EXHIBIT 10.13
AGREEMENT FOR PURCHASE
AND SALE OF ASSETS
TABLE OF CONTENTS
PAGE
ARTICLE......................................................................2
DEFINITIONS..................................................................2
ARTICLE 2...................................................................10
PURCHASE AND SALE OF SELLERS' ASSETS........................................10
2.1 Purchase and Sale of Assets........................................10
2.1.1. Real Property.............................................10
2.1.2. Machinery and Equipment...................................11
2.1.3. Inventory.................................................11
2.1.4. Contracts.................................................11
2.1.5. Personal Property.........................................11
2.1.6. Intentionally Omitted.....................................11
2.1.7. Prepaid Expenses..........................................11
2.1.8. Accounts Receivable and Notes Receivable..................11
2.1.9. Provider Numbers and Agreements...........................11
2.1.10. Other Assets..............................................11
2.2 Excluded Assets....................................................12
ARTICLE 3...................................................................13
ASSUMPTION OF LIABILITIES; AND EXCLUDED LIABILITIES.........................13
3.1 Liabilities to Be Assumed by Purchasers............................13
3.1.1. Contracts and Leases......................................13
3.1.2. Vacation Leave and Paid Time Off..........................13
3.1.3. Extended Illness Bank ("EIB") Accumulations...............13
3.1.4. Intentionally Omitted.....................................13
3.1.5. Accounts Payable..........................................14
3.1.6. Other Liabilities.........................................14
3.2 Excluded Liabilities...............................................14
ARTICLE 4...................................................................15
XXXXXXX MONEY DEPOSIT AND CONSIDERATION.....................................15
4.1 Xxxxxxx Money Deposit..............................................15
4.2 Consideration .....................................................16
4.2.1. Allocation................................................16
4.2.2. Physical Count of Inventory...............................16
4.2.3. Net Working Capital Calculation...........................17
4.3 Post-Closing Adjustments...........................................17
4.3.1. Post-Closing Adjustment Payment...........................17
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ARTICLE 5...................................................................18
CLOSING AND CLOSING DATE....................................................18
5.1 Date, Location ....................................................18
5.2 Allocation of Income and Real Estate Taxes.........................18
5.3 The Sellers Deliverables...........................................18
5.4 Purchasers Deliverables............................................20
5.5 Designation of Affiliates..........................................20
5.6 Closing Costs......................................................20
5.7 Baptist Bonds......................................................21
ARTICLE 6...................................................................21
REPRESENTATIONS AND WARRANTIES OF SELLERS...................................21
6.1 Authority to Enter into Agreement; Enforceability.................21
6.2 Organization and Standing.........................................21
6.3 Financial Statements, Undisclosed Liabilities.....................22
6.4 Compliance with Laws..............................................22
6.5 Litigation .......................................................22
6.6 No Patient Trust Funds............................................22
6.7 No Breach ........................................................23
6.8 Insurance Coverage................................................23
6.9 Absence of Material Adverse and Other Changes.....................23
6.10 No Broker or Finder...............................................24
6.11 Payment of Taxes..................................................24
6.12 Unemployment Insurance............................................25
6.13 Medical Staff.....................................................25
6.14 Fraud and Abuse; Cost Reports; Medicare and AHCCCS Certification..26
6.15 JCAHO Accreditation...............................................26
6.16 Labor Relations...................................................27
6.17 Employee Benefit Plans............................................27
6.18 Bond Requirements.................................................28
6.19 Contracts ........................................................28
6.20 Opinion of Financial Advisor......................................29
6.21 Accounts Receivable Inventory.....................................29
6.22 Equipment.........................................................29
6.23 Title to Personal Property........................................29
6.24 Real Property.....................................................30
6.25 Environmental Matters.............................................31
6.26 Intellectual Properties, Computer Software, etc...................32
6.27 Employees ........................................................32
6.28 Special Funds.....................................................32
6.29 Solvency .........................................................33
6.30 Operation of the Baptist Facilities...............................33
6.31 Material Misstatements or Omissions...............................33
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ARTICLE 7...................................................................33
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF BHHS...........................33
7.2. Litigation........................................................34
7.3. No Breach ........................................................34
7.4 Subsidiary and Third Party Rights.................................34
ARTICLE 8...................................................................36
REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................36
8.1 Authority to Enter into Agreement; Enforceability..................36
8.2 Organization and Standing..........................................36
8.3 Litigation ........................................................36
8.4 Financial Statements; Undisclosed Liabilities; Solvency............36
8.5 Compliance with Laws and Other Instruments.........................37
8.6 No Breach .........................................................37
8.7 Vanguard's and Purchasers' Management Experience...................37
8.8 No Broker or Finder................................................37
8.9 Material Misstatements or Omissions................................37
ARTICLE 9...................................................................37
PRE-CLOSING COVENANTS OF SELLERS............................................37
9.1 Preserve Accuracy of Representations and Warranties...............38
9.2 Operate in Ordinary Course........................................38
9.3 Access to Information.............................................38
9.4 Maintain Books and Accounting Practices...........................39
9.5 Third Party Authorizations/Notifications..........................39
9.6 Best Reasonable Efforts and Continuing Cooperation................39
9.7 Maintain Insurance Coverage.......................................40
9.8 Preliminary Title Report..........................................40
9.9 Surveys ..........................................................41
9.10 Environmental Reports.............................................41
9.11 UCC Reports ......................................................41
9.12 Alternative Proposals.............................................41
9.13 Negative Covenants................................................42
9.14 Casualty .........................................................43
9.15 Insurance Ratings.................................................43
9.16 Tail Insurance....................................................43
9.17 Arizona Conversion Statute........................................44
9.18 HCFA Survey ......................................................44
9.19 Use Restrictions and Subdivision of Option Property...............44
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ARTICLE 10..................................................................44
PRE-CLOSING COVENANTS OF PURCHASERS.........................................44
10.1 Preserve Accuracy of Representations and Warranties...............44
10.2 Access to Information.............................................44
10.3 Third Party Authorizations/Notifications..........................44
10.4 Reasonable Best Efforts and Continuing Cooperation................45
10.5 Lender Approval...................................................45
ARTICLE 11..................................................................45
JOINT COVENANTS OF THE PARTIES..............................................45
11.1 Non-Disclosure; Confidentiality...................................45
11.2 Publicity ........................................................45
11.3 Survival/Remedies.................................................46
11.4 Other Confidentiality Agreements..................................46
11.5 Certain Employment and Severance Arrangements.....................46
ARTICLE 12..................................................................47
ADDITIONAL POST-CLOSING AGREEMENTS/OBLIGATIONS OF THE PARTIES...............47
12.1 Employment of Sellers' Employees; Additional Employee Matters....47
12.1.1. Employment of Employees.................................47
12.1.2. WARN Act ...............................................48
12.1.3. Sellers' Plans..........................................49
12.1.4. Ads.....................................................49
12.1.5. Employee Releases and Waivers; Certain Severance
and Retention Benefits..................................49
12.2 Staffing Levels..................................................50
12.3 Medical Staff Matters............................................50
12.3.1. Medical Staff Appointment...............................50
12.3.2. No Discrimination.......................................50
12.3.3. Discontinuance/Reduction of Clinical Services...........50
12.3.4. Cardiovascular Services.................................51
12.3.5. Family Services Practice................................51
12.4 Community Board..................................................51
12.5 Management by Purchaser's Board of Directors.....................51
12.6 Regional Boards..................................................52
12.6.1. Regional Board..........................................52
12.6.2. Regional Medical Board..................................52
12.7 Baptist Bonds ...................................................52
12.8 Sellers' Cost Reports............................................52
12.9 Restriction on Sale/Transfer of PBHMC and ACHMC and
Right of First Refusal...........................................53
12.9.1. Restriction on Sale/Transfer............................53
12.9.2. Right of First Refusal..................................53
12.9.3. Permitted Exceptions....................................55
12.9.4. Recording...............................................55
12.10 Use, Purpose and Mission of Baptist Facilities...................56
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12.11 Purchasers' Payables.............................................56
12.12 Purchasers' Receivables..........................................56
12.13 Post-Closing Maintenance of and Access to Information
and Cooperation..................................................56
12.14 Bulk Transfer Laws...............................................57
12.15 Restricted Assets................................................57
12.16 Transition Services and Patients.................................57
12.17 Indigent Care ...................................................58
12.18 Purchaser Post-Closing Expenditures..............................58
12.19 Annual Compliance Certificate....................................59
12.20 Foundation Treatment.............................................60
12.21 Binding Effect on Successors, Assigns and Transferees............60
12.22 Certain COBRA Benefits...........................................60
12.23 Noncompetition...................................................60
12.24 Use of Names ....................................................61
12.25 Medical Staff Accounts...........................................62
12.26 Information System Services and License Agreements...............62
12.27 Continuing Guarantee.............................................62
12.28 Foundation Office Space..........................................62
12.29 DHHS Settlement Agreement........................................62
ARTICLE ....................................................................63
CONDITIONS TO ..............................................................63
13.1 Conditions Precedent to Purchasers' Obligation to Close..........63
13.2 Conditions Precedent to Sellers' Obligations to Close............68
ARTICLE 14..................................................................70
INDEMNIFICATION AND SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.............................................................70
14.1 Indemnification by Sellers.......................................70
14.2 Sellers' Limitations.............................................71
14.3 Indemnification by Purchasers....................................72
14.4 Purchaser's Limitations..........................................73
14.5 Notice and Procedure.............................................73
14.6 Survival of Representations: Indemnity Periods...................76
ARTICLE 15..................................................................77
DISCLAIMERS AND RELEASES....................................................77
15.1 Disclaimer and Release As To Information.........................77
15.2 Disclaimer and Release as to Representations and Warranties......77
ARTICLE 16..................................................................78
TERMINATION AND LIQUIDATED DAMAGES..........................................78
16.1 Termination of Agreement.........................................78
16.2 Effect of Termination............................................79
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16.3 Fulfillment of Conditions........................................81
ARTICLE 17..................................................................81
MISCELLANEOUS...............................................................81
17.1 Arbitration .....................................................81
17.2 Strict Compliance................................................81
17.3 Notices..........................................................81
17.4 Entire Agreement.................................................83
17.5 Amendments ......................................................83
17.6 Captions ........................................................83
17.7 Assignment ......................................................84
17.8 Controlling Law..................................................84
17.9 Severability ....................................................84
17.10 Successors and Assigns...........................................84
17.11 Attorneys' Fees..................................................84
17.12 Remedies ........................................................84
17.13 Third Party Beneficiaries........................................84
17.14 No Provisions Binding Until Signed...............................84
17.15 Time is of the Essence...........................................85
17.16 No Agency or Partnership Relations...............................85
17.17 Execution in Counterparts........................................85
17.18 Rules of Construction............................................85
17.19 Interest ........................................................85
17.20 Schedules .......................................................86
17.21 Reproduction of Documents........................................87
17.22 Consented Assignment.............................................87
17.23 Misdirected Payments.............................................87
ARTICLE 18..................................................................88
GUARANTEE; CONTINUING LIABILITY.............................................88
18.1 Guarantee of Sellers' Obligations................................88
18.2 Vanguard Guarantee of Obligations................................88
ARTICLE 19..................................................................89
FOUNDATION REPRESENTATIONS..................................................89
19.1 Authority to Enter into Agreement: Enforceability................89
19.2 Organization and Standing........................................89
19.3 No Breach .......................................................89
19.4 No Broker of Finder..............................................89
AGREEMENT FOR PURCHASE
AND SALE OF ASSETS
(Phoenix Facilities)
This AGREEMENT FOR PURCHASE AND SALE OF ASSETS (this "Agreement") is made
and entered into as of the 31st day of March, 2000 (the "Effective Date"), by
and among Vanguard Health Systems, Inc., a Delaware corporation ("Vanguard"),
VHS of Phoenix, Inc., a Delaware corporation ("VHS") on its behalf and on
behalf of such Affiliates of Vanguard that will take title to the Purchased
Assets (VHS and such Affiliates are sometimes collectively referred to herein
as the "Purchasers" and individually as a "Purchaser"), on the one hand, and
BAPTIST HOSPITALS AND HEALTH SYSTEMS, INC., an Arizona nonprofit corporation
("BHHS"), PHOENIX BAPTIST HOSPITAL AND MEDICAL CENTER, INC., an Arizona
nonprofit corporation ("PBHMC"), ARROWHEAD COMMUNITY HOSPITAL AND MEDICAL
CENTER, INC., an Arizona nonprofit corporation ("ACHMC"), ARIZONA NETWORK
DEVELOPMENT, INC., an Arizona nonprofit corporation ("ANDI"), THE FOUNDATION
FOR BAPTIST HEALTH SYSTEMS, an Arizona nonprofit corporation, and project
oasis, llc, an Arizona limited liability company (collectively with The
Foundation for Baptist Health Systems, the "Foundation"), on the other hand
(BHHS, PBHMC, ACHMC and ANDI are sometimes collectively referred to herein as
the "Sellers" and individually as a "Seller"). Purchasers, Vanguard, Sellers
and the Foundation are sometimes referred to in this Agreement collectively as
the "Parties" or individually as a "Party".
RECITALS:
WHEREAS, Sellers (other than BHHS) operate hospitals and other healthcare
facilities in Arizona that provide a broad range of healthcare services and
programs.
WHEREAS, Purchasers and their Affiliates operate hospitals and other
healthcare facilities in Arizona, California and Illinois that provide a broad
range of healthcare services and programs.
WHEREAS, the Parties share a broad range of ideals and program goals and
are each committed to the philosophy that their respective healthcare services
and programs should be offered in a quality setting and that their facilities,
services and programs, in the aggregate, should be operated on an efficient and
financially sound basis so as to maintain their continued existence, viability
and availability.
WHEREAS, the Parties believe that combination of the assets of Sellers
with the assets of Purchasers as contemplated in this Agreement will promote
quality, cost effective health services through a continuum of care to the
citizens of the communities served and will bring together organizations with
shared vision, values, philosophy and mission; and
WHEREAS, Sellers wish to sell their health care facilities to Purchasers,
and Purchasers wishes to purchase such properties, assets and operations, upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and subject to the terms and conditions hereof, the parties
agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the following respective meanings (it being
understood that such terms shall include in the singular number the plural, and
in the plural number the singular unless the context otherwise requires):
1.1 "Abandonment Date" shall be as defined in Section 5. 1.
1.2 "Accounts Payable" shall mean all accounts payable of Sellers, accrued
and unaccrued, but excluding (i) amounts due to Affiliates and (ii) accounts
payable related to the Excluded Businesses.
1.3 "Accounts Receivable" shall mean all accounts receivable of Sellers,
accrued and unaccrued, whether written off or reserved against, including
Medicare and AHCCCS program receivables, but excluding (i) all Cost Report
settlement amounts and risk pools (whether a credit balance or a debit
balance), (ii) amounts due from Affiliates and (iii) accounts receivable
related to the Excluded Businesses.
1.4 "Affiliate" of a Party shall mean a corporation, limited liability
company, partnership, joint venture, association, business trust or similar
entity organized under the laws of the United States of America or a state
thereof which directly or indirectly controls, is controlled by, or is under
common control with the Party. For purposes of this definition, "control" means
the power to direct the management and policies of a party through the
ownership of at least a majority of its voting securities or otherwise, or the
right to designate or elect at least a majority of the members of its governing
body by contract or corporate membership rights or otherwise.
1.5 "Allocated Bonds" shall mean the outstanding principal amount of the
tax-exempt Baptist Hospital System Revenue Bonds, Series 1995 and 1996, that
are allocated under federal tax law, to PBHMC and ACHMC, and shown in Exhibit
A.
1.6 "Alternative Proposal" shall be as defined in Section 9.12.
1.7 "Assumed Contracts" shall mean those Contracts described in Section
2.1.4 that Purchasers agree to assume, all Immaterial Contracts, and all
Material Contracts entered into between the Effective Date and the Closing Date
in accordance with Section 9.2.
1.8 "Assumed Liabilities" shall be as defined in Section 3. 1.
1.9 "Assignment and Assumption Agreement" shall be as defined in Section
3. 1.
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1.10 "Baptist Facility(ies)" shall individually or collectively mean
Phoenix Baptist Hospital and Medical Center, Arrowhead Community Hospital and
Medical Center, the outpatient treatment centers owned by ANDI, and all related
medical office buildings and other facilities at which the business of the
Sellers is conducted other than the Excluded Business.
1.11 "Baptist Financial Statements" shall be as defined in Section 6.3.
1.12. "Baptist Hospital" shall be as defined in Section 6.13.
1.13 "Bond Escrow Agreement" shall mean the Defeasance Escrow Agreement
among Bank One Arizona, N.A., as escrow agent, the Bond Trustee, PBHMC, ACHMC
and Medical Environments, Inc., providing for the defeasance of the Allocated
Bonds.
1.14 "Cash Portion of the Purchase Price" shall be as defined in Section
4.2.4.
1.15 "Claim Notice" shall mean written notification of a Third Party Claim
by an Indemnified Party to an Indemnifying Party under Article 14.
1.16 "Closing" shall mean the consummation of the transactions
contemplated by this Agreement, in connection with which Sellers shall execute
and deliver to or for Purchasers' benefit the Deeds and other instruments of
transfer to transfer to Purchasers all of the Purchased Assets, and otherwise
perform the obligations to be performed by Sellers under this Agreement, and at
which Purchasers shall remit to Sellers the Purchase Price and otherwise
perform the obligations to be performed by Purchasers under this Agreement.
1.17 "Closing Balance Sheets" shall mean the unaudited individual and
combined balance sheets of BHHS and the Baptist Facilities as of the close of
business on the day immediately prior to Closing Date.
1.18 "Closing Date" shall mean the date on which the Closing of the
transactions contemplated by this Agreement shall occur, as provided for in
Section 5.1 hereof.
1.19 "Closing Documents" shall mean all instruments, agreements,
certificates or other documents executed or delivered by any Party to another
at Closing.
1.20 "Closing Effective Time" shall mean for accounting purposes 12:00:01
A.M. on the Closing Date.
1.21 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.22 "Community Boards" shall be as defined in Section 12.4.
1.23 "Contracts" shall mean all commitments, contracts, leases, licenses,
agreements and understandings, written or oral, relating to the Purchased
Assets or the operation of the businesses of any Seller, the Subsidiary or the
Joint Venture to which any Seller, the Subsidiary or the Joint Venture is a
party or by which it or any of the Purchased Assets or any of the assets
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of the Subsidiary or the Joint Venture are bound, including agreements with
payers, physicians and other providers, agreements with health maintenance
organizations, independent practice associations, preferred provider
organizations and other managed care plans and alternative delivery systems,
joint venture and partnership agreements, management, employment, retention and
severance agreements, vendor agreements, real and personal property leases and
schedules, maintenance agreements and schedules, and agreements with
municipalities and labor organizations.
1.24 "Controlled Group" shall mean with respect to any Seller, a group
consisting of each trade or business (whether or not incorporated) which,
together with such Seller, would be deemed a "single employer" within the
meaning of subsections (b), (c), (m) or (o) of section 414 of the Code.
1.25 "Cost Reports" shall mean all cost and other reports filed pursuant
to the requirements of the Government Payment Programs for payment or
reimbursement of amounts due from them.
1.26 "Effective Date" shall be as defined in the first paragraph of this
Agreement.
1.27 "Encumbrances" shall mean liabilities, levies, claims, charges,
assessments, mortgages, security interests, liens, pledges, conditional sales
agreements, title retention contracts, leases, subleases, rights of first
refusal, options to purchase, restrictions (including restrictions on
transferring, pledging and mortgaging) and other encumbrances, and agreements
or commitments to create or suffer any of the foregoing.
1.28 "Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, and rule of common
law now or hereafter in effect and in each case as amended, and any binding
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment binding on Sellers or any
Affiliate of Sellers, as applicable, and relating to the environment or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 X.X.X.X.xx. 2601 et seq.; the Toxic Substances
Control Act, 15 X.X.X.xx. 2601 et seq.; the Clean Air Act, 42 X.X.X.X.xx. 7401
et seq.; the Safe Drinking Water Act, 42 X.X.X.X.xx. 3803 et seq.; the Oil
Pollution Act of 1990, 33 X.X.X.X.xx. 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 U.S.C.A.ss.11001 et seq.; the
Hazardous Material Transportation Act, 49 U.S.C.A.ss.1801 et seq.; the
Occupational - Safety and Health Act, 29 X.X.X.X.xx. 651 et seq.; and any state
and local or foreign counterparts or equivalents, in each case as amended from
time to time.
1.29 "Equipment" shall be as defined in Section 2.1.2.
1.30 "ERISA" shall be as defined in Section 6.17.
1.31 "ERISA Plans" shall be defined in Section 6.17.
1.32 "Excluded Assets" shall be as defined in Section 2.2.
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1.33 "Excluded Businesses" shall mean (i) the businesses owned or operated
by the following Affiliates of Sellers: Medical Environments, Inc., Xxxxxxx
Enterprises, Inc. (except for the Real Property described in Section 2.1.1),
CRV, Inc. (except for the Real Property described in Section 2.1.1), Xxxxx
Xxxxx Village, Inc., SRV, Inc., CRV, LP, and the Foundation, and (ii) the
businesses owned and operated by BHHS, ANDI and LaPaz Regional Hospital, Inc.
in LaPaz County, Arizona, including, but not limited to, The Quartzite Clinic.
1.34 "Excluded Liabilities" shall be as defined in Section 3.2.
1.35 "Final Abandonment Date" shall be as defined in Section 5. 1.
1.36 "Foundation" shall be as defined in the first paragraph of this
Agreement.
1.37 "GAAP" shall mean generally accepted accounting principles,
consistently applied, as in effect from time to time in the United States of
America.
1.38 "Governmental Authorities" shall mean all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures and
offices of any nature whatsoever of any federal, state, county, district,
municipal, city, foreign or other government or quasi-government unit or
political subdivision.
1.39 "Government Payment Programs" shall mean federal and state Medicare,
Medicaid (AHCCCS) and CHAMPUS programs, and similar or successor programs with
or for the benefit of Governmental Authorities.
1.40 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
1.41 "Xxxx-Xxxxxx Act" shall mean the Public Health Service Act, 42 U.S.C.
291, et seq.
1.42 "Immaterial Contracts" shall mean Contracts other than Material
Contracts that (i) require the future payment by any Seller of $40,000 or less
or the future performance by any Seller of services having a value of $40,000
or less, or (ii) are terminable by Seller at any time without cause upon notice
of 90 days or less, and that require during the period prior to termination the
payment of $40,000 or less or the future performance of services having a value
of $40,000 or less.
1.43 "Indemnified Party" shall mean any Person entitled to indemnification
under Article 14.
1.44 "Indemnifying Party" shall mean any Person obligated to indemnify
another Person under Article 14.
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1.45 "Indemnity Notice" shall mean written notification of a claim for
indemnity under Article 14, other than a Third Party Claim, made by an
Indemnified Party to an Indemnifying Party Pursuant to Section 14.5.
1.46 "Intellectual Properties" shall mean all marks, names, trademarks,
service marks, patents, patent rights, assumed names, logos, copyrights, trade
secrets and similar intangibles (including variants of and applications for the
foregoing) used in connection with the ownership and operation as of the
Effective Date or the business of any Seller, the Subsidiary or the Joint
Venture, including those Intellectual Properties listed or described on
Schedule 1.46.
1.47 "Interim Closing Balance Sheets" shall mean the unaudited individual
and combined balance sheets of BHHS and the Baptist Facilities as of the date
most recently available prior to Closing.
1.48 "Inventory" shall be as defined in Section 2.1.3.
1.49 "Joint Venture" shall mean Arrowhead MOB Joint Venture, an Arizona
general partnership.
1.50 "Joint Venture Assets" shall mean all assets, real, personal and
mixed, tangible and intangible, owned or leased by the Joint Venture and
employed in the operation of the businesses of the Joint Venture as of the
Effective Date, and arising or acquired between the Effective Date and the
Closing Date, including the medical office building currently know as Arrowhead
Medical Plaza I.
1.51 "Knowledge", "knowledge" or "best knowledge" of Sellers or variants
thereof (including "best knowledge") mean only the actual knowledge of each of
the Persons whose names or titles are set forth in Schedule 1.51, after due
inquiry by Sellers of such Persons, but no further inquiry by such Persons.
1.52 "Knowledge" "knowledge" or "best knowledge" of Purchasers or variants
thereof (including "best knowledge") mean only the actual knowledge of each of
the Persons whose names or titles are set forth in Schedule 1.52, after due
inquiry by Purchasers of such Persons, but no further inquiry by such Persons.
1.53 "Legal Requirements" shall mean with respect to any Person, all
statutes, ordinances, by-laws, codes, rules, regulations, restrictions, orders,
judgments, orders, writs, injunctions, decrees, determinations or awards of any
Governmental Authority having jurisdiction over such Person or any of such
Person's assets or businesses.
1.54 "Leased Property" shall be as defined in Section 2.1.1.
1.55 "Material Contracts" shall mean Contracts affecting the ownership or
use of, title to or interest in any Real Property; Contracts with referral
sources to any of the Hospital Businesses and Contracts between any Affiliate
of any Seller, the Subsidiary or the Joint Venture and any physician or
physician group who is (or whose members are) employees of Sellers or
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any Affiliate of Sellers or appointees to the medical staff of any of the
Baptist Facilities (but not any Contract between an Excluded Business and a
physician on the medical staff of a Baptist Facility unless the physician is an
employee of a Baptist Facility); Contracts with respect to Intellectual
Properties; Contracts relating to information and data processing systems,
hardware and software utilized in connection with the Baptist Facilities;
collective bargaining agreements or other Contracts with labor unions or other
employee representatives or groups; Contracts with directors, trustees,
shareholders, partners, Affiliates, officers or other individual employees of
any Seller, the Subsidiary or the Joint Venture relating to the Baptist
Facilities, as described on Schedule 2.1.4; Contracts relating to the sale or
factoring of Accounts Receivables or other Purchased Assets; requirements or
exclusive Contracts or Contracts prohibiting or limiting competition or the
conduct of any lawful business by the Baptist Facilities; Contracts providing
for payments based in any manner on the revenues, purchases or profits of the
Baptist Facilities or any part thereof; and any and all other Contracts that
are not Immaterial Contracts.
1.56 "Materials of Environmental Concern" shall mean (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is
friable, urea formaldehyde foam insulation, dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "restricted hazardous materials,"
"extremely hazardous wastes," "restrictive hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants," or words of
similar meaning and regulatory effect under any applicable Environmental Law;
and (c) any other chemical, material or substance, the Release of which is
prohibited, limited or regulated by any governmental authority.
1.57 "Medical Staff" shall be as defined in Section 6.13.
1.58 "Multiemployer Plan" shall be as defined in Section 3(37) of ERISA or
Section 4001(a)(3) of ERISA.
1.59 "Multiple Employer Plan" shall mean an ERISA Plan which is not a
Multiemployer Plan and for which a Person who is not a member of a Controlled
Group that includes any Seller is or has been a contributing sponsor.
1.60 "Net Working Capital" shall mean the difference between (i) "accounts
receivable (net)", usable "inventories" and usable "other current assets" and
(ii) "accounts payable", "accrued payroll and related" and "other current
liabilities" but excluding from such calculation any Excluded Assets and
Excluded Liabilities.
1.61 "Option Property" shall mean (i) the portion of the Real Property
owned by ACHMC that is currently leased to and subject to a right of first
refusal (which is not triggered by this Transaction) and option to purchase in
favor of AMPII, L.L.C., its successors and assigns, and which appears to
require the consent of AMPII, L.L.C.'s lender to the placement of an
encumbrance on such Real Property by Purchaser, and (ii) the portion of the
Real Property owned by PBHMC and subject to rights of first refusal and options
to purchase in favor of Health Care Property Investors, its successors and
assigns, and Woodmen of the World Life Insurance Society and/or Omaha Woodmen
Life Insurance Agency, its successors and assigns.
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1.62 "Other Assets" shall be as defined in Section 2.1.10.
1.63 "Owned Property" shall be as defined in Section 2.1.1.
1.64 "Parties" shall be as defined in the first paragraph of this
Agreement.
1.65 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.66 "Pension Plan" shall be as defined in Section 6.17.
1.67 "Permitted Exceptions" shall be as defined in Section 9.8.
1.68 "Person" shall mean any individual, company, body corporate,
association, partnership, limited liability company, firm, joint venture,
trust, trustee or Governmental Authority.
1.69 "Personal Property" shall be as defined in Section 2.1.5.
1.70 "PHO" shall mean Phoenix Baptist Primary Physician Group, Inc.
1.71 "Phoenix Campuses" shall mean the campuses of each of the Baptist
Hospitals and the areas within a one-half mile radius of each such campus.
1.72 "Plan" shall be as defined in Section 6.17.
1.73 "Pricing Date" shall mean December 31, 1999.
1.74 "Primary Service Areas" shall mean the geographic areas located
within the following zip codes: 85009, 85013, 85014, 85015, 85017, 85019,
85020, 85021, 85029, 85033, 85051, 85301, 85302, 85304, 85023, 85027, 85306,
85308, 85310, 85345, 85374 and 85382.
1.75 "Provider Numbers and Agreement" shall be as defined in Section
2.1.9.
1.76 "Purchase Price" shall be as defined in Section 4.2.
1.77 "Purchase Price Adjustment" shall be as defined in Section 4.3.1.
1.78 "Purchased Assets" shall be as defined in Section 2. 1.
1.79 "Purchasers" shall be as defined in the first paragraph of this
Agreement.
1.80 "Purchasers' Indemnified Persons" shall mean Purchasers, their
respective stockholders, Affiliates, successors and assigns, and all of their
respective stockholders, partners, Affiliates, directors, employees and
officers.
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1.81 "Real Property" shall be as defined in Section 2.1.1.
