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Exhibit 10.26
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EXECUTION COPY
STOCK PURCHASE AGREEMENT
FOR
MEMORIAL HOSPITAL OF CENTER
BETWEEN
SOUTHEASTERN HOSPITAL CORPORATION
AND OTHERS
SELLERS
AND
NEW AMERICAN HEALTHCARE CORPORATION
BUYER
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TABLE OF CONTENTS
ARTICLE I. PURCHASE AND SALE..........................................................................1
1.1 Purchase and Sale..........................................................................1
1.2 Assets At Closing..........................................................................2
1.3 Excluded Assets............................................................................3
1.4 Continuing Contracts, Leases and Liabilities...............................................3
1.5 Excluded Liabilities.......................................................................4
1.6 Additional Real Estate.....................................................................4
1.7 Delivery of Stock..........................................................................5
ARTICLE II. PURCHASE PRICE.............................................................................5
2.1 Purchase Price.............................................................................5
2.2 Taxes and Assessments; Prorations; Adjustments.............................................6
2.3 Closing Statements.........................................................................6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLERS AND
SHAREHOLDERS...............................................................................6
3.1 Organization, Corporate Power and Qualification............................................6
3.2 Capitalization of the Company..............................................................7
3.3 Subsidiaries and Affiliates; Organization of Sellers.......................................7
3.4 Financial Statements.......................................................................8
3.5 Absence of Undisclosed Liabilities.........................................................8
3.6 Letters of Credit..........................................................................8
3.7 Absence of Certain Recent Changes..........................................................8
3.8 Title to Assets...........................................................................10
3.9 Real Property.............................................................................11
3.10 Contracts.................................................................................12
3.11 Absence of Related Party Transactions.....................................................14
3.12 Defaults..................................................................................14
3.13 Inventory.................................................................................14
3.14 Equipment.................................................................................14
3.15 Receivables...............................................................................15
3.16 Powers of Attorney........................................................................15
3.17 Guarantees................................................................................15
3.18 Permits and Licenses......................................................................15
3.19 Bank Accounts.............................................................................15
3.20 Litigation................................................................................15
3.21 Court Orders, Decrees and Laws............................................................15
3.22 Taxes.....................................................................................16
3.23 Immigration Act...........................................................................17
3.24 Program Compliance........................................................................17
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3.25 Reimbursement Matters.....................................................................17
3.26 Environmental Matters.....................................................................18
3.27 ERISA.....................................................................................19
3.28 Employee Matters..........................................................................19
3.29 Insurance; Malpractice....................................................................20
3.30 Labor Matters.............................................................................20
3.31 Certain Representations With Respect to the Hospital and
the Agency................................................................................20
3.32 Books of Account; Reports.................................................................22
3.33 Finders and Brokers.......................................................................22
3.35 Consents and Approvals of Governmental Authorities........................................22
3.36 Disclosure................................................................................22
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER...................................................23
4.1 Organization, Qualification and Authority.................................................23
4.2 Absence of Default........................................................................23
4.3 Finders and Brokers.......................................................................23
4.4 Investment Representations................................................................24
ARTICLE V. COVENANTS OF PARTIES......................................................................24
5.1 Preservation of Company's Business and Assets.............................................24
5.2 Absence of Material Change................................................................24
5.3 Access to Books and Records...............................................................24
5.4 Consents..................................................................................26
5.5 Capital Expenditures......................................................................26
5.6 Risk of Loss..............................................................................26
5.7 Condemnation..............................................................................27
5.8 Good Faith................................................................................27
5.9 Preserve Accuracy of Representations and Warranties.......................................27
5.10 Maintain Books and Accounting Practices...................................................28
5.11 Indebtedness; Liens.......................................................................28
5.12 Compliance with Laws and Regulatory Consents..............................................28
5.13 No Merger or Consolidation................................................................28
5.14 Maintain Insurance Coverage...............................................................28
5.15 Medicare, Medicaid and Blue Cross Reporting...............................................29
5.16 Current Return Filing.....................................................................29
5.17 Environmental Assessment; Additional Environmental Inspections............................29
5.18 Performance...............................................................................30
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ARTICLE VI. TITLE AND SURVEY..........................................................................30
6.1 Title Report and Policy...................................................................30
6.2 Survey....................................................................................31
6.3 UCC Searches..............................................................................31
6.4 Defects and Cure..........................................................................31
ARTICLE VII. CLOSING...................................................................................32
7.1 Closing...................................................................................32
7.2 Termination...............................................................................32
ARTICLE VIII. SELLERS' CONDITIONS TO CLOSE..............................................................33
8.1 Representations and Warranties True at Closing; Compliance with
Agreement.................................................................................33
8.2 Regulatory Approvals......................................................................33
8.3 No Action/Proceeding......................................................................33
8.4 Compliance with Article XI................................................................34
8.5 Approval by Counsel.......................................................................34
8.6 Order Prohibiting Transaction.............................................................34
8.7 Completion of Exhibits....................................................................34
ARTICLE IX. BUYER'S CONDITIONS TO CLOSE...............................................................34
9.1 Representations and Warranties True at Closing; Compliance with
Agreement.................................................................................34
9.2 No Loss, Damage or Destruction............................................................34
9.3 No Material Adverse Change................................................................35
9.4 Regulatory Approvals......................................................................35
9.5 No Action/Proceeding......................................................................35
9.6 Compliance with Articles VI and X.........................................................35
9.7 Inspection of Assets......................................................................35
9.8 Approval by Counsel.......................................................................35
9.9 Order Prohibiting Transaction.............................................................35
9.10 Satisfaction of Long-Term Liabilities.....................................................36
9.11 Consents..................................................................................36
9.12 Tail Insurance............................................................................36
9.13 Due Diligence; Information................................................................36
9.14 Title Evidence............................................................................36
9.15 Approvals.................................................................................36
9.16 Completion of Exhibits....................................................................36
ARTICLE X. OBLIGATIONS OF SELLERS AT CLOSING.........................................................37
10.1 Documents Relating to Stock...............................................................37
10.2 Opinion of Counsel........................................................................37
10.3 Corporate Good Standing and Corporate Resolution..........................................37
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10.4 Closing Certificate.......................................................................37
10.5 Third Party Consents......................................................................37
10.6 Taxes and Other Payments..................................................................38
10.7 Releases and Other Matters................................................................38
10.8 Notice to Third-Party Payors..............................................................38
10.9 Tail Insurance............................................................................38
10.10 Additionally Requested Documents; Post Closing Assistance.................................39
10.11 Assumption Agreement......................................................................39
ARTICLE XI. OBLIGATIONS OF BUYER AT CLOSING...........................................................39
11.1 Purchase Price............................................................................39
11.2 Corporate Good Standing and Certified Board Resolutions...................................39
