13(a) shall not in any way limit the disclosure of information by GHV
or Purchaser to the extent reasonably required in connection with the efforts to
obtain entry of the Bidding Procedures Order, the Sellers' Approval Orders, the
Purchasers' Approval Order, and any other orders related to the consummation of
the transactions contemplated by this Agreement. Until GHV and Purchaser are
selected as the successful offeror, without the written consent of MPAN, MHG,
and Sellers, GHV and Purchaser shall not initiate communications with any
customer and/or supplier to the Acquired Business principally in respect of the
Acquired Business. As soon as practicable, MPAN, MHG, Sellers, GHV, and
Purchaser shall, in good faith, agree upon a reasonable plan for communication
with customers and suppliers, and shall promptly put such plan into operation.
(b) All information relating to GHV and Purchaser and their
respective business, finances, and operations obtained prior to the Closing by
MPAN, MHG, and Sellers and their financial advisors, legal counsel, accountants,
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consultants, financing sources, and other authorized representatives or
otherwise in connection with the transactions contemplated hereby shall be kept
confidential by MPAN, MHG, and Sellers for a period of 3 years following the
Closing Date; provided, however, that the foregoing shall not apply to (i) any
information generally available to the public on the date hereof or which
becomes generally available to the public through no fault of MPAN, MHG, or any
Seller, but only from and after the date such information becomes so available,
(ii) any information obtained by MPAN, MHG, or any Seller from a third party
which MPAN, MHG, or such Seller has no reason to believe is violating any
obligation of confidentiality to GHV or Purchaser, (iii) any information not
first given to MPAN, MHG, or any Seller by GHV or Purchaser, or their agents,
that was known to MPAN, MHG, or such Seller as of the date of this Agreement or
developed independently by them after the date hereof, or (iv) any information
MPAN, MHG, or any Seller is required by law to disclose. In the event no Closing
occurs and this Agreement shall have terminated or expired by its terms, upon
the request of GHV and Purchaser, MPAN, MHG, and Sellers shall promptly return
all such written information, and all copies thereof, to GHV and Purchaser, and
destroy all summaries and analyses prepared by MPAN, MHG, and Sellers containing
any such information and provide to GHV and Purchaser written certification of
such destruction. Notwithstanding the foregoing, this Section 7.13(b) shall not
in any way limit the disclosure of information by MPAN, MHG, and Sellers to the
extent reasonably required in connection with the efforts to obtain entry of the
Bidding Procedures Order, the Sellers' Approval Orders, the Purchasers' Approval
Order, and any other orders related to the consummation of the transactions
contemplated by this Agreement.
(c) The Parties agree to comply with applicable state and federal
laws and regulations relating to the security, protection and privacy of
individually identifiable health care information, including the Health
Insurance Portability and Accountability Act of 1996 and regulations promulgated
thereunder, as they may be amended from time to time.
7.14 Further Solicitations. GHV, Purchaser, MPAN, MHG, and Sellers
acknowledge that the officers and directors of MPAN, MHG, and Sellers have
fiduciary duties under applicable Law to realize the highest and best offer for
the assets and business of Sellers. Subject to the fiduciary duties and
responsibilities of MPAN, MHG, and Sellers and their respective officers and
directors under applicable Law, including applicable bankruptcy law, MPAN, MHG,
and Sellers have entered into this Agreement and agree further that (i) until
the Bidding Procedures Order is entered by the Mariner Bankruptcy Courts, MPAN,
MHG, and Sellers will not initiate, solicit, entertain or knowingly encourage
other acquisition proposals (other than any act which might be interpreted as
such, arising from, or in connection with, filings by MPAN, MHG, and Sellers in
the Mariner Bankruptcy Courts regarding the Bidding Procedures Order or the
Sellers' Approval Orders or other necessary filings therein); (ii) on entry of
the Bidding Procedures Order and until entry of the Sellers' Approval Orders,
MPAN, MHG, and Sellers retain the rights to entertain unsolicited competing
offers, including the right to (A) furnish information to, cooperate with, and
facilitate offers from, unsolicited competing bidders, (B) negotiate definitive
documents and purchase agreements on terms substantially similar to those of
this Agreement with unsolicited competitive bidders, as contemplated by the
Bidding Procedures Order, and (C) determine in their sole and absolute
discretion, consistent with the Bidding Procedures Order, which bid, if any, to
recommend to the Mariner Bankruptcy Courts for approval; and (iii) on entry of
the Sellers' Approval Orders authorizing the sale of the Acquired Assets and
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Acquired Business to Purchaser, MPAN, MHG, and Sellers will not solicit,
initiate, entertain, knowingly encourage, or engage in any substantive
discussions with any other Person regarding the proposed sale of the Acquired
Assets or the Acquired Business other than with Purchaser and GHV.
7.15 Restriction on Use of Names. From and after the Closing,
Sellers shall retain the limited right to use the names of Sellers only in
connection with (i) the Mariner Bankruptcy Cases, (ii) the application for, and
approval of, new names under Sellers' Licenses with respect to the Excluded
Medicare Part B Business and Assets and the ownership and operation of the
Excluded Part B Business and Assets until the approval of new names under
Sellers' Licenses with respect thereto, and (iii) any necessary or appropriate
filings or submissions with any Governmental Authority, including Tax Returns
and corporate filings and reports. Sellers' limited right to use the names of
Sellers shall terminate no later than upon the later to occur of (y) the
completion of (i) and (ii) above, and (z) the date that is 180 days after the
Closing Date. Immediately upon the termination of Sellers' limited right to use
the names of Sellers pursuant to the preceding sentence, Sellers covenant and
agree to cease use of all of the names of Sellers and any variations thereof
(including all corporate names, fictitious names, product names and service
names) and to file proper amendments to each of the Sellers' articles or
certificates of incorporation changing each Seller's corporate name to a name
that is not similar to any of Sellers' corporate names, fictitious names or any
variations thereof. Sellers covenant and agree that upon Purchaser's request,
Sellers shall promptly sign all consents and other documents that may be
necessary to allow Purchaser to use any name used by any Seller at any time on
or before the Closing Date.
7.16 Purchaser's Submission to the Genesis Bankruptcy Court. If
the plan of reorganization filed by GHV and Purchaser with the Genesis
Bankruptcy Court (the "Genesis Plan of Reorganization") shall have become
effective prior to November 2, 2001, then GHV and Purchaser shall no longer be
obligated to pursue the approval or otherwise obtain entry of the Purchaser's
Approval Order, as contemplated elsewhere in this Agreement, and such
requirement shall be of no further force or effect. The Parties agree to
cooperate with each other for the purpose of preparing and executing any
modifications to this Agreement or any other documents that may be required as a
consequence of the occurrence of the effective date of the Genesis Plan of
Reorganization, including re-execution and delivery of this Agreement by
revested GHV and Purchaser and obtaining all other necessary third party
consents and approvals. Notwithstanding the foregoing, if the Genesis Plan of
Reorganization has not become effective by the date which is the latest date on
which motions can be filed (and notices served) for purposes of obtaining a
hearing before the Genesis Bankruptcy Court on the Purchaser's Approval Order on
November 2, 2001, then GHV and Purchaser shall file and serve the necessary and
appropriate motions on or before such latest date, and request the November 2,
2001 hearing date. Under such circumstances and subject to the Genesis Plan of
Reorganization not becoming effective on or prior to November 8, 2001, GHV and
Purchaser shall have obtained the Genesis Bankruptcy Court's entry of the
Purchaser's Approval Order by November 8, 2001.
7.17 MPAN's, MHG's, and Sellers' Submissions to the Mariner Bankruptcy
Courts.
(a) MPAN, MHG, and Sellers shall file motions necessary and
appropriate, and request a hearing date not later than October 15, 2001, in
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order to obtain the entry of the Bidding Procedures Order by the MPAN Bankruptcy
Court and the MHG Bankruptcy Court, respectively. MPAN, MHG, and Sellers shall
have obtained their respective Bankruptcy Court's entry of the Bidding
Procedures Order by November 9, 2001.
(b) MPAN, MHG, and Sellers shall submit the Sellers' Approval
Orders to the Mariner Bankruptcy Courts for approval not later than the later to
occur of (i) 10 days after the Purchaser's Approval Order (if required by the
terms of this Agreement) becomes a Final Order or (ii) 5 days after the entry of
the Bidding Procedures Order. MPAN, MHG, and Sellers shall have obtained entry
by the Mariner Bankruptcy Courts of the Sellers' Approval Orders by December 24,
2001.
7.18 Restriction on Acceptance of Other Offers. MPAN, MHG, and Sellers
shall not accept a competing offer except in accordance with the bidding
procedures set forth in the Bidding Procedures Order (the "Bidding Procedures").
