EXHIBIT 2.1
AGREEMENT TO PURCHASE PARTNERSHIP INTERESTS
AGREEMENT, made as of this 1st day of March, 1996, by and among
Meridian Health, Inc., a Pennsylvania corporation ("Buyer"), Fairmount
Associates, Inc., a Maryland corporation ("Fairmount") and MHC Holding Company,
a Maryland corporation ("MHC") (Fairmount and MHC are hereinafter sometimes
collectively referred to as "Sellers").
BACKGROUND
Fairmount and MHC own an aggregate of 50% of the issued and outstanding
limited partnership interests in Polk Meridian Limited Partnership, a Maryland
limited partnership ("POLK"). Fairmount owns a 1% general partnership interest
and Fairmount and MHC together own an aggregate 69.7071% limited partnership
interest in Meridian/Constellation Limited Partnership, a Maryland limited
partnership ("MCLP"). MCLP owns a 99% limited partnership interest in each of
the following Maryland limited partnerships: Meridian Valley View Limited
Partnership, Meridian Edgewood Limited Partnership, Meridian Perring Limited
Partnership and Meridian Valley Limited Partnership. All of the partnership
interests owned by Fairmount and MHC in Polk are hereinafter sometimes referred
to as the "Polk Interests." All of the partnership interests owned by Fairmount
and MHC in MCLP are hereinafter sometime referred to as the "MCLP Interests."
The Polk Interests and MCLP Interests are hereinafter sometimes referred to as
the "Seller Partnership Interests." Buyer owns 49% of the issued and outstanding
limited partnership interests of Polk and is an affiliate of Meridian
Healthcare, Inc., a Pennsylvania corporation and a general and limited partner
of MCLP that owns all of the general and limited partnership interests of MCLP
not owned by Sellers. Sellers desire to sell the Seller Partnership Interests to
Buyer and Buyer desires to purchase the Seller Partnership Interests on the
terms stated in this Agreement.
NOW, THEREFORE intending to be legally bound, and in consideration of
the mutual agreements and covenants contained herein, the parties agree as
follows:
1. Certain Definitions. For purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, (1) the
terms defined in this Section have the meanings assigned to them in this
Section, wherever they appear in this Agreement (2) all accounting terms not
otherwise defined herein have the meanings assigned under generally accepted
accounting principles consistently applied and as in effect on the date hereof
("GAAP") and (3) all words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision.
1.1 "Affiliate" means, with respect to a specified Person, any
other Person that directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with, the specified
Person.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Consent" means any consent, approval, order or authorization
of, or any declaration, filing or registration with, or any application,
notice or report to, or any waiver by, or any other action (whether similar or
dissimilar to any of the foregoing) of, by or with, any Person, which is
necessary in order to take a specified action or actions in a specified manner
and/or to achieve a specified result or to avoid the occurrence of a default.
1.4 "Contract" means any written or oral contract, agreement,
instrument, order, commitment or binding arrangement, express or implied, of
any nature whatsoever.
1.5 "Documents" means and includes any document, agreement,
instrument, certificate, notice, Consent, affidavit, correspondence (by
letter, telegram, telex or otherwise), written statement, schedule or exhibit
whatsoever.
1.6 "Encumbrance" means any lien, security interest, pledge,
mortgage, easement, leasehold, assessment, covenant, restriction, or any other
encumbrance, claim, burden or charge of any kind or nature whatsoever.
1.7 "Hazardous Substances" means any dangerous, toxic or hazardous
pollutant, contaminant, waste, chemical, material or substance as defined in
or governed by any federal, state or local Law, or other requirement of any
governmental agency relating to such substances or otherwise relating to human
health or safety or the environment, and also including, but not limited to,
urea-formaldehyde, polychlorinated byphenyls, asbestos or asbestos-containing
materials, nuclear or radioactive fuel or waste, radon, explosives, known and
suspected carcinogens, petroleum, petroleum products, biomedical,
biohazardous, infectious or other medical waste, or any other waste, material,
substance, pollutant or contaminant that would subject the Sellers, the Buyer
or the Partnerships to any claims, causes of action, costs damages, penalties,
expenses, demands or liabilities, however defined, under any applicable Law.
1.8 "Indebtedness" means all items which, in accordance with GAAP,
would be included in determining total liabilities as shown on the liability
side of a balance sheet as of the date Indebtedness is to be determined.
1.9 "Judgment" means any order, writ, injunction, fine, citation,
award, decree or any other judgment of any kind whatsoever of any foreign,
federal, state or local court, governmental body, administrative agency,
regulatory authority or arbitration tribunal.
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1.10 "Law" means any provision of any law, statute, ordinance,
order, constitution, charter, treaty, rule or regulation enacted, approved or
adopted by any governmental, administrative or regulatory authority.
1.11 "Liabilities" means any direct or indirect Indebtedness,
liability, claim, loss, damage, Judgment, deficiency or obligation, known or
unknown, fixed or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise whether or not of a kind required
by GAAP to be set forth on financial statements.
