UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 30, 2018 (April 25, 2018)
Date of Report (Date of earliest event reported)
QUALITY CARE PROPERTIES, INC. |
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(Exact Name of Registrant as Specified in its Charter) |
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Maryland |
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001-37805 |
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81-2898967 |
(State of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer
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7315 Wisconsin Avenue, Suite 550 East
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(Address of principal executive offices) (Zip code) |
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(240) 223-4680
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N/A |
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(Former Name or Former Address, if Changed Since Last Report.) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 1.01. Entry into a Material Definitive Agreement.
On April 25, 2018, Quality Care Properties, Inc. (the Company ), together with certain of its subsidiaries, entered into an Agreement and Plan of Merger (the Merger Agreement ) with Welltower Inc. ( Welltower ) and Potomac Acquisition LLC ( Potomac ), a Delaware limited liability company and a subsidiary of Welltower ( Merger Sub ), pursuant to which the parties agreed that, subject to the terms and conditions set forth in the Merger Agreement, Welltower would acquire all of the outstanding capital stock of the Company in an all-cash merger (the Merger ).
In connection with the transactions contemplated by the Merger Agreement, on April 25, 2018, the Company also entered into an Alternative Plan Sponsor Agreement (the Alternative PSA ), by and among the Company, HCR ManorCare, Inc. ( HCR ), ProMedica Health System, Inc. ( ProMedica Parent ), Suburban Healthco, Inc. ( Purchaser and, together with ProMedica Parent, ProMedica ) and Meerkat I LLC (the JV ), pursuant to which the parties agreed that, subject to the terms and conditions set forth in the Alternative PSA, ProMedica would acquire all of the newly issued common stock of HCR (the HCR Acquisition ) as part of an alternative plan of reorganization in connection with HCRs ongoing bankruptcy proceeding. The Company also entered into additional agreements in respect of HCRs bankruptcy proceeding, as discussed in further detail below.
Merger Agreement
Upon consummation of the Merger, the Companys stockholders will receive $20.75 in cash for each share of Company common stock, plus an additional right to receive a per share cash payment of $0.006 per day during the period beginning on August 25, 2018 through the closing of the Merger (the Closing ) (such payments, the Merger Consideration ).
The Merger Agreement contains a go-shop provision pursuant to which the Company has the right to solicit and engage in negotiations and discussions with respect to third-party proposals until 45 days after the execution of the Merger Agreement (the Go-Shop Period End Time ). Notwithstanding the no-shop restrictions discussed below, following the Go-Shop Period End Time, the Company may continue to solicit and engage in negotiations and discussions with respect to a third-party (an Excluded Party ) whose proposal the Companys board of directors has determined in good faith, not more than three business days after the end of the Go-Shop Period End Time, is or could reasonably be expected to lead to a Superior Offer (as such term is defined in the Merger Agreement).
From and after the Go-Shop Period End Time, the Company is subject to a no-shop restriction on its ability to solicit, or provide information to or engage in discussions with, third parties in connection with, any third-party proposals. The no-shop provision is subject to a customary fiduciary-out provision.
Each of the Companys and Welltowers obligation to consummate the Merger is subject to a number of customary closing conditions, including: (1) approval of the Merger by holders of a majority of the outstanding shares of Company common stock; (2) delivery of a legal opinion to the Company addressing the Companys qualification as a REIT; (3) material compliance with covenants; (4) accuracy of each partys representations, subject to materiality thresholds; (5) absence of injunctions or orders that prohibit or restrain the consummation of the Mergers; and (6) the closing of the HCR Acquisition. The Closing is anticipated to occur in the third quarter of 2018.
Both the Company and Welltower have certain termination rights under the Merger Agreement. Upon termination of the Merger Agreement under specified circumstancesincluding by the Company to enter into a definitive agreement with respect to a Superior Offerthe Company will be required to pay Welltower a termination fee equal to either $19.8 million (including in the case of a Superior Offer made by an Excluded Party) or $59.5 million. Upon termination of the Merger Agreement under certain other specified circumstancesincluding, subject to certain exceptions, the failure of the HCR Acquisition to close prior to October 12, 2018 or the failure of the court in the HCR bankruptcy proceeding to issue a revised confirmation order prior to June 29, 2018the Company will be entitled to receive a reverse termination fee equal to $250 million.
The Company has made customary representations and warranties and has agreed to certain customary covenants in the Merger Agreement, including, among others, covenants to conduct its business in the ordinary course and maintain its REIT status.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the full text of such agreement, which is attached hereto as Exhibit 2.1, and is incorporated by reference herein.
The Merger Agreement has been attached as an exhibit hereto to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures.
Plan Agreements
Alternative PSA
The Alternative PSA contemplates that, among other things, pursuant to an amended plan of reorganization of HCR (the Amended Plan ) under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ), which Amended Plan is attached as an exhibit to and incorporated into the Alternative PSA, the Purchaser will acquire all of the newly issued common stock of HCR, in exchange for a cash contribution (consisting of either a capital contribution or a combination of a capital contribution and an unsecured, subordinated loan in a principal amount not to exceed $550 million) by ProMedica to HCR in an amount sufficient to pay, in full, all claims in respect of HCRs existing secured credit facility, an agreed deferred rent obligation owed to the Company in the amount of approximately $440 million (the Agreed Deferred Rent Obligation ) and a distribution to the holders of HCRs existing preferred and common equity in the amount of $50 million (the Total Equity Distribution ).
The Amended Plan includes the following terms, which shall apply if the transactions contemplated by the Alternative PSA (the Plan Transactions ) are consummated:
· The Agreed Deferred Rent Obligation owed to the Company will be paid in full; the balance of the Companys claims against HCR will be waived and released;
· All creditors (including creditors holding claims subordinated pursuant to section 510(b) of the Bankruptcy Code) of HCR other than the Company will be unimpaired under the Plan;
· Holders of HCRs existing preferred and common equity will receive a portion of the Total Equity Distribution, allocated as set forth in the Amended Plan; and
· The Plan will include customary releases and exculpation by HCR of the reorganized HCR, its current and former representatives, ProMedica, the Company and certain other parties.
The Alternative PSA contains additional commitments by HCR, ProMedica and the Company relating to the conduct of HCRs bankruptcy case under chapter 11 of the Bankruptcy Code (the Chapter 11 Case ), including for HCR to use reasonable best efforts to pursue entry of a confirmation order by the bankruptcy court confirming the Amended Plan within 65 days following the date of the Alternative PSA.
The consummation of the Plan Transactions is subject to certain conditions, including: (i) the receipt of certain state licensing approvals with respect to the Plan Transactions; (ii) the entry by the bankruptcy court of a confirmation order confirming the Amended Plan; and (iii) no entry of an order by the bankruptcy court dismissing the Chapter 11 Case or converting the Chapter 11 Case into a case under Chapter 7 of the Bankruptcy Code or an order materially inconsistent with the Alternative PSA, the Amended Plan or the confirmation order in a manner adverse to ProMedica or the Company. The obligation of HCR to consummate the Plan Transactions is also conditioned upon compliance by ProMedica in all material respects with its pre-closing obligations under the Alternative PSA, while the obligation of ProMedica to consummate the Plan Transactions is also conditioned upon a court of competent jurisdiction not having determined that HCR has breached in any material respect its pre-closing obligations under the Alternative PSA.
The Alternative PSA will automatically terminate if the Merger Agreement is terminated. The Alternative PSA may also be terminated by the Company if an order confirming the Amended Plan is not entered within 65 days following the date of the Alternative PSA, the Plan Transactions have not been consummated by 11:59 p.m. New York City time on October 12, 2018, or if HCR fails to pay such cash and cash equivalents available to pay all or part of the Reduced Cash Rent (as defined in the Alternative PSA) after making all transfers of funds permitted under HCRs existing secured credit facility and retaining such reserves and making such other expenditures that either HCRs chief restructuring officer or board of directors has determined would be necessary to allow HCR to operate in the ordinary course of business. Either HCR or ProMedica may also terminate the Alternative PSA if the Plan Transactions have not been consummated by 11:59 p.m. New York City time on October 15, 2018. The Alternative PSA also contains various other termination rights.
HCR, ProMedica and the Company have made customary representations, warranties and covenants in the Alternative PSA. ProMedica has further agreed to reimburse HCR for certain restructuring costs paid from and including May 1, 2018 until the earlier of (i) the Effective Date (as defined in the Amended Plan) or (ii) the date of termination of the Alternative PSA, in an aggregate amount not to exceed $2 million per calendar month.
On the date the Plan Transactions are consummated, the JV or an entity or entities designated by the JV (the " Lessors ") and HCR III Healthcare, LLC, a wholly owned subsidiary of HCR ( HCR III ), will also enter into a new master lease, the basic terms of which are attached as an exhibit to the Alternative PSA (the New Master Lease ) which lease shall be guaranteed by ProMedica and shall supersede the existing master lease. On the date the Plan Transactions are consummated, HCR III and its subsidiaries to whom HCR III subleases certain facilities will amend their applicable sublease agreements to reflect the terms of the New Master Lease. Within three days after the Effective Date, HCR III and the Original Lessors (as defined in the Alternative PSA) under the existing master lease will terminate, release and discharge HCRs guaranty of the obligations under the existing master lease.
Amendment to Existing PSA
Concurrent with the execution of the Alternative PSA, HCR, the Company, HCP Mezzanine Lender, LP and the lessors identified therein (collectively, together with the Company and HCP Mezzanine Lender, LP, the Purchaser Parties ) entered into an amendment (the Amendment to Existing PSA ) to the plan sponsor agreement, dated as of March 2, 2018 (the Existing PSA ), pursuant to which the Purchaser Parties consented to HCRs entry into the Alternative PSA and the Alternative RSA (as defined below). The Amendment to the Existing PSA also makes termination of the Alternative PSA a condition to the consummation of the transactions contemplated by the Existing PSA, extends the outside date for consummation of the transactions contemplated by the Existing PSA to January 15, 2019 and makes certain other changes to the terms of the Existing PSA.
Alternative Restructuring Support Agreement
Concurrent with the execution of the Alternative PSA, HCR, Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited Partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the Majority Holders ), ProMedica Parent and MC Operations Investments, LLC, a wholly owned indirect subsidiary of the Company (together with the Majority Holders and ProMedica Parent, the Restructuring Support Parties ), entered into a restructuring support agreement (the Alternative RSA and, together with the Alternative PSA and the Amendment to Existing RSA, the Plan Agreements ), pursuant to which, subject to the terms and conditions therein, the Restructuring Support Parties, as the owners of common stock of HCR and/or the sponsor under the Alternative PSA, covenanted to, among other things, support the Plan Transactions and the Amended Plan. In addition, the Restructuring Support Parties agreed not to transfer, sell or pledge their HCR common stock or the right to vote unless the transferee of those shares joins the Alternative RSA.
All obligations pursuant to the Alternative RSA will terminate upon the earlier of the Effective Date of the Amended Plan or the date of termination of Alternative PSA and Existing PSA. As of April 25, 2018, the Restructuring Support Parties collectively owned 38,901,801 shares of common stock of HCR, representing more than eighty percent of the total shares of common stock of HCR issued and outstanding on that date.
The foregoing description of the Plan Agreements and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the full text of such agreements, which are attached hereto as Exhibits 2.2, 2.3 and 10.1 and are incorporated by reference herein.
The Plan Agreements have been attached as exhibits hereto to provide investors with information regarding their terms. They are not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Plan Agreements were made only for purposes of the Plan Agreements as of the specific dates therein, were solely for the benefit of the parties to the Plan Agreements, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Plan Agreements instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Plan Agreements and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Plan Agreements, which subsequent information may or may not be fully reflected in the Companys public disclosures.
The information in this Current Report on Form 8-K is not intended to be, and should not in any way be construed as, a solicitation of votes on the Amended Plan, nor should the
information contained herein or in the Plan Agreements be relied on for any purpose with respect to the Amended Plan.
Additional Information and Where to Find It
This communication relates to the proposed merger transaction involving the Company. In connection with the proposed transaction, the Company will file relevant materials with the U.S. Securities and Exchange Commission (the SEC ), including the Companys proxy statement on Schedule 14A (the Proxy Statement ). This communication is not a substitute for the Proxy Statement or any other document that the Company may file with the SEC or send to its stockholders in connection with the proposed merger. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents (when available) free of charge at the SECs website, http://www.sec.gov, and the Companys website, www.qcpcorp.com.
Participants in Solicitation
The Company and its directors and officers may be deemed to be participants in the solicitation of proxies from the holders of the Companys common stock in respect of the proposed transaction. Information about the directors and executive officers of the Company is set forth in the proxy statement for the Companys 2018 annual meeting of stockholders, which was filed with the SEC on April 6, 2018, and in other documents filed by the Company, including on behalf of such individuals, with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement and other relevant materials to be filed with the SEC in respect of the proposed transaction when they become available.
Safe Harbor Statement
Certain statements contained in this communication may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are indicated by words or phrases such as guidance, believes, expects, intends, forecasts, can, could, may, anticipates, estimates, plans, projects, seeks, should, targets, will, would, outlook, continuing, ongoing, and similar words or phrases and the negative of such words and phrases. Forward-looking statements are based on the Companys current plans and expectations and involve risks and uncertainties which are, in many instances, beyond the Companys control, and which could cause actual results to differ materially from those included in or contemplated or implied by the forward-looking statements. Such risks and uncertainties include the following: the occurrence of any event, change or other circumstance that could give rise to the termination of the contemplated agreements; the failure to obtain the Companys stockholders approval of the transaction; or the failure to satisfy any of the other conditions to the completion of the transaction, including conditions related to approval by the U.S. Bankruptcy Court overseeing HCRs chapter 11 case; the effect of the announcement of the transaction on the ability of the Company to maintain relationships with its partners, tenants, providers, and others with whom it does business, or on its operating results and businesses
generally; risks associated with the disruption of managements attention from ongoing business operations due to the transaction; the ability to meet expectations regarding the timing and completion of the merger; and other risks and uncertainties described in the Companys reports and filings with the SEC, including the risks and uncertainties set forth in Item 1A under the heading Risk Factors in the Companys Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 8, 2018 and other periodic reports the Company files with the SEC, which are available at www.sec.gov and the Companys website at www.qcpcorp.com. The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof and disclaims any obligation to do so other than as may be required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
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2.1 |
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2.2 |
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2.3 |
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10.1 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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QUALITY CARE PROPERTIES, INC. |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
Date: April 30, 2018 |
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Title: |
Chief Financial Officer |
EXECUTION VERSION
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
QUALITY CARE PROPERTIES, INC.,
QCP AL REIT, LLC,
QCP SNF WEST REIT, LLC,
QCP SNF CENTRAL REIT, LLC,
QCP SNF EAST REIT, LLC,
QCP HOLDCO REIT, LLC,
QCP TRS, LLC,
WELLTOWER INC.
AND
POTOMAC ACQUISITION LLC
APRIL 25, 2018
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TABLE OF CONTENTS
ARTICLE I |
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DEFINITIONS |
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Section 1.1 |
Definitions |
2 |
Section 1.2 |
Terms Generally |
10 |
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ARTICLE II |
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THE MERGERS |
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Section 2.1 |
The Subreit Merger |
11 |
Section 2.2 |
The HoldCo REIT Merger |
11 |
Section 2.3 |
The TRS Merger |
12 |
Section 2.4 |
The Company Merger |
12 |
Section 2.5 |
Conversion and Redemption of Securities |
13 |
Section 2.6 |
Payment of Cash for Merger Shares, Class A Preferred Stock, Subsidiary Preferred Interests and Company Equity Awards |
16 |
Section 2.7 |
Treatment of Company Equity Awards |
18 |
Section 2.8 |
Intended Income Tax Treatment of the Mergers
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19 |
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ARTICLE III |
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THE SURVIVING ENTITY |
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Section 3.1 |
Articles of Organization and Operating Agreements |
20 |
Section 3.2 |
Managers and Officers |
20 |
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ARTICLE IV |
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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Section 4.1 |
Corporate Existence and Power |
20 |
Section 4.2 |
Corporate Authorization |
21 |
Section 4.3 |
Governmental Authorization |
21 |
Section 4.4 |
Non-Contravention |
22 |
Section 4.5 |
Capitalization |
22 |
Section 4.6 |
Reports and Financial Statements |
24 |
Section 4.7 |
No Undisclosed Liabilities |
25 |
Section 4.8 |
Disclosure Documents |
26 |
Section 4.9 |
Absence of Certain Changes or Events
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26 |
Section 4.10 |
Finders Fees |
26 |
Section 4.11 |
Opinion of Financial Advisor |
26 |
Section 4.12 |
Compliance with Laws |
26 |
Section 4.13 |
Employee Matters |
27 |
Section 4.14 |
Labor Matters |
28 |
Section 4.15 |
Litigation |
28 |
Section 4.16 |
Tax Matters |
29 |
Section 4.17 |
Environmental Matters |
31 |
Section 4.18 |
Intellectual Property |
32 |
Section 4.19 |
Real Property |
33 |
Section 4.20 |
Material Contracts |
34 |
Section 4.21 |
Insurance |
36 |
Section 4.22 |
Takeover Statutes |
36 |
Section 4.23 |
No Rights Plan |
36 |
Section 4.24 |
No Other Representations and Warranties |
36 |
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ARTICLE V |
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
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Section 5.1 |
Entity Existence and Power |
36 |
Section 5.2 |
Corporate Authorization |
37 |
Section 5.3 |
Governmental Authorization |
37 |
Section 5.4 |
Non-Contravention |
37 |
Section 5.5 |
Disclosure Documents |
38 |
Section 5.6 |
Finders Fees |
38 |
Section 5.7 |
Financing
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38 |
Section 5.8 |
Merger Sub |
39 |
Section 5.9 |
Ownership of Shares |
40 |
Section 5.10 |
Disclaimer of Warranties |
40 |
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ARTICLE VI |
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CONDUCT OF BUSINESS PENDING THE MERGERS |
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Section 6.1 |
Conduct of the Company and its Subsidiaries |
40 |
Section 6.2 |
Conduct of Parent and Merger Sub |
44 |
Section 6.3 |
No Control of Other Partys Business |
44 |
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ARTICLE VII |
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ADDITIONAL AGREEMENTS |
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Section 7.1 |
Stockholder Meeting; Proxy Material
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45 |
Section 7.2 |
Efforts |
46 |
Section 7.3 |
Access to Information |
47 |
Section 7.4 |
Solicitation |
47 |
Section 7.5 |
Director and Officer Liability
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52 |
Section 7.6 |
Takeover Statutes |
54 |
Section 7.7 |
Public Announcements |
54 |
Section 7.8 |
Employee Matters |
54 |
Section 7.9 |
Rule 16b-3 |
56 |
Section 7.10 |
Notification of Certain Matters |
56 |
Section 7.11 |
Real Property Leases |
56 |
Section 7.12 |
Certain Litigation |
56 |
Section 7.13 |
Stock Exchange Delisting; Deregistration |
56 |
Section 7.14 |
Resignation of Directors |
56 |
Section 7.15 |
Financing and Payoff Documentation; Cooperation |
56 |
Section 7.16 |
Alternative Plan Sponsor Agreement |
63 |
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ARTICLE VIII |
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CONDITIONS TO THE MERGERS |
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Section 8.1 |
Conditions to the Obligations of Each Party |
63 |
Section 8.2 |
Conditions to the Obligations of Parent and Merger Sub |
63 |
Section 8.3 |
Conditions to the Obligations of the Company |
64 |
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ARTICLE IX |
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TERMINATION |
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Section 9.1 |
Termination |
65 |
Section 9.2 |
Termination Fee and Reverse Termination Fee |
67 |
Section 9.3 |
Effect of Termination |
68 |
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ARTICLE X |
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MISCELLANEOUS |
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Section 10.1 |
Notices |
69 |
Section 10.2 |
Survival of Representations and Warranties |
70 |
Section 10.3 |
Expenses |
70 |
Section 10.4 |
Amendment |
70 |
Section 10.5 |
Waiver |
70 |
Section 10.6 |
Successors and Assigns |
71 |
Section 10.7 |
Governing Law |
71 |
Section 10.8 |
Counterparts; Effectiveness |
71 |
Section 10.9 |
Severability |
71 |
Section 10.10 |
Entire Agreement; No Third-Party Beneficiaries |
72 |
Section 10.11 |
Jurisdiction; Specific Performance; Waiver of Jury Trial |
72 |
Section 10.12 |
Authorship |
73 |
Section 10.13 |
Transfer Taxes |
73 |
INDEX OF DEFINED TERMS
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Page |
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Acceptable Confidentiality Agreement |
48 |
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Company Subreits |
1 |
Acquisition Proposal |
52 |
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Company Title Insurance Policy |
34 |
Action |
29 |
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Confidentiality Agreement
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4 |
Additional Per Share Consideration |
16 |
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Confirmation Order |
4 |
Affiliate |
3 |
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Contract |
4 |
Agreement |
1 |
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Controlled Group Liability |
5 |
AL Subreit |
1 |
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Current Employee |
55 |
Alternative Plan Sponsor Agreement |
2 |
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Damages |
5 |
Articles of Merger |
13 |
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Debt Financing |
39 |
Balance Sheet Date |
26 |
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Debt Offer |
63 |
Bankruptcy Case |
2 |
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Debt Offer Documents |
63 |
Bankruptcy Court |
2 |
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Debt Offers |
63 |
Book-Entry Share |
16 |
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Delaware Secretary |
12 |
Business Day |
3 |
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Disbursing Agent |
17 |
Central Subreit |
1 |
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DLLCA |
11 |
Certificate |
16 |
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East Subreit |
1 |
Closing |
14 |
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Effective Time |
14 |
Closing Date |
14 |
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End Date |
66 |
Code |
3 |
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Environment |
33 |
Company |
1 |
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Environmental Law |
33 |
Company Articles |
22 |
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Environmental Permits |
32 |
Company Benefit Plan |
3 |
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ERISA |
5 |
Company Bylaws |
22 |
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ERISA Affiliate |
5 |
Company Credit Facilities |
3 |
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Exchange Act
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5 |
Company Disclosure Letter |
21 |
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Exchange Fund |
17 |
Company Employees |
3 |
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Excluded Party |
52 |
Company Equity Awards |
3 |
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Excluded Shares |
16 |
Company Facility
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4 |
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Existing Programs |
56 |
Company Insurance Policies |
36 |
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Existing Senior Notes Indenture |
5 |
Company Intellectual Property |
33 |
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Financing Commitment Letter |
39 |
Company Merger |
1 |
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Financing Fee Letter |
39 |
Company Options |
4 |
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Financing Source Parties |
5 |
Company Preferred Consideration |
16 |
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GAAP |
5 |
Company Proxy Statement |
4 |
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Go-Shop Period End Time |
48 |
Company Real Property |
4 |
|
Governmental Authority |
5 |
Company Restricted Stock Awards |
4 |
|
Hazardous Materials |
33 |
Company RSU Awards |
4 |
|
HoldCo REIT |
1 |
Company SEC Reports |
25 |
|
HoldCo REIT Certificate of Merger |
12 |
Company Securities |
24 |
|
HoldCo REIT Common Share |
6 |
Company Stock Plans |
4 |
|
HoldCo REIT Merger |
1 |
Company Stockholder Meeting |
46 |
|
HoldCo REIT Merger Effective Time |
12 |
Company Subreit Common Share |
4 |
|
HoldCo REIT Preferred Interest |
6 |
Company Subreit Preferred Interest |
4 |
|
Indebtedness |
6 |
Indemnified Parties |
53 |
|
Recommendation Withdrawal |
50 |
Initial REIT Year |
30 |
|
REIT |
30 |
Intervening Event |
53 |
|
REIT Requirements |
9 |
Knowledge of the Company |
6 |
|
Representative |
9 |
Law |
6 |
|
Requisite Merger Filings |
13 |
Liens |
6 |
|
Requisite Stockholder Vote |
22 |
Manager |
6 |
|
Restraint |
64 |
Material Adverse Effect on Parent |
37 |
|
Reverse Termination Fee |
9 |
Material Adverse Effect on the Company |
7 |
|
Reverse Termination Fee Tax Letter |
9 |
Maximum Reverse Termination Fee |
9 |
|
Sarbanes-Oxley Act |
25 |
Maximum Termination Fee |
7 |
|
SDAT |
13 |
MD Courts |
73 |
|
SEC |
9 |
Merger Consideration |
16 |
|
Securities Act |
9 |
Merger Shares |
16 |
|
Senior Notes |
9 |
Merger Sub |
1 |
|
Service-Based Company Option |
19 |
Mergers |
1 |
|
Shares |
1 |
MGCL |
13 |
|
Solvent |
10 |
Microbial Matter |
33 |
|
Specified Contract |
36 |
Multiemployer Plan |
8 |
|
Subreit Certificate of Merger |
11 |
Occupational Safety and Health Law |
32 |
|
Subreit Merger |
1 |
Order |
8 |
|
Subreit Merger Effective Time |
12 |
Original Plan
|
2 |
|
Subsidiary
|
10 |
Original Plan Sponsor Agreement |
1 |
|
Subsidiary Preferred Consideration |
17 |
Owned Real Property |
34 |
|
Subsidiary Preferred Interests |
10 |
Parent |
1 |
|
Substitute Financing |
59 |
Parent Plan |
56 |
|
Superior Offer |
53 |
Partner |
8 |
|
Surviving Entity |
1 |
Payoff Letter |
62 |
|
Tax |
10 |
Performance-Based Company Option |
19 |
|
Tax Matters Agreement |
10 |
Permits |
8 |
|
Tax Return |
10 |
Permitted Liens |
8 |
|
Termination Fee |
10 |
Person |
8 |
|
Termination Fee Tax Letter |
10 |
Plan |
2 |
|
TRS |
30 |
Plan Acquisition |
8 |
|
TRS Certificate of Merger |
13 |
Plan Closing |
9 |
|
TRS LLC |
1 |
Plan Transactions |
9 |
|
TRS Merger |
1 |
Preferred Stock |
23 |
|
TRS Merger Effective Time |
13 |
QRS |
30 |
|
Violation |
23 |
Qualifying Income |
9 |
|
West Subreit |
1 |
Real Property Leases |
34 |
|
Willful Breach |
11 |
Recommendation |
46 |
|
|
|
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this Agreement ) is made and entered into as of this 25th day of April, 2018 by and among Quality Care Properties, Inc., a Maryland corporation (the Company ), QCP AL REIT, LLC, a Delaware limited liability company and a subsidiary of the Company ( AL Subreit ), QCP SNF West REIT, LLC, a Delaware limited liability company and a subsidiary of the Company ( West Subreit ), QCP SNF Central REIT, LLC, a Delaware limited liability company and a subsidiary of the Company ( Central Subreit ), QCP SNF East, LLC, a Delaware limited liability company and a subsidiary of the Company ( East Subreit ), QCP HoldCo REIT, LLC, a Delaware limited liability company and a subsidiary of the Company ( HoldCo REIT and together with AL Subreit, West Subreit, Central Subreit and East Subreit, the Company Subreits ), QCP TRS, LLC, a Delaware limited liability company and a subsidiary of the Company ( TRS LLC ), Welltower Inc., a Delaware corporation ( Parent ), and Potomac Acquisition LLC, a Delaware limited liability company and a direct or indirect subsidiary of Parent ( Merger Sub ).
RECITALS
WHEREAS , the parties intend that (a) each of the Company Subreits shall be merged with and into Merger Sub, with Merger Sub surviving as a wholly owned direct or indirect subsidiary of Parent (the Subreit Merger ), (b) immediately following the Subreit Merger, Holdco REIT shall be merged with and into Merger Sub, with Merger Sub surviving as a wholly owned direct or indirect subsidiary of Parent (the HoldCo REIT Merger ), (c) immediately following the HoldCo REIT Merger, TRS LLC shall be merged with and into Merger Sub, with Merger Sub surviving as a wholly owned direct or indirect subsidiary of Parent (the TRS Merger ) and (d) immediately following the TRS Merger, the Company shall be merged with and into Merger Sub (the Company Merger and together with the Subreit Merger, the HoldCo REIT Merger, and the TRS Merger, the Mergers ), with Merger Sub surviving as a wholly owned direct or indirect subsidiary of Parent (the Surviving Entity );
WHEREAS , pursuant to the Company Merger each issued and outstanding share of common stock, par value $0.01 per share, of the Company (the Shares ), other than the Excluded Shares, shall be converted into the right to receive the Merger Consideration, subject to the terms and conditions hereof;
WHEREAS , on March 2, 2018, the Manager, the Company, HCP Mezzanine Lender, LP, and certain other parties signatory thereto as lessors entered into a Plan Sponsor Agreement in respect of a proposed treatment of the claims of creditors of Manager set forth therein (the Original Plan Sponsor Agreement );
WHEREAS , on March 4, 2018, Manager filed a voluntary petition for relief under chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court );
WHEREAS , Managers chapter 11 case is currently pending before the Bankruptcy Court under case number 18-10467 (KG) (the Bankruptcy Case );
WHEREAS , on March 4, 2018, in accordance with the terms of the Original Plan Sponsor Agreement, Manager filed in the Bankruptcy Case a prepackaged plan of reorganization in respect of Manager;
WHEREAS , on April 13, 2018, the Bankruptcy Court entered an order confirming such prepackaged plan of reorganization, as amended on or prior to the date thereof (such prepackaged plan of reorganization, as confirmed, the Original Plan );
WHEREAS , on the date hereof, the parties to the Original Plan Sponsor Agreement and Partner entered into an Alternative Plan Sponsor Agreement, providing, among other things, for Partner to assume the rights and obligations of Purchaser under the Original Plan Sponsor Agreement (the Alternative Plan Sponsor Agreement );
WHEREAS , pursuant to the terms of the Alternative Plan Sponsor Agreement, the parties thereto shall seek entry of an order by the Bankruptcy Court confirming a plan of reorganization of Manager as amended in accordance with the terms of the Alternative Plan Sponsor Agreement (such amended plan of reorganization, the Plan );
WHEREAS , it is a condition to the Plan Closing that the Bankruptcy Court shall have entered the Confirmation Order with respect to the Plan;
WHEREAS , the Board of Directors of the Company has (i) determined that this Agreement, the Plan and the Alternative Plan Sponsor Agreement and the transactions contemplated hereby and thereby, including the Mergers, are in the best interests of the Company and its stockholders, (ii) approved this Agreement, the Plan, the Alternative Plan Sponsor Agreement and the transactions contemplated hereby and thereby, including the Mergers and (iii) resolved to recommend that stockholders of the Company approve the Mergers and the other transactions contemplated by this Agreement;
WHEREAS , the respective Boards of Directors of Parent and Merger Sub have approved this Agreement; and
WHEREAS , the parties desire to make certain representations, warranties, covenants and agreements in connection with the Mergers and also to prescribe certain conditions to the Mergers, as set forth herein.
AGREEMENT
NOW, THEREFORE , in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . For purposes of this Agreement, the following terms have the respective meanings set forth below:
Affiliate means, with respect to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with, such Person. For purposes of this definition, the term control (including the correlative terms controlling, controlled by and under common control with) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
Business Day means any day other than the days on which banks in New York, New York are required or authorized to close.
Code means the Internal Revenue Code of 1986, as amended.
Company Benefit Plan means each compensation or benefit plan, program, policy, practice, agreement or arrangement (other than any Multiemployer Plan), including all stock ownership, stock purchase, stock option, phantom stock or other equity-based, retirement, supplemental retirement, vacation, severance, life, disability, dependent care, death benefit, employment, consulting, change-in-control, transaction bonus, fringe benefit, bonus, incentive, pension, profit sharing, medical, and deferred compensation plan, program, policy, practice, agreement or arrangement, whether or not subject to ERISA and whether written or oral, which is sponsored, maintained or contributed to by the Company or any of its Subsidiaries.
Company Credit Facilities means the First Lien Credit and Guaranty Agreement, dated as of October 31, 2016, among West Subreit, Central Subreit, East Subreit, AL Subreit, HoldCo REIT, the Company, the guarantors party thereto, the lenders party thereto and Barclays Bank PLC, as administrative agent, as amended, restated, supplemented or otherwise modified from time to time.
Company Employees means any employee or officer of the Company or any of its Subsidiaries.
Company Equity Awards means Company Options, Company Restricted Stock Awards and Company RSU Awards.
Company Facility means any post-acute/skilled nursing facility, memory care/assisted living facility, home health facility, hospice facility or other senior living or health care facility owned, leased, subleased, managed or operated by the Company or any of its Subsidiaries.
Company Options means options to acquire Shares from the Company granted under the Company Stock Plans.
Company Proxy Statement means the proxy statement, together with any amendments or supplements thereto and any other related proxy materials, relating to the approval of the Merger and the other transactions contemplated by this Agreement by the Companys stockholders prepared in accordance with Law.
Company Real Property means the Owned Real Property and the real property leased by the Company or any of its Subsidiaries pursuant to the Real Property Leases.
Company Restricted Stock Awards means awards in respect of Shares subject to vesting, repurchase or other lapse restriction granted under the Company Stock Plans.
Company RSU Awards means restricted stock unit or deferred stock unit awards in respect of Shares granted under the Company Stock Plans.
Company Subreit Common Share means a Common Share as such term is defined in the respective amended and restated limited liability company agreements of the Company Subreits, other than HoldCo REIT, each dated as of October 14, 2016.
Company Subreit Preferred Interest means the 12.5% Series A Redeemable Cumulative Preferred Shares of each of the Company Subreits, other than HoldCo REIT.
Company Stock Plans means the Quality Care Properties, Inc. 2016 Performance Incentive Plan and any other plan, program, policy, agreement or other arrangement under which Company Equity Awards are outstanding or may be granted, in each case, as amended.
Confidentiality Agreement means the Confidentiality Agreement, dated April 13, 2018, as amended and supplemented from time to time, between the Company and Parent.
Confirmation Order has the meaning set forth in the Alternative Plan Sponsor Agreement.
Contract means any agreement, contract, obligation, promise, understanding or undertaking that is legally binding.
Controlled Group Liability means any and all liabilities (a) under Title IV of ERISA, (b) under Section 302 of ERISA, (c) under Sections 412 and 4971 of the Code, and (d) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq . of ERISA and Section 4980B of the Code.
Damages means any and all costs or expenses (including attorneys fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same controlled group as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Existing Senior Notes Indenture means the Indenture, dated as of October 17, 2016, among AL Subreit, West Subreit, Central Subreit, East Subreit, the guarantors party thereto and Wilmington Trust, National Association, as trustee, as amended, restated, supplemented or otherwise modified from time to time, in respect of the Senior Notes.
Financing Source Parties means any Person that has committed to provide or arrange or otherwise entered into agreements in connection with providing the Debt Financing or any portion thereof or other financings in connection with the transactions contemplated hereby, and the parties to any joinder agreements, indentures or credit agreements entered pursuant thereto or relating thereto, in each case, together with their respective former, current and future equityholders, controlling persons, Representatives, Affiliates, members, managers, general or limited partners or successors or assignees of such Person and/or their respective Affiliates, successors and assigns, in each case solely in their respective capacities as such; provided that Parent, Merger Sub, Partner or any of their respective Subsidiaries or Affiliates shall not be Financing Source Parties hereunder.
GAAP means U.S. generally accepted accounting principles.
Governmental Authority means any U.S. or foreign government, any agency, public or regulatory authority, instrumentality, department, commission, court, arbitrator, ministry, tribunal or board of the United States or any foreign nation or any government or political subdivision thereof, in each case, whether national, federal, tribal, provincial, state, regional, local or municipal.
HoldCo REIT Common Share means a Common Share of HoldCo REIT as such term is defined in the amended and restated limited liability company agreement of HoldCo REIT, dated as of October 14, 2016.
HoldCo REIT Preferred Interest means the 12.5% Series A Redeemable Cumulative Preferred Shares of HoldCo REIT.
Indebtedness of any Person means, without duplication, (i) the principal, accreted value, accrued and unpaid interest, prepayment and redemption premiums or penalties (if any), unpaid fees or expenses and other monetary obligations in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (in each case, other than trade accounts payable in the ordinary course of business); (iii) all obligations of such Person under leases required to be capitalized in accordance with GAAP, consistently applied; (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers acceptance or similar credit transaction, only to the extent drawn; (v) all obligations of such Person under interest rate or currency swap transactions (valued at the termination value thereof); (vi) all obligations of such Person under checks or other negotiable instruments issued by such Person in excess of cash (and cash equivalents) available to such Person to honor such obligations; (vii) all obligations of the type referred to in clauses (i) through (vi) of any Persons for the payment of which such Person is responsible or liable,
directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; and (viii) all obligations of the type referred to in clauses (i) through (vii) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).
Knowledge of the Company means the actual knowledge, after reasonable inquiry, of the chief executive officer, the chief financial officer, the chief investment officer and the general counsel of the Company.
Law means applicable statutes, common law, rules, ordinances, regulations, codes, orders, judgments, injunctions, writs, decrees, governmental guidelines or interpretations having the force of law, Permits, rules and bylaws, in each case, of a Governmental Authority.
Liens means, with respect to any asset, any mortgage, lien, pledge, charge, option, security interest, deed of trust, deed to secure Indebtedness, right of first refusal, right of first offer, encumbrance , right of way, easement, encroachment, conditional sale, title retention agreement, defect in title or restriction of any kind in respect of such asset.
Manager means HCR ManorCare, Inc., a Delaware corporation.
Material Adverse Effect on the Company means a change, event or development that has or would reasonably be expected to have a material adverse effect on the business, properties, assets, financial condition or continuing results of operations of the Company, the Manager and their respective Subsidiaries, taken as a whole; provided , however , that no change, event or development resulting from any of the following shall be taken into account in determining whether there has been or will be a Material Adverse Effect on the Company: (A) changes, events or developments in or affecting general economic or regulatory conditions, or in the securities, credit or financial markets (including interest rates and exchange rates); (B) changes, events or developments resulting from any weather-related or other force majeure event or natural disasters or outbreak or escalation of hostilities or acts of war (whether or not declared) or terrorism; (C) changes, events, developments generally affecting the industries in which the Company or its Subsidiaries operates; (D) changes or developments in Law or GAAP, or the interpretation thereof, or changes or developments in regulatory, legislative or other political conditions or developments; (E) the execution or announcement of, or compliance with, this Agreement and the Alternative Plan Sponsor Agreement (other than compliance with the first sentence of Section 6.1) or the transactions contemplated hereby or thereby, including the impact thereof on the relationships, contractual or otherwise, of the Company with suppliers, residents, lenders or landlords, and including any Action with respect to the Mergers or the transactions contemplated by the Alternative Plan Sponsor Agreement ( provided that this clause (E) shall not apply to the representations and warranties contained in Section 4.4); (F) any action taken at the request of Parent and any failure to take an action that is prohibited by this Agreement and with respect to which Parent has not granted a written waiver within two (2) Business Days after a written request from the Company; (G) any noncompliance with any financial covenants in any Contract relating to Indebtedness or any cross-default in connection therewith; (H) changes in the share price or trading volume of the Shares or in the Companys credit rating ( provided that any change, event or development underlying such change may be taken into account in determining
whether there has been or will be a Material Adverse Effect on the Company so long as it is not otherwise excluded by this definition); or (I) the failure of the Company to meet any internal or external projections or forecasts or estimates of revenues, earnings or other metrics for any period ( provided that any change, event or development underlying such change may be taken into account in determining whether there has been or will be a Material Adverse Effect on the Company so long as it is not otherwise excluded by this definition and, provided , further , that this clause (I) shall not be construed as implying that the Company is making any representation or warranty hereunder with respect to any projections or forecasts or estimates of revenues, earnings or other metrics for any period); except, in each case with respect to clauses (A)-(D) of this definition, to the extent adversely and disproportionately affecting the Company, the Manager and their respective Subsidiaries, taken as a whole, relative to other companies in the industries in which the Company, the Manager and their respective Subsidiaries operate.
Maximum Termination Fee means (i) $19,800,000 if the Termination Fee becomes payable (x) pursuant to Section 9.2(a) in connection with a Superior Offer from an Excluded Party or (y) pursuant to Section 9.2(b)(i) and the applicable Recommendation Withdrawal is in connection with an Acquisition Proposal made by an Excluded Party, and (ii) $59,500,000 if the Termination Fee becomes payable in any other circumstance.
Multiemployer Plan means any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.
Order means any order, writ, injunction, decree, judgment, award, settlement or stipulation issued, promulgated or entered into by or with any Governmental Authority.
Partner means ProMedica Health System, Inc., together with its Subsidiaries and Affiliates.
Permits means any licenses, franchises, permits, certificates, consents, approvals or other similar authorizations of, from or by a Governmental Authority possessed by or granted to or necessary for the ownership of the material assets, operation of Company Facilities or conduct of the business of the Company and its Subsidiaries.
Permitted Liens means (i) Liens for Taxes, assessments and governmental charges or levies not yet past due or that are being contested in good faith or for which adequate accruals or reserves have been established in accordance with GAAP; (ii) mechanics, vendors, carriers, warehousemens, workmens, repairmens, materialmens or construction Liens and other similar Liens imposed by Law or arising in the ordinary course of business; (iii) any Liens or security interests that secure a liquidated amount that are being contested in good faith and by appropriate Action; (iv) the Real Property Leases and any other leases, subleases and licenses; (v) any Liens arising under conditional sales contracts and equipment leases with third parties; (vi) Liens imposed by Law; (vii) pledges or deposits to secure obligations under workers compensation Laws or similar legislation or to secure public or statutory obligations; (viii) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business; (ix) any easements, encumbrances, covenants, rights of way (unrecorded and of record) and other similar restrictions of record, any Laws affecting improvements, use or occupancy
or reservations of an interest in title, and any zoning, building and other similar restrictions, in each case that do not materially and adversely affect the current use of the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries; (x) Liens the existence of which are disclosed in the consolidated financial statements of the Company and notes thereto included in any Company SEC Report filed or furnished on or after January 1, 2017 and prior to the date of this Agreement; (xi) Liens and property restrictions that are disclosed on existing title reports, existing surveys or Company Title Insurance Policies (in each case, to the extent the same have been made available to Parent or that Parent otherwise had access to); and (xii) Liens for Indebtedness relating to the Company Real Property subject thereto or affected thereby.
Person means any individual, corporation, company, limited liability company, partnership, association, trust, joint venture, group or any other entity or organization, including any Governmental Authority.
Plan Acquisition has the meaning set forth in the Alternative Plan Sponsor Agreement.
Plan Closing has the meaning ascribed to the term Closing in the Alternative Plan Sponsor Agreement.
Plan Transactions means the transactions contemplated by the Alternative Plan Sponsor Agreement, including the Plan Acquisition.
Representative means, with respect to any Person, such Persons directors, officers, employees, agents and representatives, including any investment banker, financial advisor and financing sources (in the case of Parent), attorney, accountant or other advisor, agent, representative or controlled Affiliate.
Reverse Termination Fee means an amount equal to the lesser of (or, for the avoidance of doubt, in the event that the amount described in clause (i) is equal to the amount described in clause (ii), an amount equal to the Maximum Reverse Termination Fee) (i) two hundred and fifty million dollars ($250,000,000) (the Maximum Reverse Termination Fee ) and (ii) the sum of (A) the maximum amount that can be paid to the Company without causing it to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code (the REIT Requirements ) determined as if the payment of such amount did not constitute income described in Sections 856(c)(2) and 856(c)(3) of the Code ( Qualifying Income ), as determined by independent accountants to the Company, and (B) in the event that the Company receives a letter from outside counsel (the Reverse Termination Fee Tax Letter ) indicating (1) that the Companys receipt of the Maximum Reverse Termination Fee would either (x) constitute Qualifying Income or (y) would be excluded from gross income within the meaning of the REIT Requirements or (2) that the Company is reasonably expected not to be organized or operated in conformity for qualification and taxation as a REIT for the taxable year in which any such amount is to be received, the Maximum Reverse Termination Fee less the amount payable under clause (A) above. In the event that the Company notifies Parent that it is not able to receive the Maximum Reverse Termination Fee, and the Company is entitled to the Reverse Termination Fee pursuant to the terms of this Agreement, then Parent shall place the unpaid amount in escrow and the escrow
agent shall not release any portion thereof to the Company unless and until the Company notifies the escrow agent that it has received any one or a combination of the following: (I) a letter from the Companys independent accountants indicating the maximum amount that can be paid at that time to the Company without causing the Company to fail to meet the REIT Requirements, in which event the escrow agent shall pay to the Company the lesser of the unpaid Maximum Reverse Termination Fee and the maximum amount stated in such letter or (II) a Reverse Termination Fee Tax Letter, in which event the escrow agent shall pay to the Company the unpaid Maximum Reverse Termination Fee.
SEC means the U.S. Securities and Exchange Commission.
Securities Act means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Senior Notes means the 8.125% Senior Secured Second Lien Notes due 2023, issued pursuant to the Existing Senior Notes Indenture.
Solvent means that, as of any date of determination and with respect to any Person: (a) the fair value of the assets of such Person (on a consolidated basis with its Subsidiaries), at a fair valuation, exceeds the debts and other liabilities, direct, subordinated, contingent or otherwise, of such Person (on a consolidated basis with its Subsidiaries), (b) the present fair saleable value of the property of such Person (on a consolidated basis with its Subsidiaries) exceeds the amount that will be required to pay the probable liability of such Person (on a consolidated basis with its Subsidiaries) in respect of its debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; (c) Parent (on a consolidated basis with its subsidiaries) will be able to pay its debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (d) the capital of such Person (on a consolidated basis with its Subsidiaries) is not unreasonably small in relation to the business in which such Person (on a consolidated basis with its Subsidiaries) is engaged on such date of determination; and (e) such Person (on a consolidated basis with its Subsidiaries) does not have or intend to incur debts beyond its ability to pay such debts as they mature.
Subsidiary means, with respect to any Person, any other Person of which the first Person owns, directly or indirectly, securities or other ownership interests having voting power, or which separately has the power, to elect or designate a majority of the board of directors or other persons performing similar functions (or, if there are no such voting interests, more than 50% of the equity interests of the second Person).
Subsidiary Preferred Interests means the Subsidiary REIT Preferred Interests and the HoldCo REIT Preferred Interests.
Tax means any and all U.S. federal, state, local, or non-U.S. taxes, assessments, levies, imposts and other similar governmental charges, whether imposed directly or through withholding or deductions, together with any interest, penalties or additions imposed with respect thereto.
Tax Matters Agreement means the Tax Matters Agreement dated as of October 31, 2016, by and between HCP, Inc., a Maryland corporation, and the Company.
Tax Return means any return, declaration, report, statement, certificate, information statement, claim for refund or other document filed with or supplied to or required to be filed with or supplied to a Governmental Authority with respect to Taxes, including any schedules, attachments, supplements or amendments to any of the foregoing.
Termination Fee means an amount equal to the lesser of (or, for the avoidance of doubt, in the event that the amount described in clause (i) is equal to the amount described in clause (ii), an amount equal to the Maximum Termination Fee) (i) the Maximum Termination Fee and (ii) the sum of (A) the maximum amount that can be paid to Parent without causing it to fail to meet the REIT Requirements determined as if the payment of such amount did not constitute Qualifying Income, as determined by independent accountants to Parent, and (B) in the event that Parent receives a letter from outside counsel (the Termination Fee Tax Letter ) indicating that Parents receipt of the Maximum Termination Fee would either (x) constitute Qualifying Income or (y) would be excluded from gross income within the meaning of the REIT Requirements, the Maximum Termination Fee less the amount payable under clause (A) above. In the event that Parent notifies the Company that it is not able to receive the Maximum Termination Fee, and the Parent is entitled to the Termination Fee pursuant to the terms of this Agreement, then the Company shall place the unpaid amount in escrow and the escrow agent shall not release any portion thereof to Parent unless and until Parent notifies the escrow agent that it has received any one or a combination of the following: (I) a letter from Parents independent accountants indicating the maximum amount that can be paid at that time to Parent without causing Parent to fail to meet the REIT Requirements, in which event the escrow agent shall pay to Parent the lesser of the unpaid Maximum Termination Fee and the maximum amount stated in such letter or (II) a Termination Fee Tax Letter, in which event the escrow agent shall pay to the Company the unpaid Maximum Termination Fee.
Willful Breach means a material breach, or failure to perform, that is the consequence of an act or omission by a party or a Representative or a Subsidiary of a party, in each case with the knowledge that the taking of, or failure to take, such act would, or would be reasonably expected to, cause a material breach of this Agreement.
Section 1.2 Terms Generally . The definitions in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words include, includes and including shall be deemed to be followed by the phrase without limitation, unless the context expressly provides otherwise. All references herein to Sections, paragraphs, subparagraphs, clauses, Annexes or Exhibits shall be deemed references to Sections, paragraphs, subparagraphs or clauses of, or Annexes or Exhibits to, this Agreement, unless the context expressly provides otherwise. Unless otherwise expressly defined, terms defined in this Agreement have the same meanings when used in any Exhibit or Annex hereto, including the Company Disclosure Letter. Unless otherwise specified, the words herein, hereof, hereto and hereunder and other words of similar import refer to this Agreement as a whole (including the Exhibits and Annexes) and not to any particular provision of this Agreement.
ARTICLE II
THE MERGERS
Section 2.1 The Subreit Merger . (a) At the Subreit Merger Effective Time, in accordance with the Delaware Limited Liability Company Act (the DLLCA ), and upon the terms and subject to the conditions set forth in this Agreement, each of AL Subreit, West Subreit, Central Subreit and East Subreit shall merge with and into Merger Sub, with Merger Sub surviving the Subreit Merger as a wholly owned direct or indirect subsidiary of Parent.
(b) On the Closing Date and concurrently with the filing of the HoldCo REIT Certificate of Merger, the TRS Certificate of Merger, the Certificate of Merger and the Articles of Merger, AL Subreit, West Subreit, Central Subreit, East Subreit and Merger Sub shall file a certificate of merger (the Subreit Certificate of Merger ), executed in accordance with, and containing such information as is required by, the relevant provisions of the DLLCA, with the Secretary of State of the State of Delaware (the Delaware Secretary ) and make any other filings, recordings or publications required to be made by the Subreits and Merger Sub under the DLLCA in connection with the Subreit Merger. The Subreit Merger shall become effective at such time on the Closing Date after the Subreit Certificate of Merger is accepted for record by the Delaware Secretary as shall be specified in the Subreit Certificate of Merger and the parties hereby agree to specify 6:00 p.m. New York City time on the Closing Date as the effective time in the Subreit Certificate of Merger (the date and time the Subreit Merger becomes effective, being the Subreit Merger Effective Time ).
(c) The Subreit Merger shall generally have the effects set forth in the applicable provisions of the DLLCA and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the Subreit Merger Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of each of the Subreits shall vest in Merger Sub (as the surviving entity), and all debts, liabilities, obligations, restrictions and duties of each of the Subreits shall become the debts, liabilities, obligations, restrictions and duties of Merger Sub (as the surviving entity).
Section 2.2 The HoldCo REIT Merger . (a) At the HoldCo REIT Merger Effective Time, in accordance with the DLLCA, and upon the terms and subject to the conditions set forth in this Agreement, HoldCo REIT shall merge with and into Merger Sub, with Merger Sub surviving the HoldCo REIT Merger as a wholly owned direct or indirect subsidiary of Parent.
(b) On the Closing Date and concurrently with the filing of the Subreit Certificate of Merger, the TRS Certificate of Merger, the Certificate of Merger and the Articles of Merger, HoldCo REIT and Merger Sub shall file the certificate of merger for the Holdco REIT Merger (the HoldCo REIT Certificate of Merger ), executed in accordance with, and containing such information as is required by, the relevant provisions of the DLLCA, with the Delaware Secretary and make any other filings, recordings or publications required to be made by HoldCo REIT and Merger Sub under the DLLCA in connection with the HoldCo REIT Merger. The HoldCo REIT Merger shall become effective at such time after the HoldCo REIT Certificate of Merger is accepted for record by the Delaware Secretary as shall be specified in the HoldCo
REIT Certificate of Merger and the parties hereby agree to specify 6:01 p.m. New York City time on the Closing Date as the effective time in the HoldCo REIT Certificate of Merger (the date and time the HoldCo REIT Merger becomes effective being the HoldCo REIT Merger Effective Time ) .
(c) The HoldCo REIT Merger shall generally have the effects set forth in the applicable provisions of the DLLCA and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the HoldCo REIT Merger Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of HoldCo REIT shall vest in Merger Sub (as the surviving entity), and all debts, liabilities, obligations, restrictions and duties of HoldCo REIT shall become the debts, liabilities, obligations, restrictions and duties of Merger Sub (as the surviving entity).
Section 2.3 The TRS Merger . (a) At the TRS Merger Effective Time, in accordance with the DLLCA, and upon the terms and subject to the conditions set forth in this Agreement, TRS LLC shall merge with and into Merger Sub, with Merger Sub surviving the TRS Merger as a wholly owned direct or indirect subsidiary of Parent.
(b) On the Closing Date and concurrently with the filing of the Subreit Certificate of Merger, the HoldCo REIT Certificate of Merger, the Certificate of Merger and the Articles of Merger, TRS LLC and Merger Sub shall file the certificate of merger for the TRS Merger (the TRS Certificate of Merger ), executed in accordance with, and containing such information as is required by, the relevant provisions of the DLLCA, with the Delaware Secretary and make any other filings, recordings or publications required to be made by TRS LLC and Merger Sub under the DLLCA in connection with the TRS Merger. The TRS Merger shall become effective at such time after the TRS Certificate of Merger is accepted for record by the Delaware Secretary as shall be specified in the TRS Certificate of Merger and the parties hereby agree to specify 6:02 p.m. New York City time on the Closing Date as the effective time in the TRS Certificate of Merger (the date and time the TRS Merger becomes effective being the TRS Merger Effective Time ).
(c) The TRS Merger shall generally have the effects set forth in the applicable provisions of the DLLCA and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the TRS Merger Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of TRS LLC shall vest in Merger Sub (as the surviving entity), and all debts, liabilities, obligations, restrictions and duties of TRS LLC shall become the debts, liabilities, obligations, restrictions and duties of Merger Sub (as the surviving entity).
Section 2.4 The Company Merger . (a) At the Effective Time, in accordance with the DLLCA and the Maryland General Corporation Law (the MGCL ), and upon the terms and subject to the conditions set forth in this Agreement, the Company shall merge with and into Merger Sub, with Merger Sub surviving such Company Merger as a wholly owned direct or indirect subsidiary of Parent.
(b) On the Closing Date and concurrently with the filing of the Subreit Certificate of Merger, the HoldCo REIT Certificate of Merger and the TRS Certificate of Merger, the
Company and Merger Sub shall (i) file the articles of merger for the Company Merger (the Articles of Merger , executed in accordance with, and containing such information as is required by, the relevant provisions of the MGCL with the State Department of Assessments and Taxation of Maryland (the SDAT ) and make any other filings, recordings or publications required to be made by the Company and Merger Sub under the MGCL in connection with the Company Merger and (ii) file a certificate of merger for the Merger ( Certificate of Merger and together with the Subreit Certificate of Merger, the HoldCo Certificate of Merger, the TRS Certificate of Merger and the Articles of Merger, the Requisite Merger Filings ), executed in accordance with, and containing such information as is required by, the relevant provisions of the DLLCA with the Delaware Secretary and make any other filings, recordings or publications required to be made by such parties under the DLLCA in connection with the Company Merger. The Company Merger shall become effective at such time after the Articles of Merger are accepted for record by the SDAT and the Certificate of Merger is accepted for record by the Delaware Secretary as shall be specified in the Articles of Merger and the Certificate of Merger and the parties hereby agree to specify 6:03 p.m. New York City time on the Closing Date as the effective time in the Articles of Merger and the Certificate of Merger (the date and time the Company Merger becomes effective being the Effective Time ).
(c) The Company Merger shall generally have the effects set forth in the applicable provisions of the DLLCA, MGCL and this Agreement. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of the Company and Merger Sub shall vest in the Surviving Entity, and all debts, liabilities, obligations, restrictions and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions and duties of the Surviving Entity.
(d) The closing of the Mergers (the Closing ) shall occur on the second (2 nd ) Business Day (the Closing Date ) following the date on which (x) all of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions, and other than the condition set forth in Section 8.1(c), but subject to the satisfaction or waiver of such condition) have been satisfied or waived and (y) all the conditions to the Plan Closing have been satisfied or waived (other than those conditions to the Plan Closing that by their nature are to be satisfied or waived at the Plan Closing, but subject to the satisfaction or waiver of such conditions at the Plan Closing) or on such other date and time as agreed in writing by Parent and the Company. At 8:30 a.m. New York City time on the Closing Date, the parties shall deliver the executed Requisite Merger Filings in escrow to Wachtell, Lipton, Rosen & Katz to be automatically released and filed with the relevant Governmental Authorities immediately following the Plan Closing (it being understood that the intention of the parties is for the Plan Closing and the Mergers to occur substantially contemporaneously), which Requisite Merger Filings shall provide for (i) the Subreit Merger Effective Time to be immediately following the effectiveness of the Plan Closing, (ii) the HoldCo REIT Merger Effective Time to be immediately following the Subreit Merger Effective Time, (iii) the TRS Merger Effective Time to be immediately following the HoldCo REIT Merger Effective Time and (iv) the Effective Time to be immediately after TRS Merger Effective Time.
Section 2.5 Conversion and Redemption of Securities .
(a) At the Subreit Merger Effective Time, in accordance with the DLLCA, pursuant to this Agreement and by virtue of the Subreit Merger and without any action on the part of the Company Subreits, HoldCo REIT, TRS LLC, the Company, Parent, Merger Sub or the holders of any securities or interests of any of the foregoing:
(i) Each Company Subreit Common Share issued and outstanding immediately prior to the Subreit Merger Effective Time shall be cancelled automatically and shall cease to exist and shall be converted into the right to receive after the Effective Time an amount of consideration from Merger Sub equal to the value of such Company Subreit Common Share, which right to receive consideration will automatically terminate upon the Holdco REIT Merger and the TRS Merger, respectively.
(ii) Each unit of limited liability company ownership interest of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and not be effected by the Subreit Merger.
(iii) Each Company Subreit Preferred Interest issued and outstanding immediately prior to the Subreit Merger Effective Time shall be converted into the right to receive the amount in cash, without interest, payable upon such Subreit Merger Effective Time in accordance with the terms of the amended and restated limited liability company agreement of the applicable Company Subreit and certificate of designation applicable to such Company Subreit Preferred Interest.
(b) At the HoldCo REIT Merger Effective Time, in accordance with the DLLCA, pursuant to this Agreement and by virtue of the HoldCo REIT Merger and without any action on the part of HoldCo REIT, TRS LLC, the Company, Parent, Merger Sub or the holders of any securities or interests of any of the foregoing:
(i) Each HoldCo REIT Common Share issued and outstanding immediately prior to the HoldCo REIT Merger Effective Time shall be cancelled automatically and shall cease to exist and shall be converted into the right to receive after the Effective Time an amount of consideration from Merger Sub equal to the value of such HoldCo REIT Common Share, which right to receive consideration will automatically terminate upon the Company Merger.
(ii) Each unit of limited liability company ownership interests of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and not be effected by the HoldCo REIT Merger.
(iii) Each HoldCo REIT Preferred Interest issued and outstanding immediately prior to the HoldCo REIT Merger Effective Time shall be converted into the right to receive the amount in cash, without interest, payable upon such the Holdco REIT Merger Effective Time in accordance with the terms of the amended and restated limited liability company agreement of HoldCo REIT and certificate of designation of the HoldCo REIT Preferred Interests.
(c) At the TRS Merger Effective Time, in accordance with the DLLCA, pursuant to this Agreement and by virtue of the TRS Merger and without any action on the part of
TRS LLC, the Company, Parent, Merger Sub or the holders of any securities or interests of any of the foregoing:
(i) the limited liability company interests of TRS LLC shall be cancelled automatically and shall cease to exist and shall be converted into the right to receive after the Effective Time an amount of consideration from Merger Sub equal to the value of such limited liability company ownership interests, which right to receive consideration will automatically terminate upon the Company Merger.
(ii) Each unit of limited liability company ownership interests of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and not be effected by the TRS Merger.
(d) At the Effective Time, in accordance with the MGCL, pursuant to this Agreement and by virtue of the Company Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of the Shares:
(i) Each Share held by Parent, Merger Sub, the Company or any wholly owned Subsidiary of Parent, Merger Sub or the Company (in each case, other than any such Shares held on behalf of third parties) immediately prior to the Effective Time, if any, shall be cancelled and retired and shall cease to exist (such Shares to be so cancelled and retired, the Excluded Shares ), and no payment or distribution shall be made or delivered with respect thereto.
(ii) Each unit of limited liability company ownership interests of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and not be effected by the Merger.
(iii) Each Share issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares) automatically shall be cancelled and converted into the right to receive an amount in cash equal to the sum of $20.75 and the Additional Per Share Consideration, if any (such sum, the Merger Consideration ), without interest, payable to the holder thereof upon surrender or transfer (as applicable) of a certificate (a Certificate ) or a book-entry share (a Book-Entry Share ) formerly representing such Share in the manner provided in Section 2.6. Such Shares (including Shares into which Company Restricted Stock was converted) to be cancelled and converted into the right to receive the Merger Consideration shall sometimes be referred to herein as the Merger Shares . For purposes of this Agreement, Additional Per Share Consideration means, an amount in cash equal to $0.006 for each day during the period commencing on, and including, the date that is four (4) months after the date hereof and ending on, but excluding, the Closing Date.
(iv) Each share of Class A Preferred Stock issued and outstanding immediately prior to the Effective Time automatically shall be cancelled and converted into the right to receive an amount in cash equal to the amount such share of Class A Preferred Stock would have been entitled to receive had it been redeemed by the Company
immediately prior to the Effective Time in accordance with its terms (the Company Preferred Consideration .
(e) If, between the date of this Agreement and the Effective Time, the number of outstanding Shares is changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, split-up, combination or the like, other than pursuant to the Company Merger, the amount of Merger Consideration payable per Share and any other dependent items shall be appropriately adjusted to provide the holders of the Shares the same economic effect as contemplated by this Agreement prior to such action and as so adjusted shall, from and after the date of such event, be the Merger Consideration or other dependent items, subject to further adjustment in accordance with this Section 2.5(e).
(f) No dissenters or appraisal rights shall be available with respect to the Mergers.
Section 2.6 Payment of Cash for Merger Shares, Class A Preferred Stock, Subsidiary Preferred Interests and Company Equity Awards . (a) Prior to the Closing Date, Parent shall designate (x) a bank or trust company that is reasonably satisfactory to the Company to serve as the disbursing agent for the Merger Consideration, the Company Preferred Consideration and the payments in respect of the Subsidiary Preferred Interests pursuant to Section 2.5(a)(iii) and Section 2.5(b)(iii) (the Subsidiary Preferred Consideration ) and (y) the Surviving Entity or such bank or trust company to serve as the disbursing agent for payments in respect of the Company Equity Awards (as the case may be, the Disbursing Agent ). Prior to the Subreit Merger Effective Time, Parent will deposit, or will cause to be deposited, with the applicable Disbursing Agent cash in the aggregate amount sufficient to pay (i) the Merger Consideration in respect of all Merger Shares and Company Equity Awards outstanding immediately prior to the Effective Time, (ii) the Company Preferred Consideration and (iii) the Subsidiary Preferred Consideration (the Exchange Fund ). Pending distribution of the cash deposited with the Disbursing Agent, such cash shall be held for the benefit of the holders of Merger Shares, Class A Preferred Stock, Subsidiary Preferred Interests and Company Equity Awards outstanding immediately prior to the Effective Time and shall not be used for any other purpose.
(b) The Disbursing Agent shall invest any cash included in the Exchange Fund as directed by Parent or, after the Effective Time, the Surviving Entity; provided that (i) no such investment shall relieve Parent or the Disbursing Agent from their obligations to make the payments required by this Article II, (ii) no such investment shall have maturities that could prevent or delay payments to be made pursuant to this Agreement, and (iii) such investments shall be in short-term obligations of the United States with maturities of no more than thirty (30) days or guaranteed by the United States and backed by the full faith and credit of the United States, in commercial paper obligations rated A1 or P-1 or better by Moodys Investors Services, Inc. or Standard & Poors Corporation, respectively. Any net interest or income produced by such investments will be payable to the Surviving Entity or Parent, as directed by Parent.
(c) As promptly as practicable after the Effective Time, and in any event within three (3) Business Days after the Effective Time, the Surviving Entity shall send, or cause the Disbursing Agent to send, to each record holder of Merger Shares as of immediately prior to the Effective Time a letter of transmittal and instructions for exchanging their Merger Shares for
the Merger Consideration payable therefor. The letter of transmittal will be in customary form and will specify that delivery or transfer of Certificates or Book-Entry Shares will be effected, and risk of loss and title will pass, upon proper delivery of the Certificates or transfer of Book-Entry Shares to the Disbursing Agent. Upon surrender of such Certificate(s) or transfer of such Book-Entry Share(s) to the Disbursing Agent together with a properly completed and duly executed letter of transmittal (in the case of Certificates) and any other documentation that the Disbursing Agent may reasonably require, the record holder thereof shall be entitled to receive the Merger Consideration payable in exchange therefor, without interest. Until so surrendered (or transferred) and exchanged, each such Certificate or Book-Entry Share shall, after the Effective Time, represent only the right to receive the Merger Consideration in respect of such Certificate or Book-Entry Share, and until such surrender (or transfer) and exchange, no cash shall be paid to the holder of such outstanding Certificate or Book-Entry Share in respect thereof.
(d) If payment is to be made to a Person other than the registered holder of the Merger Shares formerly represented by the Certificate(s) or Book-Entry Share(s) surrendered (or transferred) in exchange therefor, it shall be a condition to such payment that the Certificate(s) or Book-Entry Share(s) so surrendered (or transferred) shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Disbursing Agent any applicable transfer and other similar Taxes required as a result of such payment to a Person other than the registered holder of such Merger Shares or establish to the satisfaction of the Disbursing Agent that such Taxes have been paid or are not payable.
(e) As promptly as practicable after the Effective Time, and in any event within three (3) Business Days after the Effective Time, Parent shall cause the Disbursing Agent to pay to the holders of record of the shares of Class A Preferred Stock and Subsidiary Preferred Interests, the Company Preferred Consideration and the Subsidiary Preferred Consideration in accordance with the terms of this Agreement and the Class A Preferred Stock or Subsidiary Preferred Interests, as applicable.
(f) At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further transfers on the stock transfer books of the Company of the Shares or the shares of Class A Preferred Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Entity, Parent or the Disbursing Agent, such Certificates or Book-Entry Shares shall be exchanged for the Merger Consideration in accordance with the procedures set forth in this Article II.
(g) If any cash deposited with the Disbursing Agent remains unclaimed twelve (12) months after the Effective Time, such cash shall be returned to Parent or the Surviving Entity upon demand, and any holder who has not surrendered (or transferred) such holders Certificate(s) or Book-Entry Share(s) for the Merger Consideration payable in respect thereof prior to that time shall thereafter look only to the Surviving Entity for payment of the Merger Consideration. The foregoing notwithstanding, none of Parent, Merger Sub, the Company, the Surviving Entity, the Disbursing Agent or any of their respective directors, officers, employees and agents shall be liable to any holder of Certificates or Book-Entry Shares for an amount paid to a public official pursuant to any applicable unclaimed property Law. Any amounts remaining unclaimed by holders of Certificates or Book-Entry Shares as of the date on which such amounts
would otherwise escheat to or become property of any Governmental Authority shall, to the extent permitted by Law, become the property of the Surviving Entity on such date, free and clear of any claims or interest of any Person previously entitled thereto.
(h) From and after the Effective Time, the holders of Merger Shares, shares of Class A Preferred Stock or Subsidiary Preferred Interests outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Merger Shares, shares of Class A Preferred Stock or Subsidiary Preferred Shares, other than the right to receive the Merger Consideration, Company Preferred Consideration or Subsidiary Preferred Consideration, as applicable, as provided in this Agreement.
(i) In the event that any Certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, in addition to the posting by such holder of any bond in such reasonable amount as the Surviving Entity or the Disbursing Agent may direct as indemnity against any claim that may be made against the Surviving Entity or the Disbursing Agent with respect to such Certificate, the Disbursing Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration in respect thereof entitled to be received pursuant to this Agreement.
(j) Parent, the Surviving Entity and the Disbursing Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement any amounts required to be deducted and withheld with respect to the making of such payment under any applicable Tax Law. To the extent any amounts are so deducted and withheld and paid over to the applicable Governmental Authority, such deducted or withheld amounts shall be treated for all purposes as having been paid to the person in respect of which such deduction and withholding was made.
Section 2.7 Treatment of Company Equity Awards .
(a) At the Effective Time, each Company Option that is outstanding immediately prior to the Effective Time and subject solely to service-based vesting conditions (each, a Service-Based Company Option ), whether vested or unvested, shall, by virtue of this Agreement and without any action on the part of the holder thereof, become fully vested and exercisable and be converted into the right to receive an amount in cash equal to the product of (i) the excess, if any, of the Merger Consideration over the exercise price per Share of such Service-Based Company Option and (ii) the number of Shares subject to the Service-Based Company Option. Any Service-Based Company Option that has an exercise price that is equal to or exceeds the Merger Consideration shall be cancelled for no consideration.
(b) At the Effective Time, each Company Option that is outstanding immediately prior to the Effective Time and subject to performance-based vesting conditions (each, a Performance-Based Company Option ), shall, by virtue of this Agreement and without any action on the part of the holder thereof, become vested and exercisable to the extent provided for in the applicable award agreement relating to such Performance-Based Company Option and each such Performance-Based Company Option that becomes so vested and exercisable shall be converted into the right to receive an amount in cash equal to the product of (i) the excess, if any, of the Merger Consideration over the exercise price per Share of such Performance-Based Company
Option and (ii) the number of Shares subject to the Performance-Based Company Option. Any Performance-Based Company Option that does not become vested or exercisable in accordance with the immediately preceding sentence or that has an exercise price that is equal to or exceeds the Merger Consideration shall be cancelled for no consideration.
(c) At the Effective Time, each Company Restricted Stock Award that is outstanding immediately prior to the Effective Time shall be cancelled and converted automatically into the right to receive an amount in cash equal to the Merger Consideration in respect of each Share subject to such Company Restricted Stock Award immediately prior to the Effective Time (determined, in the case of Company Restricted Stock Awards subject to performance-based vesting conditions, assuming applicable performance goals are fully satisfied).
(d) At the Effective Time, each Company RSU Award that is outstanding immediately prior to the Effective Time shall fully vest (to the extent unvested) and shall be cancelled and converted automatically into the right to receive an amount in cash equal to the Merger Consideration in respect of each Share underlying such Company RSU Award immediately prior to the Effective Time.
(e) The Surviving Entity shall pay the amounts described in this Section 2.7 (together with any accrued but unpaid dividends or dividend equivalents corresponding to the Company Restricted Stock Awards and Company RSU Awards, respectively, that vest in accordance with Section 2.7(c) and Section 2.7(d)), less applicable Tax withholdings, as soon as administratively practicable (and, in any event, within five (5) Business Days) following the Closing Date. Notwithstanding the immediately preceding sentence, to the extent that payment of the amounts described in this Section 2.7 with respect to Company Equity Awards that constitute nonqualified deferred compensation subject to Section 409A of the Code would otherwise cause the imposition of a Tax or penalty under Section 409A of the Code, Parent shall cause the Surviving Entity to make such payment at the earliest time permitted under the Company Stock Plan and applicable award agreement that would not result in the imposition of such Tax or penalty.
(f) Prior to the Effective Time, the Company, the Board of Directors of the Company and/or its compensation committee, as applicable, shall adopt any resolutions and take any actions that are necessary to (i) effectuate the provisions of this Section 2.7 and (ii) ensure that the Company Stock Plan shall terminate as of the Effective Time.
Section 2.8 Intended Income Tax Treatment of the Mergers . Each of the parties hereto hereby agrees to treat, for U.S. federal and state income tax purposes, (i) each of the Mergers as a taxable sale or exchange by the relevant merging entity of all of its assets to and the assumption of all of its liabilities by Merger Sub, followed by a liquidation of the relevant merging entity under Sections 331 or 332 of the Code (which in the case of the Subreit Mergers, the Holdco REIT Merger and the Company Merger shall be deemed to give rise to a distribution under Section 562(b) of the Code), (ii) this Agreement as a plan of liquidation of each of the merging entities for U.S. federal income tax purposes, and (iii) such deemed sales, assumptions and liquidations as occurring in the order in which the Subreit Merger, the Holdco REIT Merger, the TRS Merger and the Company Merger occur and the parties hereto shall not take any position
contrary thereto in any U.S. federal income Tax Return or tax proceeding unless otherwise required by Law.
ARTICLE III
THE SURVIVING ENTITY
Section 3.1 Articles of Organization and Operating Agreements . Without limiting Parents obligations pursuant to Section 7.5, at the Effective Time, (a) the certificate of formation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the certificate of formation of the Surviving Entity and (b) the limited liability company operating agreement of Merger Sub, as in effect immediately prior to the Effective Time, shall be the limited liability company operating agreement of the Surviving Entity, in each case, until thereafter amended in accordance with applicable Law and the applicable provisions of such articles of organization and operating agreement.
Section 3.2 Managers and Officers . From and after the Effective Time, (a) the managers, if any, of Merger Sub immediately prior to the Effective Time shall be the managers of the Surviving Entity and (b) the officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Entity, in each case until their respective successors are duly elected or appointed and qualified in accordance with Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as disclosed in the disclosure letter delivered to Parent by the Company concurrently with the execution and delivery of this Agreement (the Company Disclosure Letter ) (it being agreed that the disclosure of any matter in any section in the Company Disclosure Letter shall be deemed to have been disclosed in any other section in the Company Disclosure Letter to which the applicability of such disclosure is reasonably apparent on the face of such disclosure), (b) as disclosed in publicly available filings or submissions in connection with the Bankruptcy Case on or prior to the date hereof or (c) as may be expressly disclosed in publicly available Company SEC Reports (including documents incorporated by reference therein) filed with or furnished to the SEC on or after October 14, 2016 and prior to the date of this Agreement (but excluding any disclosures set forth in any risk factor section or in the forward-looking statements section of any such Company SEC Report, or any other forward-looking disclosures set forth in any such Company SEC Report that are non-specific and cautionary in nature), the Company hereby represents and warrants to Parent as follows:
Section 4.1 Corporate Existence and Power . Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction, except where the failure to be so organized, existing and in good standing would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Each of the Company and its Subsidiaries has all corporate or similar powers and authority required to own, lease and operate its respective properties and facilities and carry on its business as now conducted, except where the failure to have such power and authority would not
be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Each of the Company and its Subsidiaries is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties, facilities and assets owned or leased or operated by it makes such qualification necessary, except where the failure to be so licensed or qualified would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.2 Corporate Authorization . (a) Each of the Company, the Company Subreits and TRS LLC has full corporate power and authority to execute and deliver this Agreement and, subject to receipt of the Requisite Stockholder Vote, to consummate the Mergers and to perform each of its obligations hereunder. The execution, delivery and performance by each of the Company, the Company Subreits and TRS LLC of this Agreement and the consummation by the Company, the Company Subreits and TRS LLC of the Mergers and the other transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company (and the board of directors or sole member of the Company Subreits and TRS LLC). Except for the approval of the Company Merger by the affirmative vote of the holders of a majority of the outstanding Shares (the Requisite Stockholder Vote ) and the approval by HoldCo REIT, TRS LLC and the Company as the holders of Company Subreit Common Shares, HoldCo REIT Common Shares and the limited liability company interests of TRS LLC, as applicable, no other corporate proceedings on the part of the Company, the Company Subreits or TRS LLC or vote of the securityholders of the Company, the Company Subreits or TRS LLC is necessary to approve the Mergers or otherwise in order for the Company, the Company Subreits or TRS LLC to consummate the Mergers and the other transactions contemplated hereby. The Board of Directors of the Company, at a duly held meeting has (i) determined that the Mergers and this Agreement are in the best interests of the Company, the Company Subreits, TRS LLC and the Companys stockholders, (ii) approved the Mergers and the execution, delivery and performance of this Agreement, and (iii) resolved to recommend that the Company stockholders approve the Company Merger, and directed that such matter be submitted for consideration by the stockholders of the Company at the Company Stockholder Meeting. The Company has made available to Parent, prior to the date of this Agreement, complete and accurate copies of the Articles of Amendment and Restatement of the Company (the Company Articles ), the articles of organization or certificates of formation of the Company Subreits and TRS LLC, the Amended and Restated Bylaws of the Company (the Company Bylaws ) and the bylaws or limited liability company operating agreements of the Company Subreits and TRS LLC.
(b) This Agreement has been duly and validly executed and delivered by the Company, the Company Subreits and TRS LLC and, assuming the due and valid authorization, execution and delivery of this Agreement by Parent and Merger Sub, constitutes a legal, valid and binding agreement of the Company, the Company Subreits and TRS LLC enforceable against the Company, the Company Subreits and TRS LLC in accordance with its terms.
(c) Upon request of Parent, the Company shall make available to Parent copies of the organizational or governing documents of its Subsidiaries.
Section 4.3 Governmental Authorization . The execution, delivery and performance by the Company of this Agreement and the consummation of the Mergers by the Company,
the Company Subreits and TRS LLC do not require any consent, approval, authorization or Permit of, action by, filing with or notification to any Governmental Authority, other than (a) the filing and acceptance for record of the Requisite Merger Filings; (b) compliance with the applicable requirements of the Exchange Act, including the filing of the Company Proxy Statement; (c) compliance with the rules and regulations of the New York Stock Exchange; (d) compliance with any applicable foreign or state securities or Blue Sky laws; (e) the notices and approvals of state licensing authorities or other Governmental Authorities governing or with jurisdiction over the Company Facilities, as applicable, required to consummate the Plan Closing, including the expiration of any applicable waiting periods; and (f) any such consent, approval, authorization, Permit, action, filing or notification the failure of which to make or obtain would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company nor reasonably be expected to adversely affect in any material respect, or prevent or materially delay, the consummation of the Mergers or the ability of the Company to observe and perform its obligations hereunder. No consent, approval, authorization or Permit of, action by, filing with or notification to any Governmental Authority is required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the execution, delivery and performance by the Company, the Company Subreits or TRS LLC of this Agreement and the consummation of the Mergers.
Section 4.4 Non-Contravention . Assuming receipt of the Requisite Stockholder Vote and compliance with, or receipt of, the approvals referred to in, and expiration of any applicable waiting periods referred to in, Section 4.3, the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Mergers do not and will not (a) contravene or conflict with the organizational or governing documents of the Company or any of its Subsidiaries; (b) contravene or conflict with or constitute a violation of any provision of any Law binding upon or applicable to the Company or any of its Subsidiaries; or (c) require the consent, approval, authorization of, or notification or filing with any third party with respect to, result in any breach or violation of or constitute (or will, with notice or lapse of time or both, constitute) a default under, or give rise to any right of termination, cancellation, amendment or acceleration of any obligation (each, a Violation ) of the Company or any of its Subsidiaries under any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties or assets are bound, except, in the case of clauses (b) and (c) above, which would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company nor reasonably be expected to adversely affect in any material respect, or prevent or materially delay, the consummation of the Merger or the ability of the Company to observe and perform its obligations hereunder.