7.19 Option to Sublicense Compuaims Medicare Part B Billing Software.
At any time after the Closing, upon the written request of any Seller and to the
extent legally permissible, for a fee of $1.00 per annum, Purchaser shall grant
to such Seller a non-exclusive sublicense to use the Compuaims Medicare Part B
Billing Software. Upon exercise of the foregoing option, Purchaser and such
Seller shall negotiate in good faith to reach a mutually acceptable form of
sublicense agreement.
7.20 Management Agreements.
(a) If on or prior to Closing any Pharmacy License is not obtained
with respect to Purchaser's operation of the Acquired Business at any particular
location or within any particular jurisdiction (the "Unlicensed Business
Location"), then, in such event and assuming the satisfaction or waiver of all
other conditions to Closing pending receipt of the applicable Pharmacy
License(s) with respect to each Unlicensed Business Location each applicable
Seller and Purchaser shall enter into a management agreement in the form
attached at Schedule 7.20 hereto (the "Management Agreement") with respect to
such Unlicensed Business Location.
(b) MPAN, MHG and Sellers covenant and agree that they will cure,
correct and/or remove (and pay all direct expenses, including those in the
nature of fines and penalties, associated with or related to such cure,
correction or removal) all deficiencies or impediments that must be corrected or
removed as a condition to the issuance of the Pharmacy Licenses required for
Purchaser's operation of the Acquired Business from and after the Closing to the
extent that such deficiencies or impediments (i) relate to a Seller's or
Sellers' ownership or operation of a pharmacy and (ii) are disclosed in writing
by a member, representative or employee of a Governmental Authority having
authority to issue a Pharmacy License (the impediments and deficiencies
described above are herein individually referred to as a "Deficiency" and
collectively referred to as "Deficiencies", and the expenses associated with the
cure and/or correction thereof are referred to herein as the "Deficiency
Expenses"). MPAN, MHG and Sellers additionally covenant and agree to promptly
pay all Deficiency Expenses, it being understood that MPAN's, MHG's and Sellers'
payment obligations hereunder (i) shall not enjoy the protection of the
Threshold contemplated by Section 9.6 hereof, (ii) shall be paid in cash when
due including promptly when required as a condition to the issuance of a License
to Purchaser, and (iii) Purchaser's remedies with respect to any failure of
MPAN, MHG and/or Sellers to satisfy their respective obligations under this
Section 7.20(b) shall not be limited to the set off against the Earnout Payments
contemplated by Section 9.5 hereof.
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7.21 Use of Service Mark. Purchaser and GHV shall have a period of one
year from and after the Closing to (i) dispose of all stationary and marketing
and other materials in their possession bearing the service mark depicted at
Schedule 7.21 hereto (the "Service Mark"), (ii) remove such Service Mark from
all motor vehicles included in the Acquired Assets, and (iii) remove such
Service Mark from all signage at locations at which Purchaser operates the
Acquired Business from and after the Closing. Purchaser shall not use the
Service Mark in connection with the creation of any new materials. At the
expiration of the one year period mentioned above, Purchaser shall cease all use
of the Service Mark or anything confusingly similar to the Service Mark.
SECTION 8
TERMINATION
8.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written consent of all Parties;
(b) by either MPAN, MHG, and Sellers, collectively, or by GHV and
Purchaser, collectively (provided that any of the Parties seeking termination is
not then in material breach of any provision of this Agreement):
(i) if the Closing has not occurred on or prior to the
earlier of (A) the latest Closing Date permitted by Sections 4.1 and 7.3 hereof,
and (B) March 31, 2002 unless otherwise agreed by the Parties in writing;
(ii) if a Governmental Authority shall have issued an order,
decree or ruling or taken any other action (which order, decree or ruling the
Parties hereto shall use their commercially reasonable efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; or
(iii) if the Mariner Bankruptcy Courts approve a higher and
better offer in accordance with the Bidding Procedures.
(c) by GHV and Purchaser (provided that neither GHV nor Purchaser
is then in material breach of any provision of this Agreement):
(i) if (x) the Bidding Procedures Order shall not have been
entered by November 9, 2001 (provided however, that if GHV or Purchaser shall
not have exercised this termination right prior to the entry of the Bidding
Procedures Order, then this termination right shall be deemed waived and shall
no longer be exercisable by GHV or Purchaser), or (y) either of the Sellers'
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Approval Orders has not become a Final Order by January 31, 2001 (provided
however, that if GHV or Purchaser shall not have exercised this termination
right prior to all of the Sellers' Approval Orders becoming Final Orders, then
this termination right shall be deemed waived and shall no longer be exercisable
by GHV or Purchaser);
(ii) if a material default or a material breach shall be made
by MHG, MPAN, or any Seller with respect to the performance of any of their
covenants or agreements contained herein, or if any of their representations or
warranties contained in this Agreement shall have been inaccurate in any
material respect as of the date of this Agreement, if such material default,
breach or inaccuracy has not been cured (if capable of being cured) or waived
within 30 days after written notice to MHG, MPAN, and Sellers specifying, in
reasonable detail, such claimed default, breach or inaccuracy and demanding its
cure or satisfaction and such default, breach or misrepresentation would, if not
cured, have a Material Adverse Effect on the Acquired Business or would
materially and adversely affect the Acquired Assets, provided that if and to the
extent that a misrepresentation consists of the failure to provide information
relative to certain facts, circumstances or matters, the provision of the
information in question shall not constitute cure if the facts, circumstances or
matters previously undisclosed, individually or in the aggregate, would have a
Material Adverse Effect on the Acquired Business or would materially and
adversely affect the Acquired Assets;
(iii) if any of the conditions set forth in Section 3.1 shall
have become incapable of fulfillment or cure and shall not have been waived by
GHV and Purchaser (provided GHV and Purchaser shall have provided written notice
to Sellers specifying, in reasonable detail, the basis for the decision to
terminate);
(iv) if any of the conditions set forth in Section 3.3 shall
have become incapable of fulfillment or cure and shall not have been waived by
GHV and Purchaser (provided GHV and Purchaser shall have provided written notice
to Sellers specifying, in reasonable detail, the basis for the decision to
terminate); or
(v) if (A) the Bidding Procedures Order is modified or amended
without GHV's and Purchaser's consent, which consent shall not be unreasonably
withheld or delayed, and (1) such modification or amendment (a) is materially
adverse to Purchaser, or (b) makes any change to Paragraph 3 of the Bidding
Procedures Order which is adverse in any respect to GHV and Purchaser, and (2)
either the Sellers have not (a) acted in good faith or (b) used reasonable best
efforts to oppose such modification or amendment, or (B) the successful offeror
is not approved pursuant to a hearing or hearings before the Mariner Bankruptcy
Courts on or before December 31, 2001, and either the Sellers have not (a) acted
in good faith or (b) used reasonable best efforts to cause such approval to
occur before such date; provided, however, that if GHV or Purchaser shall not
have exercised this termination right prior to the approval of the successful
offeror pursuant to a hearing or hearings before the Mariner Bankruptcy Courts,
then this termination right pursuant to this Section 8.1(c)(v)(B) shall be
deemed waived and shall no longer be exercisable by GHV or Purchaser.
(d) by MPAN, MHG, and Sellers, collectively (provided that none of
them is then in material breach of any provision of this Agreement):
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(i) if a material default or material breach shall be made by
GHV or Purchaser with respect to the performance of any of their respective
covenants or agreements contained herein or if any of their respective
representations or warranties contained in this Agreement shall have been
inaccurate in any material respect as of the date of this Agreement, if such
default, breach, or inaccuracy has not been cured (if capable of being cured) or
waived within 30 days after written notice to GHV or Purchaser (as applicable)
specifying in reasonable detail such claimed default, breach or inaccuracy and
demanding its cure or satisfaction and such default, breach or misrepresentation
would, if not cured, have a Material Adverse Effect on the Sellers, provided
that if and to the extent that a misrepresentation consists of the failure to
provide information relative to certain facts, circumstances or matters, the
provision of the information in question shall not constitute cure if the facts,
circumstances or matters previously undisclosed, individually or in the
aggregate, would have a Material Adverse Effect on the Sellers;
(ii) if any of the conditions set forth in Sections 3.1 shall
have become incapable of fulfillment or cure and shall not have been waived by
MPAN, MHG, or any Seller (provided MPAN, MHG and Sellers shall have provided
written notice to GHV and Purchaser specifying, in reasonable detail, the basis
for the decision to terminate);
(iii) if any of the conditions set forth in Section 3.2 shall
have become incapable of fulfillment or cure and shall not have been waived by
MPAN, MHG, or any Seller (provided MPAN, MHG and Sellers shall have provided
written notice to GHV and Purchaser specifying, in reasonable detail, the basis
for the decision to terminate); or
(iv) if the Purchaser's Approval Order, to the extent required
by the terms of this Agreement, shall not have been entered by November 8, 2001
(provided however, that if MPAN, MHG, and Sellers shall not have exercised this
termination right prior to the entry of the Purchaser's Approval Order, then
this termination right shall be deemed waived and shall no longer be exercisable
by MPAN, MHG, and Sellers).