1.12 "Losses" means any and all Liabilities, Proceedings, causes
of action, costs and expenses including, without limitation, costs of
investigation, actual interest costs, penalties and attorneys' fees.
1.13 "Obligation" means any debt, Liability or obligation of any
nature whatsoever, whether secured, unsecured, recourse, nonrecourse,
liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained,
unascertained, known, unknown or otherwise.
1.14 "Person" means any individual, sole proprietorship, joint
venture, partnership, corporation, limited liability company or partnership,
association, joint-stock company, unincorporated organization, cooperative,
trust, estate, government entity or authority (including any branch,
subdivision or agency thereof), administrative or regulatory authority, or any
other entity of any kind or nature whatsoever.
1.15 "Proceeding" means any claim, suit, action, equitable action,
litigation, investigation, arbitration, administrative hearing or any other
judicial or administrative proceeding of any kind or nature whatsoever.
1.16 "Taxes" include (1) any foreign, federal, state or local
income, earnings, profits, franchise, capital stock, sales, use, occupancy,
property, transfer, excise, unemployment compensation tax or other tax of any
kind or nature whatsoever, (2) any foreign, federal, state or local corporate
or other organizational fee, qualification fee, annual report fee, filing fee,
occupation fee, assessment, sewer rent or other fee or charge of any kind or
nature whatsoever, or (3) any deficiency, interest or penalty imposed with
respect to any of the foregoing.
1.17 "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2. Sale and Purchase of Seller Partnership Interests. On the Closing
Date (as defined in Section 4), and subject to the other provisions of this
Agreement, Sellers shall sell, assign and transfer to Buyer, and Buyer shall
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purchase from Sellers, all of Sellers' right, title and interest in and to the
Seller Partnership Interests.
3. Purchase Price for Partnership Interests.
3.1 In consideration of the sale, transfer, conveyance and
delivery to Buyer of the Seller Partnership Interests, and in reliance upon
the representations and warranties made herein by Sellers to Buyer, Buyer
shall, in full payment thereof, pay to Sellers the following consideration
(the "Purchase Price"):
(1) Cash Payment On Closing Date. On the Closing Date, Buyer
shall pay to Sellers by wire transfer of immediately available funds
$8,940,000 plus an amount of interest on such amount calculated at the rate of
6% per annum from March 1, 1996 to the Closing Date.
(2) Contingent Payment. Buyer shall pay to Sellers an amount
(the "Contingent Payment") equal to the sum of (i) 50% multiplied by the
amount by which the balance in all third party reimbursement accounts of Polk
as of September 30, 1995 (as finally determined after considering changes to
such accounts (if any) from September 30, 1995 to September 30, 1996) exceeds
$1,063,912 and (ii) 70.7071% multiplied by the amount by which the balance in
all third party reimbursement accounts of MCLP as of September 30, 1995 (as
finally determined after considering changes to such accounts (if any) from
September 30, 1995 to September 30, 1996) exceeds the negative amount of
($763,694). Notwithstanding anything to the contrary contained herein the
amount, if any, payable pursuant to this Section 3.1(2) shall be reduced by
(i) 50% of the amount, if any, by which the balance in all third party
reimbursement accounts of Polk as of September 30, 1995 (as finally determined
after considering changes to such accounts (if any) from September 30, 1995 to
September 30, 1996) is less than $1,063,912 and (ii) 70.7071% of the amount,
if any, by which the balance in all third party reimbursement accounts of MCLP
as of September 30, 1995 (as finally determined after considering changes to
such accounts (if any) from September 30, 1995 to September 30, 1996) is less
than the negative amount of ($763,694). The Contingent Payment, if any, shall
be paid by wire transfer of immediately available funds on November 15, 1996.
(3) Partnership Distributions. Buyer shall (i) cause Polk to
distribute to Sellers 50% of the book earnings before taxes, depreciation and
amortization of Polk from October 1, 1995 through February 29, 1996 and (ii)
cause MCLP to distribute to Sellers 70.7071% of the book earnings before
taxes, depreciation and amortization of MCLP from October 1, 1996 to February
29, 1996 less a credit in the amount of $468,723.02 which was previously
distributed to Sellers with respect to MCLP for such period. The amount
payable pursuant to this Section shall be determined by Buyer in consultation
with Sellers and, together with interest on such amount calculated at the rate
of 6% per annum from March 1, 1996 until paid by Buyer, shall be paid to
Sellers by wire transfer of immediately available funds within 60 days after the
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Closing Date or, if Sellers dispute the amount determined by Buyers to be
payable on such dates as such amount is finally determined by the Arbitrator
(so hereinafter defined).