Section 4.5 Capitalization . (a) The authorized capital stock of the Company consists of 200,000,000 Shares and 50,000,000 shares of preferred stock, par value $0.01 per share ( Preferred Stock ), of which Preferred Stock 2,000 shares have been designated as Class A Preferred Stock (the Class A Preferred Stock ).
(b) As of the date of this Agreement, there were:
(i) 94,196,282 Shares issued and outstanding, of which 541,648 Shares were Shares underlying unvested Company Restricted Stock Awards (assuming applicable performance conditions are fully satisfied);
(ii) 2,000 shares of Class A Preferred Stock issued and outstanding;
(iii) 5,276,822 Shares reserved for issuance pursuant to outstanding Company Options; and
(iv) 581,892 Shares reserved for issuance pursuant to outstanding Company RSU Awards.
All outstanding Shares are duly authorized, validly issued, fully paid and non-assessable, and are not subject to and were not issued in violation of any preemptive or similar right, purchase option, call or right of first refusal or similar right. As of the date of this Agreement, zero (0) Shares were held in the treasury of the Company.
(c) Except as set forth in Section 4.5(a) and Section 4.5(b) and for 3,007,320 Shares reserved for issuance pursuant to the Company Stock Plans, as of the date of this Agreement, there have not been reserved for issuance, and there are no outstanding: (i) shares of capital stock or other voting securities of the Company; (ii) securities of the Company or any Subsidiary of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company; (iii) Company Equity Awards or other rights or options to acquire from the Company, or obligations of the Company to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of the Company; or (iv) equity equivalent interests in the ownership or earnings of the Company or other similar rights in respect of the Company (the securities described in clauses (i) through (iv) are collectively referred to herein as the Company Securities ). There are no outstanding obligations of the Company or any Subsidiary of the Company to repurchase, redeem or otherwise acquire any Company Securities, except for the Companys agreement to acquire the Shares for withholding tax payments upon vesting of equity awards or for the Companys obligations with respect to the Class A Preferred Stock. There are no preemptive rights of any kind which obligate the Company or any Subsidiary of the Company to issue or deliver any Company Securities. There are no shareholder agreements, voting trusts or other agreements or understandings to which the Company or any Subsidiary of the Company is a party or by which it is bound relating to the voting or registration of any shares of capital stock of the Company, or preemptive rights with respect thereto.
(d) No bonds, debentures, notes or other Indebtedness having the right to vote on any matters on which Company stockholders may vote are outstanding.
(e) Section 4.5(e) of the Company Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of each Subsidiary of the Company, together with (x) the jurisdiction of incorporation or organization, as the case may be, of each such Subsidiary, and (y) the percentage of interest held, directly or indirectly, by the Company or its Subsidiaries in each such Subsidiary. No capital stock or other equity interests of the Companys Subsidiaries
are, or may become, issuable pursuant to any outstanding convertible or similar security, instrument or agreement. Except with respect to Manager and its Subsidiaries (or any other Person in which the Manager or its Subsidiaries own any securities or equity interests) and except as set forth in Section 4.5(e) of the Company Disclosure Letter or as would not reasonably be expected to be material to Parent or the Company, the Company does not, directly or indirectly, own, of record or beneficially, any outstanding voting securities or other equity interests in any Person (it being understood and agreed that ownership of securities possessing (i) more than ten percent (10%) of the total voting power of the outstanding voting securities of any Person that is not wholly owned, or (ii) more than ten percent (10%) of the total value of the outstanding securities of any such Person that is not wholly-owned shall be deemed to be material to the Company or Parent). With respect to this representation, the term securities includes both equity and debt securities (including secured and unsecured debt) of an issuer, and value means (A) fair value as determined in good faith by the Board of Directors of the Company or (B) in the case of securities for which market quotations are readily available, the market value of such securities.
(f) All the outstanding shares of capital stock or voting securities, or other equity interests, directly or indirectly owned by the Company, in each Subsidiary of the Company, have been validly issued and are fully paid and nonassessable and are owned, free and clear of all Liens, other than Permitted Liens, other than restrictions imposed by securities Laws.
Section 4.6 Reports and Financial Statements . (a) The Company has filed or furnished all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed or furnished by it with the SEC since October 14, 2016 (all such forms, reports, statements, certificates and other documents filed with or furnished to the SEC since October 14, 2016, with any amendments thereto, collectively, the Company SEC Reports ), each of which, including any financial statements or schedules included therein, as finally amended prior to the date hereof, complied as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ), as the case may be, and the rules and regulations of the SEC promulgated thereunder. None of the Companys Subsidiaries is required to file periodic reports with the SEC. None of the Company SEC Reports contained, when filed with the SEC or, if amended, as of the date of the last amendment prior to the date of this Agreement, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements of the Company and its Subsidiaries included (or incorporated by reference) in the Company SEC Reports (including the related notes and schedules, where applicable) fairly presents in all material respects the results of the consolidated operations and changes in shareholders equity and consolidated financial position of the Company and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject, in the case of unaudited statements, to normal year-end adjustments and other adjustments described therein, including the notes thereto). Each of such consolidated financial statements (including the related notes and schedules, where applicable) complied, as of the date of filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC applicable thereto and each of such financial statements (including the related notes and schedules, where applicable) were prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC), consistently applied during the periods involved, except in each case as indicated in such statements or in the notes thereto. The Company has made available to Parent complete and correct copies of (i) all management representation letters delivered by the Company or its management to the Companys auditors in connection with the audit of the Companys 2017 consolidated financial statements and (ii) all material correspondence of the Company with the SEC from October 14, 2016 to the date hereof (if any).
(c) The Company has disclosed, based on its most recent evaluation of internal control over financial reporting, to Parent, the Companys independent accountants and the audit committee of the Board of Directors of the Company any (i) significant deficiency in the Companys internal controls over financial reporting that are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information, (ii) material weakness in the Companys internal controls over financial reporting that are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information or (iii) fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the Companys internal controls over financial reporting. There is no outstanding significant deficiency or material weakness which the Companys independent accountants certify has not been appropriately and adequately remedied by the Company. For purposes of this Agreement, the terms significant deficiency and material weakness shall have the meanings assigned to them in Auditing Standard No. 5 of the Public Company Accounting Oversight Board, as in effect on the date of this Agreement.
(d) The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Companys disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to the Companys management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.
Section 4.7 No Undisclosed Liabilities . Except (a) as reflected or reserved against on the consolidated balance sheets (including the related notes and schedules thereto) of the Company as of December 31, 2017 (the Balance Sheet Date ) included in the Company SEC Reports, (b) liabilities and obligations incurred under or in accordance with this Agreement or in connection with the transactions contemplated by this Agreement, (c) for liabilities and obligations incurred since the Balance Sheet Date in the ordinary course of business and consistent with past practice, and (d) for liabilities and obligations that have been discharged or paid in full, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its consolidated Subsidiaries, other than those which have not had, and would not have, individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.8 Disclosure Documents . The Company Proxy Statement will not, at the date it is first mailed to stockholders of the Company, and at the time of the Company Stockholder Meeting (other than as to information supplied by Parent, Merger Sub or any of their respective Affiliates, for inclusion therein), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Company will cause the Company Proxy Statement to comply as to form in all material respects with the requirements of the Exchange Act applicable thereto and any other Law as of the date of such filing. No representation is made by the Company with respect to statements made in the Company Proxy Statement based on information supplied by Parent, Merger Sub or their respective Affiliates for inclusion therein.
Section 4.9 Absence of Certain Changes or Events . (a) From the Balance Sheet Date through the date of this Agreement, (i) the Company and its Subsidiaries have conducted their respective businesses in all material respects in the ordinary course consistent with past practice, and (ii) neither the Company nor any of its Subsidiaries has taken any action, or omitted to take any action, that would constitute a breach of any of Section 6.1(r) or Section 6.1(u) (as it relates to Section 6.1(r)), if taken or omitted to be taken after the date of this Agreement.
(b) From the Balance Sheet Date through the date of this Agreement, no change, event or development has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
(c) From the date of this Agreement, there has not been any change, event or development that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.10 Finders Fees . Except for Goldman, Sachs & Co. and Lazard Frères & Co. LLC, no agent, broker, investment banker, financial advisor or other firm or Person retained by the Company is or will be entitled to any brokers or finders fee or any other similar commission or fee payable by the Company or any Subsidiary of the Company in connection with any of the transactions contemplated by this Agreement.
Section 4.11 Opinion of Financial Advisor . Goldman, Sachs & Co. and Lazard Frères & Co. LLC each has delivered to the Board of Directors of the Company an opinion to the effect that, as of the date of this Agreement, the Merger Consideration to be received by the stockholders of the Company is fair, from a financial point of view, to such stockholders. A true and correct copy of each such opinion will be provided by the Company to Parent solely for informational purposes.
Section 4.12 Compliance with Laws . (a) Since October 31, 2016, the Company and each of its Subsidiaries has been in compliance with all Laws applicable to the Company, its Subsidiaries, and their respective businesses and activities, except for such noncompliance that has not had, and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Since October 31, 2016, none of the Company or its Subsidiaries has received written notice from any Governmental Authorities of any actual or alleged
noncompliance, default or violation of any such Laws, except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
(b) The Company and each of its Subsidiaries has and maintains in full force and effect, and is in compliance with, all Permits and all orders from Governmental Authorities necessary for the Company and each of its Subsidiaries to carry on their respective businesses as currently conducted and currently proposed to be conducted, except as has not had, and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
(c) To the Knowledge of the Company, the Company is in compliance with the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder, except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.13 Employee Matters . (a) Section 4.13(a) of the Company Disclosure Letter sets forth a list of each material Company Benefit Plan. The Company has made available to Parent true and correct copies of each material Company Benefit Plan.
(b) Each Company Benefit Plan has been established, maintained and administered in accordance with its terms and Laws, except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. There are no actions, suits or claims pending (other than routine claims for benefits) or, to the Knowledge of the Company, threatened or anticipated, with respect to any such Company Benefit Plan that have had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter, and, to the Knowledge of the Company, there are no circumstances that would reasonably be expected to result in the revocation of such letter.
(c) None of the Company, any of its Subsidiaries or any of their respective ERISA Affiliates has, at any time during the last six (6) years, sponsored, maintained, administered, contributed to or been obligated to contribute to any Multiemployer Plan or a plan that has two or more contributing sponsors at least two of whom are not under common control (within the meaning of Section 4063 of ERISA).
(d) Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (i) there does not now exist, nor do any circumstances exist that would reasonably be expected to result in, any Controlled Group Liability that would be a liability of the Company or any of its Subsidiaries following the Effective Time, and (ii) neither the Company nor any of its Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any transaction described in Section 4069 or Section 4204 or 4212 of ERISA.
(e) Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, all contributions required to be made to any Company Benefit Plan by applicable Law or by any plan document or other contractual undertaking,
and all premiums due or payable with respect to insurance policies funding any Company Benefit Plan, for any period through the date hereof have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the Companys financial statements.
(f) Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will, either alone or in conjunction with any other event (whether contingent or otherwise), (i) result in any payment or benefit becoming due or payable, or required to be provided, to any Company Employee or director or individual independent contractor of the Company or any of its Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such individual, or (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit or compensation. No amount paid or payable (whether in cash, in property, or in the form of benefits) by the Company or any of its Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with any other event) will be an excess parachute payment within the meaning of Section 280G of the Code.
(g) Neither the Company nor any of its Subsidiaries has any material liability with respect to an obligation to provide health or other non-pension benefits to any Person beyond his or her retirement other than coverage mandated by Law.
(h) Each Company Benefit Plan that is a nonqualified deferred compensation plan within the meaning of Section 409A(d)(1) of the Code has been operated in good-faith compliance in all material respects with Section 409A of the Code.
(i) There is no agreement, plan or other arrangement to which any of the Company or any Subsidiary is a party or by which any of them is otherwise bound to compensate any person in respect of taxes or other liabilities incurred with respect to Section 409A or 4999 of the Code.
Section 4.14 Labor Matters .
(a) There are no collective bargaining or other labor union agreements to which the Company or any of its Subsidiaries is a party. To the Knowledge of the Company, as of the date hereof, there is no pending or threatened material union organization or activity, strike, work stoppage or lockout involving any employees of the Company or any of its Subsidiaries.
(b) Except for such noncompliance that has not had, and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, the Company and its Subsidiaries are in compliance with all laws respecting employment and employment practices, terms and conditions of employment, collective bargaining, worker classification, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment and workers compensation.
Section 4.15 Litigation . There is no litigation, arbitration, claim, investigation, suit, action or proceeding pending (each, an Action ) or, to the Knowledge of the Company,
threatened in writing against the Company, any of its Subsidiaries or any director, officer or employee of any of the Company or any of its Subsidiaries, except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The Company is not subject to any Order of a Governmental Authority, except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.16 Tax Matters . Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company:
(a) (i) The Company and each of its Subsidiaries have timely filed, or have had timely filed on their behalf, (taking into account extensions) all Tax Returns required to be filed by any of them, (ii) all such Tax Returns are true, correct and complete, and (iii) the Company and each of its Subsidiaries have timely paid in full (or have had timely paid in full on their behalf) all Taxes required to be paid by any of them, whether or not reflected on a Tax Return, except in the case of each of clauses (i) through (iii), with respect to Taxes that are being contested in good faith or for which adequate provision has been made in accordance with GAAP.
(b) (i) Each of the Company and each Company Subreit (A) at all times since its taxable year commencing with the taxable year ended on December 31, 2016 (the Initial REIT Year ) and through the Effective Time, has been and will be treated as a real estate investment trust (a REIT ) within the meaning of Section 856 of the Code, (B) at all times during its Initial REIT Year and through the Effective Time (assuming for this purpose that the Company and each Company Subreit is liquidated as of the Effective Date as set forth herein), has been organized and operated, and will continue to be organized and operated, in conformity with the requirements for qualification and taxation as a REIT and in such a manner such that it continues to qualify as a REIT, and (C) has not taken or failed to take any action, which action or failure to act could reasonably be expected to result in the failure of the Company or any of the Company Subreits to qualify as a REIT, and no challenge to the status or qualification of the Company or any of the Company Subreits as a REIT is pending or threatened in writing. HCP 2010 REIT, LLC was treated as a REIT within the meaning of Section 856 of the Code for its taxable year beginning January 1, 2016.
(c) Section 4.16(c) of the Company Disclosure Letter sets forth each Subsidiary of the Company, other than the Company Subreits, and its classification for U.S. federal income tax purposes. Each entity, other than the Company Subreits, that is listed on Section 4.16(c) of the Company Disclosure Letter as a partnership, joint venture, or limited liability company has, since the later of the date of its formation and the date on which the Company acquired an interest in such entity, been treated for U.S. federal income tax purposes as a partnership or disregarded entity, as the case may be, and not as a corporation or an association taxable as a corporation. Each entity that is listed on Section 4.16(c) of the Company Disclosure Letter as a corporation has timely and properly elected, as of the later of the date of its formation and date on which the Company acquired an interest in such entity, to be treated for U.S. federal income tax purposes as a taxable REIT subsidiary pursuant to Section 856(l) of the Code (a TRS ). No Subsidiary of the Company has been or is treated as a qualified REIT subsidiary pursuant to Section 856(i) of the Code (a QRS ).
(d) Neither the Company nor any of its Subsidiaries holds any asset the disposition of which would be subject to (or rules similar to) Section 337(d) or Section 1374 of the Code.
(e) For all taxable years commencing with the taxable year ended on December 31, 2016, (i) none of the Company or any of its Subsidiaries has incurred (A) any liability for Taxes under Sections 857(b), 857(f), 860(c) or 4981 of the Code or Section 337(d) of the Code (and the applicable Treasury Regulations) or (B) any liability for Taxes that have become due and that have not been previously paid other than in the ordinary course of business, (ii) neither the Company nor any of its Subsidiaries (other than a TRS or any direct subsidiary of a TRS) has engaged at any time in any prohibited transaction within the meaning of Section 857(b)(6) of the Code and (iii) no event has occurred, and no condition or circumstances exists, which presents a risk that any material Tax described in clause (i) or (ii) above will be imposed on the Company or any of its Subsidiaries.
(f) No deficiencies for Taxes with respect to the Company or any of its Subsidiaries have been claimed, proposed, or assessed in writing by any Governmental Authority, which claim, proposal, or assessment is currently pending and has not been satisfied by payment in full, settled or withdrawn. Neither the Company nor any of its Subsidiaries has granted any currently effective extension or waiver of the period of limitations applicable to any Tax Return, which period (after giving effect to such extension or waiver) has not yet expired. There are no Tax proceedings pending or threatened in writing for and/or in respect of any material Taxes or material Tax Returns of the Company or any of its Subsidiaries and none of the Company or its Subsidiaries is a party to any litigation or administrative proceeding relating to material Taxes.
(g) Each of the Company and its Subsidiaries has complied with all applicable Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442 and 3402 of the Code or any similar provision of any other Laws).
(h) Neither the Company nor any of its Subsidiaries (1) has been a member of an affiliated group filing a consolidated U.S. federal income Tax Return or (2) has liability for Taxes of any Person (other than the Company and its Subsidiaries under Treasury Regulations Section 1.1502-6 or any similar provision of state, local or foreign Tax Law).
(i) Other than the Tax Matters Agreement, there are no Tax allocation or sharing agreements or similar arrangements to which the Company or any of its Subsidiaries is a party, and after the Closing Date neither the Company nor any of its Subsidiaries shall be bound by any such Tax allocation agreements or similar arrangements, in each case, other than customary provisions in agreements or arrangements the primary subject of which is not Taxes .
(j) There are no Liens for Taxes upon any property or assets of the Company or any of its Subsidiaries other than Permitted Liens.
(k) Neither the Company nor any of its Subsidiaries has participated in a listed transaction (as defined in Treasury Regulations Section 1.6011-4).
(l) Neither the Company nor any of its Subsidiaries (other than taxable REIT subsidiaries) has any accumulated earnings and profits attributable to any non-REIT year (within the meaning of Section 857(a)(2)(B) of the Code).
(m) Neither the Company nor any of its Subsidiaries has received or is subject to any ruling of a Governmental Authority that is still binding on the Company or any of its Subsidiaries or has any request for such ruling pending with any Governmental Authority.
It is agreed and understood that the only representations and warranties made in this Agreement by the Company with respect to Taxes are those set forth in this Section 4.16 and in Section 4.13.
Section 4.17 Environmental Matters . (a) Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company: (i) neither the Company nor any of its Subsidiaries has received any written notice, demand or complaint alleging that the Company or any of its Subsidiaries is in violation of, or liable under, any applicable Environmental Law or that any judicial, administrative or compliance order has been issued against the Company or any of its Subsidiaries which remains unresolved, (ii) no Action or request for information is pending or, to the Knowledge of the Company, is threatened in writing by any Governmental Authority against the Company or any of its Subsidiaries under any applicable Environmental Law; (iii) the Company and its Subsidiaries are in compliance with all Environmental Laws and all Permits required under Environmental Laws for the conduct of their respective business ( Environmental Permits ); (iv) to the Knowledge of the Company, the Company is not obligated to conduct or pay for, and is not conducting or paying for, any response or corrective action under any Environmental Law at any Company Real Property; (v) the Company is not party or subject to any order, judgment or decree that imposes any obligations under any Environmental Law; (vi) neither the Company nor any of its Subsidiaries has received any written complaint alleging that the Company or any of its Subsidiaries is in violation of or liable under any applicable Environmental Law relating to air quality or Microbial Matter at any Company Real Property; and (vii) to the Knowledge of the Company, (A) there has been no release or threatened release by the Company or its Subsidiaries of any Hazardous Materials on, in, under, or from any Company Real Property or real property formerly owned or operated by the Company or any of its Subsidiaries that requires or would reasonably be expected to result in remediation, monitoring or maintenance or any other liability under Environmental Law; (B) no Hazardous Materials have been disposed of, arranged to be disposed of, released or transported in violation of any applicable Environmental Law, or in a manner that has given rise to, or that would reasonably be expected to give rise to, any liability under any Environmental Law, in each case, on, at, under or from any current or former properties or facilities owned or operated by the Company or any of its Subsidiaries or as a result of any operations or activities of the Company or any of its Subsidiaries at any location; (C) none of the Company nor any of its Subsidiaries has given any release or waiver of liability that would waive or impair any claim based on the presence or release of Hazardous Materials in, on, from or under any real property against a previous owner of any real property or against any Person who may be potentially responsible for the presence or Release of Hazardous Substances in, on, from or under any such real property.
(b) Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company: (i) neither the Company nor any of its
Subsidiaries has received any written notice, citation, demand or complaint or request for information alleging that the Company or any of its Subsidiaries is in violation of, or liable under, any applicable Law, Order or binding agreement with any Governmental Authority relating to occupational health and safety ( Occupational Safety and Health Law ) or that any judicial, administrative or compliance order has been issued against the Company or any of its Subsidiaries under Occupational Safety and Health Law which remains unresolved and (ii) the Company and its Subsidiaries are in compliance with all Occupational Safety and Health Laws for the conduct of their respective businesses.
(c) For purposes of this Agreement:
(i) Environment means any ambient air, surface water, drinking water, groundwater, land surface (whether below or above water), subsurface strata, sediment, plant or animal life and natural resources.
(ii) Environmental Law means any applicable Law, Order or any binding agreement issued or entered by or with any Governmental Authority relating to: (w) the Environment, including pollution, contamination, cleanup, preservation, protection and reclamation of the Environment, (x) any Release or threatened Release of any Hazardous Materials, including investigation, assessment, testing, monitoring, containment, removal, remediation and cleanup of any such Release or threatened Release, (y) the management of any Hazardous Materials, including the use, labeling, processing, disposal, storage, treatment, transport, or recycling of any Hazardous Materials or (z) the presence of Hazardous Materials in any building, physical structure, product or fixture.
(iii) Hazardous Materials means any regulated pollutant or contaminant (including any constituent, raw material, product or by-product thereof), petroleum, natural gas, synthetic gas (including radon), Microbial Matter, asbestos or asbestos-containing material, polychlorinated biphenyls, lead paint, any hazardous industrial or solid waste, biohazardous waste, and any toxic, radioactive, infectious or hazardous substance, material or agent.
(iv) Microbial Matter means all hazardous fungi, bacterial or viral matter, including mold, mildew and viruses, whether or not such Microbial Matter is living.
It is agreed and understood that the only representations and warranties made in this Agreement by the Company with respect to Environmental Laws and environmental matters are those set forth in this Section 4.17.
Section 4.18 Intellectual Property . Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, the Company and its Subsidiaries own, or are validly licensed or otherwise have the right to use, the patents, patent rights, trademarks, trademark applications, trade names, service marks, service mark applications, logos, domain name registrations, registered copyrights and applications therefor, and other proprietary intellectual property rights arising under the laws of the United States to operate the business of the Company or any Subsidiary of the Company as operated as of the
date of this Agreement (the Company Intellectual Property ). Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, as of the date hereof, (a) no written claim by a third party of invalidity or conflicting ownership rights with respect to any Company Intellectual Property has been received by the Company and no such Company Intellectual Property is the subject of any pending or, to the Knowledge of the Company, threatened Action, and (b) no Person has given written notice to the Company or any of its Subsidiaries that the use of any Company Intellectual Property by the Company, any of its Subsidiaries or any licensee is infringing or has infringed any domestic or foreign registered patent, trademark, service mark, trade name, or copyright or design right, or that the Company, any Subsidiary of the Company or any licensee has misappropriated or disclosed any trade secret, confidential information or know-how.
Section 4.19 Real Property . (a) Section 4.19(a) of the Company Disclosure Letter sets forth a true and complete list of all real property owned by the Company or any of its Subsidiaries in fee simple as of the date hereof (the Owned Real Property ). With respect to each Owned Real Property, (i) the Company or a Subsidiary of the Company has valid title to such Owned Real Property, free and clear of all Liens other than Permitted Liens and (ii) there are no Contracts or binding letters of intent to which the Company or any of its Subsidiaries is a party to sell or ground lease, and outstanding options or rights of first refusal granted by the Company or any of its Subsidiaries in favor of any other party to purchase, such Owned Real Property or any portion thereof or interest therein, other than, in the case of clauses (i) and (ii) above, as have not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
(b) Section 4.19(b) of the Company Disclosure Letter sets forth a true and complete list of all leases or subleases (together with a list of all amendments thereto) to which the Company or a Company Subsidiary is a party (collectively, the Real Property Leases ). Except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, each Real Property Lease is valid, binding and in full force and there is no uncured default (or event which, with the giving of notice and the passage of time, or both, would constitute a default) under the Real Property Leases on the part of the Company or, as applicable, any of its Subsidiaries or, to the Knowledge of the Company, the landlord thereunder.
(c) Except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (i) neither the Company nor any of its Subsidiaries has received written notice of any existing zoning violations with respect to any Company Real Property, (ii) to the Knowledge of the Company, there are no pending Actions initiated by or on behalf of the Company or any of its Subsidiaries to change or redefine the zoning classification of all or any portion of any Company Real Property, (iii) neither the Company nor any of its Subsidiaries has received written notice of any Action of such kind, (iv) to the Knowledge of Company, there are no restrictions of record or zoning ordinances that would prohibit any Company Facility from being operated for its current use, and (v) to the Knowledge of Company, each Company Facility has adequate access to operate as it is currently being operated.
(d) The Company or its Subsidiarys fee simple or leasehold title to each Company Real Property is insured pursuant to a title insurance policy duly issued by a national title insurance company (each such policy, a Company Title Insurance Policy ), and, to the Knowledge of the Company and except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (i) each Company Title Insurance Policy is valid, in full force and effect, (ii) no claim has been made thereunder except as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and (iii) each Company Title Insurance Policy will remain in full force and effect following the Closing in accordance with its terms.
(e) Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect, (i) as of the date hereof, none of the Company or its Subsidiaries has received any written notice of any violation of any municipal, state, federal or homeowners association Law, rule or regulation concerning any Company Real Property and (ii) to the Knowledge of the Company, the Company Real Properties comply with all applicable zoning and other Laws, ordinances, regulations and deed restrictions and other recorded covenants.
(f) Each of the Company and its Subsidiaries has good and valid title to, or a valid and enforceable leasehold interest in, or other right to use, all personal property owned, used or held for use by it as of the date of this Agreement (other than property owned by tenants and used or held in connection with the applicable tenancy), except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.
Section 4.20 Material Contracts . (a) The Company has made available to Parent (or Parent has otherwise had access to) true, correct and complete copies of each Contract to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective properties or assets is bound (other than any of the foregoing between the Company, the Company Subreits and any of their respective wholly owned Subsidiaries or between any wholly owned Subsidiaries of the Company or the Company Subreits), as of the date hereof, that:
(i) is required to be filed by the Company as a material contract pursuant to Item 601(b)(10) of Regulation S-K promulgated under the Securities Act;
(ii) relates to (A) Indebtedness of the Company or any of its Subsidiaries, except for Contracts relating to less than $30 million of Indebtedness in the aggregate, or (B) the sale, securitization or servicing of loans or loan portfolios of the Company or any of its Subsidiaries;
(iii) would materially restrict the ability of Parent or its Subsidiaries (including the Surviving Entity) to compete in any line of business that is material to Parent and its Subsidiaries or in any geographic territory that is material to Parent and its Subsidiaries;
(iv) limits, restricts or prohibits the Company or any of its Subsidiaries from entering into or participating in any transaction or arrangement involving the investment in the Company or any of its Subsidiaries by any Person;
(v) relates to the acquisition or disposition, directly or indirectly (by merger or otherwise), not yet consummated, of material assets or capital stock or other equity interests of another Person or any Company Real Property;
(vi) is a Real Property Lease relating to a Company Facility;
(vii) by its terms calls for aggregate payment or receipt by the Company and its Subsidiaries under such Contract of more than $5 million per annum or $15 million over the remaining term of such Contract, other than Real Property Leases and the type of Contracts described in clause (ii) above and other than in the ordinary course of business procurement or sale Contracts for supplies of goods or services or Contracts that may be terminated without penalty upon ninety (90) days advance written notice or Contracts that cover the procurement or sale of supplies of goods or services;
(viii) could result in liability on the part of the Company or any of its Subsidiaries in respect of any purchase price adjustment, earn-out or contingent purchase price obligation;
(ix) is a Contract entered by the Company through its purchase department and that provides for (i) most favored nation rights with respect to existing or future Affiliates of the Company, or (ii) provides for exclusivity or any similar requirements in favor of any Person, other than ordinary course of business procurement or sale Contracts for supplies of goods or services or Contracts; or
(x) obligates the Company to make any capital commitment or expenditure (including pursuant to any renovation, construction or development project) in excess of $5 million per annum, excluding any payment obligation budgeted for in the Companys 2018 budget.
Each Contract of the type described in clauses (i) through (x) above is referred to herein as a Specified Contract .
(b) Except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, each Specified Contract is valid and binding on the Company and any Subsidiary of the Company that is a party thereto and, to the Knowledge of the Company, each other party thereto and is in full force and effect as of the date hereof. There is no Violation under any Specified Contract by the Company or any of its Subsidiaries or, to the Knowledge of the Company, by any other party, and no event has occurred that would constitute a Violation thereunder by the Company or any of its Subsidiaries, or to the Knowledge of the Company, by any other party, except in any such case which has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.21 Insurance . The Company has made available to Parent copies of all material insurance policies and all material fidelity bonds or other insurance service contracts maintained by or on behalf of the Company or its Subsidiaries, as of the date hereof, providing coverage for the material Company Real Property (the Company Insurance Policies ). Except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, each Company Insurance Policy is, as of the date hereof, in full force and effect and all premiums payable under each such Company Insurance Policy have been paid.
Section 4.22 Takeover Statutes . Assuming the accuracy of the representation contained in Section 5.9, no control share acquisition, fair price, moratorium, business combination or other anti-takeover Law is applicable to this Agreement or any transaction contemplated by this Agreement.
Section 4.23 No Rights Plan . There is no stockholder rights plan, poison pill anti-takeover plan or other similar device in effect to which the Company is a party or is otherwise bound that does not exempt therefrom Parent, Merger Sub and the transactions contemplated hereby.
Section 4.24 No Other Representations and Warranties . Except for the representations or warranties expressly set forth in this Article IV, neither the Company nor any of its Affiliates has made any representation or warranty, expressed or implied, with respect to the Company, its Subsidiaries, its and their businesses, operations, assets, properties, tenants, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Company or its Subsidiaries. Notwithstanding anything to the contrary in this Agreement, neither the Company nor any of its Affiliates has made any representation or warranty, expressed or implied, with respect to the Manager, its Subsidiaries, its and their businesses, operations, assets, properties, patients, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Manager or its Subsidiaries. The parties acknowledge that, for purposes of this Article IV and Article V, references to transactions contemplated hereby shall not include the Plan Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally hereby represent and warrant to the Company as follows:
Section 5.1 Entity Existence and Power . Parent is a corporation duly organized, validly existing and in good standing under the laws of Delaware, except where the failure to be so organized, existing and in good standing would not be reasonably expected to, individually
or in the aggregate, adversely affect in any material respect, or prevent or materially delay, the consummation of the Mergers or the ability of Parent or Merger Sub to observe and perform its obligations hereunder (a Material Adverse Effect on Parent ). Merger Sub is a limited liability company duly organized, validly existing and in good standing under the laws of Maryland. Each of Parent and Merger Sub has all corporate power and authority required to execute and deliver this Agreement and to consummate the Mergers and the other transactions contemplated hereby and to perform each of its obligations hereunder.
Section 5.2 Corporate Authorization . The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Mergers and the other transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Parent and the sole member of Merger Sub. No other corporate or other proceedings other than those previously taken or conducted on the part of Parent or Merger Sub are necessary to approve this Agreement or to consummate the Merger and the other transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due and valid execution and delivery of the Agreement by the Company, the Company Subreits and TRS LLC, constitutes a legal, valid and binding agreement of Parent and Merger Sub, respectively, enforceable against Parent and Merger Sub in accordance with its terms.
Section 5.3 Governmental Authorization . The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and other transactions contemplated hereby do not require any consent, approval, authorization or permit of, action by, filing with or notification to any Governmental Authority, other than (a) the filing and acceptance for record of the Requisite Merger Filings; (b) compliance with the applicable requirements of the Exchange Act; (c) compliance with the rules and regulations of the New York Stock Exchange; (d) compliance with any applicable foreign or state securities or Blue Sky laws; (e) the notices and approvals of state licensing authorities or other Governmental Authorities governing or with jurisdiction over the Company Facilities, as applicable, required to consummate the Plan Closing, including the expiration of any applicable waiting periods; and (f) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. No consent, approval, authorization or Permit of, action by, filing with or notification to any Governmental Authority is required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the execution, delivery and performance by Parent or Merger Sub of this Agreement and the consummation of the Mergers.
Section 5.4 Non-Contravention . The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Mergers and the other transactions contemplated hereby do not and will not (a) contravene or conflict with the organizational or governing documents of Parent or Merger Sub or their respective Subsidiaries, (b) assuming compliance with the items specified in Section 5.3, contravene, conflict with or constitute a violation of any provision of any Law binding upon or applicable to Parent or Merger Sub or any of their respective properties or assets or their respective Subsidiaries, or (c) require the consent, approval or authorization of, or notice to or filing with any third party with respect to, result in any breach or violation of or constitute a default, give rise to any
right of termination, cancellation, amendment or acceleration of any obligation of Parent or Merger Sub or their respective Subsidiaries under any Contract; except, in the case of clauses (b) and (c) above, which would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on Parent.
Section 5.5 Disclosure Documents . None of the information supplied or to be supplied by Parent or Merger Sub or any of their respective Affiliates specifically for inclusion in the Company Proxy Statement will, at the date it is first mailed to stockholders of the Company, at the time of any amendments thereof or supplements thereof and at the time of the Company Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
Section 5.6 Finders Fees . Except for Barclays Capital Inc., no agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any brokers or finders fee or any other similar commission or fee payable by Parent or Merger Sub in connection with any of the transactions contemplated by this Agreement.
Section 5.7 Financing .
(a) Parent has delivered to the Company true, correct and complete copies of (i) the fully executed debt commitment letter, dated as of the date hereof, between Parent and Barclays Bank PLC, including all annexes, schedules and exhibits thereto, pursuant to which Barclays Bank PLC has agreed, subject only to the conditions to availability set forth in the Financing Commitment Letter, to provide Parent with debt financing in the amounts set forth therein for the purposes of financing the transactions contemplated hereby and the Plan Transactions (as amended, supplemented, replaced or otherwise modified in accordance with the terms thereof and of this Agreement, the Financing Commitment Letter ; the financing intended to be incurred pursuant to the Financing Commitment Letter, as it may be amended, supplemented, replaced or otherwise modified in accordance with the terms of this Agreement, the Debt Financing ) and (ii) the fully executed fee letter referred to in the Debt Commitment Letter (as amended, supplemented, replaced or otherwise modified in accordance with the terms thereof and of this Agreement, the Financing Fee Letter and, together with the Financing Commitment Letter, the Financing Letters ); provided , that in the case of Financing Fee Letter, the fee amounts, yield or interest rate caps, original issue discount amounts, market flex and other economic terms set forth therein, none of which shall adversely affect the amount or availability of the Debt Financing, may be redacted in a customary manner.
(b) As of the date hereof, each of the Financing Letters, in the form so delivered, is in full force and effect and is the legal, valid, binding and enforceable obligation of Parent and, to the knowledge of Parent, the other parties thereto, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). The Financing Letters have not been withdrawn, terminated, repudiated, rescinded, amended, supplemented, replaced or otherwise modified in any respect except, after the date hereof, as expressly permitted pursuant to Section 7.15.
(c) As of the date hereof, no event has occurred or circumstance exists that, with or without notice, the lapse of time or both, would reasonably be expected to constitute or result in a breach, default or failure to satisfy a condition on the part of Parent (or, to the knowledge of Parent, any other Person) under the Financing Letters.
(d) As of the date hereof, neither Parent nor any of its Affiliates has entered into any side letters, contracts or other agreements or arrangements relating to the Debt Financing that impose conditions or other contingencies related to, or could affect, the funding of the full amount of the Debt Financing, in each case other than as expressly set forth in the Financing Letters. As of the date hereof, the Financing Commitment Letter contains all of the conditions precedent to the obligations of the parties thereunder to make the full amount of the Debt Financing available to Parent and its Affiliates on the terms in the Financing Letters. As of the date hereof, Parent has no reason to believe that any of the conditions to the Debt Financing will not be satisfied, nor does Parent have knowledge, as of the date hereof, that the Debt Financing will not be made available to Parent on the Closing Date in accordance with the terms of the Financing Letters.
(e) The net proceeds of the Debt Financing (both before and after giving effect to any market flex provisions), when funded on the Closing Date in accordance with the Financing Letters, together with other financial resources of Parent, will provide Parent with funds at the Effective Time sufficient to: (i) pay all cash amounts required to be paid by Parent under or in connection with this Agreement; (ii) pay any and all fees and expenses of or payable by Parent with respect to the transactions contemplated by this Agreement and the Plan Transactions, including the Mergers and the Debt Financing; (iii) repay any Indebtedness required to be repaid in connection with the consummation of the transactions contemplated hereby; and (iv) satisfy all of the other payment obligations of Parent contemplated by this Agreement or related to any of the transactions contemplated by this Agreement and the Plan Transactions.
(f) Parent has fully paid (or caused to be fully paid) any and all commitment fees or other fees that are required to be paid pursuant to the terms of any Financing Letter.
(g) Assuming the accuracy on the Closing Date of all of the representations and warranties of the Company in this Agreement, after giving effect to the transactions contemplated by this Agreement and the Plan Transactions, including the payment of the aggregate Merger Consideration, the payment of all other amounts required to be paid in connection with the consummation of the transactions contemplated by this Agreement and the Plan Transactions and the payment of all related fees and expenses, Parent will be Solvent at and immediately after the Effective Time.
Section 5.8 Merger Sub . Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and prior to the Effective Time will have engaged in no other business activities and will have incurred no liabilities or obligations other than as contemplated herein or in connection with the transactions contemplated hereby. All of the units of limited liability company membership interests of Merger Sub are owned solely and directly by Parent.
Section 5.9 Ownership of Shares . None of Parent, Merger Sub or their respective Affiliates owns (directly or indirectly, beneficially or of record) any Shares, and none of Parent, Merger Sub or their respective Affiliates has any rights to acquire any Shares except pursuant to this Agreement. None of Parent or any Subsidiary of Parent for the past five (5) years has been an interested stockholder (as defined in Section 3-601(j) of the MGCL) of the Company.
Section 5.10 Disclaimer of Warranties . Parent and Merger Sub acknowledge that (a) except for the representations or warranties expressly set forth in Article IV, neither the Company nor any of its Affiliates has made any representation or warranty, expressed or implied, with respect to the Company or its Subsidiaries, their businesses, operations, assets, properties, tenants, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Company or its Subsidiaries, (b) neither Parent nor Merger Sub have relied on any representation or warranty from the Company or any of its Affiliates in determining to enter into this Agreement, except as expressly set forth in this Agreement, and (c) neither the Company nor any of its Affiliates shall have or be subject to any liability to Parent or any of its Affiliates resulting from the distribution to Parent or Parents use of, any information, including any information, documents or material made available to Parent in any data rooms, management presentations or in any other form in expectation of the Merger and the other transactions contemplated hereby, except to the extent any such information is explicitly the subject of a representation or warranty set forth in Article IV, including the Company Disclosure Letter. Parent and Merger Sub acknowledge that neither the Company nor any of its Affiliates has made any representation or warranty, expressed or implied, with respect to the Manager, its Subsidiaries, its and their businesses, operations, assets, properties, patients, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Manager or its Subsidiaries.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 6.1 Conduct of the Company and its Subsidiaries . Except as (x) set forth in Section 6.1 of the Company Disclosure Letter or as otherwise expressly permitted or required by this Agreement or required or contemplated by the Alternative Plan Sponsor Agreement, the Bankruptcy Case or otherwise as necessary or reasonably desirable to consummate the Plan Transactions, or (y) consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), from the date hereof until the earlier of the Effective Time and termination of this Agreement in accordance with its terms, the Company shall, and shall cause its Subsidiaries to, conduct their respective businesses in the ordinary course and in compliance with Law, and use all commercially reasonable efforts to maintain and preserve intact its business organization, including the goodwill of any Governmental Authorities, lenders, suppliers, landlords and other Persons with which it has material business relationships, and to maintain the status of the Company as a REIT for U.S. federal income tax purposes; provided ,
however , that no action by the Company or its Subsidiaries of the type specifically addressed in Sections 6.1(a) through 6.1(r) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. Except (i) as required by Law, (ii) as set forth in Section 6.1 of the Company Disclosure Letter, (iii) as may be expressly permitted or required by this Agreement or required by the Alternative Plan Sponsor Agreement, the Bankruptcy Case or otherwise as necessary to consummate the Plan Transactions, or (iv) as may be consented to by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, and shall not permit its Subsidiaries to:
(a) adopt any change in the Company Articles or the Company Bylaws;
(b) merge or consolidate the Company or any of its Subsidiaries with any Person, other than the Mergers and other than any mergers or consolidations among the Company and its Subsidiaries or among the Companys Subsidiaries;
(c) redeem, repurchase or defease any Indebtedness of the Company or any Subsidiary of the Company in excess of $75 million (provided that no prepayment penalty would be payable in connection therewith), other than (i) at stated maturity and any required amortization payments and mandatory prepayments, in each case in accordance with the terms of the instrument governing such Indebtedness as in effect on the date hereof or as modified with the consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), (ii) repayments or prepayments of Indebtedness under the Company Credit Facilities (or any other revolving credit facility permitted to be incurred pursuant to the terms of this Agreement), (iii) in connection with any replacement, renewal, extension, refinancing, refunding or repayment permitted by Section 6.1(d)(iv) or (iv) any of the foregoing relating to intercompany Indebtedness;
(d) incur, create, assume or otherwise become liable for any Indebtedness, except (i) for any Indebtedness incurred in the ordinary course of business, including mortgages on real property acquired by the Company or any of its Subsidiaries, (ii) for Indebtedness among the Company and its Subsidiaries or among the Companys Subsidiaries, (iii) for Indebtedness under the Company Credit Facilities (and any other credit facility of the Company hereafter created with term or revolving Indebtedness on terms substantially the same as those governing the existing revolving credit facility as it may have been amended consistent with this clause (d)), (iv) for Indebtedness incurred to replace, renew, extend, refinance, refund or repay any existing Indebtedness on substantially the same or more favorable terms to the Company than such existing Indebtedness, (v) for any guarantees by the Company of Indebtedness of the Companys Subsidiaries or guarantees by the Companys Subsidiaries of Indebtedness of the Company or any of its Subsidiaries, and (vi) with respect to any Indebtedness not in accordance with clauses (i) through (v), for any Indebtedness not to exceed $50 million in aggregate principal amount outstanding at the time incurred by the Company or any of its Subsidiaries;
(e) make any acquisition (including by merger, consolidation or acquisition of stock or assets) of any other Person (or any division or material amount of assets thereof) or business;
(f) make any capital expenditures, except for (i) capital expenditures up to $25 million in the aggregate (without counting any capital expenditures permitted pursuant to the following clauses (ii) and (iii)), (ii) capital expenditures made in response to any emergency, whether caused by war, terrorism, weather events, natural disasters, public health events, outages, casualty, Act of God or event of force majeure or otherwise, or (iii) capital expenditures required to comply with any applicable Law;
(g) make any loans, advances or capital contributions to, or investments in, any other Person in excess of $25 million (or, with respect to seller-financing of divestitures by the Company or any of its Subsidiaries, $15 million) (without counting any amounts pursuant to the following clauses (i) through (iv)), except for those (i) required or contemplated by existing Contracts, (ii) permitted by Section 6.1(f), (iii) solely between the Company and a Subsidiary of the Company or among Subsidiaries of the Company or (iv) made in response to any emergency, whether caused by war, terrorism, weather events, natural disasters, public health events, outages, casualty, Act of God or event of force majeure or otherwise;
(h) pledge or otherwise encumber shares of capital stock or other voting securities of the Company or any of its Subsidiaries, other than Permitted Liens, except in accordance with the incurrence of Indebtedness not prohibited by Section 6.1(d);
(i) (A) sell , lease (except for the exercise of any extension or renewal option), license, mortgage, sell and leaseback or otherwise dispose of any of the Company Real Property, except for dispositions of the properties set forth in Section 6.1(i) of the Company Disclosure Letter (subject to the limits set forth therein); or (B) sell, lease (except for the exercise of any extension or renewal option), license, mortgage, sell and leaseback or otherwise dispose of any other properties or non-cash assets with a value in excess of $45 million in the aggregate, except in the case of this clause (B) (x) sales or dispositions made in connection with any transaction among the Company and its Subsidiaries or among the Companys Subsidiaries or (y) sales or dispositions made in the ordinary course of business;
(j) (i) split, combine or reclassify any Company Securities or amend the terms of any Company Securities, (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of Company Securities other than (A) a dividend or distribution by a Subsidiary of the Company to the Company or another Subsidiary of the Company or (B) any dividend or distribution reasonably necessary for the Company or any of the Company Subreits to maintain its status as a REIT or avoid or reduce the imposition of any entity-level income or excise Tax under the Code or other applicable Law, or (iii) issue or offer to issue any Company Securities, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire, any Company Securities, other than in connection with (A) any redemption or repurchase of the Class A Preferred Stock, (B) the exercise of Company Options, (C) the withholding of Company Securities to satisfy Tax obligations with respect to Company Equity Awards, (D) the acquisition by the Company of Company Securities in connection with the forfeiture of Company Equity Awards, (E) the acquisition by the Company of Company Securities in connection with the net exercise of Company Options in accordance with the terms thereof, (F) the issuance of Company Securities to newly hired or promoted employees or newly appointed directors in the ordinary course of business consistent with past practice, or in connection with annual grants to employees and directors made in the ordinary course
of business consistent with past practice, or as required to comply with any Company Benefit Plan as in effect on the date of this Agreement and (G) any transaction solely between the Company and a Subsidiary of the Company or between Subsidiaries of the Company;
(k) except (i) as required pursuant to existing Contracts or any Company Benefit Plan in effect on the date hereof, or (ii) as effected in the ordinary course of business and consistent with past practice, (A) adopt, amend or terminate any material Company Benefit Plan, (B) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any material Company Benefit Plan or (C) increase the annualized value of compensation and benefits to be provided to Company Employees or any other services providers of the Company or any of its Subsidiaries (other than increases in annualized value of cash compensation in the ordinary course of business consistent with past practice in an amount that does not exceed 5.0% of such annualized value, in the aggregate, immediately prior to the date hereof); provided that the Company may make payments to Company Employees who are not named executive officers (as defined under Regulation S-K of the Securities Act) in an amount not to exceed $1 million in the aggregate with the individual allocation and terms of such payments subject to the prior consultation with Parent;
(l) make any loans or advances to any current or former director, officer, employee or independent contractor of the Company or any of its Subsidiaries;
(m) (i) hire or engage any individual who would be a Company Employee or individual independent contractor whose annual base compensation exceeds $200,000 or (ii) terminate the employment of any Company Employee whose annual base compensation exceeds $200,000, other than for cause;
(n) other than in the ordinary course of business consistent with past practice, settle or compromise any litigation or release, dismiss or otherwise dispose of any claim or arbitration not covered by insurance, other than settlements or compromises of litigation, claims or arbitration that do not, individually or in the aggregate, involve the payment of more than $15 million in excess of the amount reserved on the latest consolidated balance sheets of the Company in respect of litigation and claims, as set forth in the Company SEC Reports, and do not involve (A) any material injunctive or other non-monetary relief on the Company or any of its Subsidiaries or (B) any admission of wrongdoing by the Company or any of its Subsidiaries;
(o) (i) cancel any material indebtedness for borrowed money owed to the Company other than as a result of a repayment of such indebtedness, or (ii) waive or release any claims or right of material value except in the exercise of the Companys commercially reasonable business judgment;
(p) enter into, materially modify or amend, or terminate any Real Property Lease (it being understood that, without limiting other modifications or amendments that may be material, any modification or amendment reducing the term or fees or other amounts that are payable to the Company or any of its Subsidiaries under any Real Property Lease will be considered a material modification or amendment of such Real Property Lease), except for the renewal, extension or replacement of any Real Property Lease expiring in accordance with its term (such renewal, extension or replacement to be on terms substantially similar to the existing Real Property
Lease) or, other than in the ordinary course of business, enter into, materially modify or amend, or terminate any other Specified Contract other than as permitted by this Section 6.1;
(q) make any material change in financial accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or Law;
(r) adopt a plan of complete or partial liquidation or dissolution of the Company or any of its Subsidiaries;
(s) make, change or revoke any material Tax election or change a material method of Tax accounting, amend any material Tax Return, or settle or compromise any material Tax liability, audit, claim or assessment, change any material method of accounting for Tax purposes, enter into any Tax allocation, sharing or indemnity agreement (other than customary provisions in agreements or arrangements the primary subject of which is not Taxes), enter into any closing agreement in respect of material Taxes or file any material Tax Return inconsistent with past practice other than as required by applicable Law;
(t) take any action, or fail to take any action, which action or failure to act would reasonably be expected to cause (i) the Company or any Company Subreit to fail to qualify as a REIT or (ii) any other Affiliate of the Company to fail to preserve its status as set forth on Section 4.16(c) of the Company Disclosure Letter, in each case, which failure would have a Material Adverse Effect on the Company; or
(u) authorize, agree or commit to do any of the foregoing.
Notwithstanding any of the foregoing or in any other provisions of this Agreement, nothing contained in this Agreement shall prohibit the Company or any of its Subsidiaries from taking or causing to be taken any action, at any time or from time to time, that in the good faith judgment of the Company is reasonably necessary or appropriate for the Company or any of the Company Subreits to maintain its qualification as a REIT; provided that, prior to taking any such action the Company and its Subsidiaries shall inform Parent in writing of such action and shall consult with and cooperate with Parent in good faith to minimize the adverse effect of such action to the Company and Parent.
Section 6.2 Conduct of Parent and Merger Sub . Each of Parent and Merger Sub agrees that, from the date hereof to the Effective Time, it shall not (a) take any action that is intended to or would reasonably be likely to result in any of the conditions to effecting the Mergers set forth in Article VIII becoming incapable of being satisfied or (b) take any action or fail to take any action which would, or would reasonably be likely to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Parent and Merger Sub to consummate the Mergers or the other transactions contemplated by this Agreement or to obtain financing for the Mergers.
Section 6.3 No Control of Other Partys Business . Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or its Subsidiaries prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct the operations of Parent or its Subsidiaries. Prior to the Effective Time, each of
Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Stockholder Meeting; Proxy Material . (a) The Company shall (i) duly call, give notice of, convene and hold a meeting of its stockholders (the Company Stockholder Meeting ) for the purpose of obtaining the approval of the Company Merger and the other transactions contemplated hereby by the stockholders of the Company in accordance with Law as promptly as reasonably practicable after the SEC confirms that it has no further comments on the Company Proxy Statement, (ii) subject to Section 7.4, use all commercially reasonable efforts to solicit the approval of the Company Merger and the other transactions contemplated hereby by the stockholders of the Company and (iii) except to the extent that the Board of Directors of the Company shall have withdrawn or modified its approval or recommendation of this Agreement as permitted by Section 7.4, include in the Company Proxy Statement the recommendation of the Board of Directors of the Company that the stockholders of the Company approve the Company Merger and other transactions contemplated hereby (the Recommendation ). The foregoing sentence notwithstanding, if on a date for which the Company Stockholder Meeting is scheduled, the Company has not received proxies representing a sufficient number of Shares to obtain the Requisite Stockholder Vote, whether or not a quorum is present, the Company may, in its discretion and in consultation with Parent, make one or more successive postponements or adjournments of the Company Stockholder Meeting; provided that the Company Stockholder Meeting is not postponed or adjourned to a date that is later than the date that is ten (10) Business Days prior to the End Date.
(b) In connection with the Company Stockholder Meeting, the Company will (i) as promptly as reasonably practicable but in any event within thirty (30) Business Days after the date hereof, prepare the Company Proxy Statement and file the Company Proxy Statement with the SEC, (ii) as promptly as reasonably practicable, respond to any comments received from the SEC with respect to such filing and provide copies of such comments to Parent and Merger Sub promptly upon receipt, (iii) as promptly as reasonably practicable, prepare and file any amendments or supplements necessary to be filed in response to any SEC comments or as required by Law, (iv) use commercially reasonable efforts to mail to the stockholders of the Company as promptly as reasonably practicable the Company Proxy Statement and all other customary proxy or other materials for meetings such as the Company Stockholder Meeting, (v) to the extent required by Law, as promptly as reasonably practicable prepare, file and distribute to the stockholders of the Company any supplement or amendment to the Company Proxy Statement if any event shall occur which requires such action at any time prior to the Company Stockholder Meeting and (vi) otherwise use commercially reasonable efforts to comply with all requirements of Law applicable to the Company Stockholder Meeting. Parent shall reasonably cooperate with the Company in connection with the preparation of the Company Proxy Statement, including promptly furnishing the Company upon request with any and all information as may be required to be set forth in the Company Proxy Statement under Law. The Company will provide Parent and Merger Sub a reasonable opportunity to review and comment upon the Company Proxy
Statement or any amendments or supplements thereto, prior to mailing the Company Proxy Statement to its stockholders.
Section 7.2 Efforts . (a) Subject to the terms and conditions of this Agreement, each party will use reasonable best efforts to take, or cause to be taken, all actions and to do promptly, or cause to be done promptly, and to assist and cooperate with each other in doing, all things necessary, proper or advisable under Law to consummate and make effective the Mergers and the other transactions contemplated by this Agreement, including (i) preparing and filing as promptly as practicable all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents to obtain as promptly as practicable all waiting period expirations or terminations, consents, clearances, waivers, licenses, orders, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Authority in order to consummate the Mergers and the other transactions contemplated by this Agreement and (ii) taking all steps as may be necessary, subject to the limitations in this Section 7.2, to obtain all such waiting period expirations or terminations, consents, clearances, waivers, licenses, orders, registrations, approvals, permits and authorizations.
(b) In furtherance and not in limitation of the covenants of the parties contained in Section 7.2(a) , each of the parties shall give any notices to third parties, and each of the parties shall use, and cause each of their respective Affiliates to use, its reasonable best efforts to obtain any third party consents that are necessary, proper or advisable to consummate the Mergers and the other transactions contemplated by this Agreement. Each of the parties will furnish to the other such necessary information and reasonable assistance as the other may request in connection with the preparation of any required filings or submissions with any Governmental Authority and will cooperate in responding to any inquiry from a Governmental Authority, including promptly informing the other parties of such inquiry, consulting in advance before making any presentations or submissions to a Governmental Authority, and supplying each other with copies of all material correspondence, filings or communications between either party and its Affiliates and any Governmental Authority with respect to this Agreement. To the extent reasonably practicable, the Parties or their Representatives shall have the right to review in advance and each of the parties will consult the others on, all the information relating to the others and each of their Affiliates that appears in any filing made with, or written materials submitted to, any Governmental Authority in connection with the Merger and the other transactions contemplated by this Agreement, except that confidential competitively sensitive business information may be redacted from such exchanges. To the extent reasonably practicable, none of the parties shall, nor shall they permit their respective Representatives to, participate independently in any meeting or engage in any substantive conversation with any Governmental Authority in respect of any filing, investigation or other inquiry without giving the other parties reasonable prior notice of such meeting or conversation and, to the extent permitted by applicable Law, without giving the other parties the opportunity to attend or participate (whether by telephone or in person) in any such meeting with such Governmental Authority.
(c) In connection with obtaining any approval or consent from any Person (other than a Governmental Authority) with respect to the Mergers, the Company or any of its Affiliates shall not pay or commit to pay to any Person whose approval or consent is being solicited
any cash or other consideration or incur any liability to such Person without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed).
(d) Each of Parent and Merger Sub shall use its reasonable best efforts to cause Partner to effect the Plan Closing as promptly as practicable and in accordance with the Alternative Plan Sponsor Agreement, including by using reasonable best efforts to cause Partner to take all necessary or desirable action to obtain as promptly as practicable all waiting period expirations or terminations, consents, clearances, waivers, licenses, orders, registrations, approvals, permits and authorizations necessary or desirable to be obtained from any third party and/or any Governmental Authority in order to effect the Plan Closing in accordance with the Alternative Plan Sponsor Agreement.
Section 7.3 Access to Information . Subject to the restrictions imposed by federal and state securities Laws and other Laws, the Company will provide, will cause its Subsidiaries and its and their respective Representatives to provide Parent and Merger Sub and their respective authorized Representatives, during normal business hours and upon reasonable advance notice (a) such access to the offices, properties, Company Facilities, books and records of the Company and its Subsidiaries (so long as such access does not interfere unreasonably with the business or operations of the Company, its Subsidiaries or the Company Facilities) as Parent or Merger Sub reasonably may request and (b) all documents that Parent or Merger Sub reasonably may request. The foregoing notwithstanding, Parent, Merger Sub and their Representatives shall not have access to any books, records, documents and other information (i) to the extent prohibited by the terms of a confidentiality agreement with a third party, (ii) to the extent that the disclosure thereof would, in the opinion of the Companys counsel, be reasonably likely to result in the loss of attorney-client privilege (in which case, the Company shall use its commercially reasonable efforts to allow for such access or disclosure in a manner that would not reasonably be expected to result in a loss or waiver of privilege) or (iii) to the extent required by Law. All information exchanged pursuant to this Section 7.3 shall be subject to the Confidentiality Agreement.
Section 7.4 Solicitation .
(a) Notwithstanding any provision of this Agreement to the contrary, during the period beginning on the date hereof and continuing until 11:59 p.m., New York time, on June 9, 2018 (the Go-Shop Period End Time ), the Company and its Subsidiaries and their respective Representatives shall have the right to directly or indirectly: (i) solicit, initiate and encourage, whether publicly or otherwise, Acquisition Proposals from any third party, including by way of providing access to non-public information or access to employees or properties pursuant to one or more confidentiality agreements between the Company and such Person with confidentiality provisions that are not less restrictive to such Person than the provisions of the Confidentiality Agreement ( Acceptable Confidentiality Agreement ) (and to the extent non-public information that has not been made available to Parent is made available to such Person, the Company shall provide or make available such non-public information to Parent substantially concurrent with the time that it is provided to such other Person); and (ii) enter into and maintain discussions or negotiations with respect to Acquisition Proposals with any third party or otherwise cooperate with or assist or participate in, or facilitate any inquiries, proposals, discussions or negotiations or the making of any Acquisition Proposal from any third party. Parent shall not, and shall cause
each of its Affiliates not to, interfere with or prevent the participation of any Person, including any director, officer or employee of the Company or any of its Subsidiaries and any bank, investment bank or other potential provider of debt or equity financing, in negotiations and discussions permitted by this Section 7.4(a).
(b) Except as permitted by this Section 7.4, from the Go-Shop Period End Time until the earlier of the Effective Time and termination of this Agreement in accordance with its terms, the Company and its Subsidiaries shall not, and the Company shall use its reasonable best efforts to cause its Representatives not to, directly or indirectly: (i) solicit, initiate, or knowingly encourage the submission of any proposal that constitutes or could reasonably be expected to result in an Acquisition Proposal, (ii) furnish any non-public information regarding the Company or any of its Subsidiaries to any third-party Person (other than Parent or Merger Sub) in connection with or in response to an Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to result in an Acquisition Proposal, (iii) engage or participate in any discussions or negotiations with a third-party Person (other than Parent or Merger Sub or their respective Representatives) making (or who could reasonably be expected to make) an Acquisition Proposal, (iv) approve or recommend (or publicly propose to approve or recommend) any Acquisition Proposal, (v) enter into any letter of intent, term sheet, memorandum of understanding, merger agreement, acquisition agreement, exchange agreement or any other agreement with a third-party Person relating to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement if otherwise permitted pursuant to this Section 7.4) or requiring the Company to abandon, terminate or fail to consummate the Mergers or any other transaction contemplated by this Agreement or (vi) resolve or agree to do any of the foregoing; provided , that, the Company and its Representatives may continue to take any of the actions described in clauses (i), (ii) and (iii) above from the Go-Shop Period End Time with respect to any Excluded Party.
(c) Anything to the contrary contained in Section 7.4(b) notwithstanding, from the Go-Shop Period End Time and prior to obtaining the Requisite Stockholder Vote, the Company, or the Board of Directors of the Company, directly or indirectly through any Representative, may (i) furnish non-public information regarding the Company or any of its Subsidiaries to, and afford access to the business, properties, books or records of the Company or any of its Subsidiaries to, any Person and (ii) engage and participate in discussions and negotiations with any Person, in each case in response to an Acquisition Proposal that the Board of Directors of the Company, prior to taking any such particular action, concludes in good faith, after consultation with its financial advisors and outside legal counsel, constitutes or could reasonably be expected to result in a Superior Offer; provided that (A) such Acquisition Proposal did not result from a material breach of this Section 7.4 and such Acquisition Proposal is not withdrawn prior to the taking of such action, (B) the Company provides to Parent the notice required by this Section 7.4(c) with respect to such Acquisition Proposal, and (C) the Company furnishes any non-public information provided to the maker of the Acquisition Proposal only pursuant to an Acceptable Confidentiality Agreement between the Company and such Person and to the extent non-public information that has not been made available to Parent is made available to the maker of the Acquisition Proposal, the Company provides or makes available such non-public information to Parent substantially concurrent with the time that it is provided to such other Person; provided , that, notwithstanding the foregoing, the Company and its Representatives may continue to take any of the actions described in clauses (i) and (ii) above with respect to any Excluded Party without any restrictions or obligations contained in this Section 7.4(c). Within three (3)
Business Days following the Go-Shop Period End Time, the Company shall advise Parent of any written Acquisition Proposal received during the Go-Shop Period and in respect of which the Company is engaged in ongoing negotiations as of the Go-Shop Period End Time, and from and after the Go-Shop Period End Time, the Company shall promptly, and in no event later than twenty-four (24) hours after its receipt of any Acquisition Proposal, advise Parent of such Acquisition Proposal (in each case, including providing the identity of the Person making or submitting such Acquisition Proposal and, (i) if the Acquisition Proposal is oral, a reasonably detailed summary of the material terms and conditions thereof or (ii) if the Acquisition Proposal is in writing, a copy of such Acquisition Proposal and any related draft agreements provided to the Company or its Subsidiaries or Representatives). From and after the Go-Shop Period End Time, the Company shall keep Parent reasonably informed of any change to the material terms and conditions of any such Acquisition Proposal and shall provide, as promptly as reasonably practicable, to Parent (i) if any such change to the material terms and conditions of any such Acquisition Proposal is oral, a detailed summary of such change or (ii) if any such change to the material terms and conditions of any such Acquisition Proposal is in writing, a copy of the so modified Acquisition Proposal and any related draft agreements provided to the Company or its Subsidiaries or Representatives.
(d) Nothing in this Section 7.4 shall prohibit the Company, or the Board of Directors, directly or indirectly through any Representative, from (i) informing any Person of the restrictions set forth in this Section 7.4, or (ii) disclosing, in the Company Proxy Statement or otherwise, factual information regarding the business, financial condition or results of operations of the Company or its Subsidiaries or the fact that an Acquisition Proposal has been made, the identity of the party making such Acquisition Proposal or the material terms of such Acquisition Proposal; provided that, in the case of this clause (ii), the Company shall in good faith determine that such information, facts, identity or terms is required to be disclosed under applicable Law or that failure to make such disclosure would be inconsistent with its fiduciary duties under applicable Law. So long as the Company and its Representatives have otherwise complied with this Section 7.4, none of the foregoing shall prohibit the Company and its Representatives from contacting any Persons or group of Persons that have made an Acquisition Proposal after the date of this Agreement solely to request the clarification of the terms and conditions thereof so as to determine whether the Acquisition Proposal is, or could reasonably be expected to result in, a Superior Offer, and any such actions shall not be a breach of this Section 7.4.
(e) Except as otherwise provided in this Section 7.4(e), Section 7.4(f) and Section 7.4(g), neither the Board of Directors of the Company nor any committee thereof may (i) withhold, withdraw, qualify or modify, or publicly propose to withhold, withdraw, qualify or modify, the Recommendation in a manner adverse to Parent, or (ii) approve, adopt or recommend, or propose publicly to approve, adopt or recommend, any Acquisition Proposal (any such action, a Recommendation Withdrawal ). Anything in this Agreement to the contrary notwithstanding, with respect to an Acquisition Proposal, the Board of Directors of the Company may at any time prior to receipt of the Requisite Stockholder Vote, make a Recommendation Withdrawal and/or terminate this Agreement pursuant to Section 9.1(c)(ii), if: (i) (A) an Acquisition Proposal (that did not result from a material breach of Section 7.4(b)) is made after the date of this Agreement to the Company by a third party, and such Acquisition Proposal is not withdrawn, and (B) the Companys Board of Directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that such Acquisition Proposal constitutes a Superior
Offer and that a failure to take such action would be inconsistent with the directors fiduciary duties under applicable Law; and (ii) (A) the Company provides Parent a four (4)-Business Day prior written notice of its intention to take such action, which notice shall include the information with respect to such Superior Offer that is specified in Section 7.4(c), (B) after providing such notice and prior to making such Recommendation Withdrawal in connection with a Superior Offer or taking any action pursuant to Section 9.1(c)(ii) with respect to a Superior Offer, the Company shall negotiate in good faith with Parent during such four (4)-Business Day period (to the extent that Parent desires to negotiate) to make such revisions to the terms of this Agreement as would permit the Board of Directors of the Company not to effect a Recommendation Withdrawal in connection with a Superior Offer or to take such action pursuant to Section 9.1(c)(ii) in response to a Superior Offer, and (C) the Board of Directors of the Company shall have considered in good faith any changes to this Agreement offered in writing by Parent and shall have determined in good faith, after consultation with its outside legal counsel and financial advisors, that the Acquisition Proposal would continue to constitute a Superior Offer if such changes offered in writing by Parent were to be given effect; provided that, in the event that the Acquisition Proposal is thereafter modified by the Person making such Acquisition Proposal, the Company shall provide written notice of such modified Acquisition Proposal and shall again comply with this Section 7.4(e), except that the Companys advance written notice obligation shall be reduced to two (2) Business Days (rather than the four (4)-Business Days otherwise contemplated by this Section 7.4(e)).
(f) Nothing contained in this Section 7.4 or elsewhere in this Agreement shall prohibit the Company or its Board of Directors from taking and disclosing to its stockholders a position contemplated by Rule 14d-9 and 14e-2(a) promulgated under the Exchange Act, or from issuing a stop, look and listen statement pending disclosure of its position thereunder.
(g) Other than in connection with a Superior Offer (which shall be subject to Section 7.4(e) and shall not be subject to this Section 7.4(g)), nothing in this Agreement shall prohibit or restrict the Board of Directors of the Company from making a Recommendation Withdrawal in response to an Intervening Event to the extent that the Board determines in good faith, after consultation with the Companys outside legal counsel, that the failure of the Board of Directors of the Company to effect a Recommendation Withdrawal would be inconsistent with the exercise of its fiduciary obligations under applicable Law; provided , however , that neither the Board of Directors of the Company nor any committee thereof shall take any of the actions set forth in this Section 7.4(g) unless the Company has first complied with the provisions of Section 7.4(e), treating the occurrence of such Intervening Event as if a Superior Offer had been received and after so complying, the Board of Directors of the Company determines in good faith, after consultation with outside legal counsel, that, in light of such Intervening Event, the failure to make a Recommendation Withdrawal would be inconsistent with the exercise of its fiduciary obligations under applicable Law.
(h) During the period from the Go-Shop Period End Time through the Effective Time, the Company shall not terminate, materially amend or modify or waive any provision of any confidentiality agreement relating to an Acquisition Proposal or standstill agreement to which the Company or any of its Subsidiaries is a party (other than any involving Parent or any Excluded Party). During such period, the Company agrees to use reasonable best efforts to enforce, to the fullest extent permitted under applicable Law and subject to the fiduciary duties of
the Companys Board of Directors, the provisions of any such agreements, including obtaining injunctions to prevent any material breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States or any state thereof having jurisdiction. Notwithstanding the foregoing, the Company shall not be required to take, or be prohibited from taking, any action otherwise prohibited by this Section 7.4(h), if, in the good faith judgment of the Companys Board of Directors, after consultation with outside counsel of the Company, such action or inaction, as the case may be, would be inconsistent with the directors fiduciary duties under applicable Law.
(i) As used in this Agreement, the term:
(i) Acquisition Proposal means any inquiry, proposal or offer from any Person (other than Parent, Merger Sub or their respective Affiliates) relating to any transaction or series of related transactions (other than the transactions contemplated by this Agreement or the Alternative Plan Sponsor Agreement) (I) pursuant to which any Person or group of Persons, other than Parent, Merger Sub or any of their respective Affiliates, (A) directly or indirectly acquires (whether in a single transaction or a series of related transactions, and whether through merger, share-exchange, spin-off, asset sale, tender offer, exchange offer, business combination, consolidation or otherwise) businesses or assets of the Company and its Subsidiaries that constitute 25% or more of the assets, revenues or cash flows of the Company and its Subsidiaries, taken as a whole, or (B) directly or indirectly acquires (whether in a single transaction or a series of related transactions, and whether through merger, share-exchange, spin-off, tender offer, exchange offer, business combination, consolidation or otherwise) beneficial ownership (within the meaning of Section 13 under the Exchange Act) of 25% or more of the outstanding Shares or (II) as a result of which the holders of Shares immediately prior to such transaction or series of related transactions would cease to beneficially own (within the meaning of Section 13 of the Exchange Act) at least 75% of the voting stock or equity interests of any surviving entity or entity that immediately following such transaction or series of transactions owns, together with such entitys subsidiaries, businesses or assets that immediately prior to such transaction or series or transactions constituted 25% or more of the assets, revenues or cash flows of the Company and its Subsidiaries, taken as a whole (or any direct or indirect parent company of such an entity or any such surviving entity), immediately following such transaction or series of related transactions;
(ii) Excluded Party means any Person, group of Persons or group that includes any Person (so long as such Person and the other members of such group, if any, who were members of such group immediately prior to the Go-Shop Period End Time constitute at least 50% of the equity financing of such group at all times following the Go-Shop Period End Time and prior to the termination of this Agreement) that submitted to the Company after the date hereof and as of or prior to the Go-Shop Period End Time an Acquisition Proposal or with whom the Company is having ongoing discussions or negotiations as of the Go-Shop Period End Time regarding a potential Acquisition Proposal (or any amendment or modifications thereto) and that the Board of Directors of the Company has determined, in good faith, no later than three (3) Business Days following the Go-Shop Period End Time that such Acquisition Proposal or potential Acquisition Proposal constitutes or could reasonably be expected to lead to a Superior Offer;
(iii) Intervening Event means an event, change, fact, circumstance, occurrence or development (other than an Acquisition Proposal, or any inquiry, proposal or offer that would reasonably be expected to result in an Acquisition Proposal) that (A) is material to the Company, (B) was not known to the Board of Directors of the Company as of the date of this Agreement or if known, the magnitude or material consequences of which were not known to or understood by the Board of Directors of the Company as of the date of this Agreement, and (C) becomes known or the material consequences of which become known to or understood by to the Board of Directors of the Company prior to obtaining the Requisite Stockholder Vote; provided that an Intervening Event shall not include any event, change or development relating to the announcement or pendency of this Agreement or the transactions contemplated hereby; and
(iv) Superior Offer means a bona fide written Acquisition Proposal (except the references therein to 25% and 75% shall be replaced by 50%), which the Board of Directors of the Company in good faith determines, after consultation with its outside legal counsel and its financial advisor, is more favorable from a financial point of view to the stockholders of the Company than the transactions contemplated hereby, taking into account all factors deemed relevant by the Board of Directors of the Company, including timing and likelihood of consummation and any proposal by Parent to amend the terms of this Agreement.
Section 7.5 Director and Officer Liability . (a) The Surviving Entity shall, and Parent shall cause the Surviving Entity to, assume the obligations with respect to all rights to indemnification and exculpation from liabilities, including advancement of expenses, for acts or omissions occurring at or prior to the Effective Time now existing in favor of the current or former directors, officers or employees of the Company or its Subsidiaries (the Indemnified Parties ) as provided in the Company Articles, the Company Bylaws or any indemnification Contract between such Indemnified Party and the Company or any of its Subsidiaries (in each case, as in effect on the date hereof), without further action, as of the Effective Time and such obligations shall survive the Mergers and shall continue in full force and effect in accordance with their terms. For a period of six (6) years from the Effective Time, Parent and the Surviving Entity shall maintain in effect in the certificate of incorporation and bylaws or similar organizational documents of the Surviving Entity and its Subsidiaries, exculpation, indemnification and advancement of expenses provisions that are no less favorable to the Indemnified Parties than those set forth in the Companys and its Subsidiaries certificate of incorporation, bylaws or similar organizational documents as in effect as of the date hereof or in any indemnification Contracts of the Company or its Subsidiaries with any Indemnified Party as in effect as of the date hereof, and shall not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any Indemnified Party; provided , however , that all rights to indemnification in respect of any Action pending or asserted or any claim made within such period shall continue until the disposition of such Action or resolution of such claim. From and after the Effective Time, Parent shall cause the Surviving Entity and its Subsidiaries to honor, in accordance with their respective terms, each of the covenants contained in this Section 7.5.
(b) From and after the Effective Time, Parent shall, and shall cause the Surviving Entity to, indemnify and hold harmless each Person that is an Indemnified Party or who is or was serving at the request of the Company or any of its Subsidiaries as a director, officer, fiduciary
or employee of another Person, against any Damages incurred in connection with any Action arising out of matters existing or occurring at or prior to the Effective Time, including in connection with any actions or omissions taken at the request of Parent, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company would have been permitted under Law and the Company Certificate of Incorporation or Company Bylaws in effect on the date hereof to indemnify such Person (and Parent shall cause the Surviving Entity to also advance expenses as incurred to the fullest extent permitted under Law; provided , however , that the Person to whom expenses are advanced provides an undertaking to repay such advances if it is determined by a final and non-appealable judgment of a court of competent jurisdiction that such Person is not legally entitled to indemnification under Law).
(c) In the event that Parent, the Surviving Entity or any of their successors or assigns (i) consolidate with or merge into any other Person and are not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer or convey all or substantially all of its properties and other assets to any Person, then, and in each such case, Parent shall cause proper provision to be made so that the successors and assigns of Parent or the Surviving Entity, as applicable, shall expressly assume the obligations set forth in this Section 7.5.
(d) For six (6) years after the Effective Time, Parent shall cause the Surviving Entity to maintain in effect the Companys current directors and officers liability insurance (or such other insurance that is no less favorable to the Indemnified Parties than the Companys current directors and officers liability insurance) in respect of acts or omissions occurring at or prior to the Effective Time, covering each Person currently covered by the Companys directors and officers liability insurance policy (a copy of which has been heretofore delivered to Parent), on terms with respect to such coverage and amounts no less favorable than those of such policy in effect on the date hereof; provided , however , the Company may, at its election, obtain a tail policy with respect to such directors and officers liability insurance with policy limits, terms and conditions at least as favorable to the directors and officers covered under such insurance policy as the limits, terms and conditions in the existing policies of the Company; provided , further , that in connection with this Section 7.5(d), neither the Company nor Parent shall pay a one-time premium (in connection with a tail policy described above) in excess of 600% of the current annual premium paid by the Company for directors and officers liability insurance or be obligated to pay annual premiums (in connection with any other directors and officers insurance policy described above) in excess of 300% of the current annual premium paid by the Company for directors and officers liability insurance. It is understood and agreed that in the event such coverage cannot be obtained for such amount or less, then the Company shall obtain the maximum amount of coverage as may be obtained for such amount.
(e) Parent shall, and shall cause the Surviving Entity to, pay all reasonable expenses, including reasonable attorneys fees, that may be incurred by any Person in enforcing the indemnity and other obligations provided in this Section 7.5; provided , however , that such Person provides an undertaking to repay such expenses if it is determined by a final and non-appealable judgment of a court of competent jurisdiction that such Person is not legally entitled to indemnification under Law.
(f) The provisions of this Section 7.5 (i) are intended to be for the benefit of, and will be enforceable from and after the Effective Time by, each Indemnified Party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such Person may have by Contract or otherwise. Nothing in this Agreement, including this Section 7.5, is intended to, shall be construed to or shall release, waive or impair any rights to directors and officers insurance claims under any policy that is or has been in existence with respect to the Company, any of its Subsidiaries or the Indemnified Parties, it being understood and agreed that the indemnification provided for in this Section 7.5 is not prior to, or in substitution for, any such claims under any such policies. The provisions of this Section 7.5 shall survive the consummation of the Mergers.
Section 7.6 Takeover Statutes . The parties shall use all reasonable efforts (a) to take all action necessary so that no takeover statute is or becomes applicable to restrict or prohibit the Mergers or any of the other transactions contemplated by this Agreement and (b) if any such takeover statute is or becomes applicable to restrict or prohibit any of the foregoing, to take all action necessary so that the Mergers and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such takeover statute on the Mergers and the other transactions contemplated by this Agreement.
Section 7.7 Public Announcements . Except with respect to any Recommendation Withdrawal or any action taken by the Company or its Board of Directors pursuant to, and in accordance with, Section 7.4, so long as this Agreement is in effect, the parties shall consult with each other before issuing any press release or making any public announcement relating to this Agreement or the transactions contemplated hereby and, except for any press release or public announcement as may be required by Law, court process or any listing agreement with the New York Stock Exchange, shall not issue any such press release or make any such public announcement without the consent of the other parties (not to be unreasonably withheld or delayed). Parent and the Company agree to issue a mutually acceptable joint press release announcing this Agreement.
Section 7.8 Employee Matters . (a) From and after the Effective Time, Parent shall cause the Surviving Entity and all of its Subsidiaries to honor each of the Company Benefit Plans. Parent shall cause the Surviving Entity and each of its Subsidiaries, for the period commencing at the Effective Time and ending on the first anniversary thereof, to maintain for each Company Employee employed by the Company or any of its Subsidiaries at the Effective Time ( Current Employee ) either, at Parents election, (i) the base salary or wage rate and benefits (not including severance (which is addressed in Section 7.8(c)) or equity-based compensation) that are substantially comparable in the aggregate to the base salary or wage rate and benefits (not including severance or equity-based compensation) that each Current Employee was receiving immediately before the Effective Time or (ii) the same compensation and benefits that are provided by Parent and its Subsidiaries to their similarly situated employees; provided , however , that, nothing in this Section 7.8 shall limit the right of Parent, the Surviving Entity or any of their Subsidiaries to terminate the employment of any Current Employee at any time in a manner consistent with any applicable contractual obligations, Company Benefit Plans and Law.