8.2 Termination Payments.
(a) If this Agreement is terminated (i) by MPAN, MHG, or Sellers
other than as permitted in this Agreement, (ii) or by GHV and Purchaser pursuant
to Section 8.1(c)(ii) or Section 8.1(c)(v), then MPAN, MHG, and Sellers, jointly
and severally, shall forthwith pay Purchaser, in cash, an amount equal to
$1,700,000 as liquidated damages, and the payment of such liquidated damages
shall constitute full discharge of any liability of MPAN, MHG, and Sellers
pursuant to this Agreement. The Parties acknowledge and agree that the damages
which GHV and Purchaser would suffer upon any such termination of this Agreement
as described in clauses (i) and (ii) above would be difficult to calculate, and
that the foregoing liquidated damages amount represents the Parties' reasonable
estimate of the actual damages that would be incurred by GHV and Purchaser in
the event of any such termination.
(b) If this Agreement is terminated pursuant to Section
8.1(b)(iii), Purchaser shall hold open as a back-up bid the offer contained in
this Agreement (the "Back-Up Offer") for a period of 60 days following the date
of the entry of the order(s) by the Mariner Bankruptcy Courts authorizing a sale
to the successful offeror other than Purchaser (the "Overbid Approval Order").
43
The Back-Up Offer shall be on, and pursuant to, the terms and conditions set
forth in this Agreement and there shall be no increase in the Purchase Price as
a result of any additional bids by Purchaser at the time of the hearing on
MPAN's, MHG's and Sellers' motions to approve the Sellers' Approval Order (the
"Sale Hearing"). The Back-Up Offer may be accepted by MPAN, MHG and Sellers
within such 60 day period by (i) terminating the sale contract with the
successful offeror in accordance with its terms, (ii) providing to Purchaser
written acceptance of the Back-Up Offer, and (iii) filing pleadings with the
Mariner Bankruptcy Courts to confirm the sale to Purchaser pursuant to the
Back-Up Offer in accordance with this Agreement. The Purchaser's Expenses shall
be paid by Sellers to Purchaser promptly upon entry of the Overbid Approval
Order, and the Break-Up Fee shall be paid by Sellers to Purchaser upon
expiration of the 60 day period following entry of the Overbid Approval Order
unless MPAN, MHG and Sellers have by that date accepted Purchaser's Back-Up
Offer, in which case the aggregate amount of the Purchaser's Expenses therefore
paid to Purchaser shall be returned by Purchaser to Sellers upon, and shall be a
condition precedent under Section 3.2 of this Agreement, to the Closing
hereunder. In the event Purchaser's Back-Up Offer is accepted by MPAN, MHG and
Sellers as provided above, all deadlines and references to time periods in this
Agreement shall be adjusted or extended, as appropriate, by that number of days
which is equal to (i) 30 days, plus (ii) the number of days commencing on the
day following the date of the entry of the Overbid Approval Order and ending on
the date of the entry of the order(s) by the Mariner Bankruptcy Courts
confirming the sale to Purchasers, but in no event shall any such period of
adjustment or extension exceed 60 days.
(c) If this Agreement is terminated (i) by GHV or Purchaser other
than as permitted in this Agreement, or (ii) by MPAN, MHG, and Sellers,
collectively, pursuant to Section 8.1(d)(i), then Sellers shall be entitled to
pursue their available legal remedies against GHV and Purchaser. GHV and/or
Purchaser shall pay to Sellers the amount of Sellers' damages arising out of the
conduct of GHV and/or Purchaser described in Section 8.2(c)(i) and 8.2(c)(ii),
as proven and established by Sellers in a proceeding at law; provided, however,
that in no event shall Purchaser and/or GHV be liable for damages which, in the
aggregate, exceed the amount obtained by subtracting the amount of Purchaser's
and GHV's documented legal fees related to this Agreement and the transactions
contemplated hereby from $10,000,000. The payment of such damages shall
constitute full discharge of any liability of GHV and Purchaser pursuant to this
Agreement.
(d) If this Agreement is terminated pursuant to Section 8.1 for
any reason other than those specified in Sections 8.2(a), (b) and (c) above, no
Party shall be entitled to any payment hereunder and each Party shall bear its
own costs and expenses.
8.3 Procedure and Effect of Termination.
(a) If this Agreement is terminated by MHG, MPAN, and Sellers, or
by GHV and Purchaser, under Section 8.1, written notice thereof shall forthwith
be given by the terminating Parties to the other Parties to this Agreement and
this Agreement shall terminate (subject to the provisions of Section 8.2 and
this Section 8.3) and the transactions contemplated hereby shall be abandoned
without further action by any of the Parties hereto.
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(b) If this Agreement is terminated as provided herein, then the
Parties shall be released from future performance and no Party hereto shall have
any liability or further obligation to any other Party resulting from such
termination under this Agreement or otherwise except (x) any Party entitled to
the payment of any sum, expense reimbursement or the Break-Up Fee pursuant to
this Section 8 shall be entitled to enforce such obligation; and (y) Sections
7.13, 9 and 10 shall survive such termination.
SECTION 9
INDEMNIFICATION
9.1 MPAN's, MHG's, and Sellers' Obligation to Indemnify. MPAN and the
MPAN Sellers jointly and severally with respect to MPAN and the MPAN Sellers,
and MHG and the MHG Sellers jointly and severally with respect to MHG and the
MHG Sellers, shall indemnify, defend, and hold harmless GHV and Purchaser (and
their successors, assigns, directors, officers, and Affiliates) (the "Purchaser
Indemnitees") from and against any and all actions, suits, claims, demands,
Liabilities, losses, damages, costs and expenses including reasonable attorneys'
fees and court costs (collectively, "Losses") arising out of or caused by,
directly or indirectly, any or all of the following:
(a) Any misrepresentation, breach or failure of any warranty,
representation, or certification made by MHG or any MHG Seller in this Agreement
or pursuant hereto;
(b) Any misrepresentation, breach or failure of any warranty,
representation, or certification made by MPAN or any MPAN Seller in this
Agreement or pursuant hereto;
(c) Any Liability of MHG or any MHG Seller in connection with the
Excluded Liabilities;
(d) Any Liability of MPAN or any MPAN Seller in connection with
the Excluded Liabilities;
(e) Any failure or refusal by any of MHG, any MHG Seller or any
Selling Affiliate of MHG to satisfy or perform any term, covenant or condition
of this Agreement to be satisfied or performed by one or more of them;
(f) Any failure or refusal by any of MPAN, any MPAN Seller or any
Selling Affiliate of MPAN to satisfy or perform any term, covenant or condition
of this Agreement to be satisfied or performed by one or more of them; and
(g) Any defense, right of set off or right of recoupment of a
Governmental Authority with respect to the Government Payment Program Proceeds
included in the Acquired Assets (or with respect to the accounts receivable that
underlie such Government Payment Program Proceeds) as a consequence of any act
or omission of the Sellers.
9.2 GHV's and Purchaser's Obligation to Indemnify. GHV and Purchaser
shall, jointly and severally, indemnify and hold harmless MPAN, MHG, and Sellers
(and their successors, assigns, directors, officers, and Affiliates) (the
"Sellers' Indemnitees") from and against any and all Losses arising out of or
caused by, directly or indirectly, any or all of the following:
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(a) Any misrepresentation, breach, or failure of any warranty,
representation, or certification made by GHV or Purchaser in this Agreement or
pursuant hereto;
(b) Any Liability in connection with the Assumed Liabilities; and
(c) Any failure or refusal by GHV or Purchaser to satisfy or
perform any term, covenant, or condition of this Agreement to be satisfied or
performed by GHV or Purchaser.