1.82 "Sellers" shall mean BHHS, PBHMC, ACHMC, and ANDI.
1.83 "Sellers' Indemnified Persons" shall mean Sellers, their respective
successors and assigns and all of their respective Affiliates, directors and
officers.
1.84 "Sellers Cost Reports" shall be as defined in Section 12.8.
1.85 "Special Severance Credit" shall mean up to $131,897 in severance
payments, plus reasonable outplacement costs, paid or incurred by Sellers
pursuant to the severance policies and practices of BHHS in effect on the
Effective Date as a result of the failure of Purchasers to offer employment at
Closing to the employees listed in Schedule 1.85 pursuant to Section 12.1.1.
1.86 "Subsidiary" means Pleasant Properties, Inc., an Arizona corporation.
1.87 "Tax" shall mean any income, unrelated business income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
privilege, premium, windfall profits, environmental (including taxes under
section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, stamp, sales, use, transfer, registration, escheat, unclaimed
property, value added, alternative or add-on minimum, estimated or other tax,
assessment, charge, levy or fee of any kind whatsoever, including payments or
services in lieu of Taxes, interest or penalties on and additions to all of the
foregoing, which are due or alleged to be due to any Governmental Authority,
whether disputed or not.
1.88 "Tax Return" shall mean any return, declaration, report, claim for
refund, information return or statement, including schedules and attachments
thereto and amendments, relating to Taxes.
1.89 "Third Party Claim" shall be as defined in Section 14.5(a)(i).
1.90 "Title Insurance Company" shall mean First American Title Insurance
Company.
1.91 "Transaction" means the transactions that will take place at Closing
and after Closing pursuant to the terms and conditions of this Agreement,
including without limitation, Sellers' execution and delivery to or for
Purchasers' benefit of the Deeds and other instruments of transfer to transfer
to Purchasers all of the Purchased Assets, and Purchasers' remittance to the
Foundation of the Purchase Price.
1.92 "Venture Documents" shall mean (i) the Joint Venture Agreement dated
October 25, 1991 between the Subsidiary and Capital Resources Group, Ltd., (ii)
the $2,800,000 Secured Promissory Note dated September 1, 1993 made payable by
the Joint Venture to Farm Bureau Life Insurance Company, (iii) the Continuing
Guarantee dated September 1, 1993, executed by BHHS in favor of Farm Bureau
Life Insurance Company, (iv) the Deed of Trust, Security Agreement, Financing
Statement and Fixture Filing with Absolute Assignment of Rents and
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Leases dated September 1, 1993, by and among the Joint Venture, Lawyers Title
of Arizona, Inc., and Farm Bureau Life Insurance Company, (iv) the
Environmental Certification and Indemnity Agreement, dated September 1, 1993,
between the Joint Venture and Farm Bureau Life Insurance Company, (v) the
Allocation Agreement, dated April 8, 1993, among BHHS, the Subsidiary and
Capital Resources Group, Ltd. (formerly Xxxxx Properties Holdings, Inc.), and
(vi) the Management Agreement dated October 1, 1992, by and between the Joint
Venture and Devman Company, as amended by Management Agreement Extensions most
recently dated October 12, 1999.
1.93 "Welfare Plan" shall be as defined in Section 6.17.
1.94 "403(b) Plan" shall be as defined in Section 6.17.
ARTICLE 2
PURCHASE AND SALE OF SELLERS' ASSETS
2.1 Purchase and Sale of Assets. At the Closing, Sellers shall sell,
convey, transfer, assign and deliver to Purchasers or cause to be sold,
conveyed, transferred, assigned and delivered to Purchasers, and Purchasers
shall purchase and acquire from Sellers, subject to Section 2.2 hereof, all of
Sellers' right, title and interest in and to all of Sellers' properties and
assets (real and personal, tangible and intangible) used, or held for use, in
connection with the operation of BHHS and the Baptist Facilities, including but
not limited to the following (collectively (and excluding the Excluded Assets),
the "Purchased Assets"):
2.1.1. Real Property. All of the real property and interests therein
(together with all of the rights, easements and appurtenances thereto, if any)
used, or held for use, in connection with the operation of BHHS, the Baptist
Facilities, the Subsidiary and the Joint Venture, either (a) owned by the
Sellers in fee simple and set forth in Schedule 2.1.1-A, subject to existing
leases described on Schedule 2.1.4 ("Owned Property"), or (b) leased by the
Sellers as lessee and set forth in Schedule 2.1.1-B, subject to existing
subleases described on Schedule 2.1.4 ("Leased Property"), or (c) owned by the
Joint Venture in fee simple and set forth in Schedule 2.1.1-C, subject to
existing leases described on Schedule 7.4(f) ("Joint Venture Property" and,
together with the Owned Property, the "Real Property"). The Real Property shall
not include those assets described in Section 2.2, but shall include all
Sellers' interests in the land and buildings and other improvements and
fixtures attached to the Real Property, and shall include the Real Property
more particularly described on Schedules 2.1.1-A, 2.1.1-B and 2.1.1-C attached
hereto. Schedule 2.1.1-A includes certain real property owned as of the
Effective Date by CRV, Inc., and Xxxxxxx Enterprises, Inc., Affiliates of
Sellers, but such properties shall be included in the Real Property conveyed
directly to Purchasers at Closing. Purchasers acknowledge and agree that
Sellers do not own and are not selling, assigning, conveying or transferring to
Purchasers, nor otherwise undertaking any obligation with respect to, any fee
simple interest in the Leased Property.
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2.1.2. Machinery and Equipment. All of the machinery, vehicles,
equipment (including spare parts), computer systems and software (to the extent
assignable or transferable by Sellers), office equipment, fixtures and
furniture and all other tangible assets owned by the Sellers and used, or held
for use, in connection with the operation of BHHS and the Baptist Facilities
and, to the extent assignable or transferable by the Sellers, all rights in all
warranties of any manufacturer or vendor with respect thereto, including, but
not by way of limitation, those items described on Schedule 2.1.2 attached
hereto (collectively, the "Equipment").
2.1.3. Inventory. All of Sellers' inventory of drugs, food, laundry,
housekeeping, and other supplies and other disposables and consumables used, or
held for use, in connection with the operation of BHHS and the Baptist
Facilities (the "Inventory").
2.1.4. Assumed Contracts. All Assumed Contracts identified as such
among the Contracts listed and described on Schedule 2.1.4, Schedule 11.5, and
all Immaterial Contracts, but with respect to Assumed Contracts that include
any Excluded Businesses, Purchasers' assumption shall be with respect to the
Purchased Assets and the Baptist Facilities only and not the Excluded
Businesses.
2.1.5. Personal Property. To the extent assignable and/or transferable
under applicable law: (a) all of the Sellers' interest in any and all personal
property, whether tangible or intangible (collectively, "Personal Property"),
including without limitation, all Intellectual Properties, used, or held for
use, in connection with the operation of BHHS and the Baptist Facilities and
described on Schedule 2.1.5.
2.1.6. Shares of Subsidiary Capital Stock. All shares of capital stock
of the Subsidiary, which is the legal and beneficial owner of 80% of the
outstanding membership interests of the Joint Venture, and all books, records
and other corporate and partnership documents of the Subsidiary and the Joint
Venture.
2.1.7. Prepaid Expenses. All of Sellers' interest in usable prepaid
expenses relating to the operation of BHHS and the Baptist Facilities.
2.1.8. Accounts Receivable and Notes Receivable. All of the Accounts
Receivable of Sellers as of the Closing Date relating to the operation of BHHS
and the Baptist Facilities, and only those notes receivable listed on Schedule
2.1.8, which will be included in Net Working Capital.
2.1.9. Provider Numbers and Agreements. Sellers' provider numbers and
related participation agreements for Medicare, AHCCCS and other federal, state
and local health care programs.
2.1.10. Other Assets. To the extent assignable and transferable under
applicable law and subject to Sellers' rights under Section 12.13, all of
Sellers' rights to all assignable certificates, accreditations, licenses,
permits, franchises, governmental approvals and similar rights relating to the
operation of the Baptist Facilities, including without limitation those
described in Schedule 6.4(i); all building or construction plans, designs and
drawings relating to
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BHHS and the Baptist Facilities; all records and books maintained in connection
with the conduct and operation of the Purchased Assets (including all
financial, patient, medical staff, personnel and other records, equipment
records, medical/administrative libraries, medical records, documents,
catalogs, books, files and operating manuals, but excluding records subject to
the attorney-client privilege); all rights as either lessor or lessee under the
Assumed Contracts to any security deposits; all warranties associated with the
Purchased Assets; all Patient Trust Fund Accounts as described in Schedule 6.6;
all patient lists, assignable data processing software, licenses and supplier
lists; all judgment rights of Sellers described in Schedule 2.1.10(a); subject
to Section 9.14, all insurance proceeds arising in connection with damage to
the Purchased Assets occurring prior to the Closing Date, to the extent not
expended for the repair or restoration of the Purchased Assets; general
intangibles of the Baptist Facilities, including goodwill and the names
"Phoenix Baptist Hospital and Medical Center", and "Arrowhead Community
Hospital and Medical Center"; claims of Sellers against third parties relating
to the Purchased Assets, xxxxxx or inchoate, known or unknown, contingent or
otherwise, but excluding such claims relating to Excluded Liabilities; and all
other assets of the Sellers used in the conduct and operation of the Purchased
Assets and not specifically excluded pursuant to Section 2.2; and all proceeds
of the foregoing and all other property of every kind, character or
description, tangible and intangible, known or unknown, owned or leased by
Sellers, wherever located and whether or not reflected on the Baptist Financial
Statements or similar to the properties described above (collectively, the
"Other Assets").
2.2 Excluded Assets. The interest of the Sellers in the following assets
as set forth on Sellers' Financial Statements or otherwise shall be excluded
from the definition of Purchased Assets under this Agreement and will not be
sold to Purchasers (the "Excluded Assets"):
2.2.1. Cash and cash equivalents.
2.2.2. Except to the extent included in the Net Working Capital,
investments and securities, including cash proceeds, if any, from the PHO
bankruptcy.
2.2.3. Trustee-held funds.
2.2.4. Prepaid insurance and insurance deposits and self-insurance
trust funds.
2.2.5. Intercompany receivables and payables.
2.2.6. Restricted funds (except as provided in Section 12.15) and
charitable cash pledges.
2.2.7. Cost Report settlement receivables, and all appeals and appeal
rights relating thereto.
2.2.8. Notes receivable, except as described in Schedule 2.1.8.
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2.2.9. All corporate documents; minute books; corporate seals;
attorney-client privileged records; the Cost Reports and other documents
described in Section 12.8; and records of Sellers relating to their respective
corporate organization and existence.
2.2.10. Other excluded items described on Schedule 2.2.10.
2.2.11. Assets owned by BHHS and its Affiliates (other than PBHMC,
ACHMC, the Subsidiary and the Joint Venture) and used solely in the conduct of
the Excluded Businesses.
ARTICLE 3
ASSUMPTION OF LIABILITIES; AND EXCLUDED LIABILITIES
3.1 Liabilities to Be Assumed by Purchasers. At the Closing, Purchasers
shall assume and agree to perform and discharge when and as due the following
liabilities and obligations of the Sellers relating to their operation and the
operation of the Purchased Assets, pursuant to an Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit B (the
"Assignment and Assumption Agreement") (collectively, the "Assumed
Liabilities"):
3.1.1. Contracts and Leases. All liabilities and obligations of the
Sellers arising on or after the Closing Date with respect to any period
commencing on the Closing Date pursuant to the Assumed Contracts.
3.1.2. Vacation Leave and Paid Time Off. All accrued unused vacation
leave, sick-leave days and paid time off with respect to former employees of
Sellers who are employed by Purchasers to the extent included in Net Working
Capital. Purchasers shall permit former employees of Sellers to use (or be paid
the vested portions of) such accrued unused vacation leave, sick-leave days and
paid time off on substantially the same terms and conditions as such employees
are permitted to use (or be paid the vested portions of) them while employed by
Sellers, provided that nothing shall prevent Purchasers from debiting vacation,
sick-leave and paid time off taken by employees against amounts accumulated
prior to Closing before debiting them against amounts that shall continue to
accumulate in the normal course of Purchasers' business after Closing.
3.1.3. Extended Illness Bank ("EIB") Accumulations. All EIB
accumulations, as of the Closing Effective Time, for the former employees of
Sellers who are employed by Purchasers with a Purchase Price deduction equal to
$683,492. Purchasers shall permit former employees of Sellers to use such EIB
accumulations on substantially the same terms and conditions as such employees
are permitted to use them while employed by Sellers, provided that nothing
shall prevent Purchasers from debiting EIB leave taken by employees against
amounts accumulated prior to Closing before debiting them against amounts that
shall continue to accumulate in the normal course of Purchasers' business after
Closing.
3.1.4. [Intentionally Omitted]
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3.1.5. Accounts Payable. All of the Accounts Payable of Sellers as of
the Closing Effective Time relating to the operation of BHHS and the Baptist
Facilities to the extent included in the computation of Net Working Capital.
3.1.6. Other Liabilities. The other liabilities and obligations
included in Net Working Capital and those, if any, described on Schedule 3.1.6.
3.2 Excluded Liabilities. Under no circumstance shall Purchasers assume or
be obligated to pay, and none of the Purchased Assets shall be or become liable
for or subject to, any and all liabilities of any Seller other than the Assumed
Liabilities, whether known or unknown, fixed or contingent, recorded or
unrecorded, and whether arising prior to or after Closing (the "Excluded
Liabilities"), which shall be, become and remain liabilities and obligations of
Sellers (subject to Section 14.2(a)(iii)), including, without limitation:
(a) other than those included in Section 3.1 and/or Net Working Capital,
all liabilities accrued on the Closing Balance Sheets;
(b) liabilities or obligations of Sellers, the Subsidiary or the Joint
Venture for Taxes in respect of periods ending on or prior to the Closing Date
or resulting from the consummation of the transactions contemplated herein;
(c) liabilities or obligations associated with any Excluded Assets and
liabilities and obligations of the Joint Venture arising prior to Closing or
with respect to periods prior to the Closing Date;
(d) liabilities or obligations associated with any and all indebtedness of
Sellers or the Subsidiary for borrowed money, except the indebtedness, if any,
expressly described on Schedule 3.1.6;
(e) liabilities or obligations accruing under any Assumed Contracts prior
to the Closing Date or resulting from any breach or default prior to the
Closing Date of any Assumed Contracts or of other Assumed Liabilities, and
liabilities arising out of any improper assignment to Purchasers at Closing of
any Assumed Contracts and liabilities arising under any Contracts not Assumed
Contracts;
(f) liabilities or obligations arising out of or in connection with Third
Party Claims, litigation or proceedings currently pending or which arise on or
after the Closing Date arising out of or based upon acts or omissions of
Sellers or its Affiliates which occurred prior to the Closing Date, including
litigation and final actions relating to peer review activities at the Baptist
Hospitals prior to the Closing Date;
(g) liabilities or obligations under the Xxxx-Xxxxxx Act or other
restricted grant or loan programs;
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(h) except to the extent included in Net Working Capital on the Closing
Balance Sheets or assumed by Purchasers with a Purchase Price credit pursuant
to Section 4.2, and except for obligations under the Contracts specified in
Schedule 11.5 as being assumed by Purchasers, liabilities or obligations to
Sellers' employees, Employee Benefit Plans, the Internal Revenue Service, PBGC
or any other Governmental Authority, arising from or relating to periods prior
to Closing (whether or not triggered by the transactions contemplated by this
Agreement), including liabilities or obligations arising under any Employee
Benefit Plan, severance, bonus or incentive pay program or arrangement, EEOC
claim, unfair labor practice, and wage and hour practice, and liabilities or
obligations arising under the Worker Adjustment and Retraining Act, 29 U.S.C.
2101-2109, as a result of acts of any Seller prior to Closing (except as
provided in Section 12.1.2);
(i) Cost Report settlement payables relating to all Cost Report periods
ending on or before the Closing Date;
(j) liabilities and obligations associated with the ownership, operation,
management, control or bankruptcy of the PHO, whether such liabilities or
obligations arise prior to or after Closing; and
(k) penalties, fines, settlements, interest, costs and expenses arising
out of or incurred as a result of any Third Party Claim alleging a violation by
any Seller of any Legal Requirement.
3.3 Subsidiary Liabilities. The Parties acknowledge and agree that the
sale to Purchasers of Sellers' interest in the assets of the Joint Venture has
been structured as a sale of BHHS' capital stock in the Subsidiary. At Closing
the Sellers and the Subsidiary shall execute and deliver an agreement in form
acceptable to the parties pursuant to which Sellers shall assume, agree to pay
and discharge and generally be responsible for any and all liabilities and
obligations of the Subsidiary (including liabilities of the Subsidiary incurred
in its capacity as general partner of the Joint Venture), except for
obligations that arise after Closing under the Venture Documents and
liabilities that arise after Closing, unless in each such instance such
obligations or liabilities arise out of or result from acts or omissions of the
Subsidiary or any Seller prior to Closing.
ARTICLE 4.
XXXXXXX MONEY DEPOSIT AND CONSIDERATION
4.1 Xxxxxxx Money Deposit. Upon the execution of this Agreement,
Purchasers shall deposit with Bank One, NA (the "Bank"), $1,000,000 in
immediately available funds (the "Xxxxxxx Money Deposit"), which Xxxxxxx Money
Deposit shall be either applied at Closing toward the Purchase Price or paid to
one of the Parties in accordance with the terms of this Agreement and the
Deposit Escrow Agreement in the form attached to this Agreement as Exhibit C.
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4.2 Consideration. The aggregate consideration for the Purchased Assets
and other covenants and commitments provided by the Sellers shall be (a) the
assumption of liabilities as provided for in Section 3.1; and (b) a purchase
price of Ninety Million Two Hundred Thousand Dollars ($90,200,000), plus the
Special Severance Credit, plus, the amount, if any, by which Net Working
Capital on the Closing Balance Sheets exceeds Twenty One Million Five Hundred
Eighty-eight Thousand, Four Hundred Seventy-five Dollars ($21,588,475), minus
the amount, if any, by which Net Working Capital on the Closing Balance Sheets
is less than Twenty-One Million Five Hundred Eighty-eight Thousand, Four
Hundred Seventy-five Dollars ($21,588,475) (the "Purchase Price"). Purchasers
shall pay to the Foundation at Closing an amount (the "Cash Portion of the
Purchase Price") equal to the Purchase Price minus (i) the net book value as of
the Closing Date of any long-term indebtedness or capitalized lease obligations
of Sellers (including the current portions thereof) that Purchasers may agree
to assume at Closing, the net book value as of the Closing Date of any
long-term indebtedness or capitalized lease obligations of the Subsidiary to
which any of its assets or properties are subject, and the 80% of the net book
value as of the Closing Date of any long-term indebtedness or capitalized lease
obligations of the Joint Venture to which any of its assets or properties are
subject (ii) the amount of immediately available funds provided by Purchasers
to the Bond Trustee sufficient to defease the Allocated Bonds in accordance
with the Bond Escrow Agreement, (iii) to the extent not included in Net Working
Capital, all vacation, holiday and sick leave accumulations of the Sellers'
former employees hired by Purchasers at the Closing (with the deduction for EIB
plans being the amount set forth in Section 3.1.3), and related Taxes thereon,
which liabilities will be assumed by Purchasers at Closing. The Purchase Price
shall be calculated by Purchasers and Sellers at Closing from the relevant
entries in the Interim Closing Balance Sheets (as adjusted to reflect the
Inventory described in Section 4.2.2.) and estimates of fees, expenses and
other items as of the Closing Date.
4.2.1. Allocation. The aggregate consideration described in Section
4.2 shall be allocated among the Purchased Assets as mutually agreed to by the
Purchasers and the Sellers in writing prior to the Closing Date and as set
forth at Schedule 4.2.1, which allocation may be amended by the parties as
necessary to reflect any adjustment in the Purchase Price which the Parties may
agree upon. The Parties agree to file the forms required by Section 1060 of the
Code, and tax returns in a manner consistent with such agreed upon allocation.
The Parties agree to abide by the allocation arrived at pursuant to this
Section 4.2.1 for Closing and terminating cost report purposes. Sellers and
Purchasers shall exchange mutually acceptable and completed Internal Revenue
Services Forms 8594 (including supplemental forms, if required), which they
shall use to report the Transaction to the Internal Revenue Service in
accordance with such allocation.
4.2.2. Physical Count of Inventory. No more than three days prior to
the Closing Date, Sellers, at their sole cost and expense, shall conduct (and
Purchasers shall be entitled to monitor) a physical count as of such date of
the usable Inventory that are not damaged, are currently dated, not obsolete,
and are of a quality and quantity that may be used in the ordinary course of
the business on hand at or used in connection with the operation of BHHS and
the Baptist Facilities, and shall prepare a schedule indicating the value of
the Inventory (determined by the lower of the cost or market value on a
first-in-first-out basis for each item). Sellers shall give Purchasers at least
five business days' prior written notice of the date that the Inventory is to
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be counted and shall permit Purchaser to monitor the count. The Parties
acknowledge that the physical count to be taken pursuant to this Section 4.2.2
will not be conducted until just prior to the Closing Date and, therefore, the
results of such physical count will not be available until some time after the
Closing Date. Accordingly, the Parties agree that for purposes of the Closing
the Net Working Capital shall include the value of the Inventory as reflected
by the Interim Closing Balance Sheets. For purposes of the Closing Balance
Sheets, the portion of Net Working Capital attributable to the Inventory shall
be the value of the Inventory as determined pursuant to the physical count
referred to in this Section 4.2.2.
4.2.3. Net Working Capital Calculation. No less than five business
days prior to the Closing Date Purchasers and Sellers shall agree on the value
of those items included in the calculation of Net Working Capital as reflected
on Sellers' Interim Closing Balance Sheets. Purchasers and Sellers shall
cooperate in good faith with one another in advance of five business days prior
to the Closing Date in order to accomplish the foregoing.
4.3 Post-Closing Adjustments.
4.3.1. Post-Closing Adjustment Payment. Within 60 days after the
Closing Date, Sellers will deliver to Purchasers the Closing Balance Sheets,
prepared in accordance with generally accepted accounting principles
consistently applied, and the Net Working Capital shall be recalculated to
reflect the difference between the Net Working Capital on the Interim Closing
Balance Sheets and on the Closing Balance Sheets (the "Purchase Price
Adjustment"); provided, however, such recalculation shall be dollar-for-dollar
for the differences between such balance sheets and no consideration in the
recalculations shall be given to the fact that under generally accepted
accounting principles consistently applied a materiality standard applies to
such Financial Statements. If Purchasers dispute any entry in the Closing
Balance Sheets relevant to the calculation of the Purchase Price Adjustment,
and/or dispute the value of the Inventory, and such dispute is not resolved to
the mutual satisfaction of Sellers and Purchasers within ninety (90) days after
the Closing Date, Sellers and Purchasers each shall have the right to require
that such dispute be submitted to Ernst & Young, acting as experts and not as
arbitrators to resolve the computation or verification of the disputed Closing
Balance Sheets entries in accordance with the provisions of this Agreement and
otherwise where applicable in accordance with generally accepted accounting
principles applied on a consistent basis. The fees and expenses of any such
submission to an accounting firm shall be split 50/50 between Sellers and
Purchasers. Sellers shall pay Purchasers, or Purchasers shall pay Sellers, as
the case may be, the Purchase Price Adjustment, if any, within five (5)
business days after its determination. The determination made by Ernst & Young,
shall be final and binding on the Parties unless Sellers, on the one hand, or
Purchasers, on the other hand, provide a written notice of objection to the
other Party within ten (10) days after receipt of the Ernst & Young
determination, in which case the matter shall be submitted to arbitration as
provided in Section 17.1 of this Agreement.
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ARTICLE 5
CLOSING AND CLOSING DATE
5.1 Date, Location. The Closing shall take place at the offices of Sellers
in Phoenix, Arizona, on a date mutually agreed upon by Purchasers and Sellers.
In the event the Closing does not take place on or before May 1, 2000 (the
"Abandonment Date"), this Agreement will terminate; provided, however, that if
the Closing is delayed beyond such date solely by virtue of any delay in
obtaining regulatory approvals, bond defeasance, or other approvals or
consents, the Abandonment Date shall be extended until such approvals have been
obtained or denied, but not beyond June 30, 2000 without the written approval
of each of the Parties (the "Final Abandonment Date").
5.2 Allocation of Income and Real Estate Taxes. Except as expressly
provided in this Agreement, all cash and income received prior to the Closing
Effective Time (as defined in Section 1.20) attributable to the operation of
the Baptist Facilities prior to the Effective Time shall be the property of the
Sellers. Except as expressly provided herein, all cash and income received
commencing at or after the Closing Effective Time attributable to the Accounts
Receivable or the operation of the Baptist Facilities on or after the Effective
Time shall be the property of the Purchasers. All cash and other deposits held
by the Sellers under Assumed Contracts as security for the performance of third
party obligations shall be delivered to the Purchasers.
To the extent not included in Net Working Capital, real estate taxes and
assessments and other expenses normally prorated upon a sale of assets
attributable to Owned Property and real estate and personal property lease
payments shall be prorated as of the Closing Effective Time. Sellers and
Purchasers will work cooperatively to (i) transfer all utilities for Real
Property to the account of Purchasers immediately following the Closing
Effective Time and (ii) calculate, pay, collect and remit all such prorated or
allocated items.
5.3 The Sellers Deliverables. At the Closing, Sellers shall at their sole
cost and expense deliver or cause to be delivered to Purchasers:
(a) A special warranty deed or deeds to the Owned Property, substantially
in the form attached hereto as Exhibit D conveying to Purchasers marketable
title in fee simple, free and clear of all Encumbrances, except for Permitted
Exceptions, and a quitclaim deed or deeds for any improvements located on any
Leased Property in which any Seller is lessee under a ground lease,
substantially in the form attached hereto as Exhibit E (such special warranty
deed(s) and quitclaim deed(s) referred to herein as the "Deeds"),.
(b) Non-foreign Affidavits and Affidavits of Property Value for the Owned
Property, in forms reasonably acceptable to the Title Insurance Company.
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(c) Bills of sale, assignments, certificates of title (or like documents),
and other instruments of transfer to convey to Purchasers good and merchantable
title to the Equipment, Inventory, Personal Property, and Other Assets, free of
all Encumbrances except Permitted Exceptions, substantially in the form
attached hereto as Exhibit F.
(d) The executed Assignment and Assumption Agreement.
(e) Stock certificates representing the shares of capital stock of the
Subsidiary (collectively, the "Shares"), duly endorsed in blank for transfer or
accompanied with stock powers duly executed in blank.
(f) A copy of the articles of incorporation for each of BHHS, PBHMC,
ACHMC, ANDI, the Foundation and the Subsidiary, certified by the Corporation
Commission of Arizona or other applicable agency of the state of its
incorporation and dated within thirty (30) days prior to the Closing Date.
(g) A copy of the bylaws of each of BHHS, PBHMC, ACHMC, ANDI, the
Foundation and the Subsidiary, certified by the secretary or assistant
secretary of each such entity and dated within thirty (30) days prior to the
Closing Date.
(h) Copies of the resolutions and other actions of the directors,
shareholders, trustees and members, as applicable, of each of BHHS, PBHMC,
ACHMC, ANDI and the Foundation, authorizing the execution and delivery of this
Agreement and the consummation by such corporation of the Transaction, which
copies have been certified by the secretary or assistant secretary of each such
corporation and dated as of the Closing Date.
(i) A certificate of good standing (or similar document) for each of BHHS,
PBHMC, ACHMC, ANDI, the Foundation and the Subsidiary issued by the Corporation
Commission of Arizona or other applicable agency of the state of its
incorporation or organization and dated within thirty (30) days prior to the
Closing Date.
(j) The executed Bond Escrow Agreement.
(k) The original minute books, transfer ledgers and other corporate books
and records of the Subsidiary and the partnership books and records of the
Joint Venture.
(l) Written resignations of the directors and officers of the Subsidiary
effective on and as of the Closing.
(m) All documents required to be provided by the Sellers by any other
provision of this Agreement and all documents reasonably requested by the
Purchasers or their counsel.
(n) UCC-2 Termination Statements, releases and reconveyances or similar
instrument for any and all financing statements filed with respect to and deeds
of trust and other Encumbrances on the Purchased Assets, excluding Permitted
Exceptions.
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5.4 Purchasers Deliverables. At the Closing, Purchasers shall deliver to
the Sellers:
(a) A wire transfer of immediately available federal funds payable to the
Foundation in the Cash Portion of the Purchase Price required under Section
4.2.
(b) A copy of the Articles of Incorporation of each Purchaser, certified
by the Corporation Commission of Arizona or other applicable agency of the
state of its incorporation and dated within thirty (30) days prior to the
Closing Date.
(c) Copies of the resolutions and other actions of the directors and, if
required by law or under each Purchaser's governing documents, shareholders of
Purchasers authorizing the execution and delivery of this Agreement and the
consummation by the Purchaser of the Transaction, which copies have been
certified by the secretary or assistant secretary of the Purchaser and dated as
of the Closing Date.
(d) A certificate of good standing for each Purchaser issued by the
Corporation Commission of Arizona or other applicable agency of the state of
its incorporation and dated within thirty (30) days prior to the Closing Date.
(e) Affidavits of Property Value, in forms reasonably acceptable to the
Title Insurance Company.
(f) The executed Assignment and Assumption Agreement.
(g) An executed document in recordable form evidencing the rights of the
Foundation and its assigns under Section 12.9 of this Agreement.
(h) All documents required to be provided by Purchasers by any other
provision of this Agreement and documents reasonably requested by Sellers or
their legal counsel.