3.2 If Sellers dispute the amount determined by Buyer to be
payable pursuant to Section 3.1(2) or Section 3.1(3) Buyer shall be notified
in writing within 10 business days after Sellers' receipt of Buyer's
determination of such amount and such notice shall specify in reasonable
detail the nature of the dispute. During the 30-day period following the
receipt of such notice by Buyer, the Sellers and Buyer shall attempt to
resolve such dispute. If at the end of the 30-day period, the Sellers and
Buyer shall have failed to reach a written agreement with respect to such
dispute, the matter shall be referred to KPMG Peat Marwick LLP (the
"Arbitrator"), which shall act as an arbitrator and shall issue its report as
to the amount payable pursuant to Section 3.1(2) or 3.1(3) within sixty (60)
days after such dispute is referred to the Arbitrator. Each of the parties
hereto shall bear all costs and expenses incurred by it in connection with
such arbitration, except that the fees and expenses of the Arbitrator
hereunder shall be borne equally by the Sellers and Buyer; provided, however,
(i) if the amounts determined payable by the Arbitrator is less than $50,000
more than the amount determined payable by the Buyer then such fees and
expenses shall be paid by the Sellers; and (ii) if the amount determined
payable by the Arbitrator is more than $50,000 more than the amount determined
payable by the Buyer then such fees and expenses shall be paid by the 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.
4. Closing. Consummation of the transactions contemplated by this
Agreement with respect to the purchase and sale of the Seller Partnership
Interests (the "Closing") shall take place on the "Closing Date." The term
"Closing Date" shall mean any date on or prior to March 15, 1996 on which the
parties mutually agree in writing to consummate the transactions contemplated in
this Agreement. The Closing shall take place at the offices of Blank, Rome,
Comisky & McCauley, 12 Four Penn Center, Philadelphia, PA 19103, commencing at
10:00 a.m., on the Closing Date, or at such other time or place as the parties
may agree in writing. Notwithstanding anything to the contrary set forth herein,
Buyer may elect to consummate the Closing of the Polk Interests on a date which
is later than the date on which the purchase of the MCLP Interests is
consummated but not later than March 29, 1996 (the "Election"). The Election
shall be effective upon Buyer giving notice in writing to Sellers that it has
made the Election. If the Election is in effect, then upon consummation of the
Closing with respect to the MCLP Interests and satisfaction of all conditions
precedent to the consummation of the Closing with respect to the Polk Interests,
(i) Buyer shall deposit with Gallagher, Evelius & Jones ("Escrow Agent")
$1,820,000, which amount represents the portion of the cash payable by Buyer to
Sellers with respect to the Purchase Price pursuant to Section 3.1(1) which is
allocable to the purchase of the Polk Interests and (ii) Buyer and Sellers shall
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execute and deliver to the Escrow Agent the documents required to be delivered
pursuant to Sections 8.3 and 9.2. Upon making such deposit with the Escrow
Agent, Buyer shall be deemed to have satisfied in full its obligations pursuant
to Section 3.1(1). The funds deposited with the Escrow Agent shall be held and
distributed in accordance with the terms of the Escrow Agreement (as hereinafter
defined). If the Election is in effect, the term "Closing" or "Closing Date"
shall be deemed to refer to two separate closings or closing dates, a first
closing on the closing date for the consummation of the acquisition of the MCLP
Interests and a second closing on the closing date for the consummation of the
acquisition of the Polk Interests (which shall occur on or before March 29,
1996).
5. Representations and Warranties. Knowing that Buyer relies thereon,
Sellers represent, warrant and covenant to Buyer on the date hereof and on and
as of the Closing Date as follows:
5.1 Due Organization and Authority of Fairmount. Fairmount is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Fairmount has the full power and
authority to own, lease and operate its assets, Properties and business, to
carry on its business as and where such business is now conducted and, to
enter into and perform this Agreement and to consummate the transactions
contemplated hereby upon the terms and conditions herein provided. Schedule
5.1 sets forth all names under which and addresses at which Fairmount has done
business at any time since January 1, 1991. Schedule 5.1 sets forth the names
of all shareholders of Fairmount (the "Shareholders"). Fairmount is not a
party to or bound by any agreement relating to the sale or other disposition
of any portion of the Seller Partnership Interests owed by it.
5.2 Due Organization and Authority of MHC. MHC is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. MHC has the full power and authority to own,
lease and operate its assets, Properties and business, to carry on its
business as and where such business is now conducted and, to enter into and
perform this Agreement and to consummate the transactions contemplated hereby
upon the terms and conditions herein provided. Schedule 5.2 sets forth all
names under which and addresses at which MHC has done business at any time
since January 1, 1991. MHC is not a party to or bound by any agreement
relating to the sale or other disposition of any portion of the Seller
Partnership Interests owed by it.
5.3 Title to Seller Partnership Interests. Sellers owns outright
and have good and marketable title to the Seller Partnership Interests free
and clear of all Encumbrances. Upon consummation of the transactions
contemplated in this Agreement, Buyer will have acquired the Seller
Partnership Interests free and clear of all Encumbrances.