9.3 Notice to Indemnifying Party. If any Party (the "Indemnitee")
receives notice of any claim, occurrence or matter ("Indemnification Matter")
with respect to which any other Party (or Parties) is obligated to provide
indemnification (collectively, the "Indemnifying Party") pursuant to Section 9.1
or Section 9.2, the Indemnitee shall promptly give written notice thereof (the
"Indemnification Notice") to the Indemnifying Party (including supporting
documentation, if any). Such notice shall be a condition precedent to any
Liability of the Indemnifying Party under the provisions for indemnification
contained in this Agreement. Except as provided below, the Indemnifying Party
may compromise, settle or defend, at such Indemnifying Party's own expense and
by such Indemnifying Party's own counsel, any such matter involving the asserted
Liability of the Indemnitee. In any event, the Indemnitee, the Indemnifying
Party and the Indemnifying Party's counsel, as the case may be, shall cooperate
in the compromise of, settlement or defense against, any such asserted
Liability. The Indemnifying Party shall defend and control the defense of any
asserted Liability. The Indemnitee may participate, at its own cost, in the
compromise, settlement or defense of any such asserted Liability with counsel of
its own choosing. Moreover, if the Indemnifying Party fails to assume the
defense of any such matter, the Indemnitee may defend (and control the defense
of) such matter with counsel of its own choosing at the sole cost and expense of
the Indemnifying Party. In connection with the Indemnifying Party's defense of
any claim, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense.
9.4 Time Limitations. With respect to any Indemnification Matter under
this Section 9, the Indemnifying Party shall have no Liability unless the
Indemnitee gives an Indemnification Notice by the date which is the later of (i)
the date by which the last of the Earnout Payments is scheduled to be paid, and
(ii) the date that the last of any disputes regarding the Earnout Payments has
been finally resolved in accordance with the provisions of this Agreement.
Notwithstanding the preceding sentence, with respect to any Indemnification
Matter involving intentional misrepresentation or fraud or the failure of
Sellers to remit accounts receivable or Government Payment Program Proceeds
pursuant to Section 2.10 hereof, there shall be no such time limitation with
respect to the Indemnification Notice or the Indemnifying Party's obligations to
indemnify the Indemnitee.
9.5 Set off as Exclusive Remedy. Other than with respect to
Indemnification Matters involving intentional misrepresentation or fraud of
Sellers, the failure of Sellers to remit accounts receivable or Government
46
Payment Program Proceeds pursuant to Section 2.10 hereof, Sellers' cure and
correction of Deficiencies, or the payment of, the Deficiency Expenses pursuant
to Section 7.20(b) hereof, the sole source of recovery for Losses for which
Purchaser Indemnitees are entitled to indemnification hereunder shall be to set
off such Losses against any and all monies owed to Sellers by Purchaser in
respect of the unpaid Earnout Payments. Purchaser Indemnitees may set off all
such Losses against the unpaid Earnout Payments without regard to the portion of
such Losses for which any of MPAN, the MPAN Sellers, MHG or the MHG Sellers is
responsible; provided, however, that the total amount of such Losses which
Purchaser shall be entitled to set off against unpaid Earnout Payments shall in
no event exceed (i) $18,000,000 for claims made from and after the Closing Date
to the first anniversary of the Closing Date, (ii) $12,000,000 for claims made
from and after the first anniversary of the Closing Date to the second
anniversary of the Closing Date, and (iii) $6,000,000 for claims made from and
after the second anniversary of the Closing Date until the third anniversary of
the Closing Date. With respect to Losses arising out of (i) the intentional
misrepresentation or fraud of MPAN, MHG or Sellers, or (ii) the failure of
Sellers to remit accounts receivable or Government Payment Program Proceeds
pursuant to Section 2.10 hereof, in each such instance that are not set off
against Earnout Payments, the Purchaser Indemnitees acknowledge that they can
only recover Losses from MPAN and the MPAN Sellers, jointly and severally, and
MHG and the MHG Sellers, jointly and severally, as to their respective
obligations in respect of such Losses. To the extent the invalidity,
unenforceability or termination of an Independent Facility Contract results in
Losses for which the Purchaser Indemnitees would be entitled to indemnification
hereunder, the amount of such indemnification shall be reduced to the extent, if
any, that the Earnout Payment otherwise payable hereunder has been reduced
solely and directly as a result of the invalidity, unenforceability or
termination of such Independent Facility Contract.
9.6 Threshold. Neither the Purchaser Indemnitees, on the one hand, nor
the Sellers' Indemnitees, on the other hand, shall be entitled to
indemnification under this Section 9 until the aggregate Losses incurred and/or
suffered by such Parties exceed $250,000 (the "Threshold"). At such time, if
any, as either the Purchaser Indemnitees, or the Sellers' Indemnitees, incur
and/or suffer aggregate Losses that exceed the Threshold, such Parties shall be
entitled to indemnification under this Section 9 for the aggregate Losses
incurred and/or suffered by them that exceed the amount of the Threshold.
Notwithstanding the foregoing, neither the Purchaser Indemnitees nor the
Sellers' Indemnitees shall enjoy the protections of the Threshold with respect
to Indemnification Matters involving (i) intentional misrepresentation or fraud,
(ii) the failure to remit accounts receivable or Government Payment Program
Proceeds pursuant to Section 2.10, (iii) Sellers' cure and correction of
Deficiencies, or (iv) the payment of, Deficiency Expenses pursuant to Section
7.20(b) hereof.
9.7 Additional Limitation Regarding Waivers of Conditions. In the
event that, prior to the Closing, any Party (the "Notifying Party") notifies any
other Party (the "Notified Party") in writing of a breach of a representation,
warranty, covenant or obligation of such Notifying Party including any
notification provided by a Notifying Party, pursuant to Section 7.7, and the
Notified Party consummates the Closing notwithstanding such notification, the
Notified Party shall not be entitled to pursue a claim under this Section 9 for
Losses that result from such breach and any such breach shall be deemed to have
been waived.
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9.8 Remedies Exclusive. It is understood and agreed that the remedies
provided for by this Section 9 shall be exclusive and in lieu of any other
rights and remedies available to the Parties hereunder, at law or in equity, to
which a Party may be entitled. Notwithstanding the exclusive nature of the
remedies provided by this Section 9, in the event that a third party brings a
claim or action of any kind against one or more of the Purchaser Indemnitees in
connection with one or more Excluded Liabilities at any time hereafter, the
Purchaser Indemnitees shall not be prohibited from defending such claims or
actions (i) on the basis that they did not assume such Excluded Liabilities
under this Agreement, and/or (ii) by joining MPAN, MHG and the Sellers, or any
thereof, as third party defendants (and taking other actions consistent
therewith) in light of the continued responsibility of MPAN, MHG and the Sellers
for such Excluded Liabilities. To the extent a Purchaser Indemnitee is sued by a
third party in a court (or becomes subject to a proceeding of any kind), other
than in the Bankruptcy Court, the limitation set forth in Section 10.8 shall not
prevent such Purchaser Indemnitee from joining MPAN, MHG or any Seller as a
third party defendant or otherwise in such action.
SECTION 10
GENERAL PROVISIONS
10.1 Notices. All notices, claims, demands, and other communications
hereunder shall be in writing and shall be deemed given upon (a) confirmation of
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (c) the expiration of 5 Business
Days after the day when mailed by registered or certified mail (postage prepaid,
return receipt requested), addressed to the respective Parties at the following
addresses (or such other address for a Party as shall be specified by like
notice):
(a) If to GHV or Purchaser, to
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square, PA 19348
Telecopy: (610) 925-4242
Attention: Law Department
with a copy to
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Telecopy: (215) 569-5555
Attention: Stephen E. Luongo, Esq.
and
48
(b) If to MPAN, MHG or Sellers, to
Mariner Post-Acute Network
One Ravinia Drive
Suite 1500
Atlanta, GA 30346
Telecopy: (678) 443-6874
Attention: Boyd Gentry, Senior Vice President and
Treasurer
and to:
Mariner Post-Acute Network
One Ravinia Drive
Suite 1500
Atlanta, GA 30346
Telecopy: (678) 443-6792
Attention: Susan Thomas Whittle, Esq.,
Executive Vice President and General Counsel
with a copy to
Reed Smith LLP
1301 K Street, N.W.
Suite 1100 - East Tower
Washington, DC 20005
Attention: Robert D. Clark, Esq.
Telecopy: (202) 414-9299
and to:
Powell, Goldstein, Frazer
& Murphy, LLP
191 Peachtree Street, NE
16th Floor
Atlanta, Georgia 30303
Attention: Richard Green, Esq.
Telecopy: 404-572-6999
and to:
Stutman, Treister & Glatt
3699 Wilshire Boulevard, Suite 900
Los Angeles, California 90010-2739
Attention; Ronald L. Fein, Esq.
Telecopy: 231-251-5288
49
10.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties made by any Party in this Agreement and in any
instrument delivered pursuant to this Agreement shall survive the date of this
Agreement, the Closing Date and the consummation of the transactions
contemplated by this Agreement, subject to the provisions of Section 9;
provided, however, that the covenants contained in this Agreement and in any
instrument delivered pursuant to this Agreement shall survive the date of this
Agreement, the Closing Date and the consummation of the transactions
contemplated by this Agreement, in accordance with their terms.
