PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made on this 3rd
day of May, 1996, by and among Mark E. Hamister, an individual residing at 88
Northington Drive, East Amherst, New York, Oliver C. Hamister, an individual
residing at 6430 Sun Eagle Lane, Bradenton, Florida, George E. Hamister, an
individual residing at 112 The Waterways, 9604 Cortez Road, Bradenton, Florida,
Julia L. Hamister, an individual residing at 6430 Sun Eagle Lane, Bradenton,
Florida, The George E. Hamister Trust, an irrevocable trust established under
the terms of a trust agreement dated December 31, 1991, and The Oliver C.
Hamister Trust, an irrevocable trust established under the terms of an agreement
dated December 31, 1991 (collectively, the "Hamisters"), National Health Care
Affiliates, Inc., a Florida corporation with an office at 651 Delaware Avenue,
Buffalo, New York ("NHCA"), Oak Hill Health Care Center, Inc., a Florida
corporation with an office at 651 Delaware Avenue, Buffalo, New York ("Oak
Hill"), Derby Nursing Center Corporation, a Connecticut corporation with an
office at 651 Delaware Avenue, Buffalo, New York ("Derby Nursing Center"),
Delaware Avenue Partnership, a New York General Partnership with an office at
651 Delaware Avenue, Buffalo, New York ("DAP"), EIDOS, Inc., a Florida
corporation with an office at 222 S. Westmonte Drive, #200, Altamonte Springs,
Florida ("EIDOS"), VersaLink, Inc., a Delaware corporation with an office at 651
Delaware Avenue, Buffalo, New York ("VersaLink"), each of the individuals
identified in Schedule A attached hereto (each of such individuals being
hereinafter sometimes referred to individually as a "Minority Shareholder" and
collectively as the "Minority Shareholders") and Sal H. Alfiero and Gerald S.
Lippes (Mr. Alfiero and Mr. Lippes being hereinafter individually referred to as
an "Optionee" and collectively referred to as the "Optionees") (it being
understood that this Agreement will be executed by Mark E. Hamister on behalf of
the Minority Shareholders and the Optionees pursuant to duly executed powers of
attorney) and Genesis Health Ventures, Inc., a Pennsylvania corporation with an
office at 148 West State Street, Kennett Square, Pennsylvania (the "Buyer").
RECITALS:
The Hamisters own and control a majority of the issued and
outstanding common stock of NHCA and Oak Hill. Mark E. Hamister, George E.
Hamister and Oliver C. Hamister collectively own all the issued and outstanding
common stock of Derby Nursing Center and all the outstanding partnership
interests of DAP.
Mark E. Hamister is the owner of all the issued and
outstanding common stock of EIDOS and all the issued and outstanding common
stock of VersaLink.
NHCA is a health care services company which, among other
things: (a) operates skilled nursing facilities in Florida, Virginia and
Connecticut providing skilled nursing services, subacute care and medically
complex rehabilitation services; (b) manages long term care facilities located
in Colorado; and (c) operates home health care service agencies located in New
York, Ohio, Florida, Colorado, Oregon and Alabama.
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DAP, Oak Hill and Derby Nursing Center are also health care
services companies which operate skilled nursing facilities.
EIDOS and VersaLink are companies which provide supporting
services to the skilled nursing facilities operated by NHCA, DAP, Oak Hill and
Derby Nursing Center consisting, in the case of EIDOS, in the provision of
enteral and parenteral feeding systems and, in the case of VersaLink, in the
provision of rehabilitation services.
Mark E. Hamister is the Chief Executive Officer of all of the
operations of NHCA, DAP, Oak Hill, Derby Nursing Center, EIDOS and VersaLink.
For purposes of this Agreement, each of NHCA, Oak Hill, DAP,
Derby Nursing Center, EIDOS and VersaLink is hereinafter referred to
individually as a "Company" and all of such entities are sometime hereinafter
collectively referred to as the "Companies".
The Buyer desires to acquire control of the business and
assets of the skilled nursing facilities of DAP, Oak Hill, Derby Nursing Center
and NHCA, the rights of NHCA to manage certain skilled nursing facilities
located in Colorado and the business and assets of EIDOS and VersaLink. For
purposes of this Agreement, the business and assets of the skilled nursing
facilities of DAP, Oak Hill, Derby Nursing Center and NHCA (including the
business and assets of such skilled nursing facilities associated with the
provision of subacute and medically complex rehabilitative services), the rights
of NHCA to manage certain skilled nursing facilities in Colorado and the
business and assets of EIDOS and VersaLink are hereinafter referred to
collectively as the "Skilled Nursing Facilities Business".
In connection with the Buyer's desire to purchase the Skilled
Nursing Facilities Business, the Hamisters and the Minority Shareholders wish to
sell all of the issued and outstanding common stock of NHCA and Oak Hill to the
Buyer and the Buyer desires to purchase all of the issued and outstanding common
stock of NHCA and Oak Hill from the Hamisters and the Minority Shareholders. In
addition, Mark E. Hamister, George E. Hamister and Oliver C. Hamister wish to
sell all of the issued and outstanding shares of common stock of Derby Nursing
Center and all of the outstanding partnership interests of DAP to the Buyer and
the Buyer desires to purchase all the issued and outstanding common stock of
Derby Nursing Center and all the outstanding partnership interests of DAP from
the Hamisters. Lastly, Mark E. Hamister desires to sell all the issued and
outstanding common stock of EIDOS and VersaLink to the Buyer and the Buyer
desires to purchase all the issued and outstanding common stock of EIDOS and
VersaLink from Mark E. Hamister.
For purposes of this Agreement, each of Mark E. Hamister,
George E. Hamister, Oliver C. Hamister, Julia Hamister, The George E. Hamister
Trust, The Oliver C. Hamister Trust and each Minority Shareholder is sometime
hereinafter referred to individually as an "Owner" and all of Mark E. Hamister,
George E. Hamister, Oliver C. Hamister, Julia Hamister, The George E. Hamister
Trust, The Oliver C. Hamister Trust and all of the Minority Shareholders are
sometimes hereinafter collectively referred to as the "Owners".
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The Minority Shareholders have, by power of attorney dated
April 25, 1996 (a copy of will be provided to Buyer), authorized Mark E.
Hamister to act on their behalf with respect to the transfer of their respective
interests in NHCA and Oak Hill. In addition, the Optionees have, by power of
attorney dated May 3, 1996 (a copy of which will be provided to Buyer)
authorized Mark E. Hamister to execute this Agreement on their behalf.
The Hamisters, the Companies, the Minority Shareholders and
the Buyer desire to set forth in writing the terms and conditions upon which the
Buyer will purchase all the issued and outstanding stock and other equity
interests in the Companies.
CONSIDERATION:
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements hereinafter set forth, the Hamisters, the Companies,
the Minority Shareholders and the Buyer hereby agree as follows:
ARTICLE 1.
SALE OF THE INTERESTS
1.01 Sale of the Interests in the Companies. Subject to the terms and
conditions of this Agreement, at the Closing (as hereinafter defined in Section
3.01 hereof):
(a) Mark E. Hamister will sell, convey, transfer and assign to
the Buyer and the Buyer will purchase, acquire and accept from Mark E. Hamister,
all of Mark E. Hamister's right, title and interest in and to: (i) eight hundred
ninety-six thousand, three hundred (896,300) shares of common stock of NHCA;
(ii) eight hundred ninety-six thousand, three hundred (896,300) shares of common
stock of Oak Hill; (iii) one thousand six hundred sixty-eight (1,668) shares of
common stock of Derby Nursing Center; (iv) one hundred (100) shares of common
stock of VersaLink; (v) one (1) share of common stock of EIDOS; and (vi) all of
Mark E. Hamister's partnership interest in DAP (all of the interests in the
Companies described above in this Section 1.01(a) being sometimes hereinafter
collectively referred to as the "Mark E. Hamister Interests").
(b) George E. Hamister will sell, convey, transfer and assign
to the Buyer and the Buyer will purchase, acquire and accept from George E.
Hamister: (i) three hundred seventy-eight thousand, nine hundred thirty-eight
(378,938) shares of common stock of NHCA; (ii) three hundred seventy-eight
thousand, nine hundred fifty-four (378,954) shares of common stock of Oak Hill;
(iii) one thousand six hundred sixty-six (1,666) shares of common stock of Derby
Nursing Center; and (iv) all of George E. Hamister's partnership interest in DAP
(all of the interests in the Companies described above in this Section 1.01(b)
being sometimes hereinafter collectively referred to as the "George E. Hamister
Interests");
(c) Oliver C. Hamister will sell, convey, transfer and assign
to the Buyer and the Buyer will purchase, acquire and accept from Oliver C.
Hamister: (i) two hundred twenty-six thousand, four hundred thirty-eight
(226,438) shares of common stock of NHCA; (ii) two hundred twenty-six thousand,
four hundred fifty-four (226,454) shares of common stock of Oak Hill; (iii) one
thousand six hundred sixty-six (1,666) shares of common stock of Derby Nursing
Center; and (iv) all of Oliver C. Hamister's partnership interest in DAP (all of
the interests in the Companies described above in this Section 1.01(c) being
sometimes hereinafter referred to as the "Oliver C. Hamister Interests");
(d) The George E. Hamister Trust will sell, transfer, convey
and assign to the Buyer, and the Buyer will purchase, acquire and accept from
The George E. Hamister Trust: (i) two hundred eighty-eight thousand, eight
hundred twenty-one (288,821) shares of common stock of NHCA; and (ii) two
hundred eighty-eight thousand, eight hundred twenty-one (288,821) shares of
common stock of Oak Hill (the interests in the Companies described above in this
Section 1.01(d) being sometimes hereinafter collectively referred to as the
"George E. Hamister Trust Interests");
(e) The Oliver C. Hamister Trust will sell, transfer, convey
and assign to the Buyer and the Buyer will purchase, acquire and accept from The
Oliver C. Hamister Trust: (i) two hundred eighty-seven thousand, six hundred
ninety-five (287,695) shares of common stock of NHCA; and (ii) two hundred
eighty-seven thousand, six hundred ninety-five (287,695) shares of common stock
of Oak Hill (the interests in the Companies described above in this Section
1.01(e) being sometimes hereinafter referred to as the "Oliver C. Hamister Trust
Interests");
(f) Julia Hamister will sell, transfer, convey and assign to
the Buyer and the Buyer will purchase, acquire and accept from Julia Hamister:
(i) two hundred twenty-five thousand (225,000) shares of common stock of NHCA;
and (ii) two hundred twenty-five thousand (225,000) shares of common stock of
Oak Hill (the interests in the Companies described above in this Section 1.01(f)
being sometimes hereinafter referred to as the "Julia Hamister Interests"); and
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(g) The Minority Shareholders will sell, transfer, convey and
assign to the Buyer, and the Buyer will purchase, acquire and accept from each
of the Minority Shareholders, the number of shares of common stock of NHCA and
Oak Hill which are identified in Schedule A as being owned by each of the
Minority Shareholders (the interests of the Minority Shareholders in the
Companies described in Schedule A being sometimes hereinafter collectively
referred to as the "Minority Shareholders Interests").
(h) For purposes of this Agreement, all of: (1) the Mark E.
Hamister Interests; (ii) the George E. Hamister Interests; (iii) the Oliver C.
Hamister Interests; (iv) the George E. Hamister Trust Interests; (v) the Oliver
C. Hamister Trust Interests; (vi) the Julia Hamister Interests; and (vii) the
Minority Shareholders Interests are sometimes hereinafter collectively referred
to as the "Interests".
ARTICLE 2.
PURCHASE PRICE
2.01 Final Purchase Price and Base Price. For purposes of this
Article 2, the term "Base Price" (subject to such adjustments as may be required
by this Agreement) shall equal One Hundred Thirty Three Million, Five Hundred
Eighty Thousand Dollars ($133,580,000.00) and the term Final Purchase Price
shall mean an amount equal to the Base Price, decreased by the Discharged and
Assumed Debt (as set forth on Schedule 2.01) and adjusted by the Closing
Adjustments (as defined in Section 2.04), the Post-Closing Working Capital
Adjustment (as defined in Section 2.06) and Post Closing Net Worth Adjustment
(as defined in Section 2.06).
2.02 Closing Payment. (a) On the Closing Date, Buyer shall pay
on account of the Final Purchase Price as set forth in this section a closing
payment equal to the Base Price, decreased by the Discharged and Assumed Debt,
increased or decreased, as the case may be (as provided in Section 2.04), by the
amount of the Closing Adjustments (the "Closing Payment"). The Closing Payment
shall be paid by Buyer as follows: (i) an amount equal to Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000.00) (hereinafter the "Escrow
Payment") shall be paid to an account established under the terms of an escrow
agreement in a form hereto (hereinafter the "Escrow Agreement"); and (ii) an
amount equal to the Base Price, decreased by the Discharged Debt and Assumed
Debt and Escrow Payment and adjusted by the Closing Adjustments, shall be paid
to the Owners. The Escrow Payment shall be paid by wire transfer of immediately
available funds to the account specified by the Escrow Agreement, and the
Closing Payment shall be paid to such account or accounts as may be specified by
Mark E. Hamister in writing.
(b) The Escrow Payment shall be held in an escrow account (the
"Escrow Account") and distributed in accordance with the terms of the Escrow
Agreement and shall serve as security for the Hamisters' indemnification and
other obligations under this Agreement. Notwithstanding the existence of the
Escrow Account, Buyer's rights under this Agreement shall in no event be limited
by the amount of the funds in the Escrow Account, and the Hamisters shall be
fully liable to Buyer for the full amount of their indemnification and other
obligations hereunder, to the extent set forth in this Agreement. When the Final
Balance Sheet has been determined in accordance with Section 2.06 hereof, the
amount held in the Escrow Account shall be reduced by $750,000, together with
any interest accrued thereon pursuant to the Escrow Agreement, which $750,000
(and accrued interest) shall be paid as set forth below. If the Closing Payment
exceeds the Final Purchase Price by an amount less than or equal to $750,000,
such excess (and any interest accrued thereon) shall be paid to the Buyer from
the Escrow Account and the amount of the difference between such excess and
$750,000, if any, together with any interest accrued on such amount, shall be
paid to the Owners from the Escrow Account. If the Closing Payment exceeds the
Final Purchase Price by more than $750,000, then $750,000 together with interest
accrued thereon shall be paid to the Buyer from the Escrow Account and the
Hamisters shall, in the proportions set forth on Schedule 2.02 attached hereto,
pay to the Buyer the difference between such excess and $750,000. If the Closing
Payment is less than the Final Purchase Price, an amount equal to $750,000
together with interest accrued thereon pursuant to the Escrow Agreement shall be
paid from the Escrow Account to an account specified in writing by Mark E.
Hamister and the Buyer shall pay to the account specified in writing by Mark E.
Hamister, the amount by which the Closing Payment is less than the Final
Purchase Price. All payments required to be made by this Section 2.02(b) shall
be made by delivery of cashiers or certified checks (or by wire transfer of
federal funds) within seven days after the Post Closing Settlement Date (as
hereinafter defined).
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2.03 Closing Balance Sheet. The Hamisters shall deliver to
Buyer as soon as reasonably practicable but in no event later than five (5)
business days prior to Closing, an unaudited combined (after elimination of
intercompany transactions) balance sheet of the Skilled Nursing Facilities
Business as of May 31, 1996, or, in the event that the Closing Date is on or
after July 24, 1996, a balance sheet of the Skilled Nursing Facilities Business
as of a month-end date not more than 55 days prior to the Closing Date (the
"Closing Balance Sheet"), together with the related statement of income for the
Skilled Nursing Facilities Business for the year-to-date period ended on the
date of the Closing Balance Sheet. The Closing Balance Sheet and related
statement of income shall have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied in a manner which is consistent
with the manner in which the unaudited balance sheet of the Skilled Nursing
Facilities Business dated at December 31, 1995 (as previously delivered to
Buyer) was prepared. The Closing Balance Sheet shall include accruals, if
applicable, for federal, state and local taxes (including income taxes, to the
extent any such accrual is in accordance with GAAP, consistently applied), as
well as accruals, if applicable, (under GAAP and consistent with the past
practices of the Companies) for payroll taxes, employee benefits, workers'
compensation payments and insurance deposits, sick pay and "comp" time, in all
cases as if there had been a closing of the books on the date of the Closing
Balance Sheet. The Closing Balance Sheet shall set forth the combined (after
elimination of intercompany transactions) Net Working Capital of the Skilled
Nursing Facilities Business as of the date of the Closing Balance Sheet (the
"Closing Net Working Capital") and the combined net worth of the Skilled Nursing
Facilities Business (after elimination of intercompany accounts and after
elimination of those assets and liabilities of the Skilled Nursing Facilities
Business used in the calculation of the Closing Net Working Capital) as of the
date of the Closing Balance Sheet (the "Closing Net Worth"). For purposes of
this Agreement, the Net Working Capital shall mean the difference between the
current assets of the Skilled Nursing Facilities Business (including, but not
limited to, cash, accounts receivable (net of adequate reserves for doubtful
accounts, and prepaid expenses) and the current liabilities of the Skilled
Nursing Facilities Business (including, but not limited to, accounts payable,
accrued interest, accrued salaries, accrued vacations, payroll taxes, benefits
and accrued expenses, but excluding the current portion of long term debt).
2.04 Closing Adjustment. If the Closing Net Working Capital of
the Companies is less than or in excess of negative $393,734 (the "Minimum Net
Working Capital"), for purposes of determining the amount payable by the Buyer
at the Closing and the amount of the Final Purchase Price, the amount of such
difference (hereinafter the "Closing Working Capital Adjustment") shall be: (i)
subtracted from the Base Price if the Closing Net Working Capital is less than
the Minimum Net Working Capital; and (ii) added to the Base Price if the Closing
Net Working Capital is greater than the Minimum Net Working Capital. If the
Closing Net Worth of the Skilled Nursing Facilities Business is less than or in
excess of negative $2,277,570 (the "Minimum Net Worth"), for purposes of
determining the amount payable by the Buyer at the Closing and the amount of the
Final Purchase Price, the amount of such difference (hereinafter the "Closing
Net Worth Adjustment"), shall be: (i) subtracted from the Base Price if the
Closing Net Worth is less than the Minimum Net Worth (i.e. a larger negative net
worth than the negative net worth which constitutes the Minimum Net Worth); and
(ii) added to the Base Price if the Closing Net Worth is greater than the
Minimum Net Worth. The Closing Working Capital Adjustment and the Closing Net
Worth Adjustment Capital are collectively referred to as the "Closing
Adjustments".