(b) As of and after the Effective Time, Parent will, or will cause the Surviving Entity to, give each Current Employee full credit for purposes of eligibility to participate, vesting and level of benefits under any Company Benefit Plans or under any employee benefit plan,
program, policy or other arrangement of Parent and its Subsidiaries, in each case, which provides benefits to any Current Employees as of and after the Effective Time (each, a Parent Plan ), for such Current Employees service prior to the Effective Time with the Company and its Subsidiaries and their predecessor entities, to the same extent such service is recognized by the Company or its Subsidiaries immediately prior to the Effective Time (other than as would result in a duplication of benefits or for purposes of benefit accrual under any defined benefit pension plan). With respect to each Parent Plan that is a welfare benefit plan (as defined in Section 3(1) of ERISA), Parent shall, or shall cause its Subsidiaries to, use commercially reasonable efforts to (i) cause any preexisting condition or eligibility limitations or exclusions and actively-at-work requirements with respect to the Current Employees and their eligible dependents to be waived and (ii) give effect, for the year in which the Closing occurs, for purposes of satisfying any deductible and maximum out-of-pocket limitations, to claims incurred and amounts paid by, and amounts reimbursed to, Current Employees and their eligible dependents under similar plans maintained by the Company and its Subsidiaries in which such Current Employees and their eligible dependents participated immediately prior to the Effective Time.
(c) For one (1) year following the Effective Time, each Current Employee shall continue to be eligible for severance benefits in amounts and on terms and conditions no less generous than those which applied to such Current Employee under the severance plans, programs, policies, agreements and other arrangements of the Company immediately prior to the Effective Time and as are set forth on Section 7.8(c) of the Company Disclosure Letter.
(d) If the Effective Time occurs prior to the payment of bonuses for the 2018 calendar year under the Companys existing annual cash bonus programs (the Existing Programs ), the Company shall, as of immediately prior to the Effective Time, pay to each Company Employee who is otherwise eligible to earn a cash bonus for calendar year 2018 under the Existing Programs a bonus in an amount equal to the product of (i) such Company Employees target-level bonus award under the applicable Existing Program, and (ii) a fraction, the numerator of which is the number of days from and including January 1, 2018 through and including the Closing Date and the denominator of which is 365.
(e) The provisions of this Section 7.8 are solely for the benefit of the parties to this Agreement, and no current or former employee, officer, director or consultant, or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. In no event shall the terms of this Agreement be deemed to (i) establish, amend, or modify any Company Benefit Plan or any other employee benefit plan as defined in Section 3(3) of ERISA, or any other benefit plan, program, agreement or arrangement maintained or sponsored by the Company, Parent, the Surviving Entity or any of their respective Affiliates; (ii) alter or limit the ability of Parent and its Subsidiaries (including, after the Effective Time, the Surviving Entity and its Subsidiaries) to amend, modify or terminate any Company Benefit Plan or any other benefit or employment plan, program, agreement or arrangement after the Effective Time; or (iii) to confer upon any current or former employee, officer, director or consultant, any right to employment or continued employment or continued service with Parent, the Surviving Entity or any of their respective Subsidiaries (including, following the Effective Time, the Surviving Entity and its Subsidiaries), or constitute or create an employment agreement with any employee.
Section 7.9 Rule 16b-3 . Notwithstanding anything herein to the contrary, prior to the Effective Time, the Company shall be permitted to take such steps as may be reasonably necessary or advisable hereto to cause disposition of Company equity securities (including derivative securities) pursuant to the transactions contemplated by this Agreement to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.10 Notification of Certain Matters . Subject to applicable Law, the Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of the discovery by a party to this Agreement of any fact, circumstance or event, the occurrence or non-occurrence of which could reasonably be likely to cause any of the conditions set forth in Article VIII not to be satisfied prior to the End Date.
Section 7.11 Real Property Leases . From and after the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with its terms, the Company will consult with Parent with respect to, and keep Parent reasonably informed of, its communications and negotiations with any lessors under Real Property Leases in connection with (a) obtaining any consent of such parties in connection with the transactions contemplated by this Agreement and (b) amending, waiving, modifying, restating or renegotiating the existing terms of any material Real Property Lease.
Section 7.12 Certain Litigation . Subject to applicable Law, the Company shall promptly advise Parent orally and in writing of any Action commenced after the date of this Agreement against the Company or any of its directors by any stockholder of the Company (other than Parent or any of its Affiliates) relating to this Agreement, the Mergers and the transactions contemplated hereby and, unless inconsistent with the fiduciary duties of the Board of Directors of the Company, shall keep Parent reasonably informed regarding any such litigation. The Company shall not settle any such Action without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed) and subject to applicable Law and unless inconsistent with the fiduciary duties of the Board of Directors of the Company, the Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any such Action and shall consider Parents views with respect to such Action.
Section 7.13 Stock Exchange Delisting; Deregistration . Prior to the Effective Time, the Company shall cooperate with Parent and use reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Law and the rules and policies of the New York Stock Exchange to enable the delisting by the Surviving Entity of the Shares from the New York Stock Exchange and the deregistration of the Shares under the Exchange Act as promptly as practicable after the Effective Time.
Section 7.14 Resignation of Directors . Prior to the Effective Time, the Company shall cause each member of the Board of Directors of the Company to execute and deliver a letter effectuating his or her resignation as a director of the Board of Directors of the Company effective immediately prior to, and subject to the occurrence of, the Effective Time.
Section 7.15 Financing and Payoff Documentation; Cooperation .
(a) Subject to the terms and conditions of this Agreement, Parent and Merger shall (and shall cause their respective Affiliates to) use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Debt Financing on the terms and conditions described in the Financing Letters (including any flex provisions related thereto) on or prior to the Closing Date, and shall not, without the Companys prior written consent, amend, supplement, modify, replace, terminate or agree to any waiver of any provision or remedy under, any Financing Letter if such amendment, supplement, modification, replacement, termination or waiver (i) reduces the aggregate amount of the Debt Financing unless the aggregate amount of the Debt Financing following such reduction, together with other financial resources available to Parent (including amounts funded into an escrow account with release provisions no less favorable in any material respect to Parent and its Affiliates than the conditions precedent set forth in the Financing Commitment Letter), is sufficient to consummate the transactions contemplated by this Agreement and make the payments referred to in Section 5.7(e), (ii) changes the conditions precedent to obtaining the Debt Financing or adds new or additional conditions precedent to obtaining the Debt Financing (unless such amendment, supplement, modification, termination or waiver results in conditions that are no less favorable in any material respect to Parent and its Affiliates than the conditions in the Financing Commitment Letter immediately prior to such amendment, supplement, modification, termination or waiver) or (iii) could reasonably be expected to (A) delay, prevent or make less likely to occur the Closing, (B) delay, prevent or make less likely to occur the funding of the Debt Financing (or satisfaction of the conditions to obtaining the Debt Financing), (C) adversely impact the ability of Parent and its Affiliates to enforce their rights against the other parties to the Financing Letters or the definitive agreements with respect thereto or (D) adversely affect the ability of Parent, Merger Sub or any of their Affiliates to timely consummate the transactions contemplated hereby and the Plan Transactions; provided , however , that Parent may amend or replace the Financing Letters to (i) add lenders, arrangers, bookrunners, syndication agents, managers or similar entities who had not executed the Financing Letters as of the date of this Agreement or (ii) implement or exercise any flex provisions provided in the Financing Fee Letter as in effect on the date hereof. Parent and Merger Sub shall keep the Company reasonably informed, on a reasonably current basis, as to the status of the Debt Financing and promptly deliver to the Company copies of any amendment, supplement, replacement, modification, waiver, withdrawal, repudiation or termination of any of the Financing Letters. Parent and Merger Sub shall (and shall cause their respective Affiliates to) use their reasonable best efforts to (I) maintain in effect the Financing Letters and comply with their respective obligations thereunder (including by paying, or causing to be paid, all fees and other amounts that become due and payable under the Financing Letters) except to the extent (A) there is a reduction of commitments in accordance with the terms thereof, (B) any of the commitments under the Financing Letters are replaced with Definitive Financing Agreements or (C) there is an amendment, supplement, modification, replacement, termination or waiver in accordance with this Section 7.15(a), Section 7.15(b) or Section 7.15(c), (II) satisfy and cause each of its Affiliates to satisfy (or, if deemed advisable by Parent, obtain the waiver of) on a timely basis all conditions to the Debt Financing that are within Parent and its Affiliates control, (III) negotiate, enter into and deliver definitive agreements with respect to the Debt Financing (the Definitive Financing Agreements ) on the terms and conditions contained in the Financing Letters (including any flex provisions contained therein) so that such agreements are in effect no later than the Closing and (IV) draw the Debt Financing in
full to the extent the proceeds thereof are required to consummate the transactions contemplated by this Agreement and make the payments referred to in Section 5.7(e).
(b) Notwithstanding any other provision of this Agreement, Parent may substitute the cash proceeds received by Parent or a wholly owned Subsidiary of Parent (to the extent segregated and limited in use to the consummation of the transactions contemplated by this Agreement, or funded into an escrow account with release provisions no less favorable to Parent in any material respect than the conditions precedent set forth in the Financing Letters) from consummated debt or equity offerings or asset sales for all or any portion of the Debt Financing by reducing commitments under the Financing Commitment Letters; provided, that the aggregate amount of the Debt Financing following such reduction, together with other financial resources available to Parent (including amounts funded into an escrow account with release provisions no less favorable in any material respect to Parent than the conditions precedent set forth in the Financing Commitment Letters), is sufficient to consummate the transactions contemplated by this Agreement and make the payments referred to in Section 5.7(e). If funds in the amounts set forth in the Financing Letters, or any portion thereof, become unavailable, such that Parent does not have financial resources sufficient to consummate the transactions contemplated by this Agreement and make the payments referred to in Section 5.7(e), Parent and Merger Sub shall (and shall cause their respective Affiliates to) as promptly as practicable following the occurrence of such event to (x) notify the Company in writing thereof, (y) use reasonable best efforts to obtain substitute financing (on terms and conditions that are not less favorable to Parent in any respect than the terms and conditions as set forth in the Financing Letters, taking into account any market flex provisions thereof) sufficient to enable Parent to consummate the transactions contemplated hereby and make the payments referred to in Section 5.7(e) (the Substitute Financing ) and (z) use reasonable best efforts to obtain a new financing commitment letter that provides for such Substitute Financing and, promptly after execution thereof, deliver to the Company true, complete and correct copies of the new commitment letter and the related fee letters and related definitive financing documents with respect to such Substitute Financing. Upon obtaining any commitment for any such Substitute Financing, such financing shall be deemed to be a part of the Debt Financing.
(c) Notwithstanding any other provision in this Agreement, Parent may substitute commitments in respect of other financing from the same and/or alternative third-party financing sources for all or any portion of the Debt Financing so long as (x) all conditions precedent to the availability of such financing have been satisfied or are no less favorable in any material respect to Parent and its Affiliates than the conditions precedent set forth in the Financing Commitment Letter, (y) the aggregate amount of the Debt Financing is not reduced as a result of such substitution if, as a result of such reduction, such reduced amount would not be sufficient, together with other financial resources available to Parent, to consummate the transactions contemplated by this Agreement and make the payments referred to in Section 5.7(e) and (z) such commitment otherwise complies with Section 7.15(a) (any such financing, a Replacement Commitment ). In the event that any new commitment letters and/or fee letters are entered into in accordance with any amendment, supplement, replacement, modification or waiver of the Financing Letters permitted pursuant to Section 7.15(a), any Substitute Financing or any Replacement Commitment, (1) any such new commitment letters shall be deemed to be a part of the Financing Commitment Letter, (2) any such new fee letters shall be deemed to be a part of the Financing Fee Letter, (3) any such new commitment letters and fee letters shall be deemed to be
part of the Financing Letters and (4) any financing to be incurred pursuant thereto shall be a part of the Debt Financing.
(d) The Company shall, and shall cause each of its Subsidiaries to, and shall use its reasonable best efforts to cause its and their Representatives to, use reasonable best efforts to provide to Parent such customary cooperation as may be reasonably requested by Parent to assist Parent in arranging, obtaining and syndicating the Debt Financing, in connection with the transactions contemplated by this Agreement, or in filing or maintaining registration statements of Parent on Form S-3, including:
(i) using reasonable best efforts to furnish Parent, within a reasonable amount of time following Parents reasonable request, with information available to the Company relating to the Company and its Subsidiaries required to consummate the Debt Financing or required to file or maintain registration statements of Parent on Form S-3, and providing reasonable assistance to Parent with Parents preparation of pro forma financial information and projections required to consummate the Debt Financing or required to file or maintain registration statements of Parent on Form S-3 and, upon reasonable notice and at mutually agreeable dates and times, participating in a reasonable number of diligence sessions with proposed lenders, underwriters, initial purchasers, placement agents or rating agencies; and
(ii) request the Companys independent accountants to provide assistance and cooperation to Parent with respect to maintaining registration statements of Parent on Form S-3, including requesting their participation in drafting sessions and accounting due diligence sessions, requesting them to agree that Parent may use their audit reports on the consolidated financial statements of the Company in offering documents, registration statements and similar documents (which may incorporate, by reference, periodic and current reports filed by the Company with the SEC) customarily required in any filings made with the SEC pursuant to applicable Law or to file or maintain registration statements of Parent on Form S-3, and requesting them to provide customary comfort letters, in each case, on customary terms and consistent with their customary practice.
(e) Notwithstanding anything to the contrary contained in this Agreement (including Section 7.15(d)): (i) nothing in this Agreement (including Section 7.15(d)) shall require any such cooperation to the extent that it would (A) require the Company or any of its Subsidiaries to pay any commitment or other fees, reimburse any expenses, otherwise incur any liabilities or give any indemnities or provide any security prior to the Closing, (B) unreasonably interfere with the ongoing business or operations of the Company and/or its Subsidiaries, (C) require the Company or any of its subsidiaries to enter into any agreement or other documentation or agree to any change or modification of any existing agreement or other documentation, (D) require the Company, any of its Subsidiaries or any of their respective boards of directors (or equivalent bodies) to pass resolutions or consents or otherwise approve or authorize the Debt Financing, (E) cause any representation, warranty covenant or other obligation in this Agreement, the Plan Sponsor Agreement or any other document related to the transactions contemplated by this Agreement or the Plan Transactions to be breached by the Company or any of its Subsidiaries, (F) reasonably be expected to cause the Company, any of its Subsidiaries or any Representative or equityholder of any of the foregoing to incur any personal liability, (G) reasonably be expected
to conflict with, result in a violation or breach of, or a default (with or without notice, lapse of time, or both) under, any contract to which the Company or any of its Subsidiaries are a party, the organizational documents of the Company or any of its Subsidiaries or any Laws, (H) provide access to or require the disclosure of any information that the Company or any of its Subsidiaries determines would jeopardize any attorney-client or other legal privilege of the Company or any of its Subsidiaries or (I) require the preparation of any audited financial statements or any other financial statements or information that are not available to the Company and its Subsidiaries and prepared in the ordinary course of the Companys financial reporting practice and (ii) no action, liability or obligation (including any obligation to pay any commitment or other fees or reimburse any expenses) of the Company, its Subsidiaries, or any of their respective Representatives under any certificate, agreement, arrangement, document or instrument relating to the Debt Financing shall be effective until the Closing.
(f) Parent and Merger Sub shall (i) promptly upon request by the Company, reimburse the Company for all of its reasonable and documented out-of-pocket fees and expenses (including reasonable and documented out-of-pocket attorneys fees) incurred by the Company, any of its Subsidiaries or any of its or their Representatives in connection with any cooperation contemplated by this Section 7.15 and (ii) indemnify and hold harmless the Company, its Subsidiaries and its and their Representatives against any claim, loss, damage, injury, liability, judgment, award, penalty, fine, Tax, cost (including cost of investigation), expense (including reasonable and documented out-of-pocket attorneys fees) or settlement payment incurred as a result of, or in connection with, such cooperation or the Debt Financing, except to the extent arising out of gross negligence or willful misconduct of the Company.
(g) Notwithstanding anything to the contrary in this Agreement, Parent and Merger Sub acknowledge and agree that their respective obligations under this Agreement are not in any way subject to the receipt or availability of any funds or financing by Parent, Merger Sub or any of their Affiliates (including the Debt Financing) for the consummation of the transactions contemplated by this Agreement or the Plan Transactions. Notwithstanding anything to the contrary in this Agreement, (i) the parties hereto acknowledge and agree that the provisions contained in Section 7.15 represent the sole obligation of the Company, its Subsidiaries and their respective Representatives with respect to cooperation in connection with the arrangement of any financing (including the Debt Financing) to be obtained by Parent, Merger Sub or any of their Affiliates with respect to the transactions contemplated by this Agreement and the Plan Transactions and no other provision of this Agreement shall be deemed to expand such obligations, and (ii) the failure of the Company, any of its Subsidiaries or any of their respective Representatives to comply with the provisions set forth in this Section 7.15 shall not be taken into account with respect to whether any condition to the Closing set forth in this Agreement shall have been satisfied.
(h) The Company hereby consents to the use of the trademarks and logos of the Company and its Subsidiaries in connection with the Debt Financing; provided , that such trademarks and logos are used solely in a manner that is not intended to or reasonably likely to harm or disparage the Company or any of its Subsidiaries or the reputation or goodwill of the Company or any of its Subsidiaries.
(i) Treatment of Company Indebtedness.
(i) The Company shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to deliver all notices and take all other actions, in each case to the extent reasonably requested by the Parent, that are reasonably necessary to facilitate the termination at the Effective Time of all commitments in respect of the Company Credit Facilities, the repayment in full on the Closing Date of all obligations in respect of the indebtedness thereunder, and the release on the Closing Date of any Liens securing such indebtedness and guarantees in connection therewith. In furtherance and not in limitation of the foregoing, the Company and its Subsidiaries shall use commercially reasonable efforts to deliver to Parent (x) at least seven (7) Business Days prior to the Closing Date, a draft payoff letter with respect to the Company Credit Facilities and (y) at least one (1) Business Days prior to the Closing Date, an executed payoff letter with respect to the Company Credit Facilities (the Payoff Letter ) in form and substance customary for transactions of this type, from the applicable agent on behalf of the Persons to whom such indebtedness is owed, which Payoff Letter together with any related release documentation shall, among other things, include the payoff amount and provide that Liens (and guarantees), if any, granted in connection with the Company Credit Facilities relating to the assets, rights and properties of the Company and its Subsidiaries securing or relating to such indebtedness, shall, upon the payment of the amount set forth in the applicable Payoff Letter, be released and terminated. The obligations of the Company pursuant to this Section 7.15(i)(i) shall be subject to Parent and Merger Sub providing or causing to be provided all funds required to effect all such repayments at or prior to the Effective Time.
(ii) With respect to the Senior Notes, if requested by Parent in writing no later than five (5) Business Days prior to the Closing Date, in lieu of commencing a Debt Offer (as defined below) for the Senior Notes (or in addition thereto), the Company shall, to the extent permitted by the Existing Senior Notes Indenture, use commercially reasonable efforts to (A) issue a notice of redemption providing for the redemption no sooner than the Closing Date of all of the outstanding aggregate principal amount of the Senior Notes in accordance with Article Three of the Existing Senior Notes Indenture and (B) take any actions reasonably requested by Parent that are reasonably necessary to facilitate the defeasance, satisfaction and/or discharge of the Senior Notes in accordance with Article Three of the Existing Senior Notes Indenture; provided , that prior to the Company being required to take any of the actions described in clause (A) or (B) above that cannot be conditioned upon the occurrence of the Closing, Parent shall have irrevocably deposited with the trustee under the Existing Senior Notes Indenture sufficient funds to effect such redemption or satisfaction and discharge; provided further , that Parents counsel shall provide all legal opinions required in connection with any such redemption or satisfaction and discharge.
(iii) Parent will be permitted to commence and conduct offers to purchase or exchange, and conduct consent solicitations with respect to, any or all of the outstanding Senior Notes on such terms and conditions, including pricing terms and amendments to the terms and provisions of the Existing Senior Notes Indenture, that are specified, from time to time, by Parent and reasonably acceptable to the Company (each, a
Debt Offer and collectively, the Debt Offers ) and which are permitted by the terms of such Senior Notes, the Existing Senior Notes Indenture and applicable Law, including SEC rules and regulations; provided , that any such Debt Offer shall be consummated substantially simultaneously with or after the Closing (and shall be expressly conditioned on the Closing) solely using funds provided by Parent. The Company shall not be required to take any action in respect of any Debt Offer, or to execute or deliver any document in connection therewith (other than the execution of the supplemental indentures relating to any consent solicitation undertaken in connection with a Debt Offer, which supplemental indenture shall not become effective until the Effective Time). Parent shall provide the Company with a reasonable opportunity to review and comment upon all documentation required in connection with such Debt Offer and shall ensure that all such documentation (and the Debt Offer) shall comply with the requirements of this clause (iii) (collectively, the Debt Offer Documents ). Parent shall consult with the Company regarding the timing of any Debt Offer in light of the regular financial reporting schedule of the Company and the requirements of applicable Law. Subject to the foregoing, the Company shall use commercially reasonable efforts to, and shall cause its Subsidiaries to use commercially reasonable efforts to, cause their respective Representatives to provide cooperation and assistance reasonably requested by Parent in connection with any Debt Offer; provided , that (1) such cooperation does not unreasonably interfere with the operations of the Company and its Subsidiaries, (2) the closing of any such Debt Offer shall be expressly conditioned on the Closing, (3) such Debt Offer shall be conducted in compliance with applicable Law, including applicable SEC rules and regulations, and the terms and conditions of the Senior Notes and the Existing Senior Notes Indenture, as applicable, and (4) Parents counsel shall provide all legal opinions required in connection with any Debt Offer. Notwithstanding anything to the contrary in this Agreement or otherwise, the parties hereto acknowledge and agree that Parent and Merger Subs respective obligations under this Agreement are not in any way subject to the consummation of any Debt Offer, a failure to consummate any offer or consent solicitation contemplated by any Debt Offer (as described above) shall not constitute a failure by the Company to satisfy its obligations under this Section 7.15(i)(iii) and the failure of the Company, any of its Subsidiaries or any of their respective Representatives to comply with the provisions set forth in Section 7.15(i)(iii) shall not be taken into account with respect to whether any condition to the Closing set forth in this Agreement shall have been satisfied .
(iv) Following the commencement of any Debt Offer, Parent shall not, and shall cause its Subsidiaries not to, make any change to the terms and conditions of such Debt Offer, unless such change is previously approved by the Company in writing (such approval not to be unreasonably withheld or delayed) or Parent reasonably determines, after consultation with its outside legal counsel, that such change is required by applicable Law or the terms and conditions of the Senior Notes or the Existing Senior Notes Indenture.
(v) Parent shall keep the Company reasonably informed, on a current basis, as to the status of communications with the holders of the Senior Notes in connection with any Debt Offer.
Section 7.16 Alternative Plan Sponsor Agreement . Parent hereby agrees to be jointly and severally responsible for the performance and compliance by Partner and its Affiliates with the covenants and agreements set forth in the Alternative Plan Sponsor Agreement, and Parent shall be liable to, and shall indemnify, the Company for any liability or Damages incurred or suffered by the Company or any of its Affiliates or stockholders arising out of, relating to, or in connection with the failure of Partner or any of its Affiliates to perform or comply with the covenants and agreements set forth in the Alternative Plan Sponsor Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGERS
Section 8.1 Conditions to the Obligations of Each Party . The obligations of the Company, the Company Subreits, TRS LLC, Parent and Merger Sub to consummate the Mergers are subject to the satisfaction (or to the extent permitted by Law, mutual waiver by both the Company and Parent) of the following conditions:
(a) Stockholder Approval . The Requisite Stockholder Vote shall have been obtained.
(b) No Injunctions or Restraints; Illegality . No temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any Governmental Authority of competent jurisdiction or other Law (each, a Restraint ) shall be in effect that prohibits, restrains or renders illegal the consummation of the Mergers; provided that a party shall not be entitled to assert the failure of this condition if such party has not used the efforts and performed the other obligations required of such party under Section 7.2.
(c) Plan Closing . The Plan Closing shall have occurred.
Section 8.2 Conditions to the Obligations of Parent and Merger Sub . The obligations of Parent and Merger Sub to consummate the Mergers are subject to the satisfaction (or, to the extent permitted by Law, waiver by Parent) of the following further conditions:
(a) Representations and Warranties . (i) The representations and warranties of the Company set forth in Section 4.2(a) and Section 4.2(b) shall be true and correct in all material respects, (ii) the representations and warranties of the Company set forth in Section 4.5(b) shall be true and correct in all respects (except for de minimis errors), (iii) the representations and warranties of the Company set forth in Section 4.9(b) and Section 4.9(c) shall be true and correct in all respects and (iv) all other representations and warranties of the Company set forth in this Agreement shall be true and correct (without giving effect to any materiality or material adverse effect qualifications contained therein), in each case, as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), except in the case of this clause (iv), for such failures to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect.
(b) Performance of Obligations of the Company . Each of the Company, the Company Subreits and TRS LLC shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it hereunder at or prior to the Effective Time. Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect.
(c) REIT Opinion . The Company shall have received a written opinion of Sullivan & Cromwell LLP, substantially in the form attached as Exhibit A to the Company Disclosure Letter (or other nationally recognized tax counsel to the Company reasonably acceptable to Parent), in each case, dated as of the Closing Date, which opinion concludes (subject to customary assumptions, qualifications, representations, including representations made by the Company and its Subsidiaries either (i) substantially in the form of the Representation Letter attached as Exhibit B to the Company Disclosure Letter or, (ii) otherwise reasonably acceptable to Parent) that the Company and each Company Subreit has been organized and operated in conformity with the requirements for qualification and taxation as a REIT for all taxable periods commencing with their Initial REIT Year and through the Effective Time (assuming, for purposes of such opinion, that the final taxable year of the Company and each Company Subreit ended as of the Closing Date).
Section 8.3 Conditions to the Obligations of the Company . The obligations of the Company, the Company Subreits and TRS LLC to consummate the Mergers are subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by the Company) of the following further conditions:
(a) Representations and Warranties . (i) The representations and warranties of Parent and Merger Sub set forth in Section 5.2 shall be true and correct in all material respects, and (ii) all other representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct (without giving effect to any materiality or material adverse effect qualifications contained therein), in each case, as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), except in the case of this clause (ii), for such failures to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. The Company shall have received a certificate signed on behalf of Parent and Merger Sub by an executive officer of Parent and Merger Sub to such effect.
(b) Performance of Obligations of Parent and Merger Sub . Each of Parent and Merger Sub shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it hereunder at or prior to the Effective Time. The Company shall have received a certificate signed on behalf of Parent and Merger Sub by an executive officer of Parent and Merger Sub to such effect.
ARTICLE IX
TERMINATION
Section 9.1 Termination . This Agreement may be terminated and the Mergers may be abandoned at any time prior to the Effective Time (any prior approval of this Agreement by the stockholders of the Company notwithstanding):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Effective Time shall not have occurred on or before 11:59 pm, New York City time, on October 15, 2018 (the End Date ); provided , however , that the right to terminate this Agreement pursuant to this Section 9.1(b)(i) shall not be available to a party if the failure of the Closing to occur by such date shall be due to the failure of such party to perform in all material respects or comply in all material respects with the covenants and agreements of such party set forth in this Agreement or if such party shall have failed to use the required efforts under Section 7.2;
(ii) any Restraint having the effect set forth in Section 8.1(b) shall be in effect and shall have become final and nonappealable; provided , however , that the right to terminate this Agreement pursuant to this Section 9.1(b)(ii) shall not be available to a party if such Restraint shall be due to the failure of such party to perform in all material respects or comply in all material respects with the covenants and agreements of such party set forth in this Agreement or if such party shall have failed to use the required efforts under Section 7.2; or
(iii) this Agreement shall have been voted upon at the Company Stockholder Meeting (including any adjournment thereof), such Company Stockholder Meeting shall have been completed, and the stockholders of the Company shall have failed to approve the Merger by the Requisite Stockholder Vote; provided , however , that the right to terminate this Agreement under this Section 9.1(b)(iii) shall not be available to the Company where the failure to obtain the Requisite Stockholder Vote is caused by any action or failure to act of the Company that constitutes a material breach of this Agreement; or
(c) by the Company, if:
(i) a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Section 8.3(a) or Section 8.3(b) not to be satisfied by the Closing, and such breach is incapable of being cured or, if capable of being cured, such breach is not cured within thirty (30) calendar days following written notice of such breach to Parent (or, if less, the number of calendar days until the Business Day immediately preceding the End Date);
(ii) at any time on or after the date of this Agreement and prior to obtaining the Requisite Stockholder Vote, in order to enter into a definitive agreement with respect to a Superior Offer; provided , however , that the Company shall have complied in all material respects with its obligations under Section 7.4, and shall have, concurrently with such termination, paid to Parent the Termination Fee pursuant to Section 9.2(a);
(iii) (x) by the close of business on the date that is 65 days from the date of this Agreement, the Bankruptcy Court has not entered the Confirmation Order or (y) the condition set forth in Section 8.1(c) has not been satisfied or waived on or before 11:59 pm, New York City time, on October 12, 2018; provided, that the Company may not exercise the termination right pursuant to this clause (y) if (1) any condition set forth in Section 8.1(a), Section 8.1(b) and Section 8.2 is not satisfied or capable of being satisfied on such date or (2) the failure of the condition set forth in Section 8.1(c) to be satisfied by such date was primarily caused by the failure of the Company or any of its Subsidiaries to perform in all material respects or comply in all material respects with the covenants and agreements set forth in the Alternative Plan Sponsor Agreement and required to be performed or complied with by the Company or any of its Subsidiaries;
(iv) any Restraint is in effect and shall have become final and nonappealable that prohibits, restrains or renders illegal the Plan Closing in accordance with the Alternative Plan Sponsor Agreement; provided , however , that the right to terminate this Agreement pursuant to this Section 9.1(c)(iv) shall not be available to the Company if such Restraint shall have been primarily caused by the failure of the Company or its Subsidiaries to perform in all material respects or comply in all material respects with the covenants and agreements set forth in the Alternative Plan Sponsor Agreement and required to be performed or complied with by the Company or any of its Subsidiaries; or
(v) the Alternative Plan Sponsor Agreement has been terminated, unless the breach of any provision of the Alternative Plan Sponsor Agreement by the Company or any of its Subsidiaries is the primary cause of the termination of the Alternative Plan Sponsor Agreement; or
(d) by Parent or Merger Sub, if:
(i) a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement shall have occurred which would cause any of the conditions set forth in Section 8.2(a) or Section 8.2(b) not to be satisfied by the Closing, and such breach is incapable of being cured or, if capable of being cured, such breach is not cured within thirty (30) calendar days following written notice of such breach to the Company (or, if less, the number of calendar days until the Business Day immediately preceding the End Date);
(ii) at any time on or after the date of this Agreement and prior to obtaining the Requisite Stockholder Vote, a Recommendation Withdrawal has occurred;
(iii) the Company or any of its Subsidiaries shall have committed a Willful Breach of its obligations under Section 7.4, other than in the case where
(A) (x) such Willful Breach is the result of an isolated action by a person that is a Representative of the Company (other than a director or senior officer of the Company) without Knowledge of or consent by the Company prior to such action, and is not any other action by the Company or any of its Subsidiaries, or (y) such Willful Breach was not caused by the Company, was not the result of an action taken by the Company and was not within the Knowledge of the Company, and in the case of clauses (x) and (y), the Company takes appropriate actions to remedy such Willful Breach upon discovery thereof, or (B) Parent is not harmed in any material respect as a result thereof; or
(iv) any Restraint is in effect and shall have become final and nonappealable that prohibits, restrains or renders illegal the Plan Closing in accordance with the Alternative Plan Sponsor Agreement; provided , however , that the right to terminate this Agreement pursuant to this Section 9.1(d)(iv) shall only be available to Parent or Merger Sub if such Restraint shall have been primarily caused by the failure of the Company or any of its Subsidiaries to perform in all material respects or comply in all material respects with the covenants and agreements of set forth in the Alternative Plan Sponsor Agreement and required to be performed or complied with by the Company or any of its Subsidiaries; or
(v) the Alternative Plan Sponsor Agreement has been terminated (other than as a result of the termination of this Agreement pursuant to Section 9.1(a), (b) or (c)) and the breach of any provision of the Alternative Plan Sponsor Agreement by the Company or any of its Subsidiaries is the primary cause of the termination of the Alternative Plan Sponsor Agreement.
Section 9.2 Termination Fee and Reverse Termination Fee . (a) In the event that this Agreement is terminated by the Company pursuant to Section 9.1(c)(ii), then the Company shall pay to Parent the Termination Fee concurrently with any such termination.
(b) In the event that (i) this Agreement is terminated by Parent pursuant to Section 9.1(d)(ii) and the Company is not entitled to terminate this Agreement pursuant to Section 9.1(c)(i), or (ii) this Agreement is terminated by Parent pursuant to Section 9.1(d)(iii) and the Company is not entitled to terminate this Agreement pursuant to Section 9.1(c)(i), then the Company shall pay to Parent the Termination Fee within three (3) Business Days after the date of termination.
(c) In the event that all of the following occur: (i) this Agreement is terminated by Parent or the Company pursuant to Section 9.1(b)(iii) or Section 9.1(d)(i) (in connection with a Willful Breach of the Companys covenants in Section 7.1(a)), (ii) at any time after the date of this Agreement and prior to the Company Stockholder Meeting, an Acquisition Proposal shall have been publicly announced and such Acquisition Proposal is not withdrawn or terminated at least five (5) Business Days prior to the Company Stockholder Meeting, and (iii) within nine (9) months after such termination, the Company or any of its Subsidiaries enters into a definitive agreement with respect to, or consummates, any Acquisition Proposal (with references to 25% and 75% in such definition replaced with 50%), then the Company shall pay to Parent the Termination Fee, within three (3) Business Days following the earlier of the execution of such agreement or consummation of such Acquisition Proposal.
(d) In the event that this Agreement is terminated by (i) the Company pursuant to Section 9.1(c)(iii), Section 9.1(c)(iv) or Section 9.1(c)(v) or (ii) the Company or Parent pursuant to Section 9.1(b)(i) if (in the case of this clause (ii)) at the time of such termination the Company could have terminated this Agreement pursuant to Section 9.1(c)(iii), then Parent shall pay to the Company the Reverse Termination Fee, within three (3) Business Days following the date of such termination.
(e) Any amount that becomes payable pursuant to Section 9.2(a), Section 9.2(b) or Section 9.2(c) shall be paid by wire transfer of immediately available funds to an account designated by Parent. Any amount that becomes payable pursuant to Section 9.2(d) shall be paid by wire transfer of immediately available funds to an account designated by the Company.
(f) Subject to Section 9.3, upon payment of the Termination Fee or the Reverse Termination Fee pursuant to this Section 9.2, the Company or its Affiliates (in the case of the payment of the Termination Fee) or Parent or its Affiliates or the Financing Source Parties (in the case of payment of the Reverse Termination Fee) shall have no further liability with respect to this Agreement or the transactions contemplated hereby; provided , that nothing in this Section 9.2(f) shall relieve Parent of its obligations pursuant to Section 7.16. Notwithstanding anything to the contrary herein, nothing in this Agreement shall relieve any party to the Alternative Plan Sponsor Agreement for any liability for any breach of the Alternative Plan Sponsor Agreement. The parties acknowledge and agree that in no event shall the Company be required to pay the Termination Fee or Parent be required to pay the Reverse Termination Fee on more than one occasion. In addition, the parties acknowledge that the agreements contained in this Section 9.2 are an integral part of the transactions contemplated by this Agreement, that without these agreements the Company, Parent and Merger Sub would not have entered into this Agreement, and that any amounts payable pursuant to this Section 9.2 do not constitute a penalty. If the Company fails to pay the Termination Fee or Parent fails to pay the Reverse Termination Fee when due, the Company or Parent, as applicable, shall also pay to Parent or the Company, as applicable, interest on the unpaid amount under this Section 9.2, accruing from its due date, at an interest rate per annum equal to two percentage points in excess of the prime commercial lending rate quoted by The Wall Street Journal . Any change in the interest rate hereunder resulting from a change in such prime rate will be effective at the beginning of the date of such change in such prime rate.
Section 9.3 Effect of Termination . In the event of termination of this Agreement by either the Company or Parent as provided in Section 9.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Parent, Merger Sub or the Company under this Agreement, other than the last sentence of Section 7.3, Section 7.16, Section 9.2, this Section 9.3 and Article X, which provisions shall survive such termination indefinitely; provided , however , that no such termination shall relieve any party hereto from any liability or Damages incurred or suffered by a party, to the extent such liabilities or Damages were the result of fraud or the willful and material breach by another party of any of its covenants or other agreements set forth in this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices . All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given (a) upon personal delivery to the party to be notified; (b) when received when sent by email or facsimile by the parties to be notified; provided , however , that notice given by email or facsimile shall not be effective unless either (i) a duplicate copy of such email or fax notice is promptly given by one of the other methods described in this Section 10.1 or (ii) the receiving party delivers a written confirmation of receipt of such notice either by email or fax or any other method described in this Section 10.1; or (c) when delivered by a private overnight courier (with confirmation of delivery); in each case to the party to be notified at the following address:
If to Parent or Merger Sub, to:
Welltower Inc.
4500 Dorr Street
Toledo, OH 43615
Attention: General Counsel
Facsimile: (419) 247-2826
with copies (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Dennis J. Friedman, Esq.
Facsimile: (212) 351-4035
Email: dfriedman@gibsondunn.com
and
Shumaker, Loop & Kendrick, LLP
1000 Jackson Street
Toledo, Ohio 43604
Attention: James I. Rothschild, Esq.
Facsimile: (419) 241-6894
Email: jrothschild@slk-law.com
If to the Company, to:
Quality Care Properties, Inc.
7315 Wisconsin Avenue, Suite 550 East
Bethesda, Maryland 20814
Attention: Mark S. Ordan
Facsimile: (240) 254-3557
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich, Esq.
David K. Lam, Esq.
Facsimile: (212) 403-2000
Email: aoemmerich@wlrk.com
dklam@wlrk.com
or such other address as any party may hereafter specify by written notice to the other parties hereto.
Section 10.2 Survival of Representations and Warranties . None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time and then only to such extent.
Section 10.3 Expenses . Except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense, except that fees and expenses in connection with the printing, filing and mailing of the Company Proxy Statement (including applicable SEC filing fees) shall be borne equally by the Company and Parent.
Section 10.4 Amendment . This Agreement may not be amended by the parties hereto except by action authorized by the respective Boards of Directors of Parent and the Company at any time prior to the Effective Time, whether before or after approval of the Merger by the stockholders of the Company; provided , however , that, after approval of the Merger by the stockholders of the Company, no amendment may be made which under Law requires the further approval of the stockholders of the Company without such further approval. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.
Section 10.5 Waiver . At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) subject to the requirements of Law, waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. The failure of any party to assert any rights or remedies shall not constitute a waiver of such rights or remedies. Notwithstanding anything to the contrary in this Section 10.5 or elsewhere in this Agreement, this Section 10.5, the second sentence of Section 10.7, Section 10.10(z) and Section 10.11(c) (and any definition set forth in, or other provision of, this Agreement to the extent that an amendment or modification of such definition or other provision would amend or modify the substance of any of the foregoing provisions) may not be amended or modified in a manner that would be adverse to any Financing
Source Parties (in their respective capacities as such) without the prior written consent of such Financing Source Parties.
Section 10.6 Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto (and any purported assignment without such consent shall be void and without effect), except that Parent may assign all or any of its rights and obligations hereunder to any direct or indirect wholly owned Subsidiary of Parent; provided , however , that no such assignment shall relieve the assigning party of its obligations hereunder.
Section 10.7 Governing Law . This Agreement, and all claims or causes of actions (whether at Law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to any choice or conflicts of laws principles thereof that would cause the application of the laws of any jurisdiction other than the State of Maryland. Notwithstanding anything to the contrary contained in this Agreement, each party hereto: (i) agrees that it will not bring, or support, or permit any of their Affiliates to bring or support, any person, in any action of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any Financing Source Parties in any way relating to this Agreement, the Financing Letters, the Debt Financing or the performance thereof or the transactions contemplated thereby, in any forum other than the federal and New York state courts located in the borough of Manhattan within the city of New York (and any appellate court thereof) and each party hereto hereby submits, for itself and its property, with respect to any such action to the jurisdiction of such courts, (ii) agrees to waive and hereby waives any right to trial by jury in respect of any such action, and (iii) agrees that all claims or causes of action (whether at law, in equity, in contract, in tort or otherwise) against any Financing Source Parties in any way relating to this Agreement, the Financing Letters, the Debt Financing or the performance thereof or the transactions contemplated hereby or thereby shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to principles or rules (including conflict of laws rules) to the extent such principles or rules would require or permit the application of laws of another jurisdiction.
Section 10.8 Counterparts; Effectiveness . This Agreement may be executed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by telecopy, electronic delivery or otherwise) to the other parties. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf ) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 10.9 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by virtue of any Law, or due to any public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are fulfilled to the extent possible.
Section 10.10 Entire Agreement; No Third-Party Beneficiaries . This Agreement (including the Annexes and Exhibits, the Company Disclosure Letter and the Parent Disclosure Letter), and the Confidentiality Agreement (a) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof and (b) except for (x) Section 2.5(a), Section 2.6 and Section 2.7 (which, from and after the Effective Time, shall be for the benefit of holders of the Merger Shares or Company Equity Awards immediately prior to the Effective Time), (y) Section 7.5 (which from and after the Effective Time shall be for the benefit of the Indemnified Parties) and (z) Section 10.5, the second sentence of Section 10.7, Section 10.10(z) and Section 10.11(c) (which from and after the Effective Time shall be for the benefit of the Financing Source Parties), are not intended to and do not confer upon any Person other than the parties any legal or equitable rights or remedies. The representations and warranties in this Agreement are the product of negotiations among the parties to this Agreement and are for the benefit of the parties to this Agreement. Any inaccuracies in such representations and warranties are subject to waiver by the parties to this Agreement in accordance with Section 10.5 without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties to this Agreement of the risks associated with particular matters regardless of the knowledge of any of the parties to this Agreement. Consequently, Persons other than the parties to this Agreement may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date hereof or any other date.
Section 10.11 Jurisdiction; Specific Performance; Waiver of Jury Trial . (a) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed, or were threatened to be not performed, in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Circuit Courts of Baltimore City, Maryland or in the United States District Court for the State of Maryland and any appellate court thereof (the MD Courts ), and all such rights and remedies at law or in equity shall be cumulative, except as may be limited by Section 9.2(f). The parties further agree that no party to this Agreement shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 10.11 and each party waives any objection to the imposition of such relief or any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. In addition, each of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively
in the MD Courts. Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve in accordance with this Section 10.11, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by the applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
(b) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.
(c) None of the Financing Source Parties will have any liability to the Company or its Affiliates in connection with this Agreement, the Debt Financing, the Financing Letters or the transactions contemplated thereby, whether at law, or equity, in contract, in tort or otherwise, and neither the Company nor any of its Affiliates will have any rights or claims against any of the Financing Source Parties in connection with this Agreement, the Debt Financing, the Financing Letters or the transactions contemplated thereby.
Section 10.12 Authorship . The parties agree that the terms and language of this Agreement are the result of negotiations between the parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.
Section 10.13 Transfer Taxes . Any and all real property transfer, sales, use, transfer, value added, recording, registration stamp or similar Taxes that become payable in connection
with the transactions contemplated by this Agreement (collectively, Transfer Taxes) shall be borne by Parent, Merger Sub and/or the Surviving Entity, as applicable, and expressly shall not be a liability of any holder of Merger Shares, Class A Preferred Stock, or Subsidiary Preferred Interests. Parent and the Company shall reasonably cooperate to prepare, execute and file, or cause to be prepared, executed and filed, all returns, questionnaires, applications or other documents regarding any Transfer Taxes that become payable in connection with the transactions contemplated by this Agreement and Parent and the Company shall cooperate in good faith and use commercially reasonable efforts to minimize the amount of Transfer Taxes to the extent permitted by applicable Law.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the day and year first written above.
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Quality Care Properties, Inc. |
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By: |
/s/ Mark S. Ordan |
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Name: |
Mark S. Ordan |
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Title: |
Chief Executive Officer |
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QCP AL REIT, LLC |
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/s/ C. Marc Richards |
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C. Marc Richards |
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Title: |
Chief Financial Officer |
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QCP SNF West REIT, LLC |
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/s/ C. Marc Richards |
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C. Marc Richards |
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Title: |
Chief Financial Officer |
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QCP SNF Central REIT, LLC |
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/s/ C. Marc Richards |
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C. Marc Richards |
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Chief Financial Officer |
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QCP SNF East, LLC |
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/s/ C. Marc Richards |
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C. Marc Richards |
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Title: |
Chief Financial Officer |
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QCP HoldCo REIT, LLC |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
[ Signature Page to Agreement and Plan of Merger ]
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QCP TRS, LLC |
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By: Quality Care Properties, Inc., its sole member |
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By: |
/s/ Mark S. Ordan |
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Name: |
Mark S. Ordan |
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Title: |
Chief Executive Officer |
[ Signature Page to Agreement and Plan of Merger ]
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Welltower Inc. |
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By: |
/s/ Matthew McQueen |
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Name: Matthew McQueen |
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Title: Senior Vice President - General Counsel & Corporate Secretary |
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Potomac Acquisition LLC |
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By: |
/s/ Matthew McQueen |
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Name: Matthew McQueen |
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Title: Senior Vice President - General Counsel & Corporate Secretary |
[ Signature Page to Agreement and Plan of Merger ]
EXECUTION VERSION
ALTERNATIVE PLAN SPONSOR AGREEMENT
among
HCR MANORCARE, INC.,
QUALITY CARE PROPERTIES, INC.,
PROMEDICA HEALTH SYSTEM, INC.
SUBURBAN HEALTHCO, INC.
MEERKAT I LLC
and
THE OTHER LESSORS IDENTIFIED HEREIN
Dated as of April 25, 2018
TABLE OF CONTENTS
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ARTICLE I |
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The Transactions |
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1.1 |
Acquisition of Reorganized Company Stock |
4 |
1.2 |
New Master Lease and Guaranty |
5 |
1.3 |
Articles of Incorporation and By-Laws of the Reorganized Debtor |
5 |
1.4 |
Closing |
5 |
1.5 |
Severance and Other Payments |
6 |
1.6 |
Deliveries by Debtor |
7 |
1.7 |
Deliveries by ProMedica |
8 |
1.8 |
Deliveries by HCR III and the Lessors |
8 |
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ARTICLE II |
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Representations and Warranties |
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2.1 |
Representations and Warranties of the Debtor |
8 |
2.2 |
Representations and Warranties of ProMedica |
22 |
2.3 |
Representations and Warranties of QCP |
25 |
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ARTICLE III |
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Bankruptcy Matters |
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3.1 |
Confirmation Order |
25 |
3.2 |
Chapter 11 Obligations |
25 |
3.3 |
Case Financing |
26 |
3.4 |
Release |
28 |
3.5 |
Release of Non-Debtor Subsidiary Claims |
28 |
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ARTICLE IV |
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Covenants |
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4.1 |
Interim Operations |
29 |
4.2 |
Filings; Other Actions; Notification |
33 |
4.3 |
Access and Records |
35 |
4.4 |
Publicity |
35 |
4.5 |
Employee Matters |
36 |
4.6 |
Expenses |
37 |
4.7 |
Indemnification; Directors and Officers Insurance |
37 |
4.8 |
Confidentiality |
40 |
4.9 |
Financing |
40 |
4.10 |
Acquisition Proposals. |
43 |
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ARTICLE V |
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Special Covenants |
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5.1 |
Corporate Governance |
45 |
5.2 |
Rent and Forbearance |
46 |
5.3 |
Business Operations |
47 |
5.4 |
QCP Support |
48 |
5.5 |
Current Rent Limitation |
48 |
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ARTICLE VI |
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Conditions |
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6.1 |
Conditions to Each Partys Obligations |
49 |
6.2 |
Conditions to Obligations of ProMedica |
50 |
6.3 |
Conditions to Obligation of the Debtor |
50 |
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ARTICLE VII |
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Termination |
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7.1 |
Automatic Termination |
50 |
7.2 |
Termination by Mutual Consent |
50 |
7.3 |
Termination by ProMedica, QCP, or the Debtor |
51 |
7.4 |
Termination by the Debtor or QCP |
51 |
7.5 |
Termination by ProMedica or QCP |
52 |
7.6 |
Termination by QCP |
53 |
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ARTICLE VIII |
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Miscellaneous and General |
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8.1 |
No Survival; Effect of Termination and Abandonment |
53 |
8.2 |
Modification or Amendment |
54 |
8.3 |
Waiver of Conditions |
54 |
8.4 |
Counterparts |
54 |
8.5 |
GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC PERFORMANCE |
54 |
8.6 |
Notices |
55 |
8.7 |
Entire Agreement |
57 |
8.8 |
No Third Party Beneficiaries; No Recourse |
58 |
8.9 |
Obligations of ProMedica and of the Debtor |
58 |
8.10 |
Transfer Taxes |
59 |
8.11 |
Definitions |
59 |
8.12 |
Severability |
59 |
8.13 |
Interpretation; Construction |
59 |
8.14 |
Assignment |
59 |
8.15 |
Certain Waivers |
60 |
8.16 |
No Solicitation |
61 |
8.17 |
Settlement Discussions |
61 |
Annex A Defined Terms
Exhibit 1 Amended Plan
Exhibit 2 New Master Lease Basic Terms
Exhibit 3 Alternative Restructuring Support Agreement
Exhibit 4 Form of Former CEO Settlement Agreement
Exhibit 5 Form of Separation Agreement
ALTERNATIVE PLAN SPONSOR AGREEMENT
This PLAN SPONSOR AGREEMENT, dated as of April 25, 2018 (hereinafter called this Agreement ), is among HCR ManorCare, Inc., a Delaware corporation (the Debtor ), Quality Care Properties, Inc., a Maryland corporation ( QCP ), ProMedica Health System, Inc., an Ohio non-profit corporation ( ProMedica Parent ), Suburban HealthCo, Inc., an Ohio non-profit corporation and a wholly-owned, indirect subsidiary of ProMedica Parent ( Purchaser and, together with ProMedica Parent, ProMedica ), and Meerkat I LLC, a Delaware limited liability company (the JV and, together with any wholly-owned Subsidiary of the JV so designated by the JV, the Lessors ). The Debtor, QCP, ProMedica, and the Lessors are each referred to in this Agreement as a party and together, the parties .
RECITALS
WHEREAS, the Debtor and its Subsidiaries are engaged in the business of providing skilled nursing, hospice and other ancillary services (the Business );
WHEREAS, pursuant to the Master Lease and Security Agreement, dated as of April 7, 2011, by and among certain lessors (the Original Lessors ) and HCR III Healthcare, LLC ( HCR III ), as Lessee (as amended from time to time, the Master Lease ), HCR III leases certain skilled nursing and assisted living facilities (each, a Leased Facility and, collectively, the Leased Facilities ) from the Original Lessors;
WHEREAS, the Debtor guarantees the obligations of HCR III under the Master Lease pursuant to that certain Guaranty of Obligations, effective as of February 11, 2013 (as amended or modified from time to time, the Guaranty );
WHEREAS, HCR III subleases the Leased Facilities to certain of its direct and indirect Subsidiaries and Affiliates (each, a Sublease OpCo and, collectively, the Sublease OpCos ) pursuant to certain subleases (the Subleases ), and the Sublease OpCos operate the Leased Facilities;
WHEREAS, the Original Lessors, HCR III and the Sublease OpCos have entered into certain Agreements Regarding Subleases made and entered as of April 7, 2011, October 23, 2015, February 16, 2016 and March 14, 2016 (each, as amended or modified from time to time, an Agreement Regarding Subleases and, collectively, the Agreements Regarding Subleases );
WHEREAS, QCP, the Debtor and certain of their respective Subsidiaries entered into a Forbearance Agreement, dated as of April 5, 2017 (the Prior Forbearance Agreement ), pursuant to which, among other things, QCP agreed to defer certain of the Debtors rent and other obligations under the Master Lease, which such Prior Forbearance Agreement terminated according to its terms on July 5, 2017;
WHEREAS, on August 17, 2017, QCP filed a complaint against the Debtor, HCR III and John Does 150 in Los Angeles County Superior Court, styled as Quality Care Properties, Inc. and HCP Properties, LP v. HCR III Healthcare, LLC et al. , Los Angeles County Super. Ct. No. BC672837, seeking, among other relief, the appointment of a receiver for HCR III (the Receivership Proceeding );
WHEREAS, QCP, the Debtor and certain of their respective Subsidiaries entered into that certain Forbearance Agreement and Amendment to Master Lease and Security Agreement, dated as of December 22, 2017 (the Second Forbearance Agreement ), pursuant to which, among other things, the Original Lessors and HCR III agreed to amend the Master Lease to defer certain of the Debtors rent and other obligations under the Master Lease and to defer the Debtors response on the Receivership Proceeding;
WHEREAS, on March 2, 2018, the Debtor, QCP, HCP Mezzanine Lender, LP and the Original Lessors entered into that certain Plan Sponsor Agreement (the Original Plan Sponsor Agreement );
WHEREAS, prior to the date of the Original Plan Sponsor Agreement, HCR III paid to the Original Lessors the Reduced Cash Rent of $23,500,000 per month, as more fully described in the Master Lease (the Reduced Cash Rent );
WHEREAS, as of the date of the Original Plan Sponsor Agreement (and taking into account payments made by HCR III to the Original Lessors on such date), the Original Lessors were owed approximately $180,571,590 in unpaid Rent currently due and owing under the Master Lease, including $14,000,000 in unpaid Rent due and owing since the date of the Second Forbearance Agreement until the date of the Original Plan Sponsor Agreement ( Reduced Cash Rent Past Due Balance );
WHEREAS, in addition to the Reduced Cash Rent Past Due Balance, as of the date of the Original Plan Sponsor Agreement, the Original Lessors were owed approximately $265,225,000 in unpaid Deferred Rent Obligations (as defined in the Master Lease) currently due and owing under the Master Lease;
WHEREAS, on March 4, 2018 (the Petition Date ) the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court and such proceedings, collectively, the Bankruptcy Case );
WHEREAS, on the Petition Date the Debtor filed the Prepackaged Plan of Reorganization For HCR ManorCare, Inc. (as modified by the Modified Prepackaged Plan of Reorganization For HCR ManorCare, Inc. filed by the Debtors on April 10, 2018 the Original Plan ) and the Disclosure Statement for the Prepackaged Plan of Reorganization for HCR ManorCare, Inc. (as amended, supplemented, or otherwise modified the Disclosure Statement ), and the Original Plan provided for the transfer of all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor to a wholly owned subsidiary of QCP;
WHEREAS, on April 13, 2018, the Bankruptcy Court entered a combined order approving the Disclosure Statement with respect to the Original Plan and confirming the Original Plan (the Original Confirmation Order );
WHEREAS, the Original Plan has not yet become effective and the parties desire to amend the Original Plan as provided in the First Amended Chapter 11 Plan of Reorganization For HCR ManorCare, Inc. (the Amended Plan ), a copy of which is attached as Exhibit 1 hereto;
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the Merger Agreement ) dated as of the date hereof, QCP and certain of its Subsidiaries will be merged with and into Potomac Acquisition LLC (the Acquirer ) with Acquirer surviving pursuant to the transactions set forth in the Merger Agreement (the Merger ) and, thereafter, Acquirer will cause all of the property leased to HCR III pursuant to the Master Lease to be transferred to the Lessors;
WHEREAS, the Effective Date (as defined in the Amended Plan) of the Amended Plan will occur concurrently with the closing of the Merger and, in connection with the occurrence of the Effective Date, the transactions contemplated by this Agreement will be consummated, including without limitation, the Plan Acquisition (as defined below), and execution of that certain new master lease by and among the Lessors and HCR III (the New Master Lease ), the form of which New Master Lease will be agreed by Debtor and ProMedica and filed in the Plan Supplement (as defined in the Amended Plan) and the basic terms of which are attached hereto as Exhibit 2 , which lease shall be guaranteed by ProMedica and shall supersede the Master Lease;
WHEREAS, if the transactions contemplated by Merger Agreement and this Plan Sponsor Agreement are not consummated, the Amended Plan provides that the transactions contemplated by the Original Plan Sponsor Agreement shall be implemented;
WHEREAS, the Debtor, with assistance from its professional advisors, has reviewed alternatives to the Transactions contemplated by this Agreement, including transfer of the Business to QCP, on the terms reflected in the Original Plan Sponsor Agreement and the Original Confirmation Order, and has determined that the Amended Plan, and implementation of the Transactions contemplated therein and herein, are in the best interests of the Debtor, its creditors and the bankruptcy estate;
WHEREAS, in connection with the Original Plan, the Debtor entered into that certain restructuring support agreement, dated March 2, 2018 (the Original Restructuring Support Agreement ) with each of (i) Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the Carlyle Holders ) and (ii) MC Operations Investments, LLC;
WHEREAS, in connection with the Amended Plan, the Debtor has entered into that certain restructuring support agreement, dated on or prior to the date hereof (the Alternative Restructuring Support Agreement ); with each of (i) the Carlyle Holders, (ii) MC Operations Investments, LLC, and (iii) ProMedica Parent;
WHEREAS, the Debtor intends to, with the consent of ProMedica and QCP, promptly offer to Paul Ormond (the Former CEO ) a settlement agreement in the form attached hereto as Exhibit 4 (the Former CEO Settlement Agreement ), by and among the Debtor and Paul Ormond, to be effective upon the Closing Date subject to the execution and delivery of the Former CEO Settlement Agreement by Mr. Ormond within 60 days of the date of this Agreement;
WHEREAS, the Debtor entered into a Credit Agreement, dated as of July 17, 2017 (as may be amended, modified or supplemented from time to time, the Centerbridge Facility ),
by and among HCR Home Health Care and Hospice, LLC, as borrower, HCR Manorcare Inc., HCR Manorcare Operations II, LLC, HCR Manorcare Heartland, LLC, Manor Care, Inc., HCR II Healthcare, LLC, and HCR Healthcare, LLC, each as Holdco, the lender parties thereto, and RD Credit, LLC, as administrative agent and collateral agent; and
WHEREAS, the Debtor, QCP, the Lessors and ProMedica desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
The Transactions
1.1 Acquisition of Reorganized Company Stock .
(a) On the Closing Date, Purchaser, in exchange for the ProMedica Plan Contribution (as defined below) and the other obligations to be paid or undertaken by the ProMedica as provided herein, shall acquire and accept from the Debtor, and the Debtor shall issue, transfer and deliver (or cause HCR III to deliver as provided in the Implementation Memo (as defined below)) to Purchaser 1,000,000 newly issued shares of the common stock of the Debtor, par value $0.01 per share (the Reorganized Company Stock ), which, pursuant to and in accordance with the Amended Plan and the Confirmation Order, shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor (such transaction, the Plan Acquisition ), free and clear of any Liens, other than those created by ProMedica, or the Lessors solely pursuant to the terms of the New Master Lease or imposed by applicable federal or state securities laws.
(b) The ProMedica Plan Contribution means Cash to be invested or contributed by ProMedica to the Reorganized Debtor, in the form, at the election of ProMedica, of (i) a capital contribution to the Reorganized Debtor or (ii) a combination of (A) the capital contribution referred to in clause (i) and (B) an unsecured, subordinated loan to the Reorganized Debtor in a principal amount not to exceed $550 million, which unsecured loan shall mature no earlier than the third anniversary of the Closing Date and the other terms and conditions of which shall be reasonably acceptable to the Debtor, in an amount sufficient to pay, in full, the Cash distribution to the Holders of Class 3 Claims under the Amended Plan, the Agreed Deferred Rent Obligation and the Total Equity Distribution (as defined in the Amended Plan). The Agreed Deferred Rent Obligation means that portion of the Allowed QCP Claims under the Amended Plan equal to $440,190,183.
(c) For purposes of this Agreement, Lien means any mortgage, lien, pledge, charge, security interest, easement, covenant, or other restriction or title matter or encumbrance of any kind in respect of such asset; and Permitted Lien means the following Liens: (i) specified encumbrances described in Section 1.1(a) of the Debtor Disclosure Letter; (ii) encumbrances for Taxes or other governmental charges not yet due and payable or that are being contested in good faith by appropriate proceedings and are reflected on or specifically reserved against or otherwise
disclosed in any consolidated balance sheet included in the Audited Financial Statements; (iii) mechanics, carriers, workmens, repairmens or other like encumbrances arising or incurred in the ordinary course of business consistent with past practice relating to obligations as to which there is no default on the part of the Debtor, or the validity or amount of which is being contested in good faith by appropriate proceedings and are reflected on or specifically reserved against or otherwise disclosed in any consolidated balance sheet included in the Audited Financial Statements; (iv) other encumbrances that do not, individually or in the aggregate, materially impair the current use or operation of the specific parcel of owned real property to which they relate or the conduct of the business of the Debtor and its Subsidiaries as presently conducted; (v) easements, rights of way or other similar matters or restrictions or exclusions which would be shown by a current title report or other similar report; (vi) any condition or other matter, if any, that may be shown or disclosed by a current and accurate survey or physical inspection; and (vii) the renewal or reaffirmation by the Debtor or any of its Subsidiaries of any Lien existing on the date hereof granted in favor of RD Credit, LLC and/or the lender parties to the Centerbridge Facility (or any agent on their behalf) to secure obligations thereunder.
1.2 New Master Lease and Guaranty .
(a) On the Closing Date, (i) the Lessors and HCR III shall enter into the New Master Lease and ProMedica shall enter into a guaranty of the New Master Lease and (ii) HCR III and the applicable Sublease OpCos shall enter into amendments to each Sublease substantially similar to the New Master Lease, mutatis mutandis (the Sublease Amendments ).
(b) On or prior to the third day after the Closing Date, the Original Lessors and HCR III shall terminate, release and discharge, and QCP shall cause the Original Lessors and HCR III to terminate, release and discharge, the Guaranty.
1.3 Articles of Incorporation and By-Laws of the Reorganized Debtor .
(a) Articles of Incorporation . Pursuant to the Amended Plan, on the Closing Date, the articles of incorporation of the Debtor (the Charter ) shall be amended in their entirety to be in a form set forth in a supplement to the Amended Plan until, subject to Section 4.7, thereafter amended as provided therein or by applicable Law.
(b) By-Laws . Pursuant to the Amended Plan, on the Closing Date, the by-laws of the Debtor (the By-Laws ) shall be amended in their entirety to be in a form set forth in a supplement to the Amended Plan until, subject to Section 4.7(a), thereafter amended as provided therein or by applicable Law.
1.4 Closing . Unless otherwise mutually agreed in writing between the Debtor, QCP and ProMedica, the closing of the Plan Acquisition, the entry into the New Master Lease and the Sublease Amendments and the other transactions contemplated by this Agreement (the Closing and such transactions, collectively, the Transactions ) shall take place at the offices of Gibson Dunn & Crutcher LLP, 200 Park Avenue, 47 th Floor, New York, New York 10166 at 9:00 a.m. on the second (2 nd ) business day following the day on which the last to be satisfied or waived of the conditions set forth in ARTICLE VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement (the date of the Closing, the Closing Date ). For purposes of this Agreement, the term business day means any day ending at 11:59 p.m. (Eastern Time) other than a Saturday or Sunday or a day on which banks are required or authorized to close in the City of New York.
1.5 Severance and Other Payments .
(a) Subject to Section 1.5(b), on the Closing Date, following the Closing, (i) ProMedica shall cause the Severance Account to be funded with all amounts necessary to make severance payments to Eligible Employees (each as defined in the Amended Plan) in the amounts set forth in Section 1.5(i) of the Debtor Disclosure Letter (the Excess Severance Payments ), (ii) ProMedica shall cause the Excess Severance Payments due each Eligible Employee to be paid from the Severance Account to such Eligible Employee on the Payment Date with respect to such Eligible Employee ( it being understood that, for the purpose of determining entitlement to payment of Excess Severance Payments, the employment of each Eligible Employee who remains employed by the Debtor immediately prior to the Closing shall be deemed to have been terminated without Cause constituting a Qualifying Termination (each as defined in such Eligible Employees written Employment Agreement with the Debtor (each, an Employment Agreement )) as of the Closing), (iii) except as provided in clause (iv) of this Section 1.5(a), ProMedica shall pay, or cause to be paid, the other obligations set forth in Section 1.5 of the Debtor Disclosure Letter, in each case, on the applicable Payment Date; provided , that payments made in respect of any nonqualified deferred compensation plan shall be made in accordance with the relevant Eligible Employees deferral election; provided , further , that payments to be made under the Key Employee Incentive Plan shall be all those due and payable as a result of the Restructuring Completion (as defined in the Key Employee Incentive Plan), (iv) the Debtor shall irrevocably terminate the HCR ManorCare, Inc. Senior Executive Retirement Plan, as amended, as of the Closing Date and ProMedica shall pay or cause to be paid all amounts due thereunder, which amounts the Parties agree are set forth in Section 1.5 of the Debtor Disclosure Letter (and which amounts, for the avoidance of doubt, reflect the actuarial reduction provided for under Section 7.05(b) of the HCR ManorCare, Inc. Senior Executive Retirement Plan) on the applicable Payment Date, (v) ProMedica will execute and deliver the applicable Separation Agreement to each Eligible Employee (if not previously executed and delivered) and (vi) ProMedica will execute and deliver the Former CEO Settlement Agreement to the Former CEO (if not previously executed and delivered), subject to the Former CEOs execution and delivery of the Former CEO Settlement Agreement to ProMedica. The Payment Date means (I) with respect to each Eligible Employee, the later of (x) the Closing Date and (y) the eighth (8 th ) day after such Eligible Employee shall have executed (and not revoked) such Eligible Employees Separation Agreement, (II) with respect to amounts payable to the Former CEO (other than the severance obligation to the Former CEO set forth on Section 1.5 of the Debtor Disclosure Letter), the Closing Date and (III) with respect to the severance obligation to the Former CEO set forth on Section 1.5 of the Debtor Disclosure Letter, the later of (x) the Closing Date and (y) the eighth (8 th ) day after the Former CEO shall have executed and delivered to the Debtor (and not revoked) the Former CEO Settlement Agreement. ProMedica shall also fund any employer Taxes related to the amounts payable pursuant to this Section 1.5(a) and timely pay such amounts, plus any applicable withholding Taxes related to such payments, to the applicable Governmental Entity ( provided , for the avoidance of doubt, that all amounts payable subject to this Section 1.5 shall be subject to withholding of any Taxes that are required to be withheld pursuant to applicable Laws).
(b) Notwithstanding anything to the contrary in this Agreement or the Amended Plan, ProMedica shall have no obligation to pay, or cause to be paid, any Excess Severance Payments to any Eligible Employee:
(i) if such Eligible Employee separates from service without the written consent of the ProMedica prior to the Closing Date; it being understood and agreed that if such Eligible Employee separates from service without the written consent of the ProMedica prior to the Closing Date due to the Eligible Employees Disability (as defined in such Eligible Employees written Employment Agreement with the Debtor (the Employment Agreement )) or death, such separation from service shall be deemed and shall constitute a Qualifying Termination within the meaning of such Eligible Employees Employment Agreement for all purposes, and the Eligible Employee shall remain entitled to, and shall receive, the Excess Severance Payments (irrespective of whether such separation from service otherwise would have constituted a Qualifying Termination under the Employment Agreement without consideration of this Agreement) upon the Payment Date, subject to Sections 1.5(b)(ii), 1.5(b)(iii) and 1.5(b)(iv) of this Agreement;
(ii) if such Eligible Employee does not execute and deliver a separation agreement and release in a form attached as Exhibit 4 hereto (each, a Separation Agreement );
(iii) to the extent that the Debtor has not obtained the approvals and waivers contemplated by Section 4.5(e)(i) and Section 4.5(e)(ii) with respect to such Eligible Employee (including, for the avoidance of doubt, waivers in respect of any tax gross-ups to which such Eligible Employee would otherwise be entitled); or
(iv) if (A) there has been a material breach of any covenant or agreement made by the Debtor in this Agreement and such material breach is not curable or, if curable, is not cured by the earlier of (i) Closing and (ii) thirty (30) days after written notice thereof is given by ProMedica to the Debtor and (B) prior to Closing, the Debtor Board determines that such Eligible Employee is responsible for or had the ability to avoid such breach and knowingly failed to do so ( it being understood that, if ProMedica asserts in a written notice to the Debtor Board that it believes any Eligible Employee is responsible for any such material breach or had the ability to avoid such material breach and knowingly failed to do so, the Debtor Board shall consider such assertion by ProMedica and make a good faith determination as to whether such Eligible Employee is responsible for any such material breach or had the ability to avoid such material breach and knowingly failed to do so); provided that all determinations by the Debtor Board relating to this Section 1.5(b)(iv) shall be made by the non-employee directors thereof.
1.6 Deliveries by Debtor . On the Closing Date, the Debtor shall deliver to ProMedica:
(a) a certificate executed by the Debtor that it is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (the Code );
(b) (i) a certificate representing the Reorganized Company Stock, (ii) evidence of the resignations or removal of those directors and officers of the Debtor and its Subsidiaries, as applicable, effective as of immediately prior to the Closing, identified in writing to the Debtor by ProMedica not less than five (5) business days prior to the Closing Date, (iii) evidence of the appointment and approval by the board of directors of the Debtor (the Debtor Board ) of those directors nominated by ProMedica not less than five (5) business days prior to the Closing Date, to the Debtor Board effective as of the Closing, and (iv) evidence of amendments to the constitutive documents of the Debtor and its Subsidiaries effective as of the Closing that may be necessary to implement acquisition of the Reorganized Company Stock as contemplated by the Amended Plan, including in accordance with Section 1.3 of this Agreement, and which shall have been identified by ProMedica in writing to the Debtor not less than five (5) business days prior to the Closing Date; and
(c) such other documents, instruments and certificates as ProMedica may reasonably request and as are customary, including a certified copy of the Confirmation Order and notice of the Closing Date.
(d) As used in this Agreement, the term (i) Subsidiary means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is directly or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries; (ii) Person means any individual, corporation, limited liability company, partnership, limited partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity; and (iii) Governmental Entity means any domestic or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity.
1.7 Deliveries by ProMedica . At the Closing, ProMedica shall deliver to the Debtor any documents, instruments or certificates as the Debtor may reasonably request and as are customary.
1.8 Deliveries by HCR III and the Lessors . At the Closing, the Debtor shall cause HCR III to execute and deliver, and HCR III shall execute and deliver, the New Master Lease, and the JV shall cause the Lessors to execute and deliver, and the Lessors shall execute and deliver, the New Master Lease.
ARTICLE II
Representations and Warranties
2.1 Representations and Warranties of the Debtor . Except as set forth in the corresponding sections or subsections of the Debtor Disclosure Letter (as defined in the Original Plan Sponsor Agreement) (it being agreed that disclosure of any item in any section or subsection of the Debtor Disclosure Letter shall be deemed disclosed with respect to any other section or subsection to which the relevance of such item is reasonably apparent), the Debtor hereby represents and warrants to ProMedica as of the date of the Original Plan Sponsor Agreement (provided that the representations and warranties set forth in Sections 2.1(a) (d) shall be deemed to be made as of the date hereof) that:
(a) Organization, Good Standing and Qualification . The Debtor is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing (with respect to jurisdictions that recognize the concept of good standing) as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Debtor has made available to ProMedica complete and correct copies of the Debtors and its material Subsidiaries certificates of incorporation and by-laws or comparable governing documents, each as amended to the date of this Agreement, and each as so delivered is in full force and effect.
As used in this Agreement, the term Material Adverse Effect with respect to the Debtor means a change, event or occurrence that has a material adverse effect on the financial condition, properties, assets, liabilities, business or results of operations of the Debtor and its Subsidiaries taken as a whole; provided , however , that none of the following, and no changes, events, occurrences or effects, to the extent arising out of or resulting from any of the following, shall constitute or be taken into account in determining whether a Material Adverse Effect has occurred or may, would or could occur with respect to the Debtor:
(i) changes in or generally affecting the economy, credit, capital or financial markets or political conditions generally in the United States or elsewhere in the world, including changes in interest and exchange rates, or changes that are the result of acts of war (whether or not declared), armed hostilities, sabotage or terrorism, any escalation or worsening of any such acts of war (whether or not declared), epidemics, pandemics, earthquakes, hurricanes, tornados or other natural disasters;
(ii) changes that are the result of factors generally affecting the industries in which the Debtor and its Subsidiaries operate or in which the services of the Debtor and its Subsidiaries are used and distributed;
(iii) any loss of, or adverse change or effect in, the relationship of the Debtor with its customers, employees, financing sources or suppliers, caused by entry into or the pendency or the announcement of the Transactions;
(iv) changes from the entry into, announcement or performance of this Agreement (including any litigation arising from allegations of any breach of fiduciary duty or violation of Law relating to this Agreement or the Transactions, or compliance by the Debtor with the terms of this Agreement);
(v) changes or prospective changes in United States generally accepted accounting principles ( GAAP ) or in any law, statute, rule or regulation after the date of this Agreement or the interpretation or enforcement thereof;
(vi) any failure by the Debtor to meet any projections, forecasts or estimates of revenues or earnings for any period, provided that the exception in this clause shall not (on its own) prevent or otherwise affect a determination that any change, event or occurrence underlying such failure has resulted in, or contributed to, a Material Adverse Effect;
(vii) (A) any action taken by the Debtor or its Subsidiaries at ProMedicas written request or (B) the failure to take any action by the Debtor or its Subsidiaries if that action is prohibited by this Agreement to the extent that ProMedica fails to give its consent after receipt of a written request therefor;
(viii) any change or announcement of a potential change in the credit rating of the Debtor or any of its Subsidiaries or its obligations, provided that the exception in this clause shall not (on its own) prevent or otherwise affect a determination that any change, event or occurrence underlying such failure has resulted in, or contributed to, a Material Adverse Effect; or
(ix) loss of customers or patients (and loss of revenue associated therewith), change in or tightening of payment or other terms provided by vendors, suppliers or service providers to the Debtor or its Subsidiaries, in each case, occurring since December 31, 2017 through the date of this Agreement;
provided , further , that, with respect to clauses (i), (ii) and (v), such change, event or occurrence does not disproportionately adversely affect the Debtor and its Subsidiaries compared to other companies operating in the principal industries in which the Debtor and its Subsidiaries operate.
(b) Capital Structure .
(i) The authorized capital stock of the Debtor consists of 55,000,000 shares of common stock of the Debtor, par value $0.01 per share ( Shares ), and 50,000,000 preferred shares, par value $0.01 per share ( Preferred Shares ), of which 44,925,848 Shares and 2,000 Preferred Shares, respectively, were outstanding as of the close of business on March 31, 2018. All of the outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable. Other than 2,049,823 Shares reserved for issuance under the Amended and Restated Equity Incentive Plan of the Debtor (the Stock Plan ), as of the close of business on March 31, 2018, the Debtor had no Shares reserved for issuance.
(ii) Section 2.1(b)(ii) of the Debtor Disclosure Letter sets forth (x) each of the Debtors Subsidiaries and the ownership interest of the Debtor in each such Subsidiary, as well as the ownership interest of any other Person or Persons in each such Subsidiary and (y) the Debtors or its Subsidiaries capital stock, equity interest or other direct or indirect ownership interest in any other Person other than securities in a publicly traded company held for investment by the Debtor or any of its Subsidiaries and consisting of less than 1% of the outstanding capital stock of such company.
(c) Corporate Authority and Approval . The Debtor has all requisite corporate power, authority and legal capacity to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by the Debtor in connection with the consummation of the Transactions (the Debtor Documents ) and to perform its obligations hereunder and thereunder and consummate the Transactions. The execution and delivery of this Agreement and the Debtor Documents and the consummation of the Transactions contemplated thereby have been duly authorized by all requisite corporate action on the part of the Debtor. This Agreement has been, and the Debtor Documents will be at or prior to the Closing, duly and validly executed and delivered by, or on behalf of, the Debtor and (assuming the due authorization, execution and delivery by the other parties hereto and thereto and the entry of the Confirmation Order) this Agreement constitutes, and each of the Debtor Documents when so executed and delivered will constitute, legal, valid and binding obligations of the Debtor and each of its applicable Subsidiaries, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and similar laws affecting creditors rights generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) (the Bankruptcy and Equity Exception ).
(d) Governmental Filings; No Violations; Certain Contracts .
(i) Other than (A) the filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtors businesses) set forth on Section 2.1(d)(i) of the Debtor Disclosure Letter (the Governmental Approvals ), (B) the entry of the Confirmation Order and (C) and compliance with the applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act ), no notices, reports or other filings are required to be made by the Debtor with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Debtor from any Governmental Entity, in connection with the execution, delivery and performance of this Agreement by the Debtor and the consummation of the Transactions, except those failures to make or obtain as would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect or prevent, materially delay or materially impair the consummation of the Transactions.
(ii) The execution, delivery and performance of this Agreement by the Debtor do not, and the consummation of the Transactions will not, constitute or result in (A) a breach or violation of, or a default under, the certificate of incorporation or by-laws of the Debtor or the comparable governing documents of any of its Subsidiaries or (B) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) or default under, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of the Debtor or any of its Subsidiaries pursuant to any agreement, lease, license, contract, note, mortgage, indenture, arrangement or other obligation, in each case, not otherwise terminable by the other party thereto on sixty (60) days or less notice (each, a Contract ) to which the Debtor or any of its Subsidiaries is a party or by which the Debtor or any of its Subsidiaries or its or any of their respective properties are bound or (C) assuming compliance with the matters referred to in Section 2.1(d)(i), a violation of any Law to which the Debtor or any of its Subsidiaries is subject, except in the case of clause (B) or (C), for any such breach, violation, termination, default,
creation, acceleration or change that is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect.
(e) Financial Statements .
(i) Set forth in the Debtor Disclosure Letter are the audited consolidated balance sheets of the Debtor and its Subsidiaries as of December 31, 2016 and December 31, 2017, and the related audited consolidated statements of operations, statements of comprehensive (loss) income, statements of cash flows and statements of equity for the twelve (12)-month periods then ended (the Audited Financial Statements ). Each of the balance sheets, statements of operations, statements of comprehensive loss, statements of cash flows and statements of equity included in the Audited Financial Statements (including any related notes thereto) fairly presents, in all material respects, the financial condition, results of operations and cash flows, as the case may be, of the Debtor and its Subsidiaries as of the dates and for the periods set forth therein, as applicable, in each case in accordance with GAAP, consistently applied during the periods involved, except as specifically noted therein.
(ii) The Debtor and its Subsidiaries maintain a system of internal accounting controls designed, in all material respects, to provide reasonable assurances (i) that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (ii) that receipts and expenditures of the Debtor and its Subsidiaries are being made in accordance with appropriate authorizations of management and the Debtor Board and (iii) regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Debtor and its Subsidiaries. To the Knowledge of the Debtor, there is not, and in the past five (5) years there has not been, any fraud that involves or involved the Debtors and/or its Subsidiaries management or other employees who have or had a significant role in the Debtors and/or its Subsidiaries internal control over financial reporting except as would not, individually or in the aggregate, be material to the Debtor and its Subsidiaries. No significant deficiencies or material weaknesses in the design or operation of the Debtors system of internal control over financial reporting were identified in the Debtors most recent assessment that would be reasonably likely to materially affect the Debtors and/or its Subsidiaries ability to record, process, summarize and report financial information. As used herein, Knowledge of the Debtor means the actual (but not constructive or imputed) knowledge of the chief executive officer, chief financial officer, chief operating officer or general counsel of the Debtor (without any obligation of further review and/or inquiry).