10.3 No Implied Warranties; No Liability of Agents.
(a) Except for the specific representations and warranties of each
of the Parties in this Agreement, none of the Parties, and none of their
respective directors, officers, employees, Affiliates, agents, advisors or
representatives makes or shall be deemed to have made any representation or
warranty, either express or implied, to any Person who is not a party to this
Agreement.
(b) The directors, officers, employees, Affiliates, agents,
advisors or representatives of MPAN, MHG, and Sellers shall not have any
liability whatsoever to GHV or Purchaser or any of their directors, officers,
employees, Affiliates, agents, advisors or representatives in respect of the
specific representations and warranties of MPAN, MHG, and Sellers in this
Agreement.
(c) The directors, officers, employees, Affiliates, controlling
Persons, agents, advisors or representatives of GHV and Purchaser shall not have
any liability whatsoever to any of MPAN, MHG, or Sellers or any of their
respective directors, officers, employees, Affiliates, controlling Persons,
agents, advisors or representatives in respect of the specific representations
and warranties of GHV or Purchaser in this Agreement.
10.4 Insurance Proceeds. From the date of signing of this Agreement, in
the event any of the Acquired Assets are damaged, destroyed or in any other way
lost in circumstances giving rise to a claim for the value thereof under a
policy of insurance, any amounts so recoverable shall, in the event the
transactions contemplated hereby are consummated, be paid to Purchaser and, if
such sums are paid after the Closing Date, MPAN, MHG, and Sellers shall direct
the relevant insurer to pay the amount directly to Purchaser. MPAN, MHG, and
Sellers shall maintain their real and personal property insurance policies in
effect until Closing.
10.5 Public Announcements. Subject to the requirements of applicable
Law, and the content of pleadings in the Mariner Bankruptcy Cases and the
Genesis Bankruptcy Cases, the timing and content of any press releases, public
announcements, or other public communications concerning this Agreement or the
transactions contemplated hereby shall be subject to the mutual agreement of
MPAN, MHG, Sellers, GHV, and Purchaser.
10.6 Descriptive Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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10.7 Entire Agreement; Assignment. This Agreement (including the
Annexes, Schedules, Exhibits, and the other documents and instruments referred
to herein) (i) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the Parties or any
of them, with respect to the subject matter hereof, including any transaction
between or among the Parties hereto, and (ii) shall not be assigned by operation
of Law or otherwise without the prior written consent of all Parties except that
GHV and Purchaser may effect any such assignment to any of their Affiliates, but
any such assignment shall not relieve GHV and Purchaser of any of their
respective duties and obligations contained in this Agreement.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Delaware without regard to the rules
of conflict of Laws of the State of Delaware or any other jurisdiction. Each of
the Parties hereto irrevocably and unconditionally consents to the determination
by the MPAN Bankruptcy Court, without a jury trial and in a contested matter as
a "core proceeding" ( as such term is defined in 28 U.S.C. Section 157 or any
successor provision) of any and all disputes concerning this Agreement,
including disputes involving the validity, interpretation, effect, or
enforcement of this Agreement, and each of the Parties hereto agrees that the
MPAN Bankruptcy Court shall be the exclusive forum to hear, determine, and enter
appropriate orders and judgments regarding all such disputes until the closing
of the MPAN Bankruptcy Case, after which any and all disputes arising out of or
under this Agreement shall be submitted to the MHG Bankruptcy Court, to the
extent that the MHG Bankruptcy Case has not been closed, after which any and all
disputes arising out of or under this Agreement shall be submitted to and
determined by arbitration (in accordance with this Section as set forth below)
for any litigation arising out of or relating to this Agreement and the
transactions contemplated thereby, waives any objection to the laying of venue
of any such litigation therein, and agrees not to plead or claim that such
litigation has been brought in an inconvenient forum. In the event a dispute is
submitted to arbitration in accordance with the preceding sentence, Purchaser
shall select one arbitrator, Sellers shall collectively select one arbitrator
and the two selected arbitrators shall together select a third arbitrator who is
neutral and unbiased, and who shall serve as the chairman of the panel. If the
two arbitrators selected by Purchaser and Sellers are unable to agree upon the
third arbitrator, or if (i) Purchaser is unable to or fails to select an
arbitrator in accordance with this Section, or (ii) Sellers are unable to or
fail to select an arbitrator in accordance with this Section, then the American
Arbitration Association ("AAA") shall be designated by the parties to the
dispute to appoint such arbitrator(s) to arbitrate the matter in accordance with
this Section. The matter shall be arbitrated under the rules of the AAA
applicable to commercial arbitrations then in effect, such arbitration to be
held in Wilmington, Delaware. At any time before a decision of the arbitration
panel has been rendered, the parties to the dispute may resolve the dispute by
settlement. Each Party shall bear the fees and expenses of its own counsel,
witnesses and the arbitrator selected by such Party. The decision of a majority
of arbitrators shall be the award of the panel of arbitrators and shall be made
in writing setting forth the award, the reasons for the decision and award and
any dissenting opinion of the panel; shall be binding, final and conclusive on
all Parties; shall not be appealable and shall include a finding for payment of
the costs of such arbitration. Judgment of a court of competent jurisdiction may
be entered upon the award and may be enforced as such in accordance with the
provisions of the award. This agreement to arbitrate is specifically enforceable
by the Parties to this Agreement.
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10.9 Expenses. Except as expressly provided herein, whether or not the
transactions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated thereby shall be paid by the Party incurring such expenses. The
foregoing shall not affect the legal right, if any, that any Party hereto may
have to recover expenses from any other party that breaches its obligations
hereunder.
10.10 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the Parties hereto.
10.11 Waiver. At any time prior to the Closing Date, the Parties hereto
may (i) extend the time for the performance of any of the obligations or other
acts of the other Parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a Party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such Party.
10.12 Counterparts; Effectiveness. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement shall
become effective when each Party hereto shall have received counterparts thereof
signed by the other Parties hereto.
10.13 Severability; Validity; Parties in Interest. If any provision of
this Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable, the remainder of this Agreement, and the application
of such provision to other Persons or circumstances, shall not be affected
thereby, and to such end, the provisions of this Agreement are agreed to be
severable. Nothing in this Agreement, express or implied, is intended to confer
upon any Person (other than a permitted assignee) not a party to this Agreement
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
10.14 Court Approval. The consummation of the transactions contemplated
by this Agreement is subject to the Sellers' Approval Orders and the Purchaser's
Approval Order each becoming a Final Order and the Closing thereof shall occur
promptly following the date (i) on which all conditions precedent to the Closing
shall have been satisfied or waived, and (ii) that is at least one Business Day
after the later of the Sellers' Approval Orders and the Purchaser's Approval
Order shall have entered on the docket of the appropriate Bankruptcy Court for
10 days (as calculated in accordance with Bankruptcy Rule 9006(a), so long as a
court of competent jurisdiction has not issued a stay order pending appeal of
the Sellers' Approval Orders or the Purchaser's Approval Order prior to the
Closing Date, in which case the Closing Date shall occur promptly following the
date that any such stay pending appeal order is dissolved, abrogated, or
otherwise rendered unenforceable by a court of competent jurisdiction (subject
to the terms hereof and the satisfaction or waiver of all conditions to
Closing). If the entry of the Sellers' Approval Orders or the Purchaser's
Approval Order is denied by the Bankruptcy Court, this Agreement shall be of no
force and effect, at law or in equity.
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10.15 Guaranty of Performance; Proportionate Liability. GHV hereby
ensures and guarantees the full and timely performance by Purchaser of all of
its duties, responsibilities and obligations under and pursuant to this
Agreement. MPAN hereby ensures and guarantees the full and timely performance by
the MPAN Sellers of all of their respective duties, responsibilities and
obligations under and pursuant to this Agreement. MHG hereby ensures and
guarantees the full and timely performance by the MHG Sellers of all of their
respective duties, responsibilities, and obligations under and pursuant to this
Agreement. Whenever, in or pursuant to this Agreement, MPAN, MHG, and Sellers
have any joint and several obligation to indemnify any other Party for any
Losses or to otherwise pay any costs, expenses, fees, Losses and the like, the
joint and several obligation of MPAN, MHG, and each Seller to indemnify any
other Party for any such Losses or to otherwise pay any such costs, expenses,
fees, Losses and the like, shall be in proportion to their respective rights and
interests in and to the Purchaser Price, or as the Mariner Bankruptcy Courts may
otherwise determine.
10.16 Representation by Counsel. The Parties acknowledge that they have
been represented by independent legal counsel of their own choosing throughout
all of the negotiations which preceded the execution and delivery of this
Agreement. This Agreement is a fully negotiated document. As a result, any rule
of construction providing for any ambiguity in the terms of the Agreement to be
construed against the draftsperson of this Agreement shall be inapplicable to
the interpretation of this Agreement.