2.05 Post-Closing Settlement. The Buyer shall, within 45 days
after the Closing Date, notify the Hamisters in writing if it disputes the
accuracy of the Closing Balance Sheet. Such notice shall specify in reasonable
detail the nature of the dispute. If no such notice is received by the
Hamisters, Buyer shall be deemed to have accepted the accuracy of the Closing
Balance Sheet.
If the Buyer delivers a written notice to the Hamisters with
respect to a dispute concerning the accuracy of the Closing Balance Sheet,
during the 45-day period following the receipt of such notice by the Hamisters,
the Hamisters and Buyer shall attempt to resolve such dispute and to agree upon
the amounts to be contained in the Closing Balance Sheet. If at the end of the
45-day period, Hamisters and Buyer shall have failed to reach a written
agreement with respect to such dispute, the matter shall be referred to the
Cleveland, Ohio office of Price Waterhouse, (the "Arbitrator"), which shall act
as an arbitrator and shall issue its report as to the Closing Balance Sheet
within forty-five (45) days after such dispute is referred to the Arbitrator.
Each of the parties hereto shall bear all costs and expenses incurred by such
party in connection with such arbitration, except that the fees and expenses of
the Arbitrator hereunder shall be borne equally by Hamisters and Buyer. This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the Arbitrator in accordance with the provisions hereof shall be
final and binding and there shall be no right of appeal therefrom. The
"Post-Closing Settlement Date" shall be the later of the 45th day after the
Closing Date, or the date upon which any dispute concerning the Closing Balance
Sheet is resolved either by the Buyer and Mark E. Hamister or by the Arbitrator.
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2.06 Post Closing Settlement Amount. If the Closing Balance
Sheet has been finalized, whether by the Buyer's agreement to the entries
contained in the Closing Balance Sheet prepared and delivered by the Hamisters,
as a result of a resolution of a dispute concerning the Closing Balance Sheet
which is mutually agreeable to the Buyer and Mark E. Hamister or as a result of
a decision of the Arbitrator (such balance sheet as so finalized being
hereinafter the "Final Balance Sheet"), the combined Net Working Capital of the
Skilled Nursing Facilities Business determined from the entries contained in the
Final Balance Sheet (hereinafter the "Post-Closing Net Working Capital") shall
be determined and the combined net worth of the Skilled Nursing Facilities
Business as determined from the entries contained in the Final Balance Sheet
(after elimination of intercompany accounts and after elimination from such net
worth calculation, those assets and liabilities of the Skilled Nursing
Facilities Business that were used in the calculation of the Post-Closing Net
Working Capital) (such net worth being hereinafter the "Post Closing Net Worth")
shall be determined. If the Post-Closing Net Working Capital differs from the
Closing Net Working Capital, the amount of any such difference (hereinafter the
"Post Closing Working Capital Adjustment"), for purposes of determining the
Final Purchase Price, shall be: (a) subtracted from the Base Price if the
Post-Closing Net Working Capital is less than the Closing Net Working Capital;
and (b) added to the Base Price if the Post Closing Net Working Capital is
greater than the Closing Net Working Capital. If the Post Closing Net Worth
differs from the Closing Net Worth and the amount of such difference
(hereinafter the "Post Closing Net Worth Adjustment") is greater than $150,000,
the amount of such difference, for purposes of determining the Final Purchase
Price, shall be: (x) subtracted from the Base Price if the Post Closing Net
Worth is less than the Closing Net Worth: and (y) added to the Base Price if the
Closing Net Worth is greater than the Minimum Net Worth.
2.07 Allocation of Purchase Price. The Final Purchase Price
and the Discharged and Assumed Debt shall be allocated among the NHCA shares,
the Oak Hill shares, the Derby Nursing Center shares, VersaLink shares, the
EIDOS shares and the DAP partnership interests in the manner set forth in
Schedule 2.07 attached hereto. Buyer and each of the Owners agree that they will
file their federal, state and local income tax returns and such other forms as
may be required pursuant to the Internal Revenue Code of 1986, as amended
(hereinafter the "Code"), on the basis of the allocation set forth in Schedule
2.07 attached hereto. In addition, as set forth in Section 8.05 hereof, the
Owners and the Buyer will cooperate with one another to the extent necessary in
order to enable the Buyer to effect an election under Section 338(h)(10) of the
Code with respect to the Buyer's purchase of the Interests.
2.08 Possible Adjustments of Purchase Price. The Hamisters and
the Buyer acknowledge and agree that the Buyer would prefer not to purchase the
issued and outstanding partnership interests of DAP and that the Buyer has
requested that the Hamisters sell or otherwise convey and transfer the issued
and outstanding partnership interests of DAP provided that, in connection with
such sale, conveyance or transfer, the Buyer and any person, firm, corporation
or other entity to whom the outstanding interests of DAP are sold, transferred
and assigned (hereinafter the "Kensington Gardens Transferee") enter into a
mutually agreeable contract for the management of the Kensington Gardens skilled
nursing facility, which is currently owned by DAP. Accordingly, the Hamisters
and the Buyer acknowledge and agree that, in the event that, on or prior to the
Closing Date, the issued and outstanding partnership interests of DAP are sold
to the Kensington Gardens Transferee and the Kensington Gardens Transferee
enters into a mutually agreeable contract with the Buyer for the management of
the Kensington Gardens facility, the Base Price (and, as a consequence, the Base
Price and the Final Purchase Price) shall be reduced by an amount equal to Eight
Million Three Hundred Forty Eight Thousand Dollars $8,348,000.00.
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ARTICLE 3.
CLOSING
3.01 Time and Place of Closing. Unless this Agreement has been
terminated pursuant to the provisions of Section 14.01 or Section 14.02, the
closing of the sale and purchase of the Interests as contemplated by this
Agreement (the "Closing") shall take place at the offices of Lippes,
Silverstein, Mathias & Wexler LLP, 700 Guaranty Building, 28 Church Street,
Buffalo, New York on the third business day following the latest to occur of:
(a) the expiration (or early termination) of the waiting period (or any
extensions thereof) established by the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended (the "HSR Act"); (b) the satisfaction (or waiver) of the
conditions to the Owners' obligations to close the transactions contemplated by
this Agreement as more particularly set forth in Article 9 hereof; and (c) the
satisfaction (or waiver) of the conditions to Buyer's obligation to close the
transactions contemplated by this Agreement as more particularly set forth in
Article 10 hereof; or at such other place, date and time as the parties hereto
may agree. For purposes of this Agreement, the date on which the Closing occurs
is referred to as the "Closing Date".
3.02 Deliveries by the Owners. At the Closing:
(a) Mark E. Hamister shall deliver to the Buyer (i) stock
certificates, duly endorsed for transfer to the Buyer or accompanied by duly
executed stock powers, which stock certificates shall represent all of the
issued and outstanding shares of common stock of NHCA, Oak Hill, Derby Nursing
Center, VersaLink and EIDOS owned by Mark E. Hamister; and (ii) unless the
transfer of the partnership interests of DAP contemplated by Section 2.08 has
occurred, a bill of sale or assignment or other appropriate instruments of
conveyance which effect, in accordance with applicable law, the sale, transfer
and conveyance to the Buyer of all Mark E. Hamister's right, title and interest
in and to DAP;
(b) George E. Hamister shall deliver to the Buyer: (i) stock
certificates, duly endorsed for transfer to the Buyer or accompanied by duly
executed stock powers, which stock certificates shall represent all the issued
and outstanding common stock of NHCA, Oak Hill and Derby Nursing Center owned by
George E. Hamister; and (ii) unless the transfer of the partnership interests of
DAP contemplated by Section 2.08 has occurred, a bill of sale or assignment or
other appropriate instruments of conveyance which effect, in accordance with
applicable law, the sale, transfer and conveyance to the Buyer of all George E.
Hamister's right, title and interest in and to DAP;
(c) Oliver C. Hamister shall deliver to Buyer: (i) stock
certificates, duly endorsed for transfer to the Buyer or accompanied by duly
executed stock powers, which stock certificates shall represent all the issued
and outstanding shares of common stock of NHCA, Oak Hill, and Derby Nursing
Center owned by Oliver C. Hamister; and (ii) unless the transfer of the
partnership interests of DAP contemplated by Section 2.08 has occurred a bill of
sale or assignment or other appropriate instruments of conveyance which effect,
in accordance with applicable law, the sale, transfer and conveyance to the
Buyer of all Oliver C. Hamister's right title and interest in and to DAP;
(d) The George E. Hamister Trust shall deliver to the Buyer
stock certificates representing the George E. Hamister Trust Interests, duly
endorsed for transfer to the Buyer or accompanied by duly executed stock powers;
(e) The Oliver C. Hamister Trust shall deliver to the Buyer
stock certificates representing The Oliver C. Hamister Trust Interests, duly
endorsed for transfer to the Buyer or accompanied by duly executed stock powers;
(f) Julia Hamister shall deliver to the Buyer stock
certificates representing the Julia Hamister Interests, duly endorsed for
transfer to the Buyer or accompanied by duly executed stock powers; and
(g) The Minority Shareholders shall deliver to Buyer, stock
certificates representing the Minority Shareholders Interests, duly endorsed for
transfer to the Buyer or accompanied by duly executed stock powers.
3.03 Additional Deliveries by the Hamisters. In addition to the items
identified in Section 3.02 hereof, at the Closing, the Hamisters shall take such
action as may reasonably be necessary to cause the delivery to Buyer of:
(a) the Escrow Agreement, duly executed by the Hamisters;
(b) the corporate minute books and stock ledgers of each of
the Companies;
(c) the written resignations of the officers and directors of
each of the Companies; and
(d) any other documentation identified in Article 10 hereof
which is required to be delivered to the Buyer in satisfaction of the conditions
to the Buyer's obligation to close the transactions contemplated by this
Agreement.
3.04 Deliveries by Buyer. At the Closing, the Buyer will
deliver (unless previously delivered):
(a) to the Owners, the Escrow Agreement, duly endorsed
by the Buyer;
(b) to the Escrow Agent, by wire transfer of immediately
available funds, an amount equal to the Escrow Payment;
(c) to or on behalf of the Companies for payment to the
entities described in Schedule 9.05 attached hereto, by wire transfer of
immediately available funds, the amount of the Discharged Debt;
(d) to the Owners by wire transfer of immediately available
funds to such account or accounts as may be specified by Mark E. Hamister in
writing, an amount equal to the Closing Payment decreased by the Escrow Payment;
and
(e) any other documentation identified in Article 9 hereof
which is required to be delivered to the Owners in satisfaction of the
conditions to the Owners' obligation to close the transactions contemplated by
this Agreement.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE HAMISTERS
The Hamisters hereby jointly and severally represent and warrant to the
Buyer as follows:
4.01 Organization of the Companies. Each Company (other than DAP) is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the jurisdiction in which it was incorporated and has the corporate
power and authority to carry on its business as presently conducted. Each
Company (other than DAP) is qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the failure of such
Company to be so qualified would have a material adverse effect on the Company.
DAP is a partnership, duly organized and validly existing
under the laws of the State of New York, and has full power and authority to
carry on its business as presently conducted. DAP is qualified to do business as
a foreign partnership in each jurisdiction in which the failure of DAP to be so
qualified would have a material adverse effect on DAP.
4.02 Authorization. Each of the Hamisters and each of the Companies has
full power and authority to enter into, execute and deliver this Agreement and
each of the other documents and instruments to be executed and delivered by the
Hamisters or the Companies, as the case may be, pursuant to this Agreement and
to carry into effect the transactions contemplated hereunder and thereunder.
Each of the Minority Shareholders and Optionees has full power and authority to
enter into, execute and deliver any and all documents required to be executed
and delivered by such individuals pursuant to this Agreement and to carry into
effect the transactions contemplated by this Agreement. Mark E. Hamister has
full power and authority to act on behalf of the Minority Shareholders and
Optionees and execute and deliver this Agreement and such of the other documents
and instruments to be executed and delivered by the Minority Shareholders and
Optionees, as the case may be, pursuant to this Agreement and to carry into
effect on behalf of the Minority Shareholders and Optionees the transactions
contemplated hereunder.
4.03 Ownership of Equity Interests in the Companies. (a) Schedule
4.03(a) attached hereto contains a true and correct statement of: (i) the total
number of shares and par value of each class of capital stock or other equity
interest which each Company is authorized to issue; (ii) the total number of
shares and par value of each class of capital stock or other equity interest of
each Company which is issued and outstanding; and (iii) the identity of the
owner (or owners) of all the issued and outstanding shares of each class of
capital stock and all other outstanding equity interests of each of the
Companies together with a statement of the number of shares of capital stock or
other equity interests of each of the Companies which is owned by any such
person, firm, corporation or other entity. The equity interests described on
Schedule 4.03(a) attached hereto constitute all the outstanding equity interests
of the Companies and such equity interests are validly issued, fully paid and
non-assessable, have not been issued in violation of any preemptive or similar
rights set forth in the Incorporation Documents (as hereinafter defined) or
created by law and have not been issued in violation of any other laws, the
violation of which would have a material adverse effect on any Company.
(b) Except as otherwise set forth in Schedule 4.03(b) attached
hereto, each person, firm, corporation or other entity which is identified in
Schedule 4.03(a) as owning any issued and outstanding capital stock or other
equity interest of any Companies has good and marketable title to all the issued
and outstanding capital stock or other equity interests which such person, firm,
corporation or other entity is identified as the owner of in Schedule 4.03(a)
attached hereto, in each case, free and clear of all liens, claims, encumbrances
or other restrictions or limitations of any kind or nature.
4.04 Options or Other Rights. Except as set forth in Schedule 4.04
attached hereto, there is no existing subscription, option, warrant, call,
commitment or other agreement entitling any third party to and there are no
convertible or exchangeable securities of any of the Companies outstanding
which, upon conversion or exchange, would require the issuance of any additional
shares of capital stock or other equity interests in or indebtedness of any of
the Companies or any other securities convertible into or exchangeable for
shares of capital stock or other equity interests in any of the Companies. None
of the Companies is a party to any agreement which would require any of the
Companies to repurchase, redeem or otherwise acquire any of the issued and
outstanding shares of capital stock or other equity interests of any of the
Companies, nor is there any "phantom stock", profit-sharing, earn-out or other
plan or agreement to which any of the Companies is a party pursuant to which any
person or entity is entitled to any distribution from or equity interest in any
of the Companies.
8
4.05 Certificates of Incorporation and By-Laws. With respect to each of
the Companies, the Hamisters have heretofore delivered to the Buyer, true and
complete copies of the Certificate of Incorporation (or any other substantially
equivalent documentation which has been filed, in connection with the
organization of any such Companies, with the governmental authorities of the
jurisdiction in which any of such Companies has been incorporated or organized)
(such Certificate of Incorporation or substantially equivalent documentation
being hereinafter referred to as "Incorporation Documents") and the By-Laws (or
any other substantially equivalent documentation regulating the internal affairs
of such Companies) (such By-Laws or substantially equivalent documentation being
hereinafter referred to as the "ByLaws") as the same are in effect on and as of
the date hereof, including all amendments and restatements thereto. In addition,
the Hamisters have heretofore made the minute books of each of the Companies
available to the Buyer for inspection by the Buyer and its representatives.
4.06 Binding Agreements. This Agreement constitutes and, when executed
and delivered on the Closing Date, each of the other documents to be executed
and delivered by the Companies, the Hamisters, the Minority Shareholders and the
Optionees to the Buyer will constitute, valid and binding obligations of the
Companies, the Hamisters, the Minority Shareholders and the Optionees
enforceable against the Companies, the Hamisters, the Minority Shareholders and
the Optionees in accordance with their respective terms, except that: (a) such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting the enforcement of
creditor's rights; and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
4.07 No Violation. Except as set forth in Schedule 4.07 attached
hereto, neither the execution and delivery of this Agreement nor the
consummation by the Hamisters of the transactions contemplated hereby will: (a)
to the knowledge of the Hamisters, violate any statute or law, or any rule or
regulation of any governmental authority; or (b) violate any order, writ,
injunction or decree of any court or governmental authority which is applicable
to any Companies; or (c) to the knowledge of the Hamisters, contravene, conflict
with or result in a violation of or, to the knowledge of the Hamisters, give any
governmental body the right to revoke, suspend or modify any governmental
authorization which is held by any of the Companies or otherwise relates to the
business or assets of the Skilled Nursing Facilities Business; or (d) violate or
conflict with or constitute a default under (or an event which, with notice or
lapse of time, or both, would constitute a default under), or could result in
the termination of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
material assets of any of the Companies under any term or provision of: (i) the
Incorporation Documents and By-Laws of any of the Companies; or (ii) any
material lease, sublease, option, mortgage, note, contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character:
(A) to which any of the Owners or any of the Companies is a party; or (B) by
which any of the Companies or any of their material assets or properties may be
bound.
4.08 Financial Statements.
(a) The Hamisters have heretofore delivered to the Buyer, the
financial statements identified in Schedule 4.08(a) attached hereto (the
"Financial Statements"). The Financial Statements (and in the case of audited
financial statements the notes thereto) present fairly, in all material
respects, the financial position and results of operations of each of the
entities identified in each of the Financial Statements as of and for each of
the years set forth in such audited financial statements, in accordance with
generally accepted accounting principles ("GAAP"), consistently applied with
past practices of the Companies.
