EXHIBIT 2.2
PURCHASE AND SALE AGREEMENT
by and among
GENESIS HEALTH VENTURES OF INDIANA, INC.
and
HALLMARK HEALTHCARE LIMITED PARTNERSHIP, collectively, as Seller
and
HUNTER ACQUISITION L.L.C., as Purchaser
for the following:
(1) Meridian Nursing Center-Cardinal, 1121 E. LaSalle Ave., South Bend,
Indiana 46617;
(2) Meridian Nursing Center-Dyer, 601 Sheffield Avenue, Dyer, Indiana 46311;
(3) Meridian Nursing Center-East Lake, 1900 Jeanwood Drive, Elkhart, Indiana
46514;
(4) Meridian Nursing Center-River Park, 915 S. 27th Street, South Bend,
Indiana 46615;
and
(5) an institutional pharmacy business in the State of Indiana commonly known
as "ASCO".
TABLE OF CONTENTS
PAGE
1.1 PURCHASE AND SALE...............................................................................2
A. Purchase of the Facilities.............................................................2
B. Purchase of The Pharmaceutical Business................................................3
1.2 EXCLUDED ASSETS.................................................................................4
2. PURCHASE PRICE; LIABILITIES.....................................................................5
3. CLOSING.........................................................................................6
4. CONVEYANCES.....................................................................................6
5. COSTS AND EXPENSES..............................................................................6
6. PRORATIONS......................................................................................7
7. PATIENT ACCOUNTING..............................................................................7
8. POSSESSION......................................................................................7
9. SELLER REPRESENTATIONS AND WARRANTIES...........................................................7
(a) Status of Seller.......................................................................7
(b) Authority..............................................................................8
(c) Title..................................................................................8
(d) The Facilities.........................................................................8
(e) Licensure..............................................................................8
(f) Cost Reports...........................................................................9
(g) Patients...............................................................................9
(h) Employees of the Property; Unions......................................................9
(i) Facilities' Compliance with Law.......................................................10
(j) The Pharmaceutical Business' Compliance with Laws.....................................10
(k) Surveys and Reports...................................................................11
(l) Necessary Action......................................................................11
(m) Inventory.............................................................................11
(n) Taxes and Tax Returns.................................................................11
(o) Litigation............................................................................11
(p) Liens.................................................................................12
(q) Defaults Under Contracts and Leases...................................................12
(r) Financial Statements..................................................................12
(s) Life Safety Code Waivers, Etc.........................................................12
(t) [Intentionally deleted]...............................................................12
(u) Insurability..........................................................................12
(v) Liabilities...........................................................................12
(w) Full Disclosure.......................................................................13
(x) Utilities.............................................................................13
(y) Improvements and Personal Property....................................................13
10. PURCHASER REPRESENTATIONS AND WARRANTIES.......................................................13
(a) Status of Purchaser...................................................................13
(b) Authority.............................................................................13
(c) Necessary Action......................................................................14
(d) Litigation............................................................................14
(e) Full Disclosure.......................................................................14
11. BROKER.........................................................................................14
12. SELLER COVENANTS...............................................................................14
(a) Pre-Closing...........................................................................14
(b) Casualty/Condemnation.................................................................17
(c) Closing...............................................................................18
(d) Title Insurance Premium...............................................................19
(e) Post-Closing..........................................................................19
13. PURCHASER COVENANTS............................................................................20
(a) Pre-Closing...........................................................................20
(b) Closing...............................................................................20
(c) Post-Closing..........................................................................20
14. MUTUAL COVENANTS...............................................................................21
15. CONDITIONS TO PURCHASER'S OBLIGATIONS..........................................................22
(a) Seller's Representations, Warranties and Covenants True at Closing....................22
(b) Seller's Performance..................................................................22
(c) Hart-Scott Condition Precedent........................................................22
(d) Title Insurance.......................................................................22
(e) No Defaults...........................................................................22
(f) Inspection............................................................................22
(g) Absence of Litigation.................................................................23
(h) Licenses and Consents.................................................................23
(i) No Material Change....................................................................23
(j) Removal of Personal Property Liens....................................................23
(k) Environmental Matters.................................................................23
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16. CONDITIONS TO SELLER'S OBLIGATIONS.............................................................23
(a) Purchaser's Representations, Warranties and Covenants True at Closing. ...............23
(b) Purchaser's Performance...............................................................23
(c) Absence of Litigation.................................................................24
(d) Hart-Scott Condition Precedent........................................................24
17. TERMINATION....................................................................................24
18. INDEMNIFICATION................................................................................24
19. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS..........................................26
20. SURVEYS AND TITLE POLICIES.....................................................................26
21. ACCOUNTS RECEIVABLE............................................................................27
22. PATIENT FUNDS..................................................................................29
23. TRANSFER OF PATIENT FUNDS......................................................................29
24. SELLER INDEMNITY REGARDING PATIENT FUNDS.......................................................29
25. EMPLOYEE MATTERS AND PATIENT RECORDS...........................................................29
26. TERMINATION OF SELLER EMPLOYEES................................................................29
27. DELIVERY OF MEDICAL RECORDS....................................................................29
28. BULK SALES LAW.................................................................................30
29. NOTICES........................................................................................30
30. ASSIGNMENT.....................................................................................30
31. SOLE AGREEMENT.................................................................................31
32. SUCCESSORS.....................................................................................31
33. CAPTIONS.......................................................................................31
34. GOVERNING LAW..................................................................................31
35. SEVERABILITY...................................................................................31
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36. GENDER.........................................................................................31
37. RISK OF LOSS...................................................................................31
38. HOLIDAYS.......................................................................................31
39. COUNTERPARTS...................................................................................31
40. DEFINITION OF KNOWLEDGE........................................................................31
LIST OF EXHIBITS
A. Description of Real Property of Nursing Homes
B. Pharmaceutical Business Services and Products
C. Leases with respect to the Nursing Homes
D. Assumed Contracts for the Facilities
E. Description of Pharmacy Real Property
F. Pharmacy Personal Property
G. Assumed Pharmacy Contracts, Program Agreements and Blue Cross and Other
Third Party Payor Contracts
H. Allocation of Purchase Price
H(a). Form of Estoppel Certificate
I. Facilities Contracts Not Terminable Without Penalty in Thirty Days
J. Employee Grievances
K. Life Safety Code Waivers, Vendor Holds and Decertification Proceedings
L. Copies of Pharmacy Licenses, Deficiency Reports and List of Licensing
Regulatory Bodies
M. Opinion of Counsel for Seller
N. Opinion of Counsel for Purchaser
O. Allocated Amounts of Title Insurance
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LIST OF SCHEDULES
Schedule 1(A)(e) -- List of Provider Agreements
Schedule 1.1(A)(f) -- List of Licenses
Schedule 1.1(B)(j) -- List of Pharmacy Intangibles
Schedule 4 -- List of Title Exceptions
Schedule 9(e)(i) -- List of License Restrictions
Schedule 9(i)(iii) -- Notices of Claims from Licensing Agencies
Schedule 9(o) -- List of Litigation
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and
entered into this ______ day of January, 1996 by and among GENESIS HEALTH
VENTURES OF INDIANA, INC., a Pennsylvania corporation ("Genesis") and HALLMARK
HEALTHCARE LIMITED PARTNERSHIP, a Maryland limited partnership ("Hallmark")
(Genesis and Hallmark collectively "Seller") and HUNTER ACQUISITION L.L.C., an
Illinois limited liability company, or its nominee or assignee ("Purchaser").
WITNESSETH:
WHEREAS, Seller owns four long term care skilled and
intermediate care nursing homes in the State of Indiana, having the following
common names, located at the following common addresses and each having the
respective number of beds so indicated for each such nursing home (collectively,
the "Nursing Homes"):
(1) Meridian Nursing Center-Cardinal, 1121 E. LaSalle Ave., South Bend,
Indiana 46617, containing 291 beds;
(2) Meridian Nursing Center-Dyer, 601 Sheffield Avenue, Dyer, Indiana
46311, containing 140 beds;
(3) Meridian Nursing Center-East Lake, 1900 Jeanwood Drive, Elkhart,
Indiana 46514, containing 160 beds;
(4) Meridian Nursing Center-River Park, 915 S. 27th Street, South Bend,
Indiana 46615, containing 44 beds
WHEREAS, the legal description and square footage of the real
property upon which each such Nursing Home is located is more particularly
described in the legal descriptions attached hereto as Exhibit A and made a part
hereof by this reference (collectively, the "Land");
WHEREAS, Seller owns and operates an institutional pharmacy
business in the State of Indiana, commonly known as ASCO, all as more
particularly described on Exhibit B attached hereto and made a part hereof,
which Exhibit B sets forth the type of services and products provided by Seller
from the pharmacy to the approximately 635 beds which it serves (all of the
business and assets comprising that certain institutional pharmacy, including
all inventory and carts, the "Pharmaceutical Business");
WHEREAS, except for the Excluded Assets (as such term is
defined in Section 1.2 hereinbelow), Seller desires to sell and transfer to
Purchaser the Property (as such term is defined in Section 1.1(B) below) to
Purchaser, and Purchaser desires to purchase the same from Seller, subject to
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained in this Agreement and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound hereby, agree as follows:
1.1 PURCHASE AND SALE. On the terms and conditions set forth
herein, Seller shall sell, assign, transfer, convey and deliver to Purchaser
and Purchaser shall purchase from Seller the following:
A. Purchase of the Facilities:
(a) The Land which is more particularly described in Exhibit A
attached hereto and made a part hereof by this reference, together with all
right, title and interest of Seller in and to all easements, tenements,
hereditaments, privileges and appurtenances belonging thereto and the
improvements, and structures located thereon that constitute each of the
Nursing Homes, as well as any other structures located thereon (collectively
the "Real Property");
(b) All equipment, furniture, furnishings, and fixtures,
inventory, supplies and other tangible personal property owned and/or leased
by Seller and located on the Real Property and/or used in connection with the
operation of the skilled and/or intermediate care nursing home located on the
Real Property and as of the Closing (the "Personal Property");
(c) Those leases or rental agreements specifically assumed by
Purchaser set forth on Exhibit C attached hereto ("Leases");
(d) All intangible property, whether enumerated herein or not,
in which Seller has an interest, now or hereafter used in connection with the
operation of the Real Property and the skilled and/or intermediate care
nursing homes located upon the Land ("Intangibles"), including, but not
limited to, Seller's licenses, permits and certificates with respect to the
Facilities (as such term is described in this Section 1.1(A)) to the extent
assignable to Purchaser, and all service contracts for the benefit of the
Facilities specifically assumed by Purchaser as set forth on Exhibit D
attached hereto ("Contracts");
(e) The rights of Seller under the provider agreements with
Medicare, Medicaid or any other third-party payor programs (excluding the
right to any reimbursement accrued prior to the Closing Date (hereinafter
defined)), to the extent assignable by Seller and accepted and assumed by
Purchaser ("Provider Agreements") listed on Schedule 1.1(A)(e);
(f) The licenses, permits, accreditation, and certificates of
occupancy listed on Schedule 1.1(A)(f) issued by any federal, state, municipal
or quasi-governmental authority relating to the use, maintenance or operation
of the Nursing Homes, running to, or in favor of, Seller, to the extent
assignable by Seller and accepted and assumed by Purchaser ("Licenses");
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(g) All documents, charts, personnel records, property
manuals, resident/patient records and lists of the Facilities (subject to the
resident's rights to access to his/her medical records as provided by law and
confidentiality requirements), books, records, files and other business
records attributable to the business or operations of the Nursing Homes
("Records"), except for those Excluded Assets (hereinafter defined);
(h) All existing agreements with residents and any guarantors
thereof of the Nursing Homes, to the extent assignable by Seller and accepted
and assumed by Purchaser ("Resident Agreements");
(i) All claims and causes of actions of Seller against any
third parties relating to the Facilities heretofore existing or hereinafter
accruing to Seller ("Claims"); and
(j) The business of the Seller as conducted at each Nursing
Home located on one of the Real Properties as a going concern, including but
not limited to the name of the business conducted thereon and all telephone
numbers presently in use therein (the "Nursing Home Business").