(iii) Each of the balance sheets, statements of operations, statements of comprehensive loss, statements of cash flows and statements of equity (including any related notes thereto) required to be delivered to QCP pursuant to the terms of the Master Lease after the date of this Agreement, including the quarterly unaudited consolidated balance sheets of the Debtor and its Subsidiaries as of March 31, 2018 and any subsequent quarterly unaudited consolidated balance sheets of the Debtor and its Subsidiaries, and the related unaudited consolidated statements of operations, statements of comprehensive (loss) income, statements of cash flows and statements of equity, will fairly present, in all material respects, the financial condition, results of operations and cash flows, as the case may be, of the Debtor and its Subsidiaries as of the dates and for the periods set forth therein, as applicable, in each case in accordance with GAAP, consistently applied during the periods involved, except as specifically noted therein, subject, in the case of any unaudited
consolidated balance sheets, statements of operations, statements of comprehensive loss, statements of cash flows and statements of equity, to the absence of footnotes and to year-end adjustments, except as would not, individually or in the aggregate, be material in amount or effect.
(f) Absence of Certain Changes . Since the date of the most recent Audited Financial Statements through the date hereof, there has not been:
(i) any material damage, destruction or other casualty loss with respect to any asset or property owned, leased or otherwise used by the Debtor or any of its Subsidiaries, whether or not covered by insurance;
(ii) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Debtor or any of its Subsidiaries (except for dividends or other distributions by any direct or indirect wholly-owned Subsidiary to the Debtor or to any wholly-owned Subsidiary of the Debtor), or any repurchase, redemption or other acquisition by the Debtor or any of its Subsidiaries of any outstanding shares of capital stock or other securities of the Debtor or any of its Subsidiaries;
(iii) any material change in any method of accounting or accounting practice by the Debtor or any of its Subsidiaries;
(iv) (A) any material increase in the compensation payable or to become payable to the officers or employees of the Debtor or any of its Subsidiaries or material increases in the benefits of such officers or employees (except for increases in the compensation of non-officer employees in the ordinary course of business and consistent with past practice), (B) any entrance into, adoption, material amendment or termination of any Company Plan (as defined in Section 2.1(h)(i)) (or any arrangement that would have been a Company Plan were it in effect as of the date hereof) that is or would be material to the Debtor and its Subsidiaries, taken as a whole, or (C) any actions taken by the Debtor or any of its Subsidiaries to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of any material compensation or benefits under any Company Plan, taken as a whole, except, in each case, to the extent required by applicable Laws; or
(v) any agreement to do any of the foregoing.
(g) Litigation and Liabilities . As of the date of this Agreement, there are no civil, criminal or administrative actions, suits, claims, hearings, arbitrations or indictments or other proceedings by or before any Governmental Entity (collectively, Proceedings ) (or to the Knowledge of the Debtor, any audits or investigations) pending or, to the Knowledge of the Debtor, threatened in writing against the Debtor or any of its Subsidiaries, except for any such Proceeding or investigation that is not reasonably likely to result in, individually or in the aggregate, a Material Adverse Effect. As of the date of this Agreement, none of the Debtor nor any of its Subsidiaries is a party to or subject to the provisions of any temporary, preliminary or permanent judgment, order, writ, injunction, ruling, decree, assessment or award of any Governmental Entity or arbitrator (collectively, an Order ) specifically imposed upon the Debtor or any of its Subsidiaries which is, individually or in the aggregate, reasonably likely to have a Material Adverse Effect.
(h) Employee Benefits .
(i) Section 2.1(h)(i)-A of the Debtor Disclosure Letter sets forth an accurate and complete list of each material Company Plan. No Company Plan is maintained outside the jurisdiction of the United States or covers any employees or other service providers of the Debtor or any of its Subsidiaries who primarily reside or work outside the United States.
For purposes of this Agreement, Company Plan means any benefit or compensation plan, program, policy, practice, agreement, Contract, arrangement or other obligation, whether or not in writing and whether or not funded (and, in each case, which is sponsored or maintained by, or required to be contributed to, or with respect to which any Liabilities (as defined in Section 2.1(k)) are borne by the Debtor or any of its Subsidiaries. Company Plans include, but are not limited to, employee benefit plans within the meaning of Section 3(3) of ERISA ( ERISA Plans ), the Stock Plan, employment, consulting, retirement, severance, termination or change in control agreements, deferred compensation, equity-based, incentive, bonus, supplemental retirement, profit sharing, insurance, medical, welfare, vacation, fringe or other benefits or remuneration of any kind.
(ii) With respect to each material Company Plan, the Debtor has made available to ProMedica, to the extent applicable, accurate and complete copies of (A) the Company Plan document, including any material amendments thereto, and all related trust documents, insurance contracts or other funding vehicles, (B) a written description of such Company Plan if such plan is not set forth in a written document, (C) the most recent annual actuarial report or annual report on Form 5500 or Form 990, and all schedules and financial statements attached thereto, (D) all material and non-routine correspondence to or from any Governmental Entity received in the last three (3) years with respect to such Company Plan, and (E) the most recent Internal Revenue Service ( IRS ) determination or opinion letter, and related trust intended to be qualified under Section 401(a) of the Code and any pending request for such a determination letter.
(iii) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (A) each Company Plan (including any related trusts) has been established, operated and administered in compliance with its terms and applicable Laws, including, without limitation, ERISA and the Code, (B) all contributions or other amounts payable by the Debtor or a Debtor Subsidiary with respect to each Debtor Plan in respect of current or prior plan years have been paid or accrued in accordance with generally accepted accounting principles, and (C) there are no pending or, to the Knowledge of the Debtor, threatened claims (other than routine claims for benefits) or Proceedings by a Governmental Entity by, on behalf of or against any Company Plan or any trust related thereto.
(iv) Except as would not reasonably be expected to result in a Material Adverse Effect, each ERISA Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be qualified under Section 401(a) of the Code and, to the Knowledge of the Debtor, nothing has occurred that would reasonably be expected to result in the loss of qualification or tax exemption of any such Company Plan. Except as would not reasonably be expected to result in a Material Adverse Effect, with respect to any ERISA Plan, neither the Debtor nor any of its Subsidiaries has engaged in a transaction in connection with which the Debtor or any of its Subsidiaries reasonably would be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975 or 4976 of the Code.
(v) Except as would not reasonably be expected to result in a Material Adverse Effect, neither the Debtor nor any of its Subsidiaries has or is expected to incur any material liability under subtitles C or D of Title IV of ERISA with respect to any ongoing, frozen or terminated single-employer plan, within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them or any ERISA Affiliate. Except as would not, individually or in the aggregate, reasonably be expected to result in material liability to the Debtor or any of its Subsidiaries, with respect to any Company Plan subject to the minimum funding requirements of Section 412 of the Code or Title IV of ERISA, (A) no such plan is, or is reasonably expected to be, in at-risk status (within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code), (B) as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all benefit liabilities within the meaning of Section 4001(a)(16) of ERISA did not exceed the then-current value of assets of such Company Plan, (C) no unsatisfied liability (other than for premiums to the PBGC) under Title IV of ERISA has been, or is reasonably expected to be, incurred by the Debtor or any of its Subsidiaries, (D) the Pension Benefit Guaranty Corporation ( PBGC ) has not instituted proceedings to terminate any such Company Plan and (E) no reportable event within the meaning of Section 4043 of ERISA (excluding any such event for which the thirty (30)-day notice requirement has been waived under the regulations to Section 4043 of ERISA) has occurred, nor has any event described in Section 4062, Section 4063 or Section 4041 of ERISA occurred. For purposes of this Agreement, ERISA Affiliate means all employers (whether or not incorporated) that would be treated together with the Debtor or any of its Subsidiaries as a single employer within the meaning of Section 414 of the Code.
(vi) Neither the Debtor nor any of its Subsidiaries has maintained, established, participated in or contributed to, or is or has been obligated to contribute to, or has otherwise incurred any obligation or liability (including any contingent liability) under, any multiemployer plan within the meaning of Section 3(37) of ERISA in the last six (6) years.
(vii) Except as required by applicable Law, no Company Plan provides retiree or post-employment medical, disability, life insurance or other welfare benefits to any Person, and none of the Debtor or any of its Subsidiaries has any obligation to provide such benefits.
(viii) Section 2.1(h)(viii) of the Debtor Disclosure Letter sets forth the following with respect to each Company Plan that is a nonqualified deferred compensation plan (within the meaning of Section 409A of the Code), the Heartland Employment Services, LLC Key Employee Incentive Plan (the Key Employee Incentive Plan ) and the Heartland Employment Services, LLC Key Employee Retention Plan, in each case as of January 31, 2018 and in a manner that is accurate in all material respects: (A) the number of participants in each such Company Plan; (B) the dollar amount of the aggregate balances for all participants (and, with respect to any such nonqualified deferred compensation plan, individual balances for any executive officer) under each such Company Plan; and (C) for any supplemental retirement plan, the amount payable under such Company Plan, assuming the participant undergoes a separation from service (within the meaning of Section 409A of the Code) on the Closing Date. In addition, the Debtor has
provided to ProMedica a list of each participant in the Key Employee Incentive Plan and the Heartland Employment Services, LLC Key Employee Retention Plan with individual balances for such participants that are accurate in all material respects as of January 31, 2018.
(ix) Neither the execution and delivery of this Agreement, nor the consummation of the Transactions will, either alone or in combination with another event, (A) entitle any current or former employee, director, officer or independent contractor of the Debtor or any of its Subsidiaries to material severance pay or any material increase in severance pay, (B) accelerate the time of payment or vesting, or materially increase the amount of compensation due to any such employee, director, officer or independent contractor, (C) directly or indirectly cause the Debtor to transfer or set aside any assets to fund any material benefits under any Company Plan, (D) otherwise give rise to any material liability under any Company Plan, (E) limit or restrict the right to merge, materially amend, terminate or transfer the assets of any Company Plan on or following the Closing Date or (F) result in the payment of any amount that could, individually or in combination with any other such payment, constitute an excess parachute payment as defined in Section 280G(b)(1) of the Code.
(x) Neither the Debtor nor any of its Subsidiaries has any obligation to provide, and no Company Plan or other agreement provides any individual with the right to, a gross up, indemnification, reimbursement or other payment for any excise or additional taxes, interest or penalties incurred pursuant to Section 409A or Section 4999 of the Code or due to the failure of any payment to be deductible under Section 280G of the Code.
(i) Labor Matters .
(i) Section 2.1(i)(i) of the Debtor Disclosure Letter sets forth an accurate and complete list of any material collective bargaining agreement or other material agreement with a labor union or like organization that the Debtor or any of its Subsidiaries is a party to or otherwise bound by (collectively, the Debtor Labor Agreements ) as of the date of this Agreement and, to the Knowledge of the Debtor, as of the date of this Agreement, there are no activities or Proceedings by any individual or group of individuals, including representatives of any labor organizations or labor unions, to organize any employees of the Debtor or any of its Subsidiaries. Within seven (7) days following the date of this Agreement, the Debtor will make available to ProMedica accurate and complete copies of each Debtor Labor Agreement listed on Section 2.1(i)(i) of the Debtor Disclosure Letter. Neither the execution and delivery of this Agreement (including any shareholder or other approval of this Agreement) nor the consummation of the Transactions would reasonably be expected to, either alone or in combination with another event, entitle any third party (including any labor organization or Governmental Entity) to any material payments or consent rights under any of the Debtor Labor Agreements. Except as would not reasonably be expected to result in a Material Adverse Effect, the Debtor and its Subsidiaries are in compliance with their obligations pursuant to all notification and bargaining obligations arising under any Debtor Labor Agreements.
(ii) As of the date hereof, there is no strike, lockout, slowdown or work stoppage pending or, to the Knowledge of the Debtor, threatened in writing, that is reasonably expected to interfere in any material respect with the respective business activities of the Debtor or any of its Subsidiaries.
(j) Compliance with Laws; Licenses . The businesses of each of the Debtor and its Subsidiaries have not, since December 31, 2014, been, and are not being, conducted in violation of any federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, standard, Order, agency requirement, license or permit of any Governmental Entity (collectively, Laws ), except for violations that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect. To the Knowledge of the Debtor, as of the date of this Agreement, no investigation by any Governmental Entity with respect to any actual or alleged violation of Law by the Debtor or any of its Subsidiaries is pending or threatened in writing, nor has any Governmental Entity notified the Debtor in writing of an intention to conduct the same, except for such investigations or reviews the outcome of which are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect. The Debtor and its Subsidiaries each has obtained and is in compliance with all permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity ( Licenses ) necessary to conduct its business as presently conducted, except those failures or the absence of which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(k) Undisclosed Liabilities . The Debtor and its Subsidiaries do not have any debts, claims, liabilities or obligations, including all costs and expenses relating thereto, whether absolute or contingent, known or unknown, liquidated or unliquidated, whether due or to become due and regardless of when or by whom asserted ( Liabilities ) that would have been required to be reflected or reserved against, or otherwise described on a consolidated balance sheet of the Debtor prepared in accordance with GAAP or in the notes thereto, other than Liabilities (i) reflected or reserved against in the balance sheet included in the Audited Financial Statements or disclosed in the notes thereto, (ii) incurred in the ordinary course of the operation of business consistent with past practice of the Debtor and its Subsidiaries since December 31, 2016, (iii) arising or incurred in connection with the Transactions or (iv) which have not had, or would not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect.
(l) Material Contracts and Government Contracts .
(i) Section 2.1(l)(i) of the Debtor Disclosure Letter sets forth a list of each of the following Contracts to which, as of the date hereof, the Debtor or any of its Subsidiaries is a party or by which the Debtor or any of its Subsidiaries or any of their respective assets is bound (each, a Material Contract ):
(A) any Contract (or group of related Contracts with respect to a single transaction or series of related transactions) pursuant to which the Debtor or any of its Subsidiaries currently leases or subleases real or personal property to or from any Person (other than QCP or any of its Affiliates) providing for lease payments in excess of $5,000,000 per annum (in each case, other than the Subleases);
(B) any Contract pursuant to which any material Intellectual Property Rights are (1) licensed by any Person to the Debtor or any of its Subsidiaries (other than non-exclusive licenses to the Debtor or any of its Subsidiaries for non-customized software that is generally available on commercial terms) or (2) licensed by the Debtor or any of its Subsidiaries to any Person;
(C) each joint venture, partnership and other similar Contract involving the sharing of profits of the Debtor or any of its Subsidiaries with any third party;
(D) each Contract that expressly limits the freedom of the Debtor or any of its Subsidiaries (or, after the Closing, ProMedica or any of its Subsidiaries) to compete in any line of business or within any geographic area or with any Person;
(E) each Contract under which the Debtor or any of its Subsidiaries has borrowed or loaned money, or any note, bond, indenture, mortgage or any guarantee of such indebtedness, in each case, relating to amounts in excess of $5,000,000;
(F) each Contract entered into in the past three (3) years relating to the acquisition or disposition of assets (other than in the ordinary course of business) or any capital stock of any enterprise, in each case, in excess of $10,000,000 individually (other than such Contracts previously approved in writing by QCP or one of its Subsidiaries pursuant to the Master Lease);
(G) each Contract entered into since January 1, 2015 related to any settlement or stipulation of any action against the Debtor or any of its Subsidiaries by any other Person, other than settlement agreements for cash that do not exceed $1,000,000 individually as to any such settlement or stipulation (excluding amounts paid by insurers) or $5,000,000 (including any amounts paid by insurers); and
(H) each Contract that provides for indemnification of any officer, director or employee of the Debtor or any of its Subsidiaries other than in the ordinary course of business.
(ii) Each Material Contract and each Government Contract is valid and binding on the Debtor or its Subsidiaries, as the case may be, and, to the Knowledge of the Debtor, each other party thereto, and, to the Knowledge of the Debtor, is in full force and effect, except for such failures to be valid and binding or to be in full force and effect as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. There is no material breach of or default under any such Contracts by the Debtor or its Subsidiaries and no event has occurred that, with the lapse of time or the giving of notice or both, would constitute a material breach of or default thereunder by the Debtor or any of its Subsidiaries or would permit termination, modification or acceleration thereof, in each case except as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. To the Knowledge of the Debtor, no party to any Material Contract or any Government Contract has delivered any written notice to the Debtor or any of its Subsidiaries that it is terminating such Material Contract or Government Contract, except as would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
(iii) For purposes of this Agreement, the following terms shall have the following meanings:
(A) Affiliate when used with respect to any party shall mean any Person who is an affiliate of that party within the meaning of Rule 405 promulgated under the Securities Act of 1933, as amended (the Securities Act );
(B) Government Contract means any contract to which the Debtor or any of its Subsidiaries is a party, or by which any of them is bound, the ultimate contracting party of which is a Governmental Entity (including any subcontract with a prime contractor or other subcontractor who is a party to any such contract); and
(C) Intellectual Property Rights means all intellectual property rights arising under the Laws of any jurisdiction in the world, including all rights in or to any of the following: (1) trademarks, service marks, certification marks, collective marks, d/b/as, Internet domain names, symbols, trade dress, trade names, and other indicia of origin, all applications and registrations for the foregoing, in each case, including all goodwill associated therewith and symbolized thereby; (2) patents, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and reissues; (3) trade secrets, proprietary or confidential information, inventions, know-how, processes, formulae, models, methodologies, formulae, drawings, prototypes, models, designs, customer lists and supplier lists; and (4) published and unpublished works of authorship, copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof.
(m) Real Property . The Debtor does not own any real property.
(n) Takeover Statutes . No fair price, moratorium, control share acquisition or other similar anti-takeover statute or regulation enacted under state or federal Laws in the United States (each, a Takeover Statute ) or any anti-takeover provision in the Debtors certificate of incorporation or by-laws is applicable to the Debtor, the Shares or the Transactions.
(o) Environmental Matters . Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, to the Knowledge of the Debtor, each real property operated by the Debtor or any of its Subsidiaries and used in the conduct of their respective businesses: (i) is in substantial compliance with all applicable Environmental Laws; (ii) is not the subject of any pending written notice from any Governmental Entity alleging the violation of any applicable Environmental Law; (iii) is not currently subject to any Orders arising under any Environmental Law; and (iv) has not had any emissions or discharges of Hazardous Substances except as permitted under applicable Environmental Laws.
As used herein, (i) the term Environmental Law means any federal, state, local or foreign statute, law, regulation, order, decree, permit, authorization or requirement of any Governmental Entity relating to: (A) the protection, investigation or restoration of the environment, natural resources or health or safety (in relation to exposure to Hazardous Substances), (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) noise, odor, indoor air, employee exposure, wetlands, pollution, contamination or any injury or threat of injury to persons or property relating to any Hazardous Substance; and (ii) the term Hazardous Substance means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law; (B) any petroleum product or byproduct, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, mold, radioactive material or radon; and (C) any other substance which may be the subject of regulatory action by any Governmental Entity in connection with any Environmental Law.
(p) Taxes .
(i) The Debtor and each of its Subsidiaries has prepared (or caused to be prepared) and timely filed (taking into account valid extensions of time within which to file) all material Tax Returns required to be filed by any of them, and all such filed Tax Returns (taking into account all amendments thereto) are accurate and complete in all material respects;
(ii) all material Taxes owed by the Debtor and each of its Subsidiaries that are due and payable (whether or not shown as due on a Tax Return) have been timely paid or, if not yet due and payable, adequately reserved against in accordance with GAAP;
(iii) no deficiency for any amount of material Taxes has been proposed or asserted in writing or assessed by any Taxing Authority against the Debtor or any of its Subsidiaries that remains unpaid or unresolved;
(iv) the Debtor and each of its Subsidiaries has not received written notice of any pending Proceedings, examinations or proposed adjustments in respect of any material amount of Taxes of the Debtor or any of its Subsidiaries;
(v) all material Taxes required to be withheld or collected by the Debtor or any of its Subsidiaries have been withheld and collected and, to the extent required by applicable Law, timely paid to the appropriate Governmental Entity or other person, and all IRS forms required with respect thereto have been properly completed and timely filed;
(vi) there are no material Liens for Taxes on any of the assets of the Debtor or any of its Subsidiaries, other than Permitted Liens;
(vii) neither the Debtor nor any of its Subsidiaries has been a controlled corporation or a distributing corporation in any distribution occurring during the two (2)-year period ending on the date of this Agreement that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or non-U.S. Law);
(viii) no claim has been received, or is expected by the Debtor to be received, with respect to the Debtor or any of its Subsidiaries from a Taxing Authority in a jurisdiction where such entity does not file Tax Returns that it is or may be subject to taxation by, or required to file any Tax Return in, that jurisdiction which claim has not since been resolved;
(ix) during the past ten (10) years, neither the Debtor nor any of its Subsidiaries has been a member of an affiliated group of corporations filing a consolidated federal income Tax Return (other than a group the common parent of which is the Debtor) or has had any liability for the Taxes of any person (other than the Debtor or any of its Subsidiaries) under U.S. Treasury Regulation Section 1.1502-6 (or any similar provision of any state, local or non-U.S. Law), as a transferee or successor;
(x) neither the Debtor nor any of its Subsidiaries is a party to, or is bound by, or has any obligation under, any Tax sharing Contract, Tax allocation agreement, Tax indemnity obligation or similar agreement or practice other than (A) Contracts solely among the Debtor and/or its Subsidiaries and (B) customary Tax indemnification provisions in Contracts
entered into in the ordinary course of business, the primary purpose of which does not relate to Taxes;
(xi) neither the Debtor nor any of its Subsidiaries has currently in effect any waiver of any statute of limitations in respect of Taxes or any agreement to any extension of time with respect to the filing of a Tax Return or an assessment or deficiency for Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business);
(xii) neither the Debtor nor any of its Subsidiaries has participated in any listed transaction within the meaning of U.S. Treasury Regulations Section 1.6011-4(b); and
(xiii) the Debtor has made available to ProMedica accurate and complete copies of any private letter ruling requests, closing agreements or gain recognition agreements with respect to Taxes of the Debtor or any of its Subsidiaries requested or executed in the last five (5) years.
As used in this Agreement, (i) the term Tax (including, with correlative meaning, the term Taxes ) means all federal, state, local or foreign taxes, including, without limitation, income, gross receipts, windfall profits, severance, property, production, sales, use, social security, license, excise, franchise, employment, withholding or similar taxes together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, (ii) the term Tax Return means any return, filing, report, questionnaire, information statement, claim for refund or declaration of estimated Taxes, including any schedule or attachment thereto or any amendment thereof, filed or required to be filed with any Taxing Authority in connection with the determination, assessment or collection of any Tax, or the administration of any laws, regulations or administrative requirements relating to any Tax, including consolidated, combined and unitary tax returns and (iii) the term Taxing Authority means any Governmental Entity exercising regulatory authority in respect of taxes or responsible for the imposition of any Tax.
(q) Intellectual Property .
(i) To the Knowledge of the Debtor, the Debtor and its Subsidiaries own or have a valid and enforceable right to use all material Intellectual Property Rights that are used in or necessary for the conduct of their respective businesses as presently conducted. All Intellectual Property Rights that are owned by the Debtor or any of its Subsidiaries ( Owned Intellectual Property ) are, to the Knowledge of the Debtor, (A) valid, subsisting and enforceable and (B) not subject to any outstanding Order adversely affecting the Debtors or any of its Subsidiaries use of, or rights in or to any such Intellectual Property Rights, except in the case of clauses (A) and (B) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(ii) To the Knowledge of the Debtor, neither the Debtor nor any of its Subsidiaries is infringing, misappropriating or otherwise violating any Intellectual Property Rights of any Person, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(iii) To the Knowledge of the Debtor, no Person is infringing, misappropriating or otherwise violating any Owned Intellectual Property, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(iv) To the Knowledge of the Debtor, no Person has gained unauthorized access to any Debtor IT Asset, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(v) The Debtor and each of its Subsidiaries are in compliance in all material respects with their respective privacy and security policies and with all applicable Laws regarding privacy and personal information, including with respect to the collection, storage, transmission, transfer, disclosure and use of personal information, in each case, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Debtor and each of its Subsidiaries have taken commercially reasonable measures consistent with customary industry practices to ensure the confidentiality, privacy and security of all personal information of their customers and employees, and no Person has gained unauthorized access to, or misused, any such information, in each case, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(vi) For purposes of this Agreement, Debtor IT Assets means all computers, software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment and associated documentation owned or used by the Debtor or any of its Subsidiaries.
(r) Insurance . The fire and casualty, general liability, business interruption, product liability, and sprinkler and water damage insurance policies maintained by the Debtor or any of its Subsidiaries ( Insurance Policies ) provide full and adequate coverage for all normal risks incident to the business of the Debtor and its Subsidiaries and their respective properties and assets, except for any such failures to maintain such insurance policies that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Insurance Policies is in full force and effect and all premiums due with respect to all Insurance Policies have been paid, in each case, with such exceptions that, individually or in the aggregate, are not reasonably expected to have a Material Adverse Effect.
(s) Brokers and Finders . Neither the Debtor nor any of its officers, directors or employees has employed any broker or finder or incurred any Liability for any brokerage fees, commissions or finders fees in connection with the Transactions or otherwise, except for fees payable to Moelis & Company as its financial advisor. The Debtor has made available to ProMedica a complete and accurate copy of all agreements pursuant to which Moelis & Company is entitled to any fees and expenses in connection with any of the Transactions or otherwise.
2.2 Representations and Warranties of ProMedica . ProMedica hereby represents and warrants to the Debtor that:
(a) Organization, Good Standing and Qualification . Each of ProMedica Parent and the Purchaser is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power
and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing (with respect to jurisdictions that recognize the concept of good standing) as a foreign corporation or other entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in such good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or impair the ability of ProMedica to consummate the Transactions.
(b) Corporate Authority . Each of the Purchaser and ProMedica Parent has all requisite corporate or similar power and authority and has taken all corporate or similar action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Transactions. This Agreement has been duly executed and delivered by each of the Purchaser and ProMedica Parent, and is a valid and binding agreement of the ProMedica Entities, enforceable against each of the Purchaser and ProMedica Parent, in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(c) Governmental Filings; No Violations; Etc .
(i) Other than the Governmental Approvals, and compliance with the applicable requirements under the HSR Act, no notices, reports or other filings are required to be made by ProMedica, with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by ProMedica from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement by ProMedica and the consummation by ProMedica of the Transactions, except those that the failure to make or obtain would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the ability of ProMedica to consummate the Transactions.
(ii) The execution, delivery and performance of this Agreement by ProMedica do not, and the consummation by ProMedica of the Transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the certificate of incorporation or by-laws of ProMedica or the comparable governing instruments of any of their respective Subsidiaries, (B) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) or a default under, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of ProMedica Parent, Purchaser or any of their respective Subsidiaries pursuant to, any Contracts binding upon ProMedica or any Laws or governmental or non-governmental permit or license to which ProMedica Parent, Purchaser or any of their respective Subsidiaries is subject, or (C) any change in the rights or obligations of any party under any of such Contracts, except, in the case of clause (B) or (C) above, for any breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the ability of ProMedica to consummate the Transactions.
(d) Capitalization of ProMedica; Financial Statements . ProMedica Parent and Purchaser are each non-profit Ohio corporations that are managed by their respective duly elected Board of Trustees. ProMedica has, and at the Closing will have, available sufficient funds to pay the ProMedica Plan Contribution and pay all other cash amounts payable pursuant to this
Agreement. ProMedica expressly acknowledges and agrees that its obligations hereunder, including its obligations to consummate the transactions contemplated hereby, are not subject to, or conditioned on, receipt of financing. ProMedica Parent has provided to the Debtor the audited consolidated balance sheets of ProMedica Parent and its Subsidiaries as of December 31, 2017, and the related audited consolidated statements of operations, statements of comprehensive (loss) income, statements of cash flows and statements of equity for the twelve (12)-month periods then ended (the ProMedica Audited Financial Statements ). Each of the balance sheets, statements of operations, statements of comprehensive loss, statements of cash flows and statements of equity included in the ProMedica Audited Financial Statements (including any related notes thereto) fairly presents, in all material respects, the financial condition, results of operations and cash flows, as the case may be, of ProMedica Parent and its Subsidiaries as of the dates and for the periods set forth therein, as applicable, in each case in accordance with GAAP, consistently applied during the periods involved, except as specifically noted therein.
(e) Proceedings . As of the date of this Agreement, other than the Bankruptcy Case and chapter 11 proceedings for HCR III and/or its Subsidiaries, there are no Proceedings pending or, to the knowledge of the officers of ProMedica, threatened against ProMedica that seek to enjoin, or would reasonably be expected to have the effect of preventing, making illegal, materially delaying or otherwise interfering with the ability of ProMedica to consummate the Transactions.
(f) No Other Company Representations or Warranties . Except for the representations and warranties set forth in Section 2.1, ProMedica hereby acknowledges and agrees that neither the Debtor nor any of its Subsidiaries, nor any of their respective stockholders, Affiliates or Representatives, has made or is making any other express or implied representation or warranty with respect to the Debtor or any of its Subsidiaries or their respective businesses or operations, including with respect to any information provided or made available to ProMedica. Subject to Section 8.1(a), neither the Debtor nor any of its Subsidiaries, nor any of their respective stockholders, Affiliates or Representatives, will have or be subject to any liability or indemnification obligation to ProMedica resulting from the delivery, dissemination or any other distribution to ProMedica, or the use by ProMedica, of any such information provided or made available to them by the Debtor or any of its Subsidiaries, or any of their respective stockholders, Affiliates or Representatives, including any information, documents, estimates, projections, forecasts or other forward-looking information, business plans or other material provided or made available to ProMedica or any of their Affiliates or Representatives, in anticipation or contemplation of any of the Transactions.
(g) Non-Reliance on Debtor Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans . In connection with the due diligence investigation of the Debtor by ProMedica, ProMedica has received and may continue to receive from the Debtor certain estimates, projections, forecasts and other forward-looking information, as well as certain business plan information, regarding the Debtor, its Subsidiaries and their respective businesses and operations. ProMedica hereby acknowledges that there are uncertainties inherent in attempting to make such estimates, projections, forecasts and other forward-looking statements, as well as in such business plans, with which ProMedica is familiar, that ProMedica is taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts and other forward-looking information, as well as such business plans, so furnished to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, forward-looking information or business plans), and that, subject to Section 8.1(a), ProMedica will have no claim against the Debtor or any of its Subsidiaries, or any of their respective stockholders, Affiliates or Representatives, with respect thereto. Accordingly, ProMedica hereby acknowledges that neither the Debtor nor any of its Subsidiaries, nor any of their respective stockholders, Affiliates or Representatives, has made or is making any representation or warranty with respect to such estimates, projections, forecasts, forward-looking statements or business plans (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, forward-looking statements or business plans).
2.3 Representations and Warranties of QCP . QCP hereby represents and warrants that:
(a) Organization, Good Standing and Qualification . QCP is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing (with respect to jurisdictions that recognize the concept of good standing) as a foreign corporation or other entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in such good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or impair the ability of QCP to consummate the Transactions.
(b) Corporate Authority . QCP has all requisite corporate or similar power and authority and has taken all corporate or similar action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Transactions. This Agreement has been duly executed and delivered by QCP, and is a valid and binding agreement of QCP, enforceable against QCP, in accordance with its terms, subject to the Bankruptcy and Equity Exception.
ARTICLE III
Bankruptcy Matters
3.1 Case Management .
In addition to any other obligations hereunder, including under Article IV, from and after the date of this Agreement, the Debtor shall deliver an updated Case Budget to QCP and ProMedica from time to time as reasonably requested by QCP or ProMedica. The Case Budget shall mean a budget for the Bankruptcy Case prepared in good faith by the Debtor in consultation with QCP and ProMedica based on the 13-Week Cash Budget, which shall include (i) expected Closing Date payments and (ii) funding for the Bankruptcy Case and Closing Date payments.
3.2 ProMedica Approvals .
ProMedica shall use best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on their part under this
Agreement and applicable Laws to consummate and make effective the Transactions as soon as practicable, including all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity to permit ProMedica to consummate the Plan Acquisition and operate the Leased Facilities (the ProMedica Approvals ).
3.3 Chapter 11 Obligations .
(a) The Debtor shall file the Amended Plan within five (5) Business Days of the date of this Agreement.
(b) The Debtor shall file the Approval Motion within ten (10) days of this Agreement and shall use reasonable best efforts to obtain entry of the Approval Order within thirty (30) days thereafter. The Approval Motion is a motion seeking entry of an order by the Bankruptcy Court (the Approval Order ) (i) authorizing the Debtor to enter into this Agreement, (ii) approving the supplemental disclosure, voting materials and solicitation procedures regarding the Amended Plan and (iii) establishing the procedures and a hearing date for consideration of entry of the Confirmation Order; provided, however, that in the event the Bankruptcy Court does not grant the relief requested in clause (i) pursuant to the Approval Order, the Debtor shall seek such relief pursuant to the Confirmation Order.
(c) The Debtor shall use reasonable best efforts to pursue entry of the Confirmation Order by the Bankruptcy Court as promptly as practicable but not later than sixty-five (65) days after the date of this Agreement. For purposes of this Agreement, (i) the Confirmation Order shall mean an Order of the Bankruptcy Court, reasonably acceptable to the Debtor, QCP, ProMedica, and JV that, among other things, (A) authorizes the Debtor to enter into this Agreement (to the extent such authorization has not previously been obtained), (B) finds that the Amended Plan is feasible, that adequate notice has been provided to all parties-in-interest in the Bankruptcy Case and that the requirements under the Bankruptcy Code for classification of claims, solicitation of votes, and confirmation of a plan have been satisfied, (C) confirms the Amended Plan, (D) approves this Agreement and all of its terms, and authorizes and directs the Debtor to perform its obligations under this Agreement, (E) approves the transactions contemplated by the Amended Plan and this Agreement, (F) exculpates and releases the members of the Debtor Board and officers of the Debtor from liability with respect to the negotiation, execution and delivery of this Agreement and the Debtors performance of its obligations hereunder prior to the Closing (or termination of this Agreement in accordance with its terms, as applicable) and (G) approves the releases, exculpations and discharge contemplated by the Amended Plan and enjoins parties from asserting claims subject to such releases, exculpations and/or discharge.
(d) In the event the entry of the Confirmation Order shall be appealed, the Debtor and ProMedica shall use their respective reasonable best efforts to defend such appeal, including opposing any stay requested in connection therewith.
(e) Each document filed with the Bankruptcy Court as a supplement to the Amended Plan, and all exhibits, schedules and annexes thereto, shall be consistent with the terms
hereof and otherwise reasonably satisfactory in form and substance to ProMedica and QCP; provided that the Charter and the By-Laws shall be satisfactory to ProMedica in its sole discretion and in compliance with Section 4.7; provided further that any document filed with the Bankruptcy Court as a supplement to the Amended Plan that shall only be effective from and after the Effective Date (as defined in the Amended Plan) and as to which QCP shall not have any rights or obligations (including, without limitation, the Implementation Memorandum and the New Master Lease) shall be satisfactory to ProMedica in its sole discretion, subject to the Debtors reasonable approval (not to be unreasonably withheld, conditioned or delayed).
(f) No later than thirty (30) days after execution of this Agreement, ProMedica shall provide the Debtor with an implementation memorandum (the Implementation Memorandum ) detailing the sequence and steps pursuant to which the Transactions will be implemented on the Effective Date of the Amended Plan; provided , however , that nothing in the Implementation Memorandum shall delay or impede ProMedicas obligation to obtain required regulatory approval or adversely impact the distributions to be made to any Holder of a Claim or Interest under the Amended Plan; provided further , however , that the Implementation Memorandum shall be subject to the Debtors reasonable approval (not to be unreasonably withheld, conditioned, or delayed).
(g) The Debtor shall not file any motion or pleading or make any statement on the record before the Bankruptcy Court that is inconsistent with the Restructuring Documents or this Agreement or that reasonably could be expected to prevent, delay or impede the successful implementation of the Transactions and the Restructuring Documents.
(h) The Amended Plan, the Confirmation Order, and the Disclosure Statement (collectively, the Restructuring Documents ) may not be amended or modified unless such amendments or modifications are (i) not inconsistent with the terms and conditions of this Agreement and the Amended Plan and (ii) consented to in writing by ProMedica and QCP, such consent not to be unreasonably withheld, conditioned or delayed.
(i) ProMedica shall, and shall cause each of their Subsidiaries to, (i) support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate, the solicitation, confirmation and consummation of the Amended Plan and the transactions contemplated by the Amended Plan; (ii) not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Amended Plan or the confirmation or consummation of the Amended Plan; (iii) not object to or otherwise commence any proceeding or take any action opposing the Amended Plan or Disclosure Statement; and (iv) otherwise use its reasonable best efforts to assist the Debtor in obtaining entry of the Confirmation Order by the Bankruptcy Court within the deadline set forth in Section 3.3(c) above.
(j) At the Closing, ProMedica shall make available, or cause to be made available, to the Debtor such amounts as may be necessary to enable the Debtor to fund or pay all of the Debtors obligations required to be funded or paid under the Amended Plan or this Agreement (to the extent the Debtor does not have sufficient funds to fund or pay such obligations when due).
(k) If an Eligible Employee does not execute and deliver a Separation Agreement, or the Former CEO does not execute and deliver the Former CEO Settlement Agreement, in each case prior to the entry of the Confirmation Order, the Debtor shall, at the request of QCP and ProMedica, promptly file with the Bankruptcy Court a motion to reject the Employment Agreement of such Eligible Employee or the Former CEO, as applicable, as of the Closing Date, and shall use reasonable best efforts to pursue entry of an order by the Bankruptcy Court prior to the Closing Date approving such rejection.
3.4 Case Financing . The Debtor agrees that it shall not incur any secured debtor-in-possession financing except with the prior written consent of ProMedica and QCP, not to be unreasonably withheld, conditioned or delayed; it being understood that, for the avoidance of doubt, the granting of security as contemplated by the Centerbridge Facility, or any customary and reasonable adequate protection to be provided to the lenders under the Centerbridge Facility as part of the Bankruptcy Case (other than as a consequence of secured debtor-in-possession financing), shall not be considered a violation of this Section 3.4.
3.5 Release of Non-Debtor Subsidiary Claims . QCP, each Lessor, ProMedica and Debtor hereby covenant and agree that, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, (a) each Subsidiary of the Debtor shall be deemed to have completely and forever released, waived, and discharged unconditionally each of the shareholders or other equity holders of the Debtor that is not an employee of the Debtor and each director of the Debtor that is not an employee of the Debtor, and any Person claiming by or through any of the foregoing Persons (including their respective officers, directors, managers, shareholders, partners, employees, equity holders, members, and professionals) (the Non-Debtor Subsidiary Released Parties ), and QCP, ProMedica, and each Lessor shall be deemed to have completely and forever released, waived, and discharged unconditionally each Non-Debtor Subsidiary Released Party, of and from any and all Claims (as such term is defined in the Amended Plan) and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever (including, without limitation, those arising under the Bankruptcy Code), whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the reorganized Debtor, their respective Subsidiaries, assets, property and estates, the Bankruptcy Case or the Restructuring Documents and (b) following the Closing, promptly upon the written request of any Non-Debtor Subsidiary Released Party, Debtor shall cause each Subsidiary of Debtor to, ProMedica shall, and JV shall cause each Lessor to, execute and deliver to such Non-Debtor Subsidiary Released Party a written instrument evidencing such release.
ARTICLE IV
Covenants
4.1 Interim Operations .
(a) The Debtor covenants and agrees as to itself and its Subsidiaries that, after the date of this Agreement and prior to the Closing, except (i) as otherwise expressly required or contemplated by this Agreement or the Original Plan Sponsor Agreement, (ii) as QCP and ProMedica may approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), (iii) as otherwise required by applicable Laws or (iv) as set forth in Section 4.1 of the Debtor Disclosure Letter, the Business shall be conducted in the ordinary and usual course and, to the extent consistent therewith, the Debtor and its Subsidiaries shall use their respective commercially reasonable efforts to preserve their business organizations intact, preserve governmental licenses, permits, consents, approvals, authorizations and qualifications and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates, and keep available the services of its and its Subsidiaries present employees and agents. Without limiting the generality of, and in furtherance of, the foregoing, from the date of this Agreement until the Closing, except (i) as otherwise expressly required or contemplated by this Agreement or the Original Plan Sponsor Agreement, (ii) as QCP and ProMedica may approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), (iii) as otherwise required by applicable Laws or (iv) as set forth in Section 4.1 of the Debtor Disclosure Letter, the Debtor will not and will not permit any of its Subsidiaries to:
(i) adopt or propose any change in its certificate of incorporation or by-laws or other applicable governing instruments;
(ii) merge or consolidate the Debtor or any of its Subsidiaries with any other Person, or restructure, reorganize or completely or partially liquidate the Debtor or any of its Subsidiaries or otherwise enter into any agreements providing for the sale of their respective material assets, operations or business (other than (A) the sale or disposition of obsolete or worn-out assets in the ordinary course of business and (B) sales and dispositions of such facilities and related assets as are contemplated by the SNF/AL Remarketing Process (as defined in the Original Plan Sponsor Agreement));
(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $1,000,000 in any transaction or series of related transactions, other than acquisitions pursuant to Contracts in effect as of the date of this Agreement which have been provided to ProMedica and QCP prior to the date of this Agreement;
(iv) acquire any corporation, partnership or other business organization or division thereof or collection of assets constituting all or substantially all of a business or business unit, whether by merger or consolidation, purchase of substantial assets or equity interest or any other manner, from any other Person;
(v) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of capital stock of the Debtor or any of its Subsidiaries (other than the issuance of shares by a wholly-owned Subsidiary of the Debtor to the Debtor or another wholly-owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities, other than such dispositions as are contemplated by the SNF/AL Remarketing Process;
(vi) create or incur any Lien securing indebtedness for borrowed money (other than a Lien currently provided for under the Centerbridge Facility, any Permitted Lien (other than a Permitted Lien under clause (iv) of such definition) and/or the grant of any cash collateral in respect of letters of credit issued in respect of, or otherwise securing, ordinary course operating liabilities) on any assets of the Debtor or any of its Subsidiaries having a value in excess of $1,000,000 in the aggregate;
(vii) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Debtor or any direct or indirect wholly-owned Subsidiary of the Debtor);
(viii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for dividends paid by any direct or indirect wholly-owned Subsidiary to the Debtor or to any other direct or indirect wholly-owned Subsidiary) or enter into any agreement with respect to the voting of its capital stock (other than the Original Restructuring Support Agreement and the Alternative Restructuring Support Agreement);
(ix) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;
(x) incur any indebtedness for borrowed money (which, for the avoidance of doubt, shall not include obligations in respect of cash-collateralized letters of credit issued in respect of, or other grants of cash collateral securing, ordinary course operating liabilities) or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Debtor or any of its Subsidiaries, except for indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice (A) not to exceed $2,000,000 in the aggregate, (B) guarantees incurred in compliance with this Section 4.1 by the Debtor of indebtedness of wholly-owned Subsidiaries of the Debtor or (C) indebtedness owed to the Debtor or another wholly-owned Subsidiary of the Debtor;
(xi) except as set forth in the capital expenditures budget set forth in Section 4.1(a)(xi) of the Debtor Disclosure Letter, make or authorize any capital expenditure in excess of $2,000,000 in the aggregate, excluding any capital expenditure required by any Contract set forth on Section 4.1(a)(xi) of the Debtor Disclosure Letter or capital expenditure determined in good faith by the Debtor Board to be required for (A) the protection of, or to avoid injury to, any
Person, (B) the care or safety of any patient under the care of any facility operated by the Debtor or any of its Subsidiaries or (C) compliance with Law;
(xii) enter into any Contract that would have been a Material Contract had it been entered into prior to this Agreement, other than such Contracts as are contemplated by the SNF/AL Remarketing Process;
(xiii) make any material changes with respect to material accounting policies or procedures, except as required by changes in applicable Law or GAAP;
(xiv) settle any litigation or other Proceeding brought against the Debtor or its Subsidiaries by a Governmental Entity (A) for an amount in excess of $100,000 individually or $1,000,000 in the aggregate for all such Proceedings (other than any resolution of claims processing for government reimbursement in the ordinary course of business, and excluding recoupment actions) or (B) in a manner that would impose any restrictions on its assets, operations or businesses or result in any injunction or equitable relief against the Debtor or any of its Subsidiaries;
(xv) settle any Proceeding other than against or brought by a Governmental Entity, (A) for an amount in excess of $500,000 individually or $8,000,000 in the aggregate for all such Proceedings in any one-calendar-month period (in each case, with respect to Proceedings in the state of Pennsylvania, net of applicable insurance proceeds) or (B) in a manner that would impose any restrictions on its assets, operations or businesses or result in any injunction or equitable relief against the Debtor or any of its Subsidiaries;
(xvi) amend, modify or terminate any Material Contract, including the Centerbridge Facility, in a manner adverse to the Debtor or its Subsidiaries;
(xvii) (A) change in any material respect any material method of accounting of the Debtor or its Subsidiaries for Tax purposes; (B) enter into any agreement with any Governmental Entity (including a closing agreement under Code Section 7121) with respect to any material Tax or Tax Returns of the Debtor or its Subsidiaries; (C) surrender a right of the Debtor or its Subsidiaries to a material Tax refund; (D) change an accounting period of the Debtor or its Subsidiaries with respect to any material Tax; (E) file an amended Tax Return; (F) change or revoke any material election with respect to Taxes; (G) make any material election with respect to Taxes that is inconsistent with past practice; (H) file any Tax Return that is inconsistent with past practice; or (I) consent to any extension or waiver of the limitations period applicable to any material Tax claim or assessment (other than in the ordinary course of business);
(xviii) transfer, sell, lease, license, mortgage, pledge, divest or otherwise dispose of any material tangible or intangible assets (including Intellectual Property Rights), licenses, operations, rights, product lines, businesses or interests therein of the Debtor or its Subsidiaries, including the capital stock of any of its Subsidiaries, except (A) in connection with services provided in the ordinary course of business and sales or other dispositions of obsolete or worn-out assets, (B) sales, leases, licenses, divestitures, cancellations, abandonments, lapses, expirations or other dispositions of assets with a fair market value not in excess of $500,000 in the aggregate, (C) pursuant to Contracts in effect prior to the date of this Agreement and (D) such
sales, leases, licenses, divestitures, cancellations, abandonments, lapses, expirations or other dispositions of assets as are contemplated by the SNF/AL Remarketing Process;
(xix) (A) enter into, adopt, amend in any material respect or terminate any Company Plan (other than entry into any new employment agreement with any individual whose hiring is not restricted by, or who is otherwise hired in accordance with, clause (H) below), (B) increase or accelerate the compensation, bonus, pension, welfare, fringe or other benefits, severance or termination pay of any director, officer or employee of the Debtor or any of its Subsidiaries, (C) grant any new awards, or amend or modify the terms of any outstanding awards, under any Company Plan (other than grants of any new awards to any individual whose hiring is not restricted by, or who is otherwise hired in accordance with, clause (H) below), (D) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Plan, (E) change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Plan that is required by applicable Law to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by the terms of any existing Company Plan set forth on Section 2.1(h)(i) of the Debtor Disclosure Letter or GAAP, (F) forgive any loans or issue any loans (other than routine travel advances issued in the ordinary course of business) to any director, officer or employee of the Debtor or any of its Subsidiaries, (G) terminate the employment of any officer of the Debtor or its Subsidiaries other than for cause, (H) hire (x) any officer of the Debtor or its Subsidiaries with a title of Vice President or higher or (y) any employee of the Debtor or its Subsidiaries with aggregate annual base salary and target bonus of more than $250,000, except, in the case of the foregoing clauses (x) and (y), to the extent jointly determined by the Chief Restructuring Officer of the Debtor ( CRO ) and the Debtor Board in their reasonable business judgment in good faith necessary in the interests of patient care (any such individual described in the foregoing clauses (x) and (y) and hired to replace any such employee, a New Hire ), provided that (i) any such officer New Hire (and his or her terms and conditions of employment, including any base and target incentive compensation) hired pursuant to this clause (H) shall be reasonably acceptable to ProMedica and QCP and (ii) the terms and conditions of employment of any New Hire that is not an officer, including base and target incentive compensation, shall be subject to notice and consultation with ProMedica and QCP, or (I) make any incentive payment or payment in respect of severance or any nonqualified deferred compensation entitlement to any current or former director, officer or employee of the Debtor or its Subsidiaries (including making any payments to any rabbi trust or taking any action that would cause the trustee of any rabbi trust to make payments to any current or former director, officer or employee of the Debtor or its Subsidiaries), except, with respect to clause (I) payment of any nondiscretionary incentive payments under existing Company Plans, nondiscretionary severance payments under existing Company Plans, and nondiscretionary payments of nonqualified deferred compensation (other than as set forth on Section 4.1(a)(xix)(I) of the Debtor Disclosure Letter) or as otherwise required by applicable Law; provided that payment in respect of any severance or nonqualified deferred compensation amount in excess of $200,000 shall be subject to prior notice and consultation with ProMedica and QCP and, with respect to clauses (A) through (H) above, (1) amendments to welfare plans in the ordinary course of business, consistent with past practices that do not materially increase the costs of such welfare plans, (2) with respect to any hourly employees and salaried facility-level employees of the Debtor or its Subsidiaries, and any other employees of the Debtor or its Subsidiaries whose annual base salary does not exceed $150,000, increases in compensation in the
ordinary course materially consistent with the Debtors 2018 operating budget or otherwise as reasonably determined by the CRO, in consultation with ProMedica and QCP, to be necessary to respond to market demand, (3) with respect to each other employee of the Debtor or its Subsidiaries whose annual base salary exceeds $150,000 (other than any Eligible Employee), increases in compensation in the ordinary course of business consistent with past practice that do not exceed 1.5% of the aggregate annual base salaries of such other employees or 7.5% of the annual base salary for any individual and (4) as required pursuant to existing Company Plans, or as otherwise required by applicable Law;
(xx) become a party to, establish, adopt, amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization;
(xxi) enter into any Contract adversely affecting in any material respect the Debtors or any of its Subsidiaries ability to use or otherwise exploit any material Intellectual Property Rights;
(xxii) fail to use commercially reasonable efforts to keep in full force the material Insurance Policies under substantially the same levels of coverage as the current policies of the Debtor and its Subsidiaries;
(xxiii) change in any material respect any of the Debtors or its Subsidiaries material policies or procedures for or timing of the collection of accounts receivable (or any other trade receivables), payment of accounts payable (or any other trade payables), billing of its customers, pricing and payment terms, cash collections, cash payments or terms with suppliers, in each case, other than changes required by suppliers, vendors and service providers;
(xxiv) dismiss the QCP Consultants other than in accordance with Section 5.1(b);
(xxv) modify or amend in any respect any Contract pursuant to which HCR III or any of its Subsidiaries currently subleases real property to any other Subsidiary of the Debtor; or
(xxvi) agree, authorize or commit to do any of the foregoing.
(b) ProMedica shall not knowingly take or permit any of its Subsidiaries to take any action that is reasonably likely to prevent or materially impede the consummation of the Transactions.
4.2 Filings; Other Actions; Notification .
(a) Cooperation . Subject to the terms and conditions set forth in this Agreement, the Debtor, JV and ProMedica (and, to the extent reasonably required, QCP) shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate and make effective the Transactions as soon as practicable,
including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity (including the Governmental Approvals and the ProMedica Approvals) and, to the extent applicable, complying with the requirements of the HSR Act. Subject to applicable Laws relating to the exchange of information, the parties shall cooperate on all matters with respect to obtaining the Governmental Approvals and making of filings with any Governmental Entity in connection with this Section 4.2. Each of the Lessors, ProMedica, and the Debtor shall (i) in coordination with each other, file as promptly as practicable after the execution hereof, all applications and documents required, necessary or advisable to obtain the Governmental Approvals and comply with the applicable requirements of the HSR Act as soon as practicable, (ii) submit to customary background checks in connection therewith, (iii) respond promptly to any additional requests from Governmental Entities and (iv) otherwise use its reasonable best efforts to obtain all Governmental Approvals and comply with the applicable requirements of the HSR Act as promptly as practicable (and in any event prior to the Termination Date). The Lessors, ProMedica and the Debtor shall have the right to review in advance (and shall deliver to QCP in advance) and, to the extent practicable, each will consult with the other (and of QCP) on and consider in good faith the views of the other (and of QCP) in connection with, all of the information relating to the Lessors, ProMedica and the Debtor, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any third party and/or any Governmental Entity in connection with the Transactions. In exercising the foregoing rights, each of the Lessors, Debtor, and ProMedica shall act reasonably and as promptly as practicable.
(b) Information; Meetings . The Debtor and ProMedica each shall (and the JV shall cause the Lessors), upon the reasonable request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of the Lessors, ProMedica or the Debtor or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Transactions.
(c) Status . Subject to applicable Laws and as required by any Governmental Entity, the Debtor, the Lessors and ProMedica each shall keep the other and QCP reasonably apprised of the status of matters relating to completion of the Transactions to the extent such party is aware of such information, including promptly furnishing the other and QCP with copies of notices or other communications received by the Lessors, ProMedica or the Debtor or any of their respective Subsidiaries, as the case may be, from any third party and/or any Governmental Entity with respect to the Transactions. The JV and ProMedica shall give prompt written notice to the Debtor and QCP of any change, fact or condition of which the Lessors and or ProMedica becomes aware that is reasonably expected to result in any failure of any condition to Debtors obligations to effect the Transactions, and the Debtor shall give prompt written notice to the Lessors, ProMedica and QCP of any change, fact or condition of which the Debtor becomes aware that is reasonably expected to result in any failure of any condition to ProMedicas obligations to effect the Transactions or to materially affect the Business. Neither the Debtor nor the Lessors or ProMedica shall permit any of their respective officers or any other representatives or agents to participate in any meeting with any Governmental Entity in respect of any filings, investigation or
other inquiry relating to the Transactions unless it consults with the other party and QCP in advance and, to the extent permitted by such Governmental Entity, gives the other parties and QCP the opportunity to attend and participate thereat.
4.3 Access and Records . Subject to applicable Law, upon reasonable notice, the Debtor shall (and shall cause its Subsidiaries to) afford ProMedicas and the Lessors officers, directors, employees, agents, counsel, accountants, investment bankers, financing sources and other authorized representatives (together, Representatives ) reasonable access, during normal business hours throughout the period prior to the Closing Date, to its employees, properties, books, contracts and records, and, upon ProMedicas or any Lessors written request, will use reasonable efforts to provide ProMedica or the Lessors with access to suppliers, creditors and third parties with whom the Debtor or its Subsidiaries does business or by whom there have been asserted any claim, and, during such period, the Debtor shall (and shall cause its Subsidiaries to) use its reasonable best efforts to furnish promptly to ProMedica and the Lessors all information concerning its business, properties, personnel, suppliers, creditors and third parties with whom the Debtor or its Subsidiaries does business as may reasonably be requested, provided that no investigation pursuant to this Section 4.3 shall affect or be deemed to modify any representation or warranty made by the Debtor herein, and provided , further , that the foregoing shall not require the Debtor (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Debtor would result in the disclosure of any trade secrets of third parties or violate any of its obligations with respect to confidentiality if the Debtor shall have used its reasonable best efforts to obtain the consent of such third party to such inspection or disclosure or (ii) to disclose any privileged information of the Debtor or any of its Subsidiaries. The Debtor shall continue to deliver its financial information and other reports required pursuant to the terms of the Master Lease. The Debtor shall cooperate to provide ProMedica with access and information reasonably requested by ProMedica to facilitate the consolidation of the Debtors financial results with and into those of ProMedica following Closing, including establishment by ProMedica of accounting and financial reporting systems, systems of internal controls over financial reporting and disclosure controls as defined in the Exchange Act.
4.4 Publicity . ProMedica and Welltower, Inc. (and/or their affiliates) shall be authorized to issue an initial joint press release regarding the Transactions; provided , however , that such press release shall be subject to the consent of the Debtor, which consent shall not be unreasonably withheld, conditioned or delayed; provided further that ProMedica and Welltower, Inc. shall consult with QCP as to the content of such press release. Thereafter, no party shall issue any press release or make any public announcement concerning the Transactions without the prior written consent of the other parties hereto except as may be required by Law, including rules promulgated by the Securities and Exchange Commission (the SEC ) or by obligations pursuant to any rules of any national securities exchange. To the extent any party is required to make any press release or public announcement by Law or by obligations pursuant to any rules of any national securities exchange, such party shall (i) to the extent practicable, consult with the other parties hereto prior to issuing any press releases or otherwise making public announcements with respect to the Transactions and prior to making any filings with any third party and/or any Governmental Entity with respect thereto, except as may be required by Law or by obligations pursuant to any rules of any national securities exchange, (ii) to the extent practicable, provide the other parties hereto with a reasonable opportunity to review and comment on such press release,
announcement or filing and (iii) consider in good faith any comments of the other parties with respect to such press release, announcement or filing.
4.5 Employee Matters .
(a) Prior to making any broad-based written or oral communications to officers and employees of the Debtor or any of its Subsidiaries pertaining to compensation or benefit matters that are affected by the Transactions, the Debtor shall provide ProMedica and QCP with a copy of the intended communication, ProMedica and QCP each shall have a reasonable period of time to review and comment on the communication, and the Debtor shall consider any such comments in good faith.
(b) ProMedica shall use all reasonable endeavors to ensure that any employee benefit plans which the employees of the Debtor and its Subsidiaries are entitled to participate in to take into account for purposes of eligibility, vesting and benefit accrual thereunder (other than any benefit accrual under any defined benefit pension plans), service by employees of the Debtor and its Subsidiaries as if such service were with ProMedica , to the same extent such service was credited under a comparable plan of the Debtor or any of its Subsidiaries (except to the extent it would result in a duplication of benefits).
(c) Nothing contained in this Agreement is intended to: (i) be treated as an amendment of any particular Company Plan; (ii) prevent QCP, ProMedica, the Debtor or any of their Affiliates from amending or terminating any of their benefit plans (or, after the Closing Date, any Company Plan) in accordance with their terms; (iii) prevent QCP, ProMedica, the Debtor or any of its Affiliates, after the Closing Date, from terminating the employment of any employee of the Debtor; or (iv) create any third-party beneficiary rights in any employee of the Debtor, any beneficiary or dependent thereof, or any collective bargaining representative thereof, with respect to the compensation, terms and conditions of employment and/or benefits that may be provided to any such employee by QCP, ProMedica, the Debtor or any of their Affiliates or under any benefit plan which QCP, ProMedica, the Debtor or any of their Affiliates may maintain.
(d) Settlement Agreement . If the Former CEO Settlement Agreement is executed and delivered by the parties thereto, from the date of execution and delivery through the Closing Date, the Debtor shall comply with the terms of the Former CEO Settlement Agreement and shall not amend, modify or alter such Former CEO Settlement Agreement without the prior written consent of ProMedica and QCP.
(e) 280G Vote .
(i) At least two (2) business days prior to the Closing Date, the Debtor shall submit for approval by its stockholders, in conformance with Section 280G of the Code and the regulations thereunder (the 280G Stockholder Vote ), any payments that would reasonably be expected to constitute a parachute payment pursuant to Section 280G of the Code (each, a Parachute Payment ).
(ii) The Debtor shall use its commercially reasonably efforts to obtain, at least three (3) business days prior to the Closing Date, irrevocable waivers of the right to any
Parachute Payment from each of the applicable disqualified individuals (as defined under Section 280G of the Code and the regulations promulgated thereunder).
(iii) True and complete copies of all disclosure and documents that comprise the stockholder approval of each Parachute Payment shall be delivered to ProMedica and QCP in sufficient time to allow ProMedica and QCP to comment thereon, but no less than five (5) business days prior to the 280G Stockholder Vote, and shall reflect all reasonable comments of ProMedica and QCP thereon.
4.6 Expenses .
(a) Whether or not the Transactions are consummated, the parties hereto shall bear their own respective expenses (including all compensation and expenses of counsel, financial advisors, consultants, actuaries and independent accountants) incurred in connection with this Agreement and the Transactions.
(b) The Debtor and its Subsidiaries sole financial advisor shall be Moelis & Company, and the Debtor shall not, and shall not permit its Subsidiaries to, hire any additional financial advisor. The Debtor shall not agree to any change in the financial terms of any agreement pursuant to which Moelis & Company is entitled to any fees and expenses in connection with any of the Transactions.
4.7 Indemnification; Directors and Officers Insurance .
(a) From and after the Closing Date, each of ProMedica and the Debtor agrees that it will indemnify, defend and hold harmless each present and former director and officer of the Debtor and its Subsidiaries (in each case, when acting in such capacity) (the Indemnified Parties ) from and against any and all costs or expenses (including reasonable attorneys fees), judgments, fines, losses, claims, damages or liabilities (whether or not incurred in connection with any Proceeding or investigation, whether civil, criminal, administrative or investigative) arising out of or related to such Indemnified Partys service or status as an officer or director of the Debtor or one of its Subsidiaries or any action or inaction on the part of any such Person in such capacity, in each case, as of prior to the Closing, whether asserted or claimed prior to, at or after the Closing Date, to the fullest extent such Indemnified Party would be permitted to be indemnified by the Debtor or its applicable Subsidiary under applicable Law and the certificate of incorporation and by-laws (or comparable organizational documents) of the Debtor or its applicable Subsidiary in effect on the date of this Agreement; provided that the Person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification.
(b) Prior to or as of the Closing Date, the Debtor shall (after reasonable consultation with ProMedica) and, if the Debtor is unable to, ProMedica shall cause the Debtor as of the Closing Date to obtain and fully pay the premium for tail insurance policies for the extension of (i) the directors and officers liability coverage of the existing directors and officers insurance policies of the Debtor and its Subsidiaries, and (ii) the existing fiduciary liability insurance policies of the Debtor and its Subsidiaries, in each case for a claims reporting or discovery period of at least six (6) years from and after the Closing Date (the Tail Period ) from
an insurance carrier with the same or better credit rating as the Debtors insurance carrier as of the date hereof with respect to directors and officers liability insurance and fiduciary liability insurance (collectively, D&O Insurance ) with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as the Debtors existing policies with respect to any matter claimed against a director or officer of the Debtor or any of its Subsidiaries by reason of him or her serving in such capacity that existed or occurred at or prior to the Closing Date (including in connection with this Agreement or the transactions or actions contemplated hereby); provided that in no event shall the aggregate cost of the D&O Insurance exceed during the Tail Period 300% of the current aggregate annual premiums paid by the Debtor for such insurance. If the Debtor for any reason fails to obtain such insurance policies as of the Closing Date, the Debtor shall, and ProMedica shall cause the Debtor to, continue to maintain in effect for the Tail Period the D&O Insurance in place as of the date hereof with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as provided in the Debtors existing policies as of the date hereof, or the Debtor shall, and ProMedica shall cause the Debtor to, use reasonable best efforts to purchase comparable D&O Insurance for the Tail Period with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as provided in the Debtors existing policies as of the date hereof; provided , however , that in no event shall the annual cost of the D&O Insurance exceed during the Tail Period 150% of the current aggregate annual premiums paid by the Debtor for such insurance; and provided , further , that if the annual premiums of such insurance coverage exceed such amount, the Debtor shall obtain a policy with the greatest coverage available for a cost not exceeding such amount. From and after the Closing Date, except as required by applicable Law, ProMedica shall cause the certificate of incorporation and by-laws (or comparable organizational documents) of each of the Debtor and its Subsidiaries to contain provisions no less favorable to the Indemnified Parties with respect to limitation of liabilities, advancement of expenses and indemnification than are set forth as of the date of this Agreement in each of such documents of the Debtor and its Subsidiaries. In the event of any Proceeding or investigation for which an Indemnified Party is entitled to indemnification pursuant to this Section 4.7, (A) Debtor shall, and ProMedica shall cause the Debtor and its Subsidiaries to, defend the Indemnified Party with respect to any such Proceeding or investigation and (B) ProMedica shall not, and shall cause the Debtor and its Subsidiaries not to, settle, compromise or consent to the entry of any judgment in any Proceeding or investigation pending or threatened in writing to which an Indemnified Party is a party (and in respect of which indemnification could be sought by such Indemnified Party hereunder) without the prior written consent of such Indemnified Party (such consent not to be unreasonably withheld, conditioned or delayed), unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such Proceeding or investigation. ProMedica agrees that all rights of the Indemnified Parties to indemnification and exculpation from liabilities for acts or omissions occurring prior to the Closing as provided in the certificate of incorporation or by-laws (or comparable organizational documents) of the Debtor or any of its Subsidiaries and any indemnification agreements entered into prior to the date hereof, including provisions relating to advancement of expenses incurred in the defense of any Proceeding or investigation, shall survive the Closing Date and shall continue in full force and effect in accordance with their terms. Such rights shall not be amended or otherwise modified in any manner that would adversely affect the rights of any of the Indemnified Parties for any acts or omissions occurring prior to the Closing without the prior written consent of each affected Indemnified Party (such consent not to be unreasonably withheld, conditioned or delayed).
(c) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 4.7, upon learning of any such Proceeding or investigation, shall promptly notify ProMedica and the Debtor thereof, but the failure to so notify shall not relieve ProMedica or the Debtor of any Liability it may have to such Indemnified Party except to the extent such failure materially prejudices the indemnifying party.
(d) If ProMedica or the Debtor or any of their respective successors or assigns (i) shall consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case, proper provisions shall be made so that the successors and assigns of ProMedica or the Debtor shall assume all of the obligations set forth in this Section 4.7.
(e) The provisions of this Section 4.7 are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties.
(f) The rights of the Indemnified Parties under this Section 4.7 shall be in addition to any rights such Indemnified Parties may have under the certificate of incorporation or by-laws (or comparable organizational documents) of the Debtor or any of its Subsidiaries, or under any applicable Contracts or Laws. All rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Closing Date and rights to advancement of expenses relating thereto now existing in favor of any Indemnified Party as provided in the certificate of incorporation, by-laws or comparable governing documents of the Debtor and its Subsidiaries or any indemnification agreement between such Indemnified Party and the Debtor or any of its Subsidiaries shall survive the Transactions and shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnified Party.
(g) ProMedica and the Debtor hereby acknowledge that the Indemnified Parties have or may, in the future, have certain rights to indemnification, advancement of expenses and/or insurance provided by Persons other than ProMedica, the Debtor or its Subsidiaries (collectively, the Other Indemnitors and, individually, an Other Indemnitor ) with respect to Proceedings or investigations that are the subject of Section 4.7(a). The Debtor hereby agrees that if any advancement or indemnification obligation is owed, at any time, to an Indemnified Party for the same Proceeding or investigation by both (i) ProMedica or the Debtor, including under Section 4.7(a), and (ii) any Other Indemnitor (whether pursuant to any certificate of incorporation, by-laws or comparable organizational documents, indemnification agreement or other agreements), the Debtor shall (and if it is unable or fails to honor its obligations under this Section 4.7, ProMedica shall) be primarily liable for indemnification and advancement of expenses to such Indemnified Parties in respect of such Proceeding or investigation, and any obligation of an Other Indemnitor to provide indemnification or advancement of expenses shall be secondary to the obligations of the Debtor (or if it is unable or fails to honor its obligations under this Section 4.7, ProMedica) under this Section 4.7. ProMedica and the Debtor irrevocably waive, relinquish and release the Other Indemnitors from any and all claims (A) against the Other Indemnitors for contribution, subrogation, indemnification or any other recovery of any kind in respect of the indemnification arrangements provided to such Indemnified Parties by such Other Indemnitors and (B) that the Indemnified Party must seek expense advancement or reimbursement, or indemnification, from
any Other Indemnitor before ProMedica and the Debtor must perform their expense advancement and reimbursement, and indemnification obligations, under this Agreement. If any Other Indemnitor pays or causes to be paid, for any reason, any amounts otherwise indemnifiable or subject to advancement under this Section 4.7, then (1) such Other Indemnitor shall be fully subrogated to all rights of the Indemnified Parties with respect to the payments actually made and (2) the Debtor shall reimburse the Other Indemnitor for the payments actually made. Notwithstanding anything to the contrary in this Agreement, for the avoidance of doubt, ProMedicas rights against the Debtor for contribution, subrogation, indemnification or any other recovery of any kind in respect of the indemnification arrangements provided by ProMedica and Debtor to the Indemnified Parties pursuant to this Section 4.7 are hereby preserved.
4.8 Confidentiality . Unless and until Closing occurs, no party hereto shall disclose any information provided to such party or its Representatives pursuant to Section 4.3 or any other provision of this Agreement, or any non-public information related to the negotiation, execution and delivery of this Agreement and the Transactions, other than (a) disclosure to such partys Representatives ( provided that such Representatives agree to comply with this Section 4.8 as if they were a party hereto and that such party shall be responsible for any Representative of such party to so comply with this Section 4.8), (b) as required by Law or by obligations pursuant to any rules of any national securities exchange, the SEC or by the request of any Governmental Entity, and (c) subject to reasonable customary confidentiality arrangements reasonably acceptable to the Debtor, any Person who expresses a bona fide interest in acquiring all or part of the Business or any business entities, properties or assets of the Debtors and its Subsidiaries following the Closing, including any potential joint venture partner (a Potential Acquiror ) and actual or potential purchasers, replacement tenants, third-party operators or other partners of ProMedica with respect to the remarketing of the Leased Facilities pursuant to the SNF/AL Remarketing Process. Notwithstanding the foregoing, nothing herein shall in any way limit any existing rights of any party to the Master Lease to use or disclose information under the terms of the Master Lease.
4.9 Financing .
(a) The Debtor shall, and shall cause its Subsidiaries to, use reasonable best efforts to provide and direct its and their respective Representatives to use their respective reasonable best efforts to provide all cooperation reasonably requested by ProMedica in connection with the arrangement, syndication and consummation of any debt financing by ProMedica or its Subsidiaries and the Debtor or any of its Subsidiaries, any equity financing of ProMedica or any minority investment in the Debtor or any of its Subsidiaries (not to exceed ten percent (10%) of the fully-diluted equity of the Debtor or such Subsidiary) including the refinancing of the indebtedness under the Centerbridge Facility, whether at the Debtor, ProMedica or any of their Subsidiaries (such financing, the Financing ). Such cooperation shall include (i) furnishing ProMedica and its Debt Financing Sources with the Audited Financial Statements and with audited financial statements for the Debtor and its Subsidiaries for each subsequent fiscal year within fifty (50) days after the end of such fiscal year, and quarterly and interim unaudited financial statements for the Debtor and its Subsidiaries for the fiscal quarters and interim periods ended March 31, 2018, June 30, 2018 and September 30, 2018 and for each subsequent fiscal quarter within thirty-five (35) days after the end of such fiscal quarter, in each case, with comparative financial information for the equivalent period of the prior year; (ii) using reasonable
best efforts to furnish ProMedica and its Debt Financing Sources with information, audit reports, historical business and other financial data and any supplements thereto regarding the Debtor and its Subsidiaries customarily included in information memoranda and other syndication materials for revolving, term loan credit facilities, bond offering documents and equity offering documents, including assisting in preparing pro forma financial information for the Debtor and its Subsidiaries; (iii) to the extent reasonably requested by ProMedica, using reasonable best efforts to prepare carve-out audited and unaudited financial statements for the time period required or desirable to any Debt Financing Source; (iv) using reasonable best efforts to cause members of management and other senior officers to participate in a reasonable number of meetings (including one-on-one meetings or conference calls), lender presentations, due diligence sessions and sessions with rating agencies, prospective lenders and investors and other syndication and marketing activities; (v) reasonably assisting ProMedica and its Debt Financing Sources in the preparation of any syndication and offering documents and materials, including information memoranda, lender presentations, offering memoranda, registration statements, prospectuses and other marketing documents (collectively, the Marketing Documentation ) and provide and execute a customary authorization letter with respect thereto; (vi) reasonably cooperating in marketing efforts of ProMedica; (vii) reasonably assisting in the negotiation and preparation of any credit agreements, indentures, underwriting agreements, purchase agreements, pledge and security documents, mortgages, guarantees, hedging agreements and other definitive documents, a certificate of the chief financial officer of the Debtor with respect to solvency matters in a form acceptable to ProMedica and any other certificates, letters and documents (including any schedules and exhibits in connection with the foregoing) as may be reasonably requested by ProMedica; (viii) reasonably assisting in the obtaining of (A) audit reports, authorization letters, comfort letters and consents of accountants and auditors with respect to financial statements for the Debtor and its Subsidiaries for inclusion in any Marketing Documentation and (B) payoff letters, instruments of discharge and Lien terminations; (ix) providing information regarding the Debtor and its Subsidiaries required by regulatory authorities under applicable know your customer and anti-money laundering rules and regulations, including, without limitation, the USA Patriot Act of 2001, to the extent requested by its Debt Financing Sources at least eight (8) business days prior to the Closing; (x) reasonably assisting ProMedica in obtaining corporate, facility and debt security ratings from rating agencies; (xi) reasonably cooperating with ProMedicas legal counsel (including providing customary back-up certificates) in connection with any legal opinions that such legal counsel may be required to deliver in connection with the Financing; (xii) taking such reasonable actions as may be reasonably requested by ProMedica necessary to permit its Debt Financing Sources to evaluate the Debtors assets and cash management policies and procedures relating thereto for the purposes of establishing collateral arrangements as of the Closing and to cooperate with other due diligence conducted by its Debt Financing Sources; (xiii) using reasonable best efforts to obtain customary evidence of authority, customary officers certificates, good standing certificates (to the extent applicable) in the respective jurisdictions of organization of the Debtor and its Subsidiaries, customary lien searches with respect to the Debtor and its Subsidiaries and insurance certificates; (xiv) using reasonable best efforts to facilitate the granting of a security interest (or perfection thereof) in collateral by the Debtor and its Subsidiaries to secure the Financing at Closing; and (xv) if applicable, reasonably cooperating with ProMedica in connection with the payoff of the Centerbridge Facility at Closing.
(b) The Debtor hereby consents to the use of its and its Subsidiaries logos in connection with the Financing; provided that such logos are used solely in a manner that is not intended to, nor reasonably likely to, harm or disparage the Debtor or its Subsidiaries.
(c) For purposes of this Agreement, Debt Financing Sources means the Persons that will provide or otherwise enter into agreements in connection with the Financing, together with, in each case, their Affiliates and Representatives.
(d) Notwithstanding anything in this Agreement to the contrary, none of the Debtor, its Subsidiaries or their respective Affiliates, or Representatives shall (i) be required to pay any commitment or other similar fee other than any such fee that may be payable by the Debtor or its Subsidiaries at the Closing, (ii) be required to incur any other liability in connection with the Financing other than any such liabilities to be incurred by the Debtor or its Subsidiaries arising after the Closing occurs or liabilities for costs and expenses to the extent required to be indemnified or reimbursed by ProMedica, (iii) otherwise be required to take any action in violation of any of the Debtors or any of its Subsidiaries organizational documents or that Debtor determines in good faith could reasonably be expected to violate any applicable Law or Contract, (iv) be required to waive or amend any terms of this Agreement or terms of any other Contract to which the Debtor or its Subsidiaries is a party, (v) be required to provide cooperation to the extent it would (y) cause any condition to the Closing set forth in ARTICLE VI not to be satisfied or (z) cause a breach of this Agreement, (vi) be required to deliver or obtain opinions of internal or external counsel or (vii) provide access to or disclose information where the Debtor reasonably determines that such access or disclosure could jeopardize the attorney-client privilege or contravene any Law or Contract to which it or any of its Subsidiaries is a party, provided that in the event that the Debtor or any of its Subsidiaries does not provide information in reliance on the exclusions in this subclause (vii), the Debtor and its Subsidiaries shall use commercially reasonable efforts to provide notice to ProMedica promptly upon obtaining knowledge that such information is being withheld (but solely if providing such notice would not violate such obligation of confidentiality). No director or officer of the Debtor or its Subsidiaries, acting in such capacity, shall be required to execute, deliver or enter into or perform any agreement, document or instrument, including any definitive documentation with respect to the Financing, or adopt any resolutions approving the agreements, documents and instruments pursuant to which the Financing is obtained, except with respect to the delivery of customary representation and authorization letters in connection with the Marketing Documentation. Nothing hereunder will require any officer or representative of the Debtor or any of its Subsidiaries to deliver any certificate or opinion or take any other action that would result in personal liability to such officer or representative. ProMedica shall indemnify, defend and hold harmless the Debtor and its Subsidiaries, and their respective officers, employees and Representatives, from and against any and all liabilities or losses suffered or incurred by them in connection with the arrangement of the Financing and any information utilized in connection therewith, except in the event such liabilities or losses arose out of or result from (A) the willful misconduct, gross negligence or bad faith of the Debtor and its subsidiaries or (B) historical information furnished in writing by or on behalf of the Debtor and its Subsidiaries, including financial statements. Notwithstanding anything in this paragraph, the Debtor and its Subsidiaries shall not be required to provide any such requested cooperation that shall unreasonably disrupt or interfere with the ongoing operations of the Debtor or its Subsidiaries. ProMedica shall, promptly upon request by the Debtor, reimburse the Debtor and its Subsidiaries for all reasonable and documented out-of-pocket costs and expenses incurred
by the Debtor and its Subsidiaries (including those of its Affiliates and Representatives) in connection with taking actions requested by ProMedica pursuant to this Section 4.9, which for the avoidance of doubt will not include audit fees and other expenses relating to the preparation of financial statements for the Business to the extent required by the Master Lease or otherwise historically prepared by the Debtors and its Subsidiaries. Notwithstanding anything to the contrary, the condition set forth in Section 6.2(b) as it applies to the Debtors obligations under this Section 4.9 shall be deemed satisfied unless there has occurred a breach by Debtor of its obligations under this Section 4.9 that directly results in the Financing not being available on the Closing Date.
4.10 Acquisition Proposals .
(a) No Solicitation or Negotiation . At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to ARTICLE VII and the Closing, except as expressly permitted by this Section 4.10, the Debtor and its Subsidiaries and its and its Subsidiaries respective directors, officers and employees shall not, and the Debtor shall direct its other agents and representatives not to, directly or indirectly:
(i) initiate, solicit, propose or knowingly encourage or otherwise knowingly facilitate any inquiry or the making of any proposal or offer that constitutes or, would reasonably be expected to lead to, an Acquisition Proposal;
(ii) engage in, continue or otherwise participate in any discussions or negotiations relating to any Acquisition Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an Acquisition Proposal (other than to state that the terms of this Section 4.10 prohibit such discussions);
(iii) provide any non-public information or data concerning the Debtor or its Subsidiaries, or access to the Debtor or its Subsidiaries properties, books and records to any Person, in each case, in connection with any Acquisition Proposal or any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to an Acquisition Proposal;
(iv) otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal;
(v) approve or recommend or publicly declare advisable any Acquisition Proposal or proposal reasonably expected to lead to an Acquisition Proposal or approve or recommend, or publicly declare advisable or publicly propose to enter into, any Alternative Acquisition Agreement;
(vi) execute or enter into an Alternative Acquisition Agreement; or
(vii) agree, authorize or commit to do any of the foregoing.