(b) Except as and to the extent reflected or reserved against
in the Financial Statements of the Skilled Nursing Facilities Business dated as
of December 31, 1995, except as set forth in Schedule 4.08(b) attached hereto,
and except for such liabilities which have been or will be incurred in the
ordinary course of business since December 31, 1995 through the date hereof and
through the Closing, there are and will be no liabilities or obligations of the
Skilled Nursing Facilities Business (whether absolute, accrued, contingent or
otherwise). In addition, none of the Companies is a party to any interest rate
swap agreement or "collar" agreement or any other agreement of similar or like
nature except as set forth in Schedule 4.08(b). Except as set forth in Schedule
4.08(b) attached hereto: (i) the payment, at the Closing, of the indebtedness
listed in Schedule 9.05 hereof will not result in any of the Companies incurring
any prepayment penalty or other liability or obligation arising out of the
payment of any such indebtedness prior to its scheduled maturity date; or (ii)
the consummation of the transactions contemplated by this Agreement will not
give rise to any of the Companies incurring any liability under any lease or
agreement to which any Company is a party.
9
4.09 Absence of Certain Changes. Except as and to the extent set forth
in Schedule 4.09 attached hereto, from December 31, 1995 through the date hereof
and through the Closing Date, none of the Companies has or will have:
(a) (i) amended its Incorporation Documents or its ByLaws; or
(ii) merged with or into or consolidated with any other person, firm,
corporation or other entity; or (iii) subdivided or reclassified any shares of
its capital stock or any of its other outstanding equity interests;
(b) issued, sold, purchased or redeemed or issued options,
warrants or other rights to subscribe to, or entered into any contracts or
commitments to issue, sell, purchase or redeem any shares of its capital stock
or other equity interests or any securities convertible into or exchangeable for
any of its shares of capital stock or other equity interests;
(c) declared or paid any dividends or declared or made any
distributions of any kind to its stockholders or other owners of any of its
outstanding equity interests or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of its capital stock or
other equity interests except for: (i) payments made to the Owners in the
ordinary course of business and consistent with the past practice of the
Companies of distributing the income of the Companies to their respective Owners
as a reflection of the fact that the Companies (with the exception of DAP, which
is a partnership) are Subchapter S Corporations; and (ii) distributions of
assets contemplated by Section 6.03 hereof;
(d) except in the ordinary course of conduct of the Skilled
Nursing Facilities Business: (i) entered into or amended any written employment
agreement or commitment with any officer, director or general manager who is
principally engaged in providing services to the Skilled Nursing Facilities
Business; (ii) entered into any material oral employment agreement or commitment
or modified in any material respect any oral employment agreement or commitment
with any officer, director or general manager who is principally engaged in
providing services to the Skilled Nursing Facilities Business; (iii) entered
into or amended any agreement with any labor union or association representing
any employee; or (iv) entered into or amended in any material respect, any
employee benefit plan or arrangement (including any arrangement to pay any
retirement or other benefits) relating to any employees who are principally
engaged in providing services to the Skilled Nursing Facilities Business;
(e) suffered any material adverse change in its financial
condition, assets, liabilities or business other than changes which arise as a
result of changes in the economy in general;
(f) except as contemplated by Section 6.03 hereof, sold,
transferred or otherwise disposed of any of its material assets, properties, or
rights other than in the ordinary course of the conduct of its business or
cancelled any claims which are material to its business;
(g) disposed of or permitted to lapse any patent, patent
application, trademark, trademark registration, trademark application, assumed
name, service mark, trade name or copyright application, copyright registration
or license which is material to the Skilled Nursing Facilities Business or
disposed of or permitted to lapse any agreement under which it has any right or
license which is material to the Skilled Nursing Facilities Business;
(h) made any single capital expenditure relating to the
Skilled Nursing Facilities Business which is in excess of Twenty
Five Thousand Dollars ($25,000) or made any commitment to make any single
capital expenditure relating to the Skilled Nursing Facilities Business which is
in excess of Twenty Five Thousand Dollars ($25,000), except for capital
expenditures and commitments to make such capital expenditures which are
included within the budget of the Companies for such period and expenditures
necessary in emergency circumstances to maintain the safety and well being of
the residents of the skilled nursing facilities;
(i) made any material change in any method of accounting
or accounting practice or policy or in its manner of keeping its
books, accounts or records;
(j) granted any general increase in the compensation or
benefits of any of its officers or employees other than in the ordinary course
of business (including any such increase pursuant to any bonus, pension, profit
sharing, severance or other plan or commitment) other than increases granted
after the date hereof which will not, in the aggregate, exceed the amounts
budgeted for such items for such periods;
(k) made any loan or advance to any of its officers, directors
or employees other than advances of expenses made in the ordinary course of its
business and the regular cash management policies of NHCA;
10
(l) entered into or terminated any material lease or sublease
(as lessor or lessee), granted, suffered or released any lien or encumbrance on
any of its assets or properties or amended any material contracts or agreements
to which it is a party or by which it is bound or its assets or properties are
bound or pursuant to which it agrees to indemnify any party or to refrain from
competing with any party;
(m) incurred or assumed any material indebtedness,
obligations or liabilities;
(n) incurred any material damage, destruction or loss,
whether or not covered by insurance, adversely affecting any
Company;
(o) suffered any judgement with respect to or made any
settlement of any claim, action, suit or proceeding except for labor grievances
involving amounts not in excess of $5,000;
(p) agreed, whether in writing or otherwise, to take any
of the actions set forth in this Section 4.09.
4.10 Title to Personal Property; Encumbrances; Etc. Except as set forth
in Schedule 4.10 attached hereto, each Company has good and valid title to the
material personal property which is used by such Company in the conduct of the
Skilled Nursing Facilities Business and which it purports to own and, on the
Closing Date, will have good and valid title to the material personal property
which is used by such Company in the conduct of the Skilled Nursing Facilities
Business and which it purports to own in each case, free and clear of any liens,
charges or encumbrances other than "Permitted Liens" as hereinafter defined. For
purposes of this Agreement "Permitted Liens" shall be deemed to refer to liens
or other encumbrances:
(a) disclosed in financial statements delivered to the
Buyer and the Closing Balance Sheet;
(b) mechanics', carriers', workmen's, repairmen's or other
like liens arising or incurred in the ordinary course of business and securing
obligations which are not overdue or which are being contested by a Company in
good faith and which are not, individually or in the aggregate, material to the
Company;
(c) other imperfections of title or encumbrances, if any,
which are not substantial in amount, do not materially detract from the value of
the property subject thereto and do not materially restrict or impair the use of
such property in the business of a Company;
(d) liens for taxes, assessments and other governmental
charges which are not due or payable or which may thereafter be paid without
interest or penalty or which are being contested by a Company in good faith and
which are not, individually or in the aggregate, material to the Company;
(e) liens upon any property acquired, constructed or improved
by a Company which secure any part of the purchase price of such property or the
cost of such construction or improvement (provided that the obligation secured
by any such lien has been properly reflected in the financial statements
delivered to the Buyer or the Closing Balance Sheet, as the case may be);
(f) items which are reserved for in the unaudited financial
statement of the Skilled Nursing Facilities Business dated at December 31, 1995
and the Closing Balance Sheet and which do not materially impair or restrict the
use of the assets subject thereto in the business of the Company;
11
(g) in the case of real property and interests in real
property, easements, servitudes, covenants, encroachments, rights of way and
other unrecorded easements or rights of way or other restrictions which do not
(and would not if recorded as to unrecorded items) materially detract from the
value of such property or such interests as used in the business of a Company;
and
(h) extensions, renewals and replacements of the liens and
other encumbrances referred to in clauses (a) through (h) above.
4.11 Real Property.
(a) Schedule 4.11(a) hereto contains a list of the address of
each parcel of real property currently owned and used by the Companies in the
conduct of the Skilled Nursing Facilities Business (hereinafter the "Owned Real
Property") and includes a statement of: (i) the approximate square footage of
each such parcel of Owned Real Property; and (ii) the identity of the Company
that is the owner of such Owned Real Property. Schedule 4.11(a) hereto contains
a list of the address of each parcel of real property currently leased and used
by the Companies in the conduct of the Skilled Nursing Facilities Business
(hereinafter the "Leased Real Property") and includes a statement of (i) the
approximate square footage of each such parcel of Leased Real Property, (ii) the
identity of the lessee and the lessor of such Leased Real Property; (iii) a
schedule identifying the commencement and termination of each Lease, all options
to purchase the Leased Real Property or to extend the terms of the Leases; and
(iv) all other contracts or agreements affecting or relating to the Owned or
Leased Real Property of any Company. Schedule 4.11(a) also identifies any leases
or subleases, assignments or licenses affecting any of the Owned or Leased Real
Property where any of the Companies is a lessor, sublessor, assignor or licensor
(collectively, the "Tenant Leases"). The Owned Real Property and the Leased Real
Property are hereinafter collectively called "Real Property."
(b) With respect to each parcel of Leased Real Property, the
Company that is identified in Schedule 4.11(a) as the lessee of such Leased Real
Property has a valid and enforceable leasehold interest in such Leased Real
Property, free and clear of all liens, charges and encumbrances and, except as
otherwise set forth in Schedule 4.11(b) attached hereto, there are no defaults
which have occurred, nor are there any conditions which, with notice or passage
of time or both, would constitute a default under the terms of any lease of any
Leased Real Property used by any of the Companies with respect to the
obligations of the Company which is identified in Schedule 4.11(a) as the lessee
of any such Leased Real Property or, to the knowledge of the Hamisters, with
respect to the obligations of the lessor of such Leased Real Property. Prior to
the date hereof, the Hamisters have made available to the Buyer, true, correct
and complete copies of each lease of any Real Property used by any of the
Companies and of each Tenant Lease.
(c) To the knowledge of the Hamisters no lessee or sublessee
has any material offset right, defenses or credits against rent or other amounts
claimed by any Company, and no Company has any work obligations or obligations
to return funds as a lessor or sublessor. Except as set forth in Schedule
4.11(d), to the knowledge of the Hamisters, none of the Real Property or the
use, occupancy or operation thereof is in violation of any restrictive
covenants, laws (including, without limitation, any building, zoning,
environmental, health, fire, safety or other ordinances, codes or regulations)
in such manner as to interfere with the use and occupancy thereof in the
ordinary course of business, and no written notice from any governmental body or
insurance underwriters or rating bureaus has been served upon any Company or
upon its Real Property claiming any violation of any such laws, ordinances,
codes or regulations, requiring or calling attention to the need for any
material work, repairs, construction, alterations or installations on, or in
connection with said Real Property which has not been complied with, or
establishing any material assessments for public improvements which could be a
lien on any of the Real Property if not paid when due or increasing the
assessments in any material way on any Real Property or claiming any material
monies are due with respect to the Real Property.
12
(d) Except as otherwise set forth in Schedule 4.11(d) attached
hereto, none of the Real Property which is used by any of the Companies in the
conduct of the Skilled Nursing Facilities Business is subject to any pending or,
to the knowledge of the Hamisters, threatened condemnation proceeding by any
public or quasi-public agency or other authority which has or would have an
adverse effect on the right or ability of the Company that (as described in
Schedule 4.11(a) attached hereto) is the owner or lessee of any such Real
Property, to continue to conduct its business in the ordinary course.
(e) All transfer taxes payable in connection with the
acquisition by any Company of any Owned Real Property have been paid.
4.12 Leases. Schedule 4.12 attached hereto contains a list of each
lease relating to any personal property used by any of the Companies in the
conduct of its business which provides for annual lease payments in excess of
Twenty Five Thousand Dollars ($25,000) whose term is in excess of one (1) year
and which is not cancelable upon thirty (30) or fewer days' notice without any
liability, penalty or premium (other than a nominal cancellation fee or
charge)(the "Leases"). Prior to the date hereof, the Hamisters have made
available to the Buyer copies of the Leases including all amendments thereto and
all modifications thereto. Except as set forth in Schedule 4.12 attached hereto,
to the knowledge of the Hamisters, no material default has occurred under the
terms of any of the Leases with respect to the obligations of any of the
Companies or any other parties to the Leases.
4.13 Patents, Trademarks, Trade Names, Etc. Schedule 4.13 attached
hereto contains a list and a general description of: (a) all material patents,
trademarks, trademark registrations, trade names, assumed names, copyrights,
copyright registrations, and all applications therefor, presently owned, held or
used by any of the Companies in connection with the conduct by the Companies of
the Skilled Nursing Facilities Business or with respect to which any of the
Companies owns or holds any license (hereinafter collectively referred to as the
"Patents and Trademarks"). Except as set forth in Schedule 4.13, the Hamisters
have not and, none of the Companies has, received any written notice and, to the
knowledge of the Hamisters, there is no basis for any written notice to be
issued to any of the Companies, that the use by any of the Companies of the
Patents and Trademarks is unlawful or infringes upon the rights of any person,
firm, corporation or other entity.
4.14 Litigation. Except as set forth in Schedule 4.14 attached hereto,
there are no actions, suits or written claims or legal, administrative,
equitable or arbitration proceedings or outstanding orders, judgments,
injunctions, awards or decrees of any court, any governmental or regulatory body
or any arbitration tribunal (such outstanding orders, judgements, injunctions,
awards or decrees being hereinafter referred to individually as an "Order")
pending or, to the knowledge of the Hamisters, threatened against or involving
the Owners or any of the Companies which: (a) seek to prevent the consummation
of the transactions contemplated by this Agreement; or (b) relate to the
business of any of the Companies or any of the assets owned or used by any of
the Companies. Each Company is in material compliance with all the terms and
requirements of any Order which applies to it or any of the assets owned or used
by it. Since December 31, 1995, no Company has received any written notice from
any governmental body or other person regarding any actual, alleged, possible or
potential violation or failure to comply with the terms or requirements of any
Order.
4.15 Banks and Brokers. Schedule 4.15 attached hereto sets forth the
name of each bank, trust company, securities or other broker or other financial
institution with which any of the Companies has any account, lock box, safe
deposit box or vault.
13
4.16 Employee Benefit Plans. (a) Except for any individual employment,
consulting or severance contracts disclosed in Schedule 4.20 attached hereto,
Schedule 4.16(a) attached hereto sets forth a list and a general description for
each of the Companies of:
(i) each written personnel practice (other than personnel
practices required to be maintained by any of the Companies under the
terms of any law, rule or regulation of any federal, state or local
governmental authority) (hereinafter the "Personnel Practices"),
including, without limitation, vacation policies, holiday pay policies,
severance pay policies, sick or personal pay policies, incentive bonus
programs, bereavement pay programs, company car policies, service award
policies, tuition refund policies, relocation assistance policies and
patent award policies;
(ii) each plan, fund or program which provides to its
participating employees or beneficiaries, through the purchase of
insurance or otherwise, medical, surgical or hospital care or benefits,
in the event of sickness, accident, disability, death or unemployment,
vacation, benefits or severance benefits (other than any such plans,
funds or programs which are required to be maintained by any of the
Companies under the terms of any law, rule or regulation of any
federal, state or local governmental authority) (each of such plans,
funds or programs being hereinafter referred to individually as an
"Employee Welfare Plan" and collectively as the "Employee Welfare
Plans"); and
(iii) each plan, fund or program which, by its express terms,
provides a retirement income to employees or results in the deferral of
income by employees for periods extending to the termination of covered
employment or beyond (other than any such plans, funds or programs
which are required to be maintained by any of the Companies under the
terms of any law, rule or regulation of any federal, state or local
governmental authority) (each of such plans, funds or programs being
hereinafter referred to individually as an "Employee Pension Plan" and
collectively as the "Employee Pension Plans")
which is maintained, assumed or contributed to by any of the Companies for the
benefit of any employee of the Skilled Nursing Facilities Business (all such
Personnel Practices, Employee Welfare Plans and Employee Pension Plans being
sometimes hereinafter referred to individually as a "Plan" and collectively as
the "Plans").
(b) Except as otherwise set forth in Schedule 4.16(b) attached
hereto, the Hamisters have previously delivered to the Buyer: (i) complete
copies of all written plan documents which set forth the terms of each of the
Plans and, where applicable, complete copies of any related trusts; and (ii)
where applicable, copies of the most recent annual report or registration forms,
if any, required to be filed with respect to any such Plans with any
governmental agency or authority and copies of the most recent letters of
determination from the Internal Revenue Service.
(c) Each of the Plans is in material compliance with the
applicable requirements of all laws, rules and regulations of any federal, state
or local governmental authority relating to the Plans, and each of the Plans has
been administered by the Companies and plan fiduciaries, as applicable, and the
Companies and plan fiduciaries have complied, in all material respects, in
substantial compliance with the respective plan documents and all laws, rules
and regulations of any federal, state or local governmental authority relating
to the Plans.
(d) With respect to the Plans, the Companies will have made,
on or prior to the Closing Date, all payments required to be made by them on or
prior to the Closing Date and will have accrued (in accordance with generally
accepted accounting principles consistently applied) all payments due but not
yet payable as of the Closing Date.
(e) Except as set forth in Schedule 4.16(e) attached hereto,
there would be no liability of Companies under Title IV of the Employee
Retirement Security Act of 1974, as amended ("ERISA") if any Employee Pension
Plan were terminated as of the Closing Date and the Companies have not incurred,
and will not incur, any withdrawal liability, nor do Companies have any
contingent withdrawal liability, to any Multiemployer Plan under ERISA, as
amended by the Multiemployer Pension Plan Amendments Act of 1980.
(f) Except as disclosed in Schedule 4.16(a), no event has
occurred or will occur which will result in liability to any of the Companies in
connection with any Employee Pension Plan established, maintained, or
contributed to (currently or previously) by any entity other than any of the
Companies, which entity, together with a Company, constitute elements of either:
(i) a controlled group of corporations (within the meaning of Section 414(b) of
the Code; (ii) a group of trades or business under common control (within the
meaning of Sections 414(c) of the Code or 4001 of ERISA); (iii) an affiliated
service group (within the meaning of Section 414(m) of the Code); or (iv)
another arrangement covered by Section 414(o) of the Code.