The Real Property, Personal Property, Leases, Intangibles, Contracts, Provider
Agreements, Licenses, Records, Resident Agreements, Claims, and Nursing Home
Business are collectively referred to as the "Facilities."
B. Purchase of The Pharmaceutical Business:
(a) All right, title and interest in the assets listed on the
Exhibits and Schedules referred to in this Section 1.1(B), free and clear of
all encumbrances, mortgages, pledges, liens, security interests, obligations
and liabilities other than the Assumed Pharmacy Contracts (as defined in
Section 1.1(B)(i) below), as follows:
(b) All right, title and interest of Seller in and to the
land and real estate owned or leased by Seller and used in connection with the
Pharmaceutical Business, as listed on Exhibit E attached hereto (any existing
leases or rental agreements collectively, the "Pharmacy Leases"), together
with all right, title and interest of Seller in and to all easements,
tenements, hereditaments, privileges and appurtenances belonging thereto and
the improvements, and structures located thereon that constitute the Pharmacy,
as well as any other structures located thereon (collectively, the "Pharmacy
Real Property");
(c) The equipment, computers, furniture, furnishings,
fixtures, inventory, supplies and other tangible personal property owned
and/or leased by Seller, used in connection with the Pharmaceutical Business
and located on Pharmacy Real Property (collectively, the "Pharmacy Personal
Property"), the computers and inventory being listed on Exhibit F attached
hereto;
(d) All accounts and inventory of goods and supplies used or
maintained in connection with the Pharmaceutical Business (collectively, the
"Pharmacy Inventory");
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(e) All patient, medical, personnel and other records
related to the Pharmaceutical Business (including both hard and microfiche
copies) to the extent assignable; and all manuals, books and records used in
operating the Pharmaceutical Business, including, without limitation,
personnel policies and files and manuals, accounting records and computer
software (the "Pharmacy Records");
(f) To the full extent transferable, all licenses, permits,
registrations, certificates, consents, accreditations, approvals and
franchises necessary to operate and conduct the Pharmaceutical Business,
together with assignments thereof, if required, and all waivers which Seller
currently has, if any, of any requirements pertaining to such licenses,
permits, registrations, certificates, consents, accreditations; approvals and
franchises (the "Pharmacy Licenses");
(g) All goodwill, and, to the extent assignable by Seller,
all warranties (express or implied) and rights and claims related to the
assets or the operation of the Pharmaceutical Business (the "Pharmacy
Goodwill");
(h) [intentionally deleted];
(i) The contract and leasehold rights and interests pursuant
to contracts for purchase or lease of personal property, franchise agreements,
contracts for purchase, sale or lease of pharmaceuticals, supplies, equipment,
goods or services currently furnished or to be furnished in connection with
the Pharmaceutical Business that are specifically assumed by Purchaser, as set
forth on Exhibit G attached hereto (the "Assumed Pharmacy Contracts"); and
(j) The intangible or intellectual property listed on
Schedule 1.1(B)(j) (the "Pharmacy Intangibles");
The Pharmacy Lease, the Pharmacy Real Property, the Pharmacy Personal Property,
the Pharmacy Inventory, the Pharmacy Records, the Pharmacy Licenses, the
Pharmacy Goodwill, the Assumed Pharmacy Contracts, the Pharmacy Intangibles and
the Pharmaceutical Business are collectively herein referred to as the "Pharmacy
Assets". The Facilities and the Pharmacy Assets are collectively herein referred
to as the "Property".
1.2 EXCLUDED ASSETS. Seller is not selling, assigning or
conveying to Purchaser any assets, rights or property of Seller not
specifically referred to in Section 1.1. Without limiting the foregoing, the
following shall be excluded from the Property sold by Seller to Purchaser
hereunder (the "Excluded Assets"):
(a) The consideration delivered to Seller pursuant to this
Agreement;
(b) Seller's cash, cash equivalents and accounts receivable
on and as of the Closing Date;
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(c) any tangible or intangible property, wherever located,
owned by third parties not affiliated with Seller or
not used by Seller in the operations of the Facilities
or the Pharmaceutical Business;
(d) the capital stock owned or held by Seller in any
subsidiary or affiliate of Seller or the corporate and
partnership records of Seller;
(e) the assets owned or held by any subsidiary or affiliate
of Seller or any other division of Seller;
(f) the names Meridian Healthcare, Genesis Health Ventures,
ASCO Healthcare, Hallmark Healthcare and all
derivations of those names; and
(g) all of Seller's proprietary manuals, such as employee
training manuals, policy manuals, any manuals that
relate to Seller or Genesis Health Ventures, Inc., a
Pennsylvania corporation ("Parent") and all of Seller's
minute books and stock records.
2. PURCHASE PRICE; LIABILITIES.
(a) The purchase price (the "Purchase Price") payable by
Purchaser to Seller for the Property shall be Twenty Two Million Two Hundred
Fifty Thousand Dollars ($22,250,000.00), plus or minus normal and customary
prorations and shall be allocated as set forth on Exhibit H attached hereto
(the "Allocation"). The Purchase Price shall be payable as follows:
(i) Upon execution of this Agreement by all parties hereto
an earnest money deposit (the "Earnest Deposit") in the amount of
$500,000.00 shall be deposited by Purchaser by wire transfer of
immediately available funds with Lawyers Title Insurance Company in its
capacity as escrow agent (the "Escrowee") into an interest bearing
escrow account with the interest for the benefit of Purchaser.
(ii) A payment in immediately available funds at Closing (as
herein defined) of the balance of the Purchase Price less the Earnest
Deposit plus or minus the prorations specified in this Agreement.
(b) Purchaser shall not assume or pay, and Seller shall
continue to be responsible for, any debt, obligation or liability of any kind
or nature, fixed or contingent, known or unknown, of Seller not expressly
assumed by Purchaser in this Agreement. Specifically, without limiting the
foregoing, Purchaser shall not assume any claim, action, suit or proceeding
pending as of the Closing or any subsequent claim, action, suit or proceeding
arising out of or relating to any such other event occurring with respect to
the manner in which Seller conducted its business on or prior to the date of
the Closing.
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(c) The parties to this Agreement expressly agree that the
Allocation set forth on Exhibit H hereto shall be used by them for all
purposes including tax, reimbursement and other purposes. Each party to this
Agreement agrees that it will report the transaction completed pursuant to
this Agreement in accordance with the Allocation, including any report made
under Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and that no such party will take a position inconsistent with the
Allocation except with the prior written consent of the other parties hereto.
3. CLOSING. The closing of the purchase and sale pursuant to
this Agreement (the "Closing") shall take place through a "New York Style"
escrow (the "Closing Escrow") to be established with Lawyers Title Insurance
Company (the "Title Company") pursuant to form escrow instructions which shall
be modified to be consistent with the terms and provisions of this Agreement
and which shall be mutually agreed upon by the parties hereto in order to
effect a New York Style closing. The Closing shall take place on March 1, 1996
("Closing Date") or such earlier or later date upon which Purchaser and Seller
may agree in writing.
4. CONVEYANCES. Conveyance of the Property to Purchaser
shall be effected by: (i) special warranty deeds and bills of sale (each of
the foregoing with covenants solely against grantor's acts) in forms
acceptable to counsel for both Seller and Purchaser; and (ii) to the extent
Seller occupies the Pharmacy Real Property as a tenant pursuant to a Pharmacy
Lease, an assignment of tenant's rights in said Pharmacy Lease consented to by
the Lessor thereunder and any underlying mortgagee, if required, together with
an estoppel certificate from said Lessor in substantially the form attached as
Exhibit H(a). Fee simple marketable title to the Real Property and Pharmacy
Real Property, and marketable title to the Personal Property and Pharmacy
Personal Property, shall be conveyed from Seller to Purchaser free and clear
of all liens, charges, easements and encumbrances of any kind, other than the
"Permitted Exceptions", as such term is defined in this Section 4. The term
"Permitted Exceptions" shall mean: (i) each of the items on Schedule 4
attached hereto, public, private and utility easements and building line and
use or occupancy restrictions and covenants of record, provided that none of
the foregoing are violated by the existing improvements or the present use
thereof; (ii) the lien of real estate taxes, water, rent and sewer charges
that are not yet due and payable on the Closing Date; (iii) matters disclosed
by the "Surveys", as such term is defined in Section 20 hereinbelow; (iv) such
other title matters existing on the Closing Date that are accepted or deemed
accepted by Purchaser pursuant to Section 20 hereinbelow; (v) the rights of
patients in possession; and (vi) zoning, use and building laws, regulations,
ordinances and codes of any governmental authority or agency applicable to the
Real Property, provided that the existing improvements on, and the uses of,
the Real Property are in substantial compliance with the foregoing.
5. COSTS AND EXPENSES.
(a) Seller shall pay any federal, state, county and local
transfer, sales, purchase, use, value added, excise or similar taxes arising
out of the transfer of the Property and shall pay for any documentary or
revenue stamps required as a result of the transfer hereunder of the Property.
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(b) Seller shall pay up to $40,000 of the cost of the Title
Policies described in Section 20 hereof; Purchaser shall pay the cost of the
Surveys described in Section 20.
(c) Purchaser and Seller shall each pay their own attorney's
fees.
(d) Seller and Purchaser shall share any Escrow fees on a
50-50 basis.
(e) Purchaser shall pay the filing fee required in
connection with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
(f) Seller shall be and remain responsible for any employee
severance pay which may be or become payable arising out of any contractual
obligation between Seller and any of its employees at the Property.