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5.4 Partnership Interests. There are no outstanding
subscriptions, rights, options, warrants, calls, commitments or agreements to
which any Seller is a party or by which any Seller is bound or may be bound
which relate to sale of any ownership interest in Polk or MCLP.
5.5 Authority to Execute and Perform Agreement. Sellers have the
full legal right and power and all authority and approvals required to enter
into, execute, deliver and perform this Agreement and their Obligations
hereunder. The execution, delivery and performance of this Agreement (and all
other agreements required to effect the transactions contemplated) and the
consummation of the transactions contemplated herein have been duly authorized
by all action required under Sellers' Certificates or Articles of
Incorporation or Bylaws. This Agreement, and each other agreement to be
executed by Sellers to effect the transactions, contemplated by this
Agreement, is and will be the valid and legally binding obligation of Sellers
enforceable in accordance with its terms, except as enforceability hereof may
be limited by bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights or contractual obligations generally.
5.6 No Breach. Except as set forth in Schedule 5.6, the
consummation of the transactions herein contemplated including, without
limitation, the execution, delivery and consummation of this Agreement and the
documents required to effect the transactions herein contemplated, do not and
will not (1) constitute a violation of or default under (either immediately or
upon notice, lapse of time or both), conflict with or result in a breach of
(a) the Certificate or Articles of Incorporation of any Seller, (b) the terms
of any Contract to which any Seller is a party, (c) any Judgment, or (d) any
Laws; or (2) result in the creation or imposition of any Encumbrance on the
Seller Partnership Interests or give to any Person any interest or right in
the Seller Partnership Interests.
5.7 Consents; Proceedings. Except as set forth in Schedule 5.7, no
Consent is required in connection with the execution, delivery and performance
by Sellers of this Agreement or the consummation by Sellers of the
transactions contemplated hereby. There are no Proceedings existing, and
Sellers have no knowledge of any such Proceedings pending or threatened
against or affecting any of the Sellers which would prevent the consummation
of the transactions contemplated herein.
5.8 No Broker. No broker, finder, agent or similar intermediary
has acted for or on behalf of Sellers in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's fee, finder's fee, or similar fee or
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commission in connection therewith based on any agreement, arrangement or
understanding with Sellers or any action taken by Sellers.
5.9 Full Disclosure. All exhibits, schedules, notices and
affidavits delivered by or on behalf of Sellers in connection with this
Agreement and the transactions contemplated hereby are true and complete; all
such exhibits, schedules, notices and affidavits are authentic. The
information furnished by or on behalf of Sellers to Buyer in connection with
this Agreement and the transactions contemplated hereby do not contain any
untrue statement of material fact and do not fail to state any material fact
necessary to make the statements made, in the context in which they are made,
not false or misleading.
5.10 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 5 shall be true on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
6. Representations and Warranties of Buyer and Genesis. Knowing
that Sellers rely thereon, Buyer represents, warrants and covenants to Sellers
on the date hereof and on the Closing Date as follows:
6.1 Organization. Buyer is a corporation duly organized, validly
existing and in6.1 good standing under the laws of Pennsylvania, the state of
its incorporation. Buyer is qualified as a foreign corporation in good
standing to transact business in each jurisdiction in which the nature of its
business or location of its business, properties or employees requires such
qualification, except where the failure to do so would not have any material
adverse effect on Buyer's business, assets or financial condition and would
not subject Buyer to any material penalty. Buyer has the full corporate power
and authority to own its assets, conduct its business as and where such
business is presently conducted, and, subject to the approval of its board of
directors, enter into this Agreement.
6.2 Effect of Agreement. Buyer's execution, delivery and
performance of this Agreement, and the consummation by Buyer of the
transactions contemplated hereby, (a) upon the approval hereof by the board of
directors of Buyer will have been duly authorized by all necessary corporate
action of Buyer, (b) do not constitute a violation of or default under Buyer's
Articles of Incorporation or bylaws or any contract or agreement to which
Buyer is a party or by which Buyer is bound, (c) do not constitute a violation
of any Law or Judgment, applicable to Buyer, and (d) do not require the
Consent of any Person. This Agreement constitutes the valid and legally
binding agreement of Buyer, enforceable against Buyer in accordance with its
terms.
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6.3 Proceedings. There are no Proceedings existing, and Buyer has
no knowledge of any such Proceedings pending or threatened, against or
affecting Buyer, which would prevent the consummation of the transactions
contemplated herein.
6.4 No Broker. No broker, finder, agent or similar intermediary
has acted for or on behalf of Buyer in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's fee, finder's fee, or similar fee or
commission in connection therewith based on any agreement, arrangement or
understanding with Buyer or any action taken by Buyer.