14
4.17 Consents and Approvals. Except for consents listed in Schedule
4.17 attached hereto and for the filing of pre-merger notification documentation
under the HSR Act and the expiration of all applicable waiting periods
thereunder, no permit, consent, approval or authorization of, or declaration,
filing or registration with: (a) any governmental agency or authority or (b) any
other person, firm or corporation in connection with any material contract, real
property mortgage, material personal property lease or any Real Property Lease,
is necessary or required to be obtained in connection with the execution and
delivery by the Hamisters of this Agreement or the consummation by the Owners of
the transactions contemplated hereby. Schedule 4.17 attached hereto also
contains a list of all material consents, approvals, permits, licenses,
authorizations, declarations, filings, or registrations which, to the knowledge
of the Hamisters, are required to be obtained by the Companies from any
governmental agency or authority in connection with the conduct of the Skilled
Nursing Facilities Business.
4.18 Environmental Protection. (a) Except as set forth in Schedule
4.18(a) attached hereto, to the knowledge of the Hamisters, each Company has
obtained all permits, licenses, registrations and other authorizations which:
(i) are required to be obtained by any such Company under applicable federal,
state or local laws, statutes, regulations, codes, promulgated and legally
enforceable guidelines, orders or decrees relating to pollution, protection of
the environment and human health and safety or the exposure of persons to
Regulated Materials, as hereinafter defined (collectively "Environmental Laws"),
including, without limitation, laws relating to emissions, discharges and
releases or threatened releases into the environment (including, without
limitation, the work place, air, surface water, ground water or land) of any
substance identified or regulated in any Environmental Law (such substances
being hereinafter referred to as "Regulated Materials"); and (ii) relate to the
use, presence, treatment, storage, disposal, transport or handling of Regulated
Materials.
(b) Except as set forth in Schedule 4.18(b) attached hereto,
to the knowledge of the Hamisters, each Company has been and is in material
compliance with: (i) all terms and conditions of all permits, licenses,
registrations and other authorizations required under any Environmental Law;
(ii) all other limitations, restrictions, conditions, prohibitions, requirements
and obligations contained in any Environmental Law as applicable to such
Company, its properties or operations; and (iii) all plans, orders, decrees,
judgments, injunctions, settlements or private agreements, notices or demand
letters applicable to such Company, its properties or operations and issued,
entered, promulgated or approved under any Environmental Law.
(c) Except as set forth in Schedule 4.18(c) attached hereto,
none of the Companies has received any notice, written or otherwise, of, nor to
the knowledge of the Hamisters are there, any past or present conditions,
circumstances, activities, practices, incidents or actions of any Company or in
connection with any Company's operations or property, relating to the use,
presence, treatment, storage, disposal, transport or handling of Regulated
Materials or relating to any emission, discharge, release or threatened release
into the environment (including, without limitation, the work place, air,
surface water, ground water or land) of any Regulated Material that: (i) may
interfere with or prevent continued compliance by any of the Companies with any
Environmental Law or any plan, order, decree, settlement or private agreement,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder; (ii) may give rise to any common law, statutory or other
legal liability; or (iii) may otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation.
(d) Except as set forth in Schedule 4.18(d) attached hereto,
to the knowledge of the Hamisters, there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice or demand letter, notice of
violation, investigation, request for information or other proceeding pending or
threatened, against any Company relating in any way to any violation of or
liability under any Environmental Law or any plan, order, decree, settlement or
private agreement, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(e) Except as set forth in Schedule 4.18(e) attached hereto,
to the knowledge of the Hamisters: (i) there are no underground or aboveground
storage tanks on or under any Company's property and no underground storage tank
previously located on any such property has been removed therefrom and any
underground storage tank disclosed in Schedule 4.18(e) and the piping
appurtenant thereto, is free of leaks and spills or other discharges; (ii) no
Regulated Materials have been disposed of in, on or under any Company's property
nor is any such property listed, now or in the past, on a federal or state
registry of historic or inactive waste disposal sites; (iii) no off-site waste
disposal location to which any Company's wastes have been taken, appears or has
appeared on any federal or state list of historic or inactive waste disposal
sites; (iv) no Regulated Materials are currently present in, on or under any
such property except for such ordinary quantities as may be necessary for
grounds and facility maintenance, and medicines and medical supplies, used in
the normal, lawful operation of the Companies; and (v) no property of any
Company is located in or contains, any flood plain, coastal zone, wetlands,
asbestos, PCBs, urea formaldehyde or radon.
15
(f) No lien or superlien has been imposed on the property of
any Company by any governmental agency or third person in connection with the
presence or release of any Regulated Material.
4.19 Insurance. Schedule 4.19 attached hereto contains a general
description (including the amount of coverage under and the amount of any
applicable deductibles) of all policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the any of the
Companies and issued with respect to or covering risks associated with the
assets, properties and business of the Skilled Nursing Facilities Business. All
premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, no notice of cancellation or termination has been
received with respect to any such policy and, to the knowledge of the Hamisters,
all such policies are in full force and effect. Such policies are valid,
outstanding and, to the knowledge of the Hamisters, enforceable policies; will
remain in full force and effect through the respective dates set forth in
Schedule 4.19 without the payment of additional premiums; and will not, with
respect to all periods up to and including the Closing Date, in any way be
affected by, or terminate or lapse by reason of the transactions contemplated by
this Agreement except to the extent set forth in Schedule 4.19. Except as set
forth on Schedule 4.19, all policies are: (a) "occurrence" policies; and (b) are
sufficient for compliance in all material respects by each Company with all
requirements of the law and all contracts to which it is a party.
4.20 Contracts and Commitments. (a) Except for leases required to be
disclosed pursuant to Sections 4.11 and 4.12 hereof, Plans required to be
disclosed pursuant to Section 4.16(a) hereof and insurance policies required to
be disclosed by Section 4.19 hereof, Schedule 4.20(a) attached hereto contains a
list of each written contract, subcontract, agreement, commitment, option, note,
bond, mortgage, indenture, deed of trust, guarantee, franchise or license which:
(i) any of the Companies is a party to or the beneficiary of; (ii) relates to
any Real Property or the Skilled Nursing Facilities Business; and (iii)(A)
requires payments in excess of Twenty-Five Thousand Dollars ($25,000) per year;
(B) contains the terms and conditions: (I) upon which any person is employed as
an officer, general manager, or consultant; or (II) upon which any severance or
other termination payments (other than severance or termination payments
required be made by applicable law) are payable; (C) provides preferential
rights to purchase any material quantity of any assets; (D) limits the freedom
of any party to engage in any business in any geographic area; (E) contains any
"change in control" provision which would be breached by the consummation of the
transactions contemplated by this Agreement; (F) contains the terms of any
guaranty of the payment or performance of any liabilities or obligations of any
person, firm, corporation or other entity; or (G) provides for the sale of
assets or properties other than in the ordinary course of business; or (H)
requires any Company to indemnify any person, firm, corporation or other entity
(hereinafter individually referred to as a "Contract" and collectively as the
"Contracts"). Prior to the date hereof the Hamisters have delivered or otherwise
made true, correct and complete copies of the Contracts available to the Buyer,
including all amendments thereof and modifications thereto.
(b) Except as set forth in Schedule 4.20(b) attached hereto,
to the knowledge of the Hamisters, each of the Contracts is valid, binding and
in full force and effect and enforceable in accordance with its terms except to
the extent that: (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights; and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
(c) Except as set forth in Schedule 4.20(c) attached hereto,
each of the Companies is in compliance with the material terms and conditions of
the Contracts to which it is a party and, to the knowledge of the Hamisters,
there is no basis for any claim that any other party to any of the Contracts is
in material default with respect to its obligations under such Contracts.
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4.21 Tax Matters. (a) Except as set forth in Schedule 4.21 attached
hereto: (i) each of the Companies has filed or caused to be filed with the
appropriate governmental agencies all Tax Returns (as hereinafter defined)
required to be filed prior to the date hereof with respect to the Companies and
their respective operations and assets for all periods ending on or prior to the
date hereof; (ii) all Tax Returns filed by the Companies constitute complete and
accurate representations in all material respects of the respective tax
liabilities of the Companies and the Companies have paid all Taxes owed, whether
or not pursuant to such Returns; (iii) the Companies have not waived or extended
any applicable statute of limitations relations to the assessment of Taxes; (iv)
except as set forth in Schedule 4.21(a), each Company that is a corporation has
in effect, a valid election to be treated as an "S" corporation under Section
1362 of the Code and under the corresponding provisions of those state and local
laws where each such Company is required to file income Tax Returns; (v) except
as set forth in Schedule 4.21(a), each Company has withheld all Taxes required
to be withheld and has paid, within the time required for payment, all Taxes
required to have been paid in connection with amounts paid or owing to any
employee, creditor, stockholder or other third party; and (vi) no examinations
of the Tax Returns of the Companies by the Internal Revenue Service or any other
applicable state or federal taxing authority is currently in progress other than
internal examinations by such taxing authorities of which the Hamisters have no
knowledge nor, to the knowledge of the Hamisters, threatened and no deficiencies
have been asserted or assessed against the Companies as a result of any audit by
the Internal Revenue Service or any state or local taxing authority and, to the
knowledge of the Hamisters, no such deficiency has been proposed or threatened.
(b) For the purposes of this Agreement: (i) "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, excise, property, sales and franchise taxes (including any
interest, penalties or additions attributable to or imposed on or with respect
to any such assessment) imposed by the United States or any other jurisdiction,
and any state, province, county, local or other government, taxing authority, or
subdivision thereof; (ii) "Income Taxes" shall mean all taxes (including any
interest, penalties or additions attributable to or imposed on or with respect
to such taxes) imposed by the United States or any jurisdiction or by any state,
province, county, local or other government, taxing authority or subdivision
thereof, solely with respect to any income of any of the Companies excluding,
specifically, any sales taxes, transfer taxes, real or personal property taxes;
and (iii) "Tax Return" shall mean any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any governmental entity or other authority in
connection with the determination, assessment or collection of any Taxes
(whether or not such Taxes are imposed on any of the Companies) or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
4.22 Labor Relations. Schedule 4.22 attached hereto contains a list of
each contract or other agreement between the Companies and any labor union or
other association representing any employees of the Skilled Nursing Facilities
Business (each such contract being hereinafter referred to as a "Labor
Agreement"). Prior to the date hereof, the Hamisters have delivered to the Buyer
true and complete copies of each Labor Agreement listed in Schedule 4.22
attached hereto. Except as set forth in Schedule 4.22 attached hereto, the
Skilled Nursing Facilities Business has not, at any time during the last three
years, experienced any material labor disputes or any work stoppage due to labor
disagreements. In addition, except to the extent set forth in Schedule 4.22
attached hereto: (a) there is no unfair labor practice charge, or complaint or
other action against any of the Companies relating to the Skilled Nursing
Facilities Business which is pending or, to the knowledge of the Hamisters,
threatened before the National Labor Relations Board or any other federal, state
or local administrative or governmental agency or authority having regulatory
powers with respect to the relationships between employers and employees and
none of the Companies is subject to any order to bargain by the National Labor
Relations Board; (b) there is no, labor strike or work stoppage actually pending
or, to the knowledge of the Hamisters, threatened against or affecting the
Skilled Nursing Facilities Business; (c) no question concerning representation
is pending or to the knowledge of the Hamisters is threatened respecting
employees of the Skilled Nursing Facilities Business; and (d) no written
grievance which might have an adverse effect on any of the Skilled Nursing
Facilities Business is pending.
4.23 Suppliers. To the knowledge of the Hamisters, none of the
Companies is engaged in any dispute with any supplier to the Skilled Nursing
Facilities Business except for disputes with suppliers to the Skilled Nursing
Facilities Business which, individually or in the aggregate, will not have a
material adverse effect on the Skilled Nursing Facilities Business. Except as
set forth in Schedule 4.23 attached hereto, no single supplier provides more
than five percent (5%) of the Companies purchases.
17
4.24 Medicaid and Medicare Cost Reimbursements. All cost reports
required to be filed with any state, federal or other governmental agency in
connection with the reimbursement to any Company by Medicare or Medicaid or any
other third party payment programs of any costs relating to the Skilled Nursing
Facilities Business (hereinafter individually a "Cost Report" and collectively
the "Cost Reports") have been filed by the Companies within the time (including
any applicable extensions thereof) required to obtain reimbursement of costs
which are eligible for reimbursement under the Medicare or Medicaid programs.
Except as set forth in Schedule 4.24, none of the Companies have received any
written notice of any pending audit by Medicare, Medicaid or any other third
party payment program and none of the Companies has received any written notice
that Medicare, Medicaid or any other third party payment program has any claims
for disallowance of costs or charges against any of them which could result in
offsets against future payments.
4.25 Compliance with Law. Except for matters pertaining to the Plans
which are provided for in Section 4.16 and matters pertaining to Environmental
Laws which are provided for in Section 4.18, the operations of the each Company
have been conducted in accordance with all applicable laws, regulations and
other requirements of all national governmental authorities, and of all states,
municipalities and other political subdivisions and agencies thereof, having
jurisdiction over such Company, including, without limitation, all such laws,
regulations and requirements relating to employment of unauthorized aliens,
antitrust, consumer protection, equal opportunity, health, occupational safety,
pension and securities, except for deviations from such laws arising from the
operations of such Company which, individually or in the aggregate would not
have a material adverse effect on the business of any such Company. Except as
set forth in Schedule 4.25 attached hereto, the Skilled Nursing Facilities
Business has not received any written notification of any asserted failure by
the Skilled Nursing Facilities Business to comply with any such laws, rules or
regulations. Except as set forth in Schedule 4.25 attached hereto, each Company
has all material facilities licenses necessary to the conduct of the Skilled
Nursing Facilities Business. Except as set forth on Schedule 4.25, each Company
is eligible to participate in and is fully certified as a provider under
Medicare and under the medical assistance programs of the states in which the
skilled nursing facilities of such Company are located and each Company operates
in full compliance with all applicable requirements for participation in such
programs except for deviations from compliance with such requirements which
would not have a material adverse effect on any such Company. Each Company has
correctly maintained in all material respects all records required to be
maintained by Title XVIII ("Medicare") and Title XIX ("Medicaid") of the Social
Security Act and applicable state medical assistance plans.
4.26 Brokers and Finders. Except for Chase Securities Inc. which has
been engaged by NHCA in connection with the transactions contemplated by this
Agreement, the Hamisters have not and none of the Companies or any of their
respective officers, directors or employees, as the case may be, has employed
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
4.27 Potential Conflicts of Interest. Except as set forth in Schedule
4.27 attached hereto, no contract, agreement or arrangement (excluding
employment agreements and rights arising under any of the Plans) providing for
the purchase or sale of any goods or services or relating to any interest in any
property, whether real or personal, or tangible or intangible, which is used by
or relates to any of the Companies exists between: (a) any of the Hamisters and
any of the Companies; (b) any of the Hamisters and any officers or directors of
any of the Companies; or (c) between any of the Companies and any officers or
directors of any of the Companies. Except as set forth in Schedule 4.27 attached
hereto, none of the partners, stockholders, officers or directors of any of the
Companies has any cause of action or other claim whatsoever against any of the
Companies.
4.28 Books and Records. The books of account, minute books, stock
record books and other records of the Companies, all of which have been made
available to the Buyer are complete.
4.29 Additional Representations and Warranties. To the knowledge of the
Hamisters, no representation or warranty of the Hamisters in this Agreement and
no statement in any of the Schedules hereto omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. No notice given pursuant
to Section 6.04 will contain any untrue statement or omit to state a material
fact necessary to make the statements therein or in this Agreement, in light of
the circumstances in which they were made, not misleading.
4.30 Accounts Receivable. The accounts receivable of the Skilled
Nursing Facilities Business reflected on the December 31 Balance Sheet and all
accounts receivable that have arisen since December 31, 1995 have arisen in the
ordinary course of business and represent valid obligation to the Companies.
4.31 Representations and Warranties on the Closing Date; Disclosure.
The representations and warranties contained in this Article 4 shall be true and
complete on and as of the Closing Date with the same force and effect as though
made on the Closing Date. Disclosure of any fact or information in any Schedule
required by this Article 4 shall be deemed for purposes of this Agreement to be
disclosure on any other Schedule required by any Section of this Agreement on
which such item could have been listed pursuant to this Agreement.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Owners as follows:
5.01 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Pennsylvania and has the
corporate power and authority to carry on its business as presently conducted.
5.02 Authorization by Buyer. The Buyer has full corporate power and
authority to enter into, execute and deliver this Agreement and each of the
other documents and instruments to be executed and delivered by Buyer pursuant
to this Agreement and to carry into effect the transactions contemplated
hereunder and thereunder. The execution and delivery of this Agreement and each
of the other documents and instruments to be executed and delivered by the Buyer
pursuant to this Agreement and the consummation of the transactions contemplated
hereunder and thereunder have been duly authorized by all necessary corporate
action on the part of Buyer. No other corporate act or proceeding on the part of
Buyer or its stockholders is necessary to authorize the execution and delivery
of this Agreement and each of the other documents and instruments to be executed
and delivered by Buyer pursuant to this Agreement or the consummation of the
transactions contemplated hereby and thereby.
5.03 Binding Agreements. This Agreement constitutes, and, when executed
and delivered on the Closing Date, each of the other documents and instruments
to be executed and delivered by Buyer to any of the Owners will constitute,
valid and binding obligations of Buyer, enforceable against Buyer in accordance
with its terms except that: (a) such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights generally; and, (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
5.04 No Violation. Neither the execution and delivery of this
Agreement, nor the consummation by Buyer of the transactions contemplated hereby
will: (a) to the knowledge of Buyer, violate any statute or law, or any rule or
regulation of any governmental authority; (b) violate any order, writ,
injunction or decree of any court or governmental authority; or (c) violate or
conflict with or constitute a default under (or an event which, with notice or
lapse of time, or both, would constitute a default under) or will result in the
termination of, or accelerate the performance required by, or result in the
creation of any material lien, security interest, charge or encumbrance upon any
of the material assets of Buyer under any term or provision of: (i) the Articles
of Incorporation or By-Laws of Buyer; or (ii) any material lease, contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Buyer is a party or by which Buyer or any of its assets or
properties may be bound or affected.