6. PRORATIONS. The following shall be prorated as of and
shall be settled as soon as practicable after the Closing Date:
(a) (i) General and special real and other ad valorem taxes
affecting the Real Property; (ii) taxes and assessments and tax escrow amounts
held by the Lessor of the Pharmacy Real Property; and (iii) any other real and
personal property taxes which are accrued but not yet due and payable. Said
prorations shall be made on an accrual basis with reference to the most recent
available tax information with a further adjustment being made after Closing
within twenty (20) days after the receipt of the actual tax bill. Any tax
escrows for the payment of future real estate taxes relating to the Real
Property shall be returned to Seller.
(b) Charges and deposits for water, fuel, gas, oil, heat,
electricity and other utility and operating charges and prepaid service
contracts. Seller shall, if possible, obtain final utility meter readings as
of the Closing Date.
7. PATIENT ACCOUNTING. Seller shall deliver to Purchaser on
the Closing Date any advance payments by patients of the Facilities or
customers of the Pharmacy and, as provided in Sections 22-24 below, any
patient funds held in trust by Seller.
8. POSSESSION. Purchaser shall be entitled to possession of
the Property on the Closing Date subject to the possessory rights of patients
and to the Permitted Exceptions, at which time Seller shall deliver to
Purchaser all patient records and other relevant records used or developed in
connection with the business conducted at the Property.
9. SELLER REPRESENTATIONS AND WARRANTIES. Seller hereby
warrants and represents to Purchaser that:
(a) Status of Seller. Genesis is a corporation duly
organized and validly existing under the laws of the Commonwealth of
Pennsylvania and Hallmark is a limited partnership duly organized and
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validly existing under the laws of the State of Maryland and each is duly
qualified to own their respective property and conduct their respective
business in the State of Indiana.
(b) Authority. Genesis has the full corporate power and
authority and Hallmark has the full partnership power and authority to execute
and to deliver this Agreement and all related documents, and to carry out the
transactions contemplated herein, and Parent has the full corporate power and
authority to execute the Joinder to this Agreement and to carry out the
transactions contemplated therein. This Agreement is, and all instruments and
documents delivered pursuant hereto at the Closing will be, valid, binding and
enforceable against Seller in accordance with their respective terms, subject
to bankruptcy, insolvency, reorganization, fraudulent transfer and similar
laws affecting creditors' rights generally. The execution, delivery and
performance of this Agreement and all related documents and the consummation
of the transaction contemplated herein will not: (a) result in a breach of the
terms and conditions of nor constitute a default under or violation of the
organizational documents of Seller or any law, regulation, court order,
mortgage, note, bond, indenture, agreement, license, charter, by-laws, or
other instrument or obligation to which Seller is now a party or by which
Seller or any of the assets of Seller may be bound or affected; or (b) result
in the creation of any mortgage, pledge, lien, claim, charge, encumbrance or
other adverse interest upon the Property; or (c) terminate or modify, or give
any party the right to terminate or modify, any Contract, Lease, Pharmacy
Contract or Pharmacy Lease.
(c) Title. Seller will convey to Purchaser title to the
Property free and clear of all liens, encumbrances, covenants, conditions,
restrictions, leases, tenancies, licenses, claims, options and other matters
affecting title thereto except only the matters permitted under Sections 4 and
20 hereof.
(d) The Facilities. Each of the Facilities is licensed for
the number of beds set forth opposite the name of the applicable Facility in
the First Recital to this Agreement and, to Seller's knowledge, the Personal
Property at each Facility includes all equipment and property required under
applicable state and federal law to operate each Facility as a skilled and/or
intermediate care nursing home with the number of beds applicable to each such
Facility as set forth in said First Recital. All rights, properties and assets
used in the operation of the Facilities are either owned by Seller or licensed
or leased to Seller and are included in the assets to be transferred
hereunder, and, to Seller's knowledge, all such properties and assets are in
good operating condition and repair, ordinary wear and tear excepted. Except
as provided in Exhibit I, there are no leases or other agreements affecting
the Facilities which cannot be terminated, without penalty, by Seller or its
assignees upon thirty (30) or fewer days' notice.
(e) Licensure.
(i) The Facilities. Each of the Facilities is a duly and
properly licensed, skilled and/or intermediate care nursing home
Facility pursuant to a license containing no restrictions except as set
forth on Schedule 9(e)(i) attached hereto and has current provider
agreements under Title XVIII and Title XIX of the Social Security Act
(herein "Title XVIII and XIX") for reimbursement for skilled and
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intermediate nursing care. There is no action pending, or, to Seller's
knowledge, threatened or recommended by the appropriate state or federal
agency having jurisdiction thereof, to revoke, withdraw or suspend any
license to operate the Facilities, to terminate the participation of the
Facilities in the Title XVIII and XIX programs, to terminate or fail to
renew any provider agreement related to the Facilities, or to take any
action of any other type (other than actions applicable to long-term
care facilities generally) which would have a material adverse effect on
the Facilities, their operations or business.
(ii) The Pharmaceutical Business. Seller has all Pharmacy
Licenses necessary for Seller to occupy, operate and conduct in all
material respects the Pharmaceutical Business and there do not exist any
waivers or exemptions relating thereto. There is no default on the part
of Seller or, to Seller's knowledge, any other party under any of the
Pharmacy Licenses. To Seller's knowledge there exist no actions pending
or, to Seller's knowledge, recommended for revocation, suspension or
limitation of any of the Pharmacy Licenses. Copies of each of the
Licenses and Permits are attached to and listed on Exhibit L attached
hereto. The most recent licensure surveys and deficiency reports related
to each of these items has also been included in Exhibit L. Seller is,
and at the time of Closing will be, licensed by the regulatory bodies
listed on Exhibit L. No notices have been received by Seller with
respect to any threatened, pending, or possible revocation, termination,
suspension or limitation of the Pharmacy Licenses. Each employee of
Seller has all Pharmacy Licenses required for each such employee to
perform such employees' designated functions and duties for Seller in
connection with conducting in all material respects the Pharmaceutical
Business, and there exists no waivers or exemptions relating thereto.
There is no default under, nor, to Seller's knowledge, does there exist
any grounds for revocation, suspension or limitation of, any such
Pharmacy Licenses. The Pharmaceutical Business currently serves, and on
the Closing will serve, 635 beds, as listed on Exhibit B.
(f) Cost Reports. Seller has filed all cost reports (the
"Cost Reports") required to be filed as of the date hereof under Title XVIII
and Title XIX. All such Cost Reports have been prepared in all material
respects in accordance with and in substantial compliance with all applicable
government rules and regulations and to Seller's knowledge do not contain any
errors, omissions or disallowable costs or expenses.
(g) Patients. There are no patient care agreements or life
care contracts with residents of the Facilities or with any other persons or
organizations which deviate in any material respect from the standard form
customarily used at the Facilities. All patient records at the Facilities,
including patient trust fund accounts, are true and correct in all material
respects.
(h) Employees of the Property; Unions. Seller is not a party
to any collective bargaining agreement, severance pay, or pension or
retirement plans with respect to its employees at either the Facilities or the
Pharmaceutical Business. Seller is not a party to or aware of any labor
dispute or grievance with respect to either the Facilities or the
Pharmaceutical Business, except as set forth in Exhibit J attached hereto.
Except as disclosed in Exhibit J, no person or party (including, without
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limitation, any governmental agency) has asserted, or to the best knowledge of
Seller, has threatened to assert, any claim for any action or proceeding,
against Seller (or any officer, director, employee, agent or shareholder of
Seller) arising out of any statute, ordinance or regulation relating to wages,
collective bargaining, discrimination in employment or employment practices or
occupational safety and health standards (including, without limitation, the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, as
amended, the Occupational Safety and Health Act, the Age Discrimination in
Employment Act of 1967, the Americans With Disabilities Act or the Family and
Medical Leave Act).
(i) Facilities' Compliance with Law.
(i) The Facilities and their operation and use now are in
substantial compliance (without waivers) with all applicable municipal,
county, state and federal laws, regulations, ordinances, standards and
orders and with all municipal, including without limitation, all health,
building, fire and zoning ordinances and life safety codes;
(ii) To Seller's knowledge there are no outstanding
deficiencies or work orders of any authority having jurisdiction over
the Facilities requiring conformity to any applicable statute,
regulation, ordinance or by-law pertaining to nursing homes in general,
including but not limited to the Medicare and Medicaid Programs;
(iii) Except as set forth in Schedule 9(i)(iii), Seller has
not received any notice of any claim, requirement or demand of any
licensing or certifying agency supervising or having authority over the
Facilities or otherwise to rework or redesign it or to provide
additional furniture, fixtures, equipment or inventory so as to conform
to or comply with any existing law, code or standard which has not been
fully satisfied prior to the date hereof or which will not be satisfied
prior to the Closing Date; and
(iv) The Facilities are in compliance, in all material
respects, with all Conditions and Standards of Participation in the
Medicaid Program.
(j) The Pharmaceutical Business' Compliance with Laws.
(i) The Pharmaceutical Business participates in the Medicare
and Medicaid Programs (the "Programs"). A list of and copies of its
existing Medicare and Medicaid contracts or, if such contracts do not
exist, other documentation evidencing such participation (collectively,
the "Program Agreements") are included in Exhibit G attached hereto.
Seller is, and will be at the time of Closing, in substantial compliance
with all of the material terms, conditions and provisions of the Program
Agreements.
(ii) No notice of any offsets against future reimbursements
under or pursuant to the Programs has been received by Seller, nor, to
Seller's knowledge, is there any basis therefor. There are no pending
appeals, adjustments, challenges, audits, litigation or notices of intent
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to recoup past or present reimbursements with respect to the Programs.
Seller has not been subject to or, to its knowledge, threatened with
loss of waiver of liability for utilization review denials with respect
to the Programs during the past twelve (12) months, nor has Seller
received notice of any pending, threatened or possible decertification
or other loss of participation in, any of the Programs.
(iii) Seller currently has contractual arrangements with
Blue Cross and other third party payors. A list of and copies of its
existing Blue Cross contracts and other third party payor contract(s)
are included in Exhibit G attached hereto. Seller is, and will be at the
time of Closing, in full compliance with all of the material terms,
conditions and provisions of such contracts.
(k) Surveys and Reports. Complete copies of survey reports,
any waivers of deficiencies, plans of correction, and any other governmental
investigation reports issued with respect to the Facilities during the past 24
months have been provided to Purchaser prior to, or will be provided to
Purchaser promptly following, execution of this Agreement.
(l) Necessary Action. The Board of Directors of Genesis has
taken all appropriate corporate action necessary to enter into this Agreement
and to carry out the terms of this Agreement; the Board of Directors of each
of the general partners of Hallmark has taken all appropriate partnership
action necessary to enter into this Agreement and to carry out the terms of
this Agreement; and the Board of Directors of Parent has taken all appropriate
corporate action necessary to authorize Seller to enter into this Agreement
and to carry out the terms of this Agreement and to authorize Parent to
execute the Joinder to this Agreement and to carry out the terms of this
Agreement applicable to Parent as set forth in said Joinder.