11.3 Opinion of Buyer's Counsel................................................................39
11.4 Closing Certificate.......................................................................40
ARTICLE XII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION................................................40
12.1 Survival..................................................................................40
12.2 Indemnification by Sellers and Shareholders...............................................40
12.3 Indemnification by Company and Buyer......................................................41
12.4 Procedure for Indemnification.............................................................41
12.5 Limitations on Obligations................................................................43
12.6 Company not Liable........................................................................43
12.7 Assignment by Buyer.......................................................................44
ARTICLE XIII. RESTRICTIVE COVENANTS.....................................................................44
13.1 Covenant Not to Compete...................................................................44
13.2 Enforceability............................................................................44
ARTICLE XIV. MISCELLANEOUS.............................................................................45
14.1 Assignment................................................................................45
14.2 Other Expenses............................................................................45
14.3 Notices...................................................................................45
14.4 Controlling Law...........................................................................46
14.5 Headings..................................................................................46
14.6 Benefit...................................................................................46
14.7 Partial Invalidity........................................................................46
14.8 Waiver....................................................................................46
14.9 Counterparts..............................................................................47
14.10 Interpretation............................................................................47
14.11 Entire Agreement..........................................................................47
14.12 Legal Fees and Costs......................................................................47
14.13 Exclusivity...............................................................................47
14.14 Completion of Exhibits....................................................................48
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EXHIBIT INDEX
Exhibit No. Exhibit Matter
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1.2(1) Real Property
1.2(2) Equipment
1.2(5) Cash and Cash Equivalents
1.2(9) Trade Name
1.3 Excluded Assets
3.1A States in which Company is Qualified to do Business
3.1B Articles of Incorporation and Bylaws of Company
3.3A Ownership Interest
3.3B Articles of Incorporation and Bylaws of each Seller
3.3C Stock Ownership of Parent
3.4 Financial Statements
3.4(1) Disclosed Liabilities
3.6 Outstanding Letters of Credit
3.7 Operations Since ______________
3.8A Title to Assets
3.9 Exceptions to Zoning, Land Use and Other Laws
3.10 Contracts and Agreements with Obligations of $25,000 or more
3.11 Related Party Transactions
3.12 Defaults
3.15 Receivables
3.16 Powers of Attorney
3.17 Guarantees
3.18 Permits and Licenses
3.19 Bank Accounts
3.20 Litigation
3.21 Court Orders and Decrees
3.22A Tax Liens
3.22B Tax Audits
3.22C Copies of Company's Last Two Federal, State and Local Tax Returns
3.25A Medicare and Medicaid Cost Reports
3.25B Audit Status of Medicare and Medicaid Cost Reports
3.25C Claims against Company by Third Party Payors
3.26 Environmental Matters
3.28A List of Employees
3.28B Employee Benefits
3.28C Ex-Employees Eligible for COBRA
3.28D List of Employees Terminated within 90 Days of Closing
3.29A Insurance Policies
3.29B Insurance Claims History
3.27 Employee Benefit Plans
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3.31(1)A Noncompliance with Licensure Regulations
3.31(1)B Home Health Agency Licenses
3.31(2) Blue Cross Contracts
3.31(3) Accreditations
3.31(4) Medicare Contract
3.31(5) Medicaid Contract
3.31(6) CHAMPUS Contract
3.31(7) Fire Marshal Reports
3.31(8) Violations of Local Building and Zoning Laws
3.31(9) Most Recent Survey by Department of health
3.31(10) Medical Staff Bylaws
3.31(11) Licensure/Professional Liability Insurance Coverage of Hospital Staff
3.31(12) Xxxx-Xxxxxx Obligations
3.35 Consents of Governmental Authorities
10.5(3) Estoppel and Attornment Letters
10.8 Notice to Third-Party Payors
10.11 Assumption Agreement
12.5 Escrow Agreement
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GLOSSARY
Section Defined Term
------- ------------
2.3 Accountants
4.4 Act
Recital A Agency
Page 1 Agreement
5.17 Asbestos Clean-Up
1.2 Assets
1.4 Continuing Liabilities
Page 1 Buyer
12.5(1) Cap
12.4(1) Claim
7.1 Closing
7.1 Closing Date
3.22 Code
6.1 Commitment
Recital A Company
1.4 Continuing Liabilities
3.10 Contracts
6.4 Defects
3.27(1) ERISA
1.2(2) Equipment
12.5(2) Escrow Agreement
1.3 Excluded Assets
1.5 Excluded Liabilities
2.3 Final Closing Statement
3.4 Financial Statements
Recital A Hospital
12.4(1) Indemnitee
12.4(1) Indemnitor
1.2(3) Inventory
1.1 Liens
2.1(2) Net Working Capital
13.1 Noncompete Area
13.1 Noncompete Period
12.4(1) Notice
Page 1 Parent
Page 1 Park
4.15(2) Permitted Exceptions
3.8 Permitted Liens
2.3 Preliminary Closing Statement
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4.11(1) Program Agreements
4.11(1) Programs
2.1 Purchase Price
1.4(2) PTO
12.2 Rate
1.2(1) Real Property
1.2(4) Receivables
Recital A Agency
12.5(2) Sale Event
Page 1 Sellers
Page 1 Shareholders
Recital B Stock
6.2 Survey
6.4 Title Evidence
6.1 Title Policy
6.3 UCC Searches
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is made as of
___________, 1997, by and among XXXXX X. XXXXXX, XXXX XXXXXXXXX, X. X.
XXXXXXXXX, XXXXXXX X. XXXXXX, XXX X. XXXXXX, XXXX X. XXXXXXX, XXXXX X. XXXXXX
and XXXXXXX X. XXXXXX (collectively, the "SHAREHOLDERS"), SOUTHEASTERN HOSPITAL
CORPORATION, a Tennessee corporation ("PARENT"), PARK HEALTHCARE COMPANY, a
Tennessee corporation ("PARK") (Parent and Park are collectively, jointly and
severally, "SELLERS"), and NEW AMERICAN HEALTHCARE CORPORATION, a Tennessee
corporation ("BUYER").
R E C I T A L S:
A. Park owns all of the issued and outstanding capital stock of Center
Hospital, Inc., d/b/a Memorial Hospital of Center, a Tennessee corporation
qualified to do business in the State of Texas (the "COMPANY"). The Company
operates Memorial Hospital of Center in Center, Texas located on approximately
4.128 acres of land at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxx Xxxxxx, Xxxxx, including
a hospital comprised of [60] licensed medical/surgical beds, associated
equipment and other hospital related businesses and programs, approximately
12.2505 acres of undeveloped real property, and a home health agency (the
"AGENCY") (all of the above are collectively, the "HOSPITAL").
B. Park owns all of the issued and outstanding capital stock of the
Company and all rights to acquire stock of the Company (the "STOCK"). Parent
owns all of the issued and outstanding capital stock of Park, and Shareholders
own 100% of the issued and outstanding capital stock of Parent.
X. Xxxxxxx desire to sell and transfer the Stock to Buyer, and Buyer
desires to purchase the same from Sellers, subject to the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions contained in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE I. PURCHASE AND SALE
1.1 Purchase and Sale. Sellers agree to sell, transfer, assign, convey
and deliver to Buyer, and Buyer agrees to purchase from Sellers, all right,
title and interest in and to the Stock. Sellers shall deliver to Buyer at
Closing all stock certificates representing the Stock, duly endorsed for
transfer or accompanied by duly executed stock powers. The
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Stock shall be delivered free and clear of all claims, liens, pledges,
mortgages, restrictions, suits, proceedings, calls, proxies, charges, options,
security interests, defects in title, assessments, covenants, rights of first
refusal and encumbrances of any kind (herein, "LIENS").
1.2 Assets At Closing. Except as provided in Section 1.3, at Closing
the Company shall own or lease, as specified, all assets, tangible and
intangible, real and personal, associated with the operation of the Hospital
(including those related to the Agency) (collectively, the "ASSETS"), free and
clear of all Liens other than the Permitted Liens (as defined in Section 3.8),
which Assets shall include, without limitation, the following:
(1) All real estate owned by the Company comprising or owned
in connection with the Hospital as described in Exhibit 1.2(1) (with leasehold
items noted as such); including, without limitation, all interests in real
property, including leaseholds, easements and improvements thereon, plants,
fixed assets, buildings, structures, fixtures (including fixed machinery and
fixed equipment) situated thereon or forming a part thereof and all
appurtenances, easements and rights-of-way related thereto (collectively, the
"REAL PROPERTY");
(2) All business, medical and other equipment, machinery, data
processing hardware and software, furniture, furnishings, appliances, vehicles
and other tangible personal property of every description and kind and all
replacement parts therefor, wherever located, including but not limited to the
items listed on Exhibit 1.2(2) (collectively, the "EQUIPMENT");
(3) All inventory of goods and supplies, including, but not
limited to, disposables, consumables, office supplies, drugs and medical
supplies (collectively, the "INVENTORY");
(4) All of the Company's patient accounts, notes and other
receivables, including those from third party payors, Medicare and Medicaid
(including all prior years and terminating cost reports), whether or not written
off and whether recorded or unrecorded, including those with respect to all
prior year and terminating cost reports (collectively, the "RECEIVABLES");
(5) All cash, bank accounts (as listed by name and address of
banking institution, account name and account and routing numbers on Exhibit
1.2(5) attached hereto), money market accounts, other accounts, certificates of
deposit and other investments of the Company;
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(6) All patient, medical, personnel, clinical and other
records of the Hospital and all manuals, books and records, including personnel
policies and manuals, and computer software;
(7) All licenses, permits, registrations, certificates,
consents, accreditations, approvals and franchises, and applications therefor,
and all waivers, if any, pertaining thereto;
(8) All plans and surveys, including "as-built" plans, all
plats, specifications, engineers' drawings, and architectural renderings and
similar items relating to the Hospital, including, without limitation, those
relating to utilities, easements and roads;
(9) All goodwill and other intangible assets including, but
not limited to, all rights to use the name "Memorial Hospital of Center," the
other trade names listed on Exhibit 1.2(9) and derivatives thereof;
(10) The Company's rights and interests under the Contracts
(as defined in Section 3.10), to the extent included, identified as a
"Continuing Liability" in Exhibit 3.10;
(11) All assets reflected on the Financial Statements, as
defined in Section 4.4(1), and additions thereto through the Closing (as defined
in Section 7.1) less deletions therefrom sold or consumed in the ordinary course
of business;
(12) All insurance proceeds arising in connection with damage
to the Assets prior to Closing, to the extent not expended for the repair and
restoration of the Assets;
(13) The Company's membership interest in Health Center
Preferred, the Hospital's managed care contracting entity and any other entities
listed on Exhibit 3.3A; and
(14) All other property, other than Excluded Assets, of every
kind, character or description owned by the Company and used or held for use in
the business of the Hospital, whether or not reflected on the Financial
Statements, wherever located.