5.5 Designation of Affiliates. Vanguard may designate one or more
Affiliates in addition to VHS to take title to the Assets for regulatory or
other reasons and references to instruments or agreements to be executed and
delivered to or by Purchasers in this Agreement at Closing shall apply to each
such designee with respect to the Assets acquired by it. Vanguard shall notify
Sellers prior to Closing of the names of such designees and, from and after
Closing, the rights, privileges, benefits and obligations of this Agreement
applicable to Purchasers shall benefit and be binding upon each such designee
as a Purchaser hereunder, subject to the terms, covenants and conditions of
this Agreement, with respect to the Assets acquired by it.
5.6 Closing Costs.
(a) Sellers shall pay the recording costs for Deeds. Seller shall pay that
portion of the title insurance premiums attributable to the ALTA standard
owner's title insurance policies to be delivered to Purchasers pursuant to the
terms of this Agreement and the cost of
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removing Encumbrances from the Real Property which are not Permitted
Exceptions, and Purchasers shall pay any additional premium for an ALTA
extended coverage policy or endorsements in the event Purchasers elect to
purchase an ALTA extended coverage policy or endorsements. All other fees,
charges, or expenses incidental to the sale, transfer and conveyance of the
Real Property and the Leased Property to Purchasers shall be paid according to
the customs of real estate transactions in the county or counties in Arizona in
which such property is situated, except as otherwise expressly provided herein.
(b) Except as otherwise expressly set forth in this Agreement, all
expenses of the preparation of this Agreement and of the purchase of the
Purchased Assets set forth herein, including counsel, accounting, brokerage and
investment advisor fees and disbursements, shall be borne by the respective
Party incurring such expenses, whether or not such transactions are
consummated. Sellers shall be responsible for paying all fees and expenses of
Xxxxxx Xxxxxxx Xxxx Xxxxxx as Sellers' independent financial advisor, in
connection with the transactions contemplated by this Agreement.
5.7 Baptist Bonds. At the Closing, cash proceeds from the Purchase Price
paid by Purchasers in accordance with Article 4 and Section 5.4(a) in an amount
sufficient to defease the Allocated Bonds (defined in Section 1.5) shall be
placed in escrow, in accordance with the terms of the Bond Escrow Agreement.
Sellers shall comply with each and every one of their respective obligations
under the Bond Escrow Agreement, subject to the conditions and limitations
specified therein.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLERS
As of the date of this Agreement and the Closing Date, each Seller
represents and warrants to Purchasers and Vanguard, with respect to itself,
that:
6.1 Authority to Enter into Agreement; Enforceability. It has full
corporate power and authority to enter into and to carry out the terms and
provisions of this Agreement, and the Transaction, without the approval and
consent of any other party or authority, other than BHHS which approval and
consent has been obtained. All corporate proceedings have been taken and all
corporate authorizations have been obtained by it to authorize execution of the
Agreement. All corporate proceedings have been or will be taken, and all
corporate authorizations have been or will be obtained by it, to effect the
Transaction. The Agreement, when duly executed and delivered by it and, when
duly executed by the other Parties hereto, will constitute its legal, valid,
and binding obligation enforceable against it in accordance with its terms
except as limited by: (a) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally, and (b)
general principles of equity.
6.2 Organization and Standing. To the extent it is a corporation, it has
been duly organized, is validly existing, and in good standing under the laws
of its jurisdiction of incorporation. It has all requisite power and authority
to own, lease, and operate its properties and to carry on its business as it is
now being conducted. To the extent it is claiming to be
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exempt from federal taxation, it is recognized as exempt from federal income
taxation under Section 501(c)(3) and 509(a), respectively, of the Code and has
no knowledge of any action by the IRS to revoke or terminate such tax-exempt
status under Code Sections 501(c)(3) or 509(a).
6.3 Financial Statements, Undisclosed Liabilities. It has provided
Purchasers with its audited balance sheets and income statements and statements
of cash flow for fiscal years 1997, 1998 and 1999, together with its unaudited
balance sheet and income statement for the period ending December 31, 1999
(referred to collectively herein with those of the other Sellers and the
financial statements delivered to Purchasers pursuant to Section 9.3(b)(i) as
the "Baptist Financial Statements"). The Baptist Financial Statements relating
to it: (a) are in accordance with its books and records, and (b) fairly present
its financial condition and results of operations as of the dates and for the
periods indicated in accordance with GAAP applied on a consistent basis
subject, in the case of such unaudited financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or
in the aggregate, be materially adverse) and the absence of notes (which, if
presented, would not differ materially from those included in such audited
statements). It has no material liabilities or obligations, whether contingent
or absolute, direct or indirect, or matured or unmatured, which are not shown
or provided for in the Baptist Financial Statements or which are not otherwise
set forth on Schedule 6.3 attached to the Agreement.
6.4 Compliance with Laws. Its business and operations have been and are
being conducted in accordance with all Legal Requirements except where the
failure to so comply would not have a material adverse effect on its business
or operations. It has all material licenses, permits, certificates and
authorizations (collectively, "Permits") required to operate its businesses as
they are currently being conducted and an accurate list and summary description
of the Permits are disclosed on Schedule 6.4(i). None of such Permits are
lapsed, revoked or terminated, and its businesses are being operated and
conducted in accordance and consistent with all material terms and conditions
thereof. Except as disclosed on Schedule 6.4(ii), no notice or warning from any
authority with respect to the suspension, revocation or termination of any such
Permits has been issued or given to it nor is it aware of the proposed or
threatened issuances thereof. Sellers have delivered to Purchasers complete and
genuine copies of the latest licensure, governmental or regulatory survey
and/or fire marshal reports of the Baptist Facilities and plans of correction
or responses thereto. All deficiencies set forth in such reports, if any, have
been or by Closing will be corrected by Sellers at their expense, except those
described in Schedule 6.4 (iii).
6.5 Litigation. Except as disclosed in the side letter described in
Section 17.20(a), (a) there are no suits, actions, or legal, administrative,
arbitration or other proceedings pending or filed against it; and (b) there are
no governmental investigations pending, filed or, to its knowledge, threatened
against it.
6.6 No Patient Trust Funds. Except as set forth at Schedule 6.6, it does
not maintain any Patient Trust Fund accounts. To the extent it discloses such
Patient Trust Fund accounts, it shall provide the name of the patient and the
amount existing in such account as of the date specified in Schedule 6.6 and
update such information to the Closing Date.
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6.7 No Breach. Except as described on Schedule 6.7, neither the execution
and delivery of the Agreement, nor the consummation of the Transaction, will
conflict with or result in a violation or breach of any term or provision of,
or constitute a default under (a) its governing documents; (b) to its
knowledge, any material statute, rule, regulation, order, judgment, writ,
injunction, or decree of any court or any governmental or regulatory body
applicable to it; or (c) to its knowledge, any Material Contract or other
instrument to which it is a party or by which it is or may be bound, or any
material license, permit or similar authorization held by it, which conflict,
violation, breach, or default would have a material adverse effect on its
business or operations.
6.8 Insurance Coverage. Schedule 6.8(i) contains a complete list of all
the insurance policies covering the ownership and operations of the Purchased
Assets owned by it, including policy numbers, identity of insurers, amounts and
coverage. All such policies are in full force and effect with no premium
arrearage. To its knowledge, it has given in a timely manner to its insurers
all notices required to be given under its insurance policies with respect to
all of the claims and actions relating to the Purchased Assets covered by
insurance. Except as described in Schedule 6.8(ii), no insurer has denied
coverage of any such claims or actions or reserved its rights in respect of or
rejected any of such claims and it has neither (a) received any notice or other
communication from any such insurance company canceling or materially amending
any of such insurance policies, and, to its knowledge, no such cancellation or
amendment is threatened, nor (b) to its knowledge, it has not failed to give
any required notice or present any claim which is still outstanding under any
of such policies with respect to its assets or businesses.
6.9 Absence of Material Adverse and Other Changes. Since the Pricing Date,
or except as set forth on Schedule 6.9, there has been:
(a) No material adverse change in or to its assets or in its business or
financial condition nor to Sellers' knowledge any occurrence or circumstance
which is likely to result therein, except for the effect of changes in laws,
regulations or market conditions generally applicable to hospitals operating in
Phoenix, Arizona;
(b) No material damage, destruction or loss to any of the material assets
which are used in connection with its business, whether or not covered by
insurance;
(c) No material increase in any of its liabilities or obligations (whether
absolute, contingent or otherwise) relating to its assets or businesses, except
liabilities or obligations incurred in the ordinary course of business;
(d) No change in the manner of keeping its books, accounts or records, or
in the accounting practices reflected therein;
(e) Except in the ordinary course of business it has not increased or
agreed to increase the compensation payable to any of its employees or agents
or made or agreed to make any bonus or severance payment to any of such
employees or agents, and it has not employed any additional management
personnel in respect of its business;
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(f) It has not sold, assigned, transferred, distributed or otherwise
disposed of any of its assets, except in the ordinary course of business, and
it has not sold or factored, or agreed to sell or factor, any Accounts
Receivable;
(g) Other than compensation paid or payable in the ordinary course of
employment, it has not paid any amount to, sold any assets to, or entered into
any Contract with, any officer, director, trustee, partner or member of it, or
any Affiliate of any such Person;
(h) No other event or condition which materially and adversely affects, or
to Sellers' knowledge is likely to affect, its operations, cash flows or
financial condition, except for the effect of changes in laws, regulations or
market conditions generally applicable to hospitals operating in Phoenix,
Arizona; and
(i) Except for employees not to be hired by Purchasers at Closing, it has
not amended or waived any provision of any Contract providing for the payment
of severance, retention bonus, "Y2K pay" or similar compensation to any
employee.
6.10 No Broker or Finder. Except for Xxxxxx Xxxxxxx Xxxx Xxxxxx and CJK
Financial, LLC, each of whose commission will be paid by Sellers pursuant to
separate agreements, it is not in any way obligated under any contract or
agreement for payment of fees and expenses to any broker or finder in
connection with the origin, negotiation, or execution of this Agreement or
consummation of the Transaction.
6.11. Payment of Taxes.
(a) All federal, state, local and other income, employment and other Tax
Returns, reports and declarations required to be filed by or on behalf of it
with respect to its assets, business and operations have been filed, and such
returns are complete and accurate and disclose all Taxes required to be paid
for the period covered thereby, except where the failure to file, or any
omission or misfiling, would not have a material adverse effect on it. All
Taxes shown on such returns, and any additional Taxes, penalties and interest,
have been paid, except where the failure to pay would not have a material
adverse effect on it. There are no Tax liens on any of its assets (except for
customary liens for property Taxes not yet due and payable) and, to its
knowledge, no basis for the imposition of any such liens. To the extent it is a
tax-exempt entity, to its knowledge, it has complied with all material IRS
requirements with respect to tax-exempt entities and it has received favorable
letters of determination from the Internal Revenue Service and the State of
Arizona regarding such Tax status.
(b) Each Seller, the Subsidiary and the Joint Venture has withheld proper
and accurate amounts from its employees' compensation in compliance with all
withholding and similar provisions of the Code and any and all other applicable
Legal Requirements, and has withheld and paid, or caused to be withheld and
paid, all Taxes on monies paid by Sellers, the Subsidiary and the Joint Venture
to independent contractors, creditors and other Persons for which withholding
or payment is required by law.
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(c) To its knowledge, no Governmental Authority intends to assess any
additional Taxes for any period for which Tax Returns have been filed. Except
as set forth on Schedule 6.11(c)(i), there is no dispute or claim concerning
any Tax liability of Sellers, the Subsidiary or the Joint Venture either
claimed or raised by any Governmental Authority in writing, or as to which any
Seller has notice or knowledge based upon personal contact with any agent of
such Authority. Schedule 6.11(c)(ii) lists all federal, state, local and
foreign income Tax Returns filed with respect to Sellers, the Subsidiary and
the Joint Venture for the last three complete fiscal years and for the current
year-to-date, and indicates those Tax Returns that have been audited and those
that currently are the subject of audit or that have not been audited.
(d) There is not currently in effect any waiver of a statute of
limitations in respect of Taxes by any Seller, the Subsidiary or the Joint
Venture or any Contract to extend the time with respect to a Tax assessment or
deficiency.
(e) Except as set forth on Schedule 6.11(e), neither any Seller nor the
Subsidiary or the Joint Venture is a party to any Tax allocation or sharing
Contract; neither any Seller nor the Subsidiary or the Joint Venture is or has
been a member of an Affiliated Group filing a consolidated federal income Tax
Return.
(f) Except as described on Schedule 6.11(f), neither an Seller nor the
Subsidiary or the Joint Venture has or may have any liability for the Taxes of
any Person other than Sellers, the Subsidiary or the Joint Venture under
Internal Revenue Service regulation 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by Contract or
otherwise.
6.12 Unemployment Insurance. To its knowledge, it has paid in full any and
all obligations due and owing under any applicable unemployment insurance act.
6.13 Medical Staff. To the extent it owns and operates a Baptist Facility
that is a hospital (a "Baptist Hospital"), it has delivered to Purchasers (a) a
correct and complete copy of the bylaws and rules and regulations of the
medical staff of its Baptist Hospital (the "Medical Staff"); and (b) the most
current roster of its Medical Staff. Except as set forth on Schedule 6.13,
there are no pending or to its knowledge threatened disputes with hospital
medical staff appointees or applicants or allied health professionals and all
appeal periods in respect of any medical staff appointee or applicant against
whom an adverse action has been taken have expired. Except as set forth either
on Schedule 6.13 or in the side letter described in Section 17.20(a), as of the
date set forth on the Schedule, no appointee to the medical staff of any
Baptist Facility which is a hospital has been excluded from participation in
any Government Payment Program. To its knowledge, Sellers have made no request
for payment from any Government Payment Program in respect of healthcare
services furnished by or directed or prescribed by a physician who at such time
was excluded from participation in such Government Payment Program.
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6.14 Fraud and Abuse; Cost Reports; Medicare and AHCCCS Certification.
(a) Except as set forth in the side letter described in Section 17.20(a),
it has complied with all applicable Medicare, AHCCCS, Federal and State of
Arizona anti-fraud and abuse laws and regulations, except where noncompliance
with any of the foregoing would not materially and adversely affect its
businesses and operations.
(b) It has delivered to Purchasers true and exact copies of all cost
reports which it has filed with Medicare and AHCCCS for the last three (3)
years, as well as correspondence and other documents relating to any disputes
and/or settlements with Medicare or AHCCCS within the last three (3) years. It
has filed when due (except for extensions allowed by law) all required cost and
other reports of any facility operated by it for Medicare and AHCCCS payments
or reimbursement. Except as set forth in the side letter described in Section
17.20(a) and disputes between it and the intermediary which concern the payment
of an individual patient claim (as opposed to such disputes concerning its
right to receive Medicare or AHCCCS reimbursement generally or to participate
in the Medicare or AHCCCS programs), there is no dispute between it and any
governmental authorities or the Medicare fiscal intermediary or other agent
regarding such cost reports other than with respect to adjustments thereto made
in the ordinary course of business which are adequately reserved for in the
Baptist Financial Statements or which do not involve a material amount. To its
knowledge, it is not subject to any pending but unassessed Medicare or AHCCCS
claim payment adjustments, except to the extent it has established adequate
reserves for such adjustments. To its knowledge, all liabilities and
contractual adjustments under Medicare, AHCCCS and other reimbursement programs
have been properly reflected and adequately reserved for on the audited Baptist
Financial Statements and the interim Baptist Financial Statements.
(c) To the extent applicable to its business, it is qualified for
participation in, and has current and valid provider Contracts with, and meets,
without material exception, the conditions for participation in, the Medicare
and AHCCCS programs, and, except as set forth in the side letter described in
Section 17.20(a), to its knowledge, there is no pending or threatened
proceeding or investigation under such programs involving it. The Baptist
Facilities are entitled to and are receiving payment under the Medicare and
AHCCCS programs for services rendered to qualified beneficiaries and are not
subject to any withholds or offsets in respect thereof.
(d) On February 21, 2000, Sellers requested in writing that the U.S Health
Care Financing Administration ("HCFA") conduct an audit of the Arrowhead
Community Hospital and Medical Center prior to Closing for the purpose of
restoring that Baptist Facility to "deemed status" under Medicare conditions of
participation in accordance with that certain Settlement Agreement dated
12/21/98 in Arrowhead Community Hospital and Medical Center, Inc. v. Shalala
(Federal District Court for the District of Arizona, No. CIV-98-2205-SMM) (the
"HCFA Settlement Agreement").
6.15 JCAHO Accreditation. Each Baptist Hospital is accredited by the Joint
Commission on Accreditation of Healthcare Organizations ("JCAHO") and the other
accrediting organizations named on Schedule 6.15 for the periods specified in
such Schedule. It has delivered to Purchasers complete and genuine copies of
the most recent accreditation survey
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reports, deficiency lists, statements of deficiency, plans of correction and
similar material. It has taken or is taking all reasonable steps to correct all
material deficiencies noted therein. Except as set forth on Schedule 6.15,
there is no pending or, to its knowledge, threatened investigation by JCAHO of
any Baptist Hospital.
6.16 Labor Relations. It has complied in all material respects with all
applicable laws relating to the employment of its employees, including
provisions relating to wages, hours, equal opportunity, collective bargaining,
and the payment of Social Security and other taxes, the failure of which would
have a material adverse effect on its business, and, except as set forth on
Schedule 6.16(i), no employee or former employee of it has filed any pending
claim against it. Except as set forth on Schedule 6.16(ii), it has not entered
into any collective bargaining agreement with a labor union and has not
received notice that any of its employees is represented by a collective
bargaining agent. There is no pending or, to its knowledge, threatened employee
strike, work stoppage or slowdown, labor dispute or unfair labor practices at
the Baptist Facilities. To its knowledge, no union organizing or collective
bargaining activities by or with respect to any employees of it are taking
place.
6.17 Employee Benefit Plans.
(a) Schedule 6.17(a) sets forth a complete list of all pension plans, as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or participated in by it, including church
plans, if any, which are exempt from the requirements of ERISA (each, a
"Pension Plan"), all welfare plans, as defined in Section 3(l) of ERISA,
maintained or participated in by it, including church plans, if any, which are
exempt from the requirements of ERISA (each a "Welfare Plan"), all Plans
maintained or participated in by it which are subject to the requirements of
Section 403(b)(12)(A)(i) of the Code, including church plans, if any, which are
exempt from the requirements of ERISA (each, a "403(b) Plan") (such welfare
plans, the Pension Plans and 403(b) Plans being hereinafter referred to as
"ERISA Plans"), and all other incentive, fringe benefit, vacation, or leave
plans, policies or arrangements sponsored or maintained by it during the last
two years, including all such plans which are or may be exempt from ERISA
(collectively, the "Plans"). Each Pension Plan which is intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to so
qualify. To its knowledge, none of the Plans or ERISA Plans has provided a
benefit which is a "Disqualified Benefit" (as such term is defined in Code
Section 4976(b)) for which an excise tax would be imposed. To its knowledge
nothing has been done or omitted to be done with respect to any ERISA Plan that
would result in any material liability on the part of it under Part 5 of Title
I or Title IV of ERISA or Section 4975 of the Code. To its knowledge, no
"reportable event," as defined in Section 4043 of ERISA, has occurred with
respect to any Pension Plan subject to Title IV of ERISA.
(b) Each Plan and ERISA Plan is and has been in the past maintained and
operated in substantial compliance with ERISA and all applicable requirements
under the Code and other applicable federal and state laws. All material
reporting and disclosure requirements under the Code and ERISA applicable to
any Plan or ERISA Plan have been substantially complied with, and there are no
currently pending or, to its knowledge, threatened actions or claims against or
with respect to any Plan, ERISA Plan, or any fiduciary of a Plan or ERISA Plan
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(other than routine claims for benefits). No Plan or ERISA Plan and no
fiduciary of any such Plan is currently the subject of a pending audit or
examination by the Department of Labor or the IRS, nor has it been notified of
the pendency of any such audit or examination. Its directors, officers, and
employees, to the extent any of them are fiduciaries with respect to any Plan
or ERISA Plan, have not breached any of their material responsibilities or
obligations imposed upon them as fiduciaries under ERISA.
(c) Sellers maintain the Baptist Hospital Pension Plan (the "Pension
Plan"), which is a defined benefit pension plan within the meaning of Section
3(35) of ERISA. Purchasers shall neither adopt nor become a sponsor of the
Pension Plan. Purchasers do not assume any obligations with respect the Pension
Plan. This Agreement does not require Sellers to amend or otherwise alter the
terms of the Pension Plan, or to interpret or administer the Pension Plan in
any particular way because of the transactions contemplated by this Agreement.
(d) Neither it nor any member of the Controlled Group that includes it,
contributes to, ever has contributed to, or ever has been required to
contribute to any Multiple Employer Plan or any Multiemployer Plan or has any
liability (including withdrawal liability) under any Multiple Employer Plan or
any Multiemployer Plan. Neither it nor any member of the Controlled Group that
includes it, maintains or contributes, ever has maintained or contributed, or
ever has been required to maintain or contribute to any ERISA Plan or Plan
providing medical, health or life insurance or other welfare-type benefits for
current or future retired or terminated employees, their spouses or their
dependents (other than in accordance with section 4980B of the Code).
(e) Any reference to ERISA or the Code or any section thereof shall be
construed to include all applicable regulations and administrative rulings
issued thereunder.
6.18 Bond Requirements. Prior to the Closing, it shall have satisfied, or
obtained a waiver or modification of, all material conditions or restrictions
of any kind in any Master Trust Indenture or other bond indenture to which it
is a party that would prevent it from complying with, carrying out or
performing any of its obligations under this Agreement.
6.19 Contracts.
(a) Except as set forth on Schedule 6.19(a), to its knowledge, all of the
Contracts listed on Schedule 2.1.4 to which it is a party are in full force and
effect, except for expired Immaterial Contracts.
(b) Except as set forth on Schedule 6.19(b), all of the Assumed Contracts
to which it is a party are assignable by it to Purchasers without the consent
of any third party, or if the consent of a third party is required, such
consent has been obtained on the date hereof or will be obtained prior to the
Closing Date, except where the failure to have such consents will not have a
material adverse effect on the conduct of the Baptist Facilities taken as a
whole.
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(c) Except as set forth on Schedule 6.19(c), it is not in, nor has it
given or received notice of, any material default or claimed, purported or
alleged material default on the part of any party in the performance of any
obligation to be performed under any of the Contracts listed on Schedule 2.1.4
to which it is a party.
(d) No Seller is a party to any Material Contract other than those
described on Schedule 2.1.4.
6.20 Opinion of Financial Advisor. Sellers have received a written
commitment from Xxxxxx Xxxxxxx Xxxx Xxxxxx to issue an opinion to the effect
that the Purchase Price is fair to Sellers in respect of a sale of the
Purchased Assets to the Purchasers, and it has no reason or basis for believing
that such opinion will not be issued to Sellers.
6.21 Accounts Receivable; Inventory.
(a) The Accounts Receivable, to the extent uncollected, are valid and
existing and represent monies due for goods sold and delivered and services
performed in bona fide commercial transactions and are not subject to any
Encumbrances, except as provided under the documents applicable to the
Allocated Bonds which Encumbrance will be released at Closing. There are no
refunds, discounts or setoffs payable or assessable with respect to the
Accounts Receivable not reflected in the Baptist Financial Statements.
(b) All Purchased Assets consisting of inventory and supplies are carried
at cost on a first-in, first-out basis and are in all material respects
properly stated in the Baptist Financial Statements as of the dates thereof.
All items of inventory and supplies on hand consist of items of a quality
usable or saleable in the ordinary course of business, except for those items
which are obsolete, below standard quality or in the process of repair.
6.22 Equipment. Schedule 6.22(i) is a depreciation schedule as of the date
set forth therein that, to its best knowledge, takes into consideration the
equipment associated with, or constituting any part of, the Purchased Assets.
Since the Pricing Date and other than in the usual course of business, neither
any Seller nor the Subsidiary or the Joint Venture has sold or otherwise
disposed of any of its equipment having an original cost in excess of $50,000
except with a comparable replacement thereof. Except as set forth in Schedule
6.22(ii), to its knowledge, all major equipment used in the operations of its
businesses, whether reflected in the Baptist Financial Statements or otherwise,
is in reasonably good operating condition in all material respects, except for
reasonable wear and tear (taking into account the age and extent of use of each
piece of equipment) and no material manufacturer or lessor required
maintenance, repair or necessary replacement has been knowingly deferred. All
major medical and leased equipment has been maintained in accordance with
manufacturer and lessor requirements, and, if required by applicable Contract
or law, maintenance logs or journals have been maintained in the ordinary
course of business.
6.23 Title to Personal Property. Sellers own and hold good and valid title
or leasehold title to all Purchased Assets other than the Real Property, free
and clear of any Encumbrances other than Encumbrances described in Schedule
6.23(i), and the Joint Venture owns and holds,
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and at Closing will own and hold, good and valid title or leasehold title to
all Joint Venture Assets other than the Joint Venture Property, free and clear
of any Encumbrances other than the Encumbrances described in Schedule 6.23(ii).
At Closing Sellers will convey to Purchasers good and valid title to all
Purchased Assets other than the Real Property, free and clear of any
Encumbrances other than the Permitted Exceptions.
6.24 Real Property.
(a) The Real Property comprises all of the real property owned by Sellers
which is associated with or employed in the operation of the Baptist
Facilities, except that two parcels are owned by Xxxxxxx Enterprises, Inc., and
CRV, Inc. The Leased Property comprises all of the real property leased by
Sellers and its Affiliates which is associated with or employed in the
operation of the Baptist Facilities. Xxxxxxx, Xxxxxxx Enterprises, Inc., and
CRV, Inc., as the case may be, own fee simple title to the Real Property
described in Schedule 2.1.1-A together with Sellers' interest in all buildings,
improvements and fixtures thereon and all appurtenances and rights thereto,
free and clear of any Encumbrances other than the Encumbrances described in
Schedule 6.24(a)(i). Sellers own leasehold title to the Leased Property
described in Schedule 2.1.1-B, free and clear of any Encumbrances other than
Encumbrances of record that a title commitment would disclose and subleases
described in Schedule 2.1.4. The Joint Venture owns fee simple title to the
Joint Venture Property, together with all buildings, improvements and fixtures
thereon and all appurtenances and rights thereto, free and clear of any
Encumbrances other than the Encumbrances described in Schedule 6.24(a)(iii).
Subject to rights of first refusal and lender approvals on the Options
Property, at Closing Sellers will convey or cause to be conveyed to Purchasers
good and marketable fee simple or leasehold title (as the case may be) to the
Real Property other than the Joint Venture Property, with warranties of special
title, free and clear of any Encumbrances other than the Permitted Exceptions,
and, subject to lender approval, the Joint Venture will own and hold good and
marketable fee simple title to the Joint Venture Property, free and clear of
any Encumbrances other than the Permitted Exceptions.
(b) No Seller has received notice of condemnation or similar proceeding
relating to the Real Property or any part thereof. Except as described on
Schedule 6.24(b), to its knowledge and taking into account the age and extent
of use of each building, the buildings standing on the Real Property, taken as
a whole, are in a state of reasonably good condition and repair, are
structurally sound, and in need of no maintenance or repairs except for
ordinary, routine maintenance.
(c) To its knowledge and except as set forth on Schedule 6.24(c), no part
of the Real Property contains, is located within or abuts any flood plain,
navigable water or other body of water, tideland, wetland, marshland or any
other area which is subject to special State, federal or municipal regulation,
control or protection.
(d) Except for tenants under Assumed Contracts and the Permitted
Exceptions, there are no Persons in possession of, or claiming any possession,
adverse or not, to or other interest in, any portion of the Real Property or
the Leased Property other than Sellers, whether as lessees, tenants at
sufferance, trespassers or otherwise.
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(e) No tenant is entitled to any rebate, concession, or free rent, other
than as reflected in the Contract with such tenant; Sellers have made no
commitments to any Tenant for repairs or improvements other than for normal
repairs and maintenance in the future or improvements required under Contracts
with tenants; and, except for applicable financing that will be paid off at
Closing or assumed by Purchasers, no rents due under any of the Contracts with
tenants have been assigned or hypothecated to, or encumbered by, any Person.
(f) To its knowledge, all essential utilities (including water, sewer,
gas, electricity and telephone service) are available to the Real Property, as
currently developed by Sellers and the Joint Venture and, to Sellers'
knowledge, there are no conditions existing which could result in the
termination or reduction of the current access from the Real Property to
existing roadways.
6.25 Environmental Matters.
(a) To its knowledge and except as described on Schedule 6.25(a), the Real
Property are in compliance in all material respects with Environmental Law.
Except as described on Schedule 6.25(a), no Seller has received any written
communication (or reduced to writing any oral communication) from any Person
alleging that, with respect to the conduct of the Real Property, any Seller,
the Subsidiary or the Joint Venture is not in material compliance with
Environmental Law. Each Seller, the Subsidiary and the Joint Venture has all
material permits, licenses and approvals required under applicable
Environmental Law to own the Real Property, to lease the Leased Property and to
conduct the businesses thereon. All licenses, permits and other authorizations
of Governmental Authorities currently held by Sellers, the Subsidiary and the
Joint Venture related to the Real Property pursuant to the Environmental Law
are identified in Schedule 6.25(a).
(b) With respect to the Real Property and the Leased Property and except
as described on Schedule 6.25(b), there is no Environmental Claim under
Environmental Law pending or to Sellers' knowledge threatened against any
Person with respect to the Real Property or the Leased Property, which
liability has been retained or assumed by any Seller, the Subsidiary or the
Joint Venture, either contractually or by operation of law.
(c) To its knowledge and except as described on Schedule 6.25(c), no
actions, activities, circumstances, conditions, events or incidents, including
the release, omission, discharge or disposal of any Materials of Environmental
Concern, have occurred on the Real Property or the Leased Property that could
form the basis of any Environmental Claim under Environmental Law against any
Person whose liability for any Environmental Claim under Environmental Law any
Seller, the Subsidiary or the Joint Venture has or may have retained or assumed
either contractually or by operation of law that has a material adverse effect
on its business or operations.