(b) Notice of Acquisition Proposals . The Debtor shall promptly (but, in any event, within twenty-four hours) give notice to ProMedica and QCP if (i) any bona fide inquiries, proposals or offers with respect to an Acquisition Proposal or that would reasonably be expected to
lead to an Acquisition Proposal are received by the Debtor or any of its Subsidiaries, or any of its or their respective Representatives of which the Debtor or its Subsidiaries are made aware ( it being understood that the Debtor and its Subsidiaries shall instruct its and their respective Representatives to promptly make them aware of any such bona fide inquiries, proposals or offers), or (ii) any bona fide request is received by the Debtor or any of its Subsidiaries, or any of its or their respective Representatives of which the Debtor or its Subsidiaries are made aware (it being understood that the Debtor and its Subsidiaries shall instruct its and their respective Representatives to promptly make them aware of any such bona fide requests), for the Debtor or any of its Subsidiaries to engage in discussions or negotiations relating to an Acquisition Proposal or that would reasonably be expected to lead to an Acquisition Proposal, setting forth in such notice the name of the Person making any such inquiry, proposal, offer or request and the material terms and conditions of any such Acquisition Proposal or inquiry, proposal or offer and the scope of any such request (including, if applicable, correct and complete copies of any such written Acquisition Proposals, inquiries, proposals or offers, including proposed agreements, or requests (or where no such copies are available, a reasonably detailed written description thereof)), and thereafter shall keep ProMedica and QCP reasonably informed, on a current basis of the status and terms and conditions of any such Acquisition Proposals, inquiries, proposals or offers or requests (including any amendments or supplements thereto) and the status of any such discussions or negotiations, including any change in such Persons intentions as previously notified.
(c) Existing Discussions . The Debtor (i) agrees, that as of the date hereof, it has ceased and caused to be terminated any activities, solicitations, discussions and negotiations with any Person (other than QCP and ProMedica, and their Subsidiaries) conducted prior to the date hereof with respect to any Acquisition Proposal, or proposal that would reasonably be expected to lead to an Acquisition Proposal (including access to any physical or electronic data rooms) and (ii) shall promptly (but in any event within twenty-four hours of the execution and delivery of this Agreement) (A) deliver a written notice to each such Person providing only that the Debtor is ending all discussions and negotiations with such Person with respect to any Acquisition Proposal, or proposal or transaction that would reasonably be expected to lead to an Acquisition Proposal and is requesting the prompt return or destruction of all confidential information concerning the Debtor and any of its Subsidiaries and (B) if applicable, terminate any physical and electronic data or other diligence access previously granted to such Persons.
(d) Standstill Provisions . From that date of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to ARTICLE VII and the Closing, the Debtor shall not terminate, amend or otherwise modify or waive any provision of any confidentiality, standstill or similar agreement to which the Debtor or any of its Subsidiaries is a party and, in the event of any breach of such agreement of which the Debtor Board becomes aware, the Debtor shall use reasonable best efforts to enforce, to the fullest extent permitted under applicable Law, the provisions of any such agreement, including by obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof.
(e) For purposes of this Agreement, the term Acquisition Proposal means any (i) proposal, offer, inquiry or indication of interest relating to a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, spin-off, share exchange, business combination or similar transaction involving the Debtor or any of its Subsidiaries or (ii)
acquisition by any Person or group (as defined under Section 13 of the Exchange Act), resulting in, or any proposal, offer, inquiry or indication of interest that if consummated would result in, any Person or group (as defined under Section 13 of the Exchange Act) becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, ten percent (10%) or more of the consolidated net revenues, net income or total assets ( it being understood that total assets include equity securities of Subsidiaries) of the Debtor, other than (A) the transactions contemplated by the Original Plan Sponsor Agreement and (B) the Transactions or the disposition of those Leased Facilities set forth in Section 5.3(b) of the Debtor Disclosure Letter; and the term Alternative Acquisition Agreement means any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement relating to any Acquisition Proposal.
(f) Notwithstanding anything to the contrary set forth herein or otherwise, nothing in this Section 4.10 shall prohibit the Debtor from cooperating with any action contemplated by Section 7.4 of the Merger Agreement taken by QCP or any of its Subsidiaries or with the exercise by QCP of any rights or remedies under the Merger Agreement
ARTICLE V
Special Covenants
5.1 Corporate Governance .
(a) Debtor Restructuring Committee . After the date of this Agreement and prior to the Closing Date, the power and authority of the special restructuring committee of the Debtor Board (the Debtor Restructuring Committee ) shall not be changed, and no new or replacement member of the Debtor Restructuring Committee, the sole members of which are Sherman Edmiston III and Kevin P. Collins in their capacity as members of the Debtor Board, shall be appointed without the consent of ProMedica and QCP, such consent not to be unreasonably withheld, conditioned or delayed.
(b) QCP Consultants . After the date of this Agreement and prior to the Closing, the Debtor will comply with Section 5.1(b) of the Original Plan Sponsor Agreement.
(c) Chief Restructuring Officer . After the date hereof, the CRO shall have those responsibilities set forth in Section 5.1(c) of the Debtor Disclosure Letter; provided , however , that at all times the responsibilities of the CRO shall include responsibility for allocation of costs under the Administrative Support Services Agreement (as referred to in the Centerbridge Facility) unless otherwise provided in the Centerbridge Facility. After the date of this Agreement and prior to the Closing Date, the power and authority of the CRO shall not be changed, and the CRO shall not be removed or replaced, without the consent of ProMedica and QCP, such consent not to be unreasonably withheld, conditioned or delayed. If the CRO voluntary terminates his employment or is otherwise unable to perform his or her responsibilities, a replacement CRO shall be appointed, subject to ProMedicas and QCPs reasonable consent (not to be unreasonably withheld, conditioned or delayed).
5.2 Rent and Forbearance .
(a) Adjustment to Rent; Forbearance .
(i) Upon the termination of the Master Lease with respect to any Leased Facility set forth on Section 5.2(a)(i) of the Debtor Disclosure Letter in connection with the releasing or sale of any Leased Facility by QCP or its Subsidiaries to any third-party purchasers, replacement tenants or other partners of QCP, there shall be no adjustment to Reduced Cash Rent. Upon the termination of the Master Lease with respect to any Leased Facility other than those set forth on Section 5.2(a)(i) of the Debtor Disclosure Letter in connection with the releasing or sale of any Leased Facility by QCP or its Subsidiaries to any third-party purchasers, replacement tenants or other partners of QCP, the parties to the Master Lease shall amend the Master Lease to reduce Minimum Rent (as defined in the Master Lease) and Reduced Cash Rent in a manner reflecting the net sales proceeds of such disposition.
(b) Forbearance . From the date of this Agreement until the earlier of the Closing Date or termination of this Agreement in accordance with ARTICLE VII hereof, QCP agrees to forbear from bringing suit or exercising remedies under the Guaranty, the Master Lease or Agreements Regarding Subleases arising out of or related to (i) the failure to pay Rent (as defined in the Master Lease), (ii) notwithstanding Section 4.4 of the Master Lease, the failure to deposit or pay any amounts required to be deposited pursuant to Section 4.4 of the Master Lease prior to the termination of this Agreement, (iii) the failure to make capital expenditures required by the Master Lease, (iv) the occurrence of any Event of Default described in Section 16.1(g) or Section 16.1(h) of the Master Lease as a result of the transactions and other actions contemplated by this Agreement, (v) any Event of Default under clause (ii) of Section 16.1(l) of the Master Lease resulting from the failure of the Debtor to make any payment due under the Guaranty, (vi) the 2017 default under and acceleration of amounts owing under that certain Credit Agreement, dated as of April 6, 2011, among Holdings (as defined therein), HCR Healthcare, LLC, the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and J.P. Morgan Securities Inc., Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as co-Lead Arrangers and Joint Bookrunners, as amended by that certain First Amendment to Credit Agreement, dated as of March 21, 2014 and that certain Second Amendment to Credit Agreement, dated as of May 6, 2015 (the JP Morgan Credit Facility ); or (vii) the failure of the Debtor to make any payment due under the Guaranty, including, in each case, by delivering a notice of default under the Master Lease, terminating the Master Lease, declaring an Event of Default under the Master Lease or exercising any other right or remedy under the Master Lease and/or Agreements Regarding Subleases against the Debtor or its direct and indirect Subsidiaries and, with respect to each, their property and interests in property.
(c) Forbearance Stipulations . The Debtor and its Subsidiaries hereby admit, stipulate and agree as follows:
(i) as of the date of the Original Plan Sponsor Agreement (and taking into account payments made by HCR III to the Original Lessors on the date hereof), the Original Lessors were owed the Reduced Cash Rent Past Due Balance;
(ii) as of the date of the Original Plan Sponsor Agreement, the Original Lessors were owed approximately $265,225,000 in unpaid Deferred Rent Obligations (as defined in the Master Lease) then due and owing under the Master Lease;
(iii) as of the date of the Original Plan Sponsor Agreement, the Rent and other obligations of HCR III under the Master Lease and the Debtor under the Guaranty constituted legal, valid and binding obligations of HCR III and the Debtor, respectively, enforceable against HCR III and the Debtor in accordance with the terms of the Master Lease and the Guaranty;
(iv) no portion of the Rent and other obligations of HCR III under the Master Lease, the Debtor under the Guaranty, or the Sublease OpCos under the Agreements Regarding Subleases is subject to avoidance, recharacterization, recovery or subordination pursuant to the Bankruptcy Code or applicable nonbankruptcy law;
(v) the Debtor and HCR III do not have any claims, counterclaims, causes of action, defenses or setoff rights arising under or in connection with the Master Lease, the Guaranty or the Agreements Regarding Subleases against ProMedica, QCP, the Original Lessors or their respective Representatives (in their capacities as such) with respect to any unpaid Rent (including the Deferred Rent Obligation); and
(vi) other than (A) as a result of HCR IIIs failure to pay all due and owing Rent in full, the failure to deposit or pay any amounts required to be deposited pursuant to Section 4.4 of the Master Lease or the failure to make capital expenditures required by the Master Lease, (B) any Event of Default under clause (ii) of Section 16.1(l) of the Master Lease resulting from the failure of the Debtor to make any payment due under the Guaranty, (C) the 2017 default under and acceleration of amounts owing under the JP Morgan Credit Facility and (D) the other matters described in Section 5.2(b), no default or Event of Default (as defined in the Master Lease) under the Master Lease is continuing.
5.3 Business Operations . Subject to the terms and conditions hereof, from the date of this Agreement until the Closing Date, the Debtor shall, and shall cause its Subsidiaries to:
(a) comply in all material respects with all non-monetary obligations under the Master Lease, Guaranty and Agreements Regarding Subleases (it being understood that an obligation to make capital expenditures shall constitute a monetary obligation);
(b) comply with Section 5.3(b), (c) and (d) of the Original Plan Sponsor Agreement;
(c) keep on the premises of each Leased Facility all material personal property utilized in the ordinary course of operations at each such Leased Facility; and
(d) deliver to the QCP Consultants, QCP and ProMedica (i) an updated 13-Week Cash Budget on a day during the last week of April 2018 and on a day during the last week of each calendar month thereafter and (ii) a report on a weekly basis, beginning on the third business day of the week after the date of this Agreement, setting forth any line-item variances
from the most recent 13-Week Cash Budget delivered to ProMedica, QCP and the QCP Consultants.
5.4 QCP Support . Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, and unless compliance is waived in writing by the JV and ProMedica, QCP agrees to, and to cause its direct and indirect subsidiaries and affiliates to:
(a) support, and take all reasonable actions reasonably requested by the Debtor or ProMedica and the JV to facilitate the solicitation, confirmation and consummation of the Amended Plan and the transactions contemplated by the Amended Plan, including, without limitation, voting in favor of the Amended Plan and, upon the Effective Date of the Amended Plan, taking such actions as are reasonably requested by the Reorganized Debtor or ProMedica to dismiss with prejudice the Receivership Proceeding; provided that nothing set forth in this Section 5.4(a) shall require QCP to make any payment, transfer any asset or otherwise grant any consideration to any Person;
(b) not take any other action, directly or indirectly, that would reasonably be expected to prevent, materially interfere with, materially delay or materially impede the solicitation of votes in connection with the Amended Plan, the confirmation of the Amended Plan or the consummation of the Amended Plan and the transactions contemplated thereunder;
(c) not to take any action, directly or indirectly, with respect to the Receivership Proceeding (except as contemplated by clause (a) above);
(d) not, without the prior written consent of the Debtor (such consent not to be unreasonably conditioned, withheld or delayed), approve any amendment or modification to the Merger Agreement or grant any waiver under the Merger Agreement that, in each case, would reasonably be expected to prevent or materially delay the consummation of the Closing;
(e) not to object to or otherwise commence, or encourage any other person to commence, any proceeding or take any action opposing the Amended Plan or Disclosure Statement that would reasonably be expected to have a material adverse effect on the consummation of the Amended Plan and the transactions contemplated thereunder; and
(f) Upon satisfaction of the condition set forth in Section 6.1(e)(i) and the satisfaction of all conditions in Article VI (other than Section 6.1(e)(ii)), QCP will take such action within its power to satisfy the condition set forth in Section 6.1(e)(ii) (including enforcing its rights under the Merger Agreement).
Notwithstanding anything to the contrary in this Agreement or otherwise, it shall not be deemed a breach or violation of this Agreement for QCP, its Subsidiaries and/or any of their respective representatives to take any actions contemplated by Section 7.4 of the Merger Agreement or for QCP to exercise any rights or remedies under the Merger Agreement.
5.5 Restructuring Costs . Subject to the limitations set forth in this Section 5.5, ProMedica shall reimburse the Debtor, promptly upon demand, for all Restructuring Costs paid by the Debtor during the Fee Reimbursement Period. Restructuring Costs means all fees, costs and expenses paid by the Debtor to professionals (to the extent either retained by the Debtor or retained by any other Person entitled to reimbursement by the Debtor) during the Fee Reimbursement Period in connection with (i) the Original Plan, (ii) the Amended Plan, (iii) the Bankruptcy Case, or (iv) the restructuring or reorganization of the Debtor. Notwithstanding the foregoing, ProMedica shall not be required by this Section 5.5 to reimburse the Debtor for Restructuring Costs in excess of $2 million per calendar month or, with respect to the calendar month in which the Fee Reimbursement Period ends, to the extent the Fee Reimbursement Period ends on a day other than the last day of such calendar month, a pro rata portion of such amount; provided that, to the extent that the amount of reimbursed Restructuring Costs in any calendar month is less than $2 million, the unused portion may be applied in future calendar months. The Fee Reimbursement Period means the period from (and including) May 1, 2018 through (and including) the earlier of (i) the Effective Date (as defined in the Amended Plan) or (ii) the date of termination of this Agreement.
ARTICLE VI
Conditions
6.1 Conditions to Each Partys Obligations . The respective obligations of each party to effect the Transactions are subject to the satisfaction or waiver at or prior to the Closing of each of the following conditions:
(a) Litigation . No court or other Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Transactions. No Law shall be in effect enjoining or otherwise prohibiting the consummation of the Transactions.
(b) Approvals . The Governmental Approvals set forth on Section 6.1(b) of the Debtor Disclosure Letter shall have been obtained or made, except to the extent the failure to obtain such Governmental Approvals would not, in the aggregate, reasonably be expected to result in losses, costs, liabilities or expenses to ProMedica, the Debtor and their respective Subsidiaries in excess of $5,000,000, and the applicable waiting period under the HSR Act shall have expired or been terminated.
(c) Confirmation Order . The Bankruptcy Court shall have entered the Confirmation Order, there shall have been no amendment to the Amended Plan or the Confirmation Order except as permitted hereby and all conditions to the effectiveness of the Amended Plan shall have been satisfied or waived in accordance with the terms of the Plan.
(d) Bankruptcy Court Orders . The Bankruptcy Court shall not have entered an Order (i) dismissing the Bankruptcy Case or converting the Bankruptcy Case to a case under Chapter 7 of the Bankruptcy Code or (ii) materially inconsistent with this Agreement, the Amended Plan or the Confirmation Order in a manner adverse to ProMedica or QCP.
(e) Merger Agreement .
(i) All conditions to the consummation of the Merger in the Merger Agreement (other than the occurrence of the Closing and such conditions to the consummation of the Merger as, by their nature, are to be satisfied at such consummation) shall have been satisfied or waived in accordance with the terms of the Merger Agreement; and
(ii) The parties to the Merger Agreement have delivered the Requisite Merger Filings (as defined in the Merger Agreement) in escrow to Wachtell, Lipton, Rosen & Katz LLP to be released and filed with the relevant Governmental Entities immediately after the Closing, pursuant to the terms of the Merger Agreement.
6.2 Conditions to Obligations of ProMedica . The obligations of ProMedica to effect the Transactions are also subject to the satisfaction or waiver by ProMedica at or prior to the Closing Date of the following conditions:
(a) Performance of Obligations of the Debtor . A court of competent jurisdiction shall not have determined that the Debtor has breached in any material respect any material covenants required to be performed by it under this Agreement on or prior to the Closing Date and such material breach either is not curable or has not been cured.
(b) Officers Certificate . ProMedica shall have received a certificate dated as of the Closing Date, signed by the chief executive officer of the Debtor, stating that the condition specified in Section 6.2(a) has been waived or satisfied.
6.3 Conditions to Obligation of the Debtor . The obligation of the Debtor to effect the Transactions is also subject to the satisfaction or waiver by the Debtor at or prior to the Closing of the following conditions:
(a) Performance of Obligations of ProMedica . ProMedica shall have performed and complied, in all material respects, all material obligations required to be performed by it under this Agreement on or prior to the Closing Date, other than any material breach which is curable and has been cured.
(b) Officers Certificate . The Debtor shall have received a certificate dated as of the Closing Date, signed by the chief executive officer of ProMedica Parent, stating that the condition specified in Section 6.3(a) has been waived or satisfied.
ARTICLE VII
Termination
7.1 Automatic Termination . Subject to Section 8.1, this Agreement will expire by its own terms and terminate automatically, without notice or further action by any party, if the Merger Agreement is terminated in accordance with its terms.
7.2 Termination by Mutual Consent . This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing, by mutual written consent of the Debtor, ProMedica and QCP, by action of their respective boards of directors.
7.3 Termination by ProMedica, QCP or the Debtor . This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing by any of ProMedica, QCP or the Debtor if:
(a) the Transactions shall not have been consummated by 11:59 p.m. NYC time on October 15, 2018 (the Termination Date ) (or 11:59 p.m. NYC time on October 12, 2018, if the termination right is exercised by QCP);
(b) the Bankruptcy Court or any court exercising appellate jurisdiction over the Bankruptcy Court enters an Order (i) denying confirmation of the Amended Plan, (ii) dismissing the Bankruptcy Case, or (iii) converting the Bankruptcy Case of the Debtor to a case under chapter 7 of the Bankruptcy Code, and such Order (x) is or becomes a Final Order or (y) has been in effect for thirty (30) days and is not subject to stay; provided that a Final Order shall mean an Order which has not been stayed (or with respect to which any stay has been lifted) and (A) as to which the time to file an appeal, a motion for rehearing or reconsideration (excluding any motion under Section 60(b) of the Federal Rules of Civil Procedure) or a petition for writ of certiorari has expired and no appeal, motion, stay or petition is pending, or (B) in the event that such an appeal or petition thereof has been sought, either (1) such Order shall have been affirmed by the highest court to which such Order was appealed or certiorari shall have been denied, and the time to take any further appeal or petition of certiorari shall have expired or (2) such appeal, motion, stay or petition shall not have been granted and shall no longer be pending and the time for seeking such appeal, motion, stay or petition shall have been expired; or
(c) any Order permanently restraining, enjoining or otherwise prohibiting consummation of the Transactions shall become a Final Order; provided , however , that the right to terminate this Agreement pursuant to this Section 7.3 shall not be available to any party that has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of the failure of a condition to the consummation of the Transactions.
7.4 Termination by the Debtor or QCP . This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing by the Debtor or QCP if:
(a) a court of competent jurisdiction shall have determined that there has been a material breach of any covenant or agreement made by ProMedica in this Agreement such that the condition set forth in Section 6.3(a) would not be satisfied and such material breach is not curable or, if curable, is not cured within the earlier of (x) thirty (30) days after written notice thereof is given by the Debtor or QCP, as applicable, to ProMedica and the other parties hereto and (y) the Termination Date; provided that the Debtor shall not have the right to terminate this Agreement pursuant to this Section 7.4(a) if the Debtor is then in material breach of any of its covenants or agreements contained in this Agreement such that the condition set forth in Section 6.2(a) would not be satisfied; provided further that QCP shall not have the right to terminate this Agreement pursuant to this Section 7.4(a) if QCP is then in material breach of any of its covenants or agreements contained in Section 5.4 of this Agreement; or
(b) if any condition set forth in Section 6.1 shall have become incapable of fulfillment prior to the Termination Date other than as a result of a material breach by the Debtor or QCP, as applicable, of any covenant or agreement contained in this Agreement, and such condition is not waived by the Debtor or QCP, as applicable.
7.5 Termination by ProMedica or QCP . This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing by ProMedica or QCP if:
(a) a court of competent jurisdiction shall have determined that there has been a material breach of any covenant or agreement made by the Debtor in this Agreement such that the condition set forth in Section 6.2(a) would not be satisfied and such material breach is not curable or, if curable, is not cured within the earlier of (x) thirty (30) days after written notice thereof is given by ProMedica or QCP, as applicable, to the Debtor and the other parties hereto and (y) the Termination Date; provided that ProMedica shall not have the right to terminate this Agreement pursuant to this Section 7.5(a) if ProMedica is then in material breach of any of its covenants or agreements contained in this Agreement; provided further that QCP shall not have the right to terminate this Agreement pursuant to this Section 7.5(a) if QCP is then in material breach of any of its covenants or agreements contained in Section 5.4 of this Agreement;
(b) if any condition set forth in Section 6.1 shall have become incapable of fulfillment prior to the Termination Date other than as a result of a material breach by ProMedica or QCP, as applicable, of any covenant or agreement contained in this Agreement, and such condition is not waived by ProMedica or QCP, as applicable;
(c) any Subsidiary of the Debtor commences proceedings under the Bankruptcy Code without the prior written consent of ProMedica or QCP, which may be withheld in such Persons sole discretion;
(d) the Bankruptcy Court or any court exercising appellate jurisdiction over the Bankruptcy Court enters an Order (i) appointing a trustee with expanded powers pursuant to section 1104 of the Bankruptcy Code or (ii) that is materially inconsistent with the Amended Plan or the Transactions in a manner adverse to ProMedica or QCP, and such Order (x) is or becomes a Final Order or (y) has been in effect for thirty (30) days and is not subject to stay;
(e) if the Carlyle Holders have (i) filed any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares (as defined in the Alternative Restructuring Support Agreement) or (ii) Transferred (as defined in the Alternative Restructuring Support Agreement) any Debtor Shares other than in accordance with the Alternative Restructuring Support Agreement;
(f) other than in accordance with the Amended Plan, if there has been (i) a termination or rejection of the Master Lease or any Agreement Regarding Subleases by the lessee or any other Subsidiary of the Debtor, or (ii) the occurrence of a Default or an Event of Default (each as defined under the Centerbridge Facility) under the Centerbridge Facility that would permit the acceleration of Obligations (as defined under the Centerbridge Facility) and a failure by the Debtor to cure such Default or Event of Default within thirty (30) days of the occurrence of
such a Default or Event of Default, or the acceleration of Obligations (as defined under the Centerbridge Facility); or
7.6 Termination by QCP . This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing by QCP if:
(a) the Confirmation Order has not been entered by the Bankruptcy Court within sixty-five (65) days after the date of this Agreement; or
(b) HCR III fails to pay such cash and cash equivalents available to pay part or all of the Reduced Cash Rent due from and after the date hereof after (A) making all transfers of funds from the Debtors home health care, hospice and other ancillary businesses other than the Debtors skilled nursing and inpatient rehabilitation facilities, memory care facilities and assisted living facilities (the SNF Business ) that are permitted under the Centerbridge Facility and (B) paying all available cash and cash equivalents from the SNF Business subject to retaining such reserves and making such other expenditures as either (x) the CRO or (y) the Debtor Board has determined in good faith, after consulting with QCP, are necessary to allow the Debtor to operate safely, prudently and in the ordinary course of business, and HCR III does not cure such failure within five (5) business days of such failure.
ARTICLE VIII
Miscellaneous and General
8.1 No Survival; Effect of Termination and Abandonment .
(a) Except as provided in Section 8.1(b) below, in the event of termination of this Agreement and the abandonment of the Transactions pursuant to ARTICLE VII, this Agreement shall become void and be of no effect with no liability to any Person on the part of any party hereto (or of any of its Representatives or Affiliates); provided , however , and notwithstanding anything in the foregoing to the contrary, that (i) no such termination shall relieve any party of any liability or damages resulting from any fraud by such party or Willful Breach of this Agreement on the part of such party occurring prior to such termination and (ii) the provisions set forth in this ARTICLE VIII, ProMedicas expense reimbursement and indemnification obligations set forth in Section 4.9(d) and the agreements of the parties contained in Section 4.4 ( Publicity ), Section 4.6 ( Expenses ) and Section 4.8 ( Confidentiality ) shall survive the termination of this Agreement. For purposes of this Agreement, Willful Breach shall mean a material breach of, or failure to perform, any of the covenants or other agreements contained in this Agreement (including failure to close the Transactions in accordance with Section 1.4) that is a consequence of an act, or failure to act, by the breaching or non-performing Person with actual knowledge, or knowledge that a Person acting reasonably under the circumstances would reasonably be expected to have, that such Persons act or failure to act would, or would be reasonably expected to, result in or constitute a breach of, or failure of, performance under this Agreement.
(b) Waiver; Automatic Stay . The failure of a party to exercise its right to terminate this Agreement under, or the extension of any time period in, any provision of ARTICLE
VII at any time will not constitute a waiver of any such right. The Debtor hereby waives any requirement that ProMedica or QCP seek or obtain relief from the automatic stay under section 362 of the Bankruptcy Code for purposes of providing notice under, or terminating, this Agreement, and the Debtor agrees not to object to ProMedica or QCP seeking, if necessary, to lift the automatic stay in connection therewith.
(c) This ARTICLE VIII and the agreements of the Debtor and ProMedica contained in Section 4.7 ( Indemnification; Directors and Officers Insurance ) shall survive the consummation of the Transactions. All other representations, warranties, covenants and agreements in this Agreement and in any certificate or other writing delivered pursuant hereto shall not survive consummation of the Transactions and, from and after the Closing Date, no party shall have any claim against any other party for breach of any representation or warranty set forth herein.
8.2 Modification or Amendment . Subject to the provisions of applicable Laws, at any time prior to the Closing Date, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties.
8.3 Waiver of Conditions . The conditions to each of the parties obligations to consummate the Transactions and the other transactions contemplated by this Agreement are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Laws.
8.4 Counterparts . This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.
8.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC PERFORMANCE .
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF TO THE EXTENT THAT SUCH PRINCIPLES WOULD DIRECT A MATTER TO ANOTHER JURISDICTION. The parties hereby irrevocably submit to the personal jurisdiction of the courts of the State of Delaware and the federal courts of the United States of America located in the State of Delaware solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the Transactions, and hereby waive, and agree not to assert, as a defense in any Proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such Proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims relating to such Proceeding or transactions shall be heard and determined in such a Delaware State or federal court. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and, to the extent permitted by law, over the subject matter of such dispute and agree that mailing of process or other papers in connection with any
such Proceeding in the manner provided in Section 8.6 or in such other manner as may be permitted by Law shall be valid and sufficient service thereof. Notwithstanding the foregoing consent to jurisdiction in either a state or federal court of competent jurisdiction in the State of Delaware, each of the parties hereby agrees that during the pendency of the Bankruptcy Case, the Bankruptcy Court shall have exclusive jurisdiction over all matters arising out of or in connection with this Agreement.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.5.
(c) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Court of Chancery of the State of Delaware or, during the Bankruptcy Case, in the Bankruptcy Court, this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (x) the other party has an adequate remedy at law or (y) an award of specific performance is not an appropriate remedy for any reason at law or in equity, and that it waives any requirement for the securing or posting of a bond in connection with any such remedy.
8.6 Notices . Any notice, request, instruction or other document to be given hereunder by any party to the other parties shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, by facsimile or overnight courier:
If to QCP :
Quality Care Properties, Inc.
7315 Wisconsin Avenue, Suite 550 East
Bethesda, Maryland 20814
Attention: David Haddock, General Counsel
Email: dhaddock@qcpcorp.com
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich and Scott K. Charles
Email: aoemmerich@wlrk.com and skcharles@wlrk.com
and
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attention: Audra D. Cohen and Andrew G. Dietderich
Email: cohena@sullcrom.com and dietdericha@sullcrom.com
If to the Debtor :
HCR ManorCare, Inc.
333 North Summit Street
Toledo, Ohio 43604
Attention: Richard A. Parr, General Counsel
John Castellano, Chief Restructuring Officer
Email: rparr@hcr-manorcare.com
jcastellano@alixpartners.com
with a copy to:
Sidley Austin LLP
One South Dearborn
Chicago, IL 60603
Attention: Larry Nyhan
Email: lnyhan@sidley.com
and
Latham & Watkins LLP
555 Eleventh Street, NW, Suite 1000
Washington, D.C. 20004-1304
Attention: Daniel T. Lennon
Roger G. Schwartz
J. Cory Tull
Email: daniel.lennon@lw.com
roger.schwartz@lw.com
cory.tull@lw.com
If to ProMedica :
ProMedica Health System, Inc.
100 Madison Avenue
Toledo, OH 43604
Attention: Jeff Kuhn, Chief Legal Officer and General Counsel
Email: jeff.kuhn@promedica.orgwith a copy to:
Shumaker, Loop & Kendrick, LLP
1000 Jackson Street
Toledo, OH 43604
Attention: James I Rothschild
David Coyle
Email: jrothschild@slk-law.com
dcoyle@slk-law.com
If to the Meerkat I LLC or the Lessors :
Meerkat I LLC
4500 Dorr Street
Toledo, OH 43615
Attn: General Counsel
with a copy to:
Gibson Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attn: Dennis Friedman
Michael A. Rosenthal
Email: dfriedman@gibsondunn.com
mrosenthal@gibsondunn.com
or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above. Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party: (i) upon actual receipt, if delivered personally; (ii) three (3) business days after deposit in the mail, if sent by registered or certified mail; (iii) upon confirmation of successful transmission if sent by facsimile ( provided that if given by facsimile, such notice, request, instruction or other document shall be followed up within one (1) business day by dispatch pursuant to one of the other methods described herein); or (iv) on the next business day after deposit with an overnight courier, if sent by an overnight courier.
8.7 Entire Agreement . This Agreement (including any exhibits hereto), the Debtor Disclosure Letter and the Alternative Restructuring Support Agreement constitute the entire agreement and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PROMEDICA, THE
LESSORS NOR THE DEBTOR MAKES OR RELIES ON ANY OTHER REPRESENTATIONS, WARRANTIES OR INDUCEMENTS, AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS, WARRANTIES OR INDUCEMENTS, EXPRESS OR IMPLIED, RELATED TO THE DEBTOR, THE TRANSACTIONS OR ANY OTHER MATTER, INCLUDING REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OR COMPLETENESS OF ANY OTHER INFORMATION, MADE BY, OR MADE AVAILABLE BY, ITSELF OR ANY OF ITS REPRESENTATIVES, WITH RESPECT TO, OR IN CONNECTION WITH, THE NEGOTIATION, EXECUTION OR DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHERS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING. No party shall be bound by, or be liable for, any alleged representation, promise, inducement or statement of intention not contained herein.
8.8 No Third Party Beneficiaries; No Recourse . Except as provided in Section 4.7 ( Indemnification; Directors and Officers Insurance ) and Section 8.15 ( Certain Waivers ) only, ProMedica, the Lessors and the Debtor hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including, without limitation, the right to rely upon the representations and warranties set forth herein. The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance with Section 8.3 without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the Transactions may only be brought against, the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement and not otherwise), no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Debtor, ProMedica or the Lessors under this Agreement (whether for indemnification or otherwise) or of or for any claim based on, arising out of, or related to this Agreement or the Transactions.
8.9 Obligations of ProMedica and of the Debtor . Whenever this Agreement requires a Subsidiary of ProMedica to take any action, such requirement shall be deemed to include an undertaking on the part of ProMedica to cause such Subsidiary to take such action.
Whenever this Agreement requires a Subsidiary of the Debtor to take any action, such requirement shall be deemed to include an undertaking on the part of the Debtor to cause such Subsidiary to take such action.
8.10 Transfer Taxes . All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including penalties and interest) incurred in connection with the Transactions shall be paid by ProMedica when due, and ProMedica will indemnify the Debtor against liability for any such Taxes. Notwithstanding the foregoing sentence, responsibility for the payment of any real property transfer taxes that are payable as a result of the consummation of the Merger shall be as set forth in the Merger Agreement.
8.11 Definitions . Each of the terms set forth in Annex A is defined in the Section of this Agreement set forth opposite such term.
8.12 Severability . The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application of such provision to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application of such provision, in any other jurisdiction.
8.13 Interpretation; Construction . The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Annex or Exhibit, such reference shall be to a Section of or Annex or Exhibit to this Agreement unless otherwise indicated. Whenever the words include, includes or including are used in this Agreement, they shall be deemed to be followed by the words without limitation.
(a) The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
(b) The Debtor and ProMedica have or may have set forth information in the Debtor Disclosure Letter in a section of such Debtor Disclosure Letter that corresponds to the section of this Agreement to which it relates. The fact that any item of information is disclosed in the Debtor Disclosure Letter to this Agreement shall not be construed to mean that such information is required to be disclosed by this Agreement.
8.14 Assignment . This Agreement shall not be, directly or indirectly, assignable by operation of law or otherwise; provided , however , that (i) ProMedica Parent may designate, by written notice to the Debtor and QCP, another
wholly-owned direct or indirect wholly-owned Subsidiary to be a party in lieu of Purchaser (provided that such Subsidiary remains wholly-owned by ProMedica Parent through the Closing Date), in which event all references herein to Purchaser shall be deemed references to such other Subsidiary, except that all representations and warranties made herein with respect to Purchaser as of the date of this Agreement shall be deemed representations and warranties made with respect to such other Subsidiary as of the date of such designation; provided that any such designation shall not violate the Merger Agreement, materially impede or delay the consummation of the Transactions or otherwise materially impede the rights of the stockholders of the Debtor under this Agreement and (ii) the Merger Agreement and consummation of the transactions contemplated thereby shall not constitute an assignment of this Agreement. Any purported assignment in violation of this Agreement is void and such designation shall not relieve ProMedica of any obligation or liability hereunder. The sale or transfer by ProMedica of any direct or indirect equity interest in Purchaser shall constitute an assignment of this Agreement.
8.15 Certain Waivers . ProMedica and the Debtor (on behalf of itself and its Affiliates) acknowledge that Latham & Watkins LLP and other legal counsel ( Prior Debtor Counsel ) have, on or prior to the Closing Date, represented (i) the Carlyle Holders in connection with the Transactions and (ii) the Debtor and its Subsidiaries and other Affiliates in one or more matters, including relating to this Agreement and the Transactions (each, an Existing Representation ), and that, in the event of any post-Closing matters (x) relating to this Agreement or any other agreements or Transactions (including any matter that may be related to a litigation, claim or dispute arising under or related to this Agreement or such other agreements or in connection with such transactions) and (y) in which ProMedica or any of its Affiliates (including the Debtor and its Subsidiaries), on the one hand, and any Carlyle Holder or any of its Affiliates (each, a Designated Person ), on the other hand, are or may be adverse to each other (each, a Post-Closing Matter ), the Designated Persons reasonably anticipate that Prior Debtor Counsel will represent them in connection with such matters. Accordingly, ProMedica and the Debtor (on behalf of itself and its Affiliates) hereby (i) waive and shall not assert, and agree after the Closing to cause their Affiliates to waive and to not assert, any conflict of interest arising out of or relating to the representation by one or more Prior Debtor Counsel of one or more Designated Persons in connection with one or more Post-Closing Matters (the Post-Closing Representations ), and (ii) agree that, in the event that a Post-Closing Matter arises, Prior Debtor Counsel may represent one or more Designated Persons in the Post-Closing Matter even though the interests of such Person(s) may be directly adverse to ProMedica or any of its Affiliates (including the Debtor and its Subsidiaries), and even though Prior Debtor Counsel may (i) have represented the Debtor or its Subsidiaries in a matter substantially related to such dispute or (ii) be currently representing the Debtor or any of its respective Affiliates. Without limiting the foregoing, ProMedica and the Debtor (on behalf of itself and its Affiliates) consent to the disclosure by Prior Debtor Counsel, in connection with one or more Post-Closing Representations, to the Designated Persons of any information learned by Prior Debtor Counsel in the course of one or more Existing Representations, whether or not such information is subject to the attorney-client privilege of the Debtor or any of its Subsidiaries or Prior Debtor Counsels duty of confidentiality as to the Debtor or any of its Subsidiaries and whether or not such disclosure is made before or after the Closing. The Carlyle Holders and Latham & Watkins LLP are intended third-party beneficiaries, and are relying on the provisions of, of this Section 8.15.
8.16 No Solicitation . This Agreement, the Transactions and the Amended Plan are the product of negotiations among the parties, together with their respective representatives. Notwithstanding anything herein to the contrary, this Agreement is not, and shall not be deemed to be, a solicitation of votes for the acceptance of the Amended Plan or any plan of reorganization for the purposes of sections 1125 and 1126 of the Bankruptcy Code or otherwise.
8.17 Settlement Discussions . This Agreement is part of a proposed settlement of matters that could otherwise be the subject of litigation among the parties. Nothing herein shall be deemed an admission of any kind. Pursuant to the agreement of the parties, Federal Rule of Evidence 408, any applicable state rules of evidence and any other applicable law, foreign or domestic, this Agreement, all exhibits, schedules and appendices hereto, and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than to prove the existence of this Agreement or in a proceeding to enforce the terms of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above.
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SUBURBAN HEALTHCO, INC. |
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SIGNATURE PAGE CONTINUES
Signature Page to Plan Sponsor Agreement
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above.
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HCR MANORCARE, INC. |
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QUALITY CARE PROPERTIES, INC. |
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PROMEDICA HEALTH SYSTEMS, INC. |
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By: |
/s/ Randy Oostra |
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Name: |
Randy Oostra |
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President & CEO |
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MEERKAT, LLC |
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SUBURBAN HEALTHCO, INC. |
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By: |
/s/ Randy Oostra |
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Name: |
Randy Oostra |
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President |
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[SIGNATURE PAGE CONTINUES]
[Signature Page to Plan Sponsor Agreement]
ANNEX A
DEFINED TERMS
Terms |
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Section |
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13-Week Cash Budget |
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5.1(b)(ii)(C) |
280G Stockholder Vote |
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4.5(e)(i) |
Acquisition Proposal |
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4.10(e) |
Affiliate |
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2.1(l)(iii)(A) |
Alternative Acquisition Agreement |
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4.10(e) |
Alternative Restructuring Support Agreement |
|
Recitals |
Agreement |
|
Preamble |
Agreement Regarding Subleases, Agreements Regarding Subleases |
|
Recitals |
Amended Plan |
|
Recitals |
Applicable Restriction |
|
5.1(b)(i) |
Approved Fees |
|
5.5 |
Audited Financial Statements |
|
2.1(e)(i) |
Authorization Order |
|
3.3(b) |
Bankruptcy and Equity Exception |
|
2.1(c) |
Bankruptcy Case |
|
Recitals |
Bankruptcy Code |
|
Recitals |
Bankruptcy Court |
|
Recitals |
Business |
|
Recitals |
business day |
|
1.4 |
By-Laws |
|
1.3(b) |
Carlyle Holders |
|
Recitals |
Case Budget |
|
3.1(d) |
Centerbridge Facility |
|
Recitals |
Charter |
|
1.3(a) |
Closing |
|
1.4 |
Closing Date |
|
1.4 |
Code |
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1.6(a) |
Company Plan |
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2.1(h)(i) |
Confirmation Order |
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3.1(b) |
Contract |
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2.1(d)(ii) |
CEO |
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5.1(b)(i) |
CFO |
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5.1(b)(i) |
CRO |
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4.1(a)(xix) |
D&O Insurance |
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4.7(b) |
Debt Exchange |
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1.1(a) |
Debt Financing Sources |
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4.9(c) |
Debtor |
|
Preamble |
Debtor Board |
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1.6(b) |
Debtor Disclosure Letter |
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2.1 |
Debtor Documents |
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2.1(c) |
Debtor IT Assets |
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2.1(q)(vi) |
Debtor Labor Agreements |
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2.1(i)(i) |
Debtor Restructuring Committee |
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5.1(a) |
Deferred Rent Obligation |
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1.1(a) |
Designated Person |
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8.15 |
Disclosure Statement |
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3.1(b) |
Employment Agreement |
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1.5(b)(i) |
Environmental Law |
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2.1(o) |
ERISA Affiliate |
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2.1(h)(v) |
ERISA Plans |
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2.1(h)(i) |
Exchange Act |
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2.2 |
Excess Severance Payments |
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1.5(a) |
Existing Representation |
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8.15 |
Fee Reimbursement Period |
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5.5 |
Final Order |
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6.1(c) |
Financing |
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4.9(a) |
Former CEO |
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Recitals |
Former CEO Settlement Agreement |
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Recitals |
Fundamental Representations of the Debtor |
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6.2(a) |
GAAP |
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2.1(a)(v) |
Governmental Approvals |
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2.1(d)(i) |
Governmental Entity |
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1.6(d) |
Government Contract |
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2.1(l)(iii)(B) |
Guaranty |
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Recitals |
Hazardous Substance |
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2.1(o) |
HCR III |
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Recitals |
Indemnified Parties |
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4.7(a) |
Insurance Policies |
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2.1(r) |
Intellectual Property Rights |
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2.1(l)(iii)(C) |
IRS |
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2.1(h)(ii) |
JP Morgan Credit Facility |
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5.2(b) |
Key Employee Incentive Plan |
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2.1(h)(viii) |
Knowledge of the Debtor |
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2.1(e)(ii) |
Laws |
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2.1(j) |
Leased Facility, Leased Facilities |
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Recitals |
Lessors |
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Preamble |
Liabilities |
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2.1(k) |
Licenses |
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2.1(j) |
Lien |
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1.1(b) |
Manorcare Financing |
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4.9(a) |
Marketing Documentation |
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4.9(a) |
Master Lease |
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Recitals |
New Master Lease |
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Recitals |
Material Adverse Effect |
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2.1(a) |
Material Contract |
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2.1(l)(i) |
New Hire |
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4.1(a)(xix) |
Non-Debtor Subsidiary Released Parties |
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3.4 |
Order |
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2.1(g) |
Original Confirmation Order |
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Recitals |
Original Lessors |
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Recitals |
Original Plan |
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Recitals |
Original Plan Sponsor Agreement |
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Recitals |
Other Indemnitors |
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4.7(g) |
Owned Intellectual Property |
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2.1(q)(i) |
Parachute Payment |
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4.5(e)(i) |
ProMedica |
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Preamble |
party, parties |
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Preamble |
Payment Date |
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1.5(a) |
PBGC |
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2.1(h)(v) |
Person |
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1.6(d) |
Permitted Lien |
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1.1(b) |
Petition Date |
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3.2(b) |
Plan Acquisition |
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1.1(a) |
Post-Closing Matter |
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8.15 |
Post-Closing Representations |
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8.15 |
Potential Acquiror |
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4.8 |
Preferred Shares |
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2.1(b)(i) |
Prior Debtor Counsel |
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8.15 |
Prior Forbearance Agreement |
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Recitals |
Proceedings |
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2.1(g) |
ProMedica |
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Preamble |
ProMedica Approvals |
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3.2 |
ProMedica Parent |
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Preamble |
Purchaser |
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Preamble |
QCP |
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Preamble |
QCP Consultants |
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5.1(b)(i) |
QCP Entities |
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Preamble |
Receivership Proceeding |
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Recitals |
Reduced Cash Rent |
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Recitals |
Reduced Cash Rent Past Due Balance |
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Recitals |
Reorganized Company Stock |
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1.1(a) |
Representatives |
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4.3 |
Restructuring Documents |
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3.1(a) |
SEC |
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4.4 |
Second Forbearance Agreement |
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Recitals |
Securities Act |
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2.1(l)(iii)(A) |
Separation Agreement |
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1.5(b)(ii) |
Shares |
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2.1(b)(i) |
SNF/AL Remarketing Process |
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5.3(b) |
SNF Business |
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7.5(j) |
Stock Plan |
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2.1(b)(i) |
Sublease Amendments |
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1.2(a) |
Subleases |
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Recitals |
Sublease OpCo, Sublease OpCos |
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Recitals |
Subsidiary |
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1.6(d) |
Tail Period |
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4.7(b) |
Takeover Statute |
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2.1(n) |
Tax, Taxes |
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2.1(p) |
Tax Return |
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2.1(p) |
Taxing Authority |
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2.1(p) |
Termination Date |
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7.3 |
Transactions |
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1.4 |
Willful Breach |
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8.1(a) |
Exhibit 1
Amended Plan
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: |
Chapter 11 |
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HCR MANORCARE, INC.,(1) |
Case No. 18-10467 (KG) |
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Debtor. |
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FIRST AMENDED CHAPTER 11 PLAN OF
REORGANIZATION FOR HCR MANORCARE, INC.
SIDLEY AUSTIN LLP |
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YOUNG CONAWAY STARGATT & TAYLOR, LLP |
Larry J. Nyhan |
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Robert S. Brady (No. 2847) |
Dennis M. Twomey |
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Edmon L. Morton (No. 3856) |
William A. Evanoff |
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Justin H. Rucki (No. 5304) |
Allison Ross Stromberg |
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Tara C. Pakrouh (No. 6192) |
Matthew E. Linder |
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Rodney Square |
One South Dearborn Street |
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1000 North King Street |
Chicago, Illinois 60603 |
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Wilmington, Delaware 19801 |
Facsimile: (312) 853-7036 |
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Facsimile: (302) 571-1253 |
Attorneys for the Debtor and Debtor in Possession
Dated: April 25, 2018
(1) The last four digits of the Debtors federal tax identification number are 9231. The mailing address for the Debtor is 333 N. Summit St., Toledo, OH 43604.
TABLE OF CONTENTS
5.15. Comprehensive Settlement of Claims and Controversies |
24 |
5.16. Tax Election |
24 |
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ARTICLE VI: TREATMENT OF EXECUTORY CONTRACTS AND INSURANCE POLICIES |
24 |
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6.1. Assumption or Rejection of Executory Contracts |
24 |
6.2. No Cure Obligations |
25 |
6.3. Insurance Policies and Agreements |
25 |
6.4. Postpetition Contracts and Leases |
25 |
6.5. Modifications, Amendments, Supplements, Restatements or Other Agreements |
25 |
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ARTICLE VII: PROVISIONS GOVERNING DISTRIBUTIONS |
25 |
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7.1. Distributions on Account of Claims Allowed as of the Effective Date |
25 |
7.2. Distributions on Account of Claims that Become Allowed after the Effective Date |
26 |
7.3. Distributions by Reorganized Debtor |
26 |
7.4. Means of Cash Payment |
26 |
7.5. Withholding and Reporting Requirements |
26 |
7.6. Compliance Matters |
26 |
7.7. Setoff and Recoupment |
26 |
7.8. Reinstated Claims |
27 |
7.9. Undeliverable or Non-Negotiated Distributions |
27 |
7.10. Claims Paid by Third Parties |
27 |
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ARTICLE VIII: CONFIRMATION AND CONSUMMATION OF THE PLAN |
27 |
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8.1. Conditions to Effective Date of Plan Implementing the Alternative Transaction |
27 |
8.2. Conditions to Effective Date of Plan Implementing the Original Transaction |
28 |
8.3. Waiver of Conditions |
28 |
8.4. Vacatur of Confirmation Order |
29 |
8.5. Notice of Effective Date |
29 |
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ARTICLE IX: EFFECT OF PLAN CONFIRMATION |
29 |
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9.1. Binding Effect |
29 |
9.2. Discharge |
29 |
9.3. Releases by the Debtor |
30 |
9.4. Releases by Certain Holders of Claims |
31 |
9.5. Exculpation |
31 |
9.6. Injunctions Related to Exculpation and Releases |
32 |
9.7. Survival of Indemnification and Exculpation Obligations |
33 |
9.8. Term of Bankruptcy Injunction or Stays |
33 |
9.9. Liability to Governmental Units |
33 |
9.10. Receivership Complaint |
34 |
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ARTICLE X: RETENTION OF JURISDICTION |
34 |
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10.1. Retention of Jurisdiction |
34 |
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ARTICLE XI: MISCELLANEOUS PROVISIONS |
36 |
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11.1. Post-Effective Date Retention of Professionals |
36 |
11.2. Effectuating Documents and Further Transactions |
36 |
11.3. Exemption from Transfer Taxes |
36 |
11.4. Payment of Statutory Fees |
37 |
11.5. Amendment or Modification of this Plan |
37 |
11.6. Severability of Plan Provisions |
37 |
11.7. Successors and Assigns |
37 |
11.8. Non-Consummation |
38 |
11.9. Notice |
38 |
11.10. Governing Law |
38 |
11.11. Tax Reporting and Compliance |
39 |
11.12. Exhibits |
39 |
11.13. Filing of Additional Documents |
39 |
11.14. Plan Documents |
39 |
11.15. Reservation of Rights |
39 |
TABLE OF EXHIBITS
Exhibit A |
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Alternative Master Lease Term Sheet |
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Exhibit B |
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Alternative Plan Sponsor Agreement |
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Exhibit C |
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Original Master Lease Amendment |
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Exhibit D |
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Original Plan Sponsor Agreement |
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Exhibit E |
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Directors and Officers of Reorganized Debtor Alternative Transaction |
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Exhibit F |
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Directors and Officers of Reorganized Debtor Original Transaction |
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Exhibit G |
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Certificate of Incorporation of Reorganized Debtor Original Transaction |
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Exhibit H |
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By-Laws of Reorganized Debtor Original Transaction |
INTRODUCTION
HCR ManorCare, Inc. (the Debtor ) hereby proposes the following first amended plan of reorganization for the Debtors reorganization case under Chapter 11 of the Bankruptcy Code for the resolution of the outstanding Claims against and Interests in the Debtor. Capitalized terms used but not defined in this paragraph have the meanings assigned to them in Article I . The classification and treatment of Claims against and Interests in the Debtor are set forth in Article II and Article III . The Debtor is the proponent of this Plan within the meaning of section 1129 of the Bankruptcy Code. Reference is made to the Disclosure Statement, distributed contemporaneously herewith, for a discussion of the Debtors history, business, properties and operations, projections for those operations, risk factors, a summary and analysis of this Plan, and related matters.
ARTICLE I:
DEFINED TERMS AND RULES OF INTERPRETATION
A. Defined Terms . As used in this Plan, capitalized terms shall have the meanings set forth in this Article I . Any term that is not otherwise defined herein, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.
1.1 Administrative Expense Claim means a Claim for costs and expenses of administration of the Chapter 11 Case arising after the Petition Date and prior to the Effective Date under sections 328, 330, 363, 364(c)(1), 365, 503(b), 507(a)(2), or 507(b) of the Bankruptcy Code, including, without limitation, (a) any actual and necessary costs and expenses of preserving the Estate and operating the businesses of the Debtor after the Petition Date and Claims of governmental units for taxes (including tax audit Claims) related to tax years commencing after the Petition Date, but excluding Claims related to tax periods, or portions thereof, ending on or before the Petition Date; (b) any Professional Fee Claim, to the extent Allowed by Final Order under sections 328, 330, 331 or 503 of the Bankruptcy Code; (c) with the exception of section 507(b) Claims, any indebtedness or obligations incurred or assumed by the Debtor during the Chapter 11 Case; (d) any cash payment required to be made under this Plan and payments to cure a default under an Executory Contract that has been or will be assumed by the Debtor; or (e) any Quarterly Fees; provided, however , in connection with the Alternative Transaction, no QCP Claim (including the Agreed Deferred Rent Obligation if the Closing of the Alternative Transaction occurs) shall be treated as an Administrative Expense Claim and all QCP Claims shall be treated only as provided in Section 3.2.4(c)(i).
1.2 Affiliate has the meaning assigned to such term in section 101(2) of the Bankruptcy Code.
1.3 Agreed Deferred Rent Obligation means, for purposes of the Alternative Transaction only, an obligation of the Debtor for deferred rent in the amount of $440,190,183.
1.4 Allowed means, with respect to a Claim or Interest, such Claim or Equity Interest or any portion thereof that the Debtor has assented to the validity of, and to which the Plan Sponsor has not objected, or that has been (a) allowed by an order of the Bankruptcy Court, (b) allowed pursuant to the terms of the Plan, (c) following the Effective Date, allowed by agreement between the Holder of such Claim, on one hand, and the Reorganized Debtor, as applicable, on the other hand, or (d)
allowed by an order of a court in which such Claim could have been determined, resolved or adjudicated if the Chapter 11 Case had not been commenced; provided , however , that an Administrative Expense Claim, other than Professional Fee Claim, incurred by the Debtor in the ordinary course of its business during the Chapter 11 Case, or assumed by the Debtor during the Chapter 11 Case, may be Allowed if the Debtor assents to the validity of such Claim; provided , further that , notwithstanding the foregoing, the Reorganized Debtor shall retain all Causes of Action and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to the Plan (including, for the avoidance of doubt, Administrative Expense Claims not paid prior to the Effective Date).
1.5 Allowed Claim or Interest means a Claim or Interest in a particular Class or of a particular type that is also an Allowed Claim or Interest. For example, an Allowed Administrative Expense Claim is an Administrative Expense Claim that is also an Allowed Claim.
1.6 Alternative Master Lease has the meaning given to such term in the Alternative Plan Sponsor Agreement. The form of Alternative Master Lease shall be filed with the Plan Supplement. A term sheet describing the terms of the Alternative Master Lease is attached hereto as Exhibit A .
1.7 Alternative Plan Sponsor Agreement means the Plan Sponsor Agreement among the Debtor, QCP, ProMedica Health System, Inc., ProMedica, and Meerkat I LLC, dated as of April 25, 2018, as amended, modified or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto. A copy of the Alternative Plan Sponsor Agreement is attached hereto as Exhibit B .
1.8 Alternative Restructuring Support Agreement means the Restructuring Support Agreement among the Debtor, Carlyle, MC Operations Investments, LLC, and ProMedica Health System, Inc., dated as of April 25, 2018, as amended, modified or supplemented from time to time in accordance with its terms.
1.9 Alternative Transaction shall have the meaning ascribed to it in Article V hereof.
1.10 Avoidance Actions means any and all actual or potential claims or causes of action to avoid a transfer of property or an obligation incurred by the Debtor arising under sections 502(d), 542, 544, 545, 547, 548, 549, 550, 551, 552 or 553(b) of the Bankruptcy Code, or under similar or related state or federal statutes or common law, including fraudulent transfer and conveyance laws, in each case whether or not litigation to prosecute such claim(s) or cause(s) of action was commenced prior to the Effective Date.
1.11 Ballot means the ballot form for accepting or rejecting this Plan, distributed with the Disclosure Statement to the Holders of Claims that are Impaired under this Plan and entitled to vote to accept or reject this Plan pursuant to Article III and Article IV .
1.12 Bankruptcy Code means Title 11 of the United States Code, 11 U.S.C. §§ 101 through 1532, as in effect on the Petition Date, together with any amendments and modifications thereto that may subsequently be made applicable to the Chapter 11 Case.
1.13 Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware or any other court with jurisdiction over the Chapter 11 Case.
1.14 Bankruptcy Rules means, collectively: (a) the Federal Rules of Bankruptcy Procedure promulgated by the United States Supreme Court under section 2075 of Title 28 of the United States Code; (b) the Federal Rules of Civil Procedure, as applicable to the Chapter 11 Case or any proceedings therein; and (c) the local rules of the Bankruptcy Court, all as in effect on the Petition Date, together with any amendments and modifications thereto that may subsequently be made applicable to the Chapter 11 Case.
1.15 Business Day means any day other than a Saturday, a Sunday or legal holiday (as defined in Bankruptcy Rule 9006(a)).
1.16 By-Laws means the amended and restated by-laws of Reorganized Debtor which (i) if the Closing of the Alternative Transaction occurs, shall be substantially in the form to be filed with the Plan Supplement and (ii) otherwise shall be substantially in the form of Exhibit H .
1.17 Carlyle means Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership, collectively.
1.18 Cash means legal tender of the United States of America.
1.19 Cash Collateral Order means, collectively, the Final Order Under 11 U.S.C. §§ 105(a), 361, 362, 363, 507 and 552 and Bankruptcy Rules 2002, 4001, 6004 and 9014 (I) Authorizing Debtor to Use Cash Collateral, (II) Granting Adequate Protection to Prepetition Secured Parties, (III) Modifying the Automatic Stay and (IV) Granting Related Relief [D.I. 94] and the interim Bankruptcy Court order entered in connection therewith [D.I. 45].
1.20 Cause of Action means any action, including any Avoidance Action, cause of action, liability, obligation, account, controversy, right to legal remedy, right to equitable remedy, right to payment, suit, debt, sum of money, damage, judgment, or Claim whatsoever, whether known or unknown, now or in the future, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured, whether alleged, asserted or assertable directly or derivatively, in law, equity, admiralty, or otherwise, arising under any applicable law, regulation, or similar governmental pronouncement.
1.21 Certificate of Incorporation means the certificate of incorporation of Reorganized Debtor which (i) if the Closing of the Alternative Transaction occurs, shall be substantially in the form to be filed with the Plan Supplement and (ii) otherwise shall be substantially in the form of Exhibit G .
1.22 Chapter 11 Case means the voluntary case under Chapter 11 of the Bankruptcy Code commenced by the Debtor in the Bankruptcy Court on the Petition Date.
1.23 Claim means a claim, as defined in section 101(5) of the Bankruptcy Code.
1.24 Class means each category of Holders of Claims or Interests established under Article III pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code.
1.25 Closing has the meaning given to such term in the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.
1.26 Common Equity Distribution means the difference between the Total Equity Distribution and the Preferred Equity Distribution.
1.27 [ Common Interest means any Interest in the Debtor issued by the Debtor prior to the Effective Date (including prior to the Petition Date) other than the Preferred Interests.](2)
1.28 Confirmation means the entry of the Confirmation Order by the Bankruptcy Court.
1.29 Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on the Bankruptcy Courts docket.
1.30 Confirmation Hearing means the hearing held by the Bankruptcy Court on confirmation of this Plan, as such hearing may be continued from time to time.
1.31 Confirmation Order means the order of the Bankruptcy Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code.
1.32 Credit Facility means that certain Credit Agreement, dated as of July 17, 2017, as subsequently amended, modified or supplemented among HCR Home Health Care and Hospice, LLC, as borrower, HCR Manorcare Operations II, LLC, HCR Manorcare Heartland, LLC, Manor Care, Inc., HCR II Healthcare, LLC and HCR Healthcare, LLC as Holdcos, the Credit Facility Lenders and the Credit Facility Agent.
1.33 Credit Facility Agent means RD Credit, LLC, in its capacity as the administrative agent and collateral agent under the Credit Facility.
1.34 Credit Facility Claim means all Claims against the Debtor of the Credit Facility Agent and Credit Facility Lenders under the Credit Facility.
1.35 Credit Facility Lenders means the lenders under the Credit Facility.
1.36 Debtor means HCR ManorCare, Inc., as debtor and debtor in possession.
1.37 Disclosure Statement means the written disclosure statement that relates to this Plan including, without limitation, all exhibits and schedules thereto, as the same may be amended, supplemented or otherwise modified from time to time, in a manner acceptable to the Debtor and the Plan Sponsor, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.
1.38 Effective Date means, and shall occur on, the Business Day on which each of the conditions precedent to the occurrence of the Effective Date set forth in Article VIII has been satisfied or waived in accordance with the terms thereof.
(2) To be revised to exclude out-of-the-money options and/or other similar interests.
1.39 Eligible Employee means each of the current Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and General Counsel of the Debtor as of the Petition Date.
1.40 Entity means an entity as defined in section 101(15) of the Bankruptcy Code.
1.41 Estate means the estate of the Debtor created in the Chapter 11 Case under section 541 of the Bankruptcy Code.
1.42 Exculpated Fiduciaries means each of the following solely in their capacity as such: (a) the Debtor; (b) the Reorganized Debtor; and (c) with respect to each of the foregoing parties, such Entities directors, officers, and professionals.
1.43 Exculpated Parties means, collectively, the Exculpated Fiduciaries and the Section 1125(e) Parties.
1.44 Executory Contracts means all executory contracts to which the Debtor is a party.
1.45 Exhibit(s) means, individually or collectively, the exhibits to this Plan.
1.46 Final Order means an order or judgment of the Bankruptcy Court (or other court of competent jurisdiction) entered by the clerk of the Bankruptcy Court on the docket in the Chapter 11 Case (or on the docket of any other court of competent jurisdiction), which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a new trial, reargument or rehearing shall then be pending, or (b) if an appeal, writ of certiorari , new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired; provided, however , that the possibility that a motion pursuant to section 502(j) or 1144 of the Bankruptcy Code or under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order shall not solely cause such order not to be a Final Order.
1.47 Former CEO Settlement Agreement has the meaning given to such term in the Plan Sponsor Agreement.
1.48 General Unsecured Claim means a Claim against the Debtor that is not an Administrative Expense Claim, a Priority Tax Claims, a Secured Claim, a Credit Facility Claim, a QCP Claim, a Severance Claim, an Intercompany Claim, or a Section 510(b) Claim.
1.49 Governmental Unit has the meaning provided in section 101(27) of the Bankruptcy Code.
1.50 Guaranty means that certain Guaranty of Obligations made by the Debtor, effective as of February 11, 2013, as amended, supplemented or modified from time to time in accordance with its terms.
1.51 HCR III means HCR III Healthcare, LLC.
1.52 Holder means an Entity holding a Claim against, or Interest in, the Debtor.
1.53 Impaired means impaired within the meaning of section 1124 of the Bankruptcy Code.
1.54 Implementation Memorandum means that certain document describing the procedures and transactions required for implementation of the Alternative Transaction on the date of the Closing, which Implementation Memorandum shall be filed no later than thirty (30) days after execution of the Alternative Plan Sponsor Agreement and shall be subject to the consent of the Debtor (which consent shall not be unreasonably withheld or delayed); provided that no such procedures or transactions shall have any force or effect prior to the occurrence of the Closing of the Alternative Transaction; provided further that nothing in the Implementation Memorandum shall delay or impede ProMedicas obligation to obtain required regulatory approval or adversely impact the distributions to be made to any Holder of a Claim or Interest under the Plan.
1.55 Intercompany Claim means any Claim against the Debtor that is held by a non-Debtor subsidiary of the Debtor.
1.56 Intercompany Note means that certain $25 million Subordinated Secured Demand Note, dated March 1, 2018, made by Debtor to HCR Home Health Care and Hospice, LLC.
1.57 Intercompany Note Claims means the secured claims of HCR Home Health Care and Hospice, LLC against the Debtor in respect of the Intercompany Note.
1.58 Interest means any equity security within the meaning of section 101(16) of the Bankruptcy Code, including any issued and outstanding common stock, preferred stock, limited liability company interest, partnership interest, or any other instrument evidencing an ownership interest in the Debtor prior to the Effective Date (including prior to the Petition Date), whether or not transferable, and any restricted stock units, calls, rights, puts, awards, commitments, repurchase rights, unvested or unexercised options, rights of conversion, warrants, unvested common interests, unvested preferred interests or any other agreements of any character related to the common or preferred interests of the Debtor, obligating the Debtor to issue, transfer, purchase, redeem, or sell any equity interests or other equity securities, and any rights under any equity incentive plans, voting agreements and registration rights agreements regarding equity securities of the Debtor.
1.59 Lessors has the meaning given to such term in the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.
1.60 Lien means, with respect to any interest in property, any mortgage, lien as defined in section 101(37) of the Bankruptcy Code, pledge, charge, security interest, easement or encumbrance of any kind whatsoever affecting such interest in property.
1.61 Merger Agreement means the Agreement and Plan of Merger by and among Welltower Inc., Potomac Acquisition LLC, Quality Care Properties, Inc., QCP AL REIT, LLC, QCP SNF West REIT, LLC, QCP SNF Central REIT, LLC, QCP SNF East, LLC, QCP HoldCo REIT,
LLC, and QCP TRS, LLC, dated as of April 25, 2018, as amended, modified, or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto.
1.62 MLSA means that certain Master Lease and Security Agreement, among certain Affiliates of QCP who are the parties thereto, as Lessor, and HCR III, as Lessee, dated as of April 7, 2011, as amended, modified or supplemented from time to time.
1.63 New Common Stock means the new common stock to be issued by Reorganized Debtor on the Effective Date authorized by this Plan, which shall have the powers, preferences and rights and be subject to the limitations, qualifications and restrictions, in each case, as set forth in the Certificate of Incorporation.
1.64 Ordinary Litigation Claims means the claims, rights of action, suits or proceedings, whether in law or in equity, whether known or unknown, that the Debtor or its Estate may hold against any Person as of the Petition Date; provided , however , Ordinary Litigation Claims shall not include (a) any claim, right of action, suit or proceeding that has been settled on or prior to the Effective Date, in accordance with the Plan Sponsor Agreement, (b) any claim, right of action, suit or proceeding that the Debtor or its Estate may hold under chapter 5 of the Bankruptcy Code, including any Avoidance Action, and (c) claims, rights of action, suits or proceedings waived or released pursuant to Article IX .
1.65 Original Master Lease means the MLSA, as amended by the Original Master Lease Amendment.
1.66 Original Master Lease Amendment has the meaning given to such term in the Plan Sponsor Agreement. The form of Original Master Lease Amendment is attached hereto as Exhibit C .
1.67 Original Plan Sponsor Agreement means the Plan Sponsor Agreement among the Debtor, QCP, HCP Mezzanine Lender, LP, a Delaware limited partnership and a wholly-owned subsidiary of QCP, and the Lessors identified therein, dated as of March 2, 2018, as amended, modified or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto. A copy of the Original Plan Sponsor Agreement is attached hereto as Exhibit D .
1.68 Original Restructuring Support Agreement means the Restructuring Support Agreement among the Debtor, Carlyle, and MC Operations Investments, LLC, dated as of March 2, 2018, as amended, modified or supplemented from time to time in accordance with its terms.
1.69 Original Transaction shall have the meaning ascribed to it in Article V hereof.
1.70 Other Priority Claim means an Allowed Claim under section 507(a) of the Bankruptcy Code other than an Administrative Expense Claim or Priority Tax Claim.
1.71 Person or person means a person as defined in section 101(41) of the Bankruptcy Code.
1.72 Petition Date means March 4, 2018, the date on which the Debtor commenced the Chapter 11 Case.
1.73 Plan means this First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc. , including all Exhibits, supplements, appendices and schedules hereto, either in its present form or as the same may be altered, amended or modified from time to time in accordance with the provisions of the Bankruptcy Code and the terms hereof.
1.74 Plan Sponsor means (i) ProMedica Health System, Inc., the sponsor under the Alternative Plan Sponsor Agreement or (ii) QCP, the sponsor under the Original Plan Sponsor Agreement, as applicable. For the avoidance of doubt, (a) absent the consent of the Debtor and the Plan Sponsor under the Original Plan Sponsor Agreement, the Plan Sponsor under the Alternative Plan Sponsor Agreement shall not enter into any agreements or transactions on behalf of the Debtor, or take any actions that obligate or purport to obligate the Debtor, prior to the occurrence of the Closing of the Alternative Transaction, and no such agreements, transactions or actions shall become effective until the occurrence of the Closing of the Alternative Transaction, and (b) absent the consent of the Debtor and the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement shall not enter into any agreements or transactions on behalf of the Debtor, or take any actions that obligate or purport to obligate the Debtor, prior to the occurrence of the Closing of the Original Transaction, and no such agreements, transactions or actions shall become effective until the occurrence of the Closing of the Original Transaction.
1.75 Plan Sponsor Agreement means the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.
1.76 Plan Supplement means the supplement to this Plan to be filed with the Bankruptcy Court fifteen (15) days prior to the Confirmation Hearing on this Plan, together with any amendments, modifications, and/or supplements thereto, which shall be subject to the consent of the Debtor and the applicable Plan Sponsor.
1.77 Preferred Equity Distribution means Cash in the amount of $2 million.
1.78 Preferred Interest means the preferred stock in the Debtor issued by the Debtor prior to the Effective Date (including prior to the Petition Date).
1.79 Priority Tax Claim means any Claim of a governmental unit of the kind against the Debtor entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.80 Professional means any Person retained by the Debtor or a statutory committee, if any, pursuant to a Final Order of the Bankruptcy Court entered pursuant to sections 327, 328 or 1103 of the Bankruptcy Code.
1.81 Professional Fee Claim means any Claim of a Professional for allowance of compensation and/or reimbursement of costs and expenses incurred in the Chapter 11 Case on or before the Effective Date.
1.82 ProMedica means Suburban HealthCo, Inc., an Ohio non-profit corporation and an indirect, wholly-owned subsidiary of ProMedica Health System, Inc., an Ohio non-profit corporation.
1.83 ProMedica Plan Contribution means Cash in the amount required to (i) pay the Allowed Credit Facility Claims in full, (ii) pay the Agreed Deferred Rent Obligation, and (iii) make the Total Equity Distribution, which shall take the form, at ProMedicas election, either of (x) a capital contribution to the Reorganized Debtor or (y) a combination of (A) the capital contribution referred to in clause (x) and (B) an unsecured, subordinated loan to the Reorganized Debtor in principal amount not to exceed $550,000,000, which unsecured loan shall mature no earlier than the third anniversary of the date of the Closing and the other terms and conditions of which shall be reasonably acceptable to the Debtor.
1.84 QCP means Quality Care Properties, Inc.
1.85 QCP Claims means all Claims of QCP and its subsidiaries against the Debtor, including, but not limited to, all Claims arising under the Guaranty and due and unpaid as of the Effective Date.
1.86 Quarterly Fees has the meaning given to such term in Section 11.4 of the Plan.
1.87 Receivership Complaint means that certain complaint filed by QCP against the Debtor, HCR III and John Does 150 in Los Angeles County Superior Court, dated on or about August 17, 2017, seeking, among other things, the appointment of a receiver for HCR III.
1.88 Reinstate , Reinstated or Reinstatement means (a) leaving unaltered the legal, equitable and contractual rights to which a Claim or Interest entitles the Holder of such Claim or Interest, or (b) notwithstanding any contractual provision or applicable law that entitles the Holder of such Claim or Interest to demand or receive accelerated payment of such Claim or Interest after the occurrence of a default, (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind specified in section 365(b)(2) of the Bankruptcy Code; (ii) reinstating the maturity of such Claim or Interest as such maturity existed before such default; (iii) compensating the Holder of such Claim or Interest for any damages incurred as a result of any reasonable reliance by such Holder on such contractual provision or such applicable law; (iv) if such Claim or Interest arises from any failure to perform a nonmonetary obligation other than a default arising from failure to operate under a nonresidential real property lease subject to section 365(b)(1)(A) of the Bankruptcy Code, compensating the Holder of such Claim or Interest (other than the Debtor or an insider of the Debtor) for any actual pecuniary loss incurred by such Holder as the result of such failure; and (v) not otherwise altering the legal, equitable or contractual rights to which such Claim or Interest entitles the Holder thereof.
1.89 Related Persons means, with respect to any Person, such Persons predecessors, successors and assigns (whether by operation of law or otherwise) and their respective present and former Affiliates and each of their respective current and former members, partners, equity holders, controlling persons, officers, directors, employees, managers, shareholders, partners, financial advisors, attorneys, accountants, investment bankers, consultants, agents and professionals each acting in such capacity, and any Person claiming by or through any of them (including their respective
officers, directors, managers, shareholders, partners, employees, equity holders, members, and professionals); provided , however , that when used in reference to the Debtor or Reorganized Debtor, the term Related Persons shall not include the Debtors and Reorganized Debtors direct or indirect subsidiaries; provided , further , that (x) no Eligible Employee shall be a Related Person unless he executes and delivers a Separation Agreement and (y) Paul Ormond shall not be a Related Person unless he executes and delivers the Former CEO Settlement Agreement, in each case, prior to the Effective Date.
1.90 Released Parties means each of the following solely in its capacity as such: (a) the Debtor; (b) the Reorganized Debtor; (c) Carlyle; (d) the Credit Facility Agent; (e) the Credit Facility Lenders; (f) the Plan Sponsor under the Alternative Plan Sponsor Agreement, (g) the Plan Sponsor under the Original Plan Sponsor Agreement, (h) Welltower; and (i) with respect to each of the foregoing parties under (a) through (h), such Entities Related Persons; provided , if the Closing of the Alternative Transaction does not occur, neither the Plan Sponsor under the Alternative Plan Sponsor Agreement, nor Welltower, or any Related Person to such Entities, shall constitute Released Parties.
1.91 Reorganized Debtor means the Debtor and any successors thereto by merger, consolidation, conversion or otherwise, on or after the Effective Date, after giving effect to the transactions implementing this Plan.
1.92 Restructuring Support Agreement means the Alternative Restructuring Support Agreement or the Original Restructuring Support Agreement, as applicable.
1.93 Section 510(b) Claim means a Claim against the Debtor that is subordinated, or subject to subordination, pursuant to section 510(b) of the Bankruptcy Code, including, without limitation, a claim arising from the rescission or purchase of a sale or security of the Debtor or an affiliate of the Debtor, for damages arising from the purchase or sale of such security or for reimbursement or contribution on account of such Claim pursuant to section 502 of the Bankruptcy Code.
1.94 Section 1125(e) Parties means each of the following, solely in their capacity as such: (a) Carlyle; (b) the Credit Facility Agent; (c) the Credit Facility Lenders; (d) the Plan Sponsor under the Alternative Plan Sponsor Agreement; (e) the Plan Sponsor under the Original Plan Sponsor Agreement; (f) Welltower; and (g) with respect to each of the foregoing parties under (a) through (f), such Entities directors, officers, and professionals; provided , if the Closing of the Alternative Transaction does not occur, the Plan Sponsor under the Alternative Plan Sponsor Agreement, Welltower, and/or any of their directors, officers or professionals, shall constitute Section 1125(e) Parties only to the extent permitted by applicable law.
1.95 Secured Claim means any Claim, other than the Credit Facility Claim and the Intercompany Note Claim, secured by a Lien on collateral in which the Estate has an interest, to the extent of the value of such collateral (i) as agreed to by the Holder of such Claim and the Debtor or (ii) as determined pursuant to a Final Order of the Bankruptcy Court in accordance with section 506(a) of the Bankruptcy Code or, in the event that such Claim is subject to setoff under section 553 of the Bankruptcy Code, to the extent of such setoff.
1.96 Securities Act means the Securities Act of 1933, as now in effect or hereafter amended, and the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder.
1.97 Separation Agreement has the meaning given to such term in the Plan Sponsor Agreement.
1.98 Severance Claim means a claim against the Debtor for damages resulting from the termination of an employment contract to which the Debtor is a party.
1.99 Total Equity Distribution means Cash in the amount of $50 million.
1.100 Unimpaired means with respect to a Claim, a Claim that is not Impaired, including any Claim that is Reinstated.
1.101 United States Trustee means the Office of the United States Trustee for the District of Delaware.
1.102 Welltower means Welltower Inc. and Meerkat I LLC.
B. Rules of Interpretation . For purposes of this Plan, unless otherwise provided herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) unless otherwise provided in this Plan, any reference in this Plan to a contract, instrument, release, or other agreement or document being in a particular form or on particular terms and conditions means that such document will be substantially in such form or substantially on such terms and conditions, subject to the Plan Sponsor Agreement; (c) any reference in this Plan to an existing document, schedule or Exhibit filed or to be filed means such document, schedule or Exhibit, as it may have been or may be amended, modified, or supplemented pursuant to this Plan and, as applicable, the Plan Sponsor Agreement; (d) any reference to an entity as a Holder of a Claim or Interest includes that entitys successors and assigns; (e) all references in this Plan to Sections or Articles are references to Sections or Articles of this Plan or the Plan Supplement, as the same may be amended, waived or modified from time to time; (f) the words herein, hereof, hereto, hereunder and other words of similar import refer to this Plan as a whole and not to any particular Section, subsection or clause contained in this Plan; (g) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (h) the rules of construction set forth in section 102 of the Bankruptcy Code (other than section 102(5) of the Bankruptcy Code) will apply; and (i) any reference to an Entitys subsidiaries means its direct and indirect subsidiaries.
C. Computation of Time. In computing any period of time prescribed or allowed by this Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall apply. In the event that any payment, distribution, act or deadline under this Plan is required to be made or performed or occurs on a day that is not a Business Day, then the making of such payment or distribution, the performance of such act or the occurrence of such deadline shall be deemed to be on the next succeeding Business Day, but if so made, performed or completed by such next succeeding Business Day shall be deemed to have been completed or to have occurred as of the required date.
D. Exhibits and Plan Supplement . All Exhibits to this Plan, as well as the Plan Supplement, are incorporated into and are a part of this Plan as if set forth in full herein. Holders of Claims and Interests may obtain a copy of the Plan Supplement and the filed Exhibits upon written request to the Debtor. Upon their filing, the Plan Supplement and the Exhibits may be inspected (i) in the office of the Clerk of the Bankruptcy Court during normal business hours, (ii) at the Bankruptcy Courts website at http://www.deb.uscourts.gov, or (iii) free of charge on the Debtors restructuring website at http://dm.epiq11.com/HCR.
E. Deemed Acts . Whenever an act or event is expressed under this Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred by virtue of this Plan and/or Confirmation Order without any further act by any party.
ARTICLE II:
TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX
CLAIMS
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified and thus are excluded from the Classes of Claims and Interests set forth in Article III .
2.1. Administrative Expense Claims .
(a) General.
Subject to the terms of the Confirmation Order and Section 2.1(b) of this Plan, each Holder of an Allowed Administrative Expense Claim shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Administrative Expense Claim, payment of Cash equal to the full unpaid amount of such Allowed Administrative Expense Claim (i) on the Effective Date or as soon as reasonably practicable thereafter, (ii) such other date as the Reorganized Debtor and such Holder shall have agreed, or (iii) as otherwise ordered by the Bankruptcy Court, provided, however , that Allowed Administrative Expense Claims not yet due or that represent obligations incurred by the Debtor in the ordinary course of its business during the Chapter 11 Case, or assumed by the Debtor during the Chapter 11 Case, shall be paid or performed when due in the ordinary course of business and in accordance with the terms and conditions of the particular agreements governing such obligations.
(b) Professionals Fee Claims.