1.3 Excluded Assets. Prior to conveyance of the Stock, Company shall
transfer to Sellers those items listed on Exhibit 1.3 (collectively, the
"EXCLUDED ASSETS"). All tangible Excluded Assets shall be removed from the
Assets, without damage or defacement to the Assets, by Sellers prior to Closing.
1.4 Continuing Contracts, Leases and Liabilities. At Closing, Company
will retain and continue to pay or perform, as the case may be, only the
following (collectively, the "CONTINUING LIABILITIES"):
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(1) All obligations accruing after Closing with respect to
those contracts, purchase orders and leases identified as Continuing Liabilities
on Exhibit 3.10;
(2) All accrued compensation, vacation time, compensatory
time/paid time off ("PTO"), holiday time and build up of sick leave, together
with all related taxes and tax withholding payable or held with respect thereto,
for the Company's employees who remain employees of the Company after Closing,
which was accrued or accumulated prior to Closing; provided, however, that the
Company shall retain the obligation to pay or remit such compensation and other
amounts, including such accrued compensation, vacation time, PTO, holiday time
and build up of sick leave together with all related taxes only to the extent
that the same is included in the calculation of Net Working Capital or Buyer has
received a credit therefor under Section 2.1(4); and
(3) All amounts payable under the Medicare, Medicaid, CHAMPUS
and Blue Cross/Blue Shield of Texas reimbursement programs applicable to cost
reports filed for services rendered prior to the Closing as properly recorded on
the Company's Financial Statements.
1.5 Excluded Liabilities. Immediately prior to conveyance of the Stock,
Sellers shall satisfy and release or Company shall transfer to Sellers and
Sellers shall assume responsibility from and after Closing for the following
(collectively, the "EXCLUDED LIABILITIES"):
(1) All obligations pursuant to or related to (i) the
Promissory Note dated June 27, 1995, in the original principal amount of
$2,000,000 payable by the Company to AmSouth Bank of Alabama or (ii) the Real
Estate Lien Note dated October 24, 1994, in the original amount of $170,000
payable by the Company to Xxxxx Xxxxxxxxx;
(2) All liabilities and obligations with respect to those
leases, contracts and purchase orders identified as Excluded Liabilities on
Exhibit 3.10;
(3) Any intercompany payables; and
(4) All liabilities, indebtedness, commitments, taxes,
assessments, claims, obligations and responsibilities of any kind whatsoever of
the Company (and any predecessor operator of the Hospital) arising from its
operations prior to Closing, including, but not limited to, malpractice claims
or suits and scheduled or unscheduled liabilities of any kind whatsoever, except
as expressly included in the Continuing Liabilities.
1.6 Additional Real Estate. Sellers, Shareholders and Buyer acknowledge
and agree that it is their intent that all real estate used in or related to the
operation of the Hospital that is owned or leased by the Company or an
Affiliate, shall be retained by the Company. To the extent any tract or parcel
of real estate (or buildings, improvements and
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fixtures and any rights, easements or appurtenances thereon) identified on
Exhibit 1.2(1) (or which should have been identified on such Exhibit) is (1)
misidentified, incorrectly described, or incorrectly identified as being owned
by a particular entity, or (2) any such real estate which should have been
included on Exhibit 1.2(1) is inadvertently not included on Exhibit 1.2(1) and
such errors are discovered subsequent to execution of this Agreement, the
parties agree that Exhibit 1.2(1) shall be amended by mutual agreement prior to
Closing to correct such errors and such amended Exhibit shall then be deemed to
be controlling as of the Closing. In the event that any such errors are
discovered subsequent to the Closing, to the extent necessary to effect the
intent of this Agreement, the parties agree that Exhibit 1.2 (1) shall be
amended by a post-Closing addendum to this Agreement to correct such errors and
such amended Exhibit 1.2(1) shall be deemed to be controlling and the Sellers
shall execute and deliver or cause to be executed and delivered, deeds,
instruments of correction, or such other instruments or documents, and to take
or cause to be taken, such other steps as may be necessary to correctly vest
title to any such real estate in or to the Company in accordance with the terms
of this Agreement.
1.7 Delivery of Stock. Sellers shall deliver to Buyer at Closing all
stock certificates representing the Stock, duly endorsed for transfer or
accompanied by duly executed stock powers. The Stock will be conveyed to Buyer
fully paid and nonassessable with good and valid title, free and clear of all
Liens, including all amounts due and payable for federal, state and local
transfer taxes.
ARTICLE II. PURCHASE PRICE
2.1 Purchase Price. Subject to the terms and conditions hereof, the
purchase price (the "PURCHASE PRICE") will be payable by Buyer to Sellers for
the Stock as provided in Section 7.1 hereof and shall be an amount derived in
the following manner:
(1) Eleven Million Dollars ($11,000,000.00);
(2) PLUS the amount by which Net Working Capital at Closing
exceeds $1,635,760.00 MINUS the amount by which $1,635,760.00 exceeds Net
Working Capital at Closing. The term "NET WORKING CAPITAL" shall mean the
following assets and liability accounts, as those terms are used in the
Financial Statements, all recorded and valued according to generally accepted
accounting principles, consistently applied: cash, net accounts receivable,
inventory and prepaid expenses and other current assets, less accounts payable,
accrued liabilities, short-term and long-term portions of leases payable and
other current liabilities;
(3) PLUS or MINUS, as appropriate, for the proration of
property taxes, utilities, rentals and payments under assumed contracts (as more
clearly detailed in Section 2.2), except to the extent already included in the
calculation of Net Working Capital;
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(4) MINUS a negotiated amount for sick pay amounts which will
be agreed upon prior to Closing.
2.2 Taxes and Assessments; Prorations; Adjustments. To the extent not
included as a reduction of Net Working Capital, Sellers shall pay or credit on
the Purchase Price the amount of all delinquent real estate and personal
property taxes, including penalties and interest, and all special assessments
that are a lien as of the day of Closing, both current and reassessed and
whether due or to become due.
2.3 Closing Statements. The adjustments specified in Sections 2.1 and
2.2 shall be estimated by the parties hereto in good faith at the Closing based
on the most current interim financial statements with provisional adjustments as
shall be mutually agreed upon and shall be called the "PRELIMINARY CLOSING
STATEMENT". No later than one hundred twenty (120) days after the Closing, the
parties hereto shall prepare the "FINAL CLOSING STATEMENT" reflecting the items
listed above determined in accordance with generally accepted accounting
principles on an accrual basis applied consistently with prior periods.