(d) Without in any way limiting the generality of the foregoing, (i) all
on-site and off-site locations where Sellers, the Subsidiary and the Joint
Venture store, dispose or arrange for the disposal of Materials of
Environmental Concern for the Baptist Facilities are identified in Schedule
6.25(d), (ii) to its knowledge, all Contracts dealing with the removal,
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storage, disposal and handling of Materials of Environmental Concern of the
Baptist Facilities are listed in Schedule 6.25(d) and (iii) all underground
storage tanks, and the capacity and contents of such tanks located on the Real
Property are identified in Schedule 6.25(d).
6.26 Intellectual Properties, Computer Software, etc.
(a) Except as described in Schedule 6.26 and except for customary
licensing and maintenance fees payable under the Contracts, Sellers, the
Subsidiary and the Joint Venture have the right to use, free and clear of any
royalty or other payment obligations, claims of infringement or other liens,
(i) all Intellectual Properties used by Sellers, the Subsidiary and the Joint
Venture in the conduct of their businesses, and (ii) all software, hardware
application programs and similar systems owned by or licensed under Contracts
to Sellers, the Subsidiary and the Joint Venture and used in the conduct of
their businesses; and neither any Seller nor the Subsidiary or the Joint
Venture is in conflict with or in violation or infringement of, nor has any
Seller, the Subsidiary or the Joint Venture received a notice alleging any
conflict with or violation or infringement of, any rights of any other Person
with respect to any such Intellectual Properties or software, hardware,
application programs or similar systems. To its knowledge, no other Person is
in conflict with or in violation or infringement of any Seller, Subsidiary or
Joint Venture rights in such Intellectual Properties or software, hardware,
application programs or similar systems. Except as described on Schedule 6.26
and except for licensing limitations and obligations described in the
Contracts, subsequent to the Closing, Purchasers will be entitled to use of all
Intellectual Properties, software, hardware, application programs and similar
systems currently used in the operation of the Baptist Facilities.
(b) Sellers make no representation or warranty, whether implied or
express, regarding the year 2000 compliance of any software, hardware,
application programs or similar systems used in the conduct of their
businesses. Neither any Seller nor the Subsidiary or the Joint Venture
experienced any uncorrected material disruption in patient care or in financial
and business office accounting as a result of applications of programs that
were not year 2000 compliant and, to its knowledge, do not expect to experience
any.
6.27 Employees. Sellers have delivered to Purchasers (i) a list (as of the
date set forth therein) of names and positions of all full-time and part-time
non-physician employees of Sellers, the Subsidiary and the Joint Venture
employed in the operation of their businesses, and (ii) a separate list (as of
the date set forth therein) of names of all full-time and part-time physician
employees of Sellers, the Subsidiary and the Joint Venture (indicating in both
lists whether each employee is part-time or full-time, whether such employee is
employed under written Contract, and, if such employee is not actively at work,
the reason therefor). Sellers have also delivered to Purchasers a list setting
forth the name of each employee whose employment was terminated during the
90-day period ending on the Effective Date and the reason for such termination.
Schedule 2.1.4 sets forth a list and description of all written Contracts
between any Seller, the Subsidiary or the Joint Venture, and its officers,
directors, trustees and employees.
6.28 Special Funds. Except as described in Schedule 6.28, none of the
Purchased Assets or Joint Venture Assets are subject to any Encumbrance in
respect of funds received by any Person for the purchase, improvement or use of
any of the Purchased Assets or the conduct
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of the Baptist Facilities under restricted or conditioned grants or donations,
including monies received under the Xxxx-Xxxxxx Act.
6.29 Solvency. No Seller immediately after Closing will be rendered
insolvent or otherwise unable to pay its debts as they become due; no Seller
has any intention of filing in any court pursuant to any statute either of the
United States or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or any
portion of such Seller's property; and, to Sellers' knowledge, no other Person
has filed or threatened to file such a petition against any Seller. Neither the
Subsidiary nor the Joint Venture is insolvent or otherwise unable to pay its
debts as they become due; Neither the Subsidiary nor the Joint Venture has any
intention of filing in any court pursuant to any statute either of the United
States or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or any
portion of the Subsidiary's or the Joint Venture's property; and, to Sellers'
knowledge, no other Person has filed or threatened to file such a petition
against the Subsidiary or the Joint Venture.
6.30 Operation of the Baptist Facilities.
(a) The Purchased Assets and the Joint Venture Assets constitute all
assets, properties, goodwill and businesses necessary to operate the Baptist
Facilities in all material respects in the manner in which they have been
operated since August 31, 1999. Schedule 6.30(a)(i) sets forth a list of the 10
largest non-governmental payors of the Baptist Facilities, determined on the
basis of revenues from services provided for the fiscal year ended August 31,
1999. Except as set forth in Schedule 6.30(a)(ii), none of the non-governmental
payors in Schedule 6.30(a)(i) has terminated or materially curtailed its
business relationship with or materially reduced reimbursement rates to the
Baptist Facilities within the last two (2) years and no Seller has received any
notice to the effect that any such non-governmental payor intends to terminate
or materially curtail its business relationship with or materially reduce
reimbursement rates to the Baptist Facilities.
(b) The healthcare businesses of the Baptist Facilities are conducted
solely by Sellers.
6.31 Material Misstatements or Omissions. None of its representations or
warranties contained in this Agreement or in any certificate or schedule
furnished to Purchasers and attached to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements and facts contained therein not materially misleading.
ARTICLE 7
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF BHHS
As of the date of this Agreement and the Closing Date, BHHS further
represents and warrants to Purchasers and Vanguard that:
7.1. Ownership. It is the sole shareholder of the Subsidiary.
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7.2. Litigation. Except as disclosed in the side letter described in
Section 17.20(a), there are no suits, actions, or legal, administrative,
arbitration or other proceedings or governmental investigations pending, filed,
initiated by, or, to its knowledge, threatened against or directly involving
the Subsidiary or the Joint Venture that would have a material adverse effect
on the operations or financial status of the Subsidiary or the Joint Venture.
7.3. No Breach. Except as described on Schedule 6.7, neither the execution
and delivery of the Agreement, nor the consummation of the Transaction, will
conflict with or result in a violation or breach of any term or provision of,
or constitute a default under (a) the governing documents of the Subsidiary or
the Joint Venture; (b) to its knowledge, any material statute, rule,
regulation, order, judgment, writ, injunction, or decree of any court or any
governmental or regulatory body applicable to the Subsidiary or the Joint
Venture; or (c) to its knowledge, any Material Contract or other instrument to
which the Subsidiary or the Joint Venture is a party or by which the Subsidiary
or the Joint Venture is or may be bound, or any material license, permit or
similar authorization held by the Subsidiary or the Joint Venture which
conflict, violation, breach, or default would have a material adverse effect on
the Subsidiary's or the Joint Venture's business or operations.
7.4 Subsidiary and Third Party Rights.
(a) The Subsidiary is duly organized, validly existing and in good
standing under the laws of the state of Arizona. The Joint Venture is duly
organized, validly existing and in good standing under the laws of the state of
Arizona. Each of the Subsidiary and the Joint Venture is duly licensed,
qualified or admitted to do business and is in good standing in the
jurisdictions specified in Schedule 7.4(a) and such jurisdictions are the only
jurisdictions in which the ownership, use or leasing of the Subsidiary's or the
Joint Venture's assets or properties, or the conduct or nature of its business,
makes such licensing, qualification or admission necessary. Complete and
genuine copies of the articles of organization, joint venture, partnership or
operating agreement, and all other agreements, instruments and documents
relating to the creation and governance of the Subsidiary and the Joint Venture
have been provided to Purchasers.
(b) The minute books and other similar records of the Subsidiary and the
Joint Venture have been made available to Purchasers prior to the Effective
Date and are accurate in all material respects. The stock transfer ledgers and
other similar records of the Subsidiary and the Joint Venture have been made
available to Purchasers, are true, correct and complete, and accurately reflect
all transactions in the ownership interests in such Person.
(c) All outstanding shares of capital stock of the Subsidiary are duly
authorized, validly issued, outstanding, fully paid and non-assessable. BHHS
owns the shares beneficially and of record, free and clear of all Encumbrances.
BHHS has full voting power over the shares, subject to no proxy, shareholders'
agreement, voting trust or other agreement relating to the voting of any of the
shares. Eighty percent of the ownership interests of the Joint Venture are
owned beneficially and of record by the Subsidiary and 20% of the ownership
interests of the Joint Venture are owned by Capital Resources Group, Ltd.
Except as set forth in the Venture
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Documents (complete and genuine copies of which have been delivered to
Purchasers), (i) the Subsidiary's ownership interest in the Joint Venture is
duly authorized, validly issued, outstanding, fully paid and non-assessable,
(ii) the Subsidiary owns its partnership interest beneficially and of record,
free and clear of all Encumbrances, and (iii) the Subsidiary has full voting
power over its partnership interest in the Joint Venture, subject to no proxy,
voting trust or other agreement relating to the voting of any of such interest.
(d) There are no outstanding securities, rights, subscriptions, warrants,
calls, options, "phantom" stock rights or (except for this Agreement) other
Contracts of any kind that give any Person (other than BHHS prior to Closing)
the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of the Subsidiary or any security or liability of any kind
convertible into or exchangeable for any such shares of the Subsidiary, (ii)
receive any benefits or rights similar to any rights enjoyed by or accruing to
the holder of shares of capital stock of the Subsidiary, or (iii) participate
in the equity, income or election of directors or officers of the Subsidiary.
Except as set forth in the Venture Documents, there are no outstanding
securities, rights, subscriptions, warrants, calls, options, "phantom" stock
rights or (except for this Agreement) other Contracts of any kind that give any
Person (other than the Subsidiary prior to Closing) the right to (i) purchase
or otherwise receive or be issued any economic or ownership interest in the
Joint Venture or any security or liability of any kind convertible into or
exchangeable for any such interest in the Joint Venture, (ii) receive any
benefits or rights similar to any rights enjoyed by or accruing to the partners
of the Joint Venture, or (iii) participate in the equity, income or election of
directors or officers (or similar officials) of the Joint Venture. Other than
this Agreement and the Venture Documents, there is no Contract between any
Seller and any Person with respect to the disposition of the shares of the
Subsidiary or the partnership interest in the Joint Venture.
(e) Schedule 7.4(e)(i) attached hereto identifies substantially all of the
equipment of the Subsidiary and the Joint Venture, Schedule 7.4(e)(ii) attached
hereto identifies substantially all of the inventory of the Subsidiary and the
Joint Venture, and Schedule 7.4(e)(iii) attached hereto identifies
substantially all of the personal property of the Subsidiary and the Joint
Venture.
(f) Schedule 7.4(f) attached hereto identifies all Material Contracts of
the Subsidiary and the Joint Venture by assigned number on the Schedule and
such Schedule includes the following additional information about each such
Contract: parties, title and/or type, date, services, compensation, term, early
termination rights and whether a sale of the Shares or the partnership interest
constitutes an impermissible assignment thereof.
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As of the date of this Agreement and the Closing Date, each of Vanguard
and the Purchasers, represents and warrants to Sellers with respect to itself
that:
8.1 Authority to Enter into Agreement; Enforceability. It has full
corporate power and authority to enter into and to carry out the terms and
provisions of the Agreement and the Transaction and has obtained all necessary
corporate approvals and consents. All corporate proceedings have been taken and
all corporate authorizations have been obtained by it to authorize execution of
the Agreement. All corporate proceedings have been or will be taken, and all
corporate authorizations have been or will be obtained by it, to effect the
Transaction. The Agreement, when duly executed and delivered by it and, when
duly executed by the other Parties hereto, will constitute the legal, valid,
and binding obligation of it enforceable against it in accordance with the
Agreement's terms except as limited by: (a) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally, and (b) general principles of equity.
8.2 Organization and Standing. It has been duly organized, is validly
existing, and in good standing under the laws of its jurisdiction of
incorporation. It has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as it is now being
conducted.
8.3 Litigation. There are no suits, actions, or legal, administrative,
arbitration or other proceedings or governmental investigations pending, filed,
or initiated by, or to its knowledge, threatened against or directly involving
it or its Affiliates that may materially and adversely affect its operations or
financial status or its ability to perform its obligations under this Agreement
or which seeks to restrain the Transaction.
8.4 Financial Statements; Undisclosed Liabilities; Solvency. It has
provided BHHS with Vanguard's consolidated audited balance sheets and income
statements and statements of cash flow for fiscal years 1998 and 1999, together
with the unaudited balance sheet and income statement of Vanguard for year to
date in 2000 (the "Vanguard Financial Statements"). The Vanguard Financial
Statements: (a) are in accordance with its books and records, and (b) fairly
present its financial condition and results of operations as of the dates and
for the periods indicated in accordance with GAAP applied on a consistent basis
subject, in the case of such unaudited financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or
in the aggregate, be materially adverse) and the absence of notes (which, if
presented, would not differ materially from those included in such audited
statements). To the best of its knowledge, Vanguard has no material liabilities
or obligations, whether contingent or absolute, direct or indirect, or matured
or unmatured, which are not shown or provided for in the Vanguard Financial
Statements. It is not insolvent and will not be rendered insolvent by the
consummation of this Transaction.
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8.5 Compliance with Laws and Other Instruments. Its businesses and
operations have been and are being conducted in accordance with all Legal
Requirements except where the failure so to comply would not have a material
adverse effect on its business or operations.
8.6 No Breach. Neither the execution and delivery of the Agreement, nor
the consummation of the Transaction, will conflict with or result in a
violation or breach of any term or provision of, or constitute a default under
(a) its governing documents, (b) to its knowledge, any material statute, rule,
regulation, order, judgment, writ, injunction, or decree of any court or any
governmental or regulatory body applicable to it; or (c) to its knowledge, any
material agreement, contract or other instrument to which it is a party or by
which it is or may be bound, or any material license, permit or similar
authorization held by it, which conflict, violation, breach, or default would
have a material adverse effect on its business or operations, except that
consummation of the Transaction requires the consent of Vanguard's lenders
under the terms of its principal credit agreement and the approval of Xxxxxx
Xxxxxxx Xxxx Xxxxxx Capital Partners under its shareholder agreement.
8.7 Vanguard's and Purchasers' Management Experience. Vanguard's and
Purchasers' management has substantial experience in the management and
operation of hospital businesses. Vanguard has delivered to Sellers a copy of a
letter dated August 16, 1999 from Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Partners
to Sellers' investment advisors regarding Vanguard's ability to finance or
cause the Purchasers to finance the consummation of the transactions described
in this Agreement. Vanguard and the Purchasers have no reason to believe that
such financing will not be forthcoming in sufficient amounts to finance the
Purchase Price, except that Vanguard's ability to obtain debt financing or
lender approval may depend in large part upon Sellers' willingness to
subordinate the provisions of Section 12.9 to the lien securing the
indebtedness of Vanguard to the lenders.
8.8 No Broker or Finder. It is not in any way obligated under any contract
or agreement for payment of fees and expenses to any broker or finder in
connection with the origin, negotiation and execution of this Agreement or
consummation of the Transaction.
8.9 Material Misstatements or Omissions. None of its representations or
warranties contained in this Agreement or in any certificate or schedule
furnished to Sellers and attached to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements and facts contained therein not materially misleading.
ARTICLE 9
PRE-CLOSING COVENANTS OF SELLERS
Each Seller covenants and agrees with Purchasers that, except as otherwise
provided in the following subsections, between the execution of this Agreement
and the earlier of the Closing or the termination of this Agreement:
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9.1 Preserve Accuracy of Representations and Warranties. It shall not take
any action which would render any representation and/or warranty contained in
Article 6 or 7 to be false or materially inaccurate. It shall promptly notify
Purchasers of any lawsuits, claims, administrative actions, or other
proceedings asserted or commenced against it, or its officers, directors,
shareholders or members involving in any material way its businesses,
properties or assets. It shall promptly notify Purchasers in writing of any
facts or circumstances which come to its attention and which it reasonably
believe causes, or through the passage of time is likely to cause, any of its
representations and warranties contained in Article 6 or 7 to be false or
materially inaccurate.
9.2 Operate in Ordinary Course. It shall continue to operate its
businesses in the ordinary course of business. In addition, it shall not,
without the written consent of Purchaser, which consent shall not be
unreasonably withheld:
(a) Declare or pay any distributions of its assets to any of its members
or shareholders;
(b) Make any material change in its business, including any changes in
accounting principles and practices;
(c) Mortgage, sell, or lease any of its material assets, other than in the
ordinary course of business and consistent with past practices;
(d) Terminate any Material Contract to which it is a party or amend any
Material Contract in any respect, except for immaterial amendments in the
ordinary course of business;
(e) Enter into any Material Contract or renew any Material Contract;
(f) fail to make or to continue to make or cause to be made all material
repairs, restoration, replacements and maintenance that may be necessary to
maintain in good, reasonable condition the Purchased Assets and the Joint
Venture Assets, taken as a whole, (taking into account the age and extent of
use of such Assets) and fail to make the capital expenditures described in
Schedule 9.2(f); or
(g) Take any action that would materially and adversely affect its net
worth, financial position or business operations from that reflected in its
most recent audited financial statement, except in the ordinary course of
business.
9.3 Access to Information.
(a) It shall, upon reasonable notice, give to Purchasers and their
counsel, accountants and other designated representatives reasonable access,
during normal business hours, to such properties, books and records, contracts
and other nonprivileged documents pertaining to its businesses, properties and
assets (to the extent reasonably relating to the Purchased Assets), as may be
reasonably requested and appropriate. Upon Purchasers'
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reasonable request, its officers and employees and, to the extent possible
after its exercise of reasonable best efforts, appointees to its medical staffs
shall be available to confer with appropriate representatives of Purchasers on
operational matters. Any reviews, investigations and inspections conducted by
or on behalf of Purchasers hereunder, and all related activities or events,
shall be conducted at Purchasers' cost and expense. If Purchasers or their
representatives damage or disturb any of Sellers' properties or assets,
Purchasers shall repair or restore such properties or assets to the same
condition that existed immediately prior to the occurrence of such damage or
disturbance. Purchasers shall use their best efforts in performing such
reviews, investigations and inspections not to interfere with Sellers'
businesses or operations.
(b) Sellers will deliver to Purchaser complete and genuine copies of
(i) within 20 days following the end of each calendar month prior to
the Closing Date, the unaudited balance sheet and the related unaudited
statements of income and cash flows of the Baptist Facilities for each
such month then ended and for the year-to-date then ended, in consolidated
and consolidating forms, and
(ii) promptly after prepared, any other financial statements or
reports prepared by or for management relating to the Baptist Facilities,
together with any notes thereto.
(c) Sellers shall notify Purchasers in writing of any material changes in
their respective operations or financial condition and, to the extent not
appropriately insured against under Sellers' insurance policies, of any
material hearings or adjudicatory proceedings filed or initiated against any
Seller by any Person and of any material complaint or investigation of a Seller
to which Sellers have knowledge, and shall keep Purchasers reasonably informed
of such matters.
9.4 Maintain Books and Accounting Practices. It will maintain its books of
account in the usual, regular, and ordinary manner in accordance with GAAP
consistently applied, and shall make no material change in any of its
accounting methods or practices without the prior written approval of
Purchaser, which approval shall not be unreasonably withheld, except for
changes required by generally accepted accounting principles.
9.5 Third Party Authorizations/Notifications. It shall use its reasonable
best efforts to obtain expeditiously all consents, approvals and authorizations
of third parties necessary for its performance of this Agreement and
consummation of the Transaction, and shall cooperate with Purchasers in
connection with its efforts to obtain such consents, approvals and
authorizations of third parties, necessary for its performance of this
Agreement and consummation of the Transaction. In addition, it shall provide in
a timely manner all notifications to third parties necessary for its
performance of this Agreement and consummation of the Transaction.
9.6 Reasonable Best Efforts and Continuing Cooperation. It shall cooperate
with Purchasers in the performance of this Agreement and the Transaction and
shall use its reasonable best efforts to take all reasonable actions to
consummate the Transaction.
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9.7 Maintain Insurance Coverage. The Sellers shall purchase and maintain
in full force and effect all of the current insurance policies applicable to
the Purchased Assets or equivalent policies, including but not limited to their
professional liability insurance for claims relating to occurrences prior to
the Closing Date.
9.8 Preliminary Title Report. Each Seller shall obtain commitments for the
issuance of ALTA extended owners title insurance policies by the Title
Insurance Company in an amount equal to the amount of the cash payment
allocated to its Owned Property and any Leased Property in which such Seller is
the lessee under a ground lease, committing to insure fee simple title to the
Owned Property and a leasehold interest in any Leased Property in which such
Seller is the lessee under a ground lease, and showing title in the Seller,
subject only to the exceptions shown in the title commitments. The costs of
such policies shall be borne by Sellers and Purchasers as provided in Section
5.6. Upon receipt of the title commitments and legible copies of all exception
documents related therein, Purchasers shall have fifteen (15) days to deliver
written notice objecting to any exceptions set forth in the title commitments.
If Purchasers do not notify Sellers prior to the expiration of such fifteen-day
period of any exceptions that Purchasers have determined are unacceptable, then
Purchasers shall be deemed to have approved the title commitments, and any
exceptions, defects or other matters disclosed by the title commitments, and
Purchasers' rights as provided for in this Section 9.8 shall have been waived.
All (i) special exceptions shown in Schedule B of the title commitments which
are not the subject of Purchasers' objections; (ii) the standard form
stipulations and exclusions referred to in the title insurance policy; (iii)
other defects, matters or exceptions arising by reason of any acts of any
Purchaser, its employees, agents, contractors or consultants; (iv) property
taxes that are a lien against the Real Property but that are not yet delinquent
as of the Closing Date; and (v) instruments placed of record at or immediately
prior to Closing in accordance with Section 9.19, shall become the "Permitted
Exceptions". In addition, Sellers shall deliver customary affidavits sufficient
in form and acceptable to Sellers to enable the title insurance company to
delete the standard exceptions and shall satisfy the requirements set forth in
the title commitments reasonably requested by the title insurance company to
issue the title policy in the prescribed form. Purchasers and Sellers shall
promptly prepare a Schedule (which will be attached hereto as Schedule 9.8 when
in final form) itemizing all exceptions shown in the title commitments which
are Permitted Exceptions. Purchasers shall be obligated to act reasonably and
agree not to object to customary easements, restrictions and similar matters
which would not materially affect the operation of the Real Property for its
intended use. After receipt of Purchasers' objections to title, the Sellers
shall have 20 days to cure such objections (or commit to cure such objections
at Closing) or to notify Purchasers in writing that the Sellers are unable to
cure such objections (which the Parties agree shall not apply to any Schedule B
exceptions that are customarily and reasonably cured by the payment of monies
to release or satisfy the exception). Sellers shall use reasonable efforts to
cure any such objection. If the Sellers are unable after using their reasonable
best efforts to cure any such objections, Purchasers shall have five (5) days
after receipt of Sellers' notice to provide written notice to Sellers of
Purchasers' election to either (a) accept title to the Real Property subject to
such item, in which case the objection shall become a Permitted Exception; or
(b) terminate this Agreement as to the affected Real Property, in which event
the Purchase Price shall be reduced by the fair market value of such Real
Property and the business conducted thereon. However, if Purchasers elect
option (b) in the previous sentence, thereby excluding certain Real Property
from the purchase hereunder, Sellers
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shall have the right, for a period of five days thereafter, to terminate this
Agreement by providing Purchasers with written notice thereof.
9.9 Surveys. Upon execution of this Agreement, Sellers shall deliver to
Purchasers copies of maps or surveys in their possession with respect to the
Real Property. Purchasers, at their option and sole expense, may obtain
additional surveys that meet the requirements described in Schedule 9.9
(collectively, the "Surveys"), which Surveys must be requested by Purchasers
within twenty (20) days after the determination of the Permitted Exceptions
pursuant to Section 9.8. Purchasers shall have ten (10) days from receipt of
the Surveys to deliver written notice to Sellers disapproving any exceptions
shown in the Surveys. Purchasers shall be obligated to act reasonably and agree
not to object to survey matters which would not materially affect the operation
of the Real Property for its intended use.
9.10 Environmental Reports. Purchasers, at their option and sole expense,
may obtain environmental surveys or reports (collectively, the "Environmental
Reports"), which Environmental Reports must be requested by Purchasers within
thirty (30) days after the determination of the Permitted Exceptions pursuant
to Section 9.8.
9.11 UCC Reports. Sellers shall obtain and deliver to Purchasers UCC lien,
litigation and tax searches on the Purchased Assets ("UCC Reports") within 30
days after execution of this Agreement by Sellers. Purchasers shall have ten
(10) days from receipt of the UCC Reports (and if additional information is
requested pertaining to any such reports, such additional information) to
deliver written notice to Sellers disapproving any items disclosed in the UCC
Reports. All matters shown in the UCC Reports which are not the subject of
Purchasers' objections shall be and remain Encumbrances upon the personal
property acquired by Purchasers and Sellers shall cure to Purchasers'
reasonable satisfaction Purchasers' objections to the other matters. Purchasers
shall not object to any items that relate to Assumed Contracts that are
operating leases or that are capital leases or other indebtedness, if any,
being assumed by Purchasers at Closing.
9.12 Alternative Proposals. From the Effective Date until the Closing of
the Transaction contemplated by, or termination of, this Agreement, and except
for the Excluded Assets used solely in the conduct of the Excluded Businesses,
Sellers agree (a) that none of them shall, and they shall direct and use their
reasonable best efforts to cause the officers, directors, employees, agents and
representatives of Sellers (including, without limitation, any investment
banker, attorney or accountant retained by any Seller) not to initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposals or offer (including, without limitation, any
proposal or offer to its board of directors) with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or equity or membership interests
of, Sellers, the Subsidiary or the Joint Venture (any such proposal or offer
being hereinafter referred to as an "Alternative Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any Person to implement an Alternative Proposal; and
(b) that Sellers will promptly cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and will take the necessary steps to
inform the individuals or entities referred to above of the obligations
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undertaken in this Section; provided that nothing contained in this Section
shall prohibit the board of directors of any Seller from furnishing information
to or entering into discussions or negotiations with any Person that makes an
unsolicited bona fide proposal to acquire Sellers, the Subsidiary or the Joint
Venture pursuant to a merger, consolidation, share exchange, purchase of a
substantial portion of assets, business combination or other similar
transactions, if, and only to the extent that, (A) the relevant board of
directors determines in good faith that such action is required for the board
to comply with its fiduciary duties imposed by law, (B) prior to furnishing
such information to, or entering into discussions or negotiations with such
Person, Sellers provide written notice to Purchasers to the effect that it is
furnishing information to, or entering into discussions or negotiations with
such Person, and (C) subject to any confidentiality agreement with such Person
(which Sellers determine in good faith is required to be executed in order for
its board to comply with fiduciary duties imposed by law), Sellers keep
Purchasers informed of the status (not the terms) of any discussions or
negotiations. Nothing in this Section shall (x) permit Sellers to terminate
this Agreement (except as specifically provided in Article 16), (y) permit
Sellers to enter into any agreement with respect to an Alternative Proposal
during the term of this Agreement (it being agreed that during the term of this
Agreement Sellers shall not enter into any agreement with any Person that
provides for or in any way facilitates an Alternative Proposal (other than a
confidentiality agreement in customary form), or (z) affect any other
obligation under this Agreement.
9.13 Negative Covenants. From the Effective Date of this Agreement until
the Closing Date or termination of this Agreement and except as otherwise
expressly provided in this Agreement or agreed to by Purchasers which consent
shall not be unreasonably withheld, Sellers will not, and will cause the
Subsidiary and the Joint Venture not to:
(a) amend or terminate any Assumed Contract, except in the ordinary course
of business;
(b) make offers to any employees of the Sellers, the Subsidiary or the
Joint Venture for employment with any Person after Closing;
(c) increase compensation payable or to become payable to, make a bonus or
severance payment to, or otherwise enter into one or more bonus or severance
Contracts with, any employee or agent of any of the Sellers, the Subsidiary or
the Joint Venture except in the ordinary course of business or otherwise
pursuant to existing contractual arrangements;
(d) create, assume or permit to exist any new encumbrance upon any of the
Purchased Assets or the Joint Venture Assets other than the interests of
lessors under operating leases entered into in the ordinary course of the
business;
(e) sell, assign, transfer, distribute or otherwise transfer or dispose of
any item of property (other than Accounts Receivable), plant or equipment of
any Seller, the Subsidiary or the Joint Venture having an original cost in
excess of $50,000 except in the ordinary course of business;
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(f) cancel, forgive, release, discharge or waive any receivable or any
similar Purchased Asset or right with respect to the Baptist Facilities, or
agree to do any of the foregoing, except in the ordinary course of the business
or otherwise pursuant to existing Contracts;
(g) change any accounting method, policy or practice or, except as
permitted by generally accepted accounting principles and in accordance with
policies and practices consistently applied in the preparation of the Baptist
Financial Statements, reduce any reserves in the Baptist Financial Statements;
or
(h) except for employees not to be hired by Purchasers at Closing, amend
or waive any provision of any Contract providing for the payment of severance,
retention bonus, "Y2K pay" or similar compensation to any employee.