5.05 Litigation. There are no actions, suits or claims or legal,
administrative, equitable or arbitration proceedings or outstanding orders,
judgments, injunctions, awards or decrees of any court, any governmental or
regulatory body or arbitration tribunal pending, or to the knowledge of Buyer,
threatened against or involving Buyer which: (a) seek to prevent the
consummation of the transactions contemplated by this Agreement; or (b) or
relate to the business or operations of the Buyer and which, if adversely
decided, would have a material adverse effect on the business, assets or
financial condition of the Buyer.
5.06 Consents and Approvals. Except for consents listed in Schedule
5.06 attached hereto and for the filing of pre-merger notification documentation
under the HSR Act and the expiration of all applicable waiting periods
thereunder, no permit, consent, approval or authorization of, or declaration,
filing or registration with, any governmental agency or authority or any other
person, firm or corporation is necessary or required to be obtained by Buyer in
connection with the execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the transactions contemplated hereby.
5.07 Financing. As of the date hereof, Buyer has net equity capital
funds and borrowing capacity under existing credit lines which will be
sufficient to enable Buyer to purchase the Companies and fund the ongoing
business and operations of the Companies (the funds to be loaned to Buyer for
such purposes being hereinafter referred to as the "Acquisition Financing").
5.08 Purchase for Investment. Buyer is purchasing all the issued and
outstanding common stock and other equity interests of the Companies for
investment and not for resale or distribution and the Buyer will not sell,
transfer, offer for sale, pledge, hypothecate or otherwise dispose of any of
such issued and outstanding common stock or other equity interests in violation
of any applicable securities laws or regulations.
5.09 Brokers and Finders. Except as set forth in Schedule 5.09, neither
Buyer, nor any of its officers, directors or employees, as the case may be, has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders fees in connection with the transactions contemplated by
this Agreement.
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ARTICLE 6.
COVENANTS OF THE HAMISTERS
6.01 Access Pending the Closing Date. Subject to applicable laws and
upon reasonable advance written notice, the Hamisters will and will cause each
of the Companies to: (a) grant to Buyer and its counsel, accountants and other
representatives, reasonable access to all books, contracts, commitments and
records of each of the Companies; and (b) furnish Buyer and its representatives
all such information as Buyer or its representatives may reasonably request
concerning the business and assets of the Companies. In addition, the Buyer,
upon reasonable advance written notice, shall have the right to enter into the
Real Property during ordinary business hours for the purpose of undertaking such
studies and inspections as the Buyer may reasonably deem appropriate including,
without limitation, surveys and environmental reports and inspections of the
Real Property.
6.02 Conduct of Business Prior to the Closing. During the period
commencing on the date hereof and ending on the Closing Date, except for the
transactions contemplated by Section 6.03 hereof, the Hamisters will take any
and all action necessary to prevent each of the Companies from taking any action
that would cause any of the representations and warranties contained in Section
4.09 to be untrue as of the Closing Date. In addition, except for the
transactions contemplated by Section 6.03 hereof, during the period beginning on
the date hereof and ending on the Closing Date, the Hamisters will use their
reasonable best efforts and will take such action as may be necessary to cause
each of the Companies to use its reasonable best efforts to operate the Skilled
Nursing Facilities Business in the ordinary course and keep intact the business
organization and reputation of each of such Companies and to preserve for the
Buyer the goodwill of the suppliers, patients, referral sources, employees and
others having business relations with each of such Companies.
6.03 Pre-Closing Re-Positioning. The businesses in which the Companies
are engaged include a joint venture between NHCA and Millard Fillmore Health
Systems (the "Joint Venture"), a home health care company operated by DAP and
known as Nurses PRN of Richmond and, certain additional home health care
companies operated by NHCA and more particularly described in Schedule 6.03
attached hereto (Nurses PRN of Richmond and the home health care companies
described in Schedule 6.03 attached hereto being hereinafter collectively
referred to as the "Home Health Care Division") and ProxyFusion, Inc., a Florida
corporation which is engaged in the provision of intravenous infusion therapy
("ProxyFusion") all the issued and outstanding common stock of which is owned,
collectively, by NHCA and Oak Hill.
The Buyer acknowledges and agrees that the Owners do not
intend to sell to the Buyer and the Buyer does not intend to purchase, any of
the stock, interests, assets or business of the Joint Venture, the Home Health
Care Division and ProxyFusion. Accordingly, the Buyer hereby acknowledges and
agrees that, prior to the Closing: (a) NHCA shall have completed any and all
action reasonably necessary to transfer all of the assets, business and
interests comprising the Joint Venture to an affiliate of NHCA (other than the
Companies) and shall have caused such affiliate to assume any liabilities of
NHCA relating to or which have been incurred in connection with the Joint
Venture; (b) NHCA and DAP shall have completed any and all action reasonably
necessary to transfer all of their respective rights, titles and interests in
and to the assets of NHCA and DAP which are used exclusively by NHCA or DAP in
the business of the Home Health Care Division to an affiliate of NHCA (other
than the Companies), and shall have caused such affiliate to assume all the
liabilities of NHCA and DAP relating to such assets or which have been incurred
in connection with the business of the Home Health Care Division; (c) NHCA and
Oak Hill shall have completed the transfer of all the issued and outstanding
common stock of ProxyFusion (including all the business and assets of
ProxyFusion subject to all the liabilities of ProxyFusion) to an affiliate of
NHCA (other than the Companies); and (d) the Companies shall take any and all
action reasonably necessary to transfer all of their respective rights, titles
and interests in and to all of the personal property of the Companies located at
651 Delaware Avenue, Buffalo, New York (hereinafter the "Corporatre Headquarters
Personalty"). For purposes of this Agreement, the businesses, assets,
liabilities, interests and capital stock, as applicable, of the Joint Venture,
the Home Health Care Division and ProxyFusion and the Corporate Headquarters
Personalty are sometimes hereinafter collectively referred to as the "Retained
Businesses". Prior to the transfer of the Retained Business, the Hamisters shall
deliver copies of the documents providing for the transfer of the Retained
Business to the Buyer.
6.04 Supplements to Schedules; Notices . Between the date of this
Agreement and the Closing Date, each of the Hamisters will promptly notify Buyer
in writing if he or she becomes aware of any fact or condition that causes or
constitutes a breach of any of the Hamisters' representations and warranties as
of the date of this Agreement, or if he or she becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Schedules if the Schedules were
dated the date of the occurrence or discovery of any such fact or condition, the
Hamisters will promptly deliver to the Buyer for its information a supplement to
the Schedules to this Agreement which reflects such change. Notwithstanding the
delivery of such supplement, no rights or remedies of Buyer under this Agreement
which could have been exercised prior to the delivery of such supplement shall
be compromised, affected or limited by the delivery of such supplement. During
the same period, each of the Hamisters will promptly notify the Buyer of the
occurrence of any breach of any covenant of the Hamisters in this Article 6 or
of the occurrence of any event that may make the satisfaction of the conditions
in Article 9 impossible or unlikely.
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6.05 No Solicitation. Except for the transactions contemplated by
Section 6.03 hereof and the possible sale, transfer or assignment of the
partnership interests in DAP contemplated by Section 2.08 hereof, the Hamisters
shall not and shall take any and all action necessary to prevent any officers,
directors, employees or agents of any of the Companies from directly or
indirectly, encouraging, soliciting, initiating or entering into any discussions
or negotiations concerning, any disposition of substantially all the stock,
equity interests or assets of any of the Companies or any of the business of the
Companies (other than pursuant to this Agreement) or any proposal therefor, or
from furnishing or causing to be furnished any information concerning the
Companies to any party in connection with any transaction involving the
acquisition of any stock, equity interests or assets of any of the Companies or
any of the business of the Companies by any person other than the Buyer.
6.06 Non-Competition. (a) The Buyer hereby acknowledges that the
Retained Businesses are, in part, engaged in the same type of business as the
Skilled Nursing Facilities Business being purchased hereunder. Accordingly, the
Buyer hereby acknowledges and agrees that, except as expressly limited by the
provisions of Section 6.06(b) hereof, each of the Hamisters, individually and
collectively, and any corporation, partnership, limited liability company, trust
or other entity in which any of the Hamisters, individually or collectively,
owns or own more than fifty percent (50%) of the issued and outstanding voting
stock or other equity interests (such corporations, partnerships, limited
liability companies, trusts or other entities being hereinafter referred to
individually as a "Hamister Affiliate" and collectively as the "Hamister
Affiliates") shall be entitled to engage in any business whatsoever in any
location whatsoever, even though such business competes, directly or indirectly,
with the Skilled Nursing Facilities Business being sold to Buyer hereunder.
Notwithstanding the foregoing, the Hamisters acknowledge that the Buyer and the
Companies may suffer damages if the Hamisters or any person, corporation,
limited liability company, partnership, trust or any other entity affiliated
with any Hamister (a "Restricted Affiliate") engages in any of the activities
restricted pursuant to the provisions set forth in Section 6.06(b).
(b) For purposes of setting forth the restrictions applicable
to the Hamisters and the Restricted Affiliates relating to competitive
activities, none of the Hamisters or any Restricted Affiliate shall, for a
period of five (5) years from the Closing Date (the "Covenant Term"), without
the prior express written consent of the Buyer, in any capacity (including, but
not limited to, owner, partner, shareholder, consultant, agent, employee,
officer, director or otherwise) directly or indirectly, for his or its own
account or for the benefit of any person, firm, corporation, partnership,
limited liability company, trust or other entity, establish, engage in or be
connected with any: (i) skilled nursing facility including, without limitation,
(A) any business which provides subacute care and traditional and medically
complex, in-patient, rehabilitative services; or (B) any business engaged in
management of skilled nursing facilities; or (C) any business which provides
contracted rehabilitative services; or (D) any business which provides enteral
and parenteral feeding systems to skilled nursing facilities or beds (the
activities described in subsections (A) through (D) above being hereinafter
referred to collectively as the "Proscribed Businesses"); and (ii) is located
within the states of Virginia, Florida, Connecticut or Massachusetts (the
geographic area contained within each such state being hereinafter referred to
as the "Restricted Territory"). Ownership or purchase by any or all of the
Hamisters at or after the time of Closing, of less than five percent (5%) of the
issued and outstanding capital stock of any enterprise engaged in any Proscribed
Businesses in the Restricted Territory, the securities of which are listed on a
national securities exchange or included in the national list of
over-the-counter securities shall not be deemed a violation of this Section
6.06(b). In addition, the Hamisters shall not be deemed to be in violation of
this Section 6.06(b) in the event that, following the Closing Date, the
Hamisters or any Hamister Affiliate acquires substantially all the assets of any
person, firm or corporation or a majority of the issued and outstanding capital
stock of any corporation and, following such acquisition, less than five percent
(5%) of the annual sales of any such acquired company is attributable to
revenues from the Proscribed Businesses in the Restricted Territory. Upon breach
by any of the Hamisters or any Hamister Affiliate of any provision of this
Section 6.06(b), Buyer shall be entitled to injunctive relief, both
preliminarily and permanently, since the remedy at law would be inadequate and
insufficient. Additionally, Buyer will be entitled to all such other legal and
equitable remedies as may be available to it. In the event any of the provisions
of this Section 6.06 are determined by a court of competent jurisdiction to be
contrary to any applicable statute, law or rule, or for any reason to be
unenforceable as written, such court may modify any of such provisions so as to
permit enforcement thereof as thus modified. If Buyer is obliged to resort to
the courts for the enforcement of any of the covenants or agreements contained
in this Section 6.06, or if such covenants or agreements are otherwise the
subject of litigation between parties, then the Covenant Term shall be extended
for a period of time equal to the period of such breach.
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6.07 Release of Options. From the date hereof until the first to occur
of the Closing Date or any termination of this Agreement, the Optionees shall
forego any right they may have to acquire any shares of NHCA pursuant to the
terms of certain option agreements between NHCA and each of the Optionees. The
Optionees shall release, as of the Closing Date, any and all rights they may
have to acquire stock of NHCA pursuant to the terms of such option agreements
without any liability or obligation of NHCA to the Optionees in connection with
such release. On or prior to the Closing Date, the Optionees shall deliver
original copies of such option agreements to NHCA for cancellation and as of the
Closing Date such options shall be deemed cancelled for all purposes.
ARTICLE 7.
COVENANTS OF BUYER
7.01 Obligation to Secure Acquisition Financing. Buyer shall take such
action as may reasonably be necessary to secure all necessary acquisition
financing prior to the Closing Date.
7.02 Obligation with Respect to Certain Employee Benefits. The Buyer
hereby agrees that, as soon as reasonably practicable after the Closing Date,
the Buyer shall take such action as may be necessary to cause each of the
Companies to maintain and provide for the employees of the Companies, the
employee welfare plans and employee pension plans which are generally made
available to the employees of the Buyer and its subsidiaries and which are more
particularly described in an employee handbook of Buyer which has previously
been delivered to the Hamisters by Buyer (such employee welfare plans and
employee pension plans being hereinafter the "Buyer's Benefits"). The Buyer
acknowledges that it has no current intention to change the type or amount of
the Buyer's Benefits in any material respect and the Hamisters acknowledge that,
notwithstanding the absence of any such intention on the part of Buyer, the
Buyer has an absolute and unconditional right to modify, amend or eliminate the
Buyer's Benefits. The Buyer hereby further agrees that until the employees of
the Companies are provided the Buyer's Benefits, the Buyer shall take such
action as may be necessary to cause each of the Companies to maintain and
provide for their respective employees the opportunity to participate in the
employee welfare plans and employee pension plans that are currently made
available to the employees of the Skilled Nursing Facilities Business.
7.03 Discontinuance of Use of NHCA Name. (a) The Buyer acknowledges
that, after the Closing Date, the Owners intend that the Retained Businesses
will be conducted under the "National Health Care Affiliates" name and logo and,
accordingly, the Buyer hereby acknowledges and agrees that the right of NHCA and
any of the other Companies to continue using the "National Health Care
Affiliates" name and logo after the Closing Date shall be limited to that period
of time which is needed to obtain any governmental or other regulatory approvals
required for any of the licenses or other permits which are used by the
Companies in connection with the Skilled Nursing Facilities Business to be
changed to delete any reference to "National Health Care Affiliates".
(b) In connection with the foregoing, the Buyer agrees that,
promptly following the Closing Date, Buyer shall file and shall take such action
as may be necessary to cause the Companies to file any and all applications or
requests necessary to obtain any governmental or regulatory approval to change
the NHCA name. In addition, Buyer further agrees to take any and all other
action necessary to discontinue its use of the name "National Health Care
Affiliates" or any variation thereof within the time period described in Section
7.03(a).
(c) Buyer hereby agrees, on behalf of NHCA and the other
Companies that, from and after the Closing, any and all persons, firms,
corporations, limited liability companies or other entities that are engaged in
the conduct of the Retained Businesses and any and all other firms, corporations
or limited liability companies that are affiliated with or otherwise owned or
controlled by the Hamisters (or any of them) shall have an irrevocable royalty
free license to use the "National Health Care Affiliates" name until such time
that NHCA and the Companies discontinue their use of the "National Health Care
Affiliates" name.
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(d) The Buyer hereby acknowledges and agrees that upon a
breach by the Buyer or any of the Companies of their obligations to discontinue
use of the "National Health Care Affiliates" name the Owners (or any of them
individually on behalf of the Retained Businesses) shall, in addition to any
other legal or equitable remedies available, be entitled to injunctive relief,
both preliminarily and permanently.
7.04 Investigation. Buyer acknowledges that, other than the
representations and warranties of the Hamisters contained in or made pursuant to
this Agreement and other than with respect to the covenants and agreements made
by the Owners in or pursuant to this Agreement, none of the Owners and none of
the officers, employees, agents, affiliates, consultants, investment bankers,
legal advisors or other representatives of the Companies shall: (a) be deemed to
have made any representations, warranties or assurances of any kind; and (b)
have any liability or obligation to Buyer in respect of any statement or
assurance made to Buyer in connection with the transactions contemplated herein,
including, without limitation, statements set forth in a Confidential
Information Memorandum provided to Buyer.
ARTICLE 8.
ADDITIONAL COVENANTS OF BUYER AND THE HAMISTERS
8.01 Consents and Conditions. (a) Each of the Hamisters will use their
respective best efforts to seek to obtain any required stockholder, third-party
and governmental consents to the consummation by the Owners of the transactions
contemplated hereunder and to cause each of the conditions to the obligations of
Buyer to close the transactions contemplated hereunder (as more particularly set
forth in Article 10 hereof) to be satisfied, including, without limitation, the
securing of the consent of any lessor or mortgagee of Real Property and the
consent of the Department of Housing and Urban Development, if necessary. Buyer
will cooperate with the Hamisters and take such action as the Hamisters may
reasonably request in connection with their efforts to obtain any governmental
consent and any consent from any third party to the consummation by the Owners
of the transactions contemplated by this Agreement, provided, however, Buyer
shall not be obligated to incur any out of pocket costs or expenses to assist
the Hamisters to obtain any such consent.
(b) Buyer will use its best efforts, at Buyer's own cost and
expense, to seek to obtain any required stockholder, third-party and
governmental consents to the consummation by the Buyer of the transactions
contemplated hereby, and to cause each of the conditions to the obligations of
the Owners to close the transactions contemplated hereunder (as more
particularly set forth in Article 9 hereof) to be satisfied. The Hamisters will
cooperate with Buyer and take any such action as Buyer may reasonably request in
connection with Buyer's efforts to obtain any consent from any third party to
the consummation by the Buyer of the transactions contemplated by this
Agreement.