Adjustments made after the Closing based on the Final Closing Statement shall be
payable in immediately available funds, on or before the tenth day following the
day the Final Closing Statement is agreed upon. If Buyer and Sellers are unable
to agree upon said Final Closing Statement within one hundred twenty (120) days
after Closing, then they shall submit their dispute to KPMG Peat Marwick (the
"ACCOUNTANTS"), and the Accountants shall make such determination which
determination shall be final and binding on the parties hereto for the purpose
of this Agreement, and Buyer and Shareholders shall each pay one-half the cost
of the Accountants.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF SELLERS AND SHAREHOLDERS
To induce Buyer to enter into this Agreement and consummate the
transactions contemplated hereunder, Sellers and Shareholders hereby represent
and warrant to Buyer, which representations and warranties shall be true and
correct on the date hereof, and at Closing, as follows:
3.1 Organization, Corporate Power and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee and has full corporate power and authority and all
material authorizations, licenses and permits necessary to own, lease and
operate its properties and assets and to carry on its business as and where it
is now being conducted, to enter into this Agreement. The Company is duly
qualified to do business and is in good standing in Texas The Company is
qualified to do business in the states and foreign countries listed in Exhibit
3.1A. No jurisdiction where the Company is not presently qualified as a foreign
corporation has made any written assertion that the Company's business or
ownership of property makes qualification as a foreign corporation in such
jurisdiction necessary. A
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copy of the Company's Articles of Incorporation and all amendments thereto as of
the date hereof and a copy of the Company's by-laws, as amended to the date
hereof (both certified by the Secretary of the Company), are included as Exhibit
3.1B and are true, accurate and complete as of the date hereof. The Company is
not in default under or in violation of any provision of its Articles of
Incorporation or bylaws.
3.2 Capitalization of the Company. The authorized capital stock of the
Company consists of 2,000 shares of no par value voting common stock, of which
as of the date hereof, 1,600 shares have been duly authorized by all necessary
corporate action on the part of the Company, are validly issued and outstanding,
fully paid and non-assessable and all of which are owned beneficially and of
record by Park. No assessments have been made with respect to such stock which
have not been fully satisfied. There are no other authorized or outstanding or
authorized equity securities of the Company of any class, kind or character, and
there are no outstanding rights, contracts, rights to subscribe, conversion
rights, exchange rights, warrants, options, calls, puts or other agreements or
commitments of any character relating to the capital stock of the Company or any
securities convertible or exchangeable or exercisable for any shares of stock of
any class of capital stock of the Company. The Stock is subject to no pledge or
other Lien. Immediately after the Closing, Buyer will own 100% of the issued and
outstanding capital stock of the Company, free and clear of any Liens. No shares
of the capital stock of the Company are reserved for any purpose; there are no
preemptive or similar rights with respect to the issuance, sale or other
transfer (whether present, past or future) of the capital stock of the Company
and there are no agreements or other obligations (contingent or otherwise) which
may require the Company to issue, repurchase or otherwise acquire any shares of
its capital stock or any other securities. There are no outstanding or
authorized stock appreciation/phantom stock or similar rights with respect to
the Company. There are no voting trusts, proxies, or any other agreements or
understandings with respect to the voting stock of the Company.
3.3 Subsidiaries and Affiliates; Organization of Sellers. Except as
disclosed on Exhibit 3.3A, at the Closing, the Company will have no direct or
indirect ownership interest in, by way of stock ownership or otherwise, any
corporation, association or business enterprise. Each Seller is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, each has full corporate power to own, lease and operate its
properties and assets and to carry on its business as and where it is now
currently conducted, is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or the nature of the business transacted by it make such qualification necessary
except for any jurisdiction wherein the failure to be so qualified will not have
a material adverse effect on such entity's financial condition. Copies of the
Articles of Incorporation and by-laws of each Seller are included as Exhibit
3.3B and are true, accurate and complete as of the date hereof. The Shareholders
and those individuals listed on Exhibit 3.3C own beneficially and of record all
shares of capital stock of Parent, and Parent owns beneficially and of record
all shares of capital stock of Park.
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3.4 Financial Statements. Exhibit 3.4 consists of the Company's audited
financial statements, including balance sheets and statements of operations for
the fiscal years ended April 30, 1993, 1994, 1995 and 1996, and the unaudited
ten (10) month interim period ending February 28, 1997 (herein collectively
called "FINANCIAL STATEMENTS"). The Financial Statements present fairly in all
material respects the financial condition of the Company as at the respective
dates thereof and the results of their operations for the periods ended at the
respective dates thereof, in each case prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and with prior periods.
3.5 Absence of Undisclosed Liabilities. Except for (i) liabilities
disclosed in Exhibit 3.5, (ii) liabilities reflected or reserved against in the
Financial Statements, or (iii) commitments and obligations incurred in the
ordinary course of business accruing after February 28, 1997, the Company had,
or will have at Closing, no material liabilities, claims or obligations.
3.6 Letters of Credit. Except as disclosed in Exhibit 3.6 hereto, there
are no outstanding letters of credit issued at the request of the Company to any
suppliers or obligees of the Company with respect to the operations of the
Company or its subsidiaries.
3.7 Absence of Certain Recent Changes. Except as expressly provided in
this Agreement or as set forth on Exhibit 3.7 in numerical order corresponding
to the following subsections since the date of the most recent Financial
Statements, and through the Closing Date, the Company has not and will not have:
(1) except in the usual and ordinary course of its businesses,
consistent with past practice, and in an amount which is usual and normal, both
individually and in the aggregate or as otherwise contemplated by this
Agreement, incurred, any material indebtedness or other liabilities (whether
accrued, absolute, contingent or otherwise), guaranteed any indebtedness or sold
any of its assets;
(2) suffered any damage, destruction or loss, whether or not
covered by insurance, in excess of $25,000;
(3) suffered the resignation or other termination of its
hospital administrator, or the loss of or other termination of a business
relationship with any material customers or suppliers of the Company's business;
(4) increased the regular rate of compensation payable by it
to any employee or any physician other than normal merit and cost of living
increases granted in the ordinary course of business; or increased such
compensation by bonus, percentage, compensation service award or similar
arrangement theretofore in effect for the benefit of any of its employees, and
no such increase is required except for increases made in the
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ordinary course of business to persons currently receiving a salary of less than
$50,000 per year, which increases, in the aggregate, do not exceed $50,000 per
annum;
(5) established or agreed to establish, amended or terminated
any pension, retirement or welfare plan or arrangement for the benefit of its
employees not theretofore in effect;
(6) suffered any material adverse change in their financial
condition, assets, liabilities, operations, or business;
(7) had any change in its capitalization, including, without
limitation, the issuance by the Company of any shares of stock of any class, any
subscriptions, options, warrants, convertible securities, rights, calls,
agreements, commitments or rights affecting or relating in any manner whatsoever
to any equitable interests in the Company;
(8) declared or paid any dividend or other distribution on any
class of its capital stock or purchased or redeemed any of its capital stock;
(9) made any direct or indirect purchase, redemption or other
acquisition or made any commitment, plan or agreement to purchase, redeem or
otherwise acquire any shares of its capital stock or other equitable interests;
(10) experienced any material labor organizational efforts,
strikes or complaints other than grievance procedures in the ordinary course of
business or entered into any collective bargaining agreements with any union;
(11) made any single capital expenditure which exceeded
$10,000 or made aggregate capital expenditures which exceeded $25,000;
(12) except with respect to Liens arising by operation of law
or conditional sales or similar security interest granted in connection with the
purchase of equipment or supplies, permitted or allowed any of its assets (real,
personal or mixed, tangible or intangible) to be subjected to any additional
Lien of any kind;
(13) written down the value of any of its assets, or written
off as uncollectible any Receivables, except for write-downs and write-offs in
the ordinary course of business and consistent with past practice, none of which
are material to the Company, or revalued any of its assets;
(14) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than in the usual
and ordinary course of business;
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(15) suffered any extraordinary losses, canceled any material
debts, or waived any claims or rights of substantial value, whether or not in
the usual and ordinary course of business;
(16) paid, lent or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with
any of the officers or directors of the Company, or of any "affiliate" or
"associate" of any of its officers or directors (as such terms are defined in
the rules and regulations of the Securities and Exchange Commission under the
Securities Act of 1933, as amended), except for reimbursement of ordinary and
reasonable business expenses related to the business of the Company;
(17) amended, terminated or otherwise altered (whether by
action or inaction) any contract, agreement or license of significant value to
which the Company is a party, except in the ordinary course of business;
(18) entered into a material transaction other than in the
ordinary course of business, or made any change in any method of accounting or
accounting practice;
(19) canceled, or failed to continue, insurance coverages; or
(20) agreed to take any action described in this Section 3.7.
3.8 Title to Assets. Except as disclosed in Exhibit 3.8A, or disclosed
elsewhere in this Agreement, the Company has or will have at Closing, good and
marketable title to its property and assets, as reflected in the Financial
Statements or acquired by the Company subsequent to the date of the most recent
Financial Statements, subject to no Lien, except the following (collectively the
"PERMITTED LIENS"):
(1) property and assets sold or otherwise disposed of
subsequent to such date in the ordinary course of business or as otherwise
contemplated by this Agreement,
(2) liens in respect of unpaid taxes and interest and
penalties thereon as reflected in the Financial Statements not yet due and
payable or being contested in good faith by appropriate proceedings,
(3) liens in respect of pledges or deposits under worker's
compensation, unemployment insurance, social security and public liability laws
and other similar legislation,
(4) liens imposed by law, such as carriers', warehousemen's or
mechanics' liens incurred in good faith in the ordinary course of business,
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(5) liens set forth in the Financial Statements as securing
specified debts or otherwise described in Exhibit 3.8A,
(6) any Lien approved in writing by Buyer, and
(7) such imperfections of title and other encumbrances, if
any, which do not in the aggregate materially detract from the value or
interfere with the use of their properties or otherwise materially impair their
business operations.
None of the encumbrances set forth in Exhibit 3.8A currently impairs or
materially interferes with the use or value of their assets. All of the Real
Property which is owned or leased by the Company is described in Exhibit 3.8A.
None of the Assets consisting of owned Real Property are subject to mortgage or
other encumbrance or charge other than those encumbrances described in Exhibit
3.8A. The owned personal property is subject to no Liens except the security
interests of record set forth on Exhibit 3.8B, which Exhibit is a copy of a
Uniform Commercial Code search as of a recent date duly obtained by the Company
and which search reports security interests of record relating to such assets in
every place where such security interests are legally required to be filed and
includes copies of all such financing statements.
3.9 Real Property. Except as disclosed on Exhibit 3.9:
(1) The Company enjoys peaceful and undisturbed possession of
its Real Property as described in Exhibit 1.2(1). The use of the Real Property
by the Company does not currently, violate any existing zoning, building or use
statutes, rules, ordinances or regulations of any federal, state, county or
local entity, authority or agency the violation of which would have a material
adverse effect on its respective assets or the business of such entity as it is
presently conducted. Neither the Company nor Sellers has received any written
notice of any violation of any law, zoning ordinance or regulation affecting the
Real Property and neither has received any written notice of nor has any actual
knowledge of or information as to any existing or condemnation or other legal
action of any kind involving the Real Property which may materially and
adversely affect the value of its respective Real Property. The use of the Real
Property, and the activities conducted thereon and are in substantial compliance
with all material applicable laws, rules, regulations, permits and licenses.
(2) There are no contracts, leases or agreements in effect
with respect to the Real Property of any kind or nature whatsoever, whether or
not of record not otherwise disclosed in this Agreement.
(3) Sellers do not know of any building, use or deed
restrictions relating to the Real Property that are not of public record or of
any latent structural defects in any buildings or improvements located on the
Real Property.
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(4) There are no unrecorded easements relating to the Real
Property known to Sellers, or special assessments or proposed special
assessments of which written notice has been given relating to the Real
Property, and no federal, state or local taxing authority has asserted any tax
deficiency, lien or assessment against the Real Property which has not been
paid.
(5) There are no outstanding accounts payable or mechanics'
liens or rights to claim a mechanic's lien in favor of any contractor,
materialman, laborer or any other Person in connection with any portion of the
Real Property which are past due or are not otherwise being contested in good
faith by appropriate proceeding.
(6) The Company has rights of ingress and egress from the Real
Property which are adequate for the purposes for which the Real Property
currently is used. All service utilities, including gas, water, electricity,
telephone and sewer, are presently available and serving the Real Property in an
adequate manner for its current use.
3.10 Contracts. Exhibit 3.10 is a list of each contract, lease,
agreement and other instrument to which the Company is a party or is bound which
involves an unperformed commitment or obligation (contingent or otherwise) of
more than $25,000 in the aggregate (herein, the "CONTRACTS"). Exhibit 3.10 also
indicates whether each Contract is an Excluded Liability. All Contracts not
designated as Excluded Liabilities shall be considered Continuing Liabilities.
Except as noted in such Exhibit, all such Contracts are in full force and
effect, there has been no cancellation or written notice of any threatened
cancellation thereof, there are no outstanding disputes thereunder, each is with
unrelated third parties and was entered into on an arms-length basis in the
ordinary course of business and except as noted in Exhibit 3.10, will continue
to be binding in accordance with their terms after consummation of the
transactions contemplated hereby. Except as noted in Exhibit 3.10, there are no
employment agreements or other agreements to which the Company is a party or by
which the Company is bound that contain any severance or termination pay
liabilities or obligations.
Except as described in Exhibit 3.10 or the other Exhibits hereto (and
except for purchase contracts and orders for inventory in the ordinary course of
business consistent with past practice), the Company is not, as of the date of
this Agreement, a party to or bound by any:
(1) material agreement or contract not made in the ordinary
course of business;
(2) employee collective bargaining agreement or other contract
with any labor union;
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(3) covenant not to compete (other than pursuant to any lease,
reciprocal easement agreement, development agreement, operating agreement or
construction, operating and reciprocal easement agreement, including any radius
restriction contained therein);
(4) lease or similar agreement under which the Company is a
lessor or sublessor of any material real property owned or leased by the
Company;
(5) (i) lease or similar agreement under which (A) the Company
is lessee of, or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by a third party or (B) the Company is a lessor
or sublessor of any tangible personal property owned by the Company, (ii)
continuing contract for the future purchase of materials, supplies or equipment,
or (iii) management, service, consulting or other similar type of contract, in
any such case which has a future liability in excess of $25,000, and which is
not terminable by the Company for a cost of less than $10,000;
(6) license or other agreement relating in whole or in part
to, trademarks (including, but not limited to, any license or other agreement
under which the Company has the right to use any of the same owned or held by a
third party);
(7) agreement or contract under which the Company has borrowed
or lent any money or issued any note, bond, indenture or other evidence of
indebtedness or directly or indirectly guaranteed indebtedness, liabilities or
obligations of others for an amount in excess of $10,000 (other than (i)
endorsements for the purpose of collection in the ordinary course of business,
(ii) agreements or contracts between the Company and Sellers, and (iii) advances
to employees of the Company in the ordinary course of business);
(8) mortgage, pledge, security agreement, deed of trust or
other document granting a lien (including liens upon properties acquired under
conditional sales, capital leases or other title retention or security devices
but excluding operating leases) other than Permitted Liens;
(9) other agreement, contract, lease, license, commitment or
instrument to which the Company is a party or by or to which the Company or any
of its assets or businesses are bound or subject which has an aggregate future
liability in excess of $10,000 and is not terminable by the Company for a cost
of less than $10,000; or
(10) any agreement, contract, understanding or business
venture with any physician, other provider or any other person which knowingly
violates the Medicare/Medicaid Fraud and Abuse amendments or any regulations
thereunder adopted by the U.S. Department of Health and Human Services.
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3.11 Absence of Related Party Transactions. Prior to the Closing, any
contracts or other financial interest which may exist between either Sellers and
the Company or between the Company and any officer, director or affiliate of the
Company shall have been terminated, except as set forth in Exhibit 3.11.
3.12 Defaults. Except as disclosed in Exhibit 3.12 or otherwise in this
Agreement, the Company is not in material default under, nor has any event
occurred which, with the lapse of time or action by a third party, could result
in a default by the Company under, any of its outstanding indentures, mortgages,
contracts, instruments or agreements to which the Company is a party or by which
the Company may be bound or under any provision of the Articles of Incorporation
or by-laws of the Company. Except as disclosed in Exhibit 3.12, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not: (i) violate any provision
of, or result in the breach of, or constitute a material default under, any law
the violation of which would result in a significant liability to the Company,
or any order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal; (ii) constitute a violation of or a material default
under, or a conflict with, any term or provision of the Articles of
Incorporation or by-laws of the Company; (iii) violate any contract, commitment,
indenture, lease, instrument or other agreement, or any other restriction of any
kind to which the Company is a party or it or its assets is bound; or (iv) give
any party thereunder grounds to cause (with or without notice, the passage of
time or both) the maturity of any liability or obligation of the Company to be
accelerated, or increase any such liability or obligation.
3.13 Inventory. Substantially all Inventory, as reflected in the
Financial Statements or otherwise (and not disposed of in the ordinary course),
consists of a quality and quantity generally usable and saleable in the ordinary
course of business and is carried on the balance sheet included in the Financial
Statements at the lower of cost or market, except for items of obsolete
materials, substantially all of which have been written down in the balance
sheet included in the Financial Statements to realizable market value or for
which adequate reserves have been provided in the balance sheet included in the
Financial Statements. The only transactions related thereto since the date of
the most recent Financial Statements, have been additions or sales in the
ordinary course of business.
3.14 Equipment. Substantially all material items of Equipment reflected
in the Financial Statements, are in good operating condition, except for
reasonable wear and tear and except for items which have been written down in
the Financial Statements to a realizable market value or for which adequate
reserves have been provided in the Financial Statements. The only transactions
related thereto since the date of the most recent Financial Statements, have
been additions thereto or dispositions thereof in the ordinary course of
business.
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3.15 Receivables. Except as set forth in Exhibit 3.15, all Receivables
shown on the Financial Statements and all those arising since the date of the
most recent Financial Statements, have arisen in the ordinary course of
business.
3.16 Powers of Attorney. Exhibit 3.16 lists and contains a copy of any
outstanding powers of attorney related to the Company.
3.17 Guarantees. Exhibit 3.17 is a list of all material guarantees and
matters of suretyship of the Company. Except as noted in Exhibit 3.17, all
guarantees by the Company of obligations of entities, whether or not related
parties, will be satisfied or released prior to Closing.
3.18 Permits and Licenses. Included as Exhibit 3.18 is a schedule of
permits and licenses, listing and briefly describing each permit, license or
similar authorization from each governmental authority issued with respect to
the operation or ownership of properties by the Company, together with the
designation of the respective expiration dates of each, and also listing each
association or governmental authority by which the Company is accredited or
otherwise recognized. The Company is not required to obtain any additional
permits, licenses or similar authorizations (including, without limitation, any
additional certificates of need) from any governmental authority for the proper
conduct of its business as currently conducted or to become a member of or
accredited by any association or governmental authority. Except as set forth in
Exhibit 3.18, all of such permits, licenses and authorizations will continue to
be valid and in full force and effect in accordance with their respective terms
after the consummation of the transactions contemplated hereby.
3.19 Bank Accounts. Exhibit 3.19 is a true and complete list as of the
date hereof of all banking institutions in which the Company has accounts, lines
of credit, letters of credit, or safety deposit boxes, plus the account numbers
thereof and the names of the persons authorized to have access thereto.
3.20 Litigation. Except as set forth in Exhibit 3.20: (i) there is no
litigation, arbitration, governmental claim, investigation or proceeding pending
or threatened in writing against the Company at law or in equity, before any
court, arbitral tribunal or governmental agency; (ii) there are no facts known
to Sellers on which material claims may be hereafter made against the Company
which are not covered by insurance assuming the same insurance programs
presently in effect are maintained after the Closing; and (iii) all currently
pending claims and litigations against the Company are fully covered by
insurance subject to applicable deductibles.
3.21 Court Orders, Decrees and Laws. There is not outstanding or
threatened in writing any order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal against or affecting the Company or
any of its assets which would significantly
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interfere with its ability to conduct its businesses as presently conducted. The
Company is in substantial compliance with all applicable federal, state and
local laws, regulations and administrative orders which are material to the
business of the Company, and the Company has received no written notices of
alleged violations thereof except as disclosed herein. Except as set forth in
Exhibit 3.21, to the best of Sellers' knowledge, no governmental authorities are
presently conducting proceedings against the Company and no such investigation
or proceeding is pending or been threatened in writing.
3.22 Taxes. All federal, state and other tax returns of the Company
required by law to be filed have been filed, and the Company has paid or accrued
on the balance sheets included in the Financial Statements (including taxes on
properties, income, franchises, licenses, sales and payrolls) which are shown to
be due on or have become due pursuant to such returns or pursuant to any
assessment, except for any taxes and assessments of which the amount,
applicability or validity is currently being contested in good faith by
appropriate proceedings and with respect to which the Company has set aside on
its books adequate reserves. All such tax returns have been prepared in
compliance with all applicable laws and regulations. The amounts set up as
provisions for taxes (including provision for deferred income taxes) on the
Financial Statements are sufficient for the payment of all unpaid federal,
state, county and local taxes accrued for or applicable to all periods (or
portions thereof) ending on or before the Closing Date. Except as otherwise
disclosed in this Agreement or disclosed in Exhibit 3.22A or elsewhere in this
Agreement, there are no tax liens on any of the property of the Company, except
those with respect to taxes not yet due and payable and except for any taxes and
assessments of which the amount, applicability or validity is currently being
contested in good faith by appropriate proceedings and with respect to which the
Company has set aside on its books adequate reserves. Except as otherwise
disclosed in this Agreement or disclosed in Exhibit 3.22B, there are no pending
tax examinations of which Sellers have knowledge, nor has the Company received a
revenue agent's report asserting a tax deficiency. Sellers have no knowledge of
any basis for any taxing authority to claim or assess any amount of additional
taxes against the Company. No written claim has ever been made by a taxing
authority in a jurisdiction where the Company does not file tax returns that the
Company is or may be subject to taxes assessed by such jurisdiction. The Federal
income tax liability of the consolidated company of which the Company is a part
has been examined and reported on by the Internal Revenue Service (or closed by
applicable statutes) and satisfied for all fiscal years prior to and including
the fiscal year ended April 30, 1994. The Company has never filed a consent
under ss. 341(f) of the Internal Revenue Code of 1986, as amended (the "CODE"),
relating to collapsible corporations.
Copies of the Company's last two state and local income tax returns are
included as Exhibit 3.22C. No waivers of any statute of limitations relating to
the payment of taxes have been given by the Company and no waivers therefor have
been requested by the Internal Revenue Service from the Company. No extensions
have been obtained to file
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any tax return which has not heretofore been filed. The Company has withheld
from each payment made to employees of the Company the amount of all taxes
(including, but not limited to, federal, state and local income taxes and
Federal Insurance Contribution Act taxes) required to be withheld therefrom and
all amounts customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
have paid or will pay the same to, or have deposited or will deposit such
payment with, the proper tax receiving officers or other appropriate
authorities. The Company will not be required as a result of a change in method
of accounting for a taxable period ending on or prior to the Closing Date to
include any adjustment in taxable income for any taxable period (or portion
thereof) beginning after the Closing Date. The Company has not been a member of
an affiliated group (as defined in ss.1504(a) of the Code) other than one of
which Parent or Park was the common parent. The Company is not a party to or
bound by any tax sharing agreement and does not have any current or potential
contractual obligation to indemnify any other person with respect to taxes. The
Company is not and will not become obligated (under any contract entered into on
or before the Closing Date) to make any payments that will be non-deductible
under ss.280G of the Code. Prior to the Closing, the Company shall deliver to
Buyer a certification pursuant to Treasury Regulation ss.1.897-2 to the effect
that the Company is not a "United States real property holding corporation" as
defined in ss.897 of the Code.
3.23 Immigration Act. There are no violations or potential violations
of the Immigration Act by the Company. The Company has not been cited, fined,
served with a Notice of Intent to Fine or with a Cease and Desist Order, nor, to
Sellers' knowledge, has any action or administrative proceeding been initiated
or threatened against the Company by reason of any actual or alleged failure to
comply with the Immigration Act.
3.24 Program Compliance. To the best of Seller's knowledge, the Company
is not a party to any agreement or contract which violates the Medicare/Medicaid
Fraud and Abuse amendments (42 USC 1320a-7b(b)) or any regulations thereunder
adopted by the U.S. Department of Health and Human Services as currently in
force and interpreted.
3.25 Reimbursement Matters. Copies of all Medicare and Medicaid Cost
Reports filed by the Company either not audited by the fiscal intermediary or
audited and not formally settled are included as Exhibit 3.25A. A schedule
setting forth the audit status of such Medicare Cost Reports is set forth in
Exhibit 3.25B. The amounts set up as provisions for Medicare and Medicaid
adjustments and adjustments by any other third-party payors on the Financial
Statements are sufficient to pay any amounts for which the Company or any of its
subsidiaries may be liable. Sellers do not know of any basis for any claims
against the Company by any third-party payors other than routine Medicare and
Medicaid audit adjustments except as identified in Exhibit 3.25C or identified
in the Financial Statements or otherwise disclosed herein.
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3.26 Environmental Matters. Except as disclosed on (i) the
Asbestos/Lead Inspection Report prepared by Esesis dated May 9, 1995 and (ii) a
Phase I Environmental Report by TRA Environmental Consulting dated October 1994
or (iii) Exhibit 3.26:
(1) All material federal, state and local permits, licenses
and authorizations required for the current use and operation of the Real
Property have been obtained and are presently in effect.
(2) None of the Real Property has been used by the Company
(and to the actual knowledge of Sellers, by any other person or entity at any
time) to handle, treat, store or dispose of any hazardous or toxic waste or
substance, nor is any of the Real Property, including all soils, groundwaters
and surface waters located on, in or under the Real Property, known to be
contaminated with pollutants or other substances which contamination may give
rise to a clean-up obligation under any federal, state or local law, rule,
regulation or ordinance, including, but not limited to, the federal
Comprehensive Environmental Response, Compensation and Liability Act, 42 USC
9601 et seq, and the common law.
(3) To the best knowledge of Sellers, all underground tanks
located in, on or under any Real Property are in a state of good condition; have
not leaked; nor are presently leaking any of the contents which they have held
or presently hold.
(4) There are no outstanding violations or any consent decrees
entered against the Company regarding environmental and land use matters,
including, but not limited to, matters affecting the emission of air pollutants,
the discharge of water pollutants, the management of hazardous or toxic
substances or wastes, or noise as those laws are in force and applied and
interpreted by courts and regulatory authorities at the time of or prior to the
Closing Date.
(5) There are no violations threatened in writing with respect
to any federal, state or local environmental law, rule, regulation, ordinance,
permit, license or authorization, and there are no present discussions by the
Company with any federal, state or local governmental agency concerning any
alleged violation of environmental laws, rules, regulations, ordinances,
permits, licenses or authorizations as those laws are in force and applied and
interpreted by courts and regulatory authorities as the time of or prior to the
Closing Date.
(6) All operations conducted by the Company on the Real
Property have been and are in substantial compliance with all federal, state and
local statutes, rules, regulations, ordinances, permits, licenses and
authorizations relating to environmental compliance and control as those laws
are in force and applied and interpreted by courts and regulatory authorities at
the time of or prior to the Closing Date.
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3.27 ERISA.
(1) Except as listed in Exhibit 3.27, the Company does not
maintain any "employee benefit plans", as such term is defined under Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any other plan or similar arrangement, written or otherwise, which
provides any type of welfare benefit any of their directors, employees, or
former employees. Neither Sellers nor the Company maintains an "employee pension
benefit plan" as defined under ERISA.
(2) With respect to all of the plans listed in Exhibit 3.27,
the Company has delivered to Buyer true and exact copies of (i) all plan
documents embodying the provisions of such plans, together with all amendments
thereto, (ii) all summary plan descriptions and summaries of material
modifications pertaining thereto, (iii) copies of the most recent Internal
Revenue Service determination letters, if any, relating to such plans, (iv)
copies of the last three (3) years' Annual Report (Form 5500 series), as filed
with respect to such plans with the Internal Revenue Service, together with all
Schedules and attachments thereto, including, without limitation, copies of the
plan audits and/or actuarial valuations, (v) copies of all contract
administration agreements between Sellers or the Company and third party
administrators, (vi) copies of all participant-related forms currently in use in
connection with such plans including, without limitation, salary reduction
agreements and beneficiary designations and (vii) participant-specific claims
history for any "welfare benefit plan" (within the meaning of Section 3(1) of
ERISA that has been in existence during any part of the last three years.
(3) No "prohibited transaction", as such term is defined under
Section 4975(c) of the Code or under Section 406 of ERISA, and the respective
regulations thereunder, has occurred or is occurring with respect to any
"employee benefit plan" maintained by the Company or with respect to any trustee
or administrator thereof.
3.28 Employee Matters. Included as Exhibit 3.28A is a list of all
employees of the Company (or employees of Sellers based at the Hospital, if any)
whose total annual compensation (including bonuses) in the last 12 months was in
excess of $50,000, together with their annual rates of compensation and a list
of all people who were paid bonuses in the last twelve months plus the amount
thereof. No written employment agreement to which Sellers or the Company is a
party requires longer than a four-week notice before termination or agreement to
lend to or guarantee any loan to an employee or an agreement relating to a
bonus, severance pay or similar plan, agreement, arrangement or understanding.
Exhibit 3.28B is a list of employee benefits of Sellers and the Company. Exhibit
3.28C sets forth all ex-employees of Company utilizing or eligible to use
continuation coverage (health insurance). Exhibit 3.28D sets forth a complete
list of all of Company's full and part time employees who have been terminated
within ninety (90) days before Closing.
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3.29 Insurance; Malpractice. Exhibit 3.29A is a list of all policies of
fire, general liability, professional liability, product liability,
environmental impairment liability, worker's compensation, health and other
forms of insurance policies or binders currently in force insuring against risks
of the Company. All insurance policies or binders of the Company are valid,
outstanding and enforceable and will continue to be valid, binding and
enforceable following the consummation of the transactions contemplated by this
Agreement assuming all premiums which become due after the Closing Date are paid
in full when due. Exhibit 3.29B contains a description of the past malpractice
liability insurance coverage and claims history of the Company since January
1992.
3.30 Labor Matters. There are no collective bargaining agreements with
any labor union to which Sellers or the Company is a party or by which Sellers
or the Company is bound, and they are not currently negotiating with a labor
union. No employees of Sellers or the Company have ever petitioned for a
representation election. The Company is in compliance in all material respects
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and is not engaged in any
unfair labor practice. There is no known unfair labor practice complaint against
Sellers or the Company currently pending before the National Labor Relations
Board. There is no labor strike, dispute, slowdown or stoppage actually pending
or, to Sellers' knowledge, threatened against or affecting Sellers or the
Company. No employee grievance which might have a material adverse effect on
Sellers or the Company or the conduct of their businesses nor any arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no written claim therefor exists. The Company has not experienced any
employee strikes during the last three years. Sellers will advise Buyer of any
material labor dispute, petition for representative election or negotiations
with any labor union which shall arise before the Closing Date. Except as may be
required by ss.4980B of the Code or applicable state health care continuation
coverage statutes, the Company has no liability under any plan or arrangement
which provides welfare benefits, including medical and life insurance, to any
current or future retiree or terminated employee.
3.31 Certain Representations With Respect to the Hospital and the
Agency.
(1) The Hospital is licensed by the Texas Department of Health
as a general acute care hospital authorized to operate 60 beds in its existing
facilities located in Center, Texas. The Agency is licensed by the Texas
Department of Health as a home health agency. Except as set forth in Exhibit
3.31(1)A, the Hospital and the Agency are presently in compliance with all the
terms, conditions and provisions of such license. Exhibit 3.31(1)B is a copy of
such licenses.
(2) The Hospital and the Agency, as applicable, each has
current contractual arrangements with Blue Cross. Copies of its existing Blue
Cross contracts are included as Exhibit 3.31(2); and the Hospital and the
Agency, as applicable, each is
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presently in compliance with all of the material terms, conditions and
provisions of its Blue Cross contract.
(3) The Hospitals is duly accredited as a general hospital by
the Joint Commission on Healthcare Organizations of the American Medical and
American Hospital Associations and included as Exhibit 3.31(3) are copies of the
most recent Certificates of Accreditation. Exhibit 3.31(3) also includes a copy
of any other accreditations currently held by the Hospital.
(4) The Hospital and the Agency, as applicable, each is
qualified for participation in the Federal Medicare Program. A copy of the
Hospital's and the Agency's, as applicable, existing Medicare contract is
included as Exhibit 3.31(4). The Hospital and the Agency, as applicable, each is
presently in compliance with all of the material terms, conditions and
provisions of such contract pertaining to it.
(5) The Hospital and the Agency, as applicable, each is
qualified for participation in the Medicaid program in the State(s) of Texas. A
copy of the Hospital's and the Agency's, as applicable, existing Medicaid
contract is included as Exhibit 3.31(5). The Hospital and the Agency, as
applicable, each is presently in compliance with all the material terms,
conditions and provisions of such contract pertaining to it except as otherwise
disclosed in this Agreement.
(6) The Hospital is qualified for participation in the CHAMPUS
program. A copy of the Hospital's existing CHAMPUS contract is included as
Exhibit 3.31(6). The Hospital is presently in compliance with all the material
terms, conditions and provisions of such contract pertaining to it except as
otherwise disclosed in this Agreement.
(7) Included as Exhibit 3.31(7) is a copy of the fire marshal
reports with respect to the Hospital after January 1, 1992. Sellers have no
knowledge of any fire code violations at the Hospital.
(8) Except as set forth in Exhibits 3.31(8) and 3.31(9), the
Company has received no written notification that the Hospital is in violation
of local building codes, ordinances or zoning laws pertaining to it. The
buildings in which the Hospital is located comply with all local building codes,
ordinances and zoning codes.
(9) Included as Exhibit 3.31(9) is a copy of the most recent
survey of the Texas Department of Health for each of the Hospital and the
Agency, as applicable.
(10) Included as Exhibit 3.31(10) are the bylaws of the
medical staff of the Hospital.
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(11) Included as Exhibit 3.31(11) is a schedule of the current
status of the Hospital's medical staff, showing state licensure, DEA licensure
and professional liability insurance coverage, which schedule includes
expiration dates, of each physician.
(12) Included as Exhibit 3.31(12) is a description of all
previous Xxxx-Xxxxxx obligations of the Hospital, and any obligations under
similar governmental programs. As of the date hereof, no such obligations are
outstanding.
3.32 Books of Account; Reports. The books of account of the Company in
reasonable detail, accurately and fairly reflect its transactions and the
disposition of its assets. The Company has filed all reports and returns
required by any law or regulation to be filed by it other than those, the
failure to file will not have a material adverse effect on the business of the
Company or its subsidiaries.
3.33 Finders and Brokers. Seller shall be fully responsible for any
finders or brokers engaged by Seller, Shareholders, the Company or any officer
or director of Sellers, Shareholders or the Company in connection with the
transactions described herein.
3.34 Authority; Binding Effect. Sellers and Shareholders have the full
right, power and authority to execute, deliver and carry out the terms of this
Agreement and all documents and agreements necessary to give effect to the
provisions of this Agreement, to consummate the transactions contemplated
hereby, and to take all actions necessary, in their respective capacities, to
approve the actions of Sellers and Shareholders taken in connection with this
Agreement. The execution, delivery and consummation of this Agreement, and all
other agreements and documents executed in connection herewith by Sellers and
Shareholders, have been duly authorized by all necessary action on the part of
such parties. This Agreement and all other agreements and documents executed in
connection herewith by Sellers and/or Shareholders, upon due execution and
delivery thereof, shall constitute the valid and binding obligations of Sellers
and/or Shareholders, as the case may be, enforceable in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and by general principles of equity.
3.35 Consents and Approvals of Governmental Authorities. Except as set
forth in Exhibit 3.35, no characteristic of the Company or Sellers or of the
nature of their businesses or operations requires any consent, approval or
authorization of, or declaration, filing or registration with any governmental
or regulatory authority in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
3.36 Disclosure. No representations and warranties by Sellers in this
Agreement and no statement in this Agreement or any document or certificate
furnished or to be furnished to Buyer pursuant hereto knowingly contains or will
knowingly contain any untrue
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statement or knowingly omits or will knowingly omit to state a fact necessary in
order to make the statements contained therein not misleading.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Sellers and Shareholders to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer represents and warrants
to Sellers and Shareholders, which representations and warranties shall be true
and correct on the date hereof, and on Closing, as follows:
4.1 Organization, Qualification and Authority. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of its
state of organization. Buyer has the full corporate power and authority to own,
lease and operate its properties and assets as presently owned, leased and
operated and to carry on its business as it is now being conducted, and has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement. Buyer has the full right, power and authority
to execute, deliver and carry out the terms of this Agreement and all documents
and agreements necessary to give effect to the provisions of this Agreement and
to consummate the transactions contemplated on the part of Buyer hereby. The
execution, delivery and consummation of this Agreement and all other agreements
and documents executed in connection herewith by Buyer has been duly authorized
by all necessary action on the part of Buyer. No other action on the part of
Buyer or any other person or entity is necessary to authorize the execution,
delivery and consummation of this Agreement and all other agreements and
documents executed in connection herewith. This Agreement and all other
agreements and documents executed in connection herewith by Buyer, upon due
execution and delivery thereof shall constitute valid binding obligations of
Buyer, enforceable in accordance with their respective terms.
4.2 Absence of Default. The execution, delivery and consummation of
this Agreement and all other agreements and documents executed in connection
herewith by Buyer will not constitute a violation of, be in conflict with, or,
with or without the giving of notice or the passage of time, or both, result in
a breach of, constitute a default under, or create (or cause the acceleration of
the maturity of) any debt, indenture, obligation or liability or result in the
creation or imposition of any Lien upon the Stock or any of the Assets under:
(a) any term or provision of the Articles of Incorporation or Bylaws of Buyer;
(b) any contract, lease, agreement, indenture, mortgage, pledge, assignment,
permit, license, approval or other commitment to which Buyer is a party or by
which Buyer is bound; (c) any judgment, decree, order, regulation or rule of any
court or regulatory authority, or (d) any law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority or
arbitration tribunal to which Buyer is subject.
4.3 Finders and Brokers. Buyer shall be fully responsible for any
finders or brokers engaged by Buyer in connection with the transactions
described herein.
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4.4 Investment Representations. Buyer understands that the Stock has
not been registered under the federal Securities Act of 1933, as amended (the
"ACT") or under the securities laws of any jurisdiction, and that the Stock is
being sold under a claim of exemption from registration under the Act. Buyer
further understands that this transaction has not been reviewed by, passed on,
or submitted to the United States Securities and Exchange Commission or any
state agency. Buyer is aware that the Stock must be held indefinitely unless it
is subsequently registered or an exemption from such registration is available
and that the Company is under no obligation to register the Stock under the Act,
any state securities law, or any other applicable securities legislation. Buyer
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks in the acquisition of the Stock. The
Stock is being acquired by Buyer solely for Buyer's own account for investment,
with no present intention of making or participating in a distribution thereof
within the meaning of the Act.
ARTICLE V. COVENANTS OF PARTIES
5.1 Preservation of Company's Business and Assets. From the date hereof
until the Closing, Sellers and Shareholders shall use their best efforts and
shall do or cause to be done all such acts and things as may be necessary to
preserve, protect and maintain intact the Assets and the business and operation
of the Hospital as a going concern