9.14 Casualty. If prior to the Closing Date any part of one or more of the
Baptist Facilities is destroyed or damaged by fire, theft, vandalism or other
cause or casualty and, as a result thereof, any material part of such Baptist
Facilities is rendered prior to the Closing Date unsuitable for its primary
intended use, Purchasers may terminate this Agreement in its entirety without
penalty. Otherwise, Purchasers may elect at their option to (i) reduce the
Purchase Price by the fair market value of the Purchased Assets destroyed or
damaged (determined as of the date immediately prior to the destruction or
damage) or, if greater, by the estimated cost to restore, repair or replace
such Purchased Assets, in which event Sellers shall retain all right, title and
interest in and to insurance proceeds payable on account of such destruction or
damage, or (ii) agree to consummate the transaction notwithstanding such
destruction or damage, in which event Sellers shall pay, transfer and assign to
Purchasers at Closing the proceeds (or the right to receive the proceeds) of,
plus any deductibles or copayments required under, the applicable insurance
policy. In the absence of an agreement among the Parties, any reduction in
Purchase Price pursuant to this Section shall be determined by an MAI appraiser
mutually selected and paid equally by Sellers, on the one hand, and Purchasers,
on the other hand.
9.15 Insurance Ratings. From the Effective Date of execution of this
Agreement until the Closing Date, Sellers will take all actions reasonably
requested by any Purchaser to seek to enable such Purchaser to succeed to the
Sellers' Workers' Compensation and Unemployment Insurance ratings.
9.16 Tail Insurance. On or prior to the Closing Date unless otherwise
agreed by Purchasers, Sellers will purchase and obtain at least an unlimited
extended claims reporting provision for all primary and excess professional and
general liability insurance policies in force as of the Effective Time which
cover Sellers and each physician employee of Sellers (or for which Sellers
otherwise have an obligation to provide such insurance) and which are written
on a claims made insuring agreement. Purchasers shall cooperate with Sellers to
evaluate alternative arrangements that provide substantially the same liability
protections to the Parties as tail insurance but that are less costly than the
purchase by Sellers of tail insurance directly.
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9.17 Arizona Conversion Statute. Sellers shall use their reasonable best
efforts after the Effective Date to comply with the provisions of the so-called
non-profit hospital facility conversion provisions of Arizona law
(A.R.S.ss.10-11251, et seq.).
9.18 HCFA Survey. Sellers shall encourage HCFA to complete the HCFA survey
described in Section 6.14(d) as soon as possible after the date hereof and
communicate to Sellers the results of such survey prior to Closing.
9.19 Subdivision of Option Property. Sellers shall use commercially
reasonable efforts to cause to be recorded in the Official Records of the
Maricopa County Recorder a plat subdividing the Option Property owned by PBHMC
from the remainder of the Real Property owned by PBHMC in accordance with
applicable law and zoning ordinances, such that title to the Option Property
may be conveyed as one or more discrete parcels, separate and distinct from the
remainder of the Real Property owned by PBHMC.
ARTICLE 10
PRE-CLOSING COVENANTS OF PURCHASERS
Each Purchaser and Vanguard covenants and agrees with Sellers that between
the execution of this Agreement and the earlier of the Closing or termination
of this Agreement:
10.1 Preserve Accuracy of Representations and Warranties. It shall not
take any action which would render any representation and/or warranty contained
in Article 8 to be false or materially inaccurate. It shall promptly notify
BHHS in writing of any facts or circumstances which come to its attention and
which it reasonably believes causes, or through the passage of time is likely
to cause, any of the representations and warranties contained in Article 8 to
be false or materially inaccurate.
10.2 Access to Information. It shall, upon reasonable notice, give to
BHHS, and its counsel, accountants and other designated representatives
reasonable access, during normal business hours, to such properties, books and
records, contracts and other nonprivileged documents pertaining to its
businesses, properties and assets, as may be reasonably requested and
appropriate. Upon BHHS's reasonable request, its officers and employees shall
be available to confer with appropriate representatives of BHHS on operational
matters.
10.3 Third Party Authorizations/Notifications. It shall use its reasonable
best efforts to obtain expeditiously all consents, approvals and authorizations
of third parties necessary for its performance of this Agreement and
consummation of the Transaction and shall cooperate with Sellers in connection
with their efforts to obtain such consents, approvals and authorizations of
third parties, necessary for their performance of this Agreement and
consummation of the Transaction. In addition, it shall provide in a timely
manner all notifications to third parties necessary for its performance of this
Agreement and consummation of the Transaction.
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10.4 Reasonable Best Efforts and Continuing Cooperation. It shall
cooperate with Sellers in the performance of this Agreement and the Transaction
and shall use its reasonable best efforts to take all reasonable actions to
consummate the Transaction.
10.5 Lender Approval. Purchasers and Vanguard shall use commercially
reasonable efforts to cause its lenders to agree to give notice to the
Foundation of Vanguard's default or breach of covenants prior to exercising the
lenders' rights under the collateral.
ARTICLE 11
JOINT COVENANTS OF THE PARTIES
11.1 Non-Disclosure; Confidentiality. Each Party agrees that the
arrangements contained herein are confidential and shall not be disclosed to
any other person or entity without the written consent of all Parties hereto
(unless ordered to do so by a court of competent jurisdiction or otherwise
required by applicable law and except to the applicable Governmental
Authorities in connection with any required notification or application for
approval or a license or exemption therefrom). The Parties acknowledge that
each has received certain documents, materials and other information during the
course of their respective evaluation and negotiation of this Agreement that
are confidential in nature (the "Confidential Information"). Each of the
Parties agrees that it shall not at any time utilize any Confidential
Information made available to it pursuant to this Agreement except for the
purpose of promoting the goals of or completing this Transaction and except
that Purchasers may utilize such information after the Closing in connection
with its operations of the Baptist Facilities, nor shall any receiving party,
directly or indirectly, disclose such Confidential Information regarding the
others to any person or entity; provided, however, the receiving party may
disclose Confidential Information to members of its and its Affiliates' boards
of directors, management employees, advisors, lenders and physicians with a
need to know, subject to the conditions that the receiving party: (a) notify
such board members, management employees, advisors and physicians that such
Confidential Information is subject to the terms of a confidentiality agreement
and (b) obtain such person's agreement to maintain the confidentiality of such
Confidential Information. For purposes of this Agreement, Confidential
Information shall not include any information which: (a) a party can
demonstrate was already lawfully in its possession prior to the disclosure
thereof by the other, (b) is known to the public and did not become so known
through the fault of the receiving party, (c) becomes known to the public
through no fault of the receiving party, (d) is later lawfully acquired by a
party from other sources, (e) is required to be disclosed pursuant to the
provisions of any state or United States statute or regulation issued by a duly
authorized agency, board or commission thereof, or (f) is required to be
disclosed by rule or order of any court of competent jurisdiction or otherwise
required by law to be disclosed.
11.2 Publicity. No public announcement concerning this Agreement or the
Transaction shall be made without the advance approval of each of the Parties
hereto, both as to the timing and content of such release.
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11.3 Survival/Remedies. The Parties each acknowledge and agree the
provisions of this Article 11 shall survive any termination of this Agreement.
The Parties agree that any breach of the confidentiality obligations of this
Agreement contained in Section 11.1 or the publicity requirements of this
Agreement contained in Section 11.2 would result in irreparable damage to the
non-disclosing party for which such party will have no adequate remedy at law.
Therefore, it is agreed that the non-disclosing parties shall be entitled to
equitable relief, including an injunction enjoining any such breach or
threatened breach by any court of competent jurisdiction, and the disclosing
party agrees to pay all reasonable attorneys' fees and other costs incurred by
the non-disclosing party to secure such injunction. Such injunction shall be
without prejudice to any other right or remedy to which the non-disclosing
party may be entitled, including but not limited to any damages resulting from
a disclosing party's breach of the confidentiality obligations or publicity
requirements under this Agreement. Any failure or delay in exercising any
right, power or privilege hereunder shall not operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege hereunder.
11.4 Other Confidentiality Agreements. The Parties further acknowledge and
agree that their respective rights and obligations under this Article 11 shall
be in addition to, and shall in no way affect their respective rights and
obligation under, existing agreements of confidentiality with one another,
including the Confidentiality Agreement, dated June 18, 1999, together with any
Amendments to the Confidentiality Agreement, attached to this Agreement as
Exhibit G.
11.5 Certain Employment and Severance Arrangements.
(a) Purchasers shall not assume any Contracts with any employees of
Sellers described as "Employment/Severance Agreements" on Schedule 2.1.4,
except those Contracts described on Schedule 11.5. Except for the Contracts
described on Schedule 11.5 and except as otherwise provided in Section 12.1.5,
Purchasers shall not assume or otherwise be responsible for any severance,
"stay-pay", "parachute" or other payments or obligations to any employees of
Sellers, the Subsidiary or the Joint Venture arising under the Contracts listed
on Schedule 2.1.4, and Sellers shall be solely responsible for any and all
obligations owing to such employees under such Contracts, whether such
obligations arise because of the passage of time, acts of Purchasers or any
other reason.
(b) Purchasers have informed Sellers that Purchaser intends to "outsource"
the information systems and telecommunications functions of the Baptist
Facilities to Shared Medical Systems Corporation ("SMS"). Any information
systems and telecommunications employees of Sellers not offered employment by
SMS pursuant to this Section will be offered employment by Purchasers or their
Affiliates pursuant to Section 12.1.1. As of the Closing Date and except as
otherwise provided above, Purchasers will cause SMS to offer at-will employment
to (and, if an offer is accepted, hire effective as of the Closing Effective
Time) all of the information systems and telecommunication employees of Sellers
who are actively at work on the Closing Date and those employees on vacation,
sick leave or other short-term leaves of absence, including but not limited to
regular weekly days off work (whether or not such employees return to active
employment) upon substantially the same terms and conditions of
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employment (i.e., salaries, wages, job duties, titles and responsibilities)
which are applicable to such employees on the Effective Date. In addition, the
employee benefit plans applicable to such employees will be the same as those
generally provided by SMS to other information systems and telecommunications
employees in the Phoenix market; provided that SMS will waive as to such
employees (and their beneficiaries) the "pre-existing condition" exclusion
under SMS's medical plan subject to the pre-existing condition limitations in
Sellers' medical plan and applicable law; provided, further, that SMS will
recognize employment and dates of hire with Sellers for former employees of
Sellers employed by SMS as of the Closing Date for purposes of eligibility
under Purchasers' Plans or ERISA Plans (as each of those terms is defined for
purposes of Section 6.17 of the Agreement but with regard to SMS's rather than
Sellers' plans) and for purposes of determining leave time benefit accrual
rates. In addition to the obligations and liabilities assumed by Purchasers
under Article 3 of this Agreement related to employees (which obligations and
liabilities shall be assumed by SMS as to those employees employed by SMS), SMS
also shall provide a severance package equal to or greater than the package
generally available to SMS's other comparable hospital-based employees in the
Phoenix market. Sellers acknowledge that all employment offers are subject to
the satisfactory completion by SMS of employee background checks customarily
employed in the healthcare industry. Nothing contained in this Section or
elsewhere in this Agreement shall be deemed to limit or otherwise affect in any
manner the right of SMS to terminate at will the employment of any such hired
employee or to change individual features or plans in the employment
compensation and benefits package of the hired employees (but not to change
recognition of employment and dates of hire with Sellers as provided above),
provided that any such change is also implemented for employees of SMS in the
Phoenix market generally. SMS will not assume or otherwise become liable for
(i) Sellers' ERISA Plans or Plans, (ii) obligations of Sellers under the
Consolidated Omnibus Budget Reconciliation Act, (iii) payment of health care
expenses of hired employees and their beneficiaries related to a continuum of
care on the Closing Date, (iv) other obligations to former or currently retired
employees, and will not make any contributions to Sellers' pension plans, or
(v) long-term disability payments to any former employee of Sellers who does
not actively work for SMS after Closing. A person is in the "continuum of care"
on the Closing Date if that person (i) is an inpatient of any hospital on the
Closing Date, (ii) is receiving medical care in an outpatient or sub-acute care
facility (e.g., skilled nursing facility, long term care facility or mental
health facility) on the Closing Date, or (iii) is admitted to any hospital
within 72 hours after receiving any outpatient or sub-acute care services prior
to the Closing Date.
ARTICLE 12
ADDITIONAL POST-CLOSING AGREEMENTS/OBLIGATIONS OF THE PARTIES
12.1 Employment of Sellers' Employees; Additional Employee Matters.
12.1.1. Employment of Employees. As of the Closing Date and except as
otherwise provided in Section 11.5(b) and in Schedule 12.1.1, Purchasers will
offer at-will employment to (and, if an offer is accepted, hire effective as of
the Closing Effective Time) all of the employees of Sellers who are actively at
work on the Closing Date and those employees on vacation, sick leave, FMLA
leave, or short-term leaves of absence, including but not limited to regular
weekly days off work (whether or not such employees return to active
employment).
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Purchasers will offer such employees substantially the same terms and
conditions of employment (i.e., salaries, wages, job duties, titles and
responsibilities) which are applicable to such employees on the Effective Date.
In addition, Purchasers' employee benefit plans applicable to such employees
will be the same as those generally provided to employees of other facilities
in the Phoenix market owned by Affiliates of Vanguard; provided that Purchasers
will waive as to such employees (and their beneficiaries) the "pre-existing
condition" exclusion under Purchasers' medical plan subject to the pre-existing
condition limitations in Sellers' medical plan and applicable law; provided,
further, that Purchasers will recognize employment and dates of hire with
Sellers for former employees of Sellers employed by Purchasers as of the
Closing Date for purposes of eligibility and vesting under Purchasers' Plans or
ERISA Plans (as each of those terms is defined for purposes of Section 6.17 of
the Agreement but with regard to Purchasers' rather than Sellers' plans) and
for purposes of determining leave time benefit accrual rates and career
achievement tributes. In addition to the obligations and liabilities assumed by
Purchasers under Article 3 of this Agreement related to employees, Purchasers
also shall provide a severance package equal to or greater than the package
generally available to Purchasers' other comparable hospital-based employees in
the Phoenix market. Sellers acknowledge that all employment offers are subject
to the satisfactory completion by Purchasers of employee background checks
customarily employed in the healthcare industry. Except as otherwise provided
in Assumed Contracts, nothing contained in this Section or elsewhere in this
Agreement shall be deemed to limit or otherwise affect in any manner the right
of Purchasers or any Affiliate of Purchasers to terminate at will the
employment of any such hired employee or to change individual features or plans
in the employment compensation and benefits package of the hired employees (but
not to change recognition of employment and dates of hire with Sellers as
provided above), provided that any such change is also implemented for
employees of other facilities in the Phoenix market owned by Affiliates of
Purchasers. Purchasers will not assume or otherwise become liable for (i)
Sellers' ERISA Plans or Plans, (ii) obligations of Sellers under the
Consolidated Omnibus Budget Reconciliation Act except as otherwise provided in
Section 12.22, (iii) payment of health care expenses of hired employees and
their beneficiaries related to a continuum of care on the Closing Date, (iv)
other obligations to former or currently retired employees, and will not make
any contributions to Sellers' pension plans, or (v) long-term disability
payments to any former employee of Sellers who does not actively work for
Purchasers after Closing. A person is in the "continuum of care" on the Closing
Date if that person (i) is an inpatient of any hospital on the Closing Date,
(ii) is receiving medical care in an outpatient or sub-acute care facility
(e.g., skilled nursing facility, long term care facility or mental health
facility) on the Closing Date, or (iii) is admitted to any hospital within 72
hours after receiving any outpatient or sub-acute care services prior to the
Closing Date.
12.1.2. WARN Act. At Closing, Sellers shall deliver to Purchasers a
list as of Closing setting forth the name of each employee of the Sellers whose
employment was terminated during the 90 day period ending on the Closing Date
and the reason for such termination, and Sellers shall not terminate prior to
Closing (except for cause) any employee to whom Purchasers or SMS have agreed
to offer employment. In reliance upon this list and covenant, Purchasers shall
indemnify, defend and hold harmless Sellers from any liability or claim arising
under the WARN Act as a result of Purchasers' termination after Closing of any
employee hired by Purchasers in accordance with Section 12.1.1 or as a result
of the termination
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by Sellers prior to or at Closing of any corporate employees of Sellers to whom
Purchasers will not make offers of employment as of Closing, as described on
Schedule 12.1.1.
12.1.3. Sellers' Plans. As of the Closing Date, Sellers shall
terminate the participation of all former employees of Sellers hired by a
Purchaser at Closing in all Plans and ERISA Plans of Sellers. Sellers shall
provide for distributions or other arrangements consistent with the terms of
the applicable plans, ERISA and the Code. Purchasers and Sellers shall employ
the Alternative Procedure described in Section 5 of the IRS Revenue Procedure
96-60 for purposes of calendar year 2000 income tax and employment tax
withholding and reporting. Accordingly, as soon as practicable after Closing
(but in any event prior to December 31 of the year in which the Closing
occurs), Sellers shall provide Purchasers with all necessary payroll records
for the calendar year in which the Closing occurs so that Purchasers will
furnish a Form W-2 to all such hired employees disclosing all wages and other
compensation paid to them (and amounts withheld therefrom) by Sellers and
Purchasers in the calendar year.
12.1.4. Ads. Between the Effective Date hereof and Closing,
Purchasers may run newspaper advertisements in the name of any of the Baptist
Facilities to recruit employees for and in the name of any of the Baptist
Facilities, such employment to commence as of the Closing Date or any time
thereafter; provided, however, that Purchasers must obtain the written consent
of BHHS prior to running any such newspaper advertisements, which consent shall
not be unreasonably withheld.
12.1.5. Employee Releases and Waivers; Certain Severance and
Retention Benefits.
(a) Purchasers and Sellers shall each use their reasonable best
efforts to obtain releases and/or waivers reasonably acceptable to both parties
from each information systems and telecommunications employee of Sellers who is
hired at Closing by Purchasers or SMS. These releases and/or waivers shall
concern applicable severance payments that may become due under a Contract (i)
in the event of constructive termination of employment or (ii) with regard to
termination of employment by BHHS notwithstanding employment by Purchasers or
SMS at comparable position, salary and benefits. The cost of any consideration
to be paid to the employees for executing the waivers and/or releases will be
borne 50% by Sellers and 50% by Purchasers.
(b) From and after Closing, Purchasers shall be responsible for and
pay any and all severance due under the Contracts (if and to the extent
modified pursuant to Section 12.1.5(a)) with information services and
telecommunication employees of Sellers who are employed by the Purchasers or
SMS on and after the Closing, if the obligation to make such payments and
bonuses results from the actual (and not constructive) termination of such
employee's employment by Purchasers or SMS for reasons other than for
"substantial cause" (as defined in subsection (e) below). Furthermore, from and
after Closing, Purchasers shall be responsible for and pay any Y2K retention
payments to the extent included in Net Working Capital due under the Contracts
with information services and telecommunication employees of Sellers who are
employed by the Purchasers or SMS on and after the Closing. In the event any
employee is required by the terms of such Contract to repay or refund to
Sellers after Closing
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any such severance or "Y2K pay" compensation, whether the amount to be repaid
or refunded was paid by Sellers prior to or after Closing, Sellers shall
promptly remit to Purchasers the amount actual repaid by such employee. Sellers
will not amend or waive any such repayment obligation and will use reasonable
collection efforts to collect any such repayment or refund.
(c) From and after Closing, Purchasers shall be responsible for and
pay any and all severance payments and outplacement benefits due under
Contracts with the employees of Sellers listed on Schedule 12.1.5(c) who are
employed by the Purchasers on and after Closing, if the obligation to make such
payments and bonuses results from the actual (and not constructive) termination
of such employee's employment by the Purchasers for reasons other than
"substantial cause" (as defined in subsection (e) below).
(d) From and after Closing, Purchasers shall be responsible for and
pay for any referral and recruitment bonuses, to the extent included in Net
Working Capital, due under Contracts with employees of Sellers who are employed
by Purchasers on or after the Closing.
(e) For purposes of this Section 12.1.5, "substantial cause" shall
mean only malfeasance, willful misconduct, gross negligence, fraud,
unauthorized disclosure or use of a trade secret or other confidential
commercially or competitively sensitive information concerning Vanguard or any
of its Affiliates, conviction of a felony or conviction of any crime involving
moral turpitude.
12.2 Staffing Levels. Purchasers shall at all times maintain minimum
staffing levels at each Baptist Hospital in accordance with applicable
accreditation standards and federal and state laws and regulations.
12.3 Medical Staff Matters.
12.3.1. Medical Staff Appointment. Purchasers agree that all current
appointees to each Baptist Hospital's Medical Staff shall continue to have the
same rights and privileges as appointees to the Medical Staff as such
appointees had prior to the Closing; provided, however, that the consummation
of the Transaction will not limit the ability of Purchaser's Board of
Directors, the Community Board (as defined in Section 12.4) and the Medical
Executive Committee to grant, withhold or suspend Medical Staff appointment or
clinical privileges in accordance with the terms and provisions of the Medical
Staff Bylaws.
12.3.2. No Discrimination. Purchasers shall not permit discrimination
against appointees to the Medical Staffs of the Baptist Hospitals in any
Purchaser's network of healthcare facilities that includes the Baptist
Facilities or in any managed care network or organization which is owned or
operated by any Purchaser or its Affiliates that includes the Baptist
Facilities.
12.3.3. Discontinuance/Reduction of Clinical Services. For a period
of five (5) years after the Closing Date, prior to any material clinical
service being discontinued or materially reduced at a Baptist Hospital, or
relocated from one Baptist Hospital to another facility owned and/or operated
by Purchasers or their Affiliates or elsewhere, Purchasers shall
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consult with the Baptist Hospital's Community Board (as defined in Section
12.4). Purchasers will also use reasonable best efforts to assist appointees to
the Medical Staffs of the Baptist Hospital providing such clinical service
("affected appointees"), as well as appointees to the Medical Staffs from which
the affected appointees seek consultative services, to be equitably
credentialed and privileged on the Medical Staff at the facility to which the
services are transferred subject to approval by the Community Board of such
facility. The purpose of this provision is to provide that appointees to the
Medical Staffs of the Baptist Hospitals shall have the ability to continue
caring for their patients and practicing medicine within their respective
specialties in a manner similar to that for which they held privileges at the
Baptist Hospital prior to any service relocation.
12.3.4. Cardiovascular Services. However, notwithstanding any other
provision of this Agreement, no Purchaser shall relocate, discontinue or
materially reduce the Cardiovascular Services of the Cardiology Department at
PBHMC during the first five (5) years after the Closing Date and each Purchaser
further agrees to adequately support the growth, marketing and development of
such Cardiovascular Services at PBHMC.
12.3.5. Family Services Practice. During the first five (5) years
after the Closing Date, each Purchaser agrees to maintain the family services
practice and family services residency program at PBHMC.
12.4 Community Board. As of the Closing and thereafter, Purchasers agree
to establish and maintain advisory boards of trustees ("Community Boards") for
each Baptist Hospital, with each Baptist Hospital's Community Board comprised
of 5 to 15 members, consisting of the CEO of the Baptist Hospital and, with
respect to the remaining members, 50% of whom shall be physicians on the
Medical Staff of the Baptist Hospital and 50% of whom shall be community
representatives. To the extent permitted by applicable law, each Baptist
Hospital's Community Board shall be responsible for quality management, medical
staff credentialing and accreditation matters at the Baptist Hospital, and
shall have such other responsibilities and authorities as delegated to it by
Purchaser's Board of Directors.
12.5 Management by Purchaser's Board of Directors. The Parties agree that,
upon the Closing, the responsibilities of each Purchaser's Board of Directors
in connection with the ownership and operation of the Purchased Assets shall
include the following:
(a) All affairs of the Baptist Hospitals, except as specifically delegated
to the Community Boards, as described in Section 12.4, or the Regional Board or
Regional Medical Board, as described in Section 12.6;
(b) Financing matters;
(c) Acquisition;
(d) Significant capital investments;
(e) Management and policy matters for the Baptist Hospitals; and
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(f) General guidance and support on local market and community concerns.
12.6 Regional Boards.
12.6.1. Regional Board. At the request of Sellers or the Foundation
made within 12 months after the Closing Date, Purchaser shall establish and
maintain a regional board ("Regional Board") for the Baptist Hospitals and
other hospitals owned by Purchasers and/or their Affiliates in the Phoenix
market (each a "Phoenix Hospital"). The Regional Board shall be composed of an
equal number of physicians, community representatives and the CEO from each
Phoenix Hospital. Membership on the Regional Board will be expanded, at the
request of the Regional Board, as additional Phoenix Hospitals are added,
including the anticipated new hospital in West Valley. The purpose of the
Regional Board shall be to advise the Purchasers about activities of the
Phoenix Hospitals, including patient care, capital expenditures, operating
budgets, physician activities and other items of concern.
12.6.2. Regional Medical Board. At the request of Sellers or the
Foundation made within 12 months after the Closing Date, Purchaser shall
establish and maintain a regional medical board ("Regional Medical Board") for
the Phoenix Hospitals. The Regional Medical Board shall be comprised of three
physicians from each Phoenix Hospital elected by the medical staff of each
Phoenix Facility. The Chairman of the Regional Medical Board shall be elected
by the members of the Regional Medical Board. Membership on the Regional
Medical Board will be expanded, at the request of the Regional Board, as
additional hospitals are added in the Phoenix market, including the new
anticipated hospital in West Valley. The purpose of the Regional Medical Board
shall be to discuss issues of concern to the physicians, including patient
care, services offered by the Phoenix Hospitals, physician recruitment and
managed care.
12.7 Baptist Bonds. At the Closing, the Purchasers shall provide
immediately available funds to the Bond Trustee in accordance with Section 4.2
so that Allocated Bonds currently outstanding shall be defeased in accordance
with their terms and so that each Bond Trustee delivers to BHHS a certificate
that the Allocated Bonds are no longer outstanding under the terms of the Bond
Indentures under which the Allocated Bonds are outstanding and are no longer
secured by the bond indenture.
12.8 Sellers' Cost Reports. Sellers will timely prepare all cost reports
relating to Sellers for periods ending on or prior to the Closing Date or
required as a result of the consummation of the Transaction set forth herein,
including terminating cost reports for the Medicare, AHCCCS and CHAMPUS
programs (the "Sellers Cost Reports") and shall forward to Purchasers copies of
the Sellers Cost Reports, including attachments and schedules. Purchasers shall
forward to BHHS any and all correspondence relating to Sellers Cost Reports
within five (5) business days after receipt by Purchasers. Except as otherwise
provided herein, Purchasers shall remit any receipts of funds relating to
Sellers Cost Reports promptly after receipt by Purchasers and shall forward to
BHHS any demand for payments within three (3) business days after receipt by
Purchasers. Sellers shall retain all rights to government agency settlements
and to Sellers Cost Reports including any amounts receivable or payable in
respect of such reports or reserves relating to such reports. Such rights shall
include the right to appeal any Medicare
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determinations relating to government agency settlements and Sellers Cost
Reports. Sellers shall retain the originals of Sellers Cost Reports,
correspondence, work papers and other documents relating to Sellers Cost
Reports and the government agency settlements.
12.9 Restriction on Sale/Transfer of PBHMC and ACHMC and Right of First
Refusal.
12.9.1. Restriction on Sale/Transfer. For a period of five (5) years
after the Closing Date, no Purchaser shall transfer ownership or control of all
or substantially all of the assets of either Baptist Hospital to any Person,
other than a Person wholly-owned and controlled by the Purchaser.
12.9.2. Right of First Refusal. In addition to, and in no way
limiting, the restrictions in Section 12.9.1, for a period of ten (10) years
after the Closing Date, the Foundation shall have a right of first refusal on
the following terms and conditions:
(a) Before a Purchaser may sell or otherwise transfer all or
substantially all of the assets of a Baptist Facility (the "Baptist
Assets") to a Person (the "Offeror") that is not wholly-owned and
controlled by the Purchasers or their Affiliates (a "Permitted
Transferee"), it must first obtain an Offer (as defined below) from the
Offeror and give notice (and send a copy) of such Offer to the Foundation.
The Purchaser shall provide the Foundation any additional information
regarding such Offer or the Offeror (subject to confidentiality
obligations) in the Purchaser's possession as may be reasonably requested
from time to time by the Elector, as defined in subsection (b) below. For
purposes hereof, an "Offer" shall mean a bona fide offer to purchase or
otherwise acquire the Baptist Assets with an actual intent to consummate
the transaction pursuant to the stated terms and conditions which states
the consideration to be given for such Baptist Assets and other material
terms. Notwithstanding anything to the contrary herein, Purchasers may
reject any Offer without providing the Foundation with a notice relating
to such Offer.
(b) If the Foundation notifies the Purchaser within 45 days from the
date on which notice (and a copy) of the Offer was given to the Foundation
(the "Response Period") that the Foundation or a Foundation assignee
specifically identified by the Foundation in accordance with Section
12.9.2(e) (the Foundation or such assignee is sometimes referred to
hereafter as the "Elector") irrevocably elects to purchase or acquire all
(but not less than all) of the Baptist Assets that are the subject of the
Offer (sometimes referred to hereinafter as a "Call Response") for the
consideration to be paid to the Purchaser pursuant to the Offer, then such
election shall be binding upon the Foundation, the Elector (if other than
the Foundation) and the Purchasers. In the event the Elector elects to
match the Offer, the Parties shall negotiate in good faith for 30 days
after the Response Period the terms and conditions of a definitive
agreement to be executed by the Purchasers and the Elector containing the
principal terms set forth in the Offer, but otherwise containing
substantially the same terms and conditions as this
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Agreement (except for Sections 12.7, 12.9 and 12.19), provided that any
representations and warranties of Purchasers about the Baptist Assets
shall relate to Purchasers' period of ownership only. If the Offer
includes any non-cash consideration, the Elector shall be entitled to
substitute cash in an amount equal to the fair market value of such
non-cash consideration. The Elector shall acquire the Baptist Assets at a
Closing to be held within five business days following the date upon which
the last material regulatory approval required in connection with the sale
of the Baptist Assets is obtained, subject to reasonable extensions
mutually acceptable to Purchasers and the Elector (the "Call Response
Termination Date"), provided that in no event shall the Call Response
Termination Date be later than 90 days after execution of the definitive
agreement described above (which 90 days shall be extended an additional
45 days if the only closing condition not satisfied at such 90th day is
the receipt by one or more of the parties of a necessary approval or
consent of a governmental authority).