8.02 Filings. As soon as practicable after the date hereof, the
Hamisters and Buyer shall make any and all filings required under the HSR Act
and any application to the Department of Housing and Urban Development which may
be required. In addition, the Hamisters shall furnish to the Buyer and Buyer
shall furnish to the Hamisters: (a) such information and assistance as may
reasonably be requested in connection with the preparation by such other party
of any necessary filings or submissions to any governmental agency, including,
without limitation, any filings necessary under the provisions of the HSR Act;
and (b) copies of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between such party or its representatives,
on the one hand, and the Federal Trade Commission, the Antitrust Division of the
U.S. Department of Justice or any other governmental agency or authority or
members of their respective staffs, on the other hand, with respect to this
Agreement or the transactions contemplated hereby.
8.03 Access After the Closing Date. The Hamisters agree with Buyer
that, on and after the Closing Date, each, upon reasonable advance notice from
the other, will permit the other and their respective representatives (including
their counsel and auditors), during normal business hours to have access to and
examine and make copies of all books and records of the other which pertain to
the business and assets of any of the Companies including, but not limited to,
correspondence, memoranda, books of account, payroll records, computer records,
insurance policies and the like. The out-of-pocket costs of photocopying any
such material (excluding the compensation and related payroll taxes of employees
engaged in the copying of any such materials) shall be borne by the party
requesting such photocopies.
8.04 Record Retention. For a period of five (5) years after the date
hereof, or, in the case of books or records pertaining to Taxes, for a period
until the expiration of all applicable statutes of limitation, Buyer and the
Hamisters agree that, prior to the destruction or disposition of any books or
records pertaining to any of the Contracts or the business or assets of any of
the Companies, each party shall provide not less than 45 days prior written
notice to the other of any such proposed destruction or disposal. If the
recipient of such notice desires to obtain any of such documents, it may do so
by notifying the other party in writing at any time prior to the scheduled date
for such destruction or disposal. Such notice must specify the documents which
the requesting party wishes to obtain. The parties shall then promptly arrange
for the delivery of such documents. All out-of-pocket costs associated with the
delivery of the requested documents (excluding the compensation and related
payroll taxes) of employees engaged in the preparation, copying or delivery of
any such documents) shall be paid by the requesting party.
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8.05 Section 338(h)(10) Election. With respect to the Buyer's
acquisition of the Companies pursuant to this Agreement, Buyer and the Owners
shall jointly make a timely election under Section 338(h)(10) of the Code (and
any corresponding elections under any state or local tax laws) (such elections
being hereinafter collectively referred to as the "338(h)(10) Election"). The
Hamisters shall cooperate with the Buyer and shall take such action as may be
necessary to cause each of the Minority Shareholders to cooperate with the Buyer
and take any and all action reasonably necessary or appropriate (including
filing such forms, returns, elections, schedules and other documents as may
reasonably be required) to effect and preserve a timely 338(h)(10) Election in
accordance with Section 338 of the Code and the applicable regulations
thereunder as promptly as practicable following the Closing Date but in no event
later than the date which is the latest date for making any such election. The
allocation of values to the assets of the Companies shall be in accordance with
the allocation set forth in Schedule 8.05 attached hereto. Thereafter, the Buyer
and the Owners shall report the sale of the stock and other equity interests of
the Companies pursuant to this Agreement in a manner which is consistent with
the 338(h)(10) Election and shall take no position contrary thereto or
inconsistent therewith in any tax returns in any discussion with or proceeding
before any taxing authority or otherwise. The Owners will pay any tax
attributable to the making of the Section 338(h)(10) Election and arising out of
a deemed sale of assets as of the Closing and any taxes attributable to any
distribution by the Companies to the Owners of the assets attributable to the
Retained Businesses.
8.06 Tax Returns and Audits. (a) The Hamisters shall be responsible for
filing, or causing to be filed, within the time and in the manner prescribed by
law, all Tax Returns required to be filed by the Companies with respect to any
income from the operation and sale of the Companies for all taxable periods of
each of the Companies ending on or before the Closing Date. The Hamisters shall
also be responsible for filing, or causing to be filed, within the time and in
the manner prescribed by law, all Tax Returns which are required to be filed
(after taking into consideration any available extensions for the filing of such
Tax Returns) prior to the Closing Date with respect to any Taxes (other than
Income Taxes) payable by any of the Companies with respect to any periods ending
prior to the Closing Date. The Hamisters shall provide Buyer a copy of any Tax
Return relating to Income Taxes which is described above in this subparagraph
and which is required to be signed by Buyer or any of the Companies not later
than ten (10) days prior to the due date (including extensions) for filing such
Tax Return.
(b) Buyer shall be responsible for filing, or causing to be
filed, within the time and in the manner prescribed by law, all Tax Returns
relating to any Taxes (other than Income Taxes) payable with respect to the
Skilled Nursing Facilities Business for all taxable periods beginning on or
before the Closing Date to the extent that such Tax Returns are not required to
be filed by any of the Companies pursuant to the provision of Section 8.06(a)
above. Buyer shall be responsible for the payment of all Taxes, other than
Income Taxes, payable with respect to the Skilled Nursing Facilities Business to
the extent that the due date (including extensions thereof) for payments of such
Taxes occurs at any time after the Closing Date. Buyer shall be responsible for
filing all Tax Returns required to be filed by Buyer or by or on behalf of the
each of the Companies in connection with the business, operations and assets of
each of the Companies for any taxable periods beginning after the Closing Date
and for the payment of all Taxes shown to be due on such Tax Returns.
(c) The Owners shall have full control and ultimate discretion
over all actions to be taken or decisions to be made in the course of any audit
or examination, or any subsequent proceedings, including settlement or other
dispositions thereof: (i) with respect to any Income Taxes due and payable by
any of the Owners for any period ending on or prior to the Closing Date; and
(ii) with respect to any Taxes (other than Income Taxes) which are payable in
connection with any Tax Returns which the Hamisters and the Companies are
required to file pursuant to the provisions of Section 8.06(a) above. The
Hamisters shall reimburse Buyer and each of the Companies for all reasonable
out-of-pocket costs incurred by Buyer and each of the Companies in connection
with the taking of any action which any of the Owners requests Buyer or such
Companies to take in the course of such audit, examination or subsequent
proceeding. If any taxing authority shall take any action which may give rise to
a claim by any such taxing authority that any Company has not filed any Tax
Return relating to Income Taxes which is required with respect to any period
ending on or before the Closing Date, then the Buyer shall promptly notify the
Hamisters thereof in writing; provided, however, that any failure to notify the
Hamisters shall not release the Hamisters from its obligation to file such Tax
Returns or pay such Income Taxes as stated in this Section to the extent that
the Owners would not be prejudiced thereby.
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(d) Buyer shall have full control and ultimate discretion over
all actions to be taken or decisions to be made in the course of any audit or
examination or any subsequent proceedings, including settlement or other
dispositions thereof, with respect to any Taxes (other than Income Taxes) due
and payable for any period beginning on or prior to the Closing Date to the
extent that, pursuant to Section 8.06(b) above, the Buyer is responsible for the
filing of the Tax Returns relating to such Taxes.
(e) Buyer acknowledges and agrees that any and all refunds of
any Income Taxes paid or payable by any of the Owners in connection with the
operations of the Companies prior to the Closing Date shall be the property of
such Owners.
(f) The Buyer shall provide the Owner or Owners of any Company
with access to or copies of such documents, files and records as may reasonably
be requested by such party in connection with the preparation of any Tax Return
or claim for refund, any audit or other examination by any taxing authority or
any judicial or administrative proceedings relating to the liability of any
Owner or Owners of the Companies for any Taxes attributable to any period ending
on or before the Closing Date.
8.07 Confidentiality. Each party hereto will hold and will cause its
directors, officers, employees, agents, consultants and advisors to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law, all
documents and information concerning the other party furnished to it by such
other party or its representatives in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been: (a) previously lawfully known by the party to which it
was furnished; (b) in the public domain through no fault of such party; or (c)
later lawfully acquired from other sources by the party to which it was
furnished), and each party will not release or disclose such information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors in connection with this Agreement. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information comes into the public
domain through no fault of the party required to hold it in confidence, and in
any event such information shall not be used to the detriment of, or in relation
to any investment in, the other party and all such documents (including copies
thereof and software) shall be returned to the other party immediately upon the
written request of such other party.
8.08 No Solicitation of Employees. (a) During the eighteen (18) month
period following the Closing Date, the Buyer shall not and shall take such
action as may be necessary to prevent the Companies or any other person, firm,
corporation or other entity in which the Buyer owns or controls a majority of
the issued and outstanding voting stock or other equity interests (hereinafter a
"Buyer Affiliate") from soliciting, enticing, encouraging or inducing any key
management employee of the Hamisters or any Hamister Affiliate to become any
employee, directly or indirectly of any of the Companies or of any Buyer
Affiliate.
(b) During the eighteen (18) month period following the
Closing Date, the Hamisters shall not and each of the Hamisters shall take such
action as may be necessary to prevent the Hamister Affiliates from soliciting,
enticing, encouraging or inducing any key management employee of the Buyer or
the Companies to become an employee, directly or indirectly, of any Hamister
Affiliate.
(c) Notwithstanding anything to the contrary contained in this
Section 8.08, (i) no Hamister Affiliate shall be prohibited from soliciting,
enticing or encouraging employees who currently provide services at the
corporate headquarters of NHCA to become an employee of any Hamister Affiliate
as of the Closing Date and (ii) no Buyer Affiliate shall be prohibited from
soliciting, enticing or encouraging employees who currently provide services at
the corporate headquarters of NHCA to become an employee of any Buyer Affiliate
as of or after the Closing Date if any Hamister Affiliate has determined not to
continue the employment of any such employee after the Closing Date.
8.09 Public Announcements. Buyer and the Hamisters will consult with
each other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any press release or make any public statement prior
to such consultation, except as may be required by law.
8.10 Post-Closing Cooperation. After the Closing, without further
consideration: (a) the Hamisters shall take all such further actions and
execute, acknowledge and deliver all such further consents and other documents
as Buyer may reasonably request to facilitate or effect the transactions
contemplated by this Agreement; and (b) Buyer shall, and shall cause each of the
Companies, to take all such further actions and execute, acknowledge and deliver
all such further consents and other documents as the Hamisters may reasonably
request in order to facilitate the transactions contemplated by this Agreement.
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8.11 Environmental Due Diligence. (a) Buyer and Buyer's agents and
representatives shall have the right to enter upon the Companies' property for
the purpose of conducting environmental due diligence, including but not limited
to conducting Phase I and Phase II environmental assessments and regulatory
compliance reviews.
(b) The Companies shall cooperate with Buyer and Buyer's
agents and representatives in their conduct of Buyer's environmental due
diligence, including but not limited to providing reasonable access to the
properties and complying with information requests to the extent such
information is known, possessed by or under the control of the Companies.
(c) Buyer shall provide the Hamisters copies of all reports,
data or other document(s) produced in the course of conducting its environmental
due diligence to the extent that such document discloses an adverse
environmental condition for which Buyer seeks a Base Price reduction pursuant to
Section 8.12 hereof and shall advise the Hamisters in writing prior to filing
any notice or disclosures to any governmental agency or third party;
(d) Buyer shall make every reasonable effort to conduct its
environmental due diligence so as not to interfere with or restrict the normal
daily operation of the Companies' business.
8.12 Environmental Remediation.
(a) If Buyer receives a report which recommends the
remediation of adverse environmental conditions at, on, under or affecting the
property of the Companies and Buyer obtains quotes from contractors which
reflect that the firm estimated cost of remediating the adverse environmental
conditions necessary to bring the property into compliance with all applicable
Environmental Laws and to remove all contamination which exists on, at, under or
affecting the property, is $500,000 or less, in the aggregate, the Base Price
shall be reduced by the amount of the firm estimated costs. Buyer shall perform
the remediation recommended, provided, however, Buyer shall not be obligated to
incur any cost or expense in excess of the reduction in Base Price. If Buyer
completes the remediation at a cost which is less than the reduction in Base
Price, Buyer shall refund the difference to Hamisters.
(b) If Buyer obtains quotes from consultants which reflect
that the firm estimated cost to remediate environmental conditions so as to
bring the property into compliance with all applicable Environmental Laws,
exceeds $500,000, in the aggregate, Buyer may elect to (a) obtain a reduction in
the Base Price equal to $500,000 and pay all costs in excess of $500,000; or (b)
terminate this Agreement pursuant to Article 10 hereof, unless Seller agrees to
reduce the Base Price by the full amount of the firm estimated cost.
(c) Buyer shall not be obligated to close the transactions
contemplated by this Agreement until Buyer has obtained the information
necessary to identify the need, if any, for remediation of environmental
conditions or to establish firm remedial cost estimates. Notwithstanding the
foregoing, nothing in this Section 8.12(c) shall be deemed to limit the rights
of the Owners to terminate this agreement pursuant to Section 14.02.
(d) Buyer hereby waives and releases Owners from (i) any and
all rights it has or may have to seek recovery from Owners for any remediation
costs with respect to any adverse environmental condition for which Buyer
received a reduction in the Base Price, and (ii) any claim, action, demand,
suit, proceeding or hearing, for contribution for claims by any third parties or
governmental bodies or agencies relating to or arising out of any adverse
environmental condition for which Buyer received a reduction in the Base Price.
26
(e) Notwithstanding anything to the contrary contained herein,
Owners' obligation to fund or perform any remediation hereunder shall not
include (a) repair, removal or encasement of any [non-]friable asbestos
identified by Owners in Schedule 4.18(e) attached hereto; or (b) the removal or
upgrading of any underground storage tanks, identified by Seller in Schedule
4.18(e) attached hereto.
(f) For the purposes of Sections 4.18, 8.11 and 8.12, the term
"property" shall mean and include all real property, buildings and other
improvements now or previously owned, operated, managed or leased by any Company
included in this transaction.
8.13 Real Property Title Matters.
(a) Within ten (10) days from the execution date of this
Agreement, Buyer shall (a) apply for title insurance commitments (ALTA Form "B",
1970 Edition, 1984 Revision to the extent available in the applicable
jurisdiction) issued by reputable title insurers licensed to do business in the
state in which the applicable Real Property is located (each commitment
individually a "Title Commitment", collectively, the "Title Commitments") which
agree to issue to the appropriate Company an owner's policy of title insurance
for Owned Real Property and a leasehold policy of title insurance for Leased
Real Property (each policy a "Title Policy", collectively "Title Policies") in
an amount determined by Buyer, but which will not exceed, in the aggregate, the
Purchase Price; and (b) order ALTA surveys of the Real Property from reputable
surveyors licensed to do business in the State in which the Real Property is
located (each survey individually a "Survey", collectively the "Surveys"). Buyer
shall use its best efforts to obtain such Title Commitments and Surveys within
thirty (30) days from the date of the execution of this Agreement. The Title
Commitments, upon payment of applicable premiums and satisfaction of all
requirements therein, shall obligate the issuing title company to insure the
appropriate Company's fee title for the Owned Real Property or leasehold estate
and option to purchase, if any, for the Leased Real Property, together with such
reasonable and customary affirmative coverage and endorsements available in the
applicable jurisdiction, including without limitation, comprehensive, survey and
nonimputation endorsements ("Affirmative Coverage and Endorsements"). The
Hamisters agree to provide any certificates or affidavits which Buyer's title
insurance company may reasonably require to issue any Affirmative Coverage and
Endorsements to Buyer.
(b) If (i)(A) a Title Commitment contains title exceptions
which in Buyer's reasonable opinion unreasonably interfere with Buyer's or a
Company's ability to operate the facility on the Real Property as a Skilled
Nursing Facility as that facility is operated on the date hereof, or (B) Buyer
is unable to obtain any Affirmative Coverage or Endorsement, the lack of which,
in Buyer's reasonable opinion, unreasonably interferes with Buyer's or a
Company's ability to operate the facility on the Real Property as a Skilled
Nursing Facility as that facility is operated on the date hereof, or (C) Buyer
is unable to obtain a nonimputation endorsement to any Title Policy in a
jurisdiction in which such endorsement is available (any of the above described
in clauses (i)(A)-(C) to be referred to as a "Title Defect"), or (ii) a Title
Commitment contains title exceptions which are liens or encumbrances in an
ascertainable monetary amount (other than a monetary obligation that Buyer has
agreed to accept) (a "Monetary Defect"), or (iii) if a Survey discloses
conditions, including, without limitation zoning code violations, which in
Buyer's reasonable opinion unreasonably interfere with Buyer's or a Company's
ability to operate the facility on the Real Property as a Skilled Nursing
Facility as those facilities are operated on the date hereof (a "Survey
Defect"), Buyer shall notify the Hamisters in writing of such fact, which notice
shall specify the Title Defects, Monetary Defects or the Survey Defects, as the
case may be, with respect to such Real Property and shall be accompanied by
information sufficient to enable the Hamisters to respond (the "Defect Notice").
Buyer shall deliver the Defect Notice to the Hamisters within forty-five (45)
days after the date hereof (such forty-five day period to be referred to as the
"Notice Delivery Period"), provided, however, Buyer shall use its best efforts
to provide any Defect Notice to the Hamisters within thirty (30) days of the
date hereof. In no event shall Buyer be entitled to provide a Defect Notice to
the Hamisters after the expiration of the Notice Delivery Period. If Buyer has
not provided the Hamisters with a Defect Notice with respect to a Real Property
within the Notice Delivery Period, Buyer shall be deemed to have accepted all
matters on the Title Commitment and Survey applicable to such Real Property and
each such matter shall be considered a "Permitted Exception".
(c) At Closing, title to the Real Property shall be insurable
at regular rates with the payment of any regular premiums for Affirmative
Coverage or Endorsements subject only to the Permitted Exceptions and any Title
Defects or Survey Defects which Buyer agrees to accept in accordance with
subparagraph e below.
(d) The Hamisters shall be obligated to satisfy all Monetary
Defects described in a Defect Notice delivered within the Notice Delivery Period
in full at or prior to Closing. The Hamisters may, but shall not be obligated,
to cure Title Defects and Survey Defects in a Defect Notice delivered within the
Notice Delivery Period as provided in paragraph e below.