10.17 Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the Parties to this Agreement and their
respective legal representatives, successors and permitted assigns, including
any trustee appointed under chapters 11 or 7 of the Bankruptcy Code and any
responsible officer or examiner appointed for any of the Parties.
10.18 References to Knowledge. All references in this Agreement to the
"knowledge" of MPAN, MHG, and/or Sellers shall mean, with respect to a specified
matter or fact, the actual knowledge of one or more of Boyd Gentry, Tom
Schleigh, Dave Carter, Chris Mollet, John Egfoske, Kathy Olson, Patrick Sager,
Jacque Daly and Chris Winkle (the "Relevant Executive Officers") with regard to
such specified fact or matter.
10.19 Certain Terminations of Services Contracts.
(a) Notwithstanding any provision in any Services Contract to the
contrary, it is hereby understood and agreed by all Parties that, in the event
any Services Contract applicable to the Mariner Facilities is terminated prior
to the expiration of its then current term (a "Terminated Services Contract") as
a result of, or in connection with (i) a sale, divestiture, or other disposition
of the Mariner Facility which is party to such contract to a third party which
is neither a debtor nor revested debtor in the Mariner Bankruptcy Cases nor the
successor in interest under a confirmed plan of reorganization to the assets of
a debtor in the Mariner Bankruptcy Cases, (ii) the rejection of the real
property lease applicable to the Mariner Facility which is party to such
contract pursuant to the MHG Bankruptcy Cases or the MPAN Bankruptcy Cases (as
the case may be), or (iii) the closure or cessation of the operation of the
Mariner Facility which is party to such contract (each Mariner Facility where
any such event referenced in (i), (ii) or (iii) above occurs, a "Terminated
Mariner Facility"), then, in any such event, except as specifically provided in
Section 10.19(b) below, none of MPAN, MHG, or any of their respective Affiliates
53
(including the Affiliate of MPAN or MHG which is the owner and/or operator of
the Mariner Facility in question), shall be deemed to be in breach of, or
default under, any such Terminated Services Contract by virtue of such
termination and shall therefore have no liability whatsoever to GHV, Purchaser,
or any of their respective Affiliates, successors, or assigns, as a result of
such termination of such Terminated Services Contract.
(b) Notwithstanding the provisions of Section 10.19(a) above, in
the event that as of the first day of each calendar month through that date
which is 30 months after the Closing Date (the "Calculation Period") on which
date there are less than 172 Mariner Facilities (the "Mariner Facilities
Threshold") which are party to Services Contracts covering the Line of Business
identified in clause (i) of Section 2.2(b)(i)(G) (each, an "Active Mariner
Facility") then MHG and MPAN, jointly and severally, shall promptly pay
Purchaser liquidated damages monthly in an amount equal to the product of (i)
$12,500 multiplied by (ii) the number by which the then-existing number of
Active Mariner Facilities is less than the Mariner Facilities Threshold;
provided, however, that the payment of such liquidated damages will continue
only for such period as would have remained on the Services Contract to which
each Terminated Mariner Facility was a party had such Services Contract not
become a Terminated Services Contract by virtue of Section 10.19(a) above. For
the purposes of calculating liquidated damages pursuant to the preceding
sentence, if the successor operator (if any) of a Terminated Mariner Facility
either: (x) assumes the Services Contract in effect at such Mariner Facility, or
(y) enters into a Contract with Purchaser or its Affiliate with a term of one
year or more (or a shorter period if less than one year remains on the
Terminated Services Contracts, provided that the term of the new Contract is
coterminous with that which remained on the Terminated Services Contract) for
the provision of some or all of the Services, then such Terminated Mariner
Facility shall continue to be deemed an Active Mariner Facility. MHG and MPAN
shall have no obligation to pay any liquidated damages pursuant to this Section
10.19(b) with respect to periods following the expiration of the Calculation
Period. In addition, the number of Active Mariner Facilities shall be increased
by each facility owned, managed or operated by an affiliate of Mariner which:
(1) (a) is not currently subject to a Services Contract, or (b) does not
currently receive the Services described in clause (i) of Section 2.2(b)(i)(G)
from Purchaser or any Affiliate of Purchaser, (2) enters into a Contract for the
provision of Services described in clause (i) of Section 2.2(b)(i)(G), and which
is coterminous with the Terminated Services Contract which such Contract is
intended to replace and (3) in such Contract or accompanying transmittal it is
specifically stated that such Contract is intended to be treated as an Active
Mariner Facility under this Agreement.
(c) So long as this Agreement has not been terminated pursuant to
Section 8.1, MPAN, MHG and the Sellers hereby agree to (i) suspend and not to
exercise their rights under Paragraph 4 of the "Order Authorizing Certain
Debtors To Enter Into Master Amendment To Various Pharmacy Service Agreements
With Debtor American Pharmaceutical Services, Inc. and Affiliates," entered in
each of their respective Bankruptcy Cases, to terminate the Services Contracts
approved by such Order pursuant to confirmation of a plan or plans or
reorganization, and (ii) waive such right of termination pursuant to
confirmation of a plan or plans of reorganization effective upon Closing.
[SIGNATURE PAGES FOLLOW]
54
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized, as of the
date first above written.
MPAN, MHG AND SELLERS:
----------------------
MARINER POST-ACUTE NETWORK, INC.
By:____________________________________
Name:
Title:
MARINER HEALTH GROUP, INC.
By:____________________________________
Name:
Title:
AMERICAN PHARMACEUTICAL SERVICES, INC.
By:____________________________________
Name:
Title:
COMPASS PHARMACY SERVICES, INC.
By:____________________________________
Name:
Title:
PINNACLE PHARMACEUTICAL SERVICES, INC.
By:____________________________________
Name:
Title:
[SIGNATURES CONTINUE ON NEXT PAGE]
OCEAN PHARMACY, INC.
By:____________________________________
Name:
Title:
COMPASS PHARMACY SERVICES OF
MARYLAND, INC.
By:____________________________________
Name:
Title:
AMERICAN MEDICAL INSURANCE BILLING
SERVICES, INC.
By:____________________________________
Name:
Title:
APS PHARMACY MANAGEMENT, INC.
By:____________________________________
Name:
Title:
COMPASS PHARMACY SERVICES OF TEXAS,
INC.
By:____________________________________
Name:
Title:
[SIGNATURES CONTINUE ON NEXT PAGE]
GHV AND PURCHASER:
GENESIS HEALTH VENTURES, INC.
By:____________________________________
Name:
Title:
NEIGHBORCARE PHARMACY SERVICES, INC.
By:____________________________________
Name:
Title:
Annex A
Unless otherwise defined herein, terms used herein shall have the meanings set
forth below:
"AAA" shall have the meaning set forth in Section 10.8 hereof.
"Accrued Revenues" shall have the meaning set forth in Section
2.2(b)(i)B hereof.
"Acquired Assets" shall have the meaning set forth in Section 2.1(a)
hereof.
"Acquired Business" means the businesses of the Sellers and their
Affiliates with respect to the sale or provision of Services and other similar
or closely related products and services to Facilities and the general public.
"Acquired Business Employees" shall have the meaning set forth in
Section 5.7 hereof.
"Acquired Medicare Part B Business and Assets" shall have the meaning
set forth in Section 2.1(a) hereof.
"Active Mariner Facility" shall have the meaning set forth in Section
10.19(b) hereof.
"Affiliate" shall mean, with respect to a Person, another Person who
controls, is controlled by or is under common control with the Person in
question.
"Agreement" shall have the meaning set forth in the first paragraph
hereof.
"Assignment and Assumption Agreement" shall have the meaning set forth
in Section 4.2(f) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 2.6
hereof.
"Assumed Reserved Liabilities" shall have the meaning set forth in
Section 2.3(a)(iii) hereof.
"Austin Joint Venture" shall have the meaning set forth in Section
2.3(a)(ii) hereof.
"Average Monthly Revenues" shall have the meaning set forth in Section
2(b)(i)(A) hereof.
"Back-Up Offer" shall have the meaning set forth in Section 8.2(b)
hereof.
"Bankruptcy Code" means title 11 of the United States Code ss.ss.
101-1330.
"Bankruptcy Court" shall have the meaning set forth in the Recitals
hereof.
"Benefit Plans" means each Pension Plan, each "employee welfare benefit
plan" (as defined in section 3(1) of ERISA) and each stock option or other
equity based, bonus, incentive or deferred compensation or severance plan or
arrangement maintained, contributed to or required to be contributed to by MPAN,
MHG, and Sellers, or any thereof, for the benefit of any current or former
employees of the Acquired Business or their beneficiaries.