(c) If (i) a copy of the Offer is delivered to the Foundation as
provided above and (ii) (A) the Foundation or the Elector fails to deliver
a Call Response within the Response Period or (B) after delivery of a Call
Response, the Elector fails to purchase or acquire the Baptist Assets that
are the subject of the Offer as provided in Section 12.9.2, or (C) the
Elector and the Purchasers fail to execute a definitive agreement within
30 days after the expiration of the Response Period after using good faith
efforts to do so, or (D) the Elector assigns or transfers its rights to
purchase under this Section after the Response Period (and prior to
execution of the definitive agreement), then the Purchaser may (but shall
not be obligated to) sell or transfer such Baptist Assets to the Offeror
in accordance with the terms and conditions of the Offer, subject to
purchase price adjustments, if any, as provided for in the Offer, within
180 days after the event described in clause (A), (B), (C) or (D) above,
as the case may be (the "Offer Closing Date"). The sale or transfer to the
Offeror shall not be consummated unless the Offeror agrees in writing to
comply with the provisions of Sections 12.1, 12.2, 12.3.1, 12.3.2, 12.3.3,
12.3.4, 12.3.5, 12.4, 12.6 (if the elections described therein are timely
made by the Foundation), 12.9.2, 12.10, 12.17, 12.20, 12.21 and (if not
already satisfied by the date of sale) 12.18 of this Agreement that apply
to the Purchaser and such Offeror shall, upon the acquisition of such
Baptist Assets, be bound by such terms as though such Offeror were an
original signatory hereto. A copy of such writing shall be provided to the
Foundation and shall state that the Foundation (but no other Person) shall
be a third party beneficiary thereof. If the sale to the Offeror of the
Baptist Assets does not occur pursuant to this Section 12.9.2(c) on or
before the Offer Closing Date, then the provisions of Section 12.9.2 shall
apply anew with respect to the sale of such Baptist Assets thereafter.
(d) If the Foundation and the Elector have not failed to perform any
obligation set forth in this Section 12.9.2 or in the executed definitive
agreement, if any, described in Section 12.9.2(b), and the terms and
conditions of the Offer are changed or revised in any material respect,
other than any purchase price adjustments, if any, as provided for in the
Offer (a "Revised Offer"), Purchaser
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may not proceed with the Revised Offer without first complying with the
other provisions of this Section 12.9.2 as to the Revised Offer. If the
Foundation or the Elector has failed to perform in any material respect
any obligation set forth in this Section 12.9.2 or in the executed
definitive agreement, if any, described in Section 12.9.2(b), then the
provisions of this Section 12.9.2 shall expire and be of no further force
and effect with respect to the Baptist Assets that were the subject of the
Offer, it being understood and acknowledged that Purchasers shall
thereafter own and control the Baptist Assets free and clear of the
restrictions set forth in this Section 12.9.2 (except for the last two
sentences of Section 12.9.2(c)).
(e) The Foundation shall have the right to assign the right of first
refusal described in this Section 12.9.2 to a third party prior to the
expiration of the Response Period, provided that (i) such assignment is
irrevocable, (ii) the Foundation notifies the Purchasers and Vanguard of
such assignment promptly thereafter (and in any event before the
expiration of the Response Period) and includes in such notice a complete
and genuine copy of the assignment, (iii) the assignee agrees in the
assignment to be bound by all of the terms and conditions of this Section
12.9.2 applicable to the Foundation and such assignment expressly states
that Purchasers and Vanguard are third party beneficiaries, (iv) such
assignment shall not relieve the Foundation of any of its obligations to
Purchasers under this Agreement, and (v) the Foundation shall provide such
financial and other information concerning the assignee as Purchasers or
Vanguard shall reasonably request (subject to confidentiality obligations)
to evaluate the ability of the assignee to perform the obligations of the
Elector hereunder.
12.9.3. Permitted Exceptions. The Purchasers shall have the right to
sell, assign, transfer or otherwise dispose of individual parcels of Real
Property (e.g., condominium units, medical office buildings or undeveloped
parcels of land) free and clear of the restrictions in this Agreement so long
as Purchasers continue to operate the Baptist Hospitals in their entirety on
that portion of their respective campuses remaining after the sale, assignment,
transfer or disposition. The Purchasers shall have the right to grant mortgages
or deeds of trusts on the Real Property and, if required by the mortgagees or
beneficiaries thereunder as a condition to approving or financing the
Transaction (and subject to Purchasers' covenant in Section 10.5), Sellers and
the Foundation shall execute such instruments or agreements that are reasonably
requested to subordinate the provisions of this Section 12.9 and 12.21 to the
lien of such mortgages or deeds of trust. Nothing in this Section 12.9 shall
limit or impair the ability of the Purchasers to operate and conduct the
business of the Baptist Hospitals as they see fit in their sole discretion,
subject to their obligations in this Agreement.
12.9.4. Recording. As of, or promptly after the Closing, the rights
and obligations of the Parties under this Section 12.9 shall be recorded with
the appropriate county and/or state agencies.
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12.10 Use, Purpose and Mission of Baptist Facilities. For a period of ten
(10) years after the Closing Date, Purchasers shall not change the use of PBHMC
or ACHMC with respect to its primary purpose or change the mission of PBHMC or
ACHMC relative to providing a continuum of health care services to the
community.
12.11 Purchasers' Payables. Purchasers shall pay in a timely manner all
Accounts Payable that are assumed by the Purchasers. Sellers agree to promptly
remit to Purchasers all relevant invoices and bills they receive after the
Closing for the payment of Accounts Payable.
12.12 Purchasers' Receivables. Sellers shall remit to Purchasers, by the
tenth (10th) day following the date of collection, any payments they may
receive after the Closing which constitute payments of Accounts Receivable.
12.13 Post-Closing Maintenance of and Access to Information and
Cooperation.
(a) The Parties acknowledge that after Closing each Party may need access
to information or documents in the control or possession of another Party for
the purposes of concluding the transactions herein contemplated, preparing Tax
Returns or conducting Tax audits, complying with the Government Payment
Programs and other Legal Requirements, and prosecuting or defending third party
claims. Accordingly, each Party shall keep, preserve and maintain in the
ordinary course of business, and as required by Legal Requirements and relevant
insurance carriers, all books, records, documents and other information in the
possession or control of such Party and relevant to the foregoing purposes at
least until the expiration of any applicable statute of limitations or
extensions thereof.
(b) Each Party shall cooperate fully with, and make available for
inspection and copying by, the other Party, its employees, agents, counsel and
accountants and/or Governmental Authorities, upon written request and at the
expense of the requesting Party, such books, records, documents and other
information (excluding those items subject to attorney-client privilege) to the
extent reasonably necessary to facilitate the purposes of Section 12.13(a). In
addition, each Party shall cooperate with, and shall permit and use its
reasonable best efforts to cause its respective former and present officers and
employees to cooperate with, the other Party on and after Closing in furnishing
information, evidence, testimony and other assistance in connection with any
action, proceeding, arrangement or dispute of any nature with respect to the
subject matters of this Agreement.
(c) Each Party to this Agreement agrees that on and after Closing, it will
execute any and all necessary documents, and take any and all necessary
actions, to effect the purposes and terms of this Agreement or any other
reasonable request. Specifically, the Parties shall (i) cooperate with each
other in the defense of any litigation, investigation, claim or proceeding
related to Sellers, Purchasers or the Baptist Facilities including the
provision of witnesses and records (including contracts, memoranda, charge
data, invoices, correspondence and other documentation) in a timely manner as
reasonably requested by a Party to this Agreement; (ii) cooperate with each
other on all matters related to the preparation and submission of claims to the
Medicare and AHCCCS programs and other third party payers for services provided
to beneficiaries; (iii) cooperate with each other in the preparation and
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settlement of Medicare and AHCCCS cost reports for all cost reporting years
which are open as of the Closing Date; and (iv) abide by any applicable
confidentiality privileges. Each Party also agrees to (v) promptly notify each
other Party in writing of any claim or threatened claim against a Party or its
present, previous or future directors or officers arising out of any matter
relating to Sellers and the Baptist Facilities; (vi) promptly deliver to each
other Party all correspondence or other written materials belonging to such
other Party received by a Party after Closing pertaining to such other Party;
and (vi) provide any documents necessary to obtain or maintain licenses,
franchises, permits, certificates, certificates of need, accreditations,
contracts, consents, and approvals, required by law or governmental regulations
from all applicable federal, state and local authorities and any other
regulatory agencies necessary for the legal operation of Sellers and the
Baptist Facilities and reimbursement for services.
(d) At any time and from time to time at and after the Closing, upon
request of any Purchaser, each Seller shall do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, such
further acts, deeds, assignments, transfers, conveyances, powers of attorney
and confirmations as Purchasers may reasonably request to more effectively
convey, assign and transfer to and vest in Purchasers, its successors and
permitted assigns, full legal right, title and interest in and actual
possession of the Purchased Assets and the Baptist Facilities, to confirm such
Seller's capacity and ability to perform its post-Closing covenants and
agreements under this Agreement and the Closing documents, and to generally
carry out the purposes and intent of this Agreement.
(e) The exercise by any Party of any right of access granted herein shall
not unreasonably interfere with the business operations of the other Party.
12.14 Bulk Transfer Laws. In the event that the provisions of any bulk
transfer law or similar law, including but not limited to any codification of
the provisions of Article 6 of the Uniform Commercial Code, are applicable to
the Transaction, the Parties hereby waive compliance with respect thereto.
12.15 Restricted Assets. Purchasers acknowledge that Sellers hold certain
monies or other restricted assets that are required by the donors thereof to be
spent at the Baptist Facilities. Schedule 12.15 sets forth a description of the
restricted assets to be transferred to Purchasers and to be retained by Sellers
and the hospital uses to which they must be applied.
12.16 Transition Services and Patients. If Purchasers receive any cost
report settlement amounts from the Government Payment Programs for discharges
occurring prior to the Closing Date, Purchasers shall tender same to Sellers
within ten (10) days after receipt thereof. If Sellers receive any cost report
settlement amounts from the Government Payment Programs for discharges
occurring on or after the Closing Date, Sellers shall tender same to Purchasers
within ten (10) days after receipt thereof. Each Party shall be entitled to
receive from the Government Payment Programs cost reimbursement settlements
(including capital costs, indirect medical education and disproportionate
share) for those patients discharged by a Party at the time such Party owned
the Baptist Facilities based upon the Cost Report filed by such Party.
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12.17 Indigent Care. Purchasers accept the responsibility to treat
indigent patients in the service area of the Baptist Facilities and will comply
with all applicable federal and state laws and regulations governing such
matters. To this end, Purchasers shall maintain for not less than five years
after Closing Sellers' policies for the treatment of indigent patients at the
Baptist Facilities as described on Schedule 12.17, subject to changes in
governmental policy, such as implementation of universal healthcare insurance
or similar governmental programs.
12.18 Purchaser Post-Closing Expenditures.
(a) From the Closing Date of the Transaction until the seventh anniversary
of the Closing Date, Purchasers shall expend not less than $50 million in
capital expenditures for the benefit of the Baptist Facilities (i) on the
Phoenix Campuses, and/or (ii) otherwise for the development within the Primary
Service Area of primary care outpatient treatment centers only, in any event
with an average annual expenditure as of the end of each of the first seven
anniversaries of the Closing Date of not less than $6 million, provided that
during the first year Purchasers shall expend not less than $4 million at the
Phoenix Campus of PBHMC and not less than $2 million at the Phoenix Campus of
ACHMC.
(b) If the Purchasers fail in any year to satisfy the capital expenditure
obligations described in Section 12.18(a) above, then the following shall apply
with respect to such year:
(i) For the first year following the Closing Date, Purchasers shall
be required to expend not less than $4 million at the Phoenix Campus of
PBHMC and not less than $2 million at the Phoenix Campus of ACHMC;
(ii) For the second year following the Closing Date, Purchasers shall
be required to expend a minimum of One Million Five Hundred Thousand
Dollars ($1,500,000) regardless of the amount of EBITDA (as defined in
Section 12.18(d) below) generated from the operation of the Baptist
Facilities during that year, but Purchasers shall not be required to
expend an amount greater than $1,500,000 unless the EBITDA of the Baptist
Facilities exceeds $1,500,000, in which case the Purchasers shall be
required to expend an amount equal to the EBITDA generated from the
operation of the Baptist Facilities, but in no event greater than
$6,000,000 unless the Purchasers elect to do so;
(iii) For the third year following the Closing Date, Purchasers shall
be required to expend a minimum of Three Million Dollars ($3,000,000)
regardless of the amount of EBITDA generated from the operation of the
Baptist Facilities during that year, but Purchasers shall not be required
to expend an amount greater than $3,000,000 unless the EBITDA of the
Baptist Facilities exceeds $3,000,000, in which case the Purchasers shall
be required to expend an amount equal to the EBITDA generated from the
operation of the Baptist Facilities, but in no event greater than
$6,000,000 unless the Purchasers elect to do so;
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(iv) For the fourth year following the Closing Date, Purchasers shall
be required to expend a minimum of Four Million Five Hundred Thousand
Dollars ($4,500,000) regardless of the amount of EBITDA generated from the
operation of the Baptist Facilities during that year, but Purchasers shall
not be required to expend an amount greater than $4,500,000 unless the
EBITDA of the Baptist Facilities exceeds $4,500,000, in which case the
Purchasers shall be required to expend an amount equal to the EBITDA
generated from the operation of the Baptist Facilities, but in no event
greater than $6,000,000 unless the Purchasers elect to do so; and
(v) For the fifth through the seventh anniversaries of the Closing
Date, Purchasers shall be required to expend a minimum of Six Million
Dollars ($6,000,000) per year.
Purchasers' compliance with the provisions of Section 12.18(b) shall not reduce
or otherwise modify Purchasers' obligation to make the full $50 million
aggregate capital commitment during the seven year period described in Section
12.18(a).
(c) If at the end of any of the first seven anniversaries of the Closing
Date, Purchasers have failed to expend an average annual amount of $6 million
pursuant to Section 12.18(a) or the minimum amount required in such year
pursuant to Section 12.18(b), the Purchasers shall pay in cash to the
Foundation or its assignee upon demand, an amount equal to the lesser of the
amounts necessary to satisfy Section 12.18(a) or Section 12.18(b), which
necessary amounts, for purposes of calculating the average annual amount
expended by Purchasers, shall be subject to credit for any previous amounts
paid to the Foundation or its assignee pursuant to this Section 12.18(c). In
addition, if the full $50 million is not expended by Purchasers within the
seven-year period, the balance shall be paid in cash to the Foundation or its
assignee upon demand, subject to credit for any previous amounts paid to the
Foundation or its assignee pursuant to this Section 12.18(c).
(d) The following shall constitute capital expenditures expended by
Purchasers within the meaning of this Section: (i) capital expenditures
actually expended by Purchasers or their Affiliates, (ii) capital expenditures
actually expended by third parties at the request or direction of Purchasers
(other than capital expenditures made by governmental authorities on public
rights-of-way), and (iii) capital expenditures committed to be expended
pursuant to binding Contracts executed by Purchasers, their Affiliates, or
third parties described in clause (ii). As used in this Section 12.18, "EBITDA"
means the earnings before interest, income taxes, depreciation and
amortization.
12.19 Annual Compliance Certificate. Purchasers shall provide the
Foundation, within 60 days after each of the first seven anniversaries of the
Closing Date, a certificate signed by an officer of Purchasers (a "Compliance
Certificate") detailing with reasonable specificity the expenditures made and
committed to by Purchasers pursuant to Section 12.18 of this Agreement during
the prior year. Upon the Foundation's request, Purchasers shall provide the
Foundation with reasonable documentation evidencing the information and
statements made in the Compliance Certificate. In addition, if requested by the
Foundation, Purchasers shall make
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available for inspection and copying by the Foundation and its employees and
agents such books, records, documents and other information deemed reasonably
necessary by such parties to verify the information and statements made in the
Compliance Certificate.
12.20 Foundation Treatment. The Parties acknowledge and agree that after
the Closing the Foundation shall remain independent of Purchasers with no
restrictions on its activities or operations, except as otherwise specifically
set forth in Section 12.23(a) of this Agreement, subject, however, to Section
12.23(b).
12.21 Binding Effect on Successors, Assigns and Transferees. The Parties
acknowledge and agree that the commitments and obligations of Purchasers in
this Article 12 shall also be binding upon any of Purchasers' respective
successors and assigns and any Person that acquires either or both of the
Baptist Hospitals if and to the extent required by Section 12.9.2(c).
Purchasers shall require any Person who acquires all or substantially all of
either or both of the Baptist Hospitals to agree to assume the provisions of
Sections 12.1, 12.2, 12.3.1, 12.3.2, 12.3.3, 12.3.4, 12.3.5, 12.4, 12.6 (if the
elections described therein are timely made by the Foundation), 12.9.2, 12.10,
12.17, 12.20, 12.21 and (if not already satisfied by the date of sale) 12.18 of
this Agreement that apply to the Purchasers. The Foundation (but no other
Person) shall be a third party beneficiary of such agreement to assume.
12.22 Certain COBRA Benefits. If requested by Sellers not less than ten
days prior to Closing, Vanguard will permit all persons who are qualified
beneficiaries of Sellers under COBRA law as of the Closing Date ("COBRA
Employees") to participate in the health benefit plans of Vanguard for the
period of time equal to that which Sellers would be required under the COBRA
law if Sellers were to keep their health benefit plans in existence. Sellers
shall reimburse Vanguard for all expenditures incurred by Vanguard for benefits
rendered under the plans to COBRA Employees. COBRA Employee participation shall
be subject to the terms of the plans with respect to participating providers,
deductibles, copayments and other conditions of plan benefits generally
applicable to persons covered by the plans. Sellers shall provide to Purchasers
at Closing a list of all COBRA Employees.
12.23 Noncompetition.
(a) For a period of ten years from and after the Closing Date, no Seller
nor any then Affiliate of Sellers nor the Foundation shall directly or
indirectly (including by affiliation or "virtual merger" with another Person),
in any capacity:
(i) own, lease, manage, operate, control, participate in the
management or control of, be employed by, or maintain or continue any
interest whatsoever in any enterprise engaged in the business of providing
healthcare goods or services, including hospitals and outpatient surgery
or diagnostic facilities, within a 30-mile radius of each of the Baptist
Facilities; or
(ii) employ or solicit the employment of any former Seller employee
employed by Purchasers at Closing or any Subsidiary or Joint Venture
employee unless (X) such employee resigns voluntarily (without any
solicitation from any Seller or any of
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its Affiliates), (Y) Purchasers consent in writing to such employment or
solicitation, or (Z) such employee is terminated by Purchasers, the
Subsidiary or the Joint Venture after the Closing Date; or
(iii) induce, cause or attempt to induce or cause any Person
(including any physician employee or medical staff appointee) to replace
or terminate any contract for the provision or arrangement of health care
services from the Baptist Facilities with products or services of any
other Person at any time after the Closing Date; or
(iv) own, operate, manage or otherwise control or operate any
independent physician association, physician hospital organization,
management service organization or similar entity or association
(including the PHO) doing business with any physician who is an appointee
to the medical staff of either of the Baptist Hospitals.
(b) Notwithstanding any of the foregoing;
(i) the Foundation shall not be prohibited from making grants and
gifts and providing financial support in the restricted area for
healthcare goods and services, research and education, or other purposes,
nor shall the Foundation be prohibited from funding indigent care services
in the restricted area;
(ii) the Affiliates of Sellers that currently own and operate the
Excluded Business may continue to operate the Excluded Businesses in the
same scope and manner as such businesses have been operated prior to the
Effective Date, provided that such Affiliates may not expand their
businesses into any business otherwise prohibited by Section 12.23(a); and
(iii) nothing in this Section 12.23 shall restrict in any manner any
purchaser of or successor to the Excluded Businesses that is not an
Affiliate of Sellers or La Paz Regional Hospital, Inc. after it ceases to
be an Affiliate of Sellers.
(c) The covenants in Section 12.23(a) shall terminate if the Foundation or
its Affiliate purchases either of the Baptist Facilities from Purchasers
pursuant to Section 12.9.2 (but only with respect to the particular purchaser
of the particular Baptist Facility acquired).
(d) Sellers acknowledge that any remedy at law for any breach of this
Section would be inadequate and consent to the granting by any court of
competent jurisdiction of an injunction or other equitable relief, without the
necessity of actual monetary loss being proved, in order that a breach or
threatened breach of this Section may be effectively enjoined.
12.24 Use of Names. From and after Closing, Sellers shall not use the
names "Phoenix Baptist Hospital and Medical Center" "Arrowhead Community
Hospital and Medical Center" and or any variation of the foregoing in the
conduct of their businesses, except as may be necessary to wind up their
corporate affairs and except that the Foundation may continue to conduct its
business under its current name after Closing.
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12.25 Medical Staff Accounts. Purchasers shall place funds in existing
Seller Medical Staff accounts into separate accounts of Purchasers for similar
use and access by the Medical Staff.
12.26. Information System Services and License Agreements. Sellers and
Purchasers shall negotiate in good faith with each other and the proposed
purchasers of the Excluded Businesses the terms and conditions of an agreement
pursuant to which Purchasers shall continue to provide information system
services to the Excluded Businesses after Closing for a period of time mutually
acceptable to the parties to enable the Sellers and such purchasers to
transition off the information systems in a smooth manner so to minimize the
disruption on patient care and the operation of the Excluded Businesses.
Sellers and Purchasers shall also negotiate in good faith with each other the
terms and conditions of an agreement pursuant to which Purchasers shall license
to Sellers and their Affiliates the right to use certain disposable supplies,
Intellectual Properties, including, but not limited to, logos and service
marks, in the operation of the Excluded Businesses until such businesses are
sold or otherwise disposed of by Sellers.
12.27 Continuing Guarantee. So long as the Continuing Guarantee dated
September 1, 1993 executed by BHHS in favor of Farm Bureau Life Insurance
Company and constituting one of the Venture Documents remains in force and
effect, Purchasers, Vanguard or their Affiliates will not close or discontinue
all or a substantial portion of the operations of the Baptist Hospital owned by
ACHMC as a medical hospital, or open another medical office building on any
portion of the Real Property owned by ACHMC, in either case in such a manner as
to constitute a "Triggering Event", as defined in the Continuing Guarantee
described above.
12.28 Foundation Office Space. Sellers and Purchasers shall negotiate in
good faith with each other the terms and conditions of a lease agreement
pursuant to which the Foundation may sublease from Purchasers adequate space
located at the existing BHHS corporate office (0000 Xxxx Xxxxxxxx Xxxxxx) for
the Foundation's operations at a fair market value rate.
12.29 DHHS Settlement Agreement. The United States Department of Health
Services ("DHHS") has proposed a form of settlement agreement to be executed by
DHHS, ACHMC and counsel to ACHMC in connection with an alleged violation on
July 10, 1997 of 42 U.S.C. ss. 1395dd(a). ACHMC shall (i) execute the
settlement agreement in the form provided to Purchasers as soon as possible
after the Effective Date and deliver to Purchasers a copy of the settlement
agreement duly executed by all parties thereto not later than Closing, (ii) pay
all sums required by and in accordance with the settlement agreement and
deliver to Purchasers a copy of the certified or cashier's check evidencing
such payment, (iii) cause to be published the advertisements required by and in
accordance with the settlement agreement as soon as possible after the
Effective Date, provided that the second publication shall occur on the 6th
Sunday after the first publication, and deliver to Purchasers copies of the
Arizona Republic containing such advertisements.
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ARTICLE 13
CONDITIONS TO CLOSING
13.1 Conditions Precedent to Purchasers' Obligation to Close. The
obligation of Purchasers to proceed with consummation of the Transaction on the
Closing Date and to close the Transaction shall be subject to the satisfaction
or waiver by it of each of the following conditions precedent:
(a) Each of the representations and warranties of Sellers contained in
this Agreement shall be true and correct on the Effective Date; each of the
representations and warranties of Sellers contained in this Agreement that are
qualified as to materiality shall be true and correct on and as of the Closing
Date; and each of the other representations and warranties of Sellers contained
in this Agreement shall be true and correct in all material respects on and as
of the Closing Date.
(b) Sellers shall have performed and complied in all material respects
with all covenants and conditions required by the Agreement to be performed or
complied with by them prior to or on the Closing Date.
(c) Purchasers shall have received a certificate of a duly authorized
officer of each Seller, dated as of the Closing Date, certifying on behalf of
Sellers: (i) since the Pricing Date and except as set forth in Schedule 6.9,
there has been no material adverse change in the operations or financial
condition of the Baptist Facilities prior to the Closing Date and to his/her
knowledge, there has been no event, occurrence or development which has had or
is likely to have a material adverse change in the Purchased Assets or results
of operations or financial condition of the Sellers, and the Baptist Facilities
taken as a whole, except for the effect of changes in laws, regulations or
market conditions generally applicable to hospitals operating in Phoenix,
Arizona; and (ii) its representations and warranties contained in Article 6 or
Article 7, as the case may be, are true and correct on and as of the Closing
Date as if made on and as of such date.
(d) No suit or action by any third party or any investigation, inquiry, or
proceeding by any governmental authority, or any legal or administrative
proceeding shall have been instituted or threatened on or before the Closing
Date which: (i) questions the validity or legality of this Agreement or any
transaction contemplated herein, (ii) seeks to enjoin any transaction
contemplated herein, or (iii) seeks material damages on account of the
consummation of the Transaction.
(e) All notices required to be given by Sellers related to any bond
financing or to any governmental or regulatory authority shall have been duly
given and any and all waiting periods (including those under the HSR Act) shall
have expired or been terminated or waived, but with respect to such notices
only to the extent the failure to give such notices would materially and
adversely affect the consummation of the Transaction or the operation of the
Baptist Facilities following the Closing. All appropriate bond trustee,
bondholder, bond insurer, third party and governmental or regulatory approvals,
authorizations or consents to the
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consummation of the Transaction shall have been obtained, to the extent the
failure to obtain any of the foregoing would materially and adversely affect
the consummation of the Transaction or the business or operations of the
Baptist Facilities following the Closing.
(f) Purchasers shall have received irrevocable commitments by the Title
Insurance Company to issue the title insurance policies, subject to the
Permitted Exceptions dated as of the Closing Date issued in favor of
Purchasers.
(g) Sellers shall have delivered to Purchasers the documents to be
delivered by them pursuant to Article 5 in the forms provided for herein.
(h) Purchasers shall have obtained documentation or other evidence
reasonably satisfactory to Purchasers that:
(i) Purchasers have received confirmation from the Arizona Department
of Health Services and other applicable licensure agencies that upon
Closing all licenses required by law to operate the Baptist Facilities
will be transferred to or issued in the name of Purchasers;
(ii) Sellers have obtained consents to assignment of substantially
all of the Assumed Contracts for which such consents are required;
(iii) Sellers have obtained such consents and approvals as may be
legally or contractually required for Sellers to transfer and assign the
Shares to Purchasers; and
(iii) Purchasers shall have obtained such consents, approvals,
amendments and/or waivers as Purchasers or Purchasers lenders shall
require pursuant to the commitments in Section 8.7 to mortgage, pledge,
collaterally assign or otherwise grant Encumbrances on the Purchased
Assets, subject to the obligations of Purchasers in the Agreement.
(i) Since the Pricing Date and except as disclosed on Schedule 6.9, no
material adverse change in the Purchased Assets or results of operations or
financial condition of the Sellers, and the Baptist Facilities taken as a
whole, shall have occurred, and there has been no event, occurrence,
development or state of circumstances which has had or is likely to have a
material adverse change in the Purchased Assets or results of operations or
financial condition of the Sellers, and the Baptist Facilities taken as a
whole, except for the effect of changes in laws, regulations or market
conditions generally applicable to hospitals operating in Phoenix, Arizona.
(j) No Seller nor the Subsidiary or Joint Venture shall (i) be in
receivership or dissolution, (ii) have made any assignment for the benefit of
creditors, (iii) have admitted in writing its inability to pay its debts as
they mature, (iv) have been adjudicated a bankrupt, (v) have filed a petition
in voluntary bankruptcy, a petition or answer seeking reorganization, or an
arrangement with creditors under the federal bankruptcy law or any other
similar law or statute of the United States or any state, nor shall any such
petition have been filed against any of them,
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or (vi) have entered into any Contract to do or permit the doing of any of the
foregoing on or after the Closing Date.
(k) Purchasers shall have received the Environmental Reports with respect
to the Baptist Facilities prepared by Persons acceptable to Purchasers and the
scope, findings and conclusions of such reports shall be reasonably
satisfactory to Purchasers.
(l) Purchasers shall have received the title insurance policies described
in Section 9.8.
(m) Purchasers shall have received an opinion from counsel to Sellers
dated as of the Closing Date and addressed to Purchasers in form and substance
reasonably satisfactory to Purchasers, to substantially the following effect:
(i) Each Seller is a nonprofit corporation duly incorporated and
validly existing in good standing under the laws of the State of Arizona
with full corporate power to carry on its business as it is now being
conducted. The Foundation for Baptist Health Systems is a nonprofit
corporation duly incorporated and validly existing in good standing under
the laws of the State of Arizona with full corporate power to carry on its
business as it is now being conducted. Project Oasis, LLC is a limited
liability company duly organized and validly existing in good standing
under the laws of the State of Arizona with full company powers to carry
on its business at it is now being conducted. Each Seller and the
Foundation has full power and authority to execute and deliver this
Agreement and each of the Closing Documents to which it is a party and to
perform its obligations therein. All corporate proceedings required to be
taken by each Seller and the Foundation to authorize the execution and
delivery of this Agreement and each of the Closing Documents to which it
is a party and to authorize the performance of its obligations therein,
have all been duly and properly taken.