(m) Inventory.
(i) Facilities' Inventory. All inventories of non-perishable
food, central supplies, linen, housekeeping and other supplies located
at the Facilities are in sufficient quantity to operate the Facilities
as currently being operated for a period of at least one week.
(ii) Pharmacy Inventory. The Pharmacy Inventory is, and on
Closing will be, of a quantity presently used by Seller in the ordinary
course of business determined and valued consistent with Seller's past
practice.
(n) Taxes and Tax Returns. All returns, reports and filings
of any kind or nature, other than the Cost Reports referred to in Section 9(f)
hereof, required to be filed by Seller prior to Closing which relate to the
Facilities have been completed and timely filed in compliance with all
applicable requirements and all taxes or other obligations which are due and
payable have been timely paid.
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(o) Litigation. Except as set forth in Schedule 9(o), there
is no litigation, investigation or other proceedings pending or, to Seller's
knowledge, threatened against or relating to business, Seller's right to carry
on and conduct its business, or to this Agreement, including, but not limited
to, condemnation proceedings, and the transactions contemplated herein have
not been challenged by any governmental agency or any other person, nor does
Seller know or have reasonable grounds to know, of any basis for any such
litigation, investigation or other proceeding.
(p) Liens. As of the Closing, there will be no mechanics',
materialmen's or similar claims or liens claimed or which may be claimed
against any of the Property for work performed or commenced prior to the
Closing Date, Seller having made or caused to be made arrangements for
payments of all those improvements now under construction or development.
(q) Defaults Under Contracts and Leases. Seller is not in
material default under any material monetary or other obligation on its part
to be observed or performed under any of the Contracts, Pharmacy Contracts,
Leases or Pharmacy Leases.
(r) Financial Statements. Seller has furnished to Purchaser
copies of the unaudited income and expense statements, operating statements
and balance sheet which relate to the operations of the all of the Property
(collectively the "Financial Statements") for the calendar years 1993 and 1994
and fiscal year ending September 30, 1995. The Financial Statements which have
been delivered to Purchaser or will be delivered to Purchaser have been
prepared in accordance with generally accepted accounting principles as of the
date thereof.
(s) Life Safety Code Waivers, Etc. Exhibit K to this
Agreement contains a complete and accurate list of all life safety code
waivers, vendor holds, decertification proceedings or licensure revocations,
termination or suspension proceedings affecting the Facilities during the
prior eighteen (18) months.
(t) [Intentionally deleted].
(u) Insurability. Seller has not received any notice or
request from any insurance company or board of fire underwriters setting forth
any defects or inadequacies in any of the Property which might affect the
insurability thereof, requesting the performance of any work or alteration of
the Property or of any defect or inadequacy in Seller's operation of the
Property which would materially and adversely affect the ability of Seller or
of Purchaser, following Closing, to: (i) operate each of the Facilities as a
skilled and/or intermediate care nursing home with the number of beds
applicable to each such Facility as set forth in the First Recital to this
Agreement; and (ii) operate the Pharmaceutical Business in material compliance
with all applicable laws, rules and regulations governing the same.
(v) Liabilities. Seller has paid, will pay or will provide
for the payment of, all of its debts, liabilities and obligations arising from
the ownership and operation of the Property including, but not limited to,
salaries, taxes and accounts payable incurred by Seller for the period
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prior to the Closing Date, and such liabilities have been paid, will be paid, or
provisions will be made for the payment of the same, by Seller in the ordinary
course of business.
(w) Full Disclosure. No representation or warranty by Seller
in this Agreement or in any instrument, certificate or statement furnished to
Purchaser pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
(x) Utilities. To Seller's knowledge, all utilities are
installed and available to each of the Facilities in an amount adequate and
sufficient for purpose of operating each of the Facilities.
(y) Improvements and Personal Property. To Seller's
knowledge there are no defects in the improvements on the Real Property or
Pharmacy Real Property, all systems therein, all structural components of the
buildings located thereon (including by way of illustration and not limitation
the roofs and the exterior walls) and the Personal Property and Pharmacy
Personal Property. To Seller's knowledge, all operating systems of the
Facilities and Pharmaceutical Property, including, without limitation, the air
conditioning system, the heating system, the plumbing system, the electrical
system, the fire alarm system, if any, the sprinkling system, if any, and the
elevators, if any, and all Personal Property and Pharmacy Personal Property
are adequate and in good working order and condition and will be in good
working condition on the Closing Date.
10. PURCHASER REPRESENTATIONS AND WARRANTIES. Purchaser
hereby warrants and represents to Seller that:
(a) Status of Purchaser. Purchaser is a limited liability
company duly organized and validly existing under the laws of the State of
Illinois and is duly qualified to own property and conduct its business in the
State of Illinois.
(b) Authority. Purchaser has full power and authority to
execute and to deliver this Agreement and all related documents, and to carry
out the transaction contemplated herein. This Agreement is, and all
instruments and documents delivered pursuant hereto at the Closing will be,
valid and binding documents enforceable against Purchaser in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
fraudulent transfer and similar laws affecting creditors' rights generally.
The execution, delivery and performance of this Agreement and all related
documents and the consummation of the transaction contemplated herein will not
(a) result in a breach of the terms and conditions of nor constitute a default
under or violation of Purchaser's organizational agreement, or any law,
regulation, court order, mortgage, note, bond, indenture, agreement, license
or other instrument or obligation to which Purchaser is now a party or by
which Purchaser or any of the assets of Purchaser may be bound or affected; or
(b) terminate, accelerate or modify, or give any party the right to terminate,
accelerate or modify any notes or other financing arrangements or agreements
to which any of the shareholders of Purchaser is a party or by which any of
them may be bound or affected.
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(c) Necessary Action. Purchaser has taken all action
required under its organizational agreement necessary to enter into this
Agreement and to carry out the terms of this Agreement. This Agreement has
been, and the other documents to be executed by Purchaser when delivered at
Closing will have been, duly executed and delivered by Purchaser.
(d) Litigation. To the best of Purchaser's knowledge, there
is no litigation, investigation or other proceeding pending or threatened
against or relating to Purchaser, its properties or business, Purchaser's
right to carry on and conduct its business, or to this Agreement and the
transaction contemplated herein has not been challenged by any governmental
agency or any other person, nor does Purchaser know or have reasonable grounds
to know of any basis for any such action.
(e) Full Disclosure. No representation or warranty by
Purchaser in this Agreement or in any instrument, certificate or statement
furnished to Purchaser pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
11. BROKER. Purchaser hereby represents, covenants, and
warrants to Seller that it has not employed any broker, agent or finder in
connection with the transaction contemplated herein and agrees to indemnify
Seller against any claim for any commission made by any broker claiming to
have been retained by Purchaser. Seller hereby represents, covenants and
warrants to Purchaser that it has not employed any broker, agent or finder in
connection with the transaction contemplated herein, and agrees to indemnify
Purchaser against any claim for any commission made by any broker claiming to
have been retained by Seller.
12. SELLER COVENANTS. Seller covenants that:
(a) Pre-Closing. Between the date hereof and the Closing
Date, except as contemplated by this Agreement or with the prior written
consent of Purchaser:
(i) Seller will operate the Property only in the ordinary
course of business and with due regard to the proper maintenance and
repair of the Real Property, the Pharmacy Real Property, the Personal
Property and Pharmacy Personal Property;
(ii) Seller will take all actions reasonably necessary to
preserve the goodwill and the present patient occupancy level of the
Facilities and to preserve the goodwill of the Pharmaceutical Business
and all of the suppliers, clientele, patients and others having business
relations with Seller, the Facilities or the Pharmaceutical Business;
(iii) Seller will make no material change in the operation
of the Property nor sell or agree to sell any items of machinery,
equipment or other assets of the Property (other than such sales of
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Pharmaceutical Inventory as are sold in the Pharmaceutical Business in
the ordinary course of business) nor otherwise enter into an agreement
affecting the Property;
(iv) Seller will use commercially reasonable efforts to
retain the services and goodwill of the employees of Seller;
(v) Seller will maintain in force the existing hazard and
liability insurance policies, or comparable coverage, for all of the
Property as now in effect;
(vi) Seller will maintain the inventories of perishable
food, non-perishable food, central supplies, linen, housekeeping and
other supplies at the Facilities at substantially the same condition and
quantity as presently being maintained;
(vii) Seller will not increase the compensation or other
benefits or bonuses payable or to become payable to any of the Seller's
employees and Seller shall, following the Closing, offer health
continuation coverage as required under Internal Revenue Code Section
4980B to all of Seller's employees and their eligible dependents.
(viii) Seller will not enter into any material contract or
commitment affecting the Property except in the ordinary course of
business;
(ix) Other than as set forth in Section 4 hereof, Seller
will satisfy and discharge all claims, liens, security interests,
tenancies, liabilities or other financial obligations which constitute a
lien or encumbrance on any of the Personal Property or Pharmacy Personal
Property;
(x) During normal business hours and at mutually agreeable
times and locations, Seller will provide designated representatives of
Purchaser with access to any of the Property, provided: (1) Purchaser
does not materially interfere with the operation of any of the Property,
and (2) Purchaser provides Shirley Liguori with sufficient advance
notice to enable Shirley Liguori to arrange for Purchaser or its
representatives to have access to the Property for the purpose of
conducting the inspections permitted to be conducted by Purchaser under
this Agreement. At such times Seller shall permit Purchaser to inspect
the books and records of any of the Property in order to ascertain that
the records and books of any of the Property are true and accurate and
have been kept in accordance with generally accepted accounting
principles, provided that if for any reason the Closing fails to take
place, Purchaser shall maintain the confidentiality of, and shall not
disclose to any third party, any proprietary or other confidential
information of Seller obtained through any such inspections;
(xi) Seller will file all returns, reports and filings of
any kind or nature, including but not limited to, cost reports referred
to in Section 9(f) hereof, required to be filed by Seller on a timely
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basis and will timely pay all taxes or other obligations and liabilities
which are due and payable with respect to the Property in the ordinary
course of business;
(xii) Seller will cause all of the Property to be operated
in compliance with all applicable municipal, county, state and federal
laws, regulations, ordinances, standards and orders as now in effect
(including without limitation, the life safety code as currently applied
and waived with respect to the Facilities) where the failure to comply
therewith could have a material adverse effect on the business,
property, condition (financial or otherwise) or operation of the
Facilities taken as a whole as skilled and/or intermediate nursing care
Facilities with the applicable number of beds per Facility as are set
forth in the First Recital to this Agreement or the Pharmaceutical
Business;
(xiii) Seller will take all actions reasonably necessary to
achieve compliance with any laws, regulations, ordinances, standards and
orders which are entered after execution of this Agreement and prior to
Closing;
(xiv) There will be no change in ownership or control of any
of the Property prior to Closing and Seller will not take any other
action inconsistent with its obligations under this Agreement or which
could hinder or delay the consummation of the transaction contemplated
by this Agreement;
(xv) Seller will maintain all of the Property in
substantially the same condition as it was on the date of Purchaser's
inspection thereof, ordinary wear and tear excepted;
(xvi) Seller will promptly notify Purchaser in writing of
any material adverse change of which Seller becomes aware in the
condition or prospects of the Property including, but not limited to,
sending Purchaser, within three (3) days after receipt copies of all
surveys and inspection reports of all governmental agencies received
after the date hereof and prior to Closing;
(xvii) Seller shall obtain all necessary third party
consents for the valid conveyance, transfer, assignment or delivery of
the material assets constituting the Property to the extent that
assignment is required under this Agreement;
(xviii) Within fifteen (15) days after the date hereof,
Seller will deliver to Purchaser certificates dated after the date
hereof evidencing the results of searches conducted to ascertain the
existence of any financing statements and tax and judgment liens
affecting or relating to all of the Property which have been filed or
recorded with the Office of the Secretary of State in which the Property
is located and the appropriate County Recorder's Office and in the State
wherein Seller is domiciled and incorporated (the "UCC Searches");
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(xix) Seller will promptly comply with any notices received
pursuant to Section 9(u) hereof and shall deliver to Purchaser a copy of
any notice received pursuant to that Section and evidence of compliance
with such notice; and
(xx) Seller will (with the assistance of the Purchaser if
and when required) timely and promptly make, and Purchaser will or if
Purchaser is not the "ultimate parent entity" it will cause its
"ultimate parent entity" (with the assistance of Seller if and when
required) to timely and promptly make, all filings which are required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"Antitrust Improvements Act"). The parties will use commercially
reasonable efforts, and it shall be a condition precedent to Purchaser's
Obligations to consummate the transactions contemplated by this
Agreement (the "Hart-Scott Condition Precedent"), to obtain the approval
of the United States Federal Trade Commission or the Antitrust Division
of the United States Department of Justice, as the case may be, to the
purchase of the Property by Purchaser or expiration or early termination
prior to the Closing Date of the waiting period under the Antitrust
Improvements Act without the commencement of litigation, or threat
thereof, by the appropriate governmental enforcement agency to restrain
the transactions contemplated by this Agreement.