"Bidding Procedures" shall have the meaning set forth in Section 7.18
hereof.
"Bidding Procedures Order" shall have the meaning set forth in Section
7.1(a) hereof.
"Bill of Sale" shall have the meaning set forth in Section 4.2(a)
hereof.
"Break-Up Fee" means $1,200,000.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
by Law to close.
"Calculation Period" shall have the meaning set forth in Section
10.19(b) hereof.
"Cash Purchase Price" shall have the meaning set forth in Section
2.3(e) hereof.
"Closing" shall have the meaning set forth in Section 4.1 hereof.
"Closing Balance Sheet" shall have the meaning set forth in Section
2.3(c)(i) hereof.
"Closing Date" shall have the meaning set forth in Section 4.1 hereof.
"Closing Inventory" shall have the meaning set forth in Section 2.3(b)
hereof.
"Closing Net Current Assets" shall have the meaning set forth in
Section 2.3(c)(ii) hereof.
"Closing Payment" shall have the meaning set forth in Section 2.2(a)
hereof.
"Closing Statement of Net Current Assets" shall have the meaning set
forth in Section 2.3(c)(ii) hereof.
"Closing Statements" shall have the meaning set forth in Section 2.3(d)
hereof.
"Closing Statements Objection Notice" shall have the meaning set forth
in Section 2.3(d) hereof.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Contract" means any agreement, contract, commitment, or other binding
arrangement or understanding, whether written or oral. Any Contract that takes
the form of a lease, including any capitalized lease, shall be treated as a
Contract under this Agreement and not as an owned asset subject to Liens.
"Cure Costs" shall have the meaning set forth in Section 2.4(a) hereof.
"Current Assets Holdback" shall have the meaning set forth in Section
2.3(a)(iv) hereof.
"Current Assets Reduction" shall have the meaning set forth in Section
2.3(c)(iii) hereof.
"DEA" means the Federal Drug Enforcement Agency.
"Deficiency" and "Deficiencies" shall have the respective meanings set
forth in Section 7.20(b)hereof.
"Deficiency Expenses" shall have the meaning set forth in Section
7.20(b) hereof.
"Designated Contracts" shall have the meaning set forth in Section
2.4(a) hereof.
"Dollars" or "$" means dollars of the United States of America.
"Earnout Audit" shall have the meaning set forth in Section
2.2(b)(ii)(F) hereof.
"Earnout Deficiency Amount" shall have the meaning set forth in Section
2.2(b)(ii)(E) hereof.
"Earnout Payment Objection Notice" shall have the meaning set forth in
Section 2.2(b)(ii)(E) hereof.
"Earnout Payment Resolution Period" shall have the meaning set forth in
Section 2.2(b)(ii)(E) hereof.
"Earnout Payment Statement" shall have the meaning set forth in Section
2.2(b)(ii)(D) hereof.
"Earnout Payments" shall have the meaning set forth in Section
2.2(b)(ii)(A) hereof.
"Environmental Laws" means all applicable Laws (including consent
decrees and administrative orders) relating to the public health and safety and
protection of the environment including those governing the use, generation,
handling, storage and disposal or cleanup of Hazardous Substances, all as
amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" shall have the meaning set forth in Section 2.1(b)
hereof.
"Excluded Employees" shall have the meaning set forth in Section
7.10(a) hereof.
"Excluded Leases" shall have the meaning set forth in Section 2.4(c)
hereof.
"Excluded Liabilities" shall have the meaning set forth in Section 2.6
hereof.
"Excluded Medicare Part B Business and Assets" shall have the meaning
set forth in Section 2.1(b)(vi) hereof.
"Extended Earnout Payout Objection Notice Date" shall have the meaning
set forth in Section 2.2(b)(ii)(E) hereof.
"Facility" and "Facilities" shall have the meanings set forth in
Section 2.2(b)(i)(C) hereof.
"Facility Persons" shall have the meaning set forth in Section
2.2(b)(i)(C)1 hereof.
"FDA" means the Food and Drug Administration.
"Final Current Assets Reduction" shall have the meaning set forth in
Section 2.3(e) hereof.
"Final Order" means an order or judgment of the Bankruptcy Court as to
which the time to appeal, petition for certiorari, or move for reargument or
rehearing has expired and as to which no appeal, petition for certiorari, or
other proceedings for reargument or rehearing shall then be pending, or, in the
event that an appeal, writ of certiorari, reargument, or rehearing thereof has
been sought, such order or judgment of the Bankruptcy Court shall have been
affirmed by the highest court to which such order or judgment of the Bankruptcy
Court was appealed, or from which reargument or rehearing was sought, or
certiorari has been denied, and the time to take any further appeal, petition
for certiorari, or move for reargument or rehearing shall have expired, but
shall not require the expiration of rights under Federal Rule of Bankruptcy
Procedure 9024.
"GAAP" means generally accepted accounting principles under current
United States accounting rules and regulations, consistently applied.
"Genesis Bankruptcy Cases" shall have the meaning set forth in the
Recitals hereof.
"Genesis Bankruptcy Court" shall have the meaning set forth in the
Recitals hereof.
"Genesis Plan of Reorganization" shall have the meaning set forth in
Section 7.16 hereof.
"GHV" means Genesis Health Ventures, Inc.
"Governmental Authority" means any federal, state, local or foreign
government or any subdivision, agency, instrumentality, authority, department,
commission, board or bureau thereof, provided, in each case, that the relevant
action in any given circumstance has the force of Law, or any federal, state,
local or foreign court, tribunal or arbitrator of competent jurisdiction
(including the Bankruptcy Court).
"Government Payment Program(s)" shall have the meaning set forth in
Section 2.1(b)(v).
"Government Payment Program Proceeds" means the proceeds of accounts
receivable from Government Payment Programs, and all right, title and interest
to payment of such proceeds.
"Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by any Governmental Body in,
under or pursuant to any Environmental Law to be capable of posing a risk of
injury or damage to health, safety, property or the environment including (a)
all substances, wastes, contaminants, pollutants and materials defined,
designated or regulated as hazardous, dangerous or toxic pursuant to any Law,
and (b) asbestos, polychlorinated biphenyls ("PCBs"), petroleum, petroleum
products and urea formaldehyde.
"HSR Act" means the Hart-Scott-Rodino Anti-Trust Improvements Act of
1976, as amended.
"Included Mariner Receivables" shall have the meaning set forth in
Section 2.3(a)(iv).
"Indemnification Matter" shall have the meaning set forth in Section
9.3 hereof.
"Indemnification Notice" shall have the meaning set forth in Section
9.3 hereof.
"Indemnifying Party" shall have the meaning set forth in Section 9.3
hereof.
"Indemnitee" shall have the meaning set forth in Section 9.3 hereof.
"Independent Facility" shall have the meaning set forth in Section
2.2(b)(i)(C) hereof.
"Independent Facility Arrangements" shall have the meaning set forth in
Section 2.2(b)(i)(E) hereof.
"Independent Facility Contract" shall have the meaning set forth in
Section 2.2(b)(i)(D) hereof.
"Intellectual Property Rights" shall mean and include rights relating
to patents, trademarks, service marks, trade names, copyrights, and all
currently pending applications for any thereof, and any inventions, processes,
trade secrets, know-how, confidentiality agreements, consulting agreements,
software, software licenses or options to obtain rights or licenses and any
documentation relating to the manufacture, marketing and maintenance of
products.
"Inventory" means any raw materials, supplies, work-in-progress,
finished goods, parts or other inventory of any nature whatsoever.
"June Balance Sheet" shall have the meaning set forth in Section
2.3(a)(i)(A) hereof.
"June Inventory" shall have the meaning set forth in Section
2.3(a)(i)(A) hereof.
"Law" means any provision of any federal, state, local or foreign law,
statute, ordinance, charter, constitution, treaty, code, rule, regulation or
guidelines (including the Medicare and Medicaid fraud and abuse provisions of
the Social Security Act and the Civil Monetary Penalty Law of the Social
Security Act, the applicable recordkeeping, inventory and other requirements and
regulations of the FDA, the DEA and state pharmacy boards), or any order, decree
or ruling.
"Leased Real Property" means all real property leased and used or held
for use by Sellers in the operation of the Acquired Business.
"Liability" means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown
or otherwise.
"Licenses" shall have the meaning set forth in Section 5.9 hereof.
"Lien" means any security interest, lien, charge, mortgage, deed,
assignment, pledge, hypothecation, claim, encumbrance, easement, restriction, or
interest of another Person of any kind or nature.
"Line of Business" shall have the meaning set forth in Section
2.2(b)(i)(F) hereof.