(ii) The Subsidiary is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Arizona with full
corporate power to carry on its business as it is now being conducted. The
Joint Venture is a general partnership duly organized and validly existing
in good standing under the laws of the State of Arizona with full
partnership power to carry on its business as it is now being conducted.
(iii) The execution, delivery and performance of this Agreement and
each of the Closing Documents to which each Seller, the Subsidiary, the
Joint Venture or the Foundation is a party does not violate any provision
of its articles of incorporation or bylaws, partnership agreement, or of
any indenture or other Contract to which such Person is a party and of
which such counsel has knowledge.
(iv) This Agreement and each of the Closing Documents to which each
Seller or the Foundation is a party constitutes a valid and binding
obligation of such person, enforceable against such Seller or the
Foundation in accordance with its terms, subject, as to enforcement of
remedies, to (a) applicable bankruptcy, reorganization,
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insolvency, moratorium or other laws affecting creditors' rights generally
from time to time in effect, (b) limitations on the enforcement of
equitable remedies and (c) such other qualifications as counsel to the
Parties may mutually agree upon.
(v) To such counsel's knowledge, the consummation of the Transaction
will not result in a violation, breach or default by any Seller, the
Subsidiary, the Joint Venture or the Foundation under any material law,
regulation, judgement or order.
In rendering such opinion, such counsel may rely upon certificates of
governmental officials and may place reasonable reliance upon certificates
of officers of Sellers and the Foundation. If requested by Vanguard's
principal lenders, such counsel shall also deliver to such lenders
reliance letters addressed to such lenders with respect to such opinions,
which reliance letters shall be in form and substance satisfactory to such
lenders.
(n) There shall be no Encumbrance on or affecting any of the Purchased
Assets, the Joint Venture Assets or the Baptist Facilities relating to or
arising out of the Xxxx-Xxxxxx Act.
(o) Sellers shall have complied with the so-called non-profit hospital
facility conversion provisions of Arizona law (A.R.S. 10- 11251, et seq.).
(p) Sellers shall have received all consents necessary to assign to
Purchasers the managed care Contracts between Sellers and the payors listed on
Schedule 6.30(a)(i).
(q) Purchasers shall have obtained equity and debt financing from
institutional investors and commercial banks or such other Persons on terms and
conditions as Purchasers shall deem satisfactory in their sole discretion in
aggregate amounts sufficient to enable Purchasers to pay the Purchase Price,
provided that, if Vanguard does not amend its existing principal credit
facility to borrow additional amounts of term loans in order to obtain debt
financing for the Transaction, then, in addition, Vanguard shall have obtained
approval of the lenders under its principal credit facility to consummate the
Transaction.
(r) A settlement agreement shall have been entered into between Sellers
and the federal authorities with respect to an alleged billing problem
pertaining to the PBHMC transitional care unit and either no Corporate
Integrity Agreement shall be imposed upon Sellers as a result of such
settlement or, if imposed, such Corporate Integrity Agreement shall not be
applicable to or otherwise bind Purchasers as the successors to Sellers in the
ownership or operation of any of the Baptist Facilities.
(s) One of the following scenarios, as applicable, shall have occurred
with respect to ACHMC:
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(i) ACHMC shall have been surveyed by HCFA prior to Closing and the
results of the survey shall have been conveyed to ACHMC and Purchasers
prior to Closing. In such event, Purchasers shall be permitted to
participate in the survey process and attend the exit interview. If HCFA
finds condition-level deficiencies at ACHMC, then Sellers must cure such
deficiencies to the reasonable satisfaction of Purchasers and HCFA prior
to Closing or the parties may mutually agree to resolve the deficiencies
in another manner. If Sellers are unable to cure the deficiencies prior to
Closing or the parties have not reached a mutually acceptable resolution
of such deficiencies prior to Closing, this condition shall not be
satisfied, and Purchasers will not be required to close the transaction.
If HCFA does not find condition-level deficiencies at ACHMC, then this
condition shall be deemed satisfied; or
(ii) ACHMC shall have been surveyed by HCFA prior to Closing, but the
results of the survey are not conveyed to ACHMC or Purchasers prior to
Closing. In such event, Purchasers shall be permitted to participate in
the survey process and attend the exit interview. If, during the exit
interview, it reasonably appears that HCFA will find condition-level
deficiencies at ACHMC, then Sellers must cure such condition-level
deficiencies to the reasonable satisfaction of Purchasers prior to Closing
or the parties may mutually agree to resolve the deficiencies in another
manner. If Sellers are unable to cure the deficiencies prior to Closing or
the parties have not reached a mutually acceptable resolution of such
deficiencies prior to Closing, this condition shall not be satisfied, and
Purchasers will not be required to close the transaction. If, however,
during the exit interview, it reasonably appears that HCFA will not find
condition-level deficiencies at ACHMC, then this condition shall be
satisfied, or
(iii) HCFA has not committed to survey ACHMC prior to the Closing
Date. In such event, Purchasers shall be permitted to conduct a "mock"
survey of ACHMC by qualified surveyors selected by Sellers and Purchasers
no later than two weeks prior to the scheduled Closing Date. If the mock
survey yields condition-level deficiencies at ACHMC, then Sellers must
cure such condition-level deficiencies to the reasonable satisfaction of
Purchasers prior to Closing or the parties may mutually agree to resolve
the deficiencies in another manner. If Sellers are unable to cure the
deficiencies prior to Closing or the parties have not reached a mutually
acceptable resolution of such deficiencies prior to Closing, this
condition shall not be satisfied, and Purchasers will not be required to
close the transaction. If, however, the mock survey does not yield
condition-level deficiencies at ACHMC, then Purchasers shall be required
to proceed with the closing, and this condition shall be satisfied. If
Purchasers do not conduct a "mock" survey no later than two weeks prior to
the scheduled Closing Date, then this condition shall be deemed satisfied.
If a HCFA survey occurs prior to Closing after a mock survey occurs, then
subsections (i) or (ii), as applicable, of this Section 13.1(s) shall
apply, and this subsection (iii) shall not apply.
(t) Sellers shall not have elected to terminate this Agreement pursuant to
Section 9.8.
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(u) Purchasers shall have received consents from lenders on the Option
Properties and Joint Venture Property necessary for, and waivers or other
instruments, executed by all holders of applicable rights of first refusal to
purchase the Option Properties waiving such rights arising out of (i) the
Transaction, (ii) the grant by Purchasers of mortgages on the Option
Properties, and (iii) the full exercise by the holders of such mortgages of
their rights in the Option Properties, pursuant to which such persons waive or
elect not to exercise such rights in each of the above circumstances.
(v) All Schedules identified in this Agreement shall have been approved by
the Parties as Final Schedules pursuant to Section 17.20.
13.2 Conditions Precedent to Sellers' Obligations to Close. The obligation
of each Seller to proceed with consummation of the Transaction on the Closing
Date and to close the Transaction shall be subject to the satisfaction or
waiver by it of each of the following conditions precedent:
(a) Each of the representations and warranties of Purchasers and Vanguard
contained in this Agreement shall be true and correct on the Effective Date;
and each of the representations and warranties of Purchasers and Vanguard
contained in this Agreement that are qualified as to materiality shall be true
and correct on and as of the Closing Date; and each of the other
representations and warranties of Purchasers and Vanguard contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date.
(b) Purchasers and Vanguard shall have performed and complied in all
material respects with all covenants and conditions required by the Agreement
to be performed or complied with by them prior to or on the Closing Date.
(c) Sellers shall have received a certificate of a duly authorized officer
of each Purchaser and Vanguard, dated as of the Closing Date, certifying on
behalf of Purchasers and Vanguard that the representations and warranties of
the Purchaser and Vanguard contained in Article 8 are true and correct on and
as of the Closing Date as if made on and as of such date.
(d) No suit or action by any third party or any investigation, inquiry, or
proceeding by any governmental authority, or any legal or administrative
proceeding shall have been instituted or threatened on or before the Closing
Date which: (i) questions the validity or legality of this Agreement or any
transaction contemplated herein, (ii) seeks to enjoin any transaction
contemplated herein, or (iii) seeks material damages on account of the
consummation of the Transaction.
(e) All notices required to be given by Purchasers or Vanguard to any
governmental or regulatory authority shall have been duly given and any and all
waiting periods (including those under the HSR Act) shall have expired or been
terminated or waived, but with respect to such notices only to the extent the
failure to give such notices would materially and adversely affect the
consummation of the Transaction or the operation of the Baptist Facilities
following the Closing. All appropriate third parties and appropriate
governmental or regulatory approvals, authorizations or consents to the
consummation of the Transaction shall have been
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obtained, to the extent the failure to obtain any of the foregoing would
materially and adversely affect the consummation of the Transaction or the
operations of the Baptist Facilities following the Closing.
(f) Purchasers and Vanguard shall have delivered to Sellers the documents
to be delivered by Purchasers pursuant to Article 5 in the forms provided for
herein.
(g) Neither any Purchaser nor Vanguard shall (i) be in receivership or
dissolution, (ii) have made any assignment for the benefit of creditors, (iii)
have admitted in writing its inability to pay its debts as they mature, (iv)
have been adjudicated a bankrupt, (v) have filed a petition in voluntary
bankruptcy, a petition or answer seeking reorganization, or an arrangement with
creditors under the federal bankruptcy law or any other similar law or statute
of the United States or any state, nor shall any such petition have been filed
against any Purchaser or Vanguard, or (vi) have entered into any Contract to do
or permit the doing of any of the foregoing on or after the Closing Date.
(h) Sellers shall have received an opinion from counsel to Purchasers and
Vanguard (who may be in-house counsel) dated as of the Closing Date and
addressed to Sellers, in form and substance reasonably satisfactory to Sellers,
to substantially the following effect:
(i) Each Purchaser and Vanguard is a corporation duly incorporated
and validly existing in good standing under the laws of the State of its
incorporation with full corporate power to carry on its business as it is
now being conducted. Each Purchaser and Vanguard has full power and
authority to execute and deliver this Agreement and each of the Closing
Documents to which it is a party and to perform its obligations therein.
All corporate proceedings required to be taken by Purchaser and Vanguard
to authorize the execution and delivery of this Agreement and each of the
Closing Documents to which it is a party and to authorize the performance
of its obligations therein, have all been duly and properly taken.
(ii) The execution, delivery and performance by each Purchaser and
Vanguard of this Agreement and each of the Closing Documents to which it
is a party does not violate any provision of its articles of
incorporation, bylaws, or of any indenture or other material Contract to
which any Purchaser or Vanguard is a party and of which counsel has
knowledge.
(iii) This Agreement and each of the Closing Documents to which each
Purchaser or Vanguard is a party constitutes a valid and binding
obligation of such Person, enforceable against each Purchaser or Vanguard
in accordance with its terms, subject, as to enforcement of remedies, to
(A) applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect,
(B) limitations on the enforcement of equitable remedies, and (C) such
other qualifications as counsel to the Parties may mutually agree upon.
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(iv) To such counsel's knowledge, the consummation of the Transaction
will not result in a violation, breach or default by any Purchaser or
Vanguard under any material Legal Requirements.
In rendering such opinion, such counsel may rely upon certificates of
governmental officials and may place reasonable reliance upon certificates
of officers of any Purchaser and Vanguard.
(i) There shall have been compliance with the requirements of Section 12.7
pertaining to the Allocated Bonds.
(j) Sellers shall not have elected to terminate this Agreement pursuant to
Section 9.8.
(k) Vanguard's lenders shall have agreed to use commercially reasonable
efforts to notify the Foundation of any default by Vanguard under Vanguard's
principal credit agreement prior to foreclosing upon the Real Property, the
Foundation hereby acknowledging that such agreement may be conditioned upon the
Foundation's acknowledgment that the lenders' failure to notify the Foundation
of such default shall not impair the lenders' rights under the loan agreement
or other applicable documents.
(l) All Schedules identified in this Agreement shall have been approved by
the Parties as Final Schedules pursuant to Section 17.20.
ARTICLE 14
INDEMNIFICATION AND SURVIVAL OF
COVENANTS, WARRANTIES AND REPRESENTATIONS
14.1 Indemnification by Sellers. Subject to and to the extent provided in
this Article, from and after the Closing, Sellers shall jointly and severally
indemnify, defend and hold harmless Purchaser's Indemnified Persons, and each
of them, from and against any Losses incurred or suffered by Purchaser's
Indemnified Persons, directly or indirectly, as a result of or arising from:
(a) any inaccuracy of any representation or warranty of any Seller,
whether or not Purchaser's Indemnified Persons relied thereon or had knowledge
thereof; provided that in determining whether there has been any such
inaccuracy, any qualification as to materiality included in any representation
or warranty shall not be taken into account;
(b) the nonfulfillment of any covenant, agreement or other obligation of
any Seller set forth in this Agreement or in any other agreement or instrument
delivered by any Seller pursuant to this Agreement;
(c) the Excluded Liabilities other than the liabilities described in
Section 14.1(e) and Section 14.1(f);
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(d) any liability or obligation of the Subsidiary or the Joint Venture
other than liabilities or obligations of the Subsidiary or Joint Venture
arising on or after the Closing Date with respect to periods commencing on or
after the Closing Date;
(e) the loss of licensure, JCAHO accreditation or Medicare or AHCCCS
certification of either of the Baptist Hospitals after Closing as a result of
acts or omissions occurring prior to the Closing Date;
(f) any deficiencies identified by the responsible governmental or
accrediting agency upon survey related to licensure, JCAHO accreditation or
Medicare or AHCCCS certification of either of the Baptist Hospitals after
Closing as a result of acts or omissions occurring prior to the Closing Date,
which do not result in the loss of licensure, JCAHO accreditation or Medicare
or AHCCCS certification of either of the Baptist Hospitals; and
(g) any liability or obligation incurred by Purchasers under section 8 of
that certain Settlement Agreement and Release dated as of March 17, 1988 by and
between PBHMC, BHHS, Xxxxxxx Enterprises, Inc., and BMC Associates (as assigned
by BMC Associates to Health Care Property Investors, Inc, the "Settlement
Agreement"). If Purchaser's liability arises under section 8(b) of the
Settlement Agreement, Sellers may satisfy their indemnification obligations
hereunder by lending to Purchasers a principal amount equal to the principal
amount to be loaned by Purchasers pursuant to section 8(a) of the Settlement
Agreement. The loan from Sellers to Purchasers pursuant to this subsection
14.1(g) shall be evidenced by a promissory note containing the same terms and
conditions as the loan made by Purchasers pursuant to section 8(b) of the
Settlement Agreement, except that (i) the loan shall be nonrecourse to
Purchasers, and (ii) the loan shall be secured by a pledge of the promissory
note payable to Purchasers pursuant to section 8(b) of the Settlement Agreement
and a collateral assignment of the second mortgage securing it. In connection
with any indemnification claim made pursuant to this Section 14.1(g), the
Parties shall cooperate in good faith in enforcing the obligations of the
obligor under the promissory note payable to Purchasers, the related second
mortgage, and the associated ground lease (whether such obligation arises under
section 8(a) or 8(b) of the Settlement Agreement).
14.2 Sellers' Limitations.
(a) Sellers shall have no liability under Section 14.1 and no claim under
Section 14.1 shall:
(i) accrue to any of Purchasers' Indemnified Persons against Sellers
under Section 14.1(a) unless (1) the claim arising under the applicable
representation or warranty under Section 14.1(a) exceeds $10,000 and (2)
only to the extent the total liability of Sellers in respect of such
claim(s) satisfying the threshold requirement in (1) above, together with
claims made under Section 14.1(f), exceed(s) $1,000,000 in the aggregate;
provided that there shall be no minimum loss requirements, and liability
of Sellers shall arise from and after $1.00 of Losses, in respect of
Losses resulting from any Seller's intentional misrepresentation or fraud;
and
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(ii) accrue to any of Purchasers' Indemnified Persons against Sellers
under Section 14.1(f) unless and only to the extent the total liability of
Sellers in respect of such claim, together with claims made under Section
14.1(a), exceeds $1,000,000;
(iii) accrue to any of Purchasers' Indemnified Persons against
Sellers under Section 14.1(e) or Section 14.1(f) unless such claim is made
within 12 months after Closing; and
(iv) be made unless notice thereof shall have been given by or on
behalf of any of Purchasers' Indemnified Persons to Sellers in the manner
provided in Section 14.5.
(b) Furthermore, notwithstanding any other provision in this Agreement to
the contrary, Sellers' total aggregate liability under Section 14.1(a),
Sections 14.1(e) and 14.1(f) shall be capped at, and shall not exceed
$10,000,000 in total with (i) up to $10,000,000 for liability under Sections
14.1(e) and 14.1(f), and (ii) up to $5,000,000 for liability under Section
14.1(a); provided that there shall be no maximum liability of Sellers in
respect of Losses resulting from any Seller's intentional misrepresentation or
fraud.
14.3 Indemnification by Purchasers. Subject to and to the extent provided
in this Article, from and after the Closing Date, Purchasers shall jointly and
severally indemnify, defend and hold harmless Sellers' Indemnified Persons, and
each of them, from and against any Losses incurred or suffered by Sellers'
Indemnified Persons, directly or indirectly, as a result of or arising from:
(a) the inaccuracy in any representation or warranty of any Purchaser
whether or not Seller's Indemnified Persons relied thereon or had knowledge
thereof; provided that in determining whether there has been any such
inaccuracy, any qualification as to materiality included in any representation
or warranty shall not be taken into account;
(b) the nonfulfillment of any covenant, agreement or other obligation of
any Purchaser set forth in this Agreement or in any other agreement or
instrument delivered by any Purchaser pursuant to this Agreement;
(c) the Assumed Liabilities; and
(d) liabilities or obligations arising out of or in connection with
claims, litigation or proceedings which arise on or after the Closing Date
allegedly arising out of or based upon acts or omissions which occurred after
the Closing Date.
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14.4 Purchaser's Limitations.
(a) Purchasers shall have no liability under Section 14.3 and no claim
under Section 14.3 shall:
(i) accrue to any of Sellers' Indemnified Persons against Purchasers
under Section 14.3(a) unless (1) the claim arising under the applicable
representation or warranty under Section 14.3(a) exceeds $10,000 and (2)
only to the extent the total liability of Purchasers in respect of such
claim(s) satisfying the threshold requirement of (1) above exceed(s)
$1,000,000 in the aggregate, provided that there shall be no such minimum
Loss requirement, and liability of Purchasers shall arise from and after
$1.00 of Losses, in respect of Losses resulting from Purchaser's
intentional misrepresentation or fraud; and
(ii) be made unless notice thereof shall have been given by or on
behalf of any of Sellers' Indemnified Persons to Purchasers in the manner
provided in Section 14.5.
(b) Furthermore, notwithstanding any other provision in this Agreement to
the contrary, Purchasers' total aggregate liability under Section 14.3(a) shall
be capped at, and shall not exceed, $5,000,000; provided that there shall be no
maximum liability of Purchasers in respect of Losses resulting from any
Purchaser's intentional misrepresentation or fraud.
14.5 Notice and Procedure. All claims for indemnification by any
Indemnified Party against an Indemnifying Party under this Article shall be
asserted and resolved as follows:
(a) (i) If any claim or demand for which an Indemnifying Party would
be liable for Losses to an Indemnified Party is alleged or asserted by a
Person other than any Purchasers' Indemnified Person or any Sellers'
Indemnified Person (a "Third Party Claim"), the Indemnified Party shall
deliver a Claim Notice with reasonable promptness to the Indemnifying
Party, together with a copy of all papers served, if any, and specifying
the nature of and alleged basis for the Third Party Claim and, to the
extent then feasible, the alleged amount or the estimated amount of the
Third Party Claim. If the Indemnified Party fails to deliver the Claim
Notice to the Indemnifying Party within 30 days after the Indemnified
Party receives notice of such Third Party Claim, the Indemnifying Party
will not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim if and only to the extent that the Indemnifying
Party's ability to defend the Third Party Claim has been irreparably
prejudiced by such failure. The Indemnifying Party will notify the
Indemnified Party within 10 days after receipt of the Claim Notice (the
"Notice Period") whether the Indemnifying Party intends, at the sole cost
and expense of the Indemnifying Party, to defend the Indemnified Party
against the Third Party Claim.
(ii) If the Indemnifying Party notifies the Indemnified Party within
the Notice Period that the Indemnifying Party intends to defend the
Indemnified Party against the Third Party Claim, then the Indemnifying
Party will have the right to defend, at its
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sole cost and expense, the Third Party Claim by all appropriate
proceedings, which proceedings will be diligently prosecuted by the
Indemnifying Party to a final conclusion or settled at the discretion of
the Indemnifying Party (with the consent of the Indemnified Party not to
be unreasonably withheld). The Indemnifying Party will have full control
of such defense and proceedings; provided that the Indemnified Party may
file during the Notice Period, at the sole cost and expense of the
Indemnified Party, any motion, answer or other pleading that the
Indemnified Party may deem necessary or appropriate to protect its
interests and not irrevocably prejudicial to the Indemnifying Party (it
being understood and agreed that, except as provided in Section
14.5(a)(iii), if an Indemnified Party takes any such action that causes a
final adjudication that is materially adverse to the Indemnifying Party,
the Indemnifying Party will be relieved of its obligations hereunder with
respect to that portion of the Third Party Claim prejudiced by the
Indemnified Party's action); and provided further that, if requested by
the Indemnifying Party, the Indemnified Party shall cooperate, at the sole
cost and expense of the Indemnifying Party, with the Indemnifying Party
and its counsel in contesting any Third Party Claim that the Indemnifying
Party elects to contest or, if appropriate in the judgment of the
Indemnified Party and related to the Third Party Claim, in making any
counterclaim or cross-claim against any Person (other than the Indemnified
Party). The Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim assumed by the Indemnifying
Party pursuant to this Section 14.5(a)(ii) and, except as provided in the
preceding sentence, the Indemnified Party will bear its own costs and
expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnifying Party may not assume the defense of the Third
Party Claim on behalf of the Indemnified Party if (1) the Persons against
whom the claim is made, or any impleaded Persons, include both the
Indemnifying Party and any Indemnified Party, and (2) representation of
both such Persons by the same counsel would be inappropriate due to actual
or potential differing interests between them, in which case any
Indemnified Party shall have the right to defend the Third Party Claim on
its own behalf and to employ counsel at the expense of the Indemnifying
Party.
(iii) If the Indemnifying Party fails to notify the Indemnified Party
within the Notice Period that the Indemnifying Party intends to defend the
Indemnified Party against the Third Party Claim, or if the Indemnifying
Party gives such notice but fails to diligently defend or settle the Third
Party Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Notice Period, then the Indemnified Party will have
the right (but not the obligation) to defend, at the sole cost and expense
of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings will be diligently prosecuted by the
Indemnified Party to a final conclusion or settled at the discretion of
the Indemnified Party. The Indemnified Party will have full control of
such defense and proceedings, including any compromise or settlement
thereof, provided that, if requested by the Indemnified Party, the
Indemnifying Party shall cooperate, at the sole cost and expense of the
Indemnifying Party, with the Indemnified Party and its counsel in
contesting the Third Party Claim which the Indemnified Party is
contesting, or, if appropriate and related to the Third Party Claim in
question, in making any counterclaim or cross claim against any Person
(other than the Indemnifying Party).
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(iv) Notwithstanding the foregoing provisions of Section
14.5(a)(iii), if the Indemnifying Party notifies the Indemnified Party
within the Notice Period that the Indemnifying Party disputes its
obligation to indemnify the Indemnified Party against the Third Party
Claim, and if such dispute is resolved pursuant to Section 14.5(c) in
favor of the Indemnifying Party, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to Section 14.5(a)(iii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in full for all
such costs and expenses. The Indemnifying Party may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to Section 14.5(a)(iii), but the Indemnifying Party will bear its
own costs and expenses with respect thereto.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that is not a Third Party Claim, the Indemnified Party shall
deliver an Indemnity Notice with reasonable promptness to the Indemnifying
Party specifying the nature of and specific basis for the claim and, to the
extent then feasible, the amount or the estimated amount of the claim. The
failure by any Indemnified Party to give timely notice referred to in the
preceding sentence shall not impair such Person's rights hereunder except to
the extent that an Indemnifying Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party does not notify the Indemnified
Party within twenty days following its receipt of the Indemnity Notice that the
Indemnifying Party disputes its obligation to indemnify the Indemnified Party
hereunder, the claim will be conclusively deemed a liability of the
Indemnifying Party hereunder.
(c) If the Indemnifying Party timely disputes its liability with respect
to a claim described in a Claim Notice or an Indemnity Notice, the Indemnifying
Party and the Indemnified Party shall proceed promptly and in good faith to
negotiate a resolution of such dispute within 60 days following receipt of the
Claim Notice or Indemnity Notice and, if such dispute is not resolved through
negotiations during such 60-day period, it shall be resolved by arbitration
pursuant to Section 17.1.
(d) The Indemnifying Party shall pay the amount of any liability to the
Indemnified Party within 30 days following its receipt of a Claim Notice or an
Indemnity Notice, or on such later date (i) in the case of a Third Party Claim,
as the Indemnified Party suffers Losses in respect of the Third Party Claim, or
(ii) in the case of an Indemnity Notice in which the amount of the claim is
estimated, promptly after any Losses in respect of such claim are actually
incurred by the Indemnified Party. In the event the Indemnified Party is not
paid in full for its claim in a timely manner after the Indemnifying Party's
obligation to indemnify and the amount thereof has been determined, the amount
due shall bear interest from the date that the Indemnifying Party received the
Claim Notice or the Indemnity Notice until paid at the interest rate provided
in Section 17.19, and in addition to any other rights it may have against the
Indemnifying Party, the Indemnified Party shall have the right to set-off the
unpaid amount of such claim against any amounts owed by it to the Indemnifying
Party.
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(e) Any estimated amount of a claim submitted in a Claim Notice or an
Indemnity Notice shall not be conclusive of the final amount of such claim, and
the giving of a Claim Notice when an Indemnity Notice is properly due, or the
giving of an Indemnity Notice when a Claim Notice is properly due, shall not
impair such Indemnified Party's rights hereunder except to the extent that an
Indemnifying Party demonstrates that it has been irreparably prejudiced
thereby. Notice of any claim comprised in part of Third Party Claims and claims
that are not Third Party Claims may be given pursuant to either Section 14.5(a)
or 14.5(b).
14.6 Survival of Representations: Indemnity Periods. Notwithstanding any
right of Purchasers (whether or not exercised) to investigate the Baptist
Facilities and the Purchased Assets or any right of any Party (whether or not
exercised) to investigate the accuracy of the representations and warranties of
the other Party contained in this Agreement, Sellers have, on the one hand, and
Purchasers have, on the other hand, the right to rely fully upon the
representations, warranties, covenants and agreements of the other contained in
this Agreement. The representations, warranties, covenants and agreements in
this Agreement made by Sellers and Purchasers respectively will survive the
Closing (a) indefinitely with respect to matters covered by Sections 3.1, 3.2,
6.2, 8.2, 14.1(c), and 14.3(c), (b) until 60 days after the expiration of all
applicable statutes of limitations (including all periods of extension, whether
automatic or permissive) with respect to matters covered by Sections 6.4
(except to the extent covered by Section 6.14(c)), 6.5, 6.10, 6.11, 6.14(a),
6.14(b), 6.17, 6.27, 6.28, 8.3, 8.5, 8.8 and the last sentence of 8.4, (c)
until the first anniversary date of the Closing Date with respect to Section
6.14(c) and, to the extent covered by Section 6.14(c), Section 6.4, and (d)
until the second anniversary of the Closing Date in the case of all other
representations, warranties, covenants and agreements, except that:
(i) any representation or warranty that would otherwise terminate in
accordance with clause (b) or (c) above shall survive if a Claim Notice or
an Indemnity Notice shall have been given on or prior to such termination
date, until the related claim has been satisfied or otherwise resolved as
provided in this Article,
(ii) in the event of intentional misrepresentation or fraud in the
making of any representation or warranty, or intentional nonfulfillment or
breach of any covenant in this Agreement, all representations, warranties,
covenants and agreements that are the subject of the intentional
misrepresentation, fraud, or intentional nonfulfillment or breach, shall
survive until 60 days after the expiration of all applicable statutes of
limitations (including all periods of extension, whether automatic or
permissive) with respect to matters covered thereby,
(iii) covenants and agreements to be performed after the Closing Date
will survive the Closing for the term specified therein, or, if no term is
specified, indefinitely, and
(iv) rights to indemnification under this Article will survive until
the respective claim brought hereunder within the time period prescribed
above shall have been satisfied or otherwise resolved as provided herein.
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ARTICLE 15
DISCLAIMERS AND RELEASES
15.1 Disclaimer and Release As To Information.
(a) Except for the representations and warranties set forth in this
Agreement and the Contracts and other documents and information set forth in or
referred to in the Schedules hereto, Purchasers and Vanguard acknowledge and
agree that any title insurance commitment, survey and any and all other
information, whether written or oral, pertaining to Sellers or the Purchased
Assets (including, without limitation, any information pertaining to the
condition, suitability, integrity, marketability, compliance with law or other
attributes or aspects of the Baptist Facilities or Purchased Assets), and any
and all records and other documents pertaining to the Baptist Facilities or
Purchased Assets they have received or may receive from Sellers or their
respective officers, employees, consultants or agents are furnished by them
without warranty or representation of any kind and solely as a courtesy to
Purchasers and Vanguard. Purchasers and Vanguard agree that all such
information has and will be accepted by them on the express condition that they
shall make their own independent verification of the accuracy and completeness
thereof. Except as represented, warranted or covenanted otherwise in this
Agreement, no Seller represents or warrants that it has verified the accuracy
or completion of any such information described in this Section 15.1(a) or the
qualifications of the persons preparing such information, nor does any Seller
warrant the accuracy or completion of any of the described information in any
way.