All Professionals or other entities requesting compensation or reimbursement of expenses pursuant to sections 327, 328, 330, 331, 503(b) and/or section 1103 of the Bankruptcy Code for services rendered before the Effective Date (including, without limitation, any compensation requested by any Professional or any other entity for making a substantial contribution in the Chapter 11 Case) shall file and serve final requests for payment of Professional Fee Claims no later than the first Business Day that is forty-five (45) days after the Effective Date. Objections to any Professional Fee Claim must be filed and served on the Reorganized Debtor and the applicable Professional within thirty (30) days after the filing of the final fee application with respect to the Professional Fee Claim. Any such objections that are not consensually resolved may be set for hearing on twenty-one (21) days notice by the Professional asserting such Professional Fee Claim.
2.2. Priority Tax Claims . Each Holder of an Allowed Priority Tax Claim against the Debtor shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Priority Tax Claim, payment in full in Cash, on the latest of: (a) the Effective Date; (b) the date such Priority Tax Claim becomes an Allowed Claim; and (c) the date such Allowed Priority Tax Claim becomes due and payable under applicable non-bankruptcy law.
2.3. Post-Effective Date Fees and Expenses . Except as otherwise specifically provided in the Plan, from and after the Effective Date, the Reorganized Debtor shall, in the ordinary course of business and without any further notice to or action, order or approval of the Bankruptcy Court, pay in Cash the legal, professional or other fees and expenses related to the implementation and consummation of the Plan incurred by the Reorganized Debtor following the Effective Date. Upon the Effective Date, any requirement that Professionals comply with sections 327 through 331 and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and each Reorganized Debtor may employ and pay any professional for services rendered or expenses incurred after the Effective Date in the ordinary course of business without any further notice to or action, order or approval of the Bankruptcy Court.
ARTICLE III:
CLASSIFICATION AND TREATMENT OF
CLASSIFIED CLAIMS AND INTERESTS
3.1. Summary of Classification and Treatment of Classified Claims and Interests .
3.1.1 General .
(a) Pursuant to sections 1122 and 1123 of the Bankruptcy Code, Claims and Interests are classified for all purposes, including, without limitation, voting, Confirmation and distributions pursuant to this Plan, as set forth herein. A Claim or Interest shall be deemed classified in a particular Class only to the extent that the Claim or Interest qualifies within the description of that Class, and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Interest qualifies within the description of such different Class. A Claim or Interest is in a particular Class only to the extent that such Claim or Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date.
(b) Any Class of Claims or Interests that, as of the commencement of the Confirmation Hearing, does not have at least one Holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Plan for purposes of voting to accept or reject the Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.
(c) Pursuant to Bankruptcy Rule 9019 and section 1123(b)(3) of the Bankruptcy Code, and in consideration for the classification, distribution and other benefits provided under the Plan, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims and controversies resolved pursuant to the Plan, including all Claims, causes of action and controversies arising prior to the Effective Date, whether known or unknown, foreseen or unforeseen, asserted or unasserted, by or against any Released Party, or Holders of Claims, arising out of, relating to or in connection with the business or affairs of or transactions with the Debtor. The entry of the
Confirmation Order shall constitute the Bankruptcy Courts approval of each of the foregoing compromises or settlements, and all other compromises and settlements provided for in the Plan, and the Bankruptcy Courts findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtor, the Estate, creditors and other parties in interest, and are fair, equitable and within the range of reasonableness. The provisions of the Plan, including its release, injunction, exculpation and compromise provisions, are mutually dependent and non-severable.
3.1.2 Identification of Classes Against the Debtor . The following chart assigns a number to each Class for purposes of identifying each separate Class:
CLASS |
|
CLAIM OR INTEREST |
|
|
|
1 |
|
Other Priority Claims |
|
|
|
2 |
|
Secured Claims |
|
|
|
3 |
|
Credit Facility Claims |
|
|
|
4 |
|
QCP Claims |
|
|
|
5 |
|
General Unsecured Claims |
|
|
|
6 |
|
Severance Claims |
|
|
|
7 |
|
Section 510(b) Claims |
|
|
|
8A |
|
Preferred Interests |
|
|
|
8B |
|
Common Interests |
3.2. Classification and Treatment of Claims Against and Interests in the Debtor
3.2.1 Class 1: Other Priority Claims .
(a) Classification: Class 1 consists of all Other Priority Claims against the Debtor.
(b) Treatment: Each Holder of an Allowed Other Priority Claim will receive, in the sole discretion of the Reorganized Debtor, (i) payment in full in Cash as promptly as reasonably practicable on the later of (a) the Effective Date and (b) the date on which such Other Priority Claim becomes an Allowed Claim payable under applicable law or any agreement relating thereto, or (ii) treatment of such Allowed Other Priority Claim in any other manner that renders the claim Unimpaired, including Reinstatement. All Allowed Other Priority Claims not due and payable on or before the Effective Date shall be paid in the ordinary course of business in accordance with the terms thereof.
(c) Voting: Allowed Claims in Class 1 are Unimpaired. Each Holder of an Allowed Claim in Class 1 shall be conclusively deemed to have accepted this Plan pursuant to
section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.2 Class 2: Secured Claims .
(a) Classification: Class 2 consists of Secured Claims against the Debtor.
(b) Treatment: Except to the extent a Holder of a Secured Claim agrees to different treatment of that Secured Claim, each Holder of an Allowed Secured Claim shall, in the sole discretion of the Reorganized Debtor, receive on the Effective Date (or as promptly thereafter as reasonably practicable) or in the ordinary course of the Reorganized Debtors business (a) payment in full by Reorganized Debtor in Cash, including the payment of any interest Allowed and payable under section 506(b) of the Bankruptcy Code, (b) delivery of the collateral securing such Allowed Secured Claim, or (c) treatment of such Allowed Secured Claim in any other manner that renders the Claim Unimpaired, including Reinstatement.
(c) Voting: Allowed Claims in Class 2 are Unimpaired. Each Holder of an Allowed Claim in Class 2 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.3 Class 3: Credit Facility Claims .
(a) Classification: Class 3 consists of the Credit Facility Claims against the Debtor.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, the Credit Facility Agent shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of (including any Liens related thereto), and in exchange for, the Allowed Credit Facility Claims, payment in full, in Cash, of all such Allowed Credit Facility Claims.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, the Credit Facility Claims shall be Reinstated and any liens held by the Credit Facility Agent, on behalf of itself and the Credit Facility Lenders, against the assets of the Debtor securing the Credit Facility Claims shall survive the Effective Date in the same priority as they existed as of the Petition Date.
(c) Voting: Claims in Class 3 are Unimpaired. Each Holder of an Allowed Claim in Class 3 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.4 Class 4: QCP Claims .
(a) Classification: Class 4 consists of all QCP Claims.
(b) Allowance: The QCP Claims shall be deemed Allowed on the Effective Date in the aggregate amount of $445,796,590.
(c) Treatment:
(i) If the Closing of the Alternative Transaction occurs, on the Effective Date, (x) the Agreed Deferred Rent Obligation shall be paid, in full, in Cash, and (y) the balance of the QCP Claims, including any such QCP Claims that are Administrative Expense Claims, shall be waived and released.
(ii) If the Closing of the Alternative Transaction does not occur, the Holders of the QCP Claims (or the designee(s) of QCP) shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of, and in exchange for, their QCP Claims, 100% of the New Common Stock of Reorganized Debtor.
(d) Voting: Allowed Claims in Class 4 are Impaired. The Holder of an Allowed QCP Claim in Class 4 shall be entitled to vote to accept or reject this Plan.
3.2.5 Class 5: General Unsecured Claims .
(a) Classification: Class 5 consists of all General Unsecured Claims.
(b) Treatment: Except to the extent a Holder of an Allowed General Unsecured Claim agrees to different treatment of that General Unsecured Claim, each Holder of an Allowed General Unsecured Claim shall receive, in the sole discretion of the Reorganized Debtor, (i) payment in full in Cash of such Claim (a) on the Effective Date or as promptly thereafter as reasonably practicable, (b) in the ordinary course of the Reorganized Debtors business, or (c) on the date such Allowed General Unsecured Claim becomes due and payable according to its terms; or (ii) satisfaction of such Allowed General Unsecured Claim in any other manner that renders the Allowed General Unsecured Claim Unimpaired, including Reinstatement.
(c) Voting: Allowed Claims in Class 5 are Unimpaired. Each Holder of an Allowed Claim in Class 5 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.6 Class 6: Severance Claims
(a) Classification: Class 6 consists of all Severance Claims.
(b) Allowance: On the Effective Date, the Severance Claims shall be Allowed in the maximum amount permitted under the applicable provisions of the Bankruptcy Code.
(c) Treatment: Each Holder of an Allowed Severance Claim shall receive, in the sole discretion of the Plan Sponsor, payment in full in Cash on account of such Allowed Severance Claim (a) on the Effective Date or as soon as thereafter as reasonably practicable or (b) as otherwise agreed by the Reorganized Debtor and such Holder of a Severance Claim.
(d) Voting: Allowed Claims in Class 6 are Unimpaired, and the Holders of such Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.
3.2.7 Class 7: Section 510(b) Claims .
(a) Classification: Class 7 consists of all Section 510(b) Claims against the Debtor.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, except to the extent a Holder of an Allowed Section 510(b) Claim, if any, agrees to different treatment of that Allowed Section 510(b) Claim, each such Holder of an Allowed Section 510(b) Claim shall receive satisfaction of such Allowed Section 510(b) Claim in any manner determined by the Debtor, with the consent of the Plan Sponsor, that renders such Allowed Section 510(b) Claim Unimpaired, including Reinstatement.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Section 510(b) Claims shall be discharged and extinguished and the Holders thereof shall not receive or retain any property under this Plan on account of such Section 510(b) Claims.
(c) Voting: Claims in Class 7 are Impaired because each Holder of an Allowed Section 510(b) Claim, if any, will not be entitled to receive or retain any property under this Plan if the Closing of the Alternative Transaction does not occur. Accordingly, each Holder of an Allowed Claim in Class 7 shall be conclusively deemed to have rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan
3.2.8 Class 8A: Preferred Interests .
(a) Classification: Class 8A consists of all Preferred Interests.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, on the Effective Date or as soon thereafter as reasonably practicable, each Holder of an Allowed Preferred Interest shall receive its pro rata share of the Preferred Equity Distribution.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Preferred Interests in the Debtor shall be cancelled, annulled, and extinguished and the Holders of such Preferred Interests shall not receive or retain any property under
this Plan on account of such Preferred Interests nor receive any distributions or property under this Plan on account of such Preferred Interests.
(c) Voting: Preferred Interests in Class 8A are Impaired. Each Holder of a Preferred Interest in Class 8A shall be entitled to vote to accept or reject this Plan.
3.2.9 Class 8B: Common Interests .
(a) Classification: Class 8B consists of all Common Interests.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, on the Effective Date or as soon thereafter as reasonably practicable, each Holder of an Allowed Common Interest shall receive its pro rata share of the Common Equity Distribution.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Common Interests in the Debtor shall be cancelled, annulled, and extinguished and the Holders of such Common Interests shall not receive or retain any property under this Plan on account of such Common Interests nor receive any distributions or property under this Plan on account of such Common Interests.
(c) Voting: Common Interests in Class 8B are Impaired. Each Holder of a Common Interest in Class 8B shall be entitled to vote to accept or reject this Plan.
3.3. Intercompany Claims .
3.3.1 On the Effective Date, in the sole discretion of the Reorganized Debtor, all Intercompany Claims shall either be (i) Reinstated, in whole or in part, (ii) deemed satisfied, or (iii) discharged and extinguished, in full or in part, and shall be eliminated as of the Effective Date, in whole or in part, in which case the Holders thereof shall not be entitled to and shall not receive or retain any property or interest on account of such discharged and extinguished portion under this Plan; provided , however , that prior to such discharge and extinguishment such Intercompany Claims may be contributed to capital, transferred, setoff or subject to any other arrangement in the sole discretion of the Reorganized Debtor; provided further , that any Intercompany Claim held by an obligor under the Credit Facility shall not be discharged or extinguished without the express written consent of the Credit Facility Agent.
3.3.2 For the avoidance of doubt, the Intercompany Note Claim evidenced by the Intercompany Note shall: (i) if the Closing of the Alternative Transaction occurs, be Allowed in the amount of $25,000,000 plus accrued and unpaid interest thereon and, in the sole discretion of the Plan Sponsor under the Alternative Plan Sponsor Agreement, either (A) HCR Home Health Care and Hospice, LLC shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of (including any liens related thereto), and in exchange for, the Intercompany Note Claim, payment in full, in Cash, of the Intercompany Note Claim or (B) such Intercompany Note Claim shall be Reinstated under the Plan, and any liens held by HCR Home Health Care and Hospice, LLC against the assets of the Debtor securing the Intercompany Note shall survive the Effective Date with the
same priority that such liens held as of the Petition Date; and (ii) if the Closing of the Alternative Transaction does not occur, such Intercompany Note Claims shall be Allowed in the amount of $25,000,000 plus accrued and unpaid interest thereon and be Reinstated under the Plan, and any liens held by HCR Home Health Care and Hospice, LLC against the assets of the Debtor securing the Intercompany Note shall survive the Effective Date with the same priority that such liens held as of the Petition Date.
3.4. Unimpaired Claims .
3.4.1 Notwithstanding anything to the contrary in this Plan or the Plan Documents, and subject to Section 3.4.2 , each Holder of a Claim arising prior to the Effective Date (i) in Classes 1, 2, 5 or 7 (if the Closing of the Alternative Transaction occurs) of this Plan or (ii) in Classes 1, 2, 3, or 5 (if the Closing of the Alternative Transaction does not occur) of the Plan (each of (i) and (ii), as applicable, a Covered Unimpaired Claim ) shall be entitled to enforce its rights in respect of its Covered Unimpaired Claim against the Reorganized Debtor, in each case, until such Claim has been (a) paid in full in accordance with applicable law, or on terms agreed to between the Holder of such Claim and the Debtor or Reorganized Debtor, or in accordance with the terms and conditions of the particular transaction giving rise to such Claim or (b) otherwise satisfied or disposed of as determined by a court of competent jurisdiction. The Debtor, Reorganized Debtor and any other Entity shall retain all rights and defenses, both legal and equitable, under the Bankruptcy Code or other applicable bankruptcy and non-bankruptcy law with respect to any Covered Unimpaired Claim (other than the power to impair such Claim within the meaning of section 1124 of the Bankruptcy Code), including, but not limited to, legal and equitable rights of setoff and/or recoupment as to Covered Unimpaired Claims; provided , however , that (x) the foregoing shall not apply with respect to the Intercompany Note Claim, which is Allowed in full under this Plan without defenses, counterclaims, setoff or recoupment, and (y) for the avoidance of doubt, the Debtor, the Reorganized Debtor and any other Entity shall not retain such rights and defenses with respect to (i) any Claims or Causes of Action held by the Debtor or its Estate or the Reorganized Debtor that are released pursuant to Section 9.3 of this Plan (the Debtor Released Claims ) or (ii) any Claims of Causes of Action released by certain Holders of Claims pursuant to Section 9.4 of this Plan (the Third Party Released Claims ). Such Debtor Released Claims and Third Party Released Claims shall be deemed settled, satisfied, resolved, released, discharged, barred and/or enjoined by the applicable provisions under, and pursuant to the express terms of, this Plan and Plan Documents on the Effective Date. Holders of Covered Unimpaired Claims shall not be required to file a Proof of Claim with the Court and shall retain all their rights under applicable non-bankruptcy law to pursue their Covered Unimpaired Claims in any forum with jurisdiction over the parties. If the Debtor or the Reorganized Debtor disputes any Covered Unimpaired Claim, such dispute shall be determined, resolved or adjudicated pursuant to applicable non-bankruptcy law.
3.4.2 Notwithstanding the foregoing or anything else to the contrary in this Plan or the Plan Documents, with respect to all Claims (a) in Class 5 arising from the rejection of an Executory Contract and (b) in Class 6: (i) the Allowed amount of such Claims may be determined by the Bankruptcy Court after notice and a hearing; (ii) such Claims may be paid in full in Cash by the Debtor on the Effective Date or as soon thereafter as reasonably practicable; and (iii) such Claims shall be discharged pursuant to Section 9.2.1 of this Plan and Holders of such Claims shall be subject to the injunction set forth in Section 9.2.2 of this Plan.
ARTICLE IV: ACCEPTANCE OR REJECTION OF THE PLAN
4.1. Impaired Classes of Claims or Interests Entitled to Vote on this Plan . Claims in Class 4 (QCP Claims) and Interests in Class 8A (Preferred Interests) and Class 8B (Common Interests) are Impaired, and the Holders of such Claims and Interests are entitled to vote to accept or reject this Plan.
4.2. Acceptance by an Impaired Class of Claims or Interests . Pursuant to section 1126(c) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted the Plan if, after excluding any Claims held by any Holder whose Claims have been designated pursuant to section 1126(e) of the Bankruptcy Code, (a) the Holders of at least two-thirds in dollar amount of the Allowed Claims actually voting in such Class have voted to accept such Plan, and (b) more than one-half in number of such Allowed Claims actually voting in such Class have voted to accept the Plan. Pursuant to section 1126(d) of the Bankruptcy Code, an Impaired Class of Interests shall have accepted the Plan if, after excluding any Interests held by any Holder who has been designated pursuant to section 1126(e) of the Bankruptcy Code, the Holders of more than two-thirds in amount of such Allowed Interests actually voting in such Class have voted to accept the Plan.
4.3. Presumed Acceptance by Unimpaired Classes . Classes 1 (Other Priority Claims), 2 (Secured Claims), 3 (Credit Facility Claims), 5 (General Unsecured Claims), and 6 (Severance Claims) are Unimpaired by this Plan. Pursuant to section 1126(f) of the Bankruptcy Code, the Holders of Claims in such Classes are conclusively presumed to have accepted this Plan and therefore shall not be entitled to vote to accept or reject this Plan.
4.4. Presumed Rejection by Certain Impaired Classes . Class 7 (Section 510(b) Claims) (if the Closing of the Alternative Transaction does not occur) is Impaired by this Plan. Holders of Claims in Class 7 (Section 510(b) Claims) (if the Closing of the Alternative Transaction does not occur) will not receive or retain any property under this Plan on account of such Claims. Pursuant to section 1126(g) of the Bankruptcy Code, the Holders of Claims in Class 7 (Section 510(b) Claims) are conclusively presumed to have rejected this Plan and therefore shall not be entitled to vote to accept or reject this Plan.
4.5. Confirmability of this Plan and Reservation of Rights .
4.5.1 Confirmation . The confirmation requirements of section 1129 of the Bankruptcy Code must be satisfied with respect to the Debtor.
4.5.2 Reservation of Rights . The Debtor reserves the right to amend, modify, or supplement this Plan for any reason.
ARTICLE V:
MEANS FOR IMPLEMENTATION OF THE PLAN
Alternative Transaction . The Alternative Transaction means the transaction described in the Alternative Plan Sponsor Agreement, pursuant to which ProMedica (or its designee(s)), on the Effective Date, shall provide the ProMedica Plan Contribution in exchange for 100% of the New
Common Stock of Reorganized Debtor. In addition, on the Effective Date, the Alternative Master Lease shall be executed and delivered.
5.2. Original Transaction . The Original Transaction means the transaction described in the Original Plan Sponsor Agreement, pursuant to which the Holders of the QCP Claims (or the designee(s) of QCP) shall receive on the Effective Date, in full and final satisfaction, release, and discharge of, and in exchange for, their QCP Claims, 100% of the New Common Stock of Reorganized Debtor. The Debtor shall consummate the Original Transaction in accordance with its terms if the Alternative Plan Sponsor Agreement is terminated in accordance with its terms.
5.3. Operations Between the Confirmation Date and Effective Date . During the period from the Confirmation Date through and until the Effective Date, the Debtor may continue to operate its business as debtor in possession in the ordinary course in a manner consistent with its obligations under the applicable Plan Sponsor Agreement and the transactions contemplated by the Plan and the Plan Sponsor Agreement, subject to all applicable orders of the Bankruptcy Court and the provisions of the Bankruptcy Code.
5.4. Sources of Cash Consideration for Plan Distributions . The Reorganized Debtor shall fund distributions and satisfy applicable Allowed Claims under the Plan with Cash on hand and/or, if the Closing of the Alternative Transaction occurs, from such Cash on hand together with the ProMedica Plan Contribution.
5.5. New Common Stock .
(a) If the Closing of the Alternative Transaction occurs, on the Effective Date, ProMedica (or its designee(s)) shall receive, and the Debtor shall, in accordance with the Implementation Memorandum, issue, transfer, and deliver to ProMedica (or its designee(s)), 1,000,000 newly issued shares of New Common Stock of the Debtor, par value $0.01 per share, which shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor, free and clear of any lien, charge, pledge, security interest, claim, or other encumbrance in consideration for the ProMedica Plan Contribution.
(b) If the Closing of the Alternative Transaction does not occur, on the Effective Date, QCP or its designee(s) shall receive, and the Debtor shall issue, transfer, and deliver to QCP or its designee(s), 1,000,000 newly issued shares of New Common Stock of the Reorganized Debtor, par value $0.01 per share, which shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor, free and clear of any lien, charge, pledge, security interest, claim, or other encumbrance, in full satisfaction of all of the QCP Claims.
5.6. Section 1145 Exemption . To the maximum extent provided by section 1145 of the Bankruptcy Code and applicable non-bankruptcy law, the offering, issuance and distribution of the New Common Stock of the Debtor shall be exempt from, among other things, the registration and prospectus delivery requirements of section 5 of the Securities Act, and any other applicable state and federal law requiring registration and/or delivery of a prospectus prior to the offering, issuance, distribution or sale of securities, subject to the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act. In addition, any securities issued under the Plan shall be freely transferable under the Securities Act by the
recipients thereof, subject to compliance with any rules and regulations of the U.S. Securities and Exchange Commission, if any, applicable at the time of any future transfer of such Interests and applicable regulatory approval, if any.
5.7. Master Lease Amendment .
(a) If the Closing of the Alternative Transaction occurs, on the Effective Date, the Reorganized Debtor shall cause HCR III to, and Meerkat I LLC (or its designees) and the Lessors shall, enter into the Alternative Master Lease.
(b) If the Closing of the Alternative Transaction does not occur, on the Effective Date, Reorganized Debtor shall cause HCR III to, and QCP and the Lessors shall, enter into the Original Master Lease Amendment.
5.8. Release of Guaranty . On or prior to the third day after the Effective Date, HCR III and the Lessors under the MLSA shall terminate, release and discharge the Guaranty pursuant either to the Original Plan Sponsor Agreement or the Alternative Plan Sponsor Agreement, as applicable.
5.9. Corporate Governance, Directors, Officers and Corporate Action.
5.9.1 Certificate of Incorporation; By-Laws . On the Effective Date, the Certificate of Incorporation and the By-Laws shall go into effect. Consistent with, but only to the extent required by, section 1123(a)(6) of the Bankruptcy Code, on the Effective Date, the Certificate of Incorporation shall be amended to prohibit the issuance of non-voting equity securities. After the Effective Date, the Reorganized Debtor may amend and restate its certificates or articles of incorporation, by-laws, or similar governing documents, as applicable, as permitted by applicable law.
5.9.2 Directors and Officers of the Reorganized Debtor . Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, the initial directors and officers of Reorganized Debtor on the Effective Date, shall be as set forth on (i) Exhibit E , if the Closing of the Alternative Transaction occurs or (ii) Exhibit F, if the Closing of the Alternative Transaction does not occur. After the Effective Date, the Certificate of Incorporation and the By-Laws, as each may be amended thereafter from time to time, shall govern the designation and election of directors.
5.9.3 Corporate Action . On the Effective Date, (i) the selection of directors and officers for Reorganized Debtor, (ii) the issuance and distribution of the New Common Stock, and (iii) all other actions and transactions contemplated by this Plan and the Plan Sponsor Agreement shall be deemed authorized and approved in all respects (subject to the provisions of this Plan and the Plan Sponsor Agreement). All matters provided for in this Plan and the Plan Sponsor Agreement involving the corporate structure of the Debtor or the Reorganized Debtor, and any corporate action required by the Debtor or the Reorganized Debtor in connection with this Plan and the Plan Sponsor Agreement, shall be deemed to have timely occurred in accordance with applicable law and shall be in effect, without any requirement of further action by the security holders or directors of the Debtor or the Reorganized Debtor in accordance with section 303 of the Delaware General Corporation Law and the provisions of the Bankruptcy Code. On and after the Effective Date, the appropriate officers of the Reorganized Debtor and members of the boards of directors or managers of the Reorganized
Debtor shall be authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by this Plan and the Plan Sponsor Agreement in the name of and on behalf of the Reorganized Debtor.
5.10. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor . On and after the Effective Date, after giving effect to each of the actions contemplated under this Plan, the Reorganized Debtor shall continue to exist in accordance with the applicable law in the jurisdiction in which it is formed. Pursuant to section 1141(b) of the Bankruptcy Code, except as otherwise provided under this Plan, all property of the Debtors Estate, including all claims, rights and causes of action and any property acquired by the Debtor or the Reorganized Debtor under or in connection with this Plan, together with any property of the Debtor that is not property of its Estate and that is not specifically disposed of pursuant to this Plan, shall revest in the Reorganized Debtor on the Effective Date free and clear of all Claims, Liens, charges, other encumbrances and Interests, except as specifically provided in this Plan (including Sections 3.2.3(b) , 3.2.4(c) and 3.3.2 herein) or the Confirmation Order. Thereafter, the Reorganized Debtor may operate its business and may use, acquire and dispose of property free of any restrictions of the Bankruptcy Code and the Bankruptcy Rules. As of the Effective Date, all property of the Reorganized Debtor shall be free and clear of all Liens and non-Reinstated Claims, except as specifically provided in this Plan (including Sections 3.2.3(b) , 3.2.4(c) and 3.3.2 herein) or the Confirmation Order.
5.11. Cancellation of Liens . Except as otherwise provided in this Plan, on the Effective Date, in consideration for the distributions to be made on the Effective Date pursuant to this Plan, all Liens, charges, and encumbrances related to any Claim or Interest, other than any Lien securing a Secured Claim, an Intercompany Note Claim or a Credit Facility Claim that is, in each case, Reinstated pursuant to this Plan, shall be terminated, null and void and of no effect. The Holders of Secured Claims (other than a Secured Claim, Intercompany Note Claim or a Credit Facility Claim that is, in each case, Reinstated pursuant to this Plan) shall be authorized and directed to release any collateral or other property of the Debtor (including any Cash collateral) held by such Holder and to take such actions as may be requested by the Debtor (or the Reorganized Debtor, as the case may be) to evidence the release of any Liens, including the execution, delivery, and filing or recording of such release documents as may be requested by the Debtor (or the Reorganized Debtor, as the case may be).
5.12. Preservation of Rights of Action and Settlement of Ordinary Litigation Claims . Except as otherwise provided in this Plan, the Confirmation Order, or in any document, instrument, release or other agreement entered into in connection with this Plan, in accordance with section 1123(b)(3)(B) of the Bankruptcy Code, the Debtor and its Estate shall retain the Ordinary Litigation Claims. The Reorganized Debtor, as the successor in interest to the Debtor and the Estate, may enforce, sue on, settle or compromise (or decline to do any of the foregoing) any or all of the Ordinary Litigation Claims or any other claims, rights of action, suits or proceedings that the Debtor or its Estate may hold against any Person, and the failure to specifically identify any Ordinary Litigation Claim as being retained herein shall not effectuate a waiver or release of such Ordinary Litigation Claim.
5.13. Registration of New Common Stock . On the Effective Date, the New Common Stock shall not be listed for public trading on any securities exchange, the Reorganized Debtor will not be a reporting company under the Securities Exchange Act of 1934, and the Reorganized Debtor shall
not be required to file reports with the U.S. Securities and Exchange Commission or any other governmental entity.
5.14. Additional Transactions Authorized Under this Plan . On or after the Effective Date, the Reorganized Debtor shall be authorized to take any such actions as may be necessary or appropriate to Reinstate Claims or render Claims not Impaired, as provided for under this Plan.
5.15. Comprehensive Settlement of Claims and Controversies. Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided under the Plan, the provisions of the Plan will constitute a good faith compromise and settlement of all Claims or controversies relating to the rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Allowed Interest or any distribution to be made pursuant to the Plan on account of any Allowed Claim or Allowed Interest. The entry of the Confirmation Order will constitute the Bankruptcy Courts approval, as of the Effective Date, of the compromise or settlement of all such claims or controversies and the Bankruptcy Courts finding that all such compromises or settlements are in the best interests (i) of the Debtor, the Reorganized Debtor, the Estate and their respective property, and (ii) Claim and Interest holders, and are fair, equitable and reasonable.
5.16. Tax Election . On or after the Effective Date, and subject to the Closing of the Alternative Transaction, the Reorganized Debtor shall be authorized to elect to opt out of the application of Section 382(l)(5) of the Internal Revenue Code of 1986, as amended, by filing such election as is required under Section 382(l)(5)(G) of the Internal Revenue Code of 1986, as amended.
ARTICLE VI:
TREATMENT OF EXECUTORY CONTRACTS AND INSURANCE POLICIES
6.1. Assumption or Rejection of Executory Contracts . On the Effective Date, all Executory Contracts of the Debtor will be deemed assumed in accordance with, and subject to, the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, unless such Executory Contract (i) was previously assumed or rejected by the Debtor, (ii) previously expired or terminated pursuant to its own terms, or (iii) upon the Plan Sponsors prior written consent or request, is subject to a motion to reject such Executory Contract filed prior to the Effective Date. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions and the rejection of any Executory Contract for which a motion to reject has been filed, pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Each Executory Contract assumed pursuant to this Article VI shall revest in and be fully enforceable by the Reorganized Debtor in accordance with its terms, except as modified by the provisions of this Plan, or any order of the Bankruptcy Court authorizing and providing for its assumption. Any motions to assume or reject Executory Contracts pending on the Effective Date shall be subject to approval by the Bankruptcy Court on or after the Effective Date. To the maximum extent permitted by law, to the extent any provision in any Executory Contract assumed pursuant to the Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption of such Executory Contract, including any change of control provision, then such provision shall be deemed modified such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such Executory Contract or to exercise any other default-related rights with respect thereto.
6.2. No Cure Obligations . There are no anticipated cure obligations with respect to any Executory Contract to which the Debtor is a party. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments shall be required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to any Executory Contract assumed pursuant to this Plan. Subject to the occurrence of the Effective Date, the entry of the Confirmation Order shall constitute a finding by the Bankruptcy Court that (i) each such assumption is in the best interest of the Debtor and its Estate, and (ii) the requirements of section 365(b)(l) of the Bankruptcy Code are deemed satisfied.
6.3. Insurance Policies and Agreements . Insurance policies issued to, or insurance agreements entered into by, the Debtor prior to the Petition Date (including, without limitation, any policies covering directors or officers conduct) shall continue in effect after the Effective Date. To the extent that such insurance policies or agreements are considered to be Executory Contracts, this Plan shall constitute a motion to assume or ratify such insurance policies and agreements, and, subject to the occurrence of the Effective Date, the entry of the Confirmation Order shall constitute approval of such assumption pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such assumption is in the best interest of the Debtor and its Estate. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments shall be required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to each such insurance policy.
6.4. Postpetition Contracts and Leases . All contracts, agreements and leases that were entered into by the Debtor or assumed by the Debtor after the Petition Date shall be deemed assigned by the Debtor to the Reorganized Debtor on the Effective Date.
6.5. Modifications, Amendments, Supplements, Restatements or Other Agreements . Unless otherwise provided in the Plan, each Executory Contract that is assumed shall include all modifications, amendments, supplements, restatements or other agreements that in any manner affect such Executory Contract including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan. Modifications, amendments, supplements and restatements to prepetition Executory Contracts that have been executed by the Debtor during the Chapter 11 Case shall not be deemed to alter the prepetition nature of the Executory Contract, or the validity, priority or amount of any Claims that may arise in connection therewith.
ARTICLE VII:
PROVISIONS GOVERNING DISTRIBUTIONS
7.1. Distributions on Account of Claims Allowed as of the Effective Date . Unless the Holder of an Allowed Claim and the Debtor or the Reorganized Debtor agree to a different date, and except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions to be made on account of each Claim that is Allowed as of the Effective Date shall be made as set forth in the provisions of the Plan governing the treatment of such Claim or as soon thereafter as practicable.
7.2. Distributions on Account of Claims that Become Allowed after the Effective Date . Unless the Holder of a Claim that becomes an Allowed Claim after the Effective Date and the Reorganized Debtor agrees to a different date, and except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions on account of Claims that become Allowed Claims after the Effective Date shall be made on the later of (a) the date such Claim becomes Allowed and (b) as set forth in the provisions of the Plan governing the treatment of such Claim or as soon thereafter as is practicable.
7.3. Distributions by Reorganized Debtor . Other than as specifically set forth in this Plan, the Reorganized Debtor shall make, or cause to be made, all distributions required to be made under this Plan.
7.4. Means of Cash Payment . Payments of Cash made pursuant to this Plan shall be in U.S. dollars and shall be made, at the option and in the sole discretion of the Reorganized Debtor, by (a) checks drawn on or (b) wire transfers from a bank selected by the Reorganized Debtor. Cash payments to foreign creditors may be made, at the option of the Reorganized Debtor, in such funds and by such means as are necessary or customary in a particular foreign jurisdiction.
7.5. Withholding and Reporting Requirements . In connection with this Plan and all distributions thereunder, the Reorganized Debtor shall comply with all withholding and reporting requirements imposed by any federal, state, local or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements. The Reorganized Debtor shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes or establishing such other mechanisms that the Reorganized Debtor believes are reasonable and appropriate. All persons holding Claims or Interests shall be required to provide any information necessary to effect information reporting and the withholding of such taxes. Each Holder of an Allowed Claim that is to receive a distribution pursuant to this Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution. No distribution shall be made to or on behalf of such Holder pursuant to this Plan unless and until such Holder has made arrangements satisfactory to the Reorganized Debtor for the payment and satisfaction of such tax obligations.
7.6. Compliance Matters . The Debtor or the Reorganized Debtor, as applicable, reserves the right to allocate and distribute all distributions made under the Plan in compliance with all applicable wage garnishments, alimony, child support and other spousal awards, Liens and similar encumbrances.
7.7. Setoff and Recoupment . The Reorganized Debtor may, pursuant to sections 553 and/or 558 of the Bankruptcy Code or applicable non-bankruptcy laws, but shall not be required to, set off and/or recoup against any Claim the payments or other distributions to be made pursuant to this Plan in respect of such Claim, or claims of any nature whatsoever that the Debtor or the Reorganized Debtor may have against the Holder of such Claim; provided , however , that neither the failure to assert such rights of setoff and/or recoupment nor the allowance of any Claim hereunder
shall constitute a waiver or release by the Reorganized Debtor of any claim that the Debtor or the Reorganized Debtor may assert against any Holder of an Allowed Claim.
7.8. Reinstated Claims . Notwithstanding anything contained herein to the contrary, nothing shall affect, diminish or impair the Debtors or the Reorganized Debtors rights and defenses, both legal and equitable, with respect to any Reinstated Claim, including, but not limited to, legal and equitable rights of setoff and/or recoupment against the Holders of any Reinstated Claims; provided , however , that the foregoing shall not apply with respect to any Credit Facility Claims or Intercompany Note Claims, each of which is Allowed in full under this Plan without defenses, counterclaims, setoff or recoupment. Additionally, and notwithstanding anything contained herein to the contrary, any Unimpaired Claim in Classes 1, 2, 5 (other than a Claim in Class 5 arising from the rejection of an Executory Contract) and, solely in the event the Closing of the Alternative Transaction occurs, Class 7, not paid in full in Cash by the Debtor on the Effective Date or as soon thereafter as reasonably practicable shall constitute a Reinstated Claim.
7.9. Undeliverable or Non-Negotiated Distributions . If any distribution is returned as undeliverable, no further distributions to the applicable Holder shall be made unless and until the Reorganized Debtor is notified in writing of such Holders then-current address, at which time the undelivered distribution shall be made to such Holder without interest or dividends. All undeliverable distributions under the Plan that remain unclaimed for one year after attempted distribution shall indefeasibly revert to the Reorganized Debtor. Upon such reversion, the relevant Allowed Claim (and any Claim on account of missed distributions) shall be automatically discharged and forever barred, notwithstanding any federal or state escheat laws to the contrary. Checks issued on account of Allowed Claims shall be null and void if not negotiated within 180 calendar days from and after the date of issuance thereof. Requests for reissuance of any check must be made directly and in writing to the Reorganized Debtor by the Holder of the relevant Allowed Claim within the 180-calendar-day period. After such date, the relevant Allowed Claim (and any Claim for reissuance of the original check) shall be deemed undeliverable as of the date of the original issuance of the check and shall indefeasibly revert to the Reorganized Debtor in accordance with the terms hereof, notwithstanding any federal or state escheat laws to the contrary.
7.10. Claims Paid by Third Parties . To the extent a Holder receives a distribution on account of a Claim and also receives payment from a party that is not the Debtor or the Reorganized Debtor on account of such Claim, such Holder shall, within thirty calendar days of receipt thereof, repay or return the distribution to the Reorganized Debtor, to the extent the Holders total recovery on account of such Claim from the third party and under the Plan exceeds the amount of the Claim as of the date of any such distribution under the Plan.
ARTICLE VIII:
CONFIRMATION AND CONSUMMATION OF THE PLAN
8.1. Conditions to Effective Date of Plan Implementing the Alternative Transaction . This Plan shall not become effective, the Effective Date shall not occur, and the Alternative Transaction
shall not be consummated unless and until the following conditions shall have been satisfied or waived in accordance with Section 8.2 of this Plan:
8.1.1 The Confirmation Order confirming this Plan shall have been entered by the Bankruptcy Court and shall not have been stayed or vacated, and there have been no amendments to the Plan or the Confirmation Order except as permitted by the Plan and the Alternative Plan Sponsor Agreement.
8.1.2 All conditions precedent to the consummation of the transactions set forth in Article VI of the Alternative Plan Sponsor Agreement (other than the occurrence of the Effective Date) shall have been satisfied.
8.1.3 The Alternative Plan Sponsor Agreement shall not have terminated in accordance with its terms.
8.1.4 All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement this Plan on the Effective Date shall have been obtained or shall have occurred.
8.2. Conditions to Effective Date of Plan Implementing the Original Transaction . If the Alternative Plan Sponsor Agreement shall have terminated in accordance with its terms, this Plan shall not become effective, the Effective Date shall not occur, and the Original Transaction shall not be consummated unless and until the following conditions shall have been satisfied or waived in accordance with Section 8.2 of this Plan:
8.2.1 The Confirmation Order confirming this Plan shall have been entered by the Bankruptcy Court and shall have become a Final Order, and there have been no amendments to the Plan or the Confirmation Order except as permitted by the Plan and the Original Plan Sponsor Agreement.
8.2.2 All conditions precedent to the consummation of the transactions set forth in Article VI of the Original Plan Sponsor Agreement (other than the occurrence of the Effective Date) shall have been satisfied.
8.2.3 The Original Plan Sponsor Agreement shall not have terminated in accordance with its terms.
8.2.4 All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement this Plan on the Effective Date shall have been obtained or shall have occurred.
8.3. Waiver of Conditions . Each of the conditions set forth in Section 8.1 of this Plan may be waived in whole or in part with the consent of both the Debtor and the Plan Sponsor under the Alternative Plan Sponsor Agreement, in their respective sole discretion; provided , however , that any such waiver which adversely affects the Plan Sponsor under the Original Plan Sponsor Agreement shall require the consent of the Plan Sponsor under the Original Plan Sponsor Agreement. Each of
the conditions set forth in Section 8.2 of this Plan may be waived in whole or in part with the consent of both the Debtor and the Plan Sponsor under the Original Plan Sponsor Agreement, in their respective sole discretion.
8.4. Vacatur of Confirmation Order . If the Confirmation Order is vacated, (a) this Plan shall be null and void in all respects; (b) any settlement of Claims or Interests provided for hereby shall be null and void without further order of the Bankruptcy Court; and (c) the Debtor shall be entitled, at any time before or after entry of the order vacating the Confirmation Order, to request appropriate relief from the Bankruptcy Court with respect to the treatment of Executory Contracts.
8.5. Notice of Effective Date . The Debtor shall file with the Bankruptcy Court a notice of the occurrence of the Effective Date on the Effective Date or as soon as practicable thereafter.
ARTICLE IX:
EFFECT OF PLAN CONFIRMATION
9.1. Binding Effect . On the Effective Date, except as otherwise provided in section 1141(d)(3) of the Bankruptcy Code, all provisions of this Plan or the Plan Supplement, including all agreements, instruments and other documents filed in connection with this Plan and executed by the Debtor or the Reorganized Debtor in connection with this Plan or the Plan Supplement, shall be binding upon the Debtor, the Reorganized Debtor, all Holders of Claims against and Interests in the Debtor and such Holders respective successors and assigns, whether or not the Claim or Interest of such Holder is Impaired under this Plan and whether or not such Holder has accepted this Plan, and all other parties that are affected in any manner by this Plan. Except as expressly provided otherwise in the Plan, all agreements, instruments and other documents filed in connection with this Plan shall be given full force and effect, and shall bind all parties referred to therein as of the Effective Date, whether or not such agreements are actually issued, delivered or recorded on the Effective Date or thereafter and whether or not a party has actually executed such agreement. For the avoidance of doubt, no provision of the Plan Supplement or any agreement, instrument or other document filed in connection with this Plan and executed by the Debtor or the Reorganized Debtor in connection with this Plan or the Plan Supplement shall render Impaired any Claim that is otherwise Unimpaired under this Plan; provided , however , that the Reorganized Debtor may take any action that it determines may be necessary, advisable or appropriate in connection with the operation of the Reorganized Debtor after the consummation of this Plan (without prejudice to the rights of creditors or other parties under contract or applicable nonbankruptcy law).
9.2. Discharge .
9.2.1 Discharge of Claims and Termination of Interests . Except as otherwise provided herein or in the Confirmation Order including with respect to any Claims that are Reinstated under this Plan, all consideration distributed under this Plan shall be in exchange for all Claims and Interests of any nature whatsoever, whether known or unknown, against the Debtor or its Estate, assets, properties or interest in property, and shall constitute a complete satisfaction and settlement of all Claims and Interests other than Reinstated Claims, in each case regardless of whether any property shall have been distributed or retained pursuant to this Plan on account of such Claims and Interests. On the Effective Date, except for Reinstated Claims, the Debtor shall be deemed discharged and released under section
1141(d)(l)(A) of the Bankruptcy Code from any and all Claims and Interests, including, but not limited to, demands and liabilities that arose before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, Section 510(b) Claims, General Unsecured Claims, and Interests in the Debtor .
9.2.2 Discharge Injunction . As of the Effective Date, except as otherwise expressly provided in this Plan or the Confirmation Order, all Entities (other than holders of Reinstated Claims solely in their capacities as such) shall be precluded from asserting against the Debtor or the Reorganized Debtor and their respective assets and property or the Estate, any other or further Claims (other than those Reinstated under this Plan) or Interests, or any other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities of any nature whatsoever, relating to the Debtor or Reorganized Debtor or any of their respective assets and property or the Estate, based upon any act, omission, transaction or other activity of any nature that occurred prior to the Effective Date. In accordance with the foregoing, except as expressly provided in this Plan or the Confirmation Order, the Confirmation Order shall constitute a judicial determination, as of the Effective Date, of the discharge of all non-Reinstated Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities, pursuant to sections 524 and 1141 of the Bankruptcy Code, and such discharge shall void and extinguish any judgment obtained against the Debtor, the Reorganized Debtor, or its respective assets, property and Estate at any time, to the extent such judgment is related to a discharged Claim, debt, liability or Interest. Except as otherwise specifically provided in this Plan or the Confirmation Order, all Persons or Entities who have held, hold or may hold Claims or Interests that arose prior to the Effective Date and all other parties-in-interest, along with their respective present or former employees, agents, officers, directors, principals, representatives and Affiliates, are permanently enjoined, from and after the Effective Date, from (i) commencing or continuing in any manner any action or other proceeding of any kind with respect to any such Claim (including a Section 510(b) Claim) against or Interest in the Reorganized Debtor or property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to the Plan, (ii) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against the Reorganized Debtor or property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to this Plan, (iii) creating, perfecting or enforcing any Lien or encumbrance of any kind against the Reorganized Debtor or against the property or interests in property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to this Plan or (iv) asserting any right of setoff or subrogation of any kind against any obligation due from the Reorganized Debtor or against the property or interests in property of the Reorganized Debtor, with respect to any such Claim or Interest. Such injunction shall extend to any successors or assignees of the Reorganized Debtor and their respective properties and interest in properties. For the avoidance of doubt, the provisions of this Section 9.2.2 shall not apply with respect to Claims that are Reinstated under this Plan, including, without limitation, the Credit Facility Claims (if the Closing of the Alternative transaction does not occur) and the Intercompany Note Claim, as applicable .
9.3. Releases by the Debtor . Except as otherwise expressly provided in this Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each of the Debtor and Reorganized Debtor on its own behalf and as a representative of its respective Estate, shall, and shall be deemed to,
completely and forever release, waive, void, extinguish and discharge unconditionally, each and all of the Released Parties of and from any and all Claims and Causes of Action (including, without limitation, Avoidance Actions), any and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever, whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the Reorganized Debtor, their respective assets and property, and the Estate, the Chapter 11 Case, this Plan, the Plan Supplement or the Disclosure Statement that may be asserted by or on behalf of the Debtor, the Reorganized Debtor or the Estate against any of the Released Parties; provided , however , that nothing in this Section 9.3 shall be construed to release any party from fraud, willful misconduct or gross negligence as determined by a Final Order.
9.4. Releases by Certain Holders of Claims . Except as otherwise expressly provided in this Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each Holder of a Claim or an Interest that votes to accept this Plan shall be deemed to have completely and forever released, waived, and discharged unconditionally each of the Released Parties of and from any and all Claims, any and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever (including, without limitation, those arising under the Bankruptcy Code), whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the Reorganized Debtor or their respective assets and property, and the Estate, the Chapter 11 Case, this Plan, the Plan Supplement, and/or the Disclosure Statement; provided , however , that nothing in this Section 9.4 shall be construed to release (x) any party from fraud, willful misconduct or gross negligence as determined by a Final Order, (y) any Reinstated Claim including, without limitation, the Credit Facility Claims (if the Closing of the alternative Transaction does not occur) and the Intercompany Note Claims, as applicable or (z) any obligations under the Plan Sponsor Agreement or the Merger Agreement.
9.5. Exculpation . From and after the Effective Date, the Exculpated Fiduciaries and, solely to the extent provided by section 1125(e) of the Bankruptcy Code, the Section 1125(e) Parties, shall neither have nor incur any liability to, or be subject to any right of action by, any Holder of a Claim or an Interest, or any other party in interest, or any of their respective employees, representatives, financial advisors, attorneys, or agents acting in such capacity, or Affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Case, formulating, negotiating or implementing this Plan and/or previous iterations hereof, the Plan Supplement, the Disclosure Statement and/or previous iterations thereof, the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, the Restructuring Support Agreement, the Alternative Master Lease or the Original Master Lease (as applicable), the solicitation of acceptances of this Plan and/or previous iterations hereof, the pursuit of Confirmation of this Plan, the Confirmation of this
Plan, the consummation of this Plan, the administration of this Plan, the property to be distributed under this Plan, the consummation of the transactions contemplated by the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, or any other act taken or omitted to be taken in connection with or in contemplation of the Chapter 11 Case or implementation of this Plan; provided , however , that this Section 9.5 shall not apply to release (x) obligations under this Plan, and obligations under the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, the Restructuring Support Agreement, the Alternative Master Lease or the Original Master Lease (as applicable), the Merger Agreement and the contracts, instruments, releases, agreements, and documents delivered, Reinstated or assumed under this Plan (including, without limitation, the Credit Facility (if the Closing of the Alternative Transaction does not occur) and the Intercompany Note, as applicable), and (y) any Claims or Causes of Action arising out of fraud, willful misconduct or gross negligence as determined by a Final Order.
Any of the Exculpated Parties shall be entitled to rely, in all respects, upon the reasonable and informed advice of counsel with respect to their duties and responsibilities under this Plan.
9.6. Injunctions Related to Exculpation and Releases . (a) Except as expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all Persons and Entities that hold, have held, or may hold a Claim or any other obligation, suit, judgment, damages, debt, right, remedy, Cause of Action or liability of any nature whatsoever, of the types described in Section 9.5 of this Plan and relating to the Debtor, the Reorganized Debtor or any of their respective assets and property and/or the Estate, are, and shall be, permanently, forever and completely stayed, restrained, prohibited, barred and enjoined from taking any of the following actions against any Exculpated Party or its property on account of such released liabilities, whether directly or indirectly, derivatively or otherwise, on account of or based on the subject matter of such discharged Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding (including, without limitation, any judicial, arbitral, administrative or other proceeding) in any forum; (ii) enforcing, attaching (including, without limitation, any prejudgment attachment), collecting, or in any way seeking to recover any judgment, award, decree, or other order; (iii) creating, perfecting or in any way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off, seeking reimbursement or contributions from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability or obligation that is discharged under Section 9.2 of this Plan; and/or (v) commencing or continuing in any manner any judicial, arbitration or administrative proceeding in any forum, that does not comply with or is inconsistent with the provisions of this Plan or the Confirmation Order.
(b) Except as expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all Persons and Entities that hold, have held, or may hold a Claim or any other obligation, suit, judgment, damages, debt, right, remedy, Cause of Action or liability of any nature whatsoever, of the types described in Section 9.4 of this Plan and relating to the Debtor, the Reorganized Debtor or any of their respective assets and property and/or the Estate, the Chapter 11 Case, this Plan, the Plan Supplement and/or the Disclosure Statement are, and shall
be, permanently, forever and completely stayed, restrained, prohibited, barred and enjoined from taking any of the following actions against any Released Party or its property on account of such released liabilities, whether directly or indirectly, derivatively or otherwise, on account of or based on the subject matter of such discharged Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding (including, without limitation, any judicial, arbitral, administrative or other proceeding) in any forum; (ii) enforcing, attaching (including, without limitation, any prejudgment attachment), collecting, or in any way seeking to recover any judgment, award, decree, or other order; (iii) creating, perfecting or in any way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off, seeking reimbursement or contributions from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability or obligation that is discharged under Section 9.2 of this Plan; and/or (v) commencing or continuing in any manner any judicial, arbitration or administrative proceeding in any forum, that does not comply with or is inconsistent with the provisions of this Plan or the Confirmation Order.
9.7. Survival of Indemnification and Exculpation Obligations . The obligations of the Debtor to indemnify and exculpate any past and present directors, officers, agents, employees and representatives who provided services to the Debtor prior to or after the Petition Date, pursuant to certificates or articles of incorporation, by-laws, contracts and/or applicable statutes, in respect of all actions, suits and proceedings against any of such officers, directors, agents, employees and representatives, based upon any act or omission related to service with, for or on behalf of the Debtor, shall not be discharged or Impaired by Confirmation or consummation of this Plan and shall be assumed by the Reorganized Debtor. For the avoidance of doubt, this Section 9.7 affects only the obligations of the Debtor and Reorganized Debtor with respect to any indemnity or exculpation owed to or for the benefit of past and present directors, officers, agents, employees and representatives of the Debtor, and shall have no effect on nor in any way discharge or reduce, in whole or in part, any obligation of any other Person, including any provider of director and officer insurance, owed to or for the benefit of such past and present directors, officers, agents, employees and representatives of the Debtor. For further avoidance of doubt, the provisions regarding indemnification, exculpation and directors and officers insurance contained in section 4.7 of the Plan Sponsor Agreement shall be deemed incorporated into this Plan as if set forth fully herein.
9.8. Term of Bankruptcy Injunction or Stays . All injunctions or stays provided for in the Chapter 11 Case under section 105 or section 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the Effective Date.
9.9. Liability to Governmental Units . Nothing in the Confirmation Order or the Plan discharges, releases, resolves, precludes, exculpates, or enjoins: (i) any liability to any Governmental Unit that is not a Claim ; (ii) any Claim of a Governmental Unit arising on or after the Confirmation Date ; (iii) any police or regulatory liability to a Governmental Unit to the extent of such entitys liability under non-bankruptcy law on account of its status as the owner or operator of property after the Confirmation Date; or (iv) any liability to a Governmental Unit on the part of any Person other than the Debtor or Reorganized Debtor. For the avoidance of doubt, the foregoing shall not limit the scope of discharge of all Claims and Interests arising prior to the Effective Date under sections 524 and 1141 of the Bankruptcy Code, or limit the Debtors or Reorganized Debtors rights under section
525 of the Bankruptcy Code. Nothing in the Confirmation Order or this Plan shall affect any setoff or recoupment rights of any Governmental Unit.
9.10. Receivership Complaint . The Receivership Complaint shall be deemed dismissed with prejudice as of the Effective Date. QCP, with the reasonable cooperation of Debtor, shall cause the Receivership Complaint to be withdrawn from the relevant court docket as soon as practicable after the Effective Date.
ARTICLE X:
RETENTION OF JURISDICTION
10.1. Retention of Jurisdiction Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters arising out of, and related to, the Chapter 11 Case and this Plan to the fullest extent permitted by law, including, among other things, jurisdiction to:allow, disallow, determine, liquidate, classify, estimate or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Expense Claim or Priority Tax Claim, and the resolution of any objections to the secured or unsecured status, allowance, priority or amount of Claims or Interests;
(b) resolve any matters related to the assumption or rejection of any Executory Contract to which the Debtor is a party or with respect to which the Debtor or Reorganized Debtor may be liable and to hear, determine, and, if necessary, liquidate any Claims arising therefrom;
(c) ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the provisions of this Plan and adjudicate any and all disputes from, or relating to distributions under, the Plan;
(d) decide or resolve any motions, adversary proceedings, contested or litigated matters and any other matters and grant or deny any applications involving the Debtor that may be pending on the Effective Date;
(e) enter such orders as may be necessary or appropriate to implement or consummate the provisions of this Plan, the Plan Sponsor Agreement, the Restructuring Support Agreement, and all contracts, instruments, releases and other agreements or documents created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, and issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation, implementation or enforcement of this Plan or the Confirmation Order;
(f) resolve any cases, controversies, suits or disputes that may arise in connection with the consummation, interpretation, or enforcement of this Plan, the Plan Sponsor Agreement, the Restructuring Support Agreement, or any contract, instrument, release or other agreement or document that is executed or created pursuant to this Plan, or any Entitys rights arising from or obligations incurred in connection with this Plan or such documents, including hearing and determining disputes, cases, or controversies arising in connection with the interpretation,
implementation or enforcement of the Plan, Plan Sponsor Agreement, Restructuring Support Agreement or the Confirmation Order;
(g) enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;
(h) adjudicate, decide or resolve any and all disputes as to the ownership of any Claim or Interest;
(i) approve any modification of this Plan before or after the Effective Date pursuant to section 1127 of the Bankruptcy Code or approve any modification of the Disclosure Statement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, or remedy any defect or omission or reconcile any inconsistency in any Bankruptcy Court order, this Plan, the Disclosure Statement, the Plan Supplement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, in such manner as may be necessary or appropriate to consummate this Plan;
(j) hear and determine all disputes involving the existence, nature or scope of the Debtors discharge;
(k) subject to Section 11.1 , hear and determine all applications for compensation and reimbursement of expenses of Professionals under this Plan or under sections 330, 331, 363, 503(b), 1103 and 1129(a)(9) of the Bankruptcy Code, which shall be payable by the Debtor only upon allowance thereof pursuant to an order of the Bankruptcy Court;
(l) hear and determine Causes of Action by or on behalf of the Debtor or the Reorganized Debtor;
(m) hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;
(n) hear and determine any issues arising under, or violations of, section 525 of the Bankruptcy Code;
(o) enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason or in any respect modified, stayed, reversed, revoked or vacated, or if distributions pursuant to this Plan are enjoined or stayed;
(p) determine any other matters that may arise in connection with or relate to this Plan, the Disclosure Statement, the Plan Supplement, the Confirmation Order, the Plan Sponsor Agreement, the Restructuring Support Agreement, or any contract, instrument, release, or other agreement, or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order;
(q) enforce all orders, judgments, injunctions, releases, exculpations, indemnifications and rulings entered in connection with the Chapter 11 Case;
(r) hear and determine all matters related to the property of the Estate from and after the Confirmation Date;
(s) hear and determine such other matters as may be provided in the Confirmation Order or as may be authorized under the Bankruptcy Code;
(t) enter a final order or decree concluding or closing the Chapter 11 Case; and
(u) hear any other matter not inconsistent with the Bankruptcy Code;
provided , however , that the Bankruptcy Court shall not retain jurisdiction after the Effective Date over disputes concerning documents contained in the Plan Supplement or in respect of the Credit Facility or Intercompany Note that have a jurisdictional, forum selection or dispute resolution clause that refers disputes to a different court, including, for the avoidance of doubt, the Alternative Master Lease or the Original Master Lease (as applicable), and any disputes concerning documents contained in the Plan Supplement that contain such clauses shall be governed in accordance with the provisions of such documents.
ARTICLE XI:
MISCELLANEOUS PROVISIONS
11.1. Post-Effective Date Retention of Professionals . On the Effective Date, any requirement that Professionals employed by the Reorganized Debtor comply with sections 327 through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date will terminate, and the Reorganized Debtor will be authorized to employ and compensate professionals in the ordinary course of business and without the need for application to or approval by the Bankruptcy Court, including professionals previously employed by the Debtor.
11.2. Effectuating Documents and Further Transactions . Each of the Debtor and the Reorganized Debtor is authorized to execute, deliver, file or record such contracts, instruments, certificates, notes, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of this Plan, the Plan Sponsor Agreement, and the New Common Stock issued under or in connection with this Plan.
11.3. Exemption from Transfer Taxes . Pursuant to section 1146(a) of the Bankruptcy Code, (a) the issuance, transfer or exchange of equity securities under this Plan; (b) the creation of any mortgage, deed of trust, lien, pledge or other security interest; or (c) the making or delivery of any deed or other instrument of transfer under this Plan, including, without limitation, merger agreements, agreements of consolidation, restructuring, disposition, liquidation or dissolution, deeds, bills of sale, and transfers of tangible property, will not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee or other similar tax or governmental assessment in the United States. The Confirmation Order shall direct the appropriate federal, state or local governmental officials or agents to forgo the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.
11.4. Payment of Statutory Fees . All fees due and payable pursuant to section 1930(a)(6) of Title 28 of the United States Code ( Quarterly Fees ) prior to the Effective Date shall be paid by the Debtor on the Effective Date. After the Effective Date, the Reorganized Debtor shall be liable for any and all Quarterly Fees when they are due and payable after the Effective Date. The Debtor shall file all Quarterly Reports due prior to the Effective Date when they become due, in a form reasonably acceptable to the United States Trustee. After the Effective Date, the Reorganized Debtor shall file with the Bankruptcy Court Quarterly Reports in a form reasonably acceptable to the United States Trustee, which reports shall include a separate schedule of disbursements made by the Reorganized Debtor during the applicable period, attested to by an authorized representative of the Reorganized Debtor. The Reorganized Debtor shall remain obligated to pay Quarterly Fees to the Office of the U.S. Trustee until the earliest of the Debtors case being closed, dismissed or converted to a case under Chapter 7 of the Bankruptcy Code.
11.5. Amendment or Modification of this Plan . Subject to section 1127 of the Bankruptcy Code, the Debtor may alter, amend or modify this Plan or the Exhibits at any time prior to or after the Confirmation Date but prior to the substantial consummation of this Plan, solely in accordance with the Plan Sponsor Agreement; provided , that sections of this Plan pertaining to the the Credit Facility Claims, the Intercompany Note or Intercompany Claims held by obligors under the Credit Facility shall not be altered, amended or modified other than in accordance with the Credit Facility. Any Holder of a Claim that has accepted this Plan shall be deemed to have accepted this Plan, as altered, amended or modified, if the proposed alteration, amendment or modification is made in accordance with the Plan Sponsor Agreement and does not materially and adversely change the treatment of the Claim of such Holder.
11.6. Severability of Plan Provisions . If, prior to the Confirmation Date, any term or provision of this Plan is determined by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision will then be applicable as altered or interpreted, provided that any such holding, alteration or interpretation complies and is consistent with the Plan Sponsor Agreement and does not adversely impact the holders of the Credit Facility Claims. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of this Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order will constitute a judicial determination and will provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.
11.7. Successors and Assigns . This Plan shall be binding upon and inure to the benefit of the Debtor, and its successors and assigns, including, without limitation, the Reorganized Debtor. The rights, benefits and obligations of any entity named or referred to in this Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign of such entity.
11.8. Non-Consummation . If consummation of this Plan does not occur, then (a) this Plan shall be null and void in all respects, (b) any settlement or compromise embodied in this Plan (including the fixing or limiting to an amount certain any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or leases affected by this Plan, and any document or agreement executed pursuant to this Plan shall be deemed null and void and (c) nothing contained in this Plan shall (i) constitute a waiver or release of any Claims by or against, or any Interests in, the Debtor or any other Person, (ii) prejudice in any manner the rights of the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, or any other Person or (iii) constitute an admission of any sort by the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, or any other Person.
11.9. Notice . All notices, requests and demands to or upon the Debtor or the Reorganized Debtor to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:
HCR ManorCare, Inc.
333 N. Summit St.
Toledo, Ohio 43604
Attn: John R. Castellano, Chief Restructuring Officer
with a copy to:
SIDLEY AUSTIN LLP
One South Dearborn Street
Chicago, Illinois 60603
Telephone: (312) 853-7000
Facsimile: (312) 853-7036
Attn: Larry J. Nyhan
Dennis M. Twomey
-and-
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
Attn: Edmon L. Morton
Attorneys for the Debtor and Debtor in Possession
11.10. Governing Law . Subject to the provisions of any contract, certificates or articles of incorporation, by-laws, instruments, releases, or other agreements or documents entered into in connection with this Plan, and subject further to Section 10.1 of this Plan, the rights and obligations
arising under this Plan shall be governed by, and construed and enforced in accordance with (i) the Bankruptcy Code, the Bankruptcy Rules or other federal law to the extent applicable and (ii) if none of such law is applicable, the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such jurisdiction.
11.11. Tax Reporting and Compliance . The Reorganized Debtor is hereby authorized, on behalf of the Debtor, to request an expedited determination under section 505 of the Bankruptcy Code of the tax liability of the Debtor for all taxable periods ending after the Petition Date through, and including, the Effective Date.
11.12. Exhibits . All Exhibits to this Plan are incorporated into and are a part of this Plan as if set forth in full herein.
11.13. Filing of Additional Documents . On or before substantial consummation of this Plan, the Reorganized Debtor and the Debtor shall, as applicable, file such agreements and other documents as may be necessary or appropriate to effectuate and evidence further the terms and conditions of this Plan.
11.14. Plan Documents . The Plan and the Plan Supplement, including all Exhibits, supplements, appendices and schedules thereto, and any modifications to any of the foregoing, shall be in form and substance acceptable to the Debtor, subject to the Plan Sponsor Agreement.
11.15. Reservation of Rights . Except as expressly set forth herein, this Plan shall have no force and effect unless the Bankruptcy Court has entered the Confirmation Order. The filing of this Plan, any statement or provision contained in this Plan, or the taking of any action by the Debtor with respect to this Plan shall not be and shall not be deemed to be an admission or waiver of any rights of the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, the Credit Facility Agent, the Credit Facility Lenders or any other Person with respect to Claims against and Interests in the Debtor.
Dated: April 25, 2018 |
Respectfully submitted, |
Wilmington, Delaware |
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HCR ManorCare, Inc. |
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/s/ John R. Castellano |
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John R. Castellano |
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Chief Restructuring Officer |
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SIDLEY AUSTIN LLP |
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Larry J. Nyhan |
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Dennis M. Twomey |
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William A. Evanoff |
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Allison Ross Stromberg |
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Matthew E. Linder |
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One South Dearborn Street |
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Chicago, Illinois 60603 |
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Telephone: (312) 853-7000 |
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Facsimile: (312) 853-7036 |
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-and- |
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YOUNG CONAWAY STARGATT & TAYLOR, LLP |
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Robert S. Brady (No. 2847) |
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Edmon L. Morton (No. 3856) |
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Justin H. Rucki (No. 5304) |
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Tara C. Pakrouh (No. 6192) |
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Rodney Square |
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1000 North King Street |
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Wilmington, Delaware 19801 |
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Telephone: (302) 571-6600 |
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Facsimile: (302) 571-1253 |
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Attorneys for the Debtor and Debtor in Possession |
Exhibit A
Alternative Master Lease Term Sheet
Exhibit B
Alternative Plan Sponsor Agreement
Exhibit C
Original Master Lease Amendment
Exhibit D
Original Plan Sponsor Agreement
Exhibit E
Directors and Officers of Reorganized Debtor Alternative Transaction
Exhibit F
Directors and Officers of Reorganized Debtor Original Transaction
Exhibit G
Certificate of Incorporation of Reorganized Debtor Original Transaction
Exhibit H
By-Laws of Reorganized Debtor Original Transaction
Exhibit 2
New Master Lease Basic Terms
Master Lease Terms
Facilities: |
All ManorCare operated facilities that are currently owned by QCP (165 SNFs, 54 ALFs) |
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Landlord: |
Joint Venture |
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Tenant: |
HCR III. ProMedica will provide a corporate guaranty of the obligations of Tenant |
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Term: |
15 years with three 5-year extensions |
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Standard termination provisions will exist, the terms and conditions of which will be set forth in the definitive documentation |
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Initial Rent: |
$179,000,000 |
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Annual Escalators: |
Y1 Rent: |
$179 million |
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Y2 Rent: |
$179 million + 1.375% = $181,461,250. |
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Y3 Rent: |
Y2 Rent + 2.75% |
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Thereafter: |
Y3 Rent + 2.75% |
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Renewal Term Rent: |
Fair market value |
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Exhibit 3
Alternative Restructuring Support Agreement
EXECUTION VERSION
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT (this Agreement ) is made and entered into as of April 25, 2018, by and among (i) HCR ManorCare, Inc., a Delaware corporation (the Debtor ), (ii) Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the Majority Holders ), ProMedica Health System, Inc., an Ohio non-profit corporation ( ProMedica or the Alternative Plan Sponsor ), and MC Operations Investments, LLC (the QCP Holder , together with ProMedica and the Majority Holders, the Supporting Parties , and together with the Debtor, the Parties ).
RECITALS
WHEREAS, the Parties have engaged in arms length, good faith discussions regarding a restructuring of the Debtor and certain of its subsidiaries (the Restructuring );
WHEREAS, on the date hereof, the Debtor, ProMedica, Quality Care Properties, Inc. ( QCP ), and certain other parties, have entered into an Alternative Plan Sponsor Agreement (the Alternative PSA ), which, among other things, contemplates the acquisition by a subsidiary of the Alternative Plan Sponsor of 100% of the equity of the reorganized Debtor through the attached First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc. (the Plan ; capitalized terms not otherwise defined in this Agreement shall have the meaning given to such terms in the Alternative PSA); and
WHEREAS, the Supporting Parties intend to support the Restructuring and the Plan upon the terms and conditions set forth herein:
AGREEMENT
NOW, THEREFORE, in consideration of the conditional promises and mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. Representations and Warranties
a. Representations and Warranties of the Debtor . The Debtor represents and warrants to the Supporting Parties that, as of the date hereof:
i. It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement.
ii. The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.
iii. Subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, and except as set forth herein, this Agreement is the legally valid and binding obligation of it, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating
to or limiting creditors rights generally or by equitable principles relating to enforceability.
b. Representations and Warranties of the Supporting Parties . Each Supporting Party represents and warrants to the Debtor and to each other Supporting Party that, as of the date hereof:
i. (A) Such Supporting Party is the sole record and beneficial owner of the shares of common stock of the Debtor set forth on its signature page hereto ( Debtor Shares ), (B) the Debtor Shares of such Supporting Party constitute the percentage of all shares of common stock of the Debtor set forth on such signature pages hereto, and (C) such Supporting Party has full power and authority to bind and act on behalf of, vote and consent to matters concerning such shares and to dispose of, exchange, assign and transfer such shares.
ii. Such Supporting Party has made no prior assignment, sale, participation, grant, conveyance or other transfer of, and has not entered into any other agreement to assign, sell, participate, grant, convey or otherwise transfer, in whole or in part, any portion of its right, title or interest in any of its Debtor Shares that conflict with the representations and warranties of such Supporting Party herein or would render such Supporting Party otherwise unable to comply with this Agreement and perform its obligations hereunder.
iii. This Agreement is the legally valid and binding obligation of each such Supporting Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating to bankruptcy or limiting creditors rights generally or by equitable principles relating to enforceability.
2. Covenants of the Majority Holders
Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Majority Holder, severally (and not jointly), agrees to, and to cause its direct and indirect subsidiaries, and its and their directors, officers, employees, agents and other representatives, to:
a. Support of Plan . Support, and take all reasonable action necessary or reasonably requested by the Debtor to support and facilitate, the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan;
b. Vote for Plan . (i) Vote all Equity Interests, Claims and other instruments carrying voting rights held or controlled, directly or indirectly, by such Majority Holder to accept the Plan (and any amendments, waivers, or consents required in connection with the Plan that are recommended or requested by the Debtor); (ii) timely deliver its duly executed and completed ballot promptly following the commencement of the solicitation of acceptances of the Plan, and (iii) not withdraw, change, or revoke (or cause to be withdrawn, changed, or revoked) its vote with respect to the Plan
c. No Competing Plans . Other than for the Plan, not pursue, propose or support, or encourage the pursuit, proposal or support of, any chapter 11 plan or other restructuring or reorganization for, or the liquidation of, the Debtor (directly or indirectly);
d. No Actions Against Plan . (i) Not take any action that would reasonably be expected to prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan, and (ii) not object to or otherwise commence, or encourage, join in or support any other person to commence, any proceeding or other analogous action opposing the Plan; and
e. Tax Matters . Not file any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares.
3. Covenants of the QCP Holder
Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, the QCP Holder agrees to, and to cause its direct and indirect subsidiaries and affiliates to:
a. support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan, including, without limitation, voting in favor of the Plan;
b. not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan;
c. not object to or otherwise commence, or encourage any other person to commence, any proceeding or take any action opposing the Plan or Disclosure Statement; and
d. not file any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares.
4. Information about the Majority Holders
Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Majority Holder, severally (and not jointly), agrees to:
a. use its reasonable best efforts to provide such information requested by the Alternative Plan Sponsor, QCP or the Debtor as is necessary regarding such Majority Holder for the Alternative Plan Sponsor, QCP, the Debtor and their affiliates to make or obtain any filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtors businesses) in connection with the Plan or the transactions contemplated thereby; and
b. upon the reasonable request of the Debtor, QCP or the Alternative Plan Sponsor, use its reasonable best efforts to provide such information concerning such Majority Holder in connection with any filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtors businesses) in connection with the Plan or the transactions contemplated thereby.
5. Transfer of Shares
Each Supporting Party agrees that, so long as this Agreement has not been terminated in accordance with its terms, it shall not directly or indirectly sell, pledge, hypothecate or otherwise transfer or dispose of or grant, issue or sell any option, right to acquire, voting, participation or other interest in any Debtor Shares (each a Transfer ), unless the transferee thereof, prior to such Transfer, agrees in writing for the benefit of the Parties to become subject to the terms and conditions of this Agreement as a Supporting Party and to be bound by this Agreement by executing the joinder attached hereto as Exhibit B (the Joinder Agreement ), and delivering an executed copy thereof, within two (2) business days of such execution, to the Debtor, in which event (i) the transferee shall be deemed to be a Supporting Party hereunder and (ii) the transferor shall be deemed to relinquish its rights and be released from its obligations under this Agreement to the extent of such transferred rights and obligations. Each Supporting Party agrees that any Transfer that does not comply with the foregoing shall be deemed void ab initio , and the Debtor and each other Supporting Party shall have the right to avoid such Transfer. This Agreement shall in no way be construed to preclude any shareholder from acquiring additional shares; provided that any such additional shares shall, upon acquisition, automatically be deemed to be subject to all the terms of this Agreement.
6. ProMedica Support
ProMedica shall, and shall cause each of its Subsidiaries to, (i) support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate, the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan; (ii) not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan; (iii) not object to or otherwise commence any proceeding or take any action opposing the Plan or Disclosure Statement; and (iv) otherwise use its reasonable best efforts to assist the Debtor in obtaining entry of the Confirmation Order by the Bankruptcy Court within the deadline set forth in Section 3.3(c) of the Alternative Plan Sponsor Agreement.
7. Additional Supporting Parties
A shareholder that is not a Supporting Party as of the date of this Agreement will become a Party to this Agreement as a Supporting Party on the date that it agrees in writing, for the benefit of the Parties, to become subject to the terms and conditions of this Agreement as a Supporting Party and to be bound by this Agreement by executing the Joinder Agreement and delivering an executed copy thereof, within two (2) business days of such execution, to the
Debtor. Upon such delivery, such Supporting Party shall immediately thereafter send a copy of such Joinder Agreement to all other Supporting Parties.
8. Termination
This Agreement and all obligations of the Parties hereunder shall immediately terminate and be of no further force and effect as follows:
a. upon the Effective Date of the Plan; and
b. upon the termination of the Alternative PSA and the Original PSA.
Upon termination of this Agreement in accordance with its terms, this Agreement shall forthwith become void and of no further force or effect, each Party shall be released from its commitments, undertakings and agreements under or related to this Agreement, and there shall be no liability or obligation on the part of any Party.
9. No Monetary Liability.
Notwithstanding anything to the contrary contained in this Agreement or provided for under any applicable law, no Party shall be liable to any other person, either in contract or in tort, for any money damages relating to any breach of this Agreement.
10. Specific Performance
It is understood and agreed by the Parties that money damages would not be a sufficient or appropriate remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach. Each Party agrees to waive any requirement for the securing or posting of a bond in connection with such remedy.
11. Entire Agreement; Prior Negotiations
This Agreement, including all exhibits attached hereto, constitutes the entire agreement of the Parties and supersedes all prior negotiations and documents reflecting such prior negotiations between and among the Parties (and their respective advisors) with respect to the subject matter of this Agreement.
12. Amendments
Except as otherwise provided herein, this Agreement may not be modified, amended or supplemented without prior written agreement signed by the Debtor, each Supporting Party and the Alternative Plan Sponsor.
13. Governing Law
This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware. By its execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in either a state or federal court of competent jurisdiction
in the State of Delaware. By execution and delivery of this Agreement, each of the parties hereto hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of each such court, generally and unconditionally, with respect to any such action, suit or proceeding. Notwithstanding the foregoing, each of the parties hereto hereby agrees that, while the Bankruptcy Case is pending, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.
14. Effectiveness
This Agreement shall become effective and binding upon each Party upon the execution and delivery of this Agreement by such Party.
15. No Solicitation
Notwithstanding anything to the contrary, this Agreement is not and shall not be deemed to be (a) a solicitation of consents to the Plan or (b) an offer for the issuance, purchase, sale exchange, hypothecation or other transfer of securities or a solicitation of an offer to purchase or otherwise acquire securities for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended.
16. Third-Party Beneficiary
This Agreement is intended for the benefit of the parties hereto and no other person shall have any rights hereunder; provided , however , that QCP shall be an express third party beneficiary of this Agreement, entitled to enforce this Agreement against the Parties as if it were itself a party hereto.
17. Counterparts
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this agreement may be delivered by electronic mail (in .pdf or .tif format), facsimile or otherwise, which shall be deemed to be an original for the purposes of this Agreement.
18. [Intentionally Omitted]
19. No Waiver of Participation and Preservation of Rights
Except as provided in this Agreement, nothing herein is intended to, does or shall be deemed in any manner to waive, limit, impair or restrict the ability of any Party to protect and preserve its rights, remedies and interests, including, but not limited to, claims against the Debtor, liens or security interests it may have in any assets of the Debtor, or its rights to participate fully in the Bankruptcy Case. Without limiting the foregoing sentence in any way, if this Agreement is terminated in accordance with its terms for any reason, the Parties each fully reserve any and all of their respective rights, remedies and interests.
20. Notices
All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier or by registered or certified mail (return receipt requested) to the following
addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):
If to the Debtor, to counsel at the following address:
Sidley Austin LLP
One South Dearborn
Chicago, IL 60603
Attention: Larry Nyhan
Email: lnyhan@sidley.com
If to the Alternative Plan Sponsor to counsel at the following address:
Shumaker, Loop & Kendrick, LLP
1000 Jackson Street
Toledo, OH 43604
Attention: James I Rothschild
David Coyle
Email: jrothschild@slk-law.com dcoyle@slk-law.com
If to the Majority Holders, to counsel at the following address:
Latham & Watkins LLP
555 Eleventh Street, NW, Suite 1000
Washington, D.C. 20004-1304
Attention: Daniel T. Lennon
Roger G. Schwartz
J. Cory Tull
Email: daniel.lennon@lw.com
roger.schwartz@lw.com
cory.tull@lw.com
If to the QCP Holder, to counsel at the following address:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich and Scott K. Charles
Email: aoemmerich@wlrk.com skcharles@wlrk.com
[Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers or other agents, solely in their respective capacity as officers or other agents of the undersigned and not in any other capacity, as of the date first set forth above.
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HCR MANORCARE, INC. |
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By: |
/s/ John R. Castellano |
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Name: |
John R. Castellano |
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Title: |
Chief Restructuring Officer |
[Signature Page to Restructuring Support Agreement]
[Signature Page to Restructuring Support Agreement]
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CP V COINVESTMENT A, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: |
Jeremy Anderson |
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Title: |
Authorized Signatory |
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Debtor Shares: |
1,015,490 |
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Debtor Shares Percentage: |
2.260% |
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CP V COINVESTMENT B, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: |
Jeremy Anderson |
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Title: |
Authorized Signatory |
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Debtor Shares: |
129,357 |
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Debtor Shares Percentage: |
0.288% |
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[Signature Page to Restructuring Support Agreement]
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PROMEDICA HEALTH SYSTEM, INC. |
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By: |
/s/ Randy Oostra |
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Name: |
Randy Oostra |
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Title: |
President & CEO |
[Signature Page to Restructuring Support Agreement]
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MC OPERATIONS INVESTMENTS, |
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LLC |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
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Debtor Shares: |
4,232,244 |
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Debtor Shares Percentage: |
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[Signature Page to Restructuring Support Agreement]
EXHIBIT A
Plan
EXHIBIT B
Joinder Agreement
Exhibit 4
Form of Former CEO Settlement Agreement
CONFIDENTIAL
FOR DISCUSSION AND SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408 AND STATE LAW ANALOGUES
[Address]
[ · ], 2018
Dear Mr. Ormond,
Reference is made to (i) the Plan Sponsor Agreement, dated as of [ · ], 2018, among Quality Care Properties, Inc. ( QCP ), HCR ManorCare, Inc. (the Company ), and certain other parties (together with its related exhibits, the PSA ) (ii) the Amended and Restated Employment Agreement between you and the Company, dated as of April 7, 2011 (as amended, the Employment Agreement ), (iii) the HCR ManorCare Senior Management Savings Plan for Corporate Officers (as amended and restated, the SMSPCO ) and (iv) that certain Letter Agreement between you and the Company regarding your employment and compensation arrangements with the Company and its subsidiaries, dated as of April 7, 2011 (the Letter Agreement ). The Employment Agreement, the SMSPCO and the Letter Agreement are collectively referred to herein as the Documents .