6.5 Full Disclosure. All exhibits, schedules, notices or
affidavits delivered by or on behalf of Buyer in connection with this
Agreement and the transactions contemplated hereby are true and complete; all
such exhibits, schedules, notices or affidavits are authentic. The information
furnished by or on behalf of Buyer to Sellers in connection with this
Agreement and the transactions contemplated hereby do not contain any untrue
statement of material fact and do not fail to state any material fact
necessary to make the statements made, in the context in which they are made,
not false or misleading.
6.6 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 6 shall be true on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
7. Covenants and Agreements. The parties agree and covenant as follows
7.1 Continued Effectiveness of Representations and Warranties of
Sellers. From the date hereof through the Closing Date, Sellers will conduct
their affairs in such a manner so that the representations and warranties
contained in Section 5 herein shall continue to be true and correct on and as
of the Closing Date as if made on and as of the Closing Date, and Buyer shall
promptly be given notice of any event, condition or circumstance known to
Sellers and occurring from the date hereof through the Closing Date which
would cause any of such representations and warranties to become untrue in any
respect.
7.2 No Shopping. Sellers shall not, directly or indirectly,
through any director, officer, employee, agent or otherwise, solicit, initiate
or encourage submission of proposals or offers from any Person relating,
directly or indirectly, to any acquisition of any of the Seller Partnership
Interests or participate in any negotiation regarding, or furnish to any other
Person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to or seek, directly or indirectly, to acquire any
of the Seller Partnership Interests. Sellers shall promptly notify Buyer if
any such proposal or offer, or any inquiry or contact with any Person with
respect thereto, is made.
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7.3 Taxes and Tax Returns. Buyer and Sellers acknowledge and agree
that the sale of Seller Partnership Interests, as set forth herein, will
result in a termination of Polk and MCLP for federal income tax and certain
state and local tax purposes. Buyer will cause to be filed all Tax Returns for
all taxable periods which end on or prior to the Closing Date as a result of
such termination. Prior to filing such Tax Returns, Buyer shall provide to
Sellers an opportunity to review and comment upon such Tax Returns. The income
and expenses of Polk and MCLP will be apportioned to the period up to and
including the Effective Time (as hereinafter defined) and the period after the
Effective Time by closing the books of Polk and MCLP as of the end of the
Effective Time. Sellers and Buyer hereby agree that each party to this
Agreement shall be liable for their respective allocable shares (as defined
below) of any Taxes which may arise as a result of the transactions
contemplated in this Agreement and which are either imposed upon Polk or MCLP,
as the case may be, and/or allocated to the partners of such entities in their
capacity as partners of either Polk or MCLP. For purposes of the immediately
preceding sentence, a partner's allocable share of any Taxes shall be based on
such partner's relative percentage partnership interests in Polk or MCLP, as
the case may be, as determined immediately prior to the Closing Date.
7.4 Allocation. The Purchase Price shall be allocated in
accordance with Schedule 7.4 hereto. Sellers and Buyer shall file Internal
Revenue Service Form 8594, if required, as jointly prepared, with respect to
the assets of Polk and MCLP. Sellers and Buyer shall (with respect to any
asset sold or acquired by such party pursuant to this Agreement) use the
respective allocations set forth on Schedule 7.4 and on Form 8594 for all
reporting purposes including, without limitation, all matters relating to
federal, state and local income and franchise taxes. Sellers, if requested by
Buyer, will consent to the filing of a Code Section 754 election by Polk or
MCLP, and will timely execute any instrument required to effect such an
election.
8. Conditions Precedent to the Obligations of Buyer. Each and every
obligation of Buyer to complete the Closing is subject to the satisfaction
of the following conditions (any one or more of which may be waived in writing
by Buyer):
8.1 Agreements, Representations and Warranties. The agreements,
representations and warranties of Sellers contained in this Agreement shall be
true on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. Sellers shall have performed and complied
with all covenants and agreements required by this Agreement to be performed
or complied with by them on or prior to the Closing Date. Sellers shall have
delivered to Buyer a Certificate dated as of the Closing Date and signed by
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the Vice President and Controller of Fairmount and MHC, certifying that all
representations and warranties of Sellers are true on and as of the Closing
Date with the same force and effect as though made on and as of the Closing
Date, that all conditions to Buyers obligations hereunder have been satisfied.
8.2 Board Approval. The board of directors of Buyer shall have
approved and authorized this Agreement and all the transactions contemplated
thereby.
8.3 Delivery of Documents. Sellers shall have executed and/or
delivered to Buyer, on or before the Closing Date, the following, which shall
be in form and substance acceptable to Buyer and Buyer's counsel:
(1) Documents and instruments of transfer for the Seller
Partnership Interests including, without limitation, Sellers withdrawal as
partners of Polk and MHLC and any required amendments to the limited
partnership certificates and agreements of Polk and MHLC;
(2) A certificate, dated no earlier than thirty days prior to
the Closing Date, that Sellers are in good standing in their states of
organization;
(3) A receipt acknowledging Buyer's payment to Sellers of the
Purchase Price payable on the Closing Date;
(4) Certificate of incumbency and specimen signatures of all
signatory officers of Sellers;
(5) A guarantee executed by each of the Shareholders, in
substantially the form attached hereto as Exhibit A, which guarantees the
prompt performance by Sellers of all their obligations under this Agreement,
including, without limitation, the indemnification obligations set forth in
Section 12.