(b) Casualty/Condemnation.
(i) Seller shall promptly notify Purchaser of any casualty
damage or notice of condemnation which Seller receives prior to the
Closing Date. Seller shall timely notify any insurance companies with
respect to any damage and shall promptly submit claims for such damage.
(ii) If: (a) any portion of a Nursing Home is damaged by
fire or casualty after the Execution Date and is not repaired and
restored substantially to its original condition prior to Closing, and
(b) at the time of Closing the estimated cost of repairs is Five Hundred
Thousand Dollars ($500,000.00) or less as determined by an independent
adjuster, there shall be no abatement or adjustment in the Purchase
Price and Purchaser shall be required to purchase the Property in
accordance with the terms of this Agreement and Purchaser shall either:
(x) receive a credit at Closing of the estimated cost or repairs as
determined by the aforesaid independent adjuster; or (y) at Closing
Seller shall: (1) assign to Purchaser, without recourse, all insurance
claims and proceeds with respect thereto (less sums theretofore
expended, if any, by Seller for temporary repairs or barricades) (in
which event Purchaser shall have the right to participate in the
adjustment and settlement of any insurance claim relating to said
damage), and (2) pay to Purchaser an amount equal to Seller's insurance
deductible. Seller shall have no liability or obligation with respect to
the condition of the Property as a result of such fire or casualty.
If, at the time of Closing, the estimated cost of repairing
such damage is more than Five Hundred Thousand Dollars ($500,000.00) as
determined by such independent adjuster, Purchaser may, at its sole
option: (x) terminate this Agreement with respect to the Nursing Home and
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the associated Real Property affected by the fire or casualty only by
notice to Seller, in which event the Purchase Price shall be reduced by
an amount equal to the amount attributable to the Nursing Home as set
forth on Exhibit H attached hereto, Seller shall return to Purchaser the
portion of the Earnest Deposit attributable to such Nursing Home, and
the parties shall proceed to Closing with respect to the remainder of
the Property, and no party shall have any further liability to any other
party under this Agreement with respect to such Nursing Home and
associated Real Property, except as otherwise provided in this
Agreement; or (y) proceed to Closing as provided in this Paragraph for
fires or casualties under Five Hundred Thousand Dollars ($500,000.00).
Seller agrees to maintain its existing property insurance coverage with
respect to the Real Property.
(iii) If, prior to Closing, any of the Nursing Homes is
materially taken by eminent domain, this Agreement shall become null and
void with respect to such Nursing Home and its associated Real Property
at Purchaser's option, and upon receipt by Seller of written notice of
an election by Purchaser to treat this Agreement as null and void with
respect to such Nursing Home and its associated Real Property, the
Purchase Price shall be reduced by an amount equal to the amount
attributable to the Nursing Home as set forth on Exhibit H attached
hereto, Seller shall return to Purchaser the portion of the Earnest
Deposit attributable to such Nursing Home, and the parties shall proceed
to Closing with respect to the remainder of the Property. If Purchaser
elects to proceed and to consummate the purchase despite said material
taking (such election being deemed to have been made unless Purchaser
notifies Seller to the contrary within fifteen (15) days after notice
from Seller to Purchaser of any taking), or if there is less than a
material taking prior to Closing, there shall be no reduction in or
abatement of the Purchase Price and Purchaser shall be required to
purchase the Property in accordance with the terms of this Agreement,
and Seller shall assign to Purchaser, without recourse, all of Seller's
right, title and interest in and to any award made or to be made in the
condemnation proceeding (in which event Purchaser shall have the right
to participate in the adjustment and settlement of any insurance claim
relating to said damage). For the purpose of this Paragraph, the term
"materially" shall mean any taking of in excess of ten percent (10%) of
the square footage of either of a particular Nursing Home or fifty
percent (50%) of the Real Property associated with any Nursing Home,
provided, further, that: (i) Purchaser shall have the ability after said
taking to operate the applicable Nursing Home in compliance with the
Licenses applicable to said Nursing Home with the same number of beds at
the applicable Nursing Home as are existing with respect to said Nursing
Home as of the date of this Agreement; (ii) there remains after said
taking means of egress and ingress to and from the Nursing Home to a
public highway; and (iii) the use of the Nursing Home after said taking
is in compliance with all applicable zoning and building rules,
regulations and ordinances.
(c) Closing. On or before the Closing Date, Seller agrees
that it will deliver the following documents into the Escrow (hereinafter the
"Closing Documents"):
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(i) Executed warranty deeds and bills of sale satisfying the
requirements of Section 4(i), endorsements, assignments and other
instruments of transfer and conveyance as shall be reasonably
satisfactory in form and substance to counsel for Purchaser transferring
and assigning to Purchaser the Property to be transferred as herein
provided ("Instruments of Assignment");
(ii) An opinion of counsel for Seller, dated as of the
Closing Date in the form attached hereto as Exhibit M;
(iii) A certificate of a responsible officer of Seller dated
as of the date of Closing, certifying to Purchaser the fulfillment of
the conditions set forth in Section 15(a) hereof;
(iv) The patient trust fund accounting more fully described
in Section 22 hereof;
(v) The employee benefits schedules more fully described in
Section 25 hereof;
(vi) Seller shall deliver to Purchaser certificates of good
standing from the Secretary of State of its state of organization, and
from each jurisdiction in which Seller is qualified to do business,
certified copies of the Bylaws and Charter of Seller (all dated the most
recent practical date prior to Closing), certified copies of the
resolutions of the Board of Directors of Seller authorizing the
execution, delivery and consummation of this Agreement and the
execution, delivery and consummation of all other agreements and
documents executed in connection herewith by them, including all deeds,
bills of sale and other instruments required hereunder, sufficient in
form and content to meet the requirements of the law of the state of
Seller's incorporation relevant to such transactions and certified by
the Secretary of Seller as adopted and in full force and effect and
unamended as of Closing; and
(vii) A certificate of non-foreign status signed by the
appropriate party and sufficient in form and substance to relieve
Purchaser of all withholding obligations under Section 1445 of the Code.
(d) Title Insurance Premium. At Closing, Seller will pay in
accordance with Section 5(b) hereinabove the premium for the title insurance
coverage in connection with the title insurance policy described in Section 20
hereof.
(e) Post-Closing. After the Closing, Seller agrees that it
will take such actions and properly execute and deliver to Purchaser such
further instruments of assignment, conveyance and transfer as, in the
reasonable opinion of counsel for Purchaser, may be necessary to assure,
complete and evidence the full and effective transfer and conveyance of the
Property.
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13. PURCHASER COVENANTS. Purchaser hereby covenants as
follows:
(a) Pre-Closing. Between the date hereof and the Closing
Date, except as contemplated by this Agreement or with the consent of Seller,
Purchaser agrees that it will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the
consummation of the transaction contemplated by this Agreement.
(b) Closing. On or before the Closing Date, Purchaser agrees
that it will:
(i) Deposit the cash portion of the Purchase Price due at
Closing in accordance with the requirements of Section 2(a) hereof into
the Closing Escrow;
(ii) Deliver into the Closing Escrow (the "Closing
Documents") an opinion of counsel of Purchaser, dated as of the Closing
Date in the form attached hereto as Exhibit N;
(iii) Deliver into the Closing Escrow a certificate of a
responsible officer of Purchaser dated as of the date of Closing,
certifying to Seller the fulfillment of the conditions set forth in
Section 16(a) hereof; and
(iv) Deliver to Seller certificates of good standing from
the Secretary of State of its state or organization, and from each
jurisdiction in which Purchaser is qualified to do business, certified
copies of the Bylaws and Charter of Purchaser (all dated the most recent
practical date prior to Closing), certified copies of the resolutions of
the Board of Directors of Purchaser authorizing the execution, delivery
and consummation of this Agreement and the execution, delivery and
consummation of all other agreements and documents executed in
connection herewith by it, including all instruments required hereunder,
sufficient in form and content to meet the requirements of the law of
the state of Purchaser's incorporation relevant to such transactions and
certified by the Secretary of Purchaser as adopted and in full force and
effect and unamended as of Closing.
(c) Post-Closing. On or after the Closing of this Agreement,
Purchaser agrees that it will:
(i) Provide Seller with access during normal business hours
to any books or records which Seller may need to file or to defend cost
reports, tax returns or other filings or with respect to any pending
litigation filed prior or subsequent to the Closing Date which relate to
periods prior to the Closing Date;
(ii) Take such actions and properly execute and deliver such
further instruments as may be convenient or necessary to assure,
complete and evidence the transactions provided for in this Agreement;
and
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(iii) within thirty (30) days following the Closing remove
or cause to be removed all signs on the Real Property containing the
names of Seller listed as an item of the Excluded Assets in Section
1.2(d) hereinabove.