(b) Purchasers and Vanguard agree that neither any Purchaser nor its
Affiliates, successors or assigns shall assert or seek to impose any claim,
liability, or obligation on any Seller or its Affiliates (including, but not
limited to, the Foundation) or their respective shareholders, members,
directors, officers, employees, agents, consultants or other representatives
arising out of any inaccuracy or incompleteness of any such information
furnished to Purchasers or Vanguard by any of them (as such information is
described in Section 15.1(a)) and Purchasers, Vanguard their Affiliates and
their successors and assigns do hereby relinquish, waive and release all such
claims, liabilities, and obligations. Notwithstanding the foregoing, Purchasers
and Vanguard do not waive and release Sellers from such claims, liabilities and
obligations from representations and warranties made by Sellers or the
Foundation from its guaranty obligations under this Agreement.
15.2 Disclaimer and Release as to Representations and Warranties.
(a) Except as expressly provided in this Agreement, including the
Schedules hereto, Purchasers acknowledge and agree that Sellers and the
Foundation have not made any representations or warranties, express or implied,
written or oral and any such representations or warranties heretofore made by
any Seller or the Foundation which is not contained herein shall not be valid
or binding. Sellers have expressly disclaimed and except as expressly set forth
in this Agreement, made no representations or warranties with respect to the
condition, suitability, integrity or marketability of the Purchased Assets or
Baptist Facilities. SELLERS HAVE ALSO EXPRESSLY DISCLAIMED AND MADE NO
REPRESENTATIONS OR WARRANTIES AS
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TO MERCHANTABILITY OF ANY OF THE PURCHASED ASSETS OR THE BAPTIST FACILITIES OR
THEIR FITNESS FOR ANY PARTICULAR USE. Purchasers and Vanguard represent that
they are knowledgeable, experienced and professional purchasers of the property
and assets included within the Purchased Assets and Baptist Facilities and that
they are relying solely on their own expertise and that of their consultants
and not on any statement, representation, inducement or agreement of any Seller
or the Foundation, except as expressly set forth in this Agreement. Purchasers
are purchasing the Purchased Assets strictly in their "As-Is" and "Where-Is"
condition with any and all defects and deficiencies, and Purchasers and
Vanguard hereby assume all risks, obligations and liability of any and all
special, direct, indirect, consequential, and other damages of any kind which
are or may be associated with or arise out of the condition of the Purchased
Assets and Baptist Facilities. Purchasers and Vanguard agree that no Seller nor
the Foundation shall be liable to any Purchaser or Vanguard for any special,
direct, indirect, consequential or other damages of any kind which are or may
be associated with or arise out of any condition of the Purchased Assets or
Baptist Facilities, except as may result from the breach of any Sellers'
representations or warranties expressly provided in this Agreement and subject
to the limitations in Section 14.2 of this Agreement.
(b) Purchasers and Vanguard hereby unconditionally and irrevocably release
all Affiliates of Sellers (except the Foundation) and any individuals who were
at any time prior to the Closing Date, who are as of the Closing Date, or who
are or have been at any time after the Closing Date directors, officers,
employees, agents, consultants or representatives of any Seller or any
Affiliates of any Seller (including, but not limited to, the Foundation) from
any and all actual or potential rights Purchasers or Vanguard might have had
regarding any form of obligation, representation or warranty, express or
implied, of any kind or type, relating to Sellers, the Purchased Assets or the
Baptist Facilities and acknowledge that none of them has made any such
representation or warranty. Such waiver and release is absolute, complete,
total and unlimited.
ARTICLE 16
TERMINATION AND LIQUIDATED DAMAGES
16.1 Termination of Agreement. This Agreement and the Transaction may be
terminated at any time prior to Closing, as follows:
(a) By mutual written consent of Sellers and Purchasers.
(b) By Sellers, on the one hand, or Purchasers, on the other hand, by
reason of the breach by the other Party ("breaching party) in any material
respect of any of its covenants or agreements contained in this Agreement, and
the breach is not cured by the breaching party to the reasonable satisfaction
of the non-breaching party within thirty (30) days of receipt of written notice
from the non-breaching party describing the breach. Notwithstanding any other
provision of this Agreement, Closing shall be postponed, but only for such time
as is necessary to accommodate this cure right.
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(c) Subject to the provisions of Section 5.1, by either Sellers, on the
one hand, or Purchasers, on the other hand, if the satisfaction of any
condition to such Party's obligations under this Agreement becomes impossible
or impracticable with the use of commercially reasonable efforts and the
failure of such condition to be satisfied is not caused by a breach by the
terminating Party;
(d) Automatically, if the Final Abandonment Date should occur, unless such
date is extended prior thereto with the written approval of each of the
Parties.
(e) By Sellers pursuant to Section 9.8.
(f) By Purchasers pursuant to Section 9.14.
(g) By Purchasers if, since the Pricing Date and except as set forth on
Schedule 6.9, a material adverse change in the Purchased Assets or results of
operations, or financial condition of the Sellers, and the Baptist Facilities
taken as a whole, has occurred, or if an event, occurrence, development or
state of circumstances has occurred which has had or is likely to have a
material adverse change in the Purchased Assets or results of operations or
financial condition of the Sellers, and the Baptist Facilities taken as a
whole, except for the effect of changes in laws, regulations or market
conditions generally applicable to hospitals operating in Phoenix, Arizona.
(h) By Sellers if, as a result of an Alternative Proposal received by any
Seller from a Person other than any Purchaser or any of its Affiliates, the
board of directors of any Seller determines in good faith that its fiduciary
obligations under applicable law require that such Alternative Proposal be
accepted; provided that (i) the board of directors of such Seller shall have
determined in good faith, after considering applicable provisions of state law
and after giving effect to all concessions, if any, which have been offered by
the Purchaser pursuant to clause (ii) of this paragraph below, on the basis of
oral or written advice of outside counsel, that such action is required by its
fiduciary obligations under applicable law, and (ii) prior to any such
termination, such Seller shall, and shall cause its financial and legal
advisors to, negotiate with Purchasers to make such adjustments in the terms
and conditions of this Agreement as would enable Purchasers to proceed with the
transactions contemplated hereby.
(i) By Purchasers or by Sellers pursuant to Section 17.20(c).
16.2 Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 16.1(b), the
breaching Party(ies) shall pay the non-breaching Party(ies) a termination fee
of $4 million. Any termination fee payable under this Section shall be payable
in 30 days; provided, however, that if this Agreement is terminated by Sellers
pursuant to Section 16.1(b), Sellers also have the right to receive the Xxxxxxx
Money Deposit to partially offset any amounts owed to Sellers pursuant to this
Section 16.2(a). In the event it is determined through the arbitration
procedure set forth in Section 17.1 that Purchasers, on the one hand, and
Sellers, on the other hand, each breached its covenants and agreements
contained in this Agreement, the Party who is determined to be more
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at fault (the "Primary Breaching Party") shall pay the other Party (the
"Secondary Breaching Party") a percentage of the Termination Fee equal to the
percentage of fault of the Primary Breaching Party minus the percentage of
fault of the Secondary Breaching Party (e.g., if one Party is 60% at fault and
the other Party is 40% at fault, the first Party shall pay the other Party 20%
of $4,000,000 or $800,000).
(b) If this Agreement is terminated by Sellers pursuant to Section
16.1(h), Sellers shall pay to Purchasers a termination fee of $4 million and
the Xxxxxxx Money Deposit shall be returned to Purchasers. No termination by
Sellers shall be effective pursuant to Section 16.1(h) unless concurrently with
such termination, the termination fee is paid in full by Sellers.
(c) If this Agreement is terminated pursuant to Section 16.1(c) due to
Purchasers' inability to obtain financing (other than by reason of Sellers'
unwillingness to subordinate the provisions of Sections 12.9 and 12.21 to the
lien of Vanguard's lenders' mortgages or deeds of trust), the Xxxxxx Money
Deposit shall be paid to Sellers.
(d) If this Agreement is terminated for any reason other than by Sellers
pursuant to Section 16.1(b), the Xxxxxxx Money Deposit shall be returned to
Purchasers, except as otherwise provided in Section 16.2(c).
(e) Except for a breach of Sections 11.1 through 11.4 of this Agreement
and notwithstanding any other provision in this Agreement to the contrary, each
Party's sole and exclusive remedy for a breach of this Agreement prior to
Closing shall be to terminate this Agreement and to collect liquidated damages
as provided in this Section 16.2.
THE PARTIES HEREBY EXPRESSLY AGREE THAT THE SUMS IN SECTION 16.2 SHALL
CONSTITUTE "LIQUIDATED DAMAGES" (THE "LIQUIDATED AMOUNT") AND FURTHER AGREE
THAT BECAUSE THE PRECISE AMOUNT OF DAMAGES CAUSED BY SUCH TERMINATION OF THIS
AGREEMENT WOULD BE EXTREMELY DIFFICULT TO CALCULATE ACCURATELY, THE AMOUNTS IN
SECTION 16.2 ARE NOT UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT THE TIME
OF THE EXECUTION OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE AND AGREE THAT THEY
HAVE MADE A REASONABLE ENDEAVOR TO ESTIMATE THE ACTUAL DAMAGES THEY WOULD
SUSTAIN AS A RESULT OF SUCH TERMINATION OF THIS AGREEMENT. HOWEVER, THE
PROSPECTIVE IMPRACTICABILITY AND EXTREME DIFFICULTY OF FIXING ACTUAL DAMAGES
HAS REQUIRED THE PARTIES TO AGREE TO LIQUIDATE DAMAGES.
(f) If one Party fails to promptly pay when due to the other Party any
termination fee due under this Section 16.2 and the other Party takes any
action, including the filing of any lawsuit or other legal action, related to
the termination of this Agreement or to collect payment of liquidated damages
under this Section 16.2, together with interest as provided in Section 17.19
from the date such fee was required to be paid, the prevailing Party in such
action shall be entitled to payment of its reasonable legal fees and expenses
by the other Party.
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16.3 Fulfillment of Conditions. Each Party will execute and deliver at
Closing each Closing document that such Party is required by this Agreement to
execute and deliver as a condition to Closing, and will take all commercially
reasonable steps necessary and proceed diligently and in good faith to satisfy
each other condition to the obligations of the Parties contained in this
Agreement other than unreasonable requests by Vanguard's lenders, to the extent
that satisfaction of such condition is within the control of such Party.
ARTICLE 17
MISCELLANEOUS
17.1 Arbitration. The Parties shall in good faith first attempt to resolve
any controversy, dispute or disagreement arising out of or relating to this
Agreement or the Transaction by face-to-face negotiations. If any such
controversy, dispute or disagreement is not resolved within 30 days after such
negotiations begin, that controversy, dispute or disagreement shall be
submitted to binding arbitration to be held in Phoenix, Arizona under the Code
of Ethics and Rules of Procedure of the American Health Lawyers Association.
The Parties shall attempt in good faith to agree upon an arbitrator who is
knowledgeable in matters covered by this Agreement. If the Parties are unable
to agree upon an arbitrator within 10 days after the deadline in the preceding
paragraph for negotiations has passed, then either party may file a demand for
arbitration with the American Health Lawyers Association and arbitration shall
proceed in accordance with the Code of Ethics and Rules of Procedure of the
American Health Lawyers Association. The arbitrator shall promptly set a date
for hearing and after consideration of the evidence and arguments of the
Parties, render a written decision on the dispute within 21 days after the
hearing. The decision of the arbitrator shall include findings of fact and
conclusions of law. The decision of the arbitrator shall be final and binding
as to each Party and any judgment upon the award rendered may be entered by any
court having jurisdiction thereof. The costs of arbitration shall be divided
equally between the Parties. The party against whom the award is rendered shall
pay any monetary award and/or comply with the order of the arbitrator within 60
days of the entry of judgment on the award. The nonprevailing party shall be
liable for all attorneys' fees and costs incurred by the prevailing party
should the nonprevailing party fail to comply with the above 60-day deadline
and the prevailing party must bring court action to collect any award rendered
in its favor or to seek other court enforcement of the arbitrator's order.
17.2 Strict Compliance. No failure by any Party to insist upon the strict
performance of any covenant, agreement, term or condition of this Agreement
shall constitute a waiver of any breach of such covenant, agreement, term or
condition. No waiver shall be effective until executed in writing by an
authorized officer of the waiving party; provided, however, no waiver of any
breach shall be deemed to have amended this Agreement and each and every
covenant, agreement, term and condition of the Agreement shall continue in full
force and effect.
17.3 Notices. All notices, requests, approvals, demands and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given and to be effective (i)
when delivered if delivered personally, (ii) when delivered if sent by
nationally recognized overnight courier or, (iii) if mailed, the earlier of
actual receipt or
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five (5) days after being deposited in the United States mail as registered or
certified mail, postage prepaid, return receipt requested, in any event
addressed to the Party at the address specified below, or to such other
individuals or such other address(es) a Party may designate in the future by
notice under this Section 17.3 to the other Party:
if to Purchasers to:
Vanguard Health Systems, Inc.
00 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to Sellers to:
Xxxxx X. Xxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx LLP
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Baptist Hospitals and Health Systems, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Baptist Hospitals and Health Systems, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Xx.
Executive Vice President - General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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if to the Foundation to:
Xxxxx X. Xxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx LLP
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
The Foundation for Baptist Health System
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
And
The Foundation for Baptist Health System
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Xx.
Executive Vice President - General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
17.4 Entire Agreement. This Agreement, including all Schedules and
Exhibits attached hereto, constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, among the
Parties or any of them, with respect to the subject matter hereof.
17.5 Amendments. Neither this Agreement nor any term or provision hereof
may be changed, waived, discharged or terminated except by the written
agreement of all of the Parties or their successors then remaining.
17.6 Captions. The captions to the Agreement are for convenience of
reference only and in no way define, limit or describe the scope or intent of
the Agreement or any part thereof, nor in any way affect the Agreement or any
part thereof.
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17.7 Assignment. Except for the Foundation's assignment rights under this
Agreement, this Agreement and the rights and obligations of the Parties hereto
shall not be assignable, provided that Vanguard may assign this Agreement, in
whole or in part, to any wholly-owned subsidiary of Vanguard; however, as more
fully described in Sections 18.2, as a condition to such an assignment,
Vanguard will be required to guaranty as a principal obligor its wholly-owned
subsidiary's performance under this Agreement and Vanguard and Purchasers will
not be relieved of any of their respective obligations under this Agreement.
17.8 Controlling Law. This Agreement shall be interpreted and construed in
accordance with the internal laws of the State of Arizona applicable to
transactions consummated entirely within this State; provided further, that the
conflicts of law principles of the State of Arizona shall not apply to the
extent they would operate to apply the laws of another state.
17.9 Severability. If any provision of the Agreement shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision thereof, provided the severing of such
provision does not materially alter the intent and purposes of the Parties, and
the Agreement shall be construed as if such invalid or unenforceable provision
were omitted.
17.10 Successors and Assigns. The Agreement shall inure to the benefit of
and be binding upon the Parties, and their respective successors and permitted
assigns.
17.11 Attorneys' Fees. In the event any party takes legal action or
arbitration to enforce any of the terms of this Agreement, then, except as
provided otherwise in Section 17.1, the prevailing Party to such action shall
be entitled to reimbursement for such Party's expenses, including reasonable
attorneys' fees, incurred in such action.
17.12 Remedies. Except as otherwise specifically provided in this
Agreement, in addition to other remedies available at law or provided for
herein, the Parties shall be entitled to restraint by injunction of the
violation, or attempted or threatened violation, of any condition or provision
of this Agreement, or to a decree specifically compelling performance of any
such condition or provision to the extent provided by applicable law.
17.13 Third Party Beneficiaries. The terms and provisions of this
Agreement (including provisions regarding employee and employee benefit
matters) are intended solely for the benefit of the Parties, Purchasers'
Indemnified Persons, Sellers' Indemnified Persons, and their respective
successors and permitted assigns, and are not intended to confer third party
beneficiary rights upon any other Person; provided, however, that the
Foundation may fully enforce the terms and provisions of this Agreement, and
may enforce provisions for the benefit of the employees hired by Purchasers and
medical staff appointees, without a showing of harm to the Foundation.
17.14 No Provisions Binding Until Signed. No Party to this Agreement shall
be bound to any of its provisions by the presence of such provision in any
draft hereof. No draft of this Agreement prior to that which is signed between
the Parties shall be used by any Party, or be admissible in any proceeding, to
interpret the intent of the Parties.
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17.15 Time is of the Essence. Time is of the essence with respect to the
performance of all terms, conditions and obligations of this Agreement.
17.16 No Agency or Partnership Relations. The Parties hereby acknowledge
and agree that they have no intention to form a joint venture, agency or
partnership relationship through this Agreement for tax or any other purpose,
nor have they done so by entering into their Agreement
17.17 Execution in Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, and each of which shall be deemed
an original agreement, but all of which together shall constitute one and the
same instrument.
17.18 Rules of Construction.
(a) The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or 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 of the provisions of
this Agreement.
(b) Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. (c) The word "including"
shall mean including without limitation.
(d) All references herein to "Articles," "Sections," "Schedules" and
"Exhibits" shall be deemed to be references to Articles, Sections, Schedules
and Exhibits of this Agreement.
(e) Any reference to the word "trustee" shall also mean "director" if
"director" is used to describe an individual's board membership under the
applicable state corporation statutes, and any reference to the word "director"
shall also mean "trustee" if "trustee" is used to describe an individual's
board membership under the applicable state corporation statutes.
(f) When the context requires, the gender of all words includes the
masculine, feminine and neuter, and the number of all words includes the
singular and plural.
(g) The division of this Agreement into Articles and Sections, and the use
of captions and headings in connection therewith, are solely for convenience
and shall have no legal effect in construing the provisions of this Agreement.
17.19 Interest. Unless otherwise provided herein to the contrary, any
monies required to be paid by any Party to another Party pursuant to this
Agreement shall be due five days after demand therefor and if not paid when due
shall accrue interest from and after the due date to and
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including the date full payment is made at an annual rate equal to the average
prime rate of Citibank, N.A., during such period plus three percent (3%) per
annum.
17.20 Schedules.
(a) The Schedules referred to in or attached to this Agreement (including
Schedules delivered to Purchasers pursuant to one or more side letters
described below) are integral parts of this Agreement as if fully set forth
herein and all statements appearing therein shall be deemed to be
representations and disclosures in one Schedule shall be disclosures for all
other Schedules in which the same disclosure would be appropriate. Nothing in
the Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Schedule reasonably
identifies the exception and, without limiting the generality of the foregoing,
the mere listing of a document as an exception to any representation or
warranty shall not be deemed to disclose the contents of such document as an
exception to any representation or warranty, but an exception may be reasonably
identified if the Schedule references an extrinsic document that sets forth the
facts relating to the particular exception. Certain Schedules include
confidential, proprietary or other sensitive information and, for that reason,
are being delivered to Purchasers pursuant to one or more side letters
simultaneously with the delivery and attachment of the Final Schedules. Except
that such Schedules shall not be attached to this Agreement, such Schedules
containing confidential, proprietary or other sensitive information shall be
treated for all purposes of this Agreement as though they were attached hereto.
(b) The parties acknowledge that not all of the Schedules anticipated to
have been completed by Sellers (the "Signing Schedules") as of the Effective
Date have been completed by Sellers and Purchasers, and Sellers shall not be in
breach of any representation or warranty made in this Agreement by reason of
the fact that all of the Signing Schedules are not in fact attached to this
Agreement on the Effective Date. Each Schedule on the List of Schedules
attached hereto which is initialed by the Parties is a "Final Schedule", may
not change without agreement of the Parties and shall not be governed by the
provisions of this Section 17.20(b). With respect to each missing Signing
Schedule:
(i) Sellers will prepare or complete a draft (the "Draft Schedules")
of all of Signing Schedules to be prepared by Seller and deliver the Draft
Schedules to Purchasers promptly after the Effective Date, but in any
event no later than two weeks after the Effective Date, and Purchasers
will prepare or complete all Draft Schedules to be prepared by Purchasers
and deliver the Draft Schedules to Sellers promptly after receipt of the
Draft Schedules prepared by Sellers, but in any event no later than ten
business days after receipt of the Draft Schedules from Sellers;
(ii) If any Draft Schedule is acceptable to the other Parties and
initialed by each Party, it will thereupon be a "Final Schedule"; and
(iii) If Purchasers notify Sellers that a Draft Schedule prepared by
Sellers is not acceptable, or if Sellers notify Purchasers that a Draft
Schedule prepared by Purchasers is not acceptable, the Parties will
attempt promptly to resolve their differences with respect to the Draft
Schedule, and if the parties
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reach a written agreement with respect to the Draft Schedule, the Draft
Schedule will be a "Final Schedule".
(c) Each Final Schedule shall be deemed to be the corresponding Schedule
referred to in this Agreement and shall be part of this Agreement as fully as
if it had been appended hereto on, and shall speak as of, the Effective Date.
Notwithstanding any other provision of this Agreement, if any Draft Schedule is
not for any reason whatsoever delivered by Sellers to Purchasers on or before
two weeks after the Effective Date, or delivered by Purchasers to Sellers on or
before ten business days after receipt of the Draft Schedules from Sellers, or
any Draft Schedule does not for any reason whatsoever become a Final Schedule
pursuant to the provisions of this Section 17.20 on or before the close of
business on one week after delivery of the Draft Schedule, then Purchasers (if
the missing Final Schedule is to be prepared by Sellers) or Sellers (if the
missing Final Schedule is to be prepared by Purchasers) shall have the absolute
right to terminate this Agreement on any date subsequent to one month after the
Effective Date. Subject to the obligation of the Parties to act in good faith,
Purchasers and Sellers shall be under no obligation whatsoever to accept any
Draft Schedule in the form provided or to resolve differences with respect
thereto.
17.21 Reproduction of Documents. This Agreement and all documents relating
hereto, including consents, waivers and modifications which may hereafter be
executed, the Closing Documents, financial statements, certificates and other
information previously or hereafter furnished to any Party, may be reproduced
by any Party by any photographic, microfilm, electronic or similar process and
the Parties may destroy any original documents so reproduced. The Parties
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial, arbitral or administrative proceeding (whether
or not the original is in existence and whether or not such reproduction was
made in the ordinary course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
17.22 Consented Assignment. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Assumed Contract, claim or other right without the consent of another Person
(unless such consent is obtained) if the assignment or attempted assignment
thereof without the consent of such other Person would (i) constitute a breach
thereof or in any material way affect the rights of any Seller thereunder, (ii)
be ineffective or render the Contract void or voidable, or (iii) materially
affect any Seller's rights thereunder so that Purchasers would not in fact
receive all such rights. In any such event, Sellers shall cooperate in any
reasonable arrangement designed to provide for Purchasers the benefits under
any such Contract, claim or right, including enforcement of any and all rights
of any Seller against the other Person arising out of the breach or
cancellation by such other Person or otherwise. After Closing, the Parties
shall continue to use commercially reasonable efforts to obtain the consent of
the assignment of such Contract, claim or right.
17.23 Misdirected Payments. Sellers shall remit to Purchasers with
reasonable promptness any monies received by Sellers constituting or in respect
of the Purchased Assets, Joint Venture Assets and Assumed Liabilities.
Purchasers shall remit to Sellers with reasonable promptness any monies
received by Purchasers constituting or in respect of the Excluded Assets
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and Excluded Liabilities. If funds previously paid or credited to any Seller or
the Baptist Facilities by a third party in respect of services rendered prior
to the Closing Date have resulted in an overpayment or must be repaid, then,
except to the extent included in the Net Working Capital, Sellers shall be
responsible for the repayment of said monies (and the defense of such actions).
If Purchasers suffer any deduction to or offset or withhold against amounts due
Purchasers of funds previously paid or credited to any Seller or the Baptist
Facilities by a third party in respect of services rendered prior to the
Closing Date, then, except to the extent included in the Net Working Capital,
Sellers shall pay to Purchasers the amounts so billed or offset upon demand.
Any amounts due Purchasers by Sellers or one of their then-Affiliates, or due
Sellers by Purchasers or one of their then-Affiliates, may be offset against
monies or other funds held by the Party entitled to payment. The provisions of
this Section shall not constitute a guarantee of collectibility of the Accounts
Receivable.
ARTICLE 18
GUARANTEE; CONTINUING LIABILITY
18.1 Guarantee of Sellers' Obligations. The Foundation, as principal
obligor and not merely as a surety, hereby unconditionally guarantees full,
punctual and complete performance by Sellers, and any of Sellers' successors or
assignees, of each Seller's obligations under this Agreement and each of the
Closing Documents subject to the terms hereof and thereof and so undertakes to
Purchasers that, if and whenever any Seller is in default, the Foundation will
on demand duly and promptly perform or procure the performance of each Seller's
obligations. The foregoing guarantee is a continuing guarantee and will remain
in full force and effect until the obligations of each Seller under this
Agreement have been duly performed or discharged and will continue to be
effective or will be reinstated, as the case may be, if at any time any sum
paid to Purchasers must be restored by Purchasers upon the bankruptcy,
liquidation or reorganization of any Seller. The Foundation's obligations under
this Section shall not be affected or discharged in any way by any proceeding
with respect to any Seller under any federal or state bankruptcy, insolvency or
debtor relief laws. The Foundation agrees that it shall execute such further
documentation as the Purchasers or its successors or assigns deem reasonably
necessary to evidence the Foundation's guaranty obligations under this Section
18.1.
18.2 Vanguard Guarantee of Obligations. Vanguard, as principal obligor and
not merely as a surety, hereby unconditionally guarantees, full, punctual and
complete performance by Purchasers and any of Purchasers' successors or
assignees, (referred to herein individually as a "Vanguard Successor" and
collectively as "Vanguard Successors") of each of the obligations of Purchasers
under this Agreement (collectively, "Purchaser Obligations") and each of the
Closing Documents subject to the terms hereof and thereof and so undertakes to
Sellers and the Foundation that, if and whenever any Purchaser or Vanguard
Successor is in default, Vanguard will on demand duly and promptly perform or
procure the performance of each Purchaser Obligation. The foregoing guarantee
is a continuing guarantee and will remain in full force and effect until all
Purchaser Obligations under this Agreement have been duly performed or
discharged and will continue to be effective or will be reinstated, as the case
may be, if at any time any sum paid to Sellers must be restored by Sellers upon
the bankruptcy, liquidation or reorganization of any Purchaser or Vanguard
Successor. Vanguard's obligations under this
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Section shall not be affected or discharged in any way by any foreclosure
proceeding by Vanguard's lenders or by any proceeding with respect to any
Purchaser or Vanguard Successor under any federal or state bankruptcy,
insolvency or debtor relief laws. Vanguard agrees that it shall execute such
further documentation as the Foundation or Sellers deem reasonably necessary to
evidence Vanguard's guaranty obligations under this Section 18.2.
ARTICLE 19
FOUNDATION REPRESENTATIONS
As of the date of this Agreement and the Closing Date, the Foundation
represents and warrants to Purchasers that:
19.1 Authority to Enter into Agreement: Enforceability. It has full
corporate power and authority to enter into and to carry out the terms and
provisions of this Agreement, and the Transaction, without the approval and
consent of any other party or authority. All corporate proceedings have been
taken and all corporate authorizations have been obtained by it to authorize
execution of the Agreement. All corporate proceedings have been or will be
taken, and all corporate authorizations have been or will be obtained by it, to
effect the Transaction. The Agreement, when duly executed and delivered by it
and, when duly executed by the other Parties hereto, will constitute its legal,
valid, and binding obligation enforceable against it in accordance with its
terms except as limited by: (a) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally, and (b) general principles of equity.
19.2 Organization and Standing. It has been duly organized, is validly
existing, and in good standing under the laws of its jurisdiction of
incorporation. It has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as it is now being
conducted. To the extent it is claiming to be exempt from federal taxation, it
is recognized as exempt from federal income taxation under Section 501(c)(3)
and 509(a), respectively, of the Code and has no knowledge of any action by the
IRS to revoke or terminate such tax-exempt status under Code Sections 501(c)(3)
or 509(a).
19.3 No Breach. Neither the execution and delivery of the Agreement, nor
the consummation of the Transaction, will conflict with or result in a
violation or breach of any term or provision of, or constitute a default under
(a) its governing documents; (b) to its knowledge, any material statute, rule,
regulation, order, judgment, writ, injunction, or decree of any court or any
governmental or regulatory body applicable to it; or (c) to its knowledge, any
material agreement, contract or other instrument to which it is a party or by
which it is or may be bound, or any material license, permit or similar
authorization held by it, which conflict, violation, breach, or default would
have a material adverse effect on its business or operations.
19.4 No Broker of Finder. It is not in any way obligated under any
contract or agreement for payment of fees and expenses to any broker or finder
in connection with the origin, negotiation or execution of this Agreement or
consummation of the Transaction.
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IN WITNESS WHEREOF, the Parties to this Agreement have executed this
Agreement by their duly authorized representatives as of the Effective Date.
"Purchaser"
VHS OF PHOENIX, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Its: Executive Vice President
------------------------------------------
"Vanguard"
VANGUARD HEALTH SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Its: Executive Vice President
-----------------------------------------
"Sellers"
BAPTIST HOSPITALS AND HEALTH SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Its: President and Chief Executive Officer
-----------------------------------------
PHOENIX BAPTIST HOSPITAL AND
MEDICAL CENTER, INC
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Its: Executive Vice President and Chief
Executive Officer
------------------------------------------
ARROWHEAD COMMUNITY HOSPITAL AND MEDICAL
CENTER, INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------------------------
Its: Executive Vice President and Chief
Executive Officer
------------------------------------------
ARIZONA NETWORK DEVELOPMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Its: President and Chief Executive Officer
------------------------------------------
"Foundation"
THE FOUNDATION FOR BAPTIST HEALTH SYSTEMS
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Its: President and Chief Executive Officer
------------------------------------------
PROJECT OASIS, LLC
By: Baptist Hospitals and Health Systems,
Inc., Manager
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Its: President/ Chief Executive Officer
------------------------------------
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