(6) If the Election is in effect, an escrow agreement executed
by Buyer, Sellers and the Escrow Agent, in substantially the form attached
hereto as Exhibit B (the "Escrow Agreement").
(7) All such further Documents and Contracts which may be
requested by Buyer or its counsel, in order to more effectively transfer title
to the Seller Partnership Interests, or to effectuate and carry out any
provision of this Agreement and the transaction provided herein.
(8) Copies of resolutions of the board of directors of Sellers
authorizing the execution and delivery of this agreement, certified by
officers of Sellers.
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8.4 Proceedings. No Proceeding shall have been instituted or
threatened to restrain or prevent the carrying out of the transactions
contemplated hereby or to seek damages in connection with such transactions.
8.5 Permits and Consents. Buyer shall have obtained any and all
Permits and Consents from any Person required for the consummation of the
Closing, all of which shall be in form and substance satisfactory to Buyer.
8.6 Due Diligence. Buyer shall be satisfied with the results of
its due diligence investigation.
9. Conditions Precedent to the Obligations of Sellers. Each and
every obligation of Sellers to complete the Closing is subject to the payment of
the Purchase Price payable on the Closing Date and satisfaction of the following
conditions (any one or more of which may be waived in writing by Sellers):
9.1 Agreements, Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement shall be
true on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. Buyer shall have performed and complied
with all covenants and agreements required by this Agreement to be performed
or complied with by it on or before the Closing Date. Buyer shall have
delivered to Sellers a Certificate dated as of the Closing Date and signed by
an officer of Buyer, certifying that all representations and warranties of
Buyer are true on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date and that all conditions to Sellers
obligations hereunder have been satisfied.
9.2 Delivery of Documents. Buyer shall have executed and/or
delivered to Sellers on or before the Closing Date the following, which shall
be in form and substance acceptable to Sellers and Sellers' counsel:
(1) A certificate, dated no earlier than thirty days prior to
the Closing Date, that Buyer is a corporation in good standing in the state of
incorporation;
(2) Copies of resolutions of the appropriate authority of
Buyer authorizing the execution and delivery of this Agreement, certified by
an officer of Buyer;
(3) A certificate of incumbency and specimen signatures of all
signatory officers of Buyer, certified by an officer of Buyer;
(4) If the Election is in effect, an escrow agreement executed
by Buyer, Sellers and the Escrow Agent, in substantially the form attached
hereto as Exhibit B (the "Escrow Agreement").
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(5) All such further documents that may be requested by
Sellers or their counsel, in order to effectuate and carry out any provision
of this Agreement and the transaction provided herein.
9.3 Proceedings. No Proceeding shall have been instituted or
threatened to restrain or prevent the carrying out of the transactions
contemplated hereby or to seek damages in connection with such transactions.
10. Termination. Anything herein to the contrary notwithstanding:
10.1 The obligations of Buyer and Sellers under this Agreement
may be terminated (i) by written mutual consent of Buyer and Sellers, or (ii)
by Buyer pursuant to notice in writing delivered to Sellers prior to the
Closing Date if Buyer is not reasonably satisfied with the results of its due
diligence review.
10.2 In the event this Agreement is terminated pursuant to this
Section, written notice shall be given to the other party and this Agreement
shall terminate and the transactions contemplated by this Agreement shall be
abandoned. Upon such termination, no party shall have any further obligation
to the other with respect to such obligations; provided however, nothing
herein shall be a waiver of or prejudice the rights and remedies of any party
arising from any default under or breach of the provisions of this Agreement.
11. Interpretation and Survival of Representations and Warranties.
Each warranty, representation and covenant contained herein is independent of
all other warranties, representations and covenants contained herein (whether or
not covering identical or related subject matter) and must be independently and
separately complied with and satisfied. All representations, warranties,
covenants and agreements shall survive the execution and delivery hereof and the
Closing for a period of one year, except, however, the representation and
warranty contained in Section 5.3 shall survive indefinitely.
12. Indemnification.
12.1 Sellers' Obligation to Indemnify. From and after the Closing
Date, Sellers shall indemnify and hold harmless Buyer (and its respective
successors, assigns, directors and officers) from and against any and all
Losses arising out of or caused by, directly or indirectly, any or all of the
following:
(1) Any misrepresentation, breach or failure of any warranty,
representation or certification made by Sellers in this Agreement or pursuant
hereto;
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(2) Any failure or refusal by Sellers to satisfy or perform
any term or condition of this Agreement to be satisfied or performed by
Sellers.
(3) Any failure by the Sellers to pay their allocable share
of any Taxes referred to in Section 7.3 of this Agreement.