14. MUTUAL COVENANTS. Following the execution of this
Agreement, Purchaser and Seller agree:
(a) If any event should occur, either within or without the
knowledge or control of Purchaser or Seller, which would prevent fulfillment
of the conditions to the obligations of any party hereto to consummate the
transaction contemplated by this Agreement, to use commercially reasonable
efforts to cure the same as expeditiously as possible;
(b) To cooperate fully with each other in preparing, filing,
prosecuting, and taking any other reasonable actions with respect to, any
applications, requests, or actions which are or may be reasonable and
necessary to obtain the consent of any governmental instrumentality or any
third party or to accomplish the transaction contemplated by this Agreement;
and
(c) Purchaser has received from Seller a Phase I
Environmental Audit of the Real Property dated January, 1994 and prepared by
Dames & Moore. Purchaser shall have the right at its sole expense to
commission a Phase I Environmental Audit of the Real Property from an
environmental consultant selected by Purchaser (said entity, the
"Environmental Consultant"). If the Environmental Consultant recommends that a
Phase II Environmental Audit be prepared and the financial institution
providing financing for Purchaser's acquisition of the Property requires that
a Phase II Environmental Audit be prepared, Purchaser (at Purchaser's sole
cost and expense) shall have the right until February 16, 1996 (the
"Inspection Period") to have a Phase II Environmental Audit prepared provided,
however, that Seller shall be entitled to receive prior written notice that
any such Phase II Environmental Audit is to be prepared and to participate in
the preparation of the same, said participation being intended to include the
right of Seller to have advance notice of any borings to be made to the soil
located on the Real Property and to have such of its agents present at the
Real Property during the preparation of any such Phase II Environmental Audit.
The Phase II Environmental Audit shall be performed by the Environmental
Consultant and shall include such sampling and testing as shall be necessary
and prudent to confirm the presence or absence of hazardous substances and
hazardous materials. If the Phase II Environmental Audit confirms the
existence of hazardous materials or hazardous substances at any of the Real
Property sites and the aggregate cost of remediation required to remedy any
violations of Environmental Laws resulting from the existence of said
hazardous materials or hazardous substances exceeds Two Hundred Thousand
Dollars ($200,000.00), Purchaser, within the expiration of the Inspection
Period, may either: (i) terminate this Agreement, in which event the Earnest
Deposit shall be returned to Purchaser; or (ii) waive its right to terminate
this Agreement pursuant to this Section 14(c), whereupon the transactions
contemplated by this Agreement shall be consummated as scheduled and Purchaser
shall take title to the Real Property and the improvements subject to the
existence of said hazardous materials. For purposes of this Agreement, the
term "hazardous materials "shall mean any asbestos, urea formaldehyde or other
hazardous wastes and substances defined as "hazardous substances" in the
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Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended 42 U.S.C. Sec. 9601 et seq. P.L. 96-510, the Resource Conservation
and Recovery Act, 42 U.S.C. Sec. 6901 et seq., the Superfund Amendments and
Reauthorization Act of 1986, P.L. 99- 499 and the Federal Water Pollution
Control Act, as amended, Sec. 311(b)(A)(2), P.L. 92-500 and all amendments
thereto and regulations adopted pursuant to said laws (all of the foregoing
collectively, the "Environmental Laws").
15. CONDITIONS TO PURCHASER'S OBLIGATIONS. All obligations
of Purchaser under this Agreement are subject to fulfillment, prior to or at
Closing, of each of the following conditions, any one or all of which may be
waived in writing by Purchaser.
(a) Seller's Representations, Warranties and Covenants True
at Closing. Seller's representations, warranties and covenants contained in
this Agreement or in any certificate or docu ment delivered in connection with
this Agreement or the transactions contemplated herein shall be true at the
date hereof and as of the Closing Date in all material respects as though such
representations, warranties and covenants were then again made.
(b) Seller's Performance. Seller shall have substantially
performed in all material respects all of its obligations and covenants under
this Agreement that are to be performed prior to or at Closing.
(c) Hart-Scott Condition Precedent. Prior to the Closing
Date, the Hart-Scott Condition Precedent shall have been satisfied.
(d) Title Insurance. A title insurance company acceptable to
the parties shall have committed to issue to Purchaser as of the date of
Closing owners' policies of title insurance in accordance with the
requirements of Section 20 hereof.
(e) No Defaults. Seller shall not be in material default
under any Lease, Contract Pharmacy Lease or Pharmacy Contract or under any
other mortgage, contract, lease or other agreement affecting or relating to
any of the Property.
(f) Inspection. Until the expiration of the Inspection
Period, Purchaser shall have the right to inspect the Property and be
satisfied with the results of the inspection. If the inspection of the
Property reveals, with respect to the Real Property, structural defects in the
air conditioning system, parking lot, the heating system, the plumbing system,
the electrical system, the fire alarm system, if any, the sprinkling system,
if any, the elevators, if any, and the roof and roof components (said defects
collectively, the "Structural Defects") which in the judgment of the third
parties inspecting the Real Property (the "Inspectors") reveals the existence
of Structural Defects and the aggregate cost of remediation required to remedy
any Structural Defects exceeds Three Hundred Thousand Dollars ($300,000.00),
as estimated by the Inspectors, Purchaser, within the expiration of the
Inspection Period, may either: (i) terminate this Agreement, in which event
the Earnest Deposit shall be returned to Purchaser; or (ii) waive its right to
terminate this Agreement pursuant to this Section 15(f), whereupon the
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transactions contemplated by this Agreement shall be consummated as scheduled
and Purchaser shall take title to the Real Property and the improvements
subject to the existence of said Structural Defects.
(g) Absence of Litigation. No action or proceeding shall
have been instituted, nor any judgment, order or decree entered by any court
or governmental body or authority preventing the acquisition by Purchaser of
the Property or the consummation of the transaction contemplated hereby.
(h) Licenses and Consents. Purchaser shall have received no
written notice that any licenses, permits, accreditation, certifications,
consents and other authorizations required for the continued operation of the
Property as now operated, including the continuation of presently existing
reimbursement arrangements with Medicaid and Medicare, will not be issued.
(i) No Material Change. No material adverse change shall
have occurred, in the reasonable opinion of Purchaser, in the physical
condition or business of the Property.
(j) Removal of Personal Property Liens. Seller shall have
removed all personal property liens disclosed by the UCC Searches which are
related to the Property and the Property shall be free and clear of all liens,
claims and encumbrances other than those permitted by Sections 4 and 20
hereof.
(k) Environmental Matters. Purchaser shall have waived its
right to terminate this Agreement pursuant to Section 14(c) hereinabove.
In the event Purchaser is dissatisfied with the results of
any of its due diligence or any of the conditions set forth in Sections 15(a)
through (e) and (g) through (j) have not been satisfied prior to the Closing
Date, Purchaser may terminate this Agreement with no liability to either party
hereunder and the Earnest Deposit shall be returned to Purchaser.
16. CONDITIONS TO SELLER'S OBLIGATIONS. All obligations of
Seller under this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions, any one or all of which may be
waived by Seller in writing.
(a) Purchaser's Representations, Warranties and Covenants
True at Closing. Purchaser's representations, warranties and covenants
contained in this Agreement or in any certificate or document delivered in
connection with this Agreement or the transactions contemplated herein shall
be true at the date hereof and as of the date of Closing as though such
representations, warranties and covenants were then again made.
(b) Purchaser's Performance. Purchaser shall have
substantially performed its obligations and covenants under this Agreement
that are to be performed prior to or at Closing.
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(c) Absence of Litigation. No action or proceeding shall
have been instituted, nor any judgment, order or decree entered by any court
or governmental body or authority preventing the acquisition by Purchaser of
the Property or the consummation of the transaction contemplated hereby.
(d) Hart-Scott Condition Precedent. Prior to the Closing
Date, the Hart-Scott Condition Precedent shall have been satisfied.
17. TERMINATION.
(a) Either party may terminate this Agreement if a condition
to its obligation to consummate the transaction contemplated by this Agreement
has not been satisfied by the Closing Date. In that event, if the other party
is not in default under this Agreement, the parties shall have no further
obligations or liabilities to one another and the Earnest Deposit shall be
returned to Purchaser.
(b) If Seller is in material breach of its obligation to
consummate the transaction contemplated by this Agreement pursuant to the
terms hereof, then Purchaser may at its option elect as its remedy to (i) seek
specific performance of this Agreement or (ii) have the Earnest Deposit
returned to Purchaser. In either event, Purchaser shall have the right to
recover its costs and expenses incurred in such actions, including, but not
limited to, reasonable attorney's fees.
(c) If Purchaser is in material breach of its obligation to
consummate the transaction contemplated by this Agreement pursuant to the
terms hereof, then, as Seller's sole and exclusive remedy for Purchaser's
default, the Earnest Deposit shall be delivered to Seller as liquidated
damages and not as a penalty.
(d) Upon termination of this Agreement for any reason, and
subject to the foregoing Paragraphs, the parties hereto agree to promptly
direct the Escrowee to deliver the Earnest Money in accordance with the terms
of this Agreement.
18. INDEMNIFICATION.
(a) Seller, for itself and its successors and assigns,
hereby indemnifies and agrees to defend and hold Purchaser and its successors,
assigns, affiliates, directors, officers, agents, servants and employees
harmless from any and all claims, demands, obligations, losses, liabilities,
damages, recoveries and deficiencies (including interest, penalties and
reasonable attorneys' fees, costs and expenses) which any of them may suffer
as a result of the untruth of any of the representations or breach of any of
the warranties of Seller herein or given pursuant hereto, or any default by
Seller in the performance of any of its commitments, covenants or obligations
under this Agreement, or with respect to any suits, arbitration proceedings,
administrative actions or investigations which relate to the ownership and use
of the Property by Seller or for any liability which may arise from operations
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of the Property prior to the Closing Date, including but not limited to any
liabilities or obligations under the Indiana Family & Social Service
Administration and Medicare Programs supervised by the Department of Health and
Human Services. It is acknowledged and agreed that any claims, liabilities or
charges arising or any provider assessment program, under the Medicare and
Medicaid or other reimbursement programs for the period prior to the Closing
Date shall be the sole responsibility of Seller and Purchaser shall in no way be
liable therefore. Seller shall be solely and exclusively responsible for any
overpayments made to the Property in which a repayment amount is owed to the
Department of Public Aid. The rights of Purchaser under this paragraph are
without prejudice to any other remedies not inconsistent herewith which
Purchaser may have against Seller. Purchaser shall notify Seller in writing of
any claim or demand. Within thirty (30) days after such notice and subject to
the terms and provisions of Section 18(e) hereinbelow, Seller shall promptly pay
to Purchaser a sum of money sufficient to pay in full such claim or demand, or
promptly cure such breach or contest such claim in accordance with Section 18(c)
hereinbelow.