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(e) Within ten (10) days of receipt of a Defect Notice
which includes notice of a Title Defect or a Survey Defect, the
Hamisters shall send written notice to the Buyer which shall state whether they
will attempt to cure the Title Defect or Survey Defect included in the Defect
Notice on or prior to the Closing (a "Cure Notice"). If the Hamisters fail to
send a Cure Notice within such ten day period, the Hamisters shall be deemed to
have agreed to cure the applicable Title Defect or Survey Defect. If the
Hamisters elect, or are deemed to have elected, to cure any Title Defect or
Survey Defect as provided immediately above, but such cure is not completed by
the Closing Date, the Hamisters may send written notice to the Buyer prior to
the Closing Date and the Closing Date will be extended for such period as
designated by the Hamisters, which period shall not exceed 15 days.
In the event that the Hamisters (i) elect not to cure a Title Defect or
a Survey Defect described in a Defect Notice delivered prior to the expiration
of the Notice Delivery Period, or (ii) any such Title Defect or Survey Defect is
not cured by the Closing Date or such date to which the closing has been
extended, then the Buyer, at the Buyers option, may (a) accept such title in its
then current state as the Hamisters may deliver without abatement, or (b) cancel
this Agreement by written notice to the Hamisters in which event, the rights and
liabilities of the parties hereto shall cease and terminate as of the date of
the notice, except as otherwise provided in this Agreement.
8.14 Expenses of Advisors. Notwithstanding any agreement of the
Companies to pay fees, costs or expenses of advisors, including, but not limited
to, Chase Securities, Inc. and Lippes, Silverstein, Mathias & Wexler, LLP, the
Owners shall pay all of such fees, costs and expenses and hold the Companies
harmless from against any claims for such fees, costs and expenses.
ARTICLE 9.
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE OWNERS
The obligation of the Owners to enter into and complete the Closing is
subject to the fulfillment of the following conditions, any one of more of which
may be waived by it:
9.01 Representations and Covenants. (a) The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
(b) Buyer shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
(c) Buyer shall have delivered to the Hamisters a certificate,
dated the Closing Date and signed by an officer of Buyer, to the foregoing
effect and stating that all conditions to the Owner's obligations hereunder have
been satisfied.
9.02 Government Consents; Filings. All consents, approvals,
authorizations, filings and registrations required to be obtained or made under
applicable law in connection with the transactions contemplated by this
Agreement shall have been obtained or made and shall be in full force and
effect, the waiting period under the HSR Act shall have expired and no material
conditions to the transactions contemplated by this Agreement shall have been
imposed or proposed by any federal or state governmental agency.
9.03 Third Party Consents. All material consents and approvals from any
parties to any contracts or other agreements with any of the Companies as more
particularly set forth in Schedule 4.17 attached hereto shall have been obtained
and all consents and approvals from any parties to any contracts or other
agreements with Buyer as more particularly set forth in Schedule 5.06 attached
hereto shall have been obtained.
9.04 Release of Guarantees. Mark E. Hamister shall be reasonably
satisfied that he has been fully and completely released from any liability or
obligation with respect to the guarantees set forth on Schedule 9.04.
9.05 Discharge of Certain Indebtedness. Buyer shall have discharged in
full, or shall have caused the Companies to have discharged in full, the
indebtedness (including any applicable prepayment penalties) identified in
Schedule 9.05 attached hereto (the "Discharged Debt").
9.06 Litigation. No action, suit or proceeding which seeks to restrain,
modify or prevent the carrying out of the transactions contemplated hereby or
which seeks damages or a discovery order in connection with such transactions
shall have been instituted before any court or U.S. governmental or regulatory
body, or instituted or threatened by any U.S. governmental or regulatory body.
9.07 Certificate of Buyer. The Hamisters shall have received a
certificate of the Secretary or Assistant Secretary of Buyer, dated the Closing
Date setting forth the resolutions of the Board of Directors of Buyer
authorizing the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and certifying that such resolutions were
duly adopted and have not been rescinded or amended as of the Closing Date.
9.08 Delivery of Other Closing Documents. At the Closing, Buyer shall
have delivered all other documents, instruments and writings reasonably
requested by the Hamisters in connection with the consummation of the
transactions contemplated by this Agreement.
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ARTICLE 10.
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER
The obligation of Buyer to enter into and complete the Closing is
subject to the fulfillment, on or prior to the Closing Date, of the following
conditions, any one or more of which may be waived by it:
10.01 Representations and Covenants. (a) The representations and
warranties of the Hamisters contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
(b) The Hamisters shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by the Hamisters on or prior to the Closing Date.
(c) The Hamisters shall have delivered to Buyer a certificate,
dated the Closing Date and signed by Mark E. Hamister, to the foregoing effect
and stating that all conditions to Buyer's obligations hereunder have been
satisfied.
10.02 Government Consents; Filings. All material consents, approvals,
authorizations, filings and registrations required to be made under applicable
law in connection with the transactions contemplated by this Agreement shall
have been made and shall be in full force and effect, the waiting period under
the HSR Act shall have expired and no material conditions to the transactions
contemplated by this Agreement shall have been imposed or proposed by any
federal or state governmental agency and all consents or approvals required from
HUD shall have been obtained.
10.03 Third Party Consents. All consents and approvals from any parties
to any contracts or other agreements with any of the Companies as more
particularly set forth in Schedule 4.17 attached hereto shall have been obtained
as required by Section 8.01 and all consents and approvals from any parties to
any contracts or other agreements with Buyer as more particularly set forth in
Schedule 5.06 attached hereto shall have been obtained as required by Section
8.01.
10.04 Litigation. No action, suit or proceeding which seeks to
restrain, modify or prevent the carrying out of the transactions contemplated
hereby or which seeks damages or a discovery order in connection with such
transaction shall have been instituted before any court or U.S. governmental or
regulatory body, or instituted or threatened by any U.S. governmental or
regulatory body, and no suit, action or proceeding shall have been instituted or
threatened by any person, firm, corporation or other entity against any of the
Companies before any court or U.S. or foreign governmental body which, if
adversely determined against any of the Companies, would have a material adverse
effect on the business and financial condition of the Skilled Nursing Facilities
Business. There must not have been made or threatened in writing, by any person,
firm, corporation or other entity other than the Owners, any claim asserting
that such person, firm, corporation or other entity is the holder or the
beneficial owner of or has the right to acquire or to obtain beneficial
ownership of any stock of or any other voting, equity or ownership interest in,
any of the Companies or is entitled to all or any part of the purchase price
payable for the Interests.
10.05 Release of Options. On or prior to the Closing, the Optionees
shall cancel and release their respective rights to acquire stock of NHCA as
contained in certain option agreements between the Optionees and NHCA. Such
release and cancellation shall include a release of any and all claims which the
Optionees may have against NHCA as consideration for the release by the
Optionees of their rights under such option agreements.
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10.06 Opinion of Counsel. Buyer shall have received an opinion from
Lippes, Silverstein, Mathias & Wexler LLP in form and substance reasonably
acceptable to Buyer opining to such matters, and containing such qualifiers, as
are customary for the transaction contemplated by this Agreement; provided, the
Buyer agrees to accept the opinion of George Hart, Esquire, Vice President and
General Counsel, as to matters relating to compliance with health care law,
rules and regulations; provided further, that in rendering their outside counsel
opinion as to required contractual consents, such opinion will be limited to
those contracts listed in Schedule 4.20 and as to consents required by law, such
opinion will be limited to Hart, Scott, Rodino matters.
10.07 Related Party Transactions. As of the Closing there shall be no
contact, agreement or arrangement providing for the purchase or sale of any
goods or services or relating to any interest in any property, whether real or
personal, or tangible or intangible which is used by or relates to any of the
Skilled Nursing Facilities Business between or among any of the Hamisters and
the Skilled Nursing Facilities Business.
10.08 Pre-Closing Re-Positioning. The transactions contemplated by
Section 7.03 with respect to the transfer of the Retained Businesses shall have
been consummated.
10.09 Certain Agreements. The Agreements disclosed on Schedule 4.03 (b)
shall have been terminated and shall be of no further force and effect.
10.10 No Material Adverse Change. There shall have been no
material adverse change in the properties, assets, business, operations,
financial condition or prospects of the Companies as a whole due to the
enactment or institution since the date hereof of any law, rule, regulation,
policy or other requirement of any Federal, State or local governmental
authority and any political subdivision and agencies thereof.
10.11 No Violation of Healthcare Laws, Rules and Regulations. There
shall be no action, suit, investigation, written claim or written notice or
legal, administrative, equitable or arbitration proceeding pending against any
Owner, Company, employee, other agents or other representative of any such party
relating in any manner to violation of, or failure to comply with, the terms or
requirements of any law, rule or regulation of any national governmental
authority, state, municipality or any political subdivision or agency thereof
which law, rule or regulation relates to the provision of and/or reimbursement
for, healthcare services and which, if adversely determined, would have a
material adverse effect on the Companies as a whole
10.12 Estoppel Certificates. Buyer shall have received an estoppel
certificate in form and content reasonably satisfactory to Buyer from Health
Care Properties Investors, Inc. with respect to the following four long term
care facilities: Brandywyne Health Care Center, Inn at Brandywyne, Sutton Place
Rehabilitation and Health Care Center, Surrey Place Convalescent Center,
confirming that there exists no default (or condition which if not cured within
the time provided could constitute a default thereunder), the rent payable
under the lease and the term of the lease.
10.13 Release of Guarantees. Buyer shall be reasonably satisfied that
the Skilled Nursing Facilities Business has been fully and completely released
from any liability or obligation with respect to the guarantees set forth on
Schedule 4.07.
10.14 Delivery of Other Closing Documents. At the Closing, Hamisters
shall have delivered all other documents, instruments and writings reasonably
requested by the Hamisters in connection with the consummation of the
transactions contemplated by this Agreement.
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ARTICLE 11.
MEDICAID AND MEDICARE REIMBURSEMENT ADJUSTMENTS
11.1 Adjustments Relating to Audits. (a) The Buyer acknowledges that
certain amounts which have been paid to the Companies by any state or federal
Medicare and Medicaid agencies may be subject to adjustment as a result of
audits by the applicable Medicare or Medicaid agencies of Cost Reports submitted
to such agencies as required by law. Buyer further acknowledges that if, as a
result of any such audits of any Cost Reports of any Company, the applicable
Medicare or Medicaid agencies determine that an amount which has previously been
paid to the Company whose Cost Report is being audited was not properly paid,
the Company whose Cost Report is being audited may be required to remit to the
applicable Medicare or Medicaid agency the amount which such agency has
determined was improperly paid to any such Company. For purposes of this
Agreement, any amount which any Company is required to remit to any Medicare or
Medicaid agency as a result of any audit of any Cost Report filed with respect
to a period ending on or prior to the Closing Date is referred to as an "Agency
Overpayment" and all amounts required to be remitted by all of the Companies in
connection with all audits of all Cost Reports filed for periods ending on or
prior to the Closing Date are referred to as "Agency Overpayments".
(b) The Hamisters acknowledge that if, in connection with any
audit by any Medicare or Medicaid agency of any Cost Report filed by any Company
for any period ending on or prior to the Closing Date, it is determined by the
Medicare or Medicaid agency that is performing such audit, that the Company
whose Cost Report is being audited should have been reimbursed for costs
incurred by the Company whose Cost Report is being audited, such Company may be
entitled to payment from the Medicare or Medicaid agency that is performing such
audit of an amount equal to the amount of the costs incurred by any such Company
which the Medicare or Medicaid agency performing the audit has determined should
have been reimbursed to such Company. For purposes of this Agreement, the amount
of any payments which any Company whose Cost Report for a period ending on or
prior to the Closing Date is being audited is entitled to receive from any
Medicare or Medicaid agency is hereinafter referred to as an "Agency
Underpayment" and the total amount of all payments which all of the Companies
are entitled to receive from any Medicare or Medicaid agency as a result of
audits of Cost Reports filed for periods ending on or prior to the Closing Date
are hereinafter collectively referred to as "Agency Underpayments".
(c) Notwithstanding anything to the contrary contained in this
Article 11, the Buyer hereby acknowledges and agrees that neither the Buyer nor
any of the Companies shall be entitled to any payment or reimbursement from the
Hamisters of the amount of any Agency Overpayments which the Buyer or any of the
Companies may be required to remit to any Medicare or Medicaid agency if: (i)
the audit of the Cost Report resulting in any determination that an Agency
Overpayment exists begins more than eighteen (18) months following the Closing
Date; or (ii) in connection with any audit resulting in any determination that
an Agency Overpayment exists, the Medicare or Medicaid agency that is performing
such audit determines that the amount of Agency Overpayments is reimbursable to
the Company whose Cost Report is being audited in a period which ends after the
Closing Date; or (iii) the aggregate amount of the Agency Overpayments resulting
from audits of Cost Reports which begin within eighteen (18) months from the
Closing Date does not exceed the amount, if any, of any liability reserve
contained in the Closing Balance Sheet to reflect anticipated Agency
Overpayments.
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(d) Notwithstanding anything to the contrary contained in this
Article 11, the Hamisters hereby acknowledge and agree that the Owners shall not
be entitled to any payment or reimbursement from Buyer or any of the Companies
of the amount any Agency Underpayments which may be received by any of the
Companies if: (i) the audit of the Cost Report resulting in any determination
that any Agency Underpayments exists begins more than eighteen (18) months
following the Closing Date; or (ii) the aggregate amount of the Agency
Underpayments resulting from audits of Cost Reports which begin within eighteen
(18) months from the Closing Date does not exceed the amount, if any, of any
asset contained in the Closing Balance Sheet to reflect anticipated Agency
Underpayments.
11.2 Audit Proceedings. No later than ten (10) days following the
receipt by Buyer or any Company of notice of any audit of any Cost Reports filed
with respect to the Skilled Nursing Facilities Business for periods ended prior
to the Closing Date, which audit is scheduled to begin within eighteen (18)
months after the Closing Date, the Buyer shall provide the Hamisters written
notice of such notice. Time is of the essence with respect to the Buyer's
obligation to provide such notice.
In any such audit proceedings, the Buyer or the Company, as the case
may be, shall represent the interest of the Company whose Cost Report is being
audited and provided, that the Hamisters pay all of Buyer's and the Companies'
costs and expenses, Buyer shall take and cause the Companies to take such action
as Mark E. Hamister may reasonably request in connection with any such
proceedings, including the filing of administrative or judicial appeals to any
Medicare or Medicaid ruling with respect to reimbursement of cost contained in
any Cost Report which is subjected to an audit. The Hamisters shall at their
expense and to the extent permitted by law, have the right to be present at and
participate in any exit conference, appeal proceeding or compromise of any claim
resulting from any such audit.
11.3 Depreciation Recapture. Any recapture of depreciation claimed by
Medicare or Medicaid as a result of the closing of the transactions contemplated
by this Agreement shall be the sole cost, responsibility and obligation of the
Buyer and the Companies.
ARTICLE 12.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
12.1 Survival of Representations. Except for the representations and
warranties made by the Hamisters in Sections 4.18, 4.21 and 4.25 hereof, all
representations and warranties contained in Articles 4 and 5 and made by any
party to this Agreement pursuant hereto shall survive until December 1, 1997.
The representations and warranties made by the Hamisters in Section 4.18 and
4.25 shall survive for a period of three (3) years following the Closing Date
and the representations and warranties made by the Hamisters in Section 4.21
hereof shall survive for a period equal to the applicable statute of limitations
with respect to any taxes referred to therein.
12.2 Statements as Representations. All statements contained in any
Schedule delivered pursuant to Articles 4 and 5 hereof, shall be deemed
representations and warranties within the meaning of Sections 9.01, 10.01 and
11.01 hereof and this Article 12.
12.3 Damages. For purposes of this Agreement, the term "Damages" shall
mean: the amount of any and all demands, claims, actions or causes of action,
assessments, fines, payments, losses, damages, liabilities, costs and expenses,
whether or not arising out of third party claims, including, without limitation,
interest, penalties, reasonable attorneys' fees and expenses and all amounts
paid in the investigation, defense or settlement of any of the foregoing;
adjusted by (i) any reduction or increase in any federal, state or local Income
Tax or other Tax liability when and as realized in connection with matters, with
respect to which indemnification is sought; and (ii) any amounts when and as
recovered under any insurance policies in connection with any matter with
respect to which indemnification is sought.
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12.4 Indemnification by the Hamisters. Subject to the terms and
conditions of this Article and Article 13 hereof, each of the Hamisters hereby,
jointly and severally, agrees to indemnify, defend and hold harmless Buyer and
any parent, subsidiary or affiliate companies of Buyer, including, without
limitation, each of the Companies (hereinafter the "Buyer Group"), from and
against any and all Damages asserted against, resulting to, imposed upon or
incurred by the Buyer Group or any member thereof, in connection with, by reason
of or resulting from: (a) the Retained Businesses; (b) a breach of any
representation or warranty of the Hamisters contained in or made pursuant to
this Agreement; (c) the failure of the Owners to pay any Income Taxes arising
with respect to all taxable periods ending on or before the Closing Date and any
and all Income Taxes of the Owners arising as a result of the sale of the
Interests as contemplated by this Agreement (including, without limitation,
Income Taxes attributable to the 338(h)(10) Election); (d) any breach of any
covenant or agreement of the Owners contained in this Agreement; (e) an action
filed in the United States District Court for the Western District of Virginia
and entitled Glymph v. National Health Care Affiliates, Inc.; or (f) an Agency
Overpayment. For purposes of this Agreement, the matters set forth in Section
12.04 and Section 12.05 shall be referred to individually as a "Claim" and
collectively as "Claims".
12.5 Indemnification by Buyer. Buyer hereby agrees to indemnify, defend
and hold each of the Owners harmless from any Damages arising by reason of or
resulting from: (a) any claim made against any of the Owners relating to any of
the business, assets or operations of the Skilled Nursing Facilities Business
before or after the Closing Date including, but not limited to, claims for
unfair labor practices; (b) any breach of any representation, warranty, covenant
or agreement of Buyer contained in or made pursuant to this Agreement; (c) any
breach of any covenant or agreement of the Buyer contained in this Agreement;
and (d) any Agency Underpayment.