12.2 Indemnification for Environmental Matters. From and after
the Closing Date Sellers shall indemnify and hold harmless Buyer (and its
respective successors, assigns, directors and officers) from and against any
and all Losses imposed upon, suffered by or asserted against Buyer by reason
of the presence, release or threat of release, between November 30, 1993 and
the Closing Date, of any Hazardous Substances on, under, above or from the
real property owned directly or indirectly by the Partnerships, (hereinafter
"Environmental Contamination"), provided, however, that Sellers' duty of
indemnification under this Section (a) shall not extend to Environmental
Contamination which first arises after the Closing Date; and (b) shall be in
proportion to their respective interests in Polk and MCLP.
12.3 Notice to Indemnifying Party. If any party (the
"Indemnitee") receives notice of any claim or the commencement of any
Proceeding with respect to which any other party (or parties) is obligated to
provide indemnification (the "Indemnifying Party") pursuant to Section 12.1,
the Indemnitee shall promptly give the Indemnifying Party notice thereof. Such
notice shall be a condition precedent to any Liability of the Indemnifying
Party under the provisions for indemnification contained in this Agreement.
Except as provided below, the Indemnifying Party may compromise, settle or
defend, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any such matter involving the asserted Liability of the
Indemnitee. In any event, the Indemnitee, the Indemnifying Party and the
Indemnifying Party's counsel, as the case may be, shall cooperate in the
compromise of, settlement or defense against, any such asserted Liability. The
Indemnifying Party shall defend any asserted liability and the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such
defense.
12.4 Limitations on Sellers' Obligations to Indemnify.
Notwithstanding anything to the contrary contained herein, Sellers shall have
no obligation to indemnify Buyer (i) unless Buyer's claims for Losses exceed
in the aggregate $50,000, provided, however, with respect to claims relating
to Taxes there shall be limitation on Sellers' obligation to indemnify Buyer;
and (ii) with respect to matters relating to Taxes unless Buyer's claim for
indemnification is made within seven years after the Closing Date and with
respect to environmental matters unless Buyer's claim for indemnification is
made within 18 months after the Closing Date.
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13. Expenses. Whether or not the transactions contemplated by this
Agreement shall be consummated, each party shall pay its own expenses incident
to preparing for, entering into and carrying into effect this Agreement and the
transactions contemplated hereby.
14. Further Assurances.
14.1 At any time and from time to time after the Closing Date, at
Buyer's request and without further consideration, Sellers will promptly
execute and deliver all such further Documents or perform such acts as Buyer
may reasonably request in order to more fully consummate the transactions
contemplated herein and in order to more effectively vest, transfer, confirm,
protect and defend the right, title and interest of Buyer in the Seller
Partnership Interests and to assist Buyer in exercising its rights and
privileges with respect thereto.
15. Trade Secrets. Sellers, jointly and severally, will not, at
any time after the date hereof, except with the express prior written consent of
Buyer, directly or indirectly, disclose, communicate or divulge to any Person,
or use for the benefit of any Person, any secret, confidential or proprietary
knowledge or information with respect to the conduct or details of the business
of Polk or MCLP including, but not limited to, customers, prospects, costs,
designs, marketing methods and strategies, finances and suppliers.
16. Miscellaneous.
16.1 Publicity. The parties will treat this Agreement and the
transaction contemplated by this Agreement with strict confidence and will
consult with one another prior to issuing any press release, trade release or
making any statement that could become public, unless otherwise required by
Law.
16.2 Notices. Any notice or other communication required or which
may be given hereunder shall be in writing and either delivered personally to
the addressee, telegraphed, telecopied or telexed to the addressee or mailed,
certified or registered mail or express mail, postage prepaid, or sent by a
nationally recognized courier service, service charges prepaid, and shall be
deemed given when so delivered personally, telegraphed, telecopied or telexed,
if by certified or registered mail, four days after the date of mailing or if
express mailed or sent by a nationally recognized courier service, two days
after the date of mailing, as follows:
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(1) If to Buyer:
148 West State Street
Kennett Square, PA 19348
Attention: Chairman and Chief Executive Officer
With a required copy to:
Blank, Rome, Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Attention: Stephen E. Luongo, Esquire
(2) If to Sellers:
Fairmount Associates, Inc.
515 Fairmount Avenue, Suite 900
Towson, MD 21286
Attention: Michael J. Batza, Jr.
With a required copy to:
Gallagher, Evelius & Jones
Park Charles, Suite 400
218 North Charles Street
Baltimore, MD 21201
Attention: Thomas B. Lewis, Esquire
and to such other address or addresses as Buyer or Sellers, as the case may be,
may designate to the other by notice as set forth above.
16.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) contains the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior or contemporaneous
agreements, written or oral, with respect thereto.