(b) Purchaser, for itself and its successors and assigns,
hereby indemnifies and agrees to defend and hold Seller, its successors,
assigns, affiliates, directors, officers, agents, servants and employees
harmless from any and all claims, demands, obligations, losses, liabilities,
damages, recoveries and deficiencies (including interest, penalties and
reasonable attorneys' fees, costs and expenses) which Seller may suffer as a
result of the untruth of any of the representations or breach of any of the
warranties of Purchaser herein or given pursuant hereto, or any default by
Purchaser in the performance of any of its commitments, covenants or
obligations under this Agreement, or with respect to any suits, arbitration
proceedings, administrative actions or investigations which relate to the
ownership and use of the Property by Purchaser or for any liability which may
arise from operation of the Property or the nursing home located thereon
following the Closing Date.
(c) 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 18(a) or 18(b), the Indemnitee shall promptly give
the Indemnifying Party notice thereof. 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 shall
cooperate in the compromise of, settlement or defense against, any such
asserted Liability. Both the Indemnitee and the Indemnifying Party may
participate in the defense of such asserted liability and neither may settle
or compromise any claim over the reasonable objection of the other.
Notwithstanding anything to the contrary contained herein, if Purchaser is the
Indemnitee, Purchaser may, at its option, assume control of the defense or
resolution of any such matter if Purchaser reasonably believes that the
defense or resolution of such matter might materially and adversely affect the
Property and so long as Seller has not commenced a compromise of, settlement
or defense against an asserted liability within thirty (30) days of the date
of the notice of any claim, provided that Seller shall continue to be
obligated to indemnify Purchaser in connection with such matter and that
Purchaser may not settle or compromise any such matter without the consent of
Seller which shall not be unreasonably withheld. If the Indemnifying Party
chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party, at reasonable times and upon reasonable notice, any books,
records or other documents within its control that are necessary or
appropriate for such defense.
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(d) The sole and exclusive obligation of Purchaser or
Seller, or any of Purchaser's or Seller's subsidiaries and affiliated
companies or any of their respective directors, officers, agents, servants and
employees, for any misrepresentation herein or breach of warranty hereunder,
or for any failure by Seller or Purchaser or any of Seller's or Purchaser's
subsidiaries and affiliated companies to perform any of its covenants, or for
any act or omission of Seller or Purchaser, shall be the liabilities and
obligations of Seller or Purchaser under, and subject to the conditions and
limitations of, this Section 18.
(e) Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 18(a) until the
total of all damages with respect to such matters exceeds Four Hundred Fifty
Thousand Dollars ($450,000), and then only for the amount by which such
damages exceed Four Hundred Fifty Thousand Dollars ($450,000). In addition,
the liability of Seller to indemnify Purchaser under Section 18(a) shall be
limited to a maximum aggregate amount of $5,000,000.00.
19. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
All representations, warranties and covenants in this Agreement, or in any
certificate or other writing delivered pursuant hereto, shall survive the
closing of the transaction described in this Agreement for a period of twelve
(12) months. Further, with respect to any matter as to which a claim has been
asserted hereunder and is pending or unresolved at the end of the foregoing
period, such claim shall continue to be covered by the indemnification
provisions hereof, and the indemnitor shall remain liable therefor, until
finally terminated or otherwise resolved.
20. SURVEYS AND TITLE POLICIES. Seller has provided to
Purchaser photocopies of Seller's owner's title insurance policies issued by
the Title Company with respect to the Real Property (the "Prior Title
Policies") and ALTA surveys for each of the Nursing Homes (the "Current
Surveys") . During the term of the Inspection Period, Purchaser shall at its
expense order updates of the Current Surveys (the "Survey Updates"), which
Survey Updates shall reflect thereon all visible utility easements, and shall
apply to the Title Company for new title insurance commitments (ALTA Form "B")
(collectively, the "Title Commitments") agreeing to issue to Purchaser, upon
recording of the deeds required to be delivered pursuant to Section 4
hereinabove owner's policies of title insurance (collectively, the "Title
Policies") in the aggregate amount of the Purchase Price, allocated to each
Nursing Home in the amounts set forth on Exhibit O attached hereto. Said Title
Commitments shall agree: (i) to insure the proposed title of the Purchaser to
the Real Property subject only to the Permitted Exceptions, such other title
exceptions as Purchaser has agreed to accept or is deemed to have accepted
pursuant to this Section 20, and any other exceptions which shall be
discharged by Seller at or before Closing; and (ii) to delete the standard
general exceptions and insure by 3.1 zoning endorsements that the Real
Property is in compliance with all applicable zoning and building codes, laws,
rules, ordinances and regulations. If: (i) title to the Real Property contains
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title exceptions other than the Permitted Exceptions to which Purchaser
reasonably objects or the Title Company is unable to perform the matters set
forth in clause (ii) of the preceding sentence (any of the foregoing a "Title
Defect"); or (ii) the Survey Updates reflect any matters which raise
exceptions other than Permitted Exceptions to which Purchaser reasonably
objects ("Survey Defects"), Purchaser shall notify Seller of such fact, which
notice shall specify the Title Defect or Survey Defect and shall be
accompanied with information sufficient to Seller, in Seller's sole judgment,
to enable Seller to respond. Purchaser's notice shall be given no later than
thirty (30) days from the date hereof, after which Seller shall have the
right, but not the obligation, to cure such Title Defect or Survey Defect, and
if Seller elects to attempt to cure the Title Defect or Survey Defect, and
such Title Defect or Survey Defect cannot or is not cured on or before the
Closing Date, then Closing (as hereinafter defined), may be extended by Seller
for up to sixty (60) days to enable Seller to effect such cure. If the Title
Defect or Survey Defect is not cured, Purchaser shall have the option, as its
sole and exclusive remedy, of: (i) accepting title to the Real Property
without abatement of the Purchase Price (provided, however, that if any such
Title Defects are liens of a definite and ascertainable amount and are not the
current mortgages encumbering the Real Property as set forth on Exhibit O
attached hereto, Purchaser shall have the right to deduct from the Purchase
Price the amount of such lien unless Seller elects to deposit with the Title
Company an amount sufficient to cause the Title Company to delete said lien as
an exception to the applicable Title Policy); or (ii) terminating this
Agreement by giving notice to Seller of such election within five (5) days
after receipt of Seller's notice that Seller does not intend or is unable to
cure the Title Defect or Survey Defect, and in the latter event, the rights
and liabilities of the parties hereto shall cease and terminate, except as
otherwise provided in this Agreement and Purchaser shall be entitled to the
return not only of the Earnest Deposit but an amount equal to the amounts paid
by Purchaser for the Title Commitments and Survey Updates. Notwithstanding the
foregoing, Purchaser shall be deemed to have accepted the condition of title
and any such Title Defect unless it has given Seller notice of the Title
Defect within thirty (30) days of the date hereof as herein provided, after
which time any such Title Defect shall automatically be a Permitted Exception.
21. ACCOUNTS RECEIVABLE.
(a) Purchaser shall assume responsibility for remitting to
Seller any payments received by Purchaser on account of services rendered by
Seller on and after the Closing Date.
(b) Seller shall continue to own all accounts receivable due
to Seller (the "Seller's Accounts Receivable") for any and all services
rendered or goods provided prior to the Closing Date. At Closing, Seller shall
deliver to Purchaser a schedule identifying Seller's Accounts Receivable and
specifically identifying the accounts receivable due Seller from private pay
patients ("Seller's Private Pay Receivables"). (For purposes of this Agreement
private pay patients shall not include any patient who has applied for public
aid and such public aid application has been denied.) Any payments received by
Purchaser from Medicare, Medicaid or other third party government or financial
payor which are allocated to a particular receivable and time period shall be
applied in payment of the particular receivable and time period to which such
payment has been so allocated, except, however, for social security checks,
which will be credited to the payment due in the month in which such checks
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were received. With respect to the post-closing billing practice to be applied
with respect to Seller's Private Pay Receivables, promptly after Closing
Seller will prepare and send to the private pay patients their private-pay
bills for all periods up to and including the Closing Date, with instructions
notifying the private-pay patient or responsible party to send payment to
Seller, with said payment payable to Seller or such other party as Seller
directs. Payments received by Purchaser with respect to a private pay patient
shall be applied first to payment of the particular Seller's Private Pay
Receivable until such private pay receivable is paid.
(c) The term "Seller's Public Pay Receivables" shall mean
all of Seller's Accounts Receivables due Seller from Medicare, Medicaid or
other third party government of financial payor. With respect to the
post-closing billing practice to be applied with respect to Seller's
Non-Private Pay Receivables, the billing for the same shall be made
post-Closing from each of the Nursing Homes, with the exception of Medicare
Part A bills for the months of December, 1995 and January, 1996. For a period
of one hundred and twenty (120) days following Closing, Seller shall upon
twenty four (24) hours' prior notice be allowed access during Purchaser's
normal business hours to such books and records of Purchaser as are necessary
in order for Seller at its own cost to prepare the bills for Seller's Public
Pay Receivables. In order to account for all sums received by Seller for
Seller's non- Private Pay Receivables, Seller shall also immediately notify
Aetna Fort Washington, its Medicare intermediary, to remit payment directly to
Seller. To the extent that Purchaser receives any remittances payable to
Purchaser which are in fact attributable to Seller's Accounts Receivables,
Purchaser shall deposit such remittances in its account. To the extent any
such remittances are in the form of checks or other negotiable instruments
payable to Seller, Purchaser shall forward said checks or negotiable
instruments directly to Seller. Every Monday during the first 120 days
following Closing, Purchaser shall provide to Seller a weekly reconciliation
(the "Receipts Report") for Seller's review and approval, together with a copy
of the remittance advice sent to Purchaser by any third party intermediary
with respect to Seller's Non-Private Pay Receivables. The Receipts Report
shall be sent by Purchaser to Seller every other Monday once the first 120
days after Closing have expired until such time as all of Seller's Accounts
Receivables have been paid to Seller and during such period following said
first 120 days after Closing Seller shall upon twenty four hours (24) prior
notice be allowed access necessary in order for Seller at its own cost to
verify the Receipts Reports that it has received from Purchaser, which access
right shall in all events expire at the earlier of sixty (60) days following
Seller's receipt of the final Receipts Report or two (2) years following the
Closing Date. Seller hereby acknowledges that all receipts attributable to
Seller's Accounts Receivable will be commingled with Purchaser's funds but, in
all events shall be remitted to Seller no later than the third business day
next following the date when the Receipts Report was, or should have been,
delivered to Seller. Seller shall instruct Blue Cross to remit payments under
Seller's current provider number directly to Seller.
(d) For a period of one hundred and twenty (120) days
following Closing, Seller shall also upon twenty-four (24) hours' prior notice
be allowed access during Purchaser's normal business hours to such books and
records of Purchaser as are necessary for Seller to review in order for Seller
to verify that Seller is being remitted the payments required to be remitted
to Seller pursuant to this Paragraph 21.