This agreement (the Settlement Letter ) is intended to resolve any outstanding disputes between yourself and the Company regarding amounts that you have claimed are owed to you by the Company or its subsidiaries in connection with your employment by the Company. As to the matters described herein and except as otherwise provided herein, this Settlement Letter supersedes any provision contained in any of the Documents or any other written or unwritten agreement, plan or arrangement of the Company or any of its subsidiaries. By countersigning this Settlement Letter in the space provided below, you indicate your acknowledgement of, agreement with and consent to the following:
1. Effectiveness of Settlement Letter Conditioned Upon Closing . The parties agree that the effectiveness of this Settlement Letter shall occur on the occurrence of the Closing (as such term is defined in the PSA). If the PSA terminates prior to the Closing, this Settlement Letter shall be void ab initio and be of no further force or effect.
2. Settlement Amounts. On the later of (a) the Effective Date, and (b) the Closing Date (as such term is defined in the PSA), you shall be entitled to the following amounts and payments (the Settlement Amounts ):
A. In respect of your claimed interest in the Frozen SERP (as such term is defined in the Letter Agreement) you will be entitled to receive your full benefit under the Frozen SERP, which was approximately $60,763,043 on January 31, 2018 and is subject to change based on investment changes as provided in the Letter Agreement;
B. In respect of your claimed interest in the SMSPCO, you will be entitled to receive your full benefit under the SMSPCO, which was approximately $42,040,673 on January 31, 2018 and subject to change based on investment changes as provided in the SMSPCO.
C. In respect of your claimed interest in the SERP Replacement (as such term is defined in the Letter Agreement), you will be entitled to receive a cash payment equal to $9,875,000.
D. In respect of your claimed entitlement to severance under the Employment Agreement, you will be entitled to a cash payment in the amount of $3,978,000.
E. Continued payment of your medical, dental and vision premiums during the Continuation Period, as provided in your Employment Agreement.
F. Any 280G Gross-Up Payment as provided in Section 8 of your Employment Agreement.
G. Continued use of office space, furnishings and secretarial support services during the Continuation Period, as provided in your Employment Agreement, at a reasonable cost to the Company; provided that such accommodations shall be provided at a location other than the premises of the Company that has a reasonable commute to your primary residence (which location shall be subject to prior notice and consultation with you) and shall be provided at a reasonably comparable quality to such accommodations as were made available to you prior to your termination of employment with the Company.
3. Release .
A. You knowingly and voluntarily waive, terminate, cancel, release and discharge forever the Company and each of its subsidiaries, as well as their respective current and former stockholders (including, for the avoidance of doubt, QCP), beneficial owners of their stock, their current or former officers, directors, employees, members, attorneys and agents, and their predecessors, successors, and assigns, individually and in their official capacities (together, the Company Released Parties ) from any and all suits, actions, causes of action, claims, allegations, rights, obligations, liabilities, demands, entitlements or charges (collectively, Claims ) that you (or your heirs, executors, administrators, successors and assigns) has or may have, whether known, unknown or unforeseen, vested or contingent, by reason of any matter, cause or thing occurring at any time before and including the date of this Settlement Letter, including all claims arising under or in connection with your employment or termination of employment with the Company, including, without limitation: Claims under United States federal, state or local law and the national or local law of any foreign country (statutory or decisional), for wrongful, abusive, constructive or unlawful discharge or dismissal, for breach of any contract, or for discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or any other unlawful criterion or circumstance, including rights or Claims under the Age Discrimination in Employment Act of 1967 (ADEA), the Older Workers Benefit Protection Act of 1990 (OWBPA), violations of the Equal Pay Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1991, the Employee Retirement Income Security Act of 1974 (ERISA), the Fair Labor
Standards Act, the Worker Adjustment Retraining and Notification Act, the Family Medical Leave Act, including all amendments to any of the aforementioned acts; and violations of any other federal, state, or municipal fair employment statutes or laws, including, without limitation, violations of any other law, rule, regulation, or ordinance pertaining to employment, wages, compensation, hours worked, or any other Claims for compensation or bonuses, whether or not paid under any compensation plan or arrangement; breach of contract; tort and other common law Claims; defamation; libel; slander; impairment of economic opportunity defamation; sexual harassment; retaliation; attorneys fees; emotional distress; intentional infliction of emotional distress; assault; battery, pain and suffering; and punitive or exemplary damages (the Ormond Released Matters ). In addition, in consideration of the provisions of this Settlement Letter, you further agree to waive any and all rights under the laws of any jurisdiction in the United States, or any other country, that limit a general release to those Claims that are known or suspected to exist in your favor as of the date of this Settlement Letter, except for the Ormond Unreleased Claims. You further represent and warrant that you have not filed any civil action, suit, arbitration, administrative charge, or legal proceeding against any Company Released Party nor, have you assigned, pledged, or hypothecated as of the Effective Date any Claim to any person and no other person has an interest in the Claims that you are releasing. You acknowledge and agree that you have read this Settlement Letter in its entirety and that this Section 3.A is a general release of all known and unknown Claims. You further acknowledge and agree that:
(i) this Release does not release, waive or discharge any rights or Claims that may arise for actions or omissions after the Effective Date and you acknowledge that you are not releasing, waiving or discharging any ADEA Claims that may arise after the Effective Date;
(ii) you are entering into this Settlement Letter and releasing, waiving and discharging rights or Claims in exchange for consideration that is presently disputed by the Company and other good and valuable consideration;
(iii) you have been advised, and are being advised by the Settlement Letter, to consult with an attorney before executing the Settlement Letter; you acknowledge that you have consulted with counsel of his choice concerning the terms and conditions of this Settlement Letter;
(iv) you have been advised, and are being advised by this Settlement Letter, that you have been given at least twenty-one (21) days within which to consider the Settlement Letter, but you can execute this Settlement Letter at any time prior to the expiration of such review period; and
(v) you are aware that this Settlement Letter shall become null and void if you revoke your agreement to this Settlement Letter within seven (7) days following the date of execution of this Settlement Letter. You may revoke this Settlement Letter at any time during such seven-day period by delivering (or causing to be delivered) to the Company written notice of your revocation of this Settlement Letter no later than 5:00 p.m. Eastern time on the seventh (7th) full day following the date of execution of this
Release (the Effective Date ). You acknowledge that a letter of revocation that is not received by such date and time will be invalid and will not revoke this Release.
B. Ormond Surviving Claims . Notwithstanding anything herein to the contrary, by executing this Settlement Letter you do not: (i) release any Claim that may not lawfully be waived; (ii) become subject to any prohibition from reporting possible violations of federal law or regulation or making other disclosures that are protected under (or claiming any award under) the whistleblower provisions of federal law or regulation; or (iii) release any Claim to enforce this Settlement Letter (collectively, the Ormond Unreleased Claims ).
C. Company and QCP Release . The Company and QCP on behalf of themselves and each of their subsidiaries and any of its or their successors and assigns, hereby irrevocably and unconditionally waives and releases any Claims, both known and unknown, in law or in equity, which the Company, QCP or any of their subsidiaries or affiliates ever had, now has or may have against you, your family members and their respective past or present successors, heirs, assigns, or agents (collectively, the Ormond Released Party ), including, but not limited to, claims that in any way relate to: (1) the your employment with the Company; (2) any claims to attorneys fees or other indemnities; and (3) any federal, state, local or foreign laws and regulations. In addition, in consideration of the provisions of this Settlement Letter, the Company and QCP further agree to waive any and all rights under the laws of any jurisdiction in the United States, or any other country, that limit a general release to those Claims that are known or suspected to exist in its favor as of the date of this Settlement Letter, except for the Company/QCP Unreleased Claims. The Company and QCP further represent and warrant that they have not filed any civil action, suit, arbitration, administrative charge, or legal proceeding against any Ormond Released Party nor has the Company or QCP assigned, pledged, or hypothecated as of the Effective Date any Claim to any person and no other person has an interest in the Claims that the Company or QCP is releasing.
D. Company and QCP Surviving Claims . Notwithstanding anything herein in to the contrary, neither the Company nor QCP waives or releases claims with respect to (i) any Claim that may not lawfully be waived, (ii) any right or claim that arises after the date this Settlement Letter is executed, or (iii) any Claim to enforce this Settlement Letter (the Company/QCP Unreleased Claims ).
4. Restrictive Covenants. You agree that you will continue to be subject to Section 10 of the Employment Agreement (Non-Competition/Non-Solicitation and Confidentiality) for the applicable periods set forth therein.
5. Non-Disparagement . You agree not to make any defamatory or derogatory statements concerning the Company, QCP or any of their respective affiliates or predecessors or their respective directors, officers and employees. The Company and QCP agree to instruct their executive officers and directors not to make any defamatory restrict or limit you, the Company, QCP or any of the Companys or QCPs executive officers or directors from providing truthful information in response to a subpoena, other legal process or to a governmental or regulatory body or in the event of litigation between you and the Company, QCP or their respective affiliates.
6. Acknowledgement . You acknowledge that you have read and understand this Settlement Letter, are fully aware of its terms and legal effect and have not acted in reliance upon any representations or promises made by the Company or any other party other than those contained in writing herein. You are advised to consult your personal tax and legal advisors in connection with the matters described in this Settlement Letter, and by countersigning this Settlement Letter in the space provided below, you represent and warrant that you have given the opportunity to consult with, and have consulted with, such advisors to the extent deemed advisable by you.
7. Withholding . The Company or one of its subsidiaries has the authority to deduct or withhold from any compensation payable to you, whether or not such compensation is described herein, or to require you to remit to the Company, an amount sufficient to satisfy any applicable federal, state, local and foreign taxes (including any FICA obligation) required by law to be withheld with respect to any compensation payable to you as provided herein.
8. Entire Agreement . This Settlement Letter sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, term sheets, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter. Any other prior agreement of the parties hereto in respect of the subject matter contained herein, including, without limitation, the Documents, is hereby terminated and cancelled.
9. Miscellaneous . This Settlement Letter may be executed in counterparts. This Settlement Letter and any related dispute shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. Each of the parties hereto (A) consents to submit itself to the personal jurisdiction of any state or federal court located in the State of Delaware in the event any dispute arises out of this Settlement Letter or any of the transactions contemplated by this Settlement Letter; (B) agrees that it will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any such court; and (C) agrees that it will not bring any action relating to this Settlement Letter or any of the transactions contemplated by this Settlement Letter in any court other than such courts sitting in the State of Delaware. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SETTLEMENT LETTER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[ Signature Page Follows ]
Please indicate your acknowledgement of, agreement with and consent to the foregoing by countersigning the enclosed copy of this Settlement Letter in the space provided below and returning the same to the Company.
Sincerely, |
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HCR MANORCARE, INC. |
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QUALITY CARE PROPERTIES, INC. |
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I hereby acknowledge and agree and consent to the foregoing as of the date first written above. |
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[EXECUTIVE] |
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CONFIDENTIAL
SEPARATION AGREEMENT, GENERAL RELEASE AND WAIVER OF CLAIMS (this Release ), in entered into by and between [ · ] ( Employee ), Quality Care Properties, Inc., a Maryland corporation ( QCP ), and HCR ManorCare, Inc., a Delaware corporation ( HCRMC , and together with QCP and their respective subsidiaries, the Company ). The Company and the Companys affiliates, stockholders, beneficial owners of its stock, its current or former officers, directors, employees, members, attorneys and agents, and their predecessors, successors and assigns, individually and in their official capacities shall be referred to herein as the Released Parties .
WHEREAS, Employee has been employed as [ title ] of HCRMC;
WHEREAS, QCP, HCRMC, and certain other entities have entered into that certain Plan Sponsor Agreement (the PSA ) dated as of [ · ], 2018;
WHEREAS, Employee and HCRMC have entered into that certain Employment Agreement, dated [ · ] (the Employment Agreement );
WHEREAS, Employees employment with the Company shall terminate by the Company without Cause (as defined in the Employment Agreement) as of the Closing (as defined in the PSA) (the Termination Date ), which termination constitutes a Qualifying Termination under the Employment Agreement entitling Employee to severance after a Change in Control pursuant to Section 6 of the Employment Agreement; ( 1) and
WHEREAS, Section 1.5(a) of the PSA provides that (i) QCP shall fund and pay, or cause to be funded and paid, to the Employee certain Excess Severance Payments (as such term is defined in the PSA) in the amounts set forth in Schedule 1, subject to certain terms and conditions as described therein, including the execution of this Release and (ii) QCP shall pay, or cause to be paid, certain other obligations set forth in Schedule 1. ( 2)
NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the parties agree as follows:
1. General Release . Except as to the Surviving Claims (defined in Section 2 below), Employee knowingly and voluntarily waives, terminates, cancels, releases and discharges forever the Released Parties from any and all suits, actions, causes of action, claims, allegations, rights, obligations, liabilities, demands, entitlements or charges (collectively, Claims ) that Employee (or Employees heirs, executors, administrators, successors and assigns) has or may have, whether known, unknown or unforeseen, vested or contingent,
(1) Note : To provide for payments upon the Closing Date, releases will be executed shortly before Closing Date so that non-revocability period has expired as of Closing Date.
(2) Note : Schedule 1 to reflect the Excess Severance Amounts and all other amounts or benefits required to be paid, other than pursuant to ERISA plans.
by reason of any matter, cause or thing occurring at any time before and including the date of this Release, including all claims arising under or in connection with Employees employment or termination of employment with the Company, including, without limitation: Claims under United States federal, state or local law and the national or local law of any foreign country (statutory or decisional), for wrongful, abusive, constructive or unlawful discharge or dismissal, for breach of any contract, or for discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or any other unlawful criterion or circumstance, including rights or Claims under the Age Discrimination in Employment Act of 1967 ( ADEA ), the Older Workers Benefit Protection Act of 1990 ( OWBPA ), violations of the Equal Pay Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1991, the Employee Retirement Income Security Act of 1974 ( ERISA ), the Fair Labor Standards Act, the Worker Adjustment Retraining and Notification Act, the Family Medical Leave Act, including all amendments to any of the aforementioned acts; and violations of any other federal, state, or municipal fair employment statutes or laws, including, without limitation, violations of any other law, rule, regulation, or ordinance pertaining to employment, wages, compensation, hours worked, or any other Claims for compensation or bonuses, whether or not paid under any compensation plan or arrangement; breach of contract; tort and other common law Claims; defamation; libel; slander; impairment of economic opportunity defamation; sexual harassment; retaliation; attorneys fees; emotional distress; intentional infliction of emotional distress; assault; battery, pain and suffering; and punitive or exemplary damages (the Released Matters ). In addition and except as to Surviving Claims, in consideration of the provisions of this Release, Employee further agrees to waive any and all rights under the laws of any jurisdiction in the United States, or any other country, that limit a general release to those Claims that are known or suspected to exist in Employees favor as of the Effective Date (as defined below).
2. Surviving Claims . On the Payment Date (as defined in the PSA), QCP shall pay or cause to be paid to Employee the amounts required to be paid to Employee pursuant to Section 1.5 of the PSA. Notwithstanding anything herein to the contrary, Employees Release set forth in Section 1 above shall not:
(i) waive or release any Claims for payment of amounts or benefits payable as set forth on Schedule 1 ( 3) hereto;
(ii) waive or release any Claim to enforce this Release;
(iii) waive or release any Claim for vested employee benefits under plans covered by ERISA;
(iv) waive or release any Claim that may not lawfully be waived;
(3) Note : Schedule 1 to reflect the Excess Severance Amounts and all other amounts or benefits required to be paid (including pursuant to Section 1.5 of the PSA and the Plan), other than pursuant to plans subject to ERISA.
(v) waive or release Claims described in Section 4(a) of this Release;
(vi) waive or release any Claim for indemnification, advancement, and D&O insurance, including Claims provided for pursuant to Section 4.7 of the PSA; or
(vii) limit Employees rights under applicable law to provide truthful information to any governmental or regulatory entity or to file a charge with or participate in an investigation conducted by any governmental or regulatory entity.
Notwithstanding the foregoing, Employee agrees to waive Employees right to recover monetary damages in connection with any charge, complaint or lawsuit unrelated to any Claim described in clauses (i), (ii) and (iv) of the immediately preceding sentence filed by Employee or anyone else on Employees behalf (whether involving a governmental entity or not) with respect to Released Matters; provided that Employee is not agreeing to waive, and this Release shall not be read as requiring Employee to waive, any right Employee may have to receive an award for information provided to any governmental or regulatory entity or respond to a subpoena or other legal requirement.
3. Additional Representations . Employee further represents and warrants that Employee has not filed any civil action, suit, arbitration, administrative charge, or legal proceeding against any Released Party nor has Employee assigned, pledged, or hypothecated as of the Effective Date any Claim to any person and no other person has an interest in the Claims that he is releasing.
4. Acknowledgements by Employee . Employee acknowledges and agrees that Employee has read this Release in its entirety and that this Release is a general release of all known and unknown Claims with respect to Released Matters. Employee further acknowledges and agrees that:
a. this Release does not release, waive or discharge any rights or Claims that may arise for actions or omissions after the Effective Date of this Release and Employee acknowledges that he is not releasing, waiving or discharging any ADEA Claims that may arise after the Effective Date of this Release;
b. Employee is entering into this Release and releasing, waiving and discharging rights or Claims only in exchange for consideration which he is not already entitled to receive;
c. Employees receipt of the Excess Severance Payments is subject to the terms and conditions set forth in Section 1.5 of the PSA (and, for the avoidance of doubt, the non-occurrence of any of the events set forth in Section 1.5(b) of the PSA that by their terms would terminate QCPs obligation to pay such Excess Severance Payments pursuant to Section 1.5(b) of the PSA);
d. Employee has been advised, and is being advised by the Release, to consult with an attorney before executing this Release; Employee acknowledges that he has consulted with counsel of his choice concerning the terms and conditions of this Release; and
e. Employee has been advised, and is being advised by this Release, that he has been given at least twenty-one (21) days within which to consider the Release, but Employee can execute this Release at any time prior to the expiration of such review period.
5. Effective Date of Release : Employee is aware that Sections 1,2,3,4,6 and 7 of this Release shall become null and void if he revokes his agreement to this Release within seven (7) days following the date of execution of this Release (or, if later, prior to the Closing Date). Employee may revoke this Release (solely with respect to Sections 1,2,3,4,6 and 7 hereof) at any time during such period by delivering (or causing to be delivered) to the Company written notice of his revocation of this Release no later than the later to occur of (i) 5:00 p.m. Eastern time on the seventh (7 th ) full day following the date of execution of this Release and (ii) the Closing (the Effective Date ). Employee agrees and acknowledges that a notice of revocation that is not received by such date and time will be invalid and will not revoke this Release with respect to Sections 1 through 4 hereof. The Excess Severance Payments shall be paid to Employee upon the later to occur of the day following the Effective Date and the Termination Date. ( 4) If Employee fails to execute this Release on or prior to the 21 st day following receipt of this Release or exercises his right to revoke Sections 1,2,3,4,6 and 7 of this Release prior to the Effective Date, he shall forfeit his right to receive any portion of the Excess Severance Payments. For the avoidance of doubt, Sections 8-17 of this Release shall survive Employees revocation of his agreement to this Release in accordance with this Section 5 and the payment of the remaining benefits under Schedule 1 shall not be affected by such revocation.
6. Company/QCP Release . The Company and QCP on behalf of themselves and each of their affiliates and any of its or their successors and assigns, hereby irrevocably and unconditionally waives and releases any Claims, both known and unknown, in law or in equity, which the Company, QCP or any of their subsidiaries or affiliates ever had, now has or may have against Employee, Employees family members and any of their respective past or present successors, heirs, assigns, or agents (collectively, the Employee Released Party ), including, but not limited to, claims that in any way relate to: (1) the Employees employment or service as an officer or director with the Company or any of its affiliates; (2) any claims to attorneys fees or other indemnities; and (3) any federal, state, local or foreign laws and regulations. In addition, in consideration of the provisions of this Release, the Company and QCP further agree on behalf of themselves and each of their affiliates to waive any and all rights under the laws of any jurisdiction in the United States, or any other country, that limit a general release to those Claims that
(4) Note : Releases to be provided in advance of Closing and can be executed 8 days prior to Closing so that Effective Date occurs on or before Closing.
are known or suspected to exist in its favor as of the date of this Release, except for the Company/QCP Unreleased Claims. The Company and QCP further represent and warrant on behalf of themselves and their affiliates that none of them has filed any civil action, suit, arbitration, administrative charge, or legal proceeding against any Employee Released Party nor have any of them assigned, pledged, or hypothecated as of the Termination Date any Claim to any person and no other person has an interest in the Claims that the Company or QCP is releasing. Notwithstanding anything herein in to the contrary, neither the Company nor QCP waives or releases any claims with respect to (i) any Claim that may not lawfully be waived, (ii) any right or claim that arises after the date this Release is executed, or (iii) any Claim to enforce this Release (the Company/QCP Unreleased Claims ).
7. Company Acknowledgement . The Company acknowledges and agrees that an authorized representative of the Company has read this Release in its entirety and that this Release is a general release of all known and unknown Claims with respect to the released matters. The Company is entering into this Release and releasing, waiving and discharging rights or Claims only in exchange for consideration which it is not already entitled to receive.
8. Officer and Director Resignations . Employee hereby confirms his resignation, effective upon the Termination Date, as a [member of the Board of Directors of the Company] and as an officer of the Company and any other officer or director position Employee held with the Company or any of its subsidiaries, affiliates, joint ventures or other related entities, and agrees to execute such documents as the Company reasonably deems to be appropriate to facilitate such resignations.
9. Cooperation .
a. For two years following the Termination Date, Employee agrees to make himself reasonably available to the Company upon reasonable advance notice to respond to requests by the Company for information concerning any litigation, regulatory inquiry or investigation, involving facts or events relating to the Company that may reasonably be within his knowledge. Employee will reasonably cooperate with the Company in connection with any and all future litigation or regulatory proceedings brought by or against the Company to the extent the Company reasonably deems Employees cooperation necessary and such cooperation does not interfere with performance of Employees duties to Employees then current employer. Employee will be entitled to reimbursement of reasonable out-of-pocket expenses incurred in connection with fulfilling his obligations under this Section 9(a) and a per hour rate of $350. This Section 9(a) is subject to Section 2(vii) above.
b. For two years following the Termination Date, Company agrees to make itself, its appropriate representatives, and Company records and information reasonably available to Employee upon reasonable advance notice to respond to requests by Employee for information concerning any matters involving Employee, including, without limitation, any litigation, governmental or regulatory inquiry or
investigation, involving facts or events relating to Employee that may be eligible for indemnification under Section 4.7 of the PSA.
10. Affirmation of Restrictive Covenants; Return of Property . Employee agrees and acknowledges that his obligations under Section [10] of the Employment Agreement (collectively, the Restrictive Covenants ), will continue to apply after the Termination Date as specified in such provisions. Employee affirms that such Restrictive Covenants are not unduly burdensome to him and are reasonably necessary to protect the legitimate interests of the Company.
Employee covenants to return to the Company all property or information, including, without limitation, all reports, files, memos, plans, lists, or other records (whether electronically stored or not) belonging to the Company, including copies, extracts or other documents derived from such property or information. The Company agrees to (a) to the extent identified by Employee to QCP prior to Closing, maintain copies of financial and other information disclosed to QCP prior to the Effective Date that Employee reasonably believes may be relevant to the shareholder and derivative actions instituted against QCP and the Company prior to, on or following the Effective Date, and (b) make available to Employee such information to the extent reasonably necessary for Employee to defend himself against actions instituted against QCP or any of its affiliates, the Company or any of its affiliates or Employee.
11. Non-Disparagement . Each party (which, in the case of the Company, shall mean the officers and the members of the board of directors of QCP and HCRMC) agrees to refrain from Disparaging (as defined below) the other party and its affiliates, including, in the case of the Company, any of its services, technologies or practices, or any of its directors, officers, agents, representatives or stockholders (including QCP), either orally or in writing. Nothing in this paragraph shall preclude any party from making truthful statements that are reasonably necessary to comply with applicable law, regulation or legal process, to defend or enforce a partys rights under this Release, or that are subject to Section 2(vii) above. For purposes of this Release, Disparaging means making remarks, comments or statements, whether written or oral, that materially impugn the character, integrity, reputation or abilities of the person being disparaged with the knowledge on the part of the person making such remarks, comments or statements that such remarks, comments or statements would so materially impugn the character, integrity, reputation or abilities of the person being disparaged.
12. Non-Admission . Nothing in this Release is intended to or shall be construed as an admission by the Company or any of the other Released Parties that any of the them violated any law, interfered with any right, breached any obligation or otherwise engaged in any improper or illegal conduct with respect to Employee or otherwise. The Company and the other Released Parties expressly deny any such illegal or wrongful conduct. Nothing in this Release is intended to or shall be construed as an admission by Employee that he violated any law, interfered with any right, breached any obligation or otherwise engaged in any improper or illegal conduct with respect to the Company or otherwise. Employee expressly denies any such illegal or wrongful conduct.
13. Amendment . This Release may be modified only in a written agreement signed by the parties, and any partys failure to enforce this Release in the event of one or more events which violate this Release shall not constitute a waiver of any right to enforce this Release against subsequent violations.
14. Governing Law . To the extent not subject to federal law, this Release shall be governed in accordance with the laws of Delaware without reference to principles of conflict of laws.
15. Severability . If any provision of this Release should be declared to be unenforceable by any administrative agency or court of law, then remainder of the Release shall remain in full force and effect.
16. Captions; Section Headings . Captions and section headings used herein are for convenience only and are not a part of this Release and shall not be used in construing it.
17. Counterparts; Facsimile Signatures . This Release may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original instrument without the production of any other counterpart. Any signature on this Release, delivered by either party by photographic, facsimile or PDF shall be deemed to be an original signature thereto.
IN WITNESS WHEREOF, Employee has signed this Release on this of , .
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Accepted and Agreed: |
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HCR ManorCare, Inc. |
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By: |
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Accepted and Agreed:
Quality Care Properties, Inc. |
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By: |
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Schedule 1
Excess Severance Payments
· Severance pursuant to Section [6(a)(i)] of the Employment Agreement: $[ · ] ( 5)
Other Obligations
· Employees accrued unpaid wages, employee benefits, and unreimbursed business expenses through and including the Termination Date.
· Employees participant balance in the Senior Management Savings Plan for Corporate Officers (the SMSPCO): $[ · ], which is subject to change based on investment changes as provided in the SMSPCO.
· Pay the full premium payments for group medical, dental and vision benefits continuation pursuant to Section [6(a)(ii)] of the Employment Agreement under the Companys group medical, dental and vision plans, which coverage will continue for three years following termination, cover Employee and his eligible dependents and will be primary coverage.
· [Lump-sum amount payable to Employee in connection with SERP: $[ · ].] ( 6)
· KEIP: [ · ]
· [Retention Payment: $250,000] ( 7)
Payment Timing: All payments will be paid to Employee as provided in the PSA.
All payments are subject to withholding of applicable Taxes as required by Law (as such terms are defined in the PSA).
(5) Note : To reflect the applicable amount for each relevant Employee.
(6) Note : Cavanaugh only.
(7) Note : Cavanaugh only.
EXECUTION VERSION
AMENDMENT TO PLAN SPONSOR AGREEMENT
This AMENDMENT (this Amendment ) to the Plan Sponsor Agreement (defined below) is entered into as of April 25, 2018, by and among HCR ManorCare, Inc., a Delaware corporation (the Debtor ), Quality Care Properties, Inc., a Maryland corporation ( Parent ), HCP Mezzanine Lender, LP, a Delaware limited partnership and a wholly-owned subsidiary of Parent ( Purchaser ), and the parties signatory hereto as lessors (collectively, the Lessors and, together with Parent and Purchaser, the Purchaser Entities ).
R E C I T A L S
A. The Debtor and the Purchaser Entities entered into that certain Plan Sponsor Agreement, dated as of March 2, 2018 (the Original PSA ).
B. Contemporaneously with this Amendment, the Debtor, ProMedica Health System, Inc. (the Alternative Plan Sponsor ), Parent and certain other parties have entered into an Alternative Plan Sponsor Agreement (the Alternative PSA ), which, among other things, contemplates the acquisition by a subsidiary of the Alternative Plan Sponsor of 100% of the equity of the reorganized Debtor through the First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc. in the form attached to the Alternative PSA (the Amended Plan );
C. In accordance with Section 8.2 of the Original PSA, the Debtor and the Purchaser Entities desire to amend certain terms of the Original PSA as expressly provided in this Amendment.
A G R E E M E N T
In consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby acknowledge and agree as follows:
1. Article I . Article I of the Original PSA is hereby amended by inserting the following new Section 1.8 after Section 1.7 and before Article II:
Section 1.8 Alternative Plan Sponsor Agreement . The parties acknowledge that the Debtor, Parent, ProMedica Health System, Inc. (the Alternative Plan Sponsor ) and certain other parties have entered into an Alternative Plan Sponsor Agreement (the Alternative PSA ), dated as of April 25, 2018, which, among other things, contemplates the acquisition by a subsidiary of the Alternative Plan Sponsor of 100% of the equity of the reorganized Debtor through the First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc. in the form attached to the Alternative PSA (the Amended Plan ) as an alternative to the transactions contemplated by this Agreement and that the Alternative PSA was entered into by the Debtor at the request of the Purchaser Entities (which Purchaser Entities would derive significant benefits from the consummation of the transactions contemplated by the Alternative PSA).
The parties further acknowledge that, at the request of the Purchaser Entities, the Debtor has entered into that certain restructuring support agreement, dated as of April 25, 2018 (the Alternative RSA ), with Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the Carlyle Holders ), MC Operations Investments, LLC and the Alternative Plan Sponsor. Notwithstanding anything in this Agreement or any other Debtor Document to the contrary, each of the Purchaser Entities hereby consents to (a) the execution, delivery and performance of the Alternative PSA and Alternative RSA by the Debtor (and, with respect to the Alternative RSA, the Carlyle Holders), the filing of the Amended Plan and all motions or pleadings in connection therewith and the consummation of the transactions contemplated thereby and (b) agrees that neither the execution, delivery or performance of the Alternative PSA and Alternative RSA by the Debtor (and, with respect to the Alternative RSA, the Carlyle Holders) nor and the consummation of the transactions contemplated thereby shall constitute, or be deemed in any manner whatsoever to constitute, any breach, default or violation of any provision of this Agreement or any other Debtor Document (including the Restructuring Support Agreement).
2. Section 4.2(a) . Section 4.2(a) of the Original PSA is hereby amended by inserting the following at the end of such section:
The parties agree that (x) notwithstanding anything to the contrary in this Section 4.2(a), from and after the execution of the Alternative PSA, neither party shall be required to, and neither party shall (without the consent of the Debtor and Parent), pursue the Governmental Approvals or make any filings with any Governmental Entity in connection with the transactions contemplated by this Agreement until such time (if any) as the condition in Section 6.1(e) shall have been satisfied, and (y) in the event the condition in Section 6.1(e) is satisfied, the foregoing provisions of this Section 4.2(a) shall continue in full force and effect and the parties shall cooperate to obtain the Governmental Approvals and make such other filings with Governmental Entities in accordance with such foregoing provisions of this Section 4.2(a) as promptly as practicable.
3. Section 4.10(e) . Section 4.10(e) of the Original PSA is hereby amended by inserting the following after the words other than and before the words the Transactions or the disposition of those Leased Facilities set forth in Section 5.3(b) of the Debtor Disclosure Letter:
(A) the transactions contemplated by the Alternative Plan Sponsor Agreement and (B)
4. Section 6.1 . Section 6.1 of the Original PSA is hereby amended by inserting the following after subsection (d) thereof:
(e) Termination of Alternative PSA . The Alternative PSA shall have terminated in accordance with its terms (it being understood and agreed that if the Debtor has elected to terminate the Alternative PSA pursuant to Section 7.3 or 7.4 of the Alternative PSA (or has provided written notice to the Alternative Plan Sponsor that the Alternative PSA has terminated automatically in accordance with Section 7.1 of the Alternative PSA, this condition shall be deemed satisfied irrespective of any dispute among any of the parties to the Alternative PSA as to the effectiveness of such termination).
5. Section 6.2(a) . Section 6.2(a) of the Original PSA is hereby amended and restated by deleting in its entirety all of the text of such section and replacing such text with the following:
Representations and Warranties . (i) The representations and warranties of the Debtor (other than the representations and warranties set forth in Sections 2.1(a) (Organization, Good Standing and Qualification), 2.1(c) (Corporate Authority and Approval), 2.1(s) (Brokers and Finders) and the first sentence of Section 2.1(b) (Capital Structure) (the Fundamental Representations of the Debtor )) in this Agreement (without giving effect to any limitations as to materiality or Material Adverse Effect set forth therein) shall have been true and correct as of the date hereof and true and correct as of June 30, 2018 as though made on and as of June 30, 2018 (except for representations and warranties that are made expressly as of a specific date, which representations and warranties shall have been true and correct as of such date), in each case, except for such failures to be so true and correct as shall not have had, and would not, individually or in the aggregate, reasonably be likely to have a Material Adverse Effect, and (ii) the Fundamental Representations of the Debtor shall be true and correct in all respects as of the date hereof and true and correct in all respects as of the Closing as though made on and as of the Closing (except for representations and warranties that are made expressly as of a specific date, which representations and warranties shall be true and correct as of such date).
6. Section 7.1 . Section 7.1 of the Original PSA is hereby amended and restated by deleting the word or after subsection (g) thereof and inserting the following before the period in subsection (h) thereof:
; or
(i) the transactions contemplated by the Alternative PSA are consummated.
7. Section 7.3 . Section 7.3 of the Original PSA is hereby amended and restated by replacing September 30, 2018 with January 15, 2019.
8. Effect of Amendment . This Amendment shall not constitute an amendment or waiver of any provision of the Original PSA not expressly amended or waived herein and shall not be construed as an amendment, waiver or consent to any action that would require an amendment, waiver or consent except as expressly stated
herein. The Original PSA, as amended by this Amendment, is and shall continue to be in full force and effect and is in all respects ratified and confirmed hereby.
9. References . On and after the date hereof, each reference in the Original PSA to this Agreement, hereunder, hereof, herein or words of like import referring to the Original PSA, and each reference in any other document relating to the Plan Sponsor Agreement, Agreement, thereunder, thereof or words of like import referring to the Original PSA, means and references the Original PSA as amended hereby.
10. Miscellaneous . The provisions contained in Sections 8.2, 8.4, 8.5, 8.12 and 8.13 of the Original PSA are incorporated by reference in this Amendment mutatis mutandis .
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF the parties have hereunto caused this Amendment to be duly executed as of the date hereof.
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HCR MANORCARE, INC. |
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By: |
/s/ John R. Castellano |
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Name: |
John R. Castellano |
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Title: |
Chief Restructuring Officer |
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QUALITY CARE PROPERTIES, INC. |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
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HCP MEZZANINE LENDER, LP |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
[SIGNATURE PAGE CONTINUES]
[Signature Page to Amendment to the Plan Sponsor Agreement]
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LESSORS |
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HCP PROPERTIES, LP, a Delaware limited partnership |
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By: |
HCP I-B Properties, LLC, a Delaware limited liability company, its General Partner |
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HCP WEST VIRGINIA PROPERTIES, LLC, a Delaware limited liability company |
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HCP PROPERTIES OF ALEXANDRIA VA, LLC, a Delaware limited liability company |
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HCP PROPERTIES OF ARLINGTON VA, LLC, a Delaware limited liability company |
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HCP PROPERTIES OF MIDWEST CITY OK, LLC, a Delaware limited liability company |
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HCP PROPERTIES OF OKLAHOMA CITY (NORTHWEST), LLC, a Delaware limited liability company |
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HCP PROPERTIES OF OKLAHOMA CITY (SOUTHWEST), LLC, a Delaware limited liability company |
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HCP PROPERTIES OF TULSA OK, LLC, a Delaware limited liability company |
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HCP PROPERTIES-ARDEN COURTS OF ANNANDALE VA, LLC, a Delaware limited liability company |
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HCP PROPERTIES-CHARLESTON OF HANAHAN SC, LLC, a Delaware limited liability company |
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HCP PROPERTIES-COLUMBIA SC, LLC, a Delaware limited liability company |
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HCP PROPERTIES-FAIR OAKS OF FAIRFAX VA, LLC, a Delaware limited liability company |
[Signature Page to Amendment to the Plan Sponsor Agreement]
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HCP PROPERTIES-IMPERIAL OF RICHMOND VA, LLC, a Delaware limited liability company |
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HCP PROPERTIES-LEXINGTON SC, LLC, a Delaware limited liability company |
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HCP PROPERTIES-MEDICAL CARE CENTER-LYNCHBURG VA, LLC, a Delaware limited liability company |
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HCP PROPERTIES-OAKMONT EAST-GREENVILLE SC, LLC, a Delaware limited liability company |
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HCP PROPERTIES-OAKMONT OF UNION SC, LLC, a Delaware limited liability company |
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HCP PROPERTIES-OAKMONT WEST-GREENVILLE SC, LLC, a Delaware limited liability company |
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HCP PROPERTIES-STRATFORD HALL OF RICHMOND VA, LLC, a Delaware limited liability company |
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HCP PROPERTIES-WEST ASHLEY-CHARLESTON SC, LLC, a Delaware limited liability company |
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HCP MARYLAND PROPERTIES, LLC, a Delaware limited liability company |
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HCP PROPERTIES-SALMON CREEK WA, LLC, a Delaware limited liability company |
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HCP PROPERTIES-WINGFIELD HILLS NV, LLC, a Delaware limited liability company |
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HCP PROPERTIES-UTICA RIDGE IA, LLC, a Delaware limited liability company |
[Signature Page to Amendment to the Plan Sponsor Agreement]
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HCP TWINSBURG OH PROPERTY, LLC, a Delaware limited liability company |
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By: |
HCR Schoenherr Road Property, LLC, a Delaware limited liability company, its sole member |
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By: |
HCP Properties, LP, a Delaware limited partnership, its sole member |
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By: |
HCP I-B Properties, LLC, a Delaware limited liability company, its General Partner |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
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HCP STERLING HEIGHTS MI PROPERTY, LLC, a Delaware limited liability company |
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By: |
HCR Schoenherr Road Property, LLC, a Delaware limited liability company, its sole member |
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By: |
HCP Properties, LP, a Delaware limited partnership, its sole member |
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By: |
HCP I-B Properties, LLC, a Delaware limited liability company, its General Partner |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
[Signature Page to Amendment to the Plan Sponsor Agreement]
EXECUTION VERSION
RESTRUCTURING SUPPORT AGREEMENT
This RESTRUCTURING SUPPORT AGREEMENT (this Agreement ) is made and entered into as of April 25, 2018, by and among (i) HCR ManorCare, Inc., a Delaware corporation (the Debtor ), (ii) Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the Majority Holders ), ProMedica Health System, Inc., an Ohio non-profit corporation ( ProMedica or the Alternative Plan Sponsor ), and MC Operations Investments, LLC (the QCP Holder , together with ProMedica and the Majority Holders, the Supporting Parties , and together with the Debtor, the Parties ).
RECITALS
WHEREAS, the Parties have engaged in arms length, good faith discussions regarding a restructuring of the Debtor and certain of its subsidiaries (the Restructuring );
WHEREAS, on the date hereof, the Debtor, ProMedica, Quality Care Properties, Inc. ( QCP ), and certain other parties, have entered into an Alternative Plan Sponsor Agreement (the Alternative PSA ), which, among other things, contemplates the acquisition by a subsidiary of the Alternative Plan Sponsor of 100% of the equity of the reorganized Debtor through the attached First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc. (the Plan ; capitalized terms not otherwise defined in this Agreement shall have the meaning given to such terms in the Alternative PSA); and
WHEREAS, the Supporting Parties intend to support the Restructuring and the Plan upon the terms and conditions set forth herein:
AGREEMENT
NOW, THEREFORE, in consideration of the conditional promises and mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. Representations and Warranties
a. Representations and Warranties of the Debtor . The Debtor represents and warrants to the Supporting Parties that, as of the date hereof:
i. It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement.
ii. The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.
iii. Subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, and except as set forth herein, this Agreement is the legally valid and binding obligation of it, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating
to or limiting creditors rights generally or by equitable principles relating to enforceability.
b. Representations and Warranties of the Supporting Parties . Each Supporting Party represents and warrants to the Debtor and to each other Supporting Party that, as of the date hereof:
i. (A) Such Supporting Party is the sole record and beneficial owner of the shares of common stock of the Debtor set forth on its signature page hereto ( Debtor Shares ), (B) the Debtor Shares of such Supporting Party constitute the percentage of all shares of common stock of the Debtor set forth on such signature pages hereto, and (C) such Supporting Party has full power and authority to bind and act on behalf of, vote and consent to matters concerning such shares and to dispose of, exchange, assign and transfer such shares.
ii. Such Supporting Party has made no prior assignment, sale, participation, grant, conveyance or other transfer of, and has not entered into any other agreement to assign, sell, participate, grant, convey or otherwise transfer, in whole or in part, any portion of its right, title or interest in any of its Debtor Shares that conflict with the representations and warranties of such Supporting Party herein or would render such Supporting Party otherwise unable to comply with this Agreement and perform its obligations hereunder.
iii. This Agreement is the legally valid and binding obligation of each such Supporting Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws relating to bankruptcy or limiting creditors rights generally or by equitable principles relating to enforceability.
2. Covenants of the Majority Holders
Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Majority Holder, severally (and not jointly), agrees to, and to cause its direct and indirect subsidiaries, and its and their directors, officers, employees, agents and other representatives, to:
a. Support of Plan . Support, and take all reasonable action necessary or reasonably requested by the Debtor to support and facilitate, the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan;
b. Vote for Plan . (i) Vote all Equity Interests, Claims and other instruments carrying voting rights held or controlled, directly or indirectly, by such Majority Holder to accept the Plan (and any amendments, waivers, or consents required in connection with the Plan that are recommended or requested by the Debtor); (ii) timely deliver its duly executed and completed ballot promptly following the commencement of the solicitation of acceptances of the Plan, and (iii) not withdraw, change, or revoke (or cause to be withdrawn, changed, or revoked) its vote with respect to the Plan
c. No Competing Plans . Other than for the Plan, not pursue, propose or support, or encourage the pursuit, proposal or support of, any chapter 11 plan or other restructuring or reorganization for, or the liquidation of, the Debtor (directly or indirectly);
d. No Actions Against Plan . (i) Not take any action that would reasonably be expected to prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan, and (ii) not object to or otherwise commence, or encourage, join in or support any other person to commence, any proceeding or other analogous action opposing the Plan; and
e. Tax Matters . Not file any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares.
3. Covenants of the QCP Holder
Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, the QCP Holder agrees to, and to cause its direct and indirect subsidiaries and affiliates to:
a. support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan, including, without limitation, voting in favor of the Plan;
b. not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan;
c. not object to or otherwise commence, or encourage any other person to commence, any proceeding or take any action opposing the Plan or Disclosure Statement; and
d. not file any federal or state tax return, or any amendment to such a return, claiming any deduction for worthlessness of its Debtor Shares.
4. Information about the Majority Holders
Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Majority Holder, severally (and not jointly), agrees to:
a. use its reasonable best efforts to provide such information requested by the Alternative Plan Sponsor, QCP or the Debtor as is necessary regarding such Majority Holder for the Alternative Plan Sponsor, QCP, the Debtor and their affiliates to make or obtain any filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtors businesses) in connection with the Plan or the transactions contemplated thereby; and
b. upon the reasonable request of the Debtor, QCP or the Alternative Plan Sponsor, use its reasonable best efforts to provide such information concerning such Majority Holder in connection with any filings, notices, consents, registrations, approvals, permits or authorizations (including those with respect to state licensing required to operate the Debtors businesses) in connection with the Plan or the transactions contemplated thereby.
5. Transfer of Shares
Each Supporting Party agrees that, so long as this Agreement has not been terminated in accordance with its terms, it shall not directly or indirectly sell, pledge, hypothecate or otherwise transfer or dispose of or grant, issue or sell any option, right to acquire, voting, participation or other interest in any Debtor Shares (each a Transfer ), unless the transferee thereof, prior to such Transfer, agrees in writing for the benefit of the Parties to become subject to the terms and conditions of this Agreement as a Supporting Party and to be bound by this Agreement by executing the joinder attached hereto as Exhibit B (the Joinder Agreement ), and delivering an executed copy thereof, within two (2) business days of such execution, to the Debtor, in which event (i) the transferee shall be deemed to be a Supporting Party hereunder and (ii) the transferor shall be deemed to relinquish its rights and be released from its obligations under this Agreement to the extent of such transferred rights and obligations. Each Supporting Party agrees that any Transfer that does not comply with the foregoing shall be deemed void ab initio , and the Debtor and each other Supporting Party shall have the right to avoid such Transfer. This Agreement shall in no way be construed to preclude any shareholder from acquiring additional shares; provided that any such additional shares shall, upon acquisition, automatically be deemed to be subject to all the terms of this Agreement.
6. ProMedica Support
ProMedica shall, and shall cause each of its Subsidiaries to, (i) support, and take all reasonable actions necessary or reasonably requested by the Debtor to facilitate, the solicitation, confirmation and consummation of the Plan and the transactions contemplated by the Plan; (ii) not take any other action, directly or indirectly, that could prevent, interfere with, delay or impede the solicitation of votes in connection with the Plan or the confirmation or consummation of the Plan; (iii) not object to or otherwise commence any proceeding or take any action opposing the Plan or Disclosure Statement; and (iv) otherwise use its reasonable best efforts to assist the Debtor in obtaining entry of the Confirmation Order by the Bankruptcy Court within the deadline set forth in Section 3.3(c) of the Alternative Plan Sponsor Agreement.
7. Additional Supporting Parties
A shareholder that is not a Supporting Party as of the date of this Agreement will become a Party to this Agreement as a Supporting Party on the date that it agrees in writing, for the benefit of the Parties, to become subject to the terms and conditions of this Agreement as a Supporting Party and to be bound by this Agreement by executing the Joinder Agreement and delivering an executed copy thereof, within two (2) business days of such execution, to the
Debtor. Upon such delivery, such Supporting Party shall immediately thereafter send a copy of such Joinder Agreement to all other Supporting Parties.
8. Termination
This Agreement and all obligations of the Parties hereunder shall immediately terminate and be of no further force and effect as follows:
a. upon the Effective Date of the Plan; and
b. upon the termination of the Alternative PSA and the Original PSA.
Upon termination of this Agreement in accordance with its terms, this Agreement shall forthwith become void and of no further force or effect, each Party shall be released from its commitments, undertakings and agreements under or related to this Agreement, and there shall be no liability or obligation on the part of any Party.
9. No Monetary Liability.
Notwithstanding anything to the contrary contained in this Agreement or provided for under any applicable law, no Party shall be liable to any other person, either in contract or in tort, for any money damages relating to any breach of this Agreement.
10. Specific Performance
It is understood and agreed by the Parties that money damages would not be a sufficient or appropriate remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach. Each Party agrees to waive any requirement for the securing or posting of a bond in connection with such remedy.
11. Entire Agreement; Prior Negotiations
This Agreement, including all exhibits attached hereto, constitutes the entire agreement of the Parties and supersedes all prior negotiations and documents reflecting such prior negotiations between and among the Parties (and their respective advisors) with respect to the subject matter of this Agreement.
12. Amendments
Except as otherwise provided herein, this Agreement may not be modified, amended or supplemented without prior written agreement signed by the Debtor, each Supporting Party and the Alternative Plan Sponsor.
13. Governing Law
This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware. By its execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in either a state or federal court of competent jurisdiction
in the State of Delaware. By execution and delivery of this Agreement, each of the parties hereto hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of each such court, generally and unconditionally, with respect to any such action, suit or proceeding. Notwithstanding the foregoing, each of the parties hereto hereby agrees that, while the Bankruptcy Case is pending, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.
14. Effectiveness
This Agreement shall become effective and binding upon each Party upon the execution and delivery of this Agreement by such Party.
15. No Solicitation
Notwithstanding anything to the contrary, this Agreement is not and shall not be deemed to be (a) a solicitation of consents to the Plan or (b) an offer for the issuance, purchase, sale exchange, hypothecation or other transfer of securities or a solicitation of an offer to purchase or otherwise acquire securities for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended.
16. Third-Party Beneficiary
This Agreement is intended for the benefit of the parties hereto and no other person shall have any rights hereunder; provided , however , that QCP shall be an express third party beneficiary of this Agreement, entitled to enforce this Agreement against the Parties as if it were itself a party hereto.
17. Counterparts
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this agreement may be delivered by electronic mail (in .pdf or .tif format), facsimile or otherwise, which shall be deemed to be an original for the purposes of this Agreement.
18. [Intentionally Omitted]
19. No Waiver of Participation and Preservation of Rights
Except as provided in this Agreement, nothing herein is intended to, does or shall be deemed in any manner to waive, limit, impair or restrict the ability of any Party to protect and preserve its rights, remedies and interests, including, but not limited to, claims against the Debtor, liens or security interests it may have in any assets of the Debtor, or its rights to participate fully in the Bankruptcy Case. Without limiting the foregoing sentence in any way, if this Agreement is terminated in accordance with its terms for any reason, the Parties each fully reserve any and all of their respective rights, remedies and interests.
20. Notices
All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier or by registered or certified mail (return receipt requested) to the following
addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):
If to the Debtor, to counsel at the following address:
Sidley Austin LLP
One South Dearborn
Chicago, IL 60603
Attention: Larry Nyhan
Email: lnyhan@sidley.com
If to the Alternative Plan Sponsor to counsel at the following address:
Shumaker, Loop & Kendrick, LLP
1000 Jackson Street
Toledo, OH 43604
Attention: James I Rothschild
David Coyle
Email: jrothschild@slk-law.com dcoyle@slk-law.com
If to the Majority Holders, to counsel at the following address:
Latham & Watkins LLP
555 Eleventh Street, NW, Suite 1000
Washington, D.C. 20004-1304
Attention: Daniel T. Lennon
Roger G. Schwartz
J. Cory Tull
Email: daniel.lennon@lw.com
roger.schwartz@lw.com
cory.tull@lw.com
If to the QCP Holder, to counsel at the following address:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich and Scott K. Charles
Email: aoemmerich@wlrk.com skcharles@wlrk.com
[Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers or other agents, solely in their respective capacity as officers or other agents of the undersigned and not in any other capacity, as of the date first set forth above.
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HCR MANORCARE, INC. |
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By: |
/s/ John R. Castellano |
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Name: |
John R. Castellano |
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Title: |
Chief Restructuring Officer |
[Signature Page to Restructuring Support Agreement]
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CARLYLE MC PARTNERS, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: Jeremy Anderson |
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Title: Authorized Signatory |
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Debtor Shares: |
6,908,455 |
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Debtor Shares Percentage: |
15.377% |
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CARLYLE PARTNERS V-A MC, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: Jeremy Anderson |
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Title: Authorized Signatory |
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Debtor Shares: |
527,141 |
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Debtor Shares Percentage: |
1.173% |
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CARLYLE PARTNERS V MC, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: Jeremy Anderson |
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Title: Authorized Signatory |
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Debtor Shares: |
26,089,114 |
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Debtor Shares Percentage: |
58.072% |
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[Signature Page to Restructuring Support Agreement]
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CP V COINVESTMENT A, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: Jeremy Anderson |
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Title: Authorized Signatory |
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Debtor Shares: |
1,015,490 |
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Debtor Shares Percentage: |
2.260% |
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CP V COINVESTMENT B, L.P. |
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By: TC Group V, L.P., its general partner |
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By: TC Group V, L.L.C., its general partner |
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By: |
/s/ Jeremy Anderson |
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Name: Jeremy Anderson |
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Title: Authorized Signatory |
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Debtor Shares: |
129,357 |
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Debtor Shares Percentage: |
0.288% |
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[Signature Page to Restructuring Support Agreement]
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PROMEDICA HEALTH SYSTEM, INC. |
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By: |
/s/ Randy Oostra |
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Name: |
Randy Oostra |
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Title: |
President & CEO |
[Signature Page to Restructuring Support Agreement]
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MC OPERATIONS INVESTMENTS, LLC |
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By: |
/s/ C. Marc Richards |
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Name: |
C. Marc Richards |
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Title: |
Chief Financial Officer |
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Debtor Shares: |
4,232,244 |
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Debtor Shares Percentage: |
|
||
[Signature Page to Restructuring Support Agreement]
EXHIBIT A
Plan
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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In re: |
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Chapter 11 |
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HCR MANORCARE, INC.,(1) |
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Case No. 18-10467 (KG) |
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Debtor. |
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FIRST AMENDED CHAPTER 11 PLAN OF
REORGANIZATION FOR HCR MANORCARE, INC.
SIDLEY AUSTIN LLP |
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YOUNG CONAWAY STARGATT & TAYLOR, LLP |
Larry J. Nyhan |
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Robert S. Brady (No. 2847) |
Dennis M. Twomey |
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Edmon L. Morton (No. 3856) |
William A. Evanoff |
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Justin H. Rucki (No. 5304) |
Allison Ross Stromberg |
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Tara C. Pakrouh (No. 6192) |
Matthew E. Linder |
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Rodney Square |
One South Dearborn Street |
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1000 North King Street |
Chicago, Illinois 60603 |
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Wilmington, Delaware 19801 |
Facsimile: (312) 853-7036 |
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Facsimile: (302) 571-1253 |
Attorneys for the Debtor and Debtor in Possession
Dated: April 25, 2018
(1) The last four digits of the Debtors federal tax identification number are 9231. The mailing address for the Debtor is 333 N. Summit St., Toledo, OH 43604.
TABLE OF CONTENTS
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PAGE |
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ARTICLE I: DEFINED TERMS AND RULES OF INTERPRETATION |
1 |
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ARTICLE II: TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS |
12 |
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2.1. |
Administrative Expense Claims |
12 |
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2.2. |
Priority Tax Claims |
13 |
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2.3. |
Post-Effective Date Fees and Expenses |
13 |
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ARTICLE III: CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS |
13 |
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3.1. |
Summary of Classification and Treatment of Classified Claims and Interests |
13 |
|
3.2. |
Classification and Treatment of Claims Against and Interests in the Debtor |
14 |
|
3.3. |
Intercompany Claims |
18 |
|
3.4. |
Unimpaired Claims |
19 |
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ARTICLE IV: ACCEPTANCE OR REJECTION OF THE PLAN |
20 |
||
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4.1. |
Impaired Classes of Claims Entitled to Vote on this Plan |
20 |
|
4.2. |
Acceptance by an Impaired Class of Claims and Interests |
20 |
|
4.3. |
Presumed Acceptance by Unimpaired Classes |
20 |
|
4.4. |
Presumed Rejection by Certain Impaired Classes |
20 |
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4.5. |
Confirmability of this Plan and Reservation of Rights |
20 |
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ARTICLE V: MEANS FOR IMPLEMENTATION OF THE PLAN |
20 |
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5.1. |
Alternative Transaction |
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5.2. |
Original Transaction |
21 |
|
5.3. |
Operations Between the Confirmation Date and Effective Date |
21 |
|
5.4. |
Sources of Cash Consideration for Plan Distributions |
21 |
|
5.5. |
New Common Stock |
21 |
|
5.6. |
Section 1145 Exemption |
21 |
|
5.7. |
Master Lease Amendment |
22 |
|
5.8. |
Release of Guaranty |
22 |
|
5.9. |
Corporate Governance, Directors, Officers and Corporate Action |
22 |
|
5.10. |
Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor |
23 |
|
5.11. |
Cancellation of Liens |
23 |
|
5.12. |
Preservation of Rights of Action and Settlement of Ordinary Litigation Claims |
23 |
|
5.13. |
Registration of New Common Stock |
23 |
|
5.14. |
Additional Transactions Authorized Under this Plan |
24 |
|
5.15. |
Comprehensive Settlement of Claims and Controversies |
24 |
|
5.16. |
Tax Election |
24 |
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ARTICLE VI: TREATMENT OF EXECUTORY CONTRACTS AND INSURANCE POLICIES |
24 |
||
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6.1. |
Assumption or Rejection of Executory Contracts |
24 |
|
6.2. |
No Cure Obligations |
25 |
|
6.3. |
Insurance Policies and Agreements |
25 |
|
6.4. |
Postpetition Contracts and Leases |
25 |
|
6.5. |
Modifications, Amendments, Supplements, Restatements or Other Agreements |
25 |
|
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ARTICLE VII: PROVISIONS GOVERNING DISTRIBUTIONS |
25 |
||
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7.1. |
Distributions on Account of Claims Allowed as of the Effective Date |
25 |
|
7.2. |
Distributions on Account of Claims that Become Allowed after the Effective Date |
26 |
|
7.3. |
Distributions by Reorganized Debtor |
26 |
|
7.4. |
Means of Cash Payment |
26 |
|
7.5. |
Withholding and Reporting Requirements |
26 |
|
7.6. |
Compliance Matters |
26 |
|
7.7. |
Setoff and Recoupment |
26 |
|
7.8. |
Reinstated Claims |
27 |
|
7.9. |
Undeliverable or Non-Negotiated Distributions |
27 |
|
7.10. |
Claims Paid by Third Parties |
27 |
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ARTICLE VIII: CONFIRMATION AND CONSUMMATION OF THE PLAN |
27 |
||
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8.1. |
Conditions to Effective Date of Plan Implementing the Alternative Transaction |
27 |
|
8.2. |
Conditions to Effective Date of Plan Implementing the Original Transaction |
28 |
|
8.3. |
Waiver of Conditions |
28 |
|
8.4. |
Vacatur of Confirmation Order |
29 |
|
8.5. |
Notice of Effective Date |
29 |
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ARTICLE IX: EFFECT OF PLAN CONFIRMATION |
29 |
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9.1. |
Binding Effect |
29 |
|
9.2. |
Discharge |
29 |
|
9.3. |
Releases by the Debtor |
30 |
|
9.4. |
Releases by Certain Holders of Claims |
31 |
|
9.5. |
Exculpation |
31 |
|
9.6. |
Injunctions Related to Exculpation and Releases |
32 |
|
9.7. |
Survival of Indemnification and Exculpation Obligations |
33 |
|
9.8. |
Term of Bankruptcy Injunction or Stays |
33 |
|
9.9. |
Liability to Governmental Units |
33 |
|
9.10. |
Receivership Complaint |
34 |
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ARTICLE X: RETENTION OF JURISDICTION |
34 |
||
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10.1. |
Retention of Jurisdiction |
34 |
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ARTICLE XI: MISCELLANEOUS PROVISIONS |
36 |
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11.1. |
Post-Effective Date Retention of Professionals |
36 |
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11.2. |
Effectuating Documents and Further Transactions |
36 |
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11.3. |
Exemption from Transfer Taxes |
36 |
|
11.4. |
Payment of Statutory Fees |
37 |
|
11.5. |
Amendment or Modification of this Plan |
37 |
|
11.6. |
Severability of Plan Provisions |
37 |
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11.7. |
Successors and Assigns |
37 |
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11.8. |
Non-Consummation |
38 |
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11.9. |
Notice |
38 |
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11.10. |
Governing Law |
38 |
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11.11. |
Tax Reporting and Compliance |
39 |
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11.12. |
Exhibits |
39 |
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11.13. |
Filing of Additional Documents |
39 |
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11.14. |
Plan Documents |
39 |
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11.15. |
Reservation of Rights |
39 |
TABLE OF EXHIBITS
Exhibit A |
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Alternative Master Lease Term Sheet |
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Exhibit B |
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Alternative Plan Sponsor Agreement |
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Exhibit C |
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Original Master Lease Amendment |
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Exhibit D |
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Original Plan Sponsor Agreement |
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Exhibit E |
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Directors and Officers of Reorganized Debtor Alternative Transaction |
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Exhibit F |
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Directors and Officers of Reorganized Debtor Original Transaction |
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Exhibit G |
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Certificate of Incorporation of Reorganized Debtor Original Transaction |
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Exhibit H |
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By-Laws of Reorganized Debtor Original Transaction |
INTRODUCTION
HCR ManorCare, Inc. (the Debtor ) hereby proposes the following first amended plan of reorganization for the Debtors reorganization case under Chapter 11 of the Bankruptcy Code for the resolution of the outstanding Claims against and Interests in the Debtor. Capitalized terms used but not defined in this paragraph have the meanings assigned to them in Article I . The classification and treatment of Claims against and Interests in the Debtor are set forth in Article II and Article III . The Debtor is the proponent of this Plan within the meaning of section 1129 of the Bankruptcy Code. Reference is made to the Disclosure Statement, distributed contemporaneously herewith, for a discussion of the Debtors history, business, properties and operations, projections for those operations, risk factors, a summary and analysis of this Plan, and related matters.
ARTICLE I:
DEFINED TERMS AND RULES OF INTERPRETATION
A. Defined Terms . As used in this Plan, capitalized terms shall have the meanings set forth in this Article I . Any term that is not otherwise defined herein, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.
1.1 Administrative Expense Claim means a Claim for costs and expenses of administration of the Chapter 11 Case arising after the Petition Date and prior to the Effective Date under sections 328, 330, 363, 364(c)(1), 365, 503(b), 507(a)(2), or 507(b) of the Bankruptcy Code, including, without limitation, (a) any actual and necessary costs and expenses of preserving the Estate and operating the businesses of the Debtor after the Petition Date and Claims of governmental units for taxes (including tax audit Claims) related to tax years commencing after the Petition Date, but excluding Claims related to tax periods, or portions thereof, ending on or before the Petition Date; (b) any Professional Fee Claim, to the extent Allowed by Final Order under sections 328, 330, 331 or 503 of the Bankruptcy Code; (c) with the exception of section 507(b) Claims, any indebtedness or obligations incurred or assumed by the Debtor during the Chapter 11 Case; (d) any cash payment required to be made under this Plan and payments to cure a default under an Executory Contract that has been or will be assumed by the Debtor; or (e) any Quarterly Fees; provided , however , in connection with the Alternative Transaction, no QCP Claim (including the Agreed Deferred Rent Obligation if the Closing of the Alternative Transaction occurs) shall be treated as an Administrative Expense Claim and all QCP Claims shall be treated only as provided in Section 3.2.4(c)(i).
1.2 Affiliate has the meaning assigned to such term in section 101(2) of the Bankruptcy Code.
1.3 Agreed Deferred Rent Obligation means, for purposes of the Alternative Transaction only, an obligation of the Debtor for deferred rent in the amount of $440,190,183.
1.4 Allowed means, with respect to a Claim or Interest, such Claim or Equity Interest or any portion thereof that the Debtor has assented to the validity of, and to which the Plan Sponsor has not objected, or that has been (a) allowed by an order of the Bankruptcy Court, (b) allowed pursuant to the terms of the Plan, (c) following the Effective Date, allowed by agreement between the Holder of such Claim, on one hand, and the Reorganized Debtor, as applicable, on the other hand, or (d)
allowed by an order of a court in which such Claim could have been determined, resolved or adjudicated if the Chapter 11 Case had not been commenced; provided , however , that an Administrative Expense Claim, other than Professional Fee Claim, incurred by the Debtor in the ordinary course of its business during the Chapter 11 Case, or assumed by the Debtor during the Chapter 11 Case, may be Allowed if the Debtor assents to the validity of such Claim; provided , further that , notwithstanding the foregoing, the Reorganized Debtor shall retain all Causes of Action and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to the Plan (including, for the avoidance of doubt, Administrative Expense Claims not paid prior to the Effective Date).
1.5 Allowed Claim or Interest means a Claim or Interest in a particular Class or of a particular type that is also an Allowed Claim or Interest. For example, an Allowed Administrative Expense Claim is an Administrative Expense Claim that is also an Allowed Claim.
1.6 Alternative Master Lease has the meaning given to such term in the Alternative Plan Sponsor Agreement. The form of Alternative Master Lease shall be filed with the Plan Supplement. A term sheet describing the terms of the Alternative Master Lease is attached hereto as Exhibit A .
1.7 Alternative Plan Sponsor Agreement means the Plan Sponsor Agreement among the Debtor, QCP, ProMedica Health System, Inc., ProMedica, and Meerkat I LLC, dated as of April 25, 2018, as amended, modified or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto. A copy of the Alternative Plan Sponsor Agreement is attached hereto as Exhibit B .
1.8 Alternative Restructuring Support Agreement means the Restructuring Support Agreement among the Debtor, Carlyle, MC Operations Investments, LLC, and ProMedica Health System, Inc., dated as of April 25, 2018, as amended, modified or supplemented from time to time in accordance with its terms.
1.9 Alternative Transaction shall have the meaning ascribed to it in Article V hereof.
1.10 Avoidance Actions means any and all actual or potential claims or causes of action to avoid a transfer of property or an obligation incurred by the Debtor arising under sections 502(d), 542, 544, 545, 547, 548, 549, 550, 551, 552 or 553(b) of the Bankruptcy Code, or under similar or related state or federal statutes or common law, including fraudulent transfer and conveyance laws, in each case whether or not litigation to prosecute such claim(s) or cause(s) of action was commenced prior to the Effective Date.
1.11 Ballot means the ballot form for accepting or rejecting this Plan, distributed with the Disclosure Statement to the Holders of Claims that are Impaired under this Plan and entitled to vote to accept or reject this Plan pursuant to Article III and Article IV .
1.12 Bankruptcy Code means Title 11 of the United States Code, 11 U.S.C. §§ 101 through 1532, as in effect on the Petition Date, together with any amendments and modifications thereto that may subsequently be made applicable to the Chapter 11 Case.
1.13 Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware or any other court with jurisdiction over the Chapter 11 Case.
1.14 Bankruptcy Rules means, collectively: (a) the Federal Rules of Bankruptcy Procedure promulgated by the United States Supreme Court under section 2075 of Title 28 of the United States Code; (b) the Federal Rules of Civil Procedure, as applicable to the Chapter 11 Case or any proceedings therein; and (c) the local rules of the Bankruptcy Court, all as in effect on the Petition Date, together with any amendments and modifications thereto that may subsequently be made applicable to the Chapter 11 Case.
1.15 Business Day means any day other than a Saturday, a Sunday or legal holiday (as defined in Bankruptcy Rule 9006(a)).
1.16 By-Laws means the amended and restated by-laws of Reorganized Debtor which (i) if the Closing of the Alternative Transaction occurs, shall be substantially in the form to be filed with the Plan Supplement and (ii) otherwise shall be substantially in the form of Exhibit H .
1.17 Carlyle means Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership, collectively.
1.18 Cash means legal tender of the United States of America.
1.19 Cash Collateral Order means, collectively, the Final Order Under 11 U.S.C. §§ 105(a), 361, 362, 363, 507 and 552 and Bankruptcy Rules 2002, 4001, 6004 and 9014 (I) Authorizing Debtor to Use Cash Collateral, (II) Granting Adequate Protection to Prepetition Secured Parties, (III) Modifying the Automatic Stay and (IV) Granting Related Relief [D.I. 94] and the interim Bankruptcy Court order entered in connection therewith [D.I. 45].
1.20 Cause of Action means any action, including any Avoidance Action, cause of action, liability, obligation, account, controversy, right to legal remedy, right to equitable remedy, right to payment, suit, debt, sum of money, damage, judgment, or Claim whatsoever, whether known or unknown, now or in the future, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured, whether alleged, asserted or assertable directly or derivatively, in law, equity, admiralty, or otherwise, arising under any applicable law, regulation, or similar governmental pronouncement.
1.21 Certificate of Incorporation means the certificate of incorporation of Reorganized Debtor which (i) if the Closing of the Alternative Transaction occurs, shall be substantially in the form to be filed with the Plan Supplement and (ii) otherwise shall be substantially in the form of Exhibit G .
1.22 Chapter 11 Case means the voluntary case under Chapter 11 of the Bankruptcy Code commenced by the Debtor in the Bankruptcy Court on the Petition Date.
1.23 Claim means a claim, as defined in section 101(5) of the Bankruptcy Code.
1.24 Class means each category of Holders of Claims or Interests established under Article III pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code.
1.25 Closing has the meaning given to such term in the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.
1.26 Common Equity Distribution means the difference between the Total Equity Distribution and the Preferred Equity Distribution.
1.27 [ Common Interest means any Interest in the Debtor issued by the Debtor prior to the Effective Date (including prior to the Petition Date) other than the Preferred Interests.](2)
1.28 Confirmation means the entry of the Confirmation Order by the Bankruptcy Court.
1.29 Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on the Bankruptcy Courts docket.
1.30 Confirmation Hearing means the hearing held by the Bankruptcy Court on confirmation of this Plan, as such hearing may be continued from time to time.
1.31 Confirmation Order means the order of the Bankruptcy Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code.
1.32 Credit Facility means that certain Credit Agreement, dated as of July 17, 2017, as subsequently amended, modified or supplemented among HCR Home Health Care and Hospice, LLC, as borrower, HCR Manorcare Operations II, LLC, HCR Manorcare Heartland, LLC, Manor Care, Inc., HCR II Healthcare, LLC and HCR Healthcare, LLC as Holdcos, the Credit Facility Lenders and the Credit Facility Agent.
1.33 Credit Facility Agent means RD Credit, LLC, in its capacity as the administrative agent and collateral agent under the Credit Facility.
1.34 Credit Facility Claim means all Claims against the Debtor of the Credit Facility Agent and Credit Facility Lenders under the Credit Facility.
1.35 Credit Facility Lenders means the lenders under the Credit Facility.
1.36 Debtor means HCR ManorCare, Inc., as debtor and debtor in possession.
1.37 Disclosure Statement means the written disclosure statement that relates to this Plan including, without limitation, all exhibits and schedules thereto, as the same may be amended, supplemented or otherwise modified from time to time, in a manner acceptable to the Debtor and the Plan Sponsor, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.
1.38 Effective Date means, and shall occur on, the Business Day on which each of the conditions precedent to the occurrence of the Effective Date set forth in Article VIII has been satisfied or waived in accordance with the terms thereof.
(2) To be revised to exclude out-of-the-money options and/or other similar interests.
1.39 Eligible Employee means each of the current Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and General Counsel of the Debtor as of the Petition Date.
1.40 Entity means an entity as defined in section 101(15) of the Bankruptcy Code.
1.41 Estate means the estate of the Debtor created in the Chapter 11 Case under section 541 of the Bankruptcy Code.
1.42 Exculpated Fiduciaries means each of the following solely in their capacity as such: (a) the Debtor; (b) the Reorganized Debtor; and (c) with respect to each of the foregoing parties, such Entities directors, officers, and professionals.
1.43 Exculpated Parties means, collectively, the Exculpated Fiduciaries and the Section 1125(e) Parties.
1.44 Executory Contracts means all executory contracts to which the Debtor is a party.
1.45 Exhibit(s) means, individually or collectively, the exhibits to this Plan.
1.46 Final Order means an order or judgment of the Bankruptcy Court (or other court of competent jurisdiction) entered by the clerk of the Bankruptcy Court on the docket in the Chapter 11 Case (or on the docket of any other court of competent jurisdiction), which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a new trial, reargument or rehearing shall then be pending, or (b) if an appeal, writ of certiorari , new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired; provided , however , that the possibility that a motion pursuant to section 502(j) or 1144 of the Bankruptcy Code or under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order shall not solely cause such order not to be a Final Order.
1.47 Former CEO Settlement Agreement has the meaning given to such term in the Plan Sponsor Agreement.
1.48 General Unsecured Claim means a Claim against the Debtor that is not an Administrative Expense Claim, a Priority Tax Claims, a Secured Claim, a Credit Facility Claim, a QCP Claim, a Severance Claim, an Intercompany Claim, or a Section 510(b) Claim.
1.49 Governmental Unit has the meaning provided in section 101(27) of the Bankruptcy Code.
1.50 Guaranty means that certain Guaranty of Obligations made by the Debtor, effective as of February 11, 2013, as amended, supplemented or modified from time to time in accordance with its terms.
1.51 HCR III means HCR III Healthcare, LLC.
1.52 Holder means an Entity holding a Claim against, or Interest in, the Debtor.
1.53 Impaired means impaired within the meaning of section 1124 of the Bankruptcy Code.
1.54 Implementation Memorandum means that certain document describing the procedures and transactions required for implementation of the Alternative Transaction on the date of the Closing, which Implementation Memorandum shall be filed no later than thirty (30) days after execution of the Alternative Plan Sponsor Agreement and shall be subject to the consent of the Debtor (which consent shall not be unreasonably withheld or delayed); provided that no such procedures or transactions shall have any force or effect prior to the occurrence of the Closing of the Alternative Transaction; provided further that nothing in the Implementation Memorandum shall delay or impede ProMedicas obligation to obtain required regulatory approval or adversely impact the distributions to be made to any Holder of a Claim or Interest under the Plan.
1.55 Intercompany Claim means any Claim against the Debtor that is held by a non-Debtor subsidiary of the Debtor.
1.56 Intercompany Note means that certain $25 million Subordinated Secured Demand Note, dated March 1, 2018, made by Debtor to HCR Home Health Care and Hospice, LLC.
1.57 Intercompany Note Claims means the secured claims of HCR Home Health Care and Hospice, LLC against the Debtor in respect of the Intercompany Note.
1.58 Interest means any equity security within the meaning of section 101(16) of the Bankruptcy Code, including any issued and outstanding common stock, preferred stock, limited liability company interest, partnership interest, or any other instrument evidencing an ownership interest in the Debtor prior to the Effective Date (including prior to the Petition Date), whether or not transferable, and any restricted stock units, calls, rights, puts, awards, commitments, repurchase rights, unvested or unexercised options, rights of conversion, warrants, unvested common interests, unvested preferred interests or any other agreements of any character related to the common or preferred interests of the Debtor, obligating the Debtor to issue, transfer, purchase, redeem, or sell any equity interests or other equity securities, and any rights under any equity incentive plans, voting agreements and registration rights agreements regarding equity securities of the Debtor.
1.59 Lessors has the meaning given to such term in the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.
1.60 Lien means, with respect to any interest in property, any mortgage, lien as defined in section 101(37) of the Bankruptcy Code, pledge, charge, security interest, easement or encumbrance of any kind whatsoever affecting such interest in property.
1.61 Merger Agreement means the Agreement and Plan of Merger by and among Welltower Inc., Potomac Acquisition LLC, Quality Care Properties, Inc., QCP AL REIT, LLC, QCP SNF West REIT, LLC, QCP SNF Central REIT, LLC, QCP SNF East, LLC, QCP HoldCo REIT,
LLC, and QCP TRS, LLC, dated as of April 25, 2018, as amended, modified, or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto.
1.62 MLSA means that certain Master Lease and Security Agreement, among certain Affiliates of QCP who are the parties thereto, as Lessor, and HCR III, as Lessee, dated as of April 7, 2011, as amended, modified or supplemented from time to time.
1.63 New Common Stock means the new common stock to be issued by Reorganized Debtor on the Effective Date authorized by this Plan, which shall have the powers, preferences and rights and be subject to the limitations, qualifications and restrictions, in each case, as set forth in the Certificate of Incorporation.
1.64 Ordinary Litigation Claims means the claims, rights of action, suits or proceedings, whether in law or in equity, whether known or unknown, that the Debtor or its Estate may hold against any Person as of the Petition Date; provided , however , Ordinary Litigation Claims shall not include (a) any claim, right of action, suit or proceeding that has been settled on or prior to the Effective Date, in accordance with the Plan Sponsor Agreement, (b) any claim, right of action, suit or proceeding that the Debtor or its Estate may hold under chapter 5 of the Bankruptcy Code, including any Avoidance Action, and (c) claims, rights of action, suits or proceedings waived or released pursuant to Article IX .
1.65 Original Master Lease means the MLSA, as amended by the Original Master Lease Amendment.
1.66 Original Master Lease Amendment has the meaning given to such term in the Plan Sponsor Agreement. The form of Original Master Lease Amendment is attached hereto as Exhibit C .
1.67 Original Plan Sponsor Agreement means the Plan Sponsor Agreement among the Debtor, QCP, HCP Mezzanine Lender, LP, a Delaware limited partnership and a wholly-owned subsidiary of QCP, and the Lessors identified therein, dated as of March 2, 2018, as amended, modified or supplemented from time to time in accordance with its terms, and including all schedules and exhibits thereto. A copy of the Original Plan Sponsor Agreement is attached hereto as Exhibit D .
1.68 Original Restructuring Support Agreement means the Restructuring Support Agreement among the Debtor, Carlyle, and MC Operations Investments, LLC, dated as of March 2, 2018, as amended, modified or supplemented from time to time in accordance with its terms.
1.69 Original Transaction shall have the meaning ascribed to it in Article V hereof.
1.70 Other Priority Claim means an Allowed Claim under section 507(a) of the Bankruptcy Code other than an Administrative Expense Claim or Priority Tax Claim.
1.71 Person or person means a person as defined in section 101(41) of the Bankruptcy Code.
1.72 Petition Date means March 4, 2018, the date on which the Debtor commenced the Chapter 11 Case.
1.73 Plan means this First Amended Chapter 11 Plan of Reorganization for HCR ManorCare, Inc ., including all Exhibits, supplements, appendices and schedules hereto, either in its present form or as the same may be altered, amended or modified from time to time in accordance with the provisions of the Bankruptcy Code and the terms hereof.
1.74 Plan Sponsor means (i) ProMedica Health System, Inc., the sponsor under the Alternative Plan Sponsor Agreement or (ii) QCP, the sponsor under the Original Plan Sponsor Agreement, as applicable. For the avoidance of doubt, (a) absent the consent of the Debtor and the Plan Sponsor under the Original Plan Sponsor Agreement, the Plan Sponsor under the Alternative Plan Sponsor Agreement shall not enter into any agreements or transactions on behalf of the Debtor, or take any actions that obligate or purport to obligate the Debtor, prior to the occurrence of the Closing of the Alternative Transaction, and no such agreements, transactions or actions shall become effective until the occurrence of the Closing of the Alternative Transaction, and (b) absent the consent of the Debtor and the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement shall not enter into any agreements or transactions on behalf of the Debtor, or take any actions that obligate or purport to obligate the Debtor, prior to the occurrence of the Closing of the Original Transaction, and no such agreements, transactions or actions shall become effective until the occurrence of the Closing of the Original Transaction.
1.75 Plan Sponsor Agreement means the Alternative Plan Sponsor Agreement or the Original Plan Sponsor Agreement, as applicable.
1.76 Plan Supplement means the supplement to this Plan to be filed with the Bankruptcy Court fifteen (15) days prior to the Confirmation Hearing on this Plan, together with any amendments, modifications, and/or supplements thereto, which shall be subject to the consent of the Debtor and the applicable Plan Sponsor.
1.77 Preferred Equity Distribution means Cash in the amount of $2 million.
1.78 Preferred Interest means the preferred stock in the Debtor issued by the Debtor prior to the Effective Date (including prior to the Petition Date).