"Losses" shall have the meaning set forth in Section 9.1 hereof.
"Management Agreement" shall have the meaning set forth in Section
7.20(a) hereof.
"March Financial Statements" shall have the meaning set forth in
Section 2.3(a)(i)(A) hereof.
"Mariner Bankruptcy Cases" shall have the meaning set forth in the
Recitals hereof.
"Mariner Bankruptcy Courts" shall have the meaning set forth in the
Recitals hereof.
"Mariner Facilities" shall have the meaning set forth in Section
2.1(b)(vi) hereof.
"Mariner Facilities Threshold" shall have the meaning set forth in
Section 10.19(b) hereof.
"Mariner Receivables" means all accounts receivable from MPAN, MHG and
their Affiliates (other than Sellers).
"Material Adverse Effect" means, with respect to the businesses or
entities specified, any event, change, condition or matter in respect thereof
that, individually or in the aggregate, results in or would be reasonably
expected to result in, a material adverse effect on the business, results of
operations, assets, or condition (financial or otherwise) of the specified
businesses or entities, taken as a whole, and any reference to Material Adverse
Effect with respect to Sellers, the Acquired Business or the Acquired Assets
shall be interpreted to mean a Material Adverse Effect on Sellers, the Acquired
Business or the Acquired Assets, as the case may be, taken as a whole.
"MCI" shall have the meaning set forth in Section 7.11(b) hereof.
"MCI Agreements" shall have the meaning set forth in Section 7.11(b)
hereof.
"Medicare Part B Business and Assets" means any assets related to the
provision of Medicare Part B Products and Services, including related accounts
receivables, Inventory equipment and fixed assets.
"Medicare Part B Products and Services" means products and services
billed directly to the Medicare Part B program.
"MHG" shall have the meaning set forth in the first paragraph hereof.
"MHG Bank Group" means PNC Bank, in its capacity as Agent for MHG's and
the MHG Sellers' senior secured prepetition lenders and in its capacity as Agent
for MHG's and the MHG Sellers' postpetition debtor in possession lenders.
"MHG Bankruptcy Cases" shall have the meaning set forth in the Recitals
hereof.
"MHG Bankruptcy Court" shall have the meaning set forth in the Recitals
hereof.
"MHG Sellers" shall have the meaning set forth in the first paragraph
hereof.
"MPAN" shall have the meaning set forth in the first paragraph hereof.
"MPAN Bank Group" means the Chase Manhattan Bank, in its capacity as
Agent for MPAN's and the MPAN Sellers' senior secured prepetition lenders and in
its capacity as Agent for MPAN's and the MPAN Sellers' postpetition debtor in
possession lenders.
"MPAN Bankruptcy Cases" shall have the meaning set forth in the
Recitals hereof.
"MPAN Bankruptcy Court" shall have the meaning set forth in the
Recitals hereof.
"MPAN Sellers" shall have the meaning set forth in the first paragraph
hereof.
"NCPDP" shall have the meaning set forth in Section 7.9 hereof.
"Net Current Assets" means the accounts receivable (other than the
Mariner Receivables), rebate accounts receivable, Inventory, and prepaid
expenses (to the extent usable and of benefit to Purchaser in its conduct of the
Acquired Business), all as determined in accordance with Sellers' Accounting
Policies, included in the Acquired Assets, subject to appropriate reserves.
"Non-Compete Agreements" means the noncompetition agreements in the
form attached at Schedule 3.3(h) to this Agreement.
"Notified Party" shall have the meaning set forth in Section 9.7
hereof.
"Notifying Party" shall have the meaning set forth in Section 9.7
hereof.
"Overbid Approval Order" shall have the meaning set forth in Section
8.2(b) hereof.
"Owned Real Property" means all real property owned by Sellers relating
to the operation of the Acquired Business.
"Paid Included Mariner Receivables" shall have the meaning set forth in
Section 2.3(c)(iii) hereof.
"Party" or "Parties" are those Persons listed in the first paragraph of
this Agreement.
"Payment Date" shall have the meaning set forth in Section
2.2(b)(ii)(E) hereof.
"Pension Plan" means each "employee pension benefit plan" as defined in
section 3(2) of ERISA.
"Permitted Liens" means the Liens set forth in Schedule 5.2.
"Person" means any corporation, partnership, joint venture, limited
liability company, organization, entity, authority or individual.
"Pharmacy License" shall have the meaning set forth in Section 5.9(a)
hereof.
"Pre-Closing Balance Sheet" shall have the meaning set forth in Section
2.3(a)(i)(B) hereof.
"Pre-Closing Balance Sheet Date" shall have the meaning set forth in
Section 2.3(a)(i)(B) hereof.
"Pre-Closing Inventory" shall have the meaning set forth in Section
2.3(a)(i)(B) hereof.
"Pre-Closing Net Current Assets" shall have the meaning set forth in
Section 2.3(a)(ii) hereof.
"Pre-Closing Statement of Net Current Assets" shall have the meaning
set forth in Section 2.3(a)(ii) hereof.
"Purchase Price" shall have the meaning set forth in Section 2.2(a)
hereof.
"Purchaser" means NeighborCare Pharmacy Services, Inc.
"Purchaser Indemnitees" shall have the meaning set forth in Section 9.1
hereof.
"Purchaser's Approval Order" shall have the meaning set forth in the
Recitals hereof.
"Purchaser's Calculation of the Current Assets Reduction" shall have
the meaning set forth in Section 2.3(c)(iii) hereof.
"Purchaser's Expenses" shall mean Purchaser's and GHV's aggregate
reasonable out-of-pocket expenses (including reasonable financial advisors',
accountants' or attorneys' fees and expenses), up to a maximum aggregate amount
of $500,000, incurred in connection with the negotiation and performance of this
Agreement and their due diligence investigation of MHG, MPAN, and the Sellers
and the Acquired Assets and the Acquired Business in connection with this
Agreement.
"Real Property Leases" means all written and oral leases and subleases
in effect as of the date hereof with respect to the Leased Real Property.
"Relevant Executive Officers" shall have the meaning set forth in
Section 10.18 hereof.
"Required Consents" shall have the meaning set forth in Section 3.3(f)
hereof.
"Resolution Period" shall have the meaning set forth in Section 2.3 (d)
hereof.
"Revenues" shall have the meaning set forth in Section 2.2(b)(i)(F)
hereof.
"Sale Hearing" shall have the meaning set forth in Section 8.2(b)
hereof.
"Seller" and "Sellers" shall have the meaning set forth in the first
paragraph of this Agreement.
"Sellers' Accounting Policies" shall have the meaning set forth in
Section 2.3(a)(i)(A) hereof.
"Sellers' Approval Orders" shall have the meaning set forth in the
Recitals hereof.
"Sellers' Calculation of the Current Assets Holdback" shall have the
meaning set forth in Section 2.3(a)(iv) hereof.
"Sellers' Indemnitees" shall have the meaning set forth in Section 9.2
hereof.
"Selling Affiliates" shall have the meaning set forth in Section 2.1(a)
hereof.
"Service Mark" shall have the meaning set forth in Section 7.21 hereof.
"Services" shall have the meaning set forth in Section 2.2(b)(i)(G)
hereof.
"Services Contracts" shall have the meaning set forth in Section 5.4(c)
hereof.
"Statement of Assumed Reserved Liabilities" shall have the meaning set
forth in Section 2.3(a)(iii) hereof.
"Statement of Estimated Assumed Reserved Liabilities" shall have the
meaning set forth in Section 2.3(a)(iii) hereof.
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, license, payroll, unemployment, environmental,
customs duties, capital stock, disability, stamp, leasing, lease, user,
transfer, fuel, excess profits, occupational and interest equalization, windfall
profits, severance and employees' income withholding and Social Security taxes
imposed by the United States or any other country or by any state, municipality,
subdivision or instrumentality of the United States or of any other country or
by any other tax authority, including all applicable penalties and interest, and
such term shall include any interest, penalties or additions to tax attributable
to such Taxes.
"Tax Return" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
"Temporary Occupancy Provision" shall have the meaning set forth in
Section 2.4(c) hereof.
"Terminated Mariner Facility" shall have the meaning set forth in
Section 10.19(a) hereof.
"Terminated Services Contract" shall have the meaning set forth in
Section 10.19(a) hereof.
"Transferred Employee" shall have the meaning set forth in Section
7.10(a) hereof.
"Threshold" shall have the meaning set forth in Section 9.6 hereof.
"Undisclosed Contract" shall have the meaning set forth in Section
2.4(b) hereof.
"Undisclosed Contract Designation Date" shall have the meaning set
forth in Section 2.4(b) hereof.
"Unlicensed Business Location" shall have the meaning set forth in
Section 7.20(a) hereof.