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22. PATIENT FUNDS. On the Closing Date, Seller shall provide
Purchaser with an accounting of all funds belonging to patients at the
Property which are held by Seller in a custodial capacity. Such accounting
shall set forth the names of the patients for whom such funds are held, the
amounts held on behalf of each such patient and the Seller's warranty that the
accounting is true, correct and complete.
23. TRANSFER OF PATIENT FUNDS. On the Closing Date, Seller,
in accordance with all applicable rules and regulations, shall transfer the
funds referred to in Section 22 hereof to a bank account designated by
Purchaser, and Purchaser shall in writing acknowledge receipt of and expressly
assume all the Seller's financial and custodial obligations with respect
thereto.
24. SELLER INDEMNITY REGARDING PATIENT FUNDS.
Notwithstanding the foregoing, Seller will indemnify and hold Purchaser
harmless from all liabilities, claims and demands, including reasonable
attorney's fees, in the event the amount of funds, if any, transferred to
Purchaser's bank account as provided in Section 23 above, did not represent
the full amount of the funds then or thereafter shown to have been delivered
to Seller as custodian or with respect to any matters relating to patient
funds which arise or relate to any period prior to the Closing Date.
25. EMPLOYEE MATTERS AND PATIENT RECORDS. At the Closing
Date, Seller shall provide Purchaser with a schedule of the gross amount of
all earned and accrued sick pay, vacation pay, personal holiday pay, FICA,
federal unemployment taxes and workers' compensation payments as of the
Closing Date ("Seller's Benefits"), which schedule shall include the names and
addresses of the employees to whom Seller's Benefits are owed. Purchaser shall
be entitled to a credit against the cash portion of the Purchase Price equal
to the amount of Seller's Benefits.
26. TERMINATION OF SELLER EMPLOYEES. Effective as of 11:00
p.m. on the day immediately preceding the Closing Date, the Seller shall
terminate the employment of all of the employees and shall pay to all of the
employees all salaries, wages due or accrued for periods prior to 11:01 p.m.
on the day immediately preceding the Closing Date. The Seller timely shall pay
to all applicable governmental and regulatory authorities all
employment-related taxes due with respect to the employees for periods prior
to 11:01 p.m. on the day immediately preceding the Closing Date. On the
Closing Date, the Purchaser shall offer employment to such employees as
Purchaser may elect in its sole discretion. Such offers of employment shall be
on such terms and at such salary or wage and benefit levels as Purchaser may
determine. Anything to the contrary notwithstanding, this Agreement shall not
be deemed to create any third party beneficiary rights to any third party.
27. DELIVERY OF MEDICAL RECORDS. Seller shall, on the
Closing Date, transfer and deliver to Purchaser all medical records and other
personal information concerning all patients residing at the Property as of
the Closing Date. Such transfer and delivery shall be in accordance with all
applicable laws, rules and regulations concerning the transfer of medical
records and other types of patient records.
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28. BULK SALES LAW. Purchaser hereby waives compliance by
Seller with the provisions of any applicable Bulk Sales Law. Seller hereby
agrees to indemnify and hold Purchaser harmless against and in respect of any
claims, losses, liabilities, damages or expenses (including reasonable
attorney's fees) incurred by or asserted against Purchaser as a result of such
non-compliance; provided that nothing herein shall prevent Seller from
contesting any such liability in good faith.
29. NOTICES. Any notice, request or other communication to
be given by any party hereunder shall be in writing and shall be sent by
recognized overnight courier or registered or certified mail, postage prepaid,
return receipt requested to the following address:
To Seller: Genesis Development Group
Attn: Joseph Travaglini
375 Morris Road, P.O. Box 200
West Point, Pennsylvania 19486
Copy to: Blank, Rome, Comisky & McCauley
Attn: Stephen E. Luongo, Esq.
1200 Four Penn Center Plaza
Philadelphia, Pennsylvania 19103
To Purchaser: Hunter Acquisition L.L.C.
c/o Eric Rothner
5301 W. Touhy Avenue
Skokie, Illinois 60077
Copy to: Albert Milstein, Esq.
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Notice shall be deemed delivered three (3) days after deposit in the mail or
upon receipt from an overnight courier.
30. ASSIGNMENT. Neither party may assign its rights
hereunder without the other party's prior written consent, provided, however,
that Purchaser shall have the right to cause to be formed prior to the Closing
such number of Indiana limited liability companies as Purchaser in its sole
discretion deems appropriate for purposes of being designated by Purchaser the
nominee or nominees, as the case may be, of Purchaser's rights and obligations
under this Agreement and Purchaser shall not be relieved of any liability
under this Agreement as a result of such assignment.
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31. SOLE AGREEMENT. This Agreement may not be amended or
modified in any respect whatsoever except by an instrument in writing signed
by the parties hereto. This Agreement constitutes the entire agreement between
the parties hereto.
32. SUCCESSORS. Subject to the limitations on assignment set
forth above, all the terms of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by and against the heirs, successors and
assigns of the parties hereto.
33. CAPTIONS. The captions of this Agreement are for
convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
34. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
35. SEVERABILITY. Should any one or more of the provisions
of this Agreement be determined to be invalid, unlawful or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby and
each such provision shall be valid and remain in full force and effect.
36. GENDER. All nouns and pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular
or plural as the identity of the person or persons, firm or firms, corporation
or corporations, entity or entities or any other thing or things may require.
37. RISK OF LOSS. Until the Closing the risk of loss for the
Property shall be that of the Seller. The Purchaser shall bear the risk of
loss of the Property from and after the Closing.
38. HOLIDAYS. Whenever under the terms and provisions of
this Agreement the time for performance falls upon a Saturday, Sunday or legal
holiday, such time for performance shall be extended to the next business day.
39. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
40. DEFINITION OF KNOWLEDGE. As used in this Agreement, an
individual will be deemed to have "knowledge" of a particular fact or other
matter if such individual is actually aware of such fact or other matter. A
Person other than an individual will be deemed to have "knowledge" of a
particular fact or other matter if any individual who is serving as a
director, officer or partner of such person has "knowledge" of such fact or
other matter.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement by parties legally entitled to do so as of the day and year first
set forth above.
SELLER: PURCHASER:
GENESIS HEALTH VENTURES OF HUNTER ACQUISITION L.L.C., an
INDIANA, INC., a Pennsylvania Illinois limited liability company
corporation
By: By:
------------------------------- --------------------------------
Its: Eric Rothner, one of its managing
------------------------ members
HALLMARK HEALTHCARE LIMITED
PARTNERSHIP, a Maryland limited
partnership
By: Meridian Inc., a Pennsylvania
corporation and one of its
General Partners
By:
-----------------------
Its:
----------------
JOINDER
GENESIS HEALTH VENTURES, INC., a Pennsylvania corporation, hereby joins
in the execution of this Agreement for the purpose of joining in as an
Indemnifying Party on behalf of Seller with respect to the obligations of
Seller set forth in Sections 18(a) and 12(a)(vii) of this Agreement.
GENESIS HEALTH VENTURES, INC., a
Pennsylvania corporation
By:
----------------------------------
Its:
---------------------------------
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Exhibit H(a)
FORM OF ESTOPPEL CERTIFICATE
DATED: __________________
TO: Hunter Acquisition L.L.C.
c/o Eric Rothner
5301 W. Touhy Avenue
Skokie, Illinois 60077
Re: That certain property commonly known as
--------------------------------
-----------------------------------------------------------------------
(the "Building").
-------------------------------------
Gentlemen:
The following statements are made with the knowledge that you are
relying on them in connection with the assignment to ______________________,
your nominee (the "Nominee") of the Lease referred to below in connection
therewith, and you and your Nominee and your respective successors and assigns
may rely on them for that purpose. The undersigned hereby acknowledges receipt
of that certain Assignment and Assumption Agreement executed by Tenant and
Nominee and consents to the terms and conditions thereof.
The undersigned ("Landlord"), being the Landlord under the lease
referred to in Paragraph 1 below, covering certain premises ("Leased
Premises") in the Building hereby certifies to you that the following
statements are true, correct and complete as of the date hereof:
1. ___________________________________ ("Tenant") is the tenant under a
lease with Landlord dated ______, 19 ___, demising to Tenant _________________
square feet in the Building. The initial term of the lease commenced on
____________, 19 __, will expire on , exclusive of unexercised renewal options
and extension options contained in the lease. There have been no amendments,
modifications or revisions to the lease, and there are no agreements of any
kind between Landlord and Tenant regarding the Leased Premises, except as
provided in the lease or except as follows: (if none, write "none").
The lease, and all amendments and other agreements referred to above are
referred to in the following portions of this letter collectively as the
"Lease."
2. The Lease has been duly authorized and executed by Landlord and is in
full force and effect, and Landlord has attached hereto a true, correct and
complete copy of the Lease.
3. Tenant has accepted and is in sole possession of the Leased Premises
and is presently occupying the Leased Premises. The Lease has not been
assigned, by operation of law or otherwise, by Landlord or Tenant and no
sublease, concession agreement or license, covering the Leased Premises, or
any portion of the Leased Premises, has been entered into by Tenant.
4. Tenant began paying rent on ___________. Tenant is obligated to pay
fixed or base rent under the Lease in the annual amount of $____________,
payable in monthly installments of $_______________. No rent under the Lease
has been paid more than one (1) month in advance, and no other sums have been
deposited with Landlord other than $_______________ deposited as security
under the Lease. Except as specifically stated in the Lease, Tenant is
entitled to no rent concessions or free rent. Percentage Rent for the last
lease year ending ________, 19 ___, in the amount of $________________ based
on Tenant's receipts of $__________________ has been paid by Tenant to
Landlord. The Lease provides for the Tenant to pay _________________ percent
(_______________%) of any increase in operating expenses and real property
taxes in excess of the ____________ base year operating expenses and real
property taxes of $_______________.
5. All conditions and obligations of Landlord relating to completion of
tenant improvements and making the Leased Premises ready for occupancy by
Tenant have been satisfied or performed and all other conditions and
obligations under the Lease to be satisfied or performed, or to have been
satisfied or performed, by Landlord as of the date hereof have been fully
satisfied or performed.
6. There exists no defense to, or right of offset against, enforcement
of the Lease by Landlord. Neither Landlord nor Tenant is in default under the
Lease and no event has occurred which, with the giving of notice or passage of
time, or both, could result in such a default.
7. Landlord has not received any notice of any present violation of any
federal, state, county or municipal laws, regulations, ordinances, orders or
directives relating to the use or condition of the Leased Premises or the
Building.
8. Except as specifically stated in the Lease, Tenant has not been
granted: (a) any option to extend the term of the Lease, (b) any option to
expand the Leased Premises or to lease additional space within the Building,
(c) any right of first refusal on any space in the Building, (d) any right to
terminate the Lease prior to its stated expiration, or (e) any option or right
of first refusal to purchase the Leased Premises or the Building or any part
thereof.
LANDLORD
----------------------------------------
(Name of Landlord)
By:
-------------------------------------
Title:
--------------------------------
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