16.4 Waivers and Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by all
the parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part
of any party of any right, power or privilege hereunder, nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
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other or further exercise thereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies which any party may otherwise have
at law or in equity. The rights and remedies of any party arising out of or
otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant or agreement contained in this Agreement shall in no way be
limited by the fact that the act, omission, occurrence, or other state of facts
upon which any claim of any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty, covenant or agreement
contained in this Agreement (or in any other agreement between the parties) as
to which there is no inaccuracy or breach.
16.5 Binding Agreement. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
each of the parties hereto and their respective heirs, legal representatives,
executors, successors and assigns.
16.6 Assignment. This Agreement and the rights and obligations of
the parties hereto shall not be assigned by any party to any one or more
Persons, except Buyer may assign and/or delegate any or all of its rights and
obligations hereunder to one or more Persons which are direct or indirect
wholly-owned subsidiaries of Genesis Health Ventures, Inc. Nothing in this
Agreement, unless otherwise expressly provided, is intended to confer upon any
Person, other than the parties hereto and their successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
16.7 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
16.8 Severability. If any provision of this Agreement shall be
determined by a court of competent jurisdiction to be invalid or
unenforceable, such determination shall not affect the remaining provisions of
this Agreement, all of which shall remain in full force and effect.
16.9 Governing Law. This Agreement shall be governed and
construed in accordance with the Laws of the Commonwealth of Pennsylvania
applicable to agreements made, delivered and to be performed entirely within
the Commonwealth of Pennsylvania.
16.10 Consent to Jurisdiction and Service of Process. Any
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby shall be instituted in the Court of Common Please of
Philadelphia County or, if jurisdiction for the matter exists solely in
federal court, in the District Court of the Eastern District of Pennsylvania,
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and each party waives any objection which such party may now or hereafter have
to the laying of the venue of any such Proceeding, and irrevocably submits to
the jurisdiction of any such court in any such Proceeding. Any and all service
of process and any other notice in any such Proceeding shall be effective
against any party if given by registered or certified mail, return receipt
requested, or by any other means of mail which requires a signed receipt,
postage prepaid, mailed to such party as herein provided. Nothing herein
contained shall be deemed to affect the right of any party to serve process in
any manner permitted by law or to commence legal Proceedings or otherwise
proceed against any other party in any jurisdiction other than Pennsylvania.
16.11 Counterparts. This Agreement may be executed 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.
16.12 Exhibits and Schedules. The Exhibits and Schedules to this
Agreement are a part of this Agreement as if set forth in full herein.
16.13 Effective Time. Notwithstanding anything to the contrary
contained herein, the effective time of the consummation of the transaction
contemplated herein shall be deemed to have occurred as of 12:01 a.m. on March
1, 1996 (the "Effective Time").
16.14 Option Regarding Structure. At any time prior to the
Closing with respect to the Polk Interests, Buyer may elect to change the
structure of the transaction from the purchase of partnership interests from
Sellers (followed by the redemption by Polk of all its outstanding limited
partnership interests and the subsequent liquidation of Polk and distribution
of all its assets to Meridian Healthcare, Inc.) to the purchase of
substantially all of the assets of Polk by Meridian Healthcare, Inc. or
another wholly-owned subsidiary of Genesis Health Ventures, Inc. followed by a
liquidation of Polk and distribution of its assets to its partners. So long as
such change shall have no substantive negative economic effect to the Sellers,
the execution of this Agreement by Sellers shall be deemed Sellers' consent as
partners of Polk to such sale of assets. Any change in structure shall be
accomplished by Buyer and Sellers in a manner which changes the rights and
obligations of the parties hereto and the terms and conditions of this
Agreement only to the extent necessary to accommodate changes which are
necessary to reflect the change in structure.
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16.15 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MERIDIAN HEALTH, INC.
By:_____________________________________________
Name:
Title
FAIRMOUNT ASSOCIATES, INC.
By:_____________________________________________
Name:
Title:
MHC HOLDING COMPANY
By:_____________________________________________
Name:
Title:
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SCHEDULE 5.1
Names and Address of Fairmount and Shareholders
1. Fairmount Associates, Inc.
515 Fairmount Avenue, Suite 900
Towson, MD 21286
2. Michael J. Batza, Jr.
Edward A. Burchell
Earl L. Linehan
Roger C. Lipitz
Arnold I. Richman
(All c/o Fairmount Associates, Inc. at above address)
SCHEDULE 5.2
Names and Addresses of MHC
515 Fairmount Avenue, Suite 900
Towson, MD 21286
SCHEDULE 5.6
No Breach
(Except to the extent the contemplated transactions would
cause a breach under financing documents which are intended to
be paid off and terminated concurrently with Closing
hereunder).
SCHEDULE 5.7
Consents
(Except to the extent the contemplated transactions would
cause a consent to be required to be obtained pursuant to the
financing documents which are intended to be paid off and
terminated with Closing hereunder).
SCHEDULE 7.4
Allocation of Purchase Price
Polk Interests - $1,820,000
MCLP Interests - $7,120,000