12.6 Conditions of Indemnification. The obligations and liabilities of
the Hamisters under Section 12.04 hereof and the obligations and liabilities of
Buyer under Section 12.05 hereof shall be subject to the following terms and
conditions:
(a) A party claiming indemnification under this
Agreement ("Indemnified Party") will give the party required to provide such
indemnification (the "Indemnifying Party") prompt notice of any such Claim, and
thereafter the Indemnifying Party will undertake the defense thereof by
representatives chosen by it.
(b) If the Indemnifying Party, within a reasonable time after
notice of any such Claim, fails to defend such Claim, the Indemnified Party
will, upon further notice to the Indemnifying Party, have the right to undertake
the defense, compromise or settlement of such Claim on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination thereof.
(c) Anything in this Section 12.06 to the contrary
notwithstanding: (i) if there is a reasonable probability that a Claim may
materially and adversely affect an Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to defend, and with the consent of the
Indemnifying Party, to compromise or settle such Claim; and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party, its successors and assigns settle or compromise any Claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party, a
release from all liability in respect of such Claim.
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12.7 Litigation Cooperation. (a) Any Owner or Owners seeking to be
indemnified pursuant to Section 12.05 shall cooperate with the Buyer and each of
the Companies and shall cause their agents, employees, auditors and
representatives to cooperate with the Buyer and each of the Companies in
connection with the investigation, prosecution, defense and settlement of any
judicial or administrative proceeding or claim which Buyer or any of the
Companies has undertaken the defense of in connection with the Buyer's
obligation to indemnify any such Owners as provided for in Section 12.05 above;
provided that the Buyer shall reimburse the Owners that are seeking
indemnification pursuant to Section 12.05 and their employees, agents, auditors
and representatives for the reasonable out-of-pocket costs and expenses incurred
in providing such assistance.
(b) The Buyer shall cooperate with the Hamisters and shall
cause its officers, employees, agents, auditors and representatives (and the
officers, employees, agents, auditors and representatives of each of the
Companies) to cooperate with the Hamisters in connection with the investigation,
prosecution, defense and settlement of any judicial or administrative proceeding
or claim which the Hamisters have undertaken the defense of in connection with
the obligation of the Hamisters to indemnify the Buyer as provided for in
Section 12.04 above provided that the Hamisters shall reimburse the Buyer, its
officers, employees, agents, auditors and representatives (and the officers,
employees, agents, auditors and representatives of each of the Companies) for
the reasonable out-of-pocket costs and expenses incurred in providing such
assistance.
12.8 Remedies Cumulative. Except as herein expressly provided, the
remedies provided herein shall be cumulative and shall not preclude assertion by
any party hereto of any other rights or the seeking of any other remedies
against any other party hereto.
ARTICLE 13.
LIMITATIONS ON INDEMNIFICATION AND AGENCY ADJUSTMENTS
13.1 Limitation on the Hamisters' Indemnity and Adjustment Obligations.
(a) The obligation of the Hamisters to indemnify and hold Buyer harmless from
and against any Damages incurred as a result of Claims described in subclauses
(a), (c) (d) and (e) of Section 12.04 shall apply with respect to the full
amount of any and all Damages incurred by Buyer and the Buyer Group as a result
of such Claims.
(b) The liability and obligation of the Hamisters to indemnify
and hold the Buyer harmless from and against any Damages incurred as a result of
Claims described in subclause (b) of Section 12.04, other than with respect to
any Claims relating to any breach of any representation or warranty made in
Section 4.25, shall be a several liability of each Hamister (as opposed to a
joint and several liability of all of the Hamisters) and, in addition to any
limitations on the amount of Damages which the Buyer may be entitled to be
indemnified against as further provided in this Article 13, in no event shall
the amount of the Damages which any of the Hamisters, individually, shall be
obligated to indemnify the Buyer against exceed the amount determined by
multiplying the aggregate Damages (as limited by the provisions of Section
13.01(d)) by the percentage (set forth in Schedule 13.01(b)). Notwithstanding
the foregoing, with respect to any Damages which the Buyer may be entitled to be
indemnified against under Article 12, the liability and obligation of the
Hamisters to indemnify and hold the Buyer harmless from and against any Damages
incurred as a result of Claims described in subclause (b) of Section 12.04 and
relating to the breach of any representation or warranty made in Section 4.25
attached hereto shall be a joint and several liability as a result of which,
each of the Hamisters, individually, shall be liable for the full amount of
Damages which the Buyer is entitled to be indemnified against (subject to the
limitations contained in this Article 13 other than the limitations contained in
the preceding sentence).
(c) The Hamisters shall have no liability or obligation: (i)
to indemnify and hold Buyer or any member of the Buyer Group harmless from any
Damages incurred by Buyer or any member of the Buyer Group arising as a result
of any Claim or Claims described solely in subclauses (b) and (f) of Section
12.04 unless; (ii) the sum of: (w) aggregate amount of the Damages incurred by
Buyer and the Buyer Group arising from any such Claim or from all Claims
exceeds (y) One Million Dollars ($1,000,000.00); and then, (iii) the obligation
of the Hamisters to indemnify or reimburse the Buyer and the Companies (as
provided for by subclauses (b) and (f) of Section 12.04 hereof) shall only apply
to the extent that the sum of such Damages exceeds One Million Dollars
($1,000,000.00).
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(d) In addition to the limitations on the obligations of the
Hamisters provided for in Section 13.01(c) above, the Hamisters shall have no
liability or obligation to indemnify and hold the Buyer or any member of the
Buyer Group harmless with respect to the portion of the aggregate amount of all
Damages resulting from all Claims made with respect to the matters described in
subclauses (b) and (f) of Section 12.04 which exceeds Six Million Dollars
($6,000,000.00).
13.2 Limitations on Buyer's Indemnity and Adjustment Obligations. (a)
The Buyer's obligation to indemnify and hold the Owners harmless from and
against any Damages incurred as a result of Claims described in subclauses (a)
and (c) of Section 12.05 shall apply with respect to the full amount of any and
all Damages incurred by any of the Owners as a result of such Claims.
(b) The Buyer shall have no liability or obligation: (i) to
indemnify and hold any of the Owners harmless from any Damages arising as a
result of any Claim or Claims described solely in subclauses (b) and (d) of
Section 12.05 unless the sum of (w) the aggregate amount of the Damages incurred
by all Owners, in the aggregate, and arising from any such Claim or from all
Claims exceeds One Million Dollars ($1,000,000.00) and then, the
obligation of the Buyer to indemnify or reimburse the Owners shall only apply to
the extent that the sum of such Damages exceeds (x) One Million Dollars
($1,000,000.00); (ii) to indemnify and hold any of the Owners harmless from any
Damages arising as a result of any Claim or Claims made against any of the
Owners relating to any of the business, assets or operations of the Skilled
Nursing Facilities Business before the Closing Date if the Claim or Claims arise
in connection with, by reason of or as a result of any of the matters set forth
in subclauses (a), (b), (c), (d) or (e) of Section 12.04; and (iii) to indemnify
and hold any of the Owners harmless from any Damages arising from or in
connection with any action, suit or proceeding under, pursuant to, or claiming a
violation of a criminal law.
(c) In addition to the limitations on the obligations of the
Buyer as provided for by Section 13.02(b) above, the Buyer shall have no
liability or obligation to indemnify and hold the Owners, or any of them
harmless with respect to the portion of the aggregate amount of all Damages
resulting from all Claims made with respect to the matters described in
subclauses (b) and (d) of Section 12.05 which exceeds Six Million Dollars
($6,000,000.00).
13.3 Termination of Indemnification Obligations.
(a) The obligations to indemnify and hold harmless a party
hereto: (i) contained in subclause (b) of Section 12.04 and subclause (b) of
Section 12.05 shall terminate when the applicable representation or warranty
terminates pursuant to Section 12.01; and (ii) contained in the provisions of
subclauses (a), (c), (d) and (e) of Section 12.04 and subclauses (a) and (c) of
Section 12.05 shall not terminate; provided that, as to clause (i) above, such
obligations to indemnify and hold harmless shall not terminate with respect to
any representation or warranty with respect to which the Indemnified Party shall
have, prior to the termination of such representation or warranty, made a
specific Claim relating to a breach of such representation or warranty by
delivering written notice (stating in reasonable detail the basis of such Claim)
to the Indemnifying Party.
(b) Buyer shall have no right to be indemnified against any
breach of a representation or warranty made by the Hamisters pursuant to this
Agreement to the extent that, on the Closing Date, Buyer had knowledge that, as
of the Closing Date, there was a material breach, violation or inaccuracy in any
representation or warranty as made by the Hamisters pursuant to Article 4
hereof, and the existence of such material breach, violation or inaccuracy is
not disclosed in writing by Buyer to Mark E. Hamister on or prior to the Closing
Date. For purposes of this Section "knowledge" means the actual knowledge of the
persons listed in Schedule 13.03(b).
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ARTICLE 14.
MISCELLANEOUS PROVISIONS
14.1 Termination by Buyer. This Agreement may be terminated by Buyer
without any liability to the Buyer or the Owners if: (a) the conditions to the
obligations of the Buyer to close the transactions contemplated by this
Agreement as contained in Section 10.01 hereof shall not have been satisfied by
August 5, 1996; (b) prior to the end of the applicable waiting period under the
HSR Act, either the Federal Trade Commission or the Antitrust Division of the
U.S. Department of Justice shall have notified the Buyer and the Hamisters of
its intent to examine the transactions contemplated by this Agreement and the
approval of the transactions contemplated by this Agreement is not received from
the Antitrust Divisions of the U.S. Department of Justice or the Federal Trade
Commission (as the case may be) by August 5, 1996; (c) any action, suit or
proceeding which seeks to restrain, modify or prevent the carrying out of the
transactions contemplated hereby or which seeks damages or a discovery order in
connection with such transactions shall have been instituted before any court or
U.S. governmental or regulatory body; or (d) the costs to remediate contemplated
by Section 8.12(b) exceeds $500,000 and the Owners have not agreed to a Base
Price reduction equal to the full amount of such costs. The Owners and the
Minority Shareholders acknowledge that, in the event that this Agreement is
terminated by the Buyer pursuant to this Section 14.01 and if the failure to
close is due to the breach by any of the Owners or the Optionees of their
respective obligations hereunder, the Owners and Optinees, subject to the
provisions of Section 14.4, shall be liable to the Buyer for any and all damages
which may be incurred by the Buyer as a result of such termination.
14.2 Termination by the Hamisters. This Agreement may be terminated by
Mark E. Hamister at any time prior to the Closing without any liability on the
part of the Owners if the Closing has not occurred by or before August 5, 1996.
The Buyer acknowledges that in the event that this Agreement is terminated by
Mark E. Hamister pursuant to this Section 14.02, and if the failure to close is
due to the breach by Buyer of its obligations hereunder, the Buyer shall be
liable to the Owners for any and all damages which may be incurred by the Owners
(or any of them) or by the Companies (or any of them) as a result of such
termination.
14.3 Knowledge. For purposes of this Agreement, the term "knowledge"
when used with respect to the Hamisters means the actual knowledge of any of the
persons set forth on Schedule 14.03 (the "Listed Persons") and when used with
respect to the knowledge of the Hamisters of any violation of any material
statute, law, authorization or published written rule of any governmental
authority, or any order, writ, injunction or decree of any governmental
authority applicable to the Skilled Nursing Facilities Business, means the
knowledge of any Listed Persons regardless of whether the facts or information
giving rise to the knowledge is actually known if such knowledge should have
been known by such Listed Person.
14.4 Limited Liability of Minority Shareholders and Optionees. The
Buyer expressly acknowledges and agrees that this Agreement has been executed by
Mark E. Hamister for and on behalf of each of the Minority Shareholders and the
Optionees for the sole purpose of binding the Minority Shareholders and the
Optionees with respect to the express obligations of such parties set forth
herein. Accordingly, the Buyer hereby expressly acknowledges and agrees that (a)
each Minority Shareholder shall have no liability or obligation to Buyer for any
Damages which may be incurred by Buyer in connection with this Agreement and the
transactions contemplated hereby excepting only those Damages, if any, which are
attributable to the breach by each such Minority Shareholder of his or her
obligation to transfer to the Buyer the interests of such Minority Shareholder
in NHCA and Oak Hill; and (b) each Optionee shall have no liability or
obligation to Buyer for any Damages which may be incurred by Buyer in connection
with this Agreement and the transactions contemplated hereby excepting only
those Damages, if any, which are attributable to the breach by each such
Optionee of his obligation contained in Section 6.07 hereof.
36
14.5 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement of
the parties hereto at any time with respect to any of the terms contained
herein.
14.6 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
14.7 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given: (a) if delivered by hand when delivered; (b) if by telex,
telecopy, cable or overnight delivery when received, or (c) if by mail, five (5)
days after being mailed, certified or registered mail, with postage prepaid:
(i) If to the Hamisters, to:
Mark E. Hamister
651 Delaware Avenue
Buffalo, New York 14202
with a copy to:
Gerald S. Lippes, Esq.
Lippes, Silverstein, Mathias & Wexler LLP
700 Guaranty Building
28 Church Street
Buffalo, New York 14202
or to such other person or address as Mark E. Hamister shall furnish to Buyer
in writing.
(ii) If to Buyer, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, PA 19348
Attn: Chairman and CEO
Law Department
with a copy to:
Stephen E. Luongo, Esq.
Blank, Rome, Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
or to such other person or address as Buyer shall furnish to Mark E. Hamister
in writing.
37
14.8 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that the Buyer shall have the right to assign its rights under this
Agreement to one or more of its subsidiaries and shall have the further right to
assign to any person, firm, corporation or other entity, the rights of Buyer set
forth in Section 6.06 hereof. Buyer expressly acknowledges and agrees that
notwithstanding any assignment or conveyance by Buyer contemplated by the
preceding provisions of this Section 14.08, no such assignment or conveyance
shall operate or be deemed or construed to release, impair, or restrict the
obligations of the Buyer under this Agreement and, to the extent that any such
assignment or conveyance would reasonably require the assignee or transferee to
take or perform any action, Buyer agrees that Buyer shall be obligated to take
any and all action to cause any such assignee or transferee to take or perform
any such action.
14.9 Alternative Transaction Structure. At Buyer's option and subject
to the provisions of this section, the acquisition by Buyer of the Skilled
Nursing Facilities Business contemplated by this Agreement may be restructured
from a transaction which contemplates the purchase by Buyer of the Interests of
the Companies to a transaction which contemplates such other structure that
Buyer deems necessary to finance the acquisition of the Skilled Nursing
Facilities Business, including, without limitation, a transaction whereby some
or all of the Interests are purchased by Buyer or a nominee of Buyer and some or
all of the assets of the Skilled Nursing Facilities Business is purchased by
Buyer or its nominee. Buyer may exercise its option to restructure the
transaction only if Buyer pays the incremental costs and expenses incurred by
Owners which are a direct result of accomplishing the transaction on the basis
of the restructured transaction. Buyer and the Owners agree to execute such
further agreements as may be reasonably necessary to close the transactions,
provided that the rights and remedies of the Buyer and the Owners that are
reflected in the agreements necessary to accomplish the restructured transaction
are not substantively different from the rights and remedies reflected in the
Agreement, except for such different rights and remedies which are necessary to
be modified, increased or diminished for the purpose of accommodating the
structure of the restructured transaction. Notwithstanding the foregoing, the
Owners shall not be obligated to close the transactions contemplated by any
restructured transaction contemplated by this Section unless the Owners are
reasonably satisfied that they will not incur any significant risk of incurring
any material additional liabilities as a result of any such restructured
transaction.
14.09 Governing Law and Jurisdiction. This Agreement and the legal
relations among the parties hereto shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania without
regard to its conflicts of law doctrine.
14.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.11 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
14.12 Entire Agreement. This Agreement, including the Exhibits hereto,
the Schedules hereto and the other documents and certificates delivered pursuant
to the terms hereof, sets forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party hereto.
38
14.13 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation other than the
parties hereto and their successors or assigns, any rights or remedies under or
by reason of this Agreement.
14.14 Severability. The invalidity or illegality of any provision,
term, or agreement contained in or made a part of this Agreement shall not
affect the validity of the remainder of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be affixed hereto, all as
of the day and year first above written.
------------------------------
MARK E. HAMISTER
EIDOS, INC.
By:----------------------------
Mark E. Hamister,
Chief Executive Officer
VERSALINK, INC.
By:----------------------------
Mark E. Hamister,
Chief Executive Officer
39
NATIONAL HEALTH CARE AFFILIATES
By:-----------------------------
Mark E. Hamister,
Chief Executive Officer
OAK HILL HEALTH CARE CENTER, INC.
By:-----------------------------
Mark E. Hamister,
Chief Executive Officer
DERBY NURSING CENTER CORPORATION
By:------------------------------
Mark E. Hamister,
Chief Executive Officer
DELAWARE AVENUE PARTNERSHIP
By:------------------------------
Mark E. Hamister,
General Partner
GENESIS HEALTH VENTURES, INC.
By:-------------------------------
Edward B. Romanov, Jr.
Senior Vice President,
Development/Finance
40
* *
- -------------------------- ---------------------------
OLIVER C. HAMISTER Jack A. Turesky
* *
- -------------------------- ---------------------------
GEORGE E. HAMISTER David R. Taber
* *
- -------------------------- ---------------------------
JULIA L. HAMISTER Lisa Clark Driscoll
*
---------------------------
George E. Hart
THE GEORGE E. HAMISTER TRUST *
---------------------------
Sal H. Alfiero
*
By:------------------------
Trustee
*
--------------------------
Gerald S. Lippes
* *
By:------------------------ By:-----------------------
Trustee Mark E. Hamister,
Attorney-in-Fact
THE OLIVER C. HAMISTER TRUST
*
By:------------------------
Trustee
*
By:-------------------------