1.79 Priority Tax Claim means any Claim of a governmental unit of the kind against the Debtor entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.80 Professional means any Person retained by the Debtor or a statutory committee, if any, pursuant to a Final Order of the Bankruptcy Court entered pursuant to sections 327, 328 or 1103 of the Bankruptcy Code.
1.81 Professional Fee Claim means any Claim of a Professional for allowance of compensation and/or reimbursement of costs and expenses incurred in the Chapter 11 Case on or before the Effective Date.
1.82 ProMedica means Suburban HealthCo, Inc., an Ohio non-profit corporation and an indirect, wholly-owned subsidiary of ProMedica Health System, Inc., an Ohio non-profit corporation.
1.83 ProMedica Plan Contribution means Cash in the amount required to (i) pay the Allowed Credit Facility Claims in full, (ii) pay the Agreed Deferred Rent Obligation, and (iii) make the Total Equity Distribution, which shall take the form, at ProMedicas election, either of (x) a capital contribution to the Reorganized Debtor or (y) a combination of (A) the capital contribution referred to in clause (x) and (B) an unsecured, subordinated loan to the Reorganized Debtor in principal amount not to exceed $550,000,000, which unsecured loan shall mature no earlier than the third anniversary of the date of the Closing and the other terms and conditions of which shall be reasonably acceptable to the Debtor.
1.84 QCP means Quality Care Properties, Inc.
1.85 QCP Claims means all Claims of QCP and its subsidiaries against the Debtor, including, but not limited to, all Claims arising under the Guaranty and due and unpaid as of the Effective Date.
1.86 Quarterly Fees has the meaning given to such term in Section 11.4 of the Plan.
1.87 Receivership Complaint means that certain complaint filed by QCP against the Debtor, HCR III and John Does 150 in Los Angeles County Superior Court, dated on or about August 17, 2017, seeking, among other things, the appointment of a receiver for HCR III.
1.88 Reinstate , Reinstated or Reinstatement means (a) leaving unaltered the legal, equitable and contractual rights to which a Claim or Interest entitles the Holder of such Claim or Interest, or (b) notwithstanding any contractual provision or applicable law that entitles the Holder of such Claim or Interest to demand or receive accelerated payment of such Claim or Interest after the occurrence of a default, (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind specified in section 365(b)(2) of the Bankruptcy Code; (ii) reinstating the maturity of such Claim or Interest as such maturity existed before such default; (iii) compensating the Holder of such Claim or Interest for any damages incurred as a result of any reasonable reliance by such Holder on such contractual provision or such applicable law; (iv) if such Claim or Interest arises from any failure to perform a nonmonetary obligation other than a default arising from failure to operate under a nonresidential real property lease subject to section 365(b)(1)(A) of the Bankruptcy Code, compensating the Holder of such Claim or Interest (other than the Debtor or an insider of the Debtor) for any actual pecuniary loss incurred by such Holder as the result of such failure; and (v) not otherwise altering the legal, equitable or contractual rights to which such Claim or Interest entitles the Holder thereof.
1.89 Related Persons means, with respect to any Person, such Persons predecessors, successors and assigns (whether by operation of law or otherwise) and their respective present and former Affiliates and each of their respective current and former members, partners, equity holders, controlling persons, officers, directors, employees, managers, shareholders, partners, financial advisors, attorneys, accountants, investment bankers, consultants, agents and professionals each acting in such capacity, and any Person claiming by or through any of them (including their respective
officers, directors, managers, shareholders, partners, employees, equity holders, members, and professionals); provided , however , that when used in reference to the Debtor or Reorganized Debtor, the term Related Persons shall not include the Debtors and Reorganized Debtors direct or indirect subsidiaries; provided , further , that (x) no Eligible Employee shall be a Related Person unless he executes and delivers a Separation Agreement and (y) Paul Ormond shall not be a Related Person unless he executes and delivers the Former CEO Settlement Agreement, in each case, prior to the Effective Date.
1.90 Released Parties means each of the following solely in its capacity as such: (a) the Debtor; (b) the Reorganized Debtor; (c) Carlyle; (d) the Credit Facility Agent; (e) the Credit Facility Lenders; (f) the Plan Sponsor under the Alternative Plan Sponsor Agreement, (g) the Plan Sponsor under the Original Plan Sponsor Agreement, (h) Welltower; and (i) with respect to each of the foregoing parties under (a) through (h), such Entities Related Persons; provided , if the Closing of the Alternative Transaction does not occur, neither the Plan Sponsor under the Alternative Plan Sponsor Agreement, nor Welltower, or any Related Person to such Entities, shall constitute Released Parties.
1.91 Reorganized Debtor means the Debtor and any successors thereto by merger, consolidation, conversion or otherwise, on or after the Effective Date, after giving effect to the transactions implementing this Plan.
1.92 Restructuring Support Agreement means the Alternative Restructuring Support Agreement or the Original Restructuring Support Agreement, as applicable.
1.93 Section 510(b) Claim means a Claim against the Debtor that is subordinated, or subject to subordination, pursuant to section 510(b) of the Bankruptcy Code, including, without limitation, a claim arising from the rescission or purchase of a sale or security of the Debtor or an affiliate of the Debtor, for damages arising from the purchase or sale of such security or for reimbursement or contribution on account of such Claim pursuant to section 502 of the Bankruptcy Code.
1.94 Section 1125(e) Parties means each of the following, solely in their capacity as such: (a) Carlyle; (b) the Credit Facility Agent; (c) the Credit Facility Lenders; (d) the Plan Sponsor under the Alternative Plan Sponsor Agreement; (e) the Plan Sponsor under the Original Plan Sponsor Agreement; (f) Welltower; and (g) with respect to each of the foregoing parties under (a) through (f), such Entities directors, officers, and professionals; provided , if the Closing of the Alternative Transaction does not occur, the Plan Sponsor under the Alternative Plan Sponsor Agreement, Welltower, and/or any of their directors, officers or professionals, shall constitute Section 1125(e) Parties only to the extent permitted by applicable law.
1.95 Secured Claim means any Claim, other than the Credit Facility Claim and the Intercompany Note Claim, secured by a Lien on collateral in which the Estate has an interest, to the extent of the value of such collateral (i) as agreed to by the Holder of such Claim and the Debtor or (ii) as determined pursuant to a Final Order of the Bankruptcy Court in accordance with section 506(a) of the Bankruptcy Code or, in the event that such Claim is subject to setoff under section 553 of the Bankruptcy Code, to the extent of such setoff.
1.96 Securities Act means the Securities Act of 1933, as now in effect or hereafter amended, and the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder.
1.97 Separation Agreement has the meaning given to such term in the Plan Sponsor Agreement.
1.98 Severance Claim means a claim against the Debtor for damages resulting from the termination of an employment contract to which the Debtor is a party.
1.99 Total Equity Distribution means Cash in the amount of $50 million.
1.100 Unimpaired means with respect to a Claim, a Claim that is not Impaired, including any Claim that is Reinstated.
1.101 United States Trustee means the Office of the United States Trustee for the District of Delaware.
1.102 Welltower means Welltower Inc. and Meerkat I LLC.
B. Rules of Interpretation . For purposes of this Plan, unless otherwise provided herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) unless otherwise provided in this Plan, any reference in this Plan to a contract, instrument, release, or other agreement or document being in a particular form or on particular terms and conditions means that such document will be substantially in such form or substantially on such terms and conditions, subject to the Plan Sponsor Agreement; (c) any reference in this Plan to an existing document, schedule or Exhibit filed or to be filed means such document, schedule or Exhibit, as it may have been or may be amended, modified, or supplemented pursuant to this Plan and, as applicable, the Plan Sponsor Agreement; (d) any reference to an entity as a Holder of a Claim or Interest includes that entitys successors and assigns; (e) all references in this Plan to Sections or Articles are references to Sections or Articles of this Plan or the Plan Supplement, as the same may be amended, waived or modified from time to time; (f) the words herein, hereof, hereto, hereunder and other words of similar import refer to this Plan as a whole and not to any particular Section, subsection or clause contained in this Plan; (g) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (h) the rules of construction set forth in section 102 of the Bankruptcy Code (other than section 102(5) of the Bankruptcy Code) will apply; and (i) any reference to an Entitys subsidiaries means its direct and indirect subsidiaries.
C. Computation of Time. In computing any period of time prescribed or allowed by this Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall apply. In the event that any payment, distribution, act or deadline under this Plan is required to be made or performed or occurs on a day that is not a Business Day, then the making of such payment or distribution, the performance of such act or the occurrence of such deadline shall be deemed to be on the next succeeding Business Day, but if so made, performed or completed by such next succeeding Business Day shall be deemed to have been completed or to have occurred as of the required date.
D. Exhibits and Plan Supplement . All Exhibits to this Plan, as well as the Plan Supplement, are incorporated into and are a part of this Plan as if set forth in full herein. Holders of Claims and Interests may obtain a copy of the Plan Supplement and the filed Exhibits upon written request to the Debtor. Upon their filing, the Plan Supplement and the Exhibits may be inspected (i) in the office of the Clerk of the Bankruptcy Court during normal business hours, (ii) at the Bankruptcy Courts website at http://www.deb.uscourts.gov, or (iii) free of charge on the Debtors restructuring website at http://dm.epiq11.com/HCR.
E. Deemed Acts . Whenever an act or event is expressed under this Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred by virtue of this Plan and/or Confirmation Order without any further act by any party.
ARTICLE II:
TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified and thus are excluded from the Classes of Claims and Interests set forth in Article III .
2.1. Administrative Expense Claims .
(a) General.
Subject to the terms of the Confirmation Order and Section 2.1(b) of this Plan, each Holder of an Allowed Administrative Expense Claim shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Administrative Expense Claim, payment of Cash equal to the full unpaid amount of such Allowed Administrative Expense Claim (i) on the Effective Date or as soon as reasonably practicable thereafter, (ii) such other date as the Reorganized Debtor and such Holder shall have agreed, or (iii) as otherwise ordered by the Bankruptcy Court, provided , however , that Allowed Administrative Expense Claims not yet due or that represent obligations incurred by the Debtor in the ordinary course of its business during the Chapter 11 Case, or assumed by the Debtor during the Chapter 11 Case, shall be paid or performed when due in the ordinary course of business and in accordance with the terms and conditions of the particular agreements governing such obligations.
(b) Professionals Fee Claims.
All Professionals or other entities requesting compensation or reimbursement of expenses pursuant to sections 327, 328, 330, 331, 503(b) and/or section 1103 of the Bankruptcy Code for services rendered before the Effective Date (including, without limitation, any compensation requested by any Professional or any other entity for making a substantial contribution in the Chapter 11 Case) shall file and serve final requests for payment of Professional Fee Claims no later than the first Business Day that is forty-five (45) days after the Effective Date. Objections to any Professional Fee Claim must be filed and served on the Reorganized Debtor and the applicable Professional within thirty (30) days after the filing of the final fee application with respect to the Professional Fee Claim. Any such objections that are not consensually resolved may be set for hearing on twenty-one (21) days notice by the Professional asserting such Professional Fee Claim.
2.2. Priority Tax Claims . Each Holder of an Allowed Priority Tax Claim against the Debtor shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Priority Tax Claim, payment in full in Cash, on the latest of: (a) the Effective Date; (b) the date such Priority Tax Claim becomes an Allowed Claim; and (c) the date such Allowed Priority Tax Claim becomes due and payable under applicable non-bankruptcy law.
2.3. Post-Effective Date Fees and Expenses . Except as otherwise specifically provided in the Plan, from and after the Effective Date, the Reorganized Debtor shall, in the ordinary course of business and without any further notice to or action, order or approval of the Bankruptcy Court, pay in Cash the legal, professional or other fees and expenses related to the implementation and consummation of the Plan incurred by the Reorganized Debtor following the Effective Date. Upon the Effective Date, any requirement that Professionals comply with sections 327 through 331 and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and each Reorganized Debtor may employ and pay any professional for services rendered or expenses incurred after the Effective Date in the ordinary course of business without any further notice to or action, order or approval of the Bankruptcy Court.
ARTICLE III:
CLASSIFICATION AND TREATMENT OF
CLASSIFIED CLAIMS AND INTERESTS
3.1. Summary of Classification and Treatment of Classified Claims and Interests .
3.1.1 General .
(a) Pursuant to sections 1122 and 1123 of the Bankruptcy Code, Claims and Interests are classified for all purposes, including, without limitation, voting, Confirmation and distributions pursuant to this Plan, as set forth herein. A Claim or Interest shall be deemed classified in a particular Class only to the extent that the Claim or Interest qualifies within the description of that Class, and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Interest qualifies within the description of such different Class. A Claim or Interest is in a particular Class only to the extent that such Claim or Interest is Allowed in that Class and has not been paid or otherwise settled prior to the Effective Date.
(b) Any Class of Claims or Interests that, as of the commencement of the Confirmation Hearing, does not have at least one Holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Plan for purposes of voting to accept or reject the Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.
(c) Pursuant to Bankruptcy Rule 9019 and section 1123(b)(3) of the Bankruptcy Code, and in consideration for the classification, distribution and other benefits provided under the Plan, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims and controversies resolved pursuant to the Plan, including all Claims, causes of action and controversies arising prior to the Effective Date, whether known or unknown, foreseen or unforeseen, asserted or unasserted, by or against any Released Party, or Holders of Claims, arising out of, relating to or in connection with the business or affairs of or transactions with the Debtor. The entry of the
Confirmation Order shall constitute the Bankruptcy Courts approval of each of the foregoing compromises or settlements, and all other compromises and settlements provided for in the Plan, and the Bankruptcy Courts findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtor, the Estate, creditors and other parties in interest, and are fair, equitable and within the range of reasonableness. The provisions of the Plan, including its release, injunction, exculpation and compromise provisions, are mutually dependent and non-severable.
3.1.2 Identification of Classes Against the Debtor . The following chart assigns a number to each Class for purposes of identifying each separate Class:
CLASS |
|
CLAIM OR INTEREST |
|
|
|
|
|
1 |
|
|
Other Priority Claims |
|
|
|
|
2 |
|
|
Secured Claims |
|
|
|
|
3 |
|
|
Credit Facility Claims |
|
|
|
|
4 |
|
|
QCP Claims |
|
|
|
|
5 |
|
|
General Unsecured Claims |
|
|
|
|
6 |
|
|
Severance Claims |
|
|
|
|
7 |
|
|
Section 510(b) Claims |
|
|
|
|
8A |
|
|
Preferred Interests |
|
|
|
|
8B |
|
|
Common Interests |
3.2. Classification and Treatment of Claims Against and Interests in the Debtor
3.2.1 Class 1: Other Priority Claims .
(a) Classification: Class 1 consists of all Other Priority Claims against the Debtor.
(b) Treatment: Each Holder of an Allowed Other Priority Claim will receive, in the sole discretion of the Reorganized Debtor, (i) payment in full in Cash as promptly as reasonably practicable on the later of (a) the Effective Date and (b) the date on which such Other Priority Claim becomes an Allowed Claim payable under applicable law or any agreement relating thereto, or (ii) treatment of such Allowed Other Priority Claim in any other manner that renders the claim Unimpaired, including Reinstatement. All Allowed Other Priority Claims not due and payable on or before the Effective Date shall be paid in the ordinary course of business in accordance with the terms thereof.
(c) Voting: Allowed Claims in Class 1 are Unimpaired. Each Holder of an Allowed Claim in Class 1 shall be conclusively deemed to have accepted this Plan pursuant to
section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.2 Class 2: Secured Claims .
(a) Classification: Class 2 consists of Secured Claims against the Debtor.
(b) Treatment: Except to the extent a Holder of a Secured Claim agrees to different treatment of that Secured Claim, each Holder of an Allowed Secured Claim shall, in the sole discretion of the Reorganized Debtor, receive on the Effective Date (or as promptly thereafter as reasonably practicable) or in the ordinary course of the Reorganized Debtors business (a) payment in full by Reorganized Debtor in Cash, including the payment of any interest Allowed and payable under section 506(b) of the Bankruptcy Code, (b) delivery of the collateral securing such Allowed Secured Claim, or (c) treatment of such Allowed Secured Claim in any other manner that renders the Claim Unimpaired, including Reinstatement.
(c) Voting: Allowed Claims in Class 2 are Unimpaired. Each Holder of an Allowed Claim in Class 2 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.3 Class 3: Credit Facility Claims .
(a) Classification: Class 3 consists of the Credit Facility Claims against the Debtor.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, the Credit Facility Agent shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of (including any Liens related thereto), and in exchange for, the Allowed Credit Facility Claims, payment in full, in Cash, of all such Allowed Credit Facility Claims.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, the Credit Facility Claims shall be Reinstated and any liens held by the Credit Facility Agent, on behalf of itself and the Credit Facility Lenders, against the assets of the Debtor securing the Credit Facility Claims shall survive the Effective Date in the same priority as they existed as of the Petition Date.
(c) Voting: Claims in Class 3 are Unimpaired. Each Holder of an Allowed Claim in Class 3 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.4 Class 4: QCP Claims .
(a) Classification: Class 4 consists of all QCP Claims.
(b) Allowance: The QCP Claims shall be deemed Allowed on the Effective Date in the aggregate amount of $445,796,590.
(c) Treatment:
(i) If the Closing of the Alternative Transaction occurs, on the Effective Date, (x) the Agreed Deferred Rent Obligation shall be paid, in full, in Cash, and (y) the balance of the QCP Claims, including any such QCP Claims that are Administrative Expense Claims, shall be waived and released.
(ii) If the Closing of the Alternative Transaction does not occur, the Holders of the QCP Claims (or the designee(s) of QCP) shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of, and in exchange for, their QCP Claims, 100% of the New Common Stock of Reorganized Debtor.
(d) Voting: Allowed Claims in Class 4 are Impaired. The Holder of an Allowed QCP Claim in Class 4 shall be entitled to vote to accept or reject this Plan.
3.2.5 Class 5: General Unsecured Claims .
(a) Classification: Class 5 consists of all General Unsecured Claims.
(b) Treatment: Except to the extent a Holder of an Allowed General Unsecured Claim agrees to different treatment of that General Unsecured Claim, each Holder of an Allowed General Unsecured Claim shall receive, in the sole discretion of the Reorganized Debtor, (i) payment in full in Cash of such Claim (a) on the Effective Date or as promptly thereafter as reasonably practicable, (b) in the ordinary course of the Reorganized Debtors business, or (c) on the date such Allowed General Unsecured Claim becomes due and payable according to its terms; or (ii) satisfaction of such Allowed General Unsecured Claim in any other manner that renders the Allowed General Unsecured Claim Unimpaired, including Reinstatement.
(c) Voting: Allowed Claims in Class 5 are Unimpaired. Each Holder of an Allowed Claim in Class 5 shall be conclusively deemed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan.
3.2.6 Class 6: Severance Claims
(a) Classification: Class 6 consists of all Severance Claims.
(b) Allowance: On the Effective Date, the Severance Claims shall be Allowed in the maximum amount permitted under the applicable provisions of the Bankruptcy Code.
(c) Treatment: Each Holder of an Allowed Severance Claim shall receive, in the sole discretion of the Plan Sponsor, payment in full in Cash on account of such Allowed Severance Claim (a) on the Effective Date or as soon as thereafter as reasonably practicable or (b) as otherwise agreed by the Reorganized Debtor and such Holder of a Severance Claim.
(d) Voting: Allowed Claims in Class 6 are Unimpaired, and the Holders of such Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.
3.2.7 Class 7: Section 510(b) Claims .
(a) Classification: Class 7 consists of all Section 510(b) Claims against the Debtor.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, except to the extent a Holder of an Allowed Section 510(b) Claim, if any, agrees to different treatment of that Allowed Section 510(b) Claim, each such Holder of an Allowed Section 510(b) Claim shall receive satisfaction of such Allowed Section 510(b) Claim in any manner determined by the Debtor, with the consent of the Plan Sponsor, that renders such Allowed Section 510(b) Claim Unimpaired, including Reinstatement.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Section 510(b) Claims shall be discharged and extinguished and the Holders thereof shall not receive or retain any property under this Plan on account of such Section 510(b) Claims.
(c) Voting: Claims in Class 7 are Impaired because each Holder of an Allowed Section 510(b) Claim, if any, will not be entitled to receive or retain any property under this Plan if the Closing of the Alternative Transaction does not occur. Accordingly, each Holder of an Allowed Claim in Class 7 shall be conclusively deemed to have rejected this Plan pursuant to section 1126(g) of the Bankruptcy Code, and, therefore, shall not be entitled to vote to accept or reject this Plan
3.2.8 Class 8A: Preferred Interests .
(a) Classification: Class 8A consists of all Preferred Interests.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, on the Effective Date or as soon thereafter as reasonably practicable, each Holder of an Allowed Preferred Interest shall receive its pro rata share of the Preferred Equity Distribution.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Preferred Interests in the Debtor shall be cancelled, annulled, and extinguished and the Holders of such Preferred Interests shall not receive or retain any property under
this Plan on account of such Preferred Interests nor receive any distributions or property under this Plan on account of such Preferred Interests.
(c) Voting: Preferred Interests in Class 8A are Impaired. Each Holder of a Preferred Interest in Class 8A shall be entitled to vote to accept or reject this Plan.
3.2.9 Class 8B: Common Interests .
(a) Classification: Class 8B consists of all Common Interests.
(b) Treatment:
(i) If the Closing of the Alternative Transaction occurs, on the Effective Date or as soon thereafter as reasonably practicable, each Holder of an Allowed Common Interest shall receive its pro rata share of the Common Equity Distribution.
(ii) If the Closing of the Alternative Transaction does not occur, on the Effective Date, all Common Interests in the Debtor shall be cancelled, annulled, and extinguished and the Holders of such Common Interests shall not receive or retain any property under this Plan on account of such Common Interests nor receive any distributions or property under this Plan on account of such Common Interests.
(c) Voting: Common Interests in Class 8B are Impaired. Each Holder of a Common Interest in Class 8B shall be entitled to vote to accept or reject this Plan.
3.3. Intercompany Claims .
3.3.1 On the Effective Date, in the sole discretion of the Reorganized Debtor, all Intercompany Claims shall either be (i) Reinstated, in whole or in part, (ii) deemed satisfied, or (iii) discharged and extinguished, in full or in part, and shall be eliminated as of the Effective Date, in whole or in part, in which case the Holders thereof shall not be entitled to and shall not receive or retain any property or interest on account of such discharged and extinguished portion under this Plan; provided , however , that prior to such discharge and extinguishment such Intercompany Claims may be contributed to capital, transferred, setoff or subject to any other arrangement in the sole discretion of the Reorganized Debtor; provided further , that any Intercompany Claim held by an obligor under the Credit Facility shall not be discharged or extinguished without the express written consent of the Credit Facility Agent.
3.3.2 For the avoidance of doubt, the Intercompany Note Claim evidenced by the Intercompany Note shall: (i) if the Closing of the Alternative Transaction occurs, be Allowed in the amount of $25,000,000 plus accrued and unpaid interest thereon and, in the sole discretion of the Plan Sponsor under the Alternative Plan Sponsor Agreement, either (A) HCR Home Health Care and Hospice, LLC shall receive, on the Effective Date, in full and final satisfaction, release, and discharge of (including any liens related thereto), and in exchange for, the Intercompany Note Claim, payment in full, in Cash, of the Intercompany Note Claim or (B) such Intercompany Note Claim shall be Reinstated under the Plan, and any liens held by HCR Home Health Care and Hospice, LLC against the assets of the Debtor securing the Intercompany Note shall survive the Effective Date with the
same priority that such liens held as of the Petition Date; and (ii) if the Closing of the Alternative Transaction does not occur, such Intercompany Note Claims shall be Allowed in the amount of $25,000,000 plus accrued and unpaid interest thereon and be Reinstated under the Plan, and any liens held by HCR Home Health Care and Hospice, LLC against the assets of the Debtor securing the Intercompany Note shall survive the Effective Date with the same priority that such liens held as of the Petition Date.
3.4. Unimpaired Claims .
3.4.1 Notwithstanding anything to the contrary in this Plan or the Plan Documents, and subject to Section 3.4.2 , each Holder of a Claim arising prior to the Effective Date (i) in Classes 1, 2, 5 or 7 (if the Closing of the Alternative Transaction occurs) of this Plan or (ii) in Classes 1, 2, 3, or 5 (if the Closing of the Alternative Transaction does not occur) of the Plan (each of (i) and (ii), as applicable, a Covered Unimpaired Claim ) shall be entitled to enforce its rights in respect of its Covered Unimpaired Claim against the Reorganized Debtor, in each case, until such Claim has been (a) paid in full in accordance with applicable law, or on terms agreed to between the Holder of such Claim and the Debtor or Reorganized Debtor, or in accordance with the terms and conditions of the particular transaction giving rise to such Claim or (b) otherwise satisfied or disposed of as determined by a court of competent jurisdiction. The Debtor, Reorganized Debtor and any other Entity shall retain all rights and defenses, both legal and equitable, under the Bankruptcy Code or other applicable bankruptcy and non-bankruptcy law with respect to any Covered Unimpaired Claim (other than the power to impair such Claim within the meaning of section 1124 of the Bankruptcy Code), including, but not limited to, legal and equitable rights of setoff and/or recoupment as to Covered Unimpaired Claims; provided , however , that (x) the foregoing shall not apply with respect to the Intercompany Note Claim, which is Allowed in full under this Plan without defenses, counterclaims, setoff or recoupment, and (y) for the avoidance of doubt, the Debtor, the Reorganized Debtor and any other Entity shall not retain such rights and defenses with respect to (i) any Claims or Causes of Action held by the Debtor or its Estate or the Reorganized Debtor that are released pursuant to Section 9.3 of this Plan (the Debtor Released Claims ) or (ii) any Claims of Causes of Action released by certain Holders of Claims pursuant to Section 9.4 of this Plan (the Third Party Released Claims ). Such Debtor Released Claims and Third Party Released Claims shall be deemed settled, satisfied, resolved, released, discharged, barred and/or enjoined by the applicable provisions under, and pursuant to the express terms of, this Plan and Plan Documents on the Effective Date. Holders of Covered Unimpaired Claims shall not be required to file a Proof of Claim with the Court and shall retain all their rights under applicable non-bankruptcy law to pursue their Covered Unimpaired Claims in any forum with jurisdiction over the parties. If the Debtor or the Reorganized Debtor disputes any Covered Unimpaired Claim, such dispute shall be determined, resolved or adjudicated pursuant to applicable non-bankruptcy law.
3.4.2 Notwithstanding the foregoing or anything else to the contrary in this Plan or the Plan Documents, with respect to all Claims (a) in Class 5 arising from the rejection of an Executory Contract and (b) in Class 6: (i) the Allowed amount of such Claims may be determined by the Bankruptcy Court after notice and a hearing; (ii) such Claims may be paid in full in Cash by the Debtor on the Effective Date or as soon thereafter as reasonably practicable; and (iii) such Claims shall be discharged pursuant to Section 9.2.1 of this Plan and Holders of such Claims shall be subject to the injunction set forth in Section 9.2.2 of this Plan.
ARTICLE IV: ACCEPTANCE OR REJECTION OF THE PLAN
4.1. Impaired Classes of Claims or Interests Entitled to Vote on this Plan . Claims in Class 4 (QCP Claims) and Interests in Class 8A (Preferred Interests) and Class 8B (Common Interests) are Impaired, and the Holders of such Claims and Interests are entitled to vote to accept or reject this Plan.
4.2. Acceptance by an Impaired Class of Claims or Interests . Pursuant to section 1126(c) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted the Plan if, after excluding any Claims held by any Holder whose Claims have been designated pursuant to section 1126(e) of the Bankruptcy Code, (a) the Holders of at least two-thirds in dollar amount of the Allowed Claims actually voting in such Class have voted to accept such Plan, and (b) more than one-half in number of such Allowed Claims actually voting in such Class have voted to accept the Plan. Pursuant to section 1126(d) of the Bankruptcy Code, an Impaired Class of Interests shall have accepted the Plan if, after excluding any Interests held by any Holder who has been designated pursuant to section 1126(e) of the Bankruptcy Code, the Holders of more than two-thirds in amount of such Allowed Interests actually voting in such Class have voted to accept the Plan.
4.3. Presumed Acceptance by Unimpaired Classes . Classes 1 (Other Priority Claims), 2 (Secured Claims), 3 (Credit Facility Claims), 5 (General Unsecured Claims), and 6 (Severance Claims) are Unimpaired by this Plan. Pursuant to section 1126(f) of the Bankruptcy Code, the Holders of Claims in such Classes are conclusively presumed to have accepted this Plan and therefore shall not be entitled to vote to accept or reject this Plan.
4.4. Presumed Rejection by Certain Impaired Classes . Class 7 (Section 510(b) Claims) (if the Closing of the Alternative Transaction does not occur) is Impaired by this Plan. Holders of Claims in Class 7 (Section 510(b) Claims) (if the Closing of the Alternative Transaction does not occur) will not receive or retain any property under this Plan on account of such Claims. Pursuant to section 1126(g) of the Bankruptcy Code, the Holders of Claims in Class 7 (Section 510(b) Claims) are conclusively presumed to have rejected this Plan and therefore shall not be entitled to vote to accept or reject this Plan.
4.5. Confirmability of this Plan and Reservation of Rights .
4.5.1 Confirmation . The confirmation requirements of section 1129 of the Bankruptcy Code must be satisfied with respect to the Debtor.
4.5.2 Reservation of Rights . The Debtor reserves the right to amend, modify, or supplement this Plan for any reason.
ARTICLE V:
MEANS FOR IMPLEMENTATION OF THE PLAN
Alternative Transaction . The Alternative Transaction means the transaction described in the Alternative Plan Sponsor Agreement, pursuant to which ProMedica (or its designee(s)), on the Effective Date, shall provide the ProMedica Plan Contribution in exchange for 100% of the New
Common Stock of Reorganized Debtor. In addition, on the Effective Date, the Alternative Master Lease shall be executed and delivered.
5.2. Original Transaction . The Original Transaction means the transaction described in the Original Plan Sponsor Agreement, pursuant to which the Holders of the QCP Claims (or the designee(s) of QCP) shall receive on the Effective Date, in full and final satisfaction, release, and discharge of, and in exchange for, their QCP Claims, 100% of the New Common Stock of Reorganized Debtor. The Debtor shall consummate the Original Transaction in accordance with its terms if the Alternative Plan Sponsor Agreement is terminated in accordance with its terms.
5.3. Operations Between the Confirmation Date and Effective Date . During the period from the Confirmation Date through and until the Effective Date, the Debtor may continue to operate its business as debtor in possession in the ordinary course in a manner consistent with its obligations under the applicable Plan Sponsor Agreement and the transactions contemplated by the Plan and the Plan Sponsor Agreement, subject to all applicable orders of the Bankruptcy Court and the provisions of the Bankruptcy Code.
5.4. Sources of Cash Consideration for Plan Distributions . The Reorganized Debtor shall fund distributions and satisfy applicable Allowed Claims under the Plan with Cash on hand and/or, if the Closing of the Alternative Transaction occurs, from such Cash on hand together with the ProMedica Plan Contribution.
5.5. New Common Stock .
(a) If the Closing of the Alternative Transaction occurs, on the Effective Date, ProMedica (or its designee(s)) shall receive, and the Debtor shall, in accordance with the Implementation Memorandum, issue, transfer, and deliver to ProMedica (or its designee(s)), 1,000,000 newly issued shares of New Common Stock of the Debtor, par value $0.01 per share, which shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor, free and clear of any lien, charge, pledge, security interest, claim, or other encumbrance in consideration for the ProMedica Plan Contribution.
(b) If the Closing of the Alternative Transaction does not occur, on the Effective Date, QCP or its designee(s) shall receive, and the Debtor shall issue, transfer, and deliver to QCP or its designee(s), 1,000,000 newly issued shares of New Common Stock of the Reorganized Debtor, par value $0.01 per share, which shall constitute all of the issued and outstanding capital stock and rights to purchase or otherwise acquire capital stock of the Debtor, free and clear of any lien, charge, pledge, security interest, claim, or other encumbrance, in full satisfaction of all of the QCP Claims.
5.6. Section 1145 Exemption . To the maximum extent provided by section 1145 of the Bankruptcy Code and applicable non-bankruptcy law, the offering, issuance and distribution of the New Common Stock of the Debtor shall be exempt from, among other things, the registration and prospectus delivery requirements of section 5 of the Securities Act, and any other applicable state and federal law requiring registration and/or delivery of a prospectus prior to the offering, issuance, distribution or sale of securities, subject to the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act. In addition, any securities issued under the Plan shall be freely transferable under the Securities Act by the
recipients thereof, subject to compliance with any rules and regulations of the U.S. Securities and Exchange Commission, if any, applicable at the time of any future transfer of such Interests and applicable regulatory approval, if any.
5.7. Master Lease Amendment .
(a) If the Closing of the Alternative Transaction occurs, on the Effective Date, the Reorganized Debtor shall cause HCR III to, and Meerkat I LLC (or its designees) and the Lessors shall, enter into the Alternative Master Lease.
(b) If the Closing of the Alternative Transaction does not occur, on the Effective Date, Reorganized Debtor shall cause HCR III to, and QCP and the Lessors shall, enter into the Original Master Lease Amendment.
5.8. Release of Guaranty . On or prior to the third day after the Effective Date, HCR III and the Lessors under the MLSA shall terminate, release and discharge the Guaranty pursuant either to the Original Plan Sponsor Agreement or the Alternative Plan Sponsor Agreement, as applicable.
5.9. Corporate Governance, Directors, Officers and Corporate Action.
5.9.1 Certificate of Incorporation; By-Laws . On the Effective Date, the Certificate of Incorporation and the By-Laws shall go into effect. Consistent with, but only to the extent required by, section 1123(a)(6) of the Bankruptcy Code, on the Effective Date, the Certificate of Incorporation shall be amended to prohibit the issuance of non-voting equity securities. After the Effective Date, the Reorganized Debtor may amend and restate its certificates or articles of incorporation, by-laws, or similar governing documents, as applicable, as permitted by applicable law.
5.9.2 Directors and Officers of the Reorganized Debtor . Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, the initial directors and officers of Reorganized Debtor on the Effective Date, shall be as set forth on (i) Exhibit E , if the Closing of the Alternative Transaction occurs or (ii) Exhibit F, if the Closing of the Alternative Transaction does not occur. After the Effective Date, the Certificate of Incorporation and the By-Laws, as each may be amended thereafter from time to time, shall govern the designation and election of directors.
5.9.3 Corporate Action . On the Effective Date, (i) the selection of directors and officers for Reorganized Debtor, (ii) the issuance and distribution of the New Common Stock, and (iii) all other actions and transactions contemplated by this Plan and the Plan Sponsor Agreement shall be deemed authorized and approved in all respects (subject to the provisions of this Plan and the Plan Sponsor Agreement). All matters provided for in this Plan and the Plan Sponsor Agreement involving the corporate structure of the Debtor or the Reorganized Debtor, and any corporate action required by the Debtor or the Reorganized Debtor in connection with this Plan and the Plan Sponsor Agreement, shall be deemed to have timely occurred in accordance with applicable law and shall be in effect, without any requirement of further action by the security holders or directors of the Debtor or the Reorganized Debtor in accordance with section 303 of the Delaware General Corporation Law and the provisions of the Bankruptcy Code. On and after the Effective Date, the appropriate officers of the Reorganized Debtor and members of the boards of directors or managers of the Reorganized
Debtor shall be authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by this Plan and the Plan Sponsor Agreement in the name of and on behalf of the Reorganized Debtor.
5.10. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtor . On and after the Effective Date, after giving effect to each of the actions contemplated under this Plan, the Reorganized Debtor shall continue to exist in accordance with the applicable law in the jurisdiction in which it is formed. Pursuant to section 1141(b) of the Bankruptcy Code, except as otherwise provided under this Plan, all property of the Debtors Estate, including all claims, rights and causes of action and any property acquired by the Debtor or the Reorganized Debtor under or in connection with this Plan, together with any property of the Debtor that is not property of its Estate and that is not specifically disposed of pursuant to this Plan, shall revest in the Reorganized Debtor on the Effective Date free and clear of all Claims, Liens, charges, other encumbrances and Interests, except as specifically provided in this Plan (including Sections 3.2.3(b), 3.2.4(c) and 3.3.2 herein) or the Confirmation Order. Thereafter, the Reorganized Debtor may operate its business and may use, acquire and dispose of property free of any restrictions of the Bankruptcy Code and the Bankruptcy Rules. As of the Effective Date, all property of the Reorganized Debtor shall be free and clear of all Liens and non-Reinstated Claims, except as specifically provided in this Plan (including Sections 3.2.3(b) , 3.2.4(c) and 3.3.2 herein) or the Confirmation Order.
5.11. Cancellation of Liens . Except as otherwise provided in this Plan, on the Effective Date, in consideration for the distributions to be made on the Effective Date pursuant to this Plan, all Liens, charges, and encumbrances related to any Claim or Interest, other than any Lien securing a Secured Claim, an Intercompany Note Claim or a Credit Facility Claim that is, in each case, Reinstated pursuant to this Plan, shall be terminated, null and void and of no effect. The Holders of Secured Claims (other than a Secured Claim, Intercompany Note Claim or a Credit Facility Claim that is, in each case, Reinstated pursuant to this Plan) shall be authorized and directed to release any collateral or other property of the Debtor (including any Cash collateral) held by such Holder and to take such actions as may be requested by the Debtor (or the Reorganized Debtor, as the case may be) to evidence the release of any Liens, including the execution, delivery, and filing or recording of such release documents as may be requested by the Debtor (or the Reorganized Debtor, as the case may be).
5.12. Preservation of Rights of Action and Settlement of Ordinary Litigation Claims . Except as otherwise provided in this Plan, the Confirmation Order, or in any document, instrument, release or other agreement entered into in connection with this Plan, in accordance with section 1123(b)(3)(B) of the Bankruptcy Code, the Debtor and its Estate shall retain the Ordinary Litigation Claims. The Reorganized Debtor, as the successor in interest to the Debtor and the Estate, may enforce, sue on, settle or compromise (or decline to do any of the foregoing) any or all of the Ordinary Litigation Claims or any other claims, rights of action, suits or proceedings that the Debtor or its Estate may hold against any Person, and the failure to specifically identify any Ordinary Litigation Claim as being retained herein shall not effectuate a waiver or release of such Ordinary Litigation Claim.
5.13. Registration of New Common Stock . On the Effective Date, the New Common Stock shall not be listed for public trading on any securities exchange, the Reorganized Debtor will not be a reporting company under the Securities Exchange Act of 1934, and the Reorganized Debtor shall
not be required to file reports with the U.S. Securities and Exchange Commission or any other governmental entity.
5.14. Additional Transactions Authorized Under this Plan . On or after the Effective Date, the Reorganized Debtor shall be authorized to take any such actions as may be necessary or appropriate to Reinstate Claims or render Claims not Impaired, as provided for under this Plan.
5.15. Comprehensive Settlement of Claims and Controversies. Pursuant to Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided under the Plan, the provisions of the Plan will constitute a good faith compromise and settlement of all Claims or controversies relating to the rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Allowed Interest or any distribution to be made pursuant to the Plan on account of any Allowed Claim or Allowed Interest. The entry of the Confirmation Order will constitute the Bankruptcy Courts approval, as of the Effective Date, of the compromise or settlement of all such claims or controversies and the Bankruptcy Courts finding that all such compromises or settlements are in the best interests (i) of the Debtor, the Reorganized Debtor, the Estate and their respective property, and (ii) Claim and Interest holders, and are fair, equitable and reasonable.
5.16. Tax Election . On or after the Effective Date, and subject to the Closing of the Alternative Transaction, the Reorganized Debtor shall be authorized to elect to opt out of the application of Section 382(l)(5) of the Internal Revenue Code of 1986, as amended, by filing such election as is required under Section 382(l)(5)(G) of the Internal Revenue Code of 1986, as amended.
ARTICLE VI:
TREATMENT OF EXECUTORY CONTRACTS AND INSURANCE POLICIES
6.1. Assumption or Rejection of Executory Contracts . On the Effective Date, all Executory Contracts of the Debtor will be deemed assumed in accordance with, and subject to, the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, unless such Executory Contract (i) was previously assumed or rejected by the Debtor, (ii) previously expired or terminated pursuant to its own terms, or (iii) upon the Plan Sponsors prior written consent or request, is subject to a motion to reject such Executory Contract filed prior to the Effective Date. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions and the rejection of any Executory Contract for which a motion to reject has been filed, pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Each Executory Contract assumed pursuant to this Article VI shall revest in and be fully enforceable by the Reorganized Debtor in accordance with its terms, except as modified by the provisions of this Plan, or any order of the Bankruptcy Court authorizing and providing for its assumption. Any motions to assume or reject Executory Contracts pending on the Effective Date shall be subject to approval by the Bankruptcy Court on or after the Effective Date. To the maximum extent permitted by law, to the extent any provision in any Executory Contract assumed pursuant to the Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption of such Executory Contract, including any change of control provision, then such provision shall be deemed modified such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such Executory Contract or to exercise any other default-related rights with respect thereto.
6.2. No Cure Obligations . There are no anticipated cure obligations with respect to any Executory Contract to which the Debtor is a party. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments shall be required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to any Executory Contract assumed pursuant to this Plan. Subject to the occurrence of the Effective Date, the entry of the Confirmation Order shall constitute a finding by the Bankruptcy Court that (i) each such assumption is in the best interest of the Debtor and its Estate, and (ii) the requirements of section 365(b)(l) of the Bankruptcy Code are deemed satisfied.
6.3. Insurance Policies and Agreements . Insurance policies issued to, or insurance agreements entered into by, the Debtor prior to the Petition Date (including, without limitation, any policies covering directors or officers conduct) shall continue in effect after the Effective Date. To the extent that such insurance policies or agreements are considered to be Executory Contracts, this Plan shall constitute a motion to assume or ratify such insurance policies and agreements, and, subject to the occurrence of the Effective Date, the entry of the Confirmation Order shall constitute approval of such assumption pursuant to section 365(a) of the Bankruptcy Code and a finding by the Bankruptcy Court that each such assumption is in the best interest of the Debtor and its Estate. Unless otherwise determined by the Bankruptcy Court pursuant to a Final Order or agreed to by the parties thereto prior to the Effective Date, no payments shall be required to cure any defaults of the Debtor existing as of the Confirmation Date with respect to each such insurance policy.
6.4. Postpetition Contracts and Leases . All contracts, agreements and leases that were entered into by the Debtor or assumed by the Debtor after the Petition Date shall be deemed assigned by the Debtor to the Reorganized Debtor on the Effective Date.
6.5. Modifications, Amendments, Supplements, Restatements or Other Agreements . Unless otherwise provided in the Plan, each Executory Contract that is assumed shall include all modifications, amendments, supplements, restatements or other agreements that in any manner affect such Executory Contract including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan. Modifications, amendments, supplements and restatements to prepetition Executory Contracts that have been executed by the Debtor during the Chapter 11 Case shall not be deemed to alter the prepetition nature of the Executory Contract, or the validity, priority or amount of any Claims that may arise in connection therewith.
ARTICLE VII:
PROVISIONS GOVERNING DISTRIBUTIONS
7.1. Distributions on Account of Claims Allowed as of the Effective Date . Unless the Holder of an Allowed Claim and the Debtor or the Reorganized Debtor agree to a different date, and except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions to be made on account of each Claim that is Allowed as of the Effective Date shall be made as set forth in the provisions of the Plan governing the treatment of such Claim or as soon thereafter as practicable.
7.2. Distributions on Account of Claims that Become Allowed after the Effective Date . Unless the Holder of a Claim that becomes an Allowed Claim after the Effective Date and the Reorganized Debtor agrees to a different date, and except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions on account of Claims that become Allowed Claims after the Effective Date shall be made on the later of (a) the date such Claim becomes Allowed and (b) as set forth in the provisions of the Plan governing the treatment of such Claim or as soon thereafter as is practicable.
7.3. Distributions by Reorganized Debtor . Other than as specifically set forth in this Plan, the Reorganized Debtor shall make, or cause to be made, all distributions required to be made under this Plan.
7.4. Means of Cash Payment . Payments of Cash made pursuant to this Plan shall be in U.S. dollars and shall be made, at the option and in the sole discretion of the Reorganized Debtor, by (a) checks drawn on or (b) wire transfers from a bank selected by the Reorganized Debtor. Cash payments to foreign creditors may be made, at the option of the Reorganized Debtor, in such funds and by such means as are necessary or customary in a particular foreign jurisdiction.
7.5. Withholding and Reporting Requirements . In connection with this Plan and all distributions thereunder, the Reorganized Debtor shall comply with all withholding and reporting requirements imposed by any federal, state, local or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements. The Reorganized Debtor shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes or establishing such other mechanisms that the Reorganized Debtor believes are reasonable and appropriate. All persons holding Claims or Interests shall be required to provide any information necessary to effect information reporting and the withholding of such taxes. Each Holder of an Allowed Claim that is to receive a distribution pursuant to this Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution. No distribution shall be made to or on behalf of such Holder pursuant to this Plan unless and until such Holder has made arrangements satisfactory to the Reorganized Debtor for the payment and satisfaction of such tax obligations.
7.6. Compliance Matters . The Debtor or the Reorganized Debtor, as applicable, reserves the right to allocate and distribute all distributions made under the Plan in compliance with all applicable wage garnishments, alimony, child support and other spousal awards, Liens and similar encumbrances.
7.7. Setoff and Recoupment . The Reorganized Debtor may, pursuant to sections 553 and/or 558 of the Bankruptcy Code or applicable non-bankruptcy laws, but shall not be required to, set off and/or recoup against any Claim the payments or other distributions to be made pursuant to this Plan in respect of such Claim, or claims of any nature whatsoever that the Debtor or the Reorganized Debtor may have against the Holder of such Claim; provided , however , that neither the failure to assert such rights of setoff and/or recoupment nor the allowance of any Claim hereunder
shall constitute a waiver or release by the Reorganized Debtor of any claim that the Debtor or the Reorganized Debtor may assert against any Holder of an Allowed Claim.
7.8. Reinstated Claims . Notwithstanding anything contained herein to the contrary, nothing shall affect, diminish or impair the Debtors or the Reorganized Debtors rights and defenses, both legal and equitable, with respect to any Reinstated Claim, including, but not limited to, legal and equitable rights of setoff and/or recoupment against the Holders of any Reinstated Claims; provided , however , that the foregoing shall not apply with respect to any Credit Facility Claims or Intercompany Note Claims, each of which is Allowed in full under this Plan without defenses, counterclaims, setoff or recoupment. Additionally, and notwithstanding anything contained herein to the contrary, any Unimpaired Claim in Classes 1, 2, 5 (other than a Claim in Class 5 arising from the rejection of an Executory Contract) and, solely in the event the Closing of the Alternative Transaction occurs, Class 7, not paid in full in Cash by the Debtor on the Effective Date or as soon thereafter as reasonably practicable shall constitute a Reinstated Claim.
7.9. Undeliverable or Non-Negotiated Distributions . If any distribution is returned as undeliverable, no further distributions to the applicable Holder shall be made unless and until the Reorganized Debtor is notified in writing of such Holders then-current address, at which time the undelivered distribution shall be made to such Holder without interest or dividends. All undeliverable distributions under the Plan that remain unclaimed for one year after attempted distribution shall indefeasibly revert to the Reorganized Debtor. Upon such reversion, the relevant Allowed Claim (and any Claim on account of missed distributions) shall be automatically discharged and forever barred, notwithstanding any federal or state escheat laws to the contrary. Checks issued on account of Allowed Claims shall be null and void if not negotiated within 180 calendar days from and after the date of issuance thereof. Requests for reissuance of any check must be made directly and in writing to the Reorganized Debtor by the Holder of the relevant Allowed Claim within the 180-calendar-day period. After such date, the relevant Allowed Claim (and any Claim for reissuance of the original check) shall be deemed undeliverable as of the date of the original issuance of the check and shall indefeasibly revert to the Reorganized Debtor in accordance with the terms hereof, notwithstanding any federal or state escheat laws to the contrary.
7.10. Claims Paid by Third Parties . To the extent a Holder receives a distribution on account of a Claim and also receives payment from a party that is not the Debtor or the Reorganized Debtor on account of such Claim, such Holder shall, within thirty calendar days of receipt thereof, repay or return the distribution to the Reorganized Debtor, to the extent the Holders total recovery on account of such Claim from the third party and under the Plan exceeds the amount of the Claim as of the date of any such distribution under the Plan.
ARTICLE VIII:
CONFIRMATION AND CONSUMMATION OF THE PLAN
8.1. Conditions to Effective Date of Plan Implementing the Alternative Transaction . This Plan shall not become effective, the Effective Date shall not occur, and the Alternative Transaction
shall not be consummated unless and until the following conditions shall have been satisfied or waived in accordance with Section 8.2 of this Plan:
8.1.1 The Confirmation Order confirming this Plan shall have been entered by the Bankruptcy Court and shall not have been stayed or vacated, and there have been no amendments to the Plan or the Confirmation Order except as permitted by the Plan and the Alternative Plan Sponsor Agreement.
8.1.2 All conditions precedent to the consummation of the transactions set forth in Article VI of the Alternative Plan Sponsor Agreement (other than the occurrence of the Effective Date) shall have been satisfied.
8.1.3 The Alternative Plan Sponsor Agreement shall not have terminated in accordance with its terms.
8.1.4 All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement this Plan on the Effective Date shall have been obtained or shall have occurred.
8.2. Conditions to Effective Date of Plan Implementing the Original Transaction . If the Alternative Plan Sponsor Agreement shall have terminated in accordance with its terms, this Plan shall not become effective, the Effective Date shall not occur, and the Original Transaction shall not be consummated unless and until the following conditions shall have been satisfied or waived in accordance with Section 8.2 of this Plan:
8.2.1 The Confirmation Order confirming this Plan shall have been entered by the Bankruptcy Court and shall have become a Final Order, and there have been no amendments to the Plan or the Confirmation Order except as permitted by the Plan and the Original Plan Sponsor Agreement.
8.2.2 All conditions precedent to the consummation of the transactions set forth in Article VI of the Original Plan Sponsor Agreement (other than the occurrence of the Effective Date) shall have been satisfied.
8.2.3 The Original Plan Sponsor Agreement shall not have terminated in accordance with its terms.
8.2.4 All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement this Plan on the Effective Date shall have been obtained or shall have occurred.
8.3. Waiver of Conditions . Each of the conditions set forth in Section 8.1 of this Plan may be waived in whole or in part with the consent of both the Debtor and the Plan Sponsor under the Alternative Plan Sponsor Agreement, in their respective sole discretion; provided , however , that any such waiver which adversely affects the Plan Sponsor under the Original Plan Sponsor Agreement shall require the consent of the Plan Sponsor under the Original Plan Sponsor Agreement. Each of
the conditions set forth in Section 8.2 of this Plan may be waived in whole or in part with the consent of both the Debtor and the Plan Sponsor under the Original Plan Sponsor Agreement, in their respective sole discretion.
8.4. Vacatur of Confirmation Order . If the Confirmation Order is vacated, (a) this Plan shall be null and void in all respects; (b) any settlement of Claims or Interests provided for hereby shall be null and void without further order of the Bankruptcy Court; and (c) the Debtor shall be entitled, at any time before or after entry of the order vacating the Confirmation Order, to request appropriate relief from the Bankruptcy Court with respect to the treatment of Executory Contracts.
8.5. Notice of Effective Date . The Debtor shall file with the Bankruptcy Court a notice of the occurrence of the Effective Date on the Effective Date or as soon as practicable thereafter.
ARTICLE IX:
EFFECT OF PLAN CONFIRMATION
9.1. Binding Effect . On the Effective Date, except as otherwise provided in section 1141(d)(3) of the Bankruptcy Code, all provisions of this Plan or the Plan Supplement, including all agreements, instruments and other documents filed in connection with this Plan and executed by the Debtor or the Reorganized Debtor in connection with this Plan or the Plan Supplement, shall be binding upon the Debtor, the Reorganized Debtor, all Holders of Claims against and Interests in the Debtor and such Holders respective successors and assigns, whether or not the Claim or Interest of such Holder is Impaired under this Plan and whether or not such Holder has accepted this Plan, and all other parties that are affected in any manner by this Plan. Except as expressly provided otherwise in the Plan, all agreements, instruments and other documents filed in connection with this Plan shall be given full force and effect, and shall bind all parties referred to therein as of the Effective Date, whether or not such agreements are actually issued, delivered or recorded on the Effective Date or thereafter and whether or not a party has actually executed such agreement. For the avoidance of doubt, no provision of the Plan Supplement or any agreement, instrument or other document filed in connection with this Plan and executed by the Debtor or the Reorganized Debtor in connection with this Plan or the Plan Supplement shall render Impaired any Claim that is otherwise Unimpaired under this Plan; provided , however , that the Reorganized Debtor may take any action that it determines may be necessary, advisable or appropriate in connection with the operation of the Reorganized Debtor after the consummation of this Plan (without prejudice to the rights of creditors or other parties under contract or applicable nonbankruptcy law).
9.2. Discharge .
9.2.1 Discharge of Claims and Termination of Interests . Except as otherwise provided herein or in the Confirmation Order including with respect to any Claims that are Reinstated under this Plan, all consideration distributed under this Plan shall be in exchange for all Claims and Interests of any nature whatsoever, whether known or unknown, against the Debtor or its Estate, assets, properties or interest in property, and shall constitute a complete satisfaction and settlement of all Claims and Interests other than Reinstated Claims, in each case regardless of whether any property shall have been distributed or retained pursuant to this Plan on account of such Claims and Interests. On the Effective Date, except for Reinstated Claims, the Debtor shall be deemed discharged and released under section
1141(d)(l)(A) of the Bankruptcy Code from any and all Claims and Interests, including, but not limited to, demands and liabilities that arose before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, Section 510(b) Claims, General Unsecured Claims, and Interests in the Debtor .
9.2.2 Discharge Injunction . As of the Effective Date, except as otherwise expressly provided in this Plan or the Confirmation Order, all Entities (other than holders of Reinstated Claims solely in their capacities as such) shall be precluded from asserting against the Debtor or the Reorganized Debtor and their respective assets and property or the Estate, any other or further Claims (other than those Reinstated under this Plan) or Interests, or any other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities of any nature whatsoever, relating to the Debtor or Reorganized Debtor or any of their respective assets and property or the Estate, based upon any act, omission, transaction or other activity of any nature that occurred prior to the Effective Date. In accordance with the foregoing, except as expressly provided in this Plan or the Confirmation Order, the Confirmation Order shall constitute a judicial determination, as of the Effective Date, of the discharge of all non-Reinstated Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities, pursuant to sections 524 and 1141 of the Bankruptcy Code, and such discharge shall void and extinguish any judgment obtained against the Debtor, the Reorganized Debtor, or its respective assets, property and Estate at any time, to the extent such judgment is related to a discharged Claim, debt, liability or Interest. Except as otherwise specifically provided in this Plan or the Confirmation Order, all Persons or Entities who have held, hold or may hold Claims or Interests that arose prior to the Effective Date and all other parties-in-interest, along with their respective present or former employees, agents, officers, directors, principals, representatives and Affiliates, are permanently enjoined, from and after the Effective Date, from (i) commencing or continuing in any manner any action or other proceeding of any kind with respect to any such Claim (including a Section 510(b) Claim) against or Interest in the Reorganized Debtor or property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to the Plan, (ii) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against the Reorganized Debtor or property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to this Plan, (iii) creating, perfecting or enforcing any Lien or encumbrance of any kind against the Reorganized Debtor or against the property or interests in property of the Reorganized Debtor, other than to enforce any right to a distribution pursuant to this Plan or (iv) asserting any right of setoff or subrogation of any kind against any obligation due from the Reorganized Debtor or against the property or interests in property of the Reorganized Debtor, with respect to any such Claim or Interest. Such injunction shall extend to any successors or assignees of the Reorganized Debtor and their respective properties and interest in properties. For the avoidance of doubt, the provisions of this Section 9.2.2 shall not apply with respect to Claims that are Reinstated under this Plan, including, without limitation, the Credit Facility Claims (if the Closing of the Alternative transaction does not occur) and the Intercompany Note Claim, as applicable .
9.3. Releases by the Debtor . Except as otherwise expressly provided in this Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each of the Debtor and Reorganized Debtor on its own behalf and as a representative of its respective Estate, shall, and shall be deemed to,
completely and forever release, waive, void, extinguish and discharge unconditionally, each and all of the Released Parties of and from any and all Claims and Causes of Action (including, without limitation, Avoidance Actions), any and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever, whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the Reorganized Debtor, their respective assets and property, and the Estate, the Chapter 11 Case, this Plan, the Plan Supplement or the Disclosure Statement that may be asserted by or on behalf of the Debtor, the Reorganized Debtor or the Estate against any of the Released Parties; provided , however , that nothing in this Section 9.3 shall be construed to release any party from fraud, willful misconduct or gross negligence as determined by a Final Order.
9.4. Releases by Certain Holders of Claims . Except as otherwise expressly provided in this Plan or the Confirmation Order, on the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each Holder of a Claim or an Interest that votes to accept this Plan shall be deemed to have completely and forever released, waived, and discharged unconditionally each of the Released Parties of and from any and all Claims, any and all other obligations, suits, judgments, damages, debts, rights, remedies, causes of action and liabilities of any nature whatsoever (including, without limitation, those arising under the Bankruptcy Code), whether liquidated or unliquidated, fixed or contingent, direct or derivative, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are or may be based in whole or part on any act, omission, transaction, event or other circumstance taking place or existing on or prior to the Effective Date (including prior to the Petition Date) in connection with or related to the Debtor, the Reorganized Debtor or their respective assets and property, and the Estate, the Chapter 11 Case, this Plan, the Plan Supplement, and/or the Disclosure Statement; provided , however , that nothing in this Section 9.4 shall be construed to release (x) any party from fraud, willful misconduct or gross negligence as determined by a Final Order, (y) any Reinstated Claim including, without limitation, the Credit Facility Claims (if the Closing of the alternative Transaction does not occur) and the Intercompany Note Claims, as applicable or (z) any obligations under the Plan Sponsor Agreement or the Merger Agreement.
9.5. Exculpation . From and after the Effective Date, the Exculpated Fiduciaries and, solely to the extent provided by section 1125(e) of the Bankruptcy Code, the Section 1125(e) Parties, shall neither have nor incur any liability to, or be subject to any right of action by, any Holder of a Claim or an Interest, or any other party in interest, or any of their respective employees, representatives, financial advisors, attorneys, or agents acting in such capacity, or Affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Case, formulating, negotiating or implementing this Plan and/or previous iterations hereof, the Plan Supplement, the Disclosure Statement and/or previous iterations thereof, the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, the Restructuring Support Agreement, the Alternative Master Lease or the Original Master Lease (as applicable), the solicitation of acceptances of this Plan and/or previous iterations hereof, the pursuit of Confirmation of this Plan, the Confirmation of this
Plan, the consummation of this Plan, the administration of this Plan, the property to be distributed under this Plan, the consummation of the transactions contemplated by the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, or any other act taken or omitted to be taken in connection with or in contemplation of the Chapter 11 Case or implementation of this Plan; provided , however , that this Section 9.5 shall not apply to release (x) obligations under this Plan, and obligations under the Alternative Plan Sponsor Agreement, the Original Plan Sponsor Agreement, the Restructuring Support Agreement, the Alternative Master Lease or the Original Master Lease (as applicable), the Merger Agreement and the contracts, instruments, releases, agreements, and documents delivered, Reinstated or assumed under this Plan (including, without limitation, the Credit Facility (if the Closing of the Alternative Transaction does not occur) and the Intercompany Note, as applicable), and (y) any Claims or Causes of Action arising out of fraud, willful misconduct or gross negligence as determined by a Final Order.
Any of the Exculpated Parties shall be entitled to rely, in all respects, upon the reasonable and informed advice of counsel with respect to their duties and responsibilities under this Plan.
9.6. Injunctions Related to Exculpation and Releases . (a) Except as expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all Persons and Entities that hold, have held, or may hold a Claim or any other obligation, suit, judgment, damages, debt, right, remedy, Cause of Action or liability of any nature whatsoever, of the types described in Section 9.5 of this Plan and relating to the Debtor, the Reorganized Debtor or any of their respective assets and property and/or the Estate, are, and shall be, permanently, forever and completely stayed, restrained, prohibited, barred and enjoined from taking any of the following actions against any Exculpated Party or its property on account of such released liabilities, whether directly or indirectly, derivatively or otherwise, on account of or based on the subject matter of such discharged Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding (including, without limitation, any judicial, arbitral, administrative or other proceeding) in any forum; (ii) enforcing, attaching (including, without limitation, any prejudgment attachment), collecting, or in any way seeking to recover any judgment, award, decree, or other order; (iii) creating, perfecting or in any way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off, seeking reimbursement or contributions from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability or obligation that is discharged under Section 9.2 of this Plan; and/or (v) commencing or continuing in any manner any judicial, arbitration or administrative proceeding in any forum, that does not comply with or is inconsistent with the provisions of this Plan or the Confirmation Order.
(b) Except as expressly provided in this Plan or the Confirmation Order, as of the Effective Date, all Persons and Entities that hold, have held, or may hold a Claim or any other obligation, suit, judgment, damages, debt, right, remedy, Cause of Action or liability of any nature whatsoever, of the types described in Section 9.4 of this Plan and relating to the Debtor, the Reorganized Debtor or any of their respective assets and property and/or the Estate, the Chapter 11 Case, this Plan, the Plan Supplement and/or the Disclosure Statement are, and shall
be, permanently, forever and completely stayed, restrained, prohibited, barred and enjoined from taking any of the following actions against any Released Party or its property on account of such released liabilities, whether directly or indirectly, derivatively or otherwise, on account of or based on the subject matter of such discharged Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding (including, without limitation, any judicial, arbitral, administrative or other proceeding) in any forum; (ii) enforcing, attaching (including, without limitation, any prejudgment attachment), collecting, or in any way seeking to recover any judgment, award, decree, or other order; (iii) creating, perfecting or in any way enforcing in any matter, directly or indirectly, any Lien; (iv) setting off, seeking reimbursement or contributions from, or subrogation against, or otherwise recouping in any manner, directly or indirectly, any amount against any liability or obligation that is discharged under Section 9.2 of this Plan; and/or (v) commencing or continuing in any manner any judicial, arbitration or administrative proceeding in any forum, that does not comply with or is inconsistent with the provisions of this Plan or the Confirmation Order.
9.7. Survival of Indemnification and Exculpation Obligations . The obligations of the Debtor to indemnify and exculpate any past and present directors, officers, agents, employees and representatives who provided services to the Debtor prior to or after the Petition Date, pursuant to certificates or articles of incorporation, by-laws, contracts and/or applicable statutes, in respect of all actions, suits and proceedings against any of such officers, directors, agents, employees and representatives, based upon any act or omission related to service with, for or on behalf of the Debtor, shall not be discharged or Impaired by Confirmation or consummation of this Plan and shall be assumed by the Reorganized Debtor. For the avoidance of doubt, this Section 9.7 affects only the obligations of the Debtor and Reorganized Debtor with respect to any indemnity or exculpation owed to or for the benefit of past and present directors, officers, agents, employees and representatives of the Debtor, and shall have no effect on nor in any way discharge or reduce, in whole or in part, any obligation of any other Person, including any provider of director and officer insurance, owed to or for the benefit of such past and present directors, officers, agents, employees and representatives of the Debtor. For further avoidance of doubt, the provisions regarding indemnification, exculpation and directors and officers insurance contained in section 4.7 of the Plan Sponsor Agreement shall be deemed incorporated into this Plan as if set forth fully herein.
9.8. Term of Bankruptcy Injunction or Stays . All injunctions or stays provided for in the Chapter 11 Case under section 105 or section 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the Effective Date.
9.9. Liability to Governmental Units . Nothing in the Confirmation Order or the Plan discharges, releases, resolves, precludes, exculpates, or enjoins: (i) any liability to any Governmental Unit that is not a Claim ; (ii) any Claim of a Governmental Unit arising on or after the Confirmation Date ; (iii) any police or regulatory liability to a Governmental Unit to the extent of such entitys liability under non-bankruptcy law on account of its status as the owner or operator of property after the Confirmation Date; or (iv) any liability to a Governmental Unit on the part of any Person other than the Debtor or Reorganized Debtor. For the avoidance of doubt, the foregoing shall not limit the scope of discharge of all Claims and Interests arising prior to the Effective Date under sections 524 and 1141 of the Bankruptcy Code, or limit the Debtors or Reorganized Debtors rights under section
525 of the Bankruptcy Code. Nothing in the Confirmation Order or this Plan shall affect any setoff or recoupment rights of any Governmental Unit.
9.10. Receivership Complaint . The Receivership Complaint shall be deemed dismissed with prejudice as of the Effective Date. QCP, with the reasonable cooperation of Debtor, shall cause the Receivership Complaint to be withdrawn from the relevant court docket as soon as practicable after the Effective Date.
ARTICLE X:
RETENTION OF JURISDICTION
10.1. Retention of Jurisdiction Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters arising out of, and related to, the Chapter 11 Case and this Plan to the fullest extent permitted by law, including, among other things, jurisdiction to:allow, disallow, determine, liquidate, classify, estimate or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Expense Claim or Priority Tax Claim, and the resolution of any objections to the secured or unsecured status, allowance, priority or amount of Claims or Interests;
(b) resolve any matters related to the assumption or rejection of any Executory Contract to which the Debtor is a party or with respect to which the Debtor or Reorganized Debtor may be liable and to hear, determine, and, if necessary, liquidate any Claims arising therefrom;
(c) ensure that distributions to Holders of Allowed Claims are accomplished pursuant to the provisions of this Plan and adjudicate any and all disputes from, or relating to distributions under, the Plan;
(d) decide or resolve any motions, adversary proceedings, contested or litigated matters and any other matters and grant or deny any applications involving the Debtor that may be pending on the Effective Date;
(e) enter such orders as may be necessary or appropriate to implement or consummate the provisions of this Plan, the Plan Sponsor Agreement, the Restructuring Support Agreement, and all contracts, instruments, releases and other agreements or documents created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, and issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation, implementation or enforcement of this Plan or the Confirmation Order;
(f) resolve any cases, controversies, suits or disputes that may arise in connection with the consummation, interpretation, or enforcement of this Plan, the Plan Sponsor Agreement, the Restructuring Support Agreement, or any contract, instrument, release or other agreement or document that is executed or created pursuant to this Plan, or any Entitys rights arising from or obligations incurred in connection with this Plan or such documents, including hearing and determining disputes, cases, or controversies arising in connection with the interpretation,
implementation or enforcement of the Plan, Plan Sponsor Agreement, Restructuring Support Agreement or the Confirmation Order;
(g) enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;
(h) adjudicate, decide or resolve any and all disputes as to the ownership of any Claim or Interest;
(i) approve any modification of this Plan before or after the Effective Date pursuant to section 1127 of the Bankruptcy Code or approve any modification of the Disclosure Statement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, or remedy any defect or omission or reconcile any inconsistency in any Bankruptcy Court order, this Plan, the Disclosure Statement, the Plan Supplement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order, in such manner as may be necessary or appropriate to consummate this Plan;
(j) hear and determine all disputes involving the existence, nature or scope of the Debtors discharge;
(k) subject to Section 11.1 , hear and determine all applications for compensation and reimbursement of expenses of Professionals under this Plan or under sections 330, 331, 363, 503(b), 1103 and 1129(a)(9) of the Bankruptcy Code, which shall be payable by the Debtor only upon allowance thereof pursuant to an order of the Bankruptcy Court;
(l) hear and determine Causes of Action by or on behalf of the Debtor or the Reorganized Debtor;
(m) hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;
(n) hear and determine any issues arising under, or violations of, section 525 of the Bankruptcy Code;
(o) enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason or in any respect modified, stayed, reversed, revoked or vacated, or if distributions pursuant to this Plan are enjoined or stayed;
(p) determine any other matters that may arise in connection with or relate to this Plan, the Disclosure Statement, the Plan Supplement, the Confirmation Order, the Plan Sponsor Agreement, the Restructuring Support Agreement, or any contract, instrument, release, or other agreement, or document created in connection with this Plan, the Disclosure Statement, the Plan Supplement or the Confirmation Order;
(q) enforce all orders, judgments, injunctions, releases, exculpations, indemnifications and rulings entered in connection with the Chapter 11 Case;
(r) hear and determine all matters related to the property of the Estate from and after the Confirmation Date;
(s) hear and determine such other matters as may be provided in the Confirmation Order or as may be authorized under the Bankruptcy Code;
(t) enter a final order or decree concluding or closing the Chapter 11 Case; and
(u) hear any other matter not inconsistent with the Bankruptcy Code;
provided , however , that the Bankruptcy Court shall not retain jurisdiction after the Effective Date over disputes concerning documents contained in the Plan Supplement or in respect of the Credit Facility or Intercompany Note that have a jurisdictional, forum selection or dispute resolution clause that refers disputes to a different court, including, for the avoidance of doubt, the Alternative Master Lease or the Original Master Lease (as applicable), and any disputes concerning documents contained in the Plan Supplement that contain such clauses shall be governed in accordance with the provisions of such documents.
ARTICLE XI:
MISCELLANEOUS PROVISIONS
11.1. Post-Effective Date Retention of Professionals . On the Effective Date, any requirement that Professionals employed by the Reorganized Debtor comply with sections 327 through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date will terminate, and the Reorganized Debtor will be authorized to employ and compensate professionals in the ordinary course of business and without the need for application to or approval by the Bankruptcy Court, including professionals previously employed by the Debtor.
11.2. Effectuating Documents and Further Transactions . Each of the Debtor and the Reorganized Debtor is authorized to execute, deliver, file or record such contracts, instruments, certificates, notes, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of this Plan, the Plan Sponsor Agreement, and the New Common Stock issued under or in connection with this Plan.
11.3. Exemption from Transfer Taxes . Pursuant to section 1146(a) of the Bankruptcy Code, (a) the issuance, transfer or exchange of equity securities under this Plan; (b) the creation of any mortgage, deed of trust, lien, pledge or other security interest; or (c) the making or delivery of any deed or other instrument of transfer under this Plan, including, without limitation, merger agreements, agreements of consolidation, restructuring, disposition, liquidation or dissolution, deeds, bills of sale, and transfers of tangible property, will not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee or other similar tax or governmental assessment in the United States. The Confirmation Order shall direct the appropriate federal, state or local governmental officials or agents to forgo the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.
11.4. Payment of Statutory Fees . All fees due and payable pursuant to section 1930(a)(6) of Title 28 of the United States Code ( Quarterly Fees ) prior to the Effective Date shall be paid by the Debtor on the Effective Date. After the Effective Date, the Reorganized Debtor shall be liable for any and all Quarterly Fees when they are due and payable after the Effective Date. The Debtor shall file all Quarterly Reports due prior to the Effective Date when they become due, in a form reasonably acceptable to the United States Trustee. After the Effective Date, the Reorganized Debtor shall file with the Bankruptcy Court Quarterly Reports in a form reasonably acceptable to the United States Trustee, which reports shall include a separate schedule of disbursements made by the Reorganized Debtor during the applicable period, attested to by an authorized representative of the Reorganized Debtor. The Reorganized Debtor shall remain obligated to pay Quarterly Fees to the Office of the U.S. Trustee until the earliest of the Debtors case being closed, dismissed or converted to a case under Chapter 7 of the Bankruptcy Code.
11.5. Amendment or Modification of this Plan . Subject to section 1127 of the Bankruptcy Code, the Debtor may alter, amend or modify this Plan or the Exhibits at any time prior to or after the Confirmation Date but prior to the substantial consummation of this Plan, solely in accordance with the Plan Sponsor Agreement; provided , that sections of this Plan pertaining to the the Credit Facility Claims, the Intercompany Note or Intercompany Claims held by obligors under the Credit Facility shall not be altered, amended or modified other than in accordance with the Credit Facility. Any Holder of a Claim that has accepted this Plan shall be deemed to have accepted this Plan, as altered, amended or modified, if the proposed alteration, amendment or modification is made in accordance with the Plan Sponsor Agreement and does not materially and adversely change the treatment of the Claim of such Holder.
11.6. Severability of Plan Provisions . If, prior to the Confirmation Date, any term or provision of this Plan is determined by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision will then be applicable as altered or interpreted, provided that any such holding, alteration or interpretation complies and is consistent with the Plan Sponsor Agreement and does not adversely impact the holders of the Credit Facility Claims. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of this Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order will constitute a judicial determination and will provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.
11.7. Successors and Assigns . This Plan shall be binding upon and inure to the benefit of the Debtor, and its successors and assigns, including, without limitation, the Reorganized Debtor. The rights, benefits and obligations of any entity named or referred to in this Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign of such entity.
11.8. Non-Consummation . If consummation of this Plan does not occur, then (a) this Plan shall be null and void in all respects, (b) any settlement or compromise embodied in this Plan (including the fixing or limiting to an amount certain any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or leases affected by this Plan, and any document or agreement executed pursuant to this Plan shall be deemed null and void and (c) nothing contained in this Plan shall (i) constitute a waiver or release of any Claims by or against, or any Interests in, the Debtor or any other Person, (ii) prejudice in any manner the rights of the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, or any other Person or (iii) constitute an admission of any sort by the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, or any other Person.
11.9. Notice . All notices, requests and demands to or upon the Debtor or the Reorganized Debtor to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:
HCR ManorCare, Inc.
333 N. Summit St.
Toledo, Ohio 43604
Attn: John R. Castellano, Chief Restructuring Officer
with a copy to:
SIDLEY AUSTIN LLP
One South Dearborn Street
Chicago, Illinois 60603
Telephone: (312) 853-7000
Facsimile: (312) 853-7036
Attn: Larry J. Nyhan
Dennis M. Twomey
-and-
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
Attn: Edmon L. Morton
Attorneys for the Debtor and Debtor in Possession
11.10. Governing Law . Subject to the provisions of any contract, certificates or articles of incorporation, by-laws, instruments, releases, or other agreements or documents entered into in connection with this Plan, and subject further to Section 10.1 of this Plan, the rights and obligations
arising under this Plan shall be governed by, and construed and enforced in accordance with (i) the Bankruptcy Code, the Bankruptcy Rules or other federal law to the extent applicable and (ii) if none of such law is applicable, the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such jurisdiction.
11.11. Tax Reporting and Compliance . The Reorganized Debtor is hereby authorized, on behalf of the Debtor, to request an expedited determination under section 505 of the Bankruptcy Code of the tax liability of the Debtor for all taxable periods ending after the Petition Date through, and including, the Effective Date.
11.12. Exhibits . All Exhibits to this Plan are incorporated into and are a part of this Plan as if set forth in full herein.
11.13. Filing of Additional Documents . On or before substantial consummation of this Plan, the Reorganized Debtor and the Debtor shall, as applicable, file such agreements and other documents as may be necessary or appropriate to effectuate and evidence further the terms and conditions of this Plan.
11.14. Plan Documents . The Plan and the Plan Supplement, including all Exhibits, supplements, appendices and schedules thereto, and any modifications to any of the foregoing, shall be in form and substance acceptable to the Debtor, subject to the Plan Sponsor Agreement.
11.15. Reservation of Rights . Except as expressly set forth herein, this Plan shall have no force and effect unless the Bankruptcy Court has entered the Confirmation Order. The filing of this Plan, any statement or provision contained in this Plan, or the taking of any action by the Debtor with respect to this Plan shall not be and shall not be deemed to be an admission or waiver of any rights of the Debtor, the Plan Sponsor under the Alternative Plan Sponsor Agreement, the Plan Sponsor under the Original Plan Sponsor Agreement, the Credit Facility Agent, the Credit Facility Lenders or any other Person with respect to Claims against and Interests in the Debtor.
Dated: April 25, 2018 |
Respectfully submitted, |
Wilmington, Delaware |
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HCR ManorCare, Inc. |
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/s/ John R. Castellano |
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John R. Castellano |
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Chief Restructuring Officer |
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SIDLEY AUSTIN LLP |
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Larry J. Nyhan |
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Dennis M. Twomey |
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William A. Evanoff |
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Allison Ross Stromberg |
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Matthew E. Linder |
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One South Dearborn Street |
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Chicago, Illinois 60603 |
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Telephone: (312) 853-7000 |
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Facsimile: (312) 853-7036 |
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-and- |
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YOUNG CONAWAY STARGATT & TAYLOR, LLP |
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Robert S. Brady (No. 2847) |
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Edmon L. Morton (No. 3856) |
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Justin H. Rucki (No. 5304) |
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Tara C. Pakrouh (No. 6192) |
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Rodney Square |
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1000 North King Street |
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Wilmington, Delaware 19801 |
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Telephone: (302) 571-6600 |
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Facsimile: (302) 571-1253 |
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Attorneys for the Debtor and Debtor in Possession |
Exhibit A
Alternative Master Lease Term Sheet
Exhibit B
Alternative Plan Sponsor Agreement
Exhibit C
Original Master Lease Amendment
Exhibit D
Original Plan Sponsor Agreement
Exhibit E
Directors and Officers of Reorganized Debtor Alternative Transaction
Exhibit F
Directors and Officers of Reorganized Debtor Original Transaction
Exhibit G
Certificate of Incorporation of Reorganized Debtor Original Transaction
Exhibit H
By - Laws of Reorganized Debtor Original Transaction
EXHIBIT B
Joinder Agreement
This Joinder Agreement to the Restructuring Support Agreement, dated as of [ · ], 2018, by and among (a) HCR Manorcare, Inc. (the Debtor ), (b) MC Operations Investments, LLC (the QCP Holder ) and (c) Carlyle MC Partners, L.P., a Delaware limited partnership, Carlyle Partners V-A MC, L.P., a Delaware limited partnership, Carlyle Partners V MC, L.P., a Delaware limited partnership, CP V Coinvestment A, L.P., a Delaware limited partnership, and CP V Coinvestment B, L.P., a Delaware limited partnership (collectively, the Majority Holders ) (as set forth in Annex I hereto, the Restructuring Support Agreement ), is executed and delivered by [ ] (the Joining Supporting Party ) as of [ ], 2018. Each capitalized term used herein but not otherwise defined shall have the meanings set forth in the Restructuring Support Agreement.
1. Agreement to be Bound . The Joining Supporting Party hereby agrees to be bound by all of the terms of the Restructuring Support Agreement (as the same may be hereafter amended, restated or otherwise modified from time to time), including, without limitation, the covenants set forth in Section 2 of the Restructuring Support Agreement. The Joining Supporting Party shall hereafter be deemed to be a Supporting Party and a Party for all purposes under the Restructuring Support Agreement.
2. Representations and Warranties . With respect to the aggregate principal amount of shares held by the Joining Supporting Party upon consummation of the Transfer of such shares, the Joining Supporting Party hereby makes the representations and warranties of the Supporting Parties set forth in Section 1 of the Restructuring Support Agreement to each of the other Parties.
3. Governing Law . This Joinder Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to any conflicts of law provisions which would require the application of the law of any other jurisdiction.
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[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Joining Supporting Party has caused this Joinder Agreement to be executed as of the date first written above.
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Annex 1 to Joinder Agreement
Restructuring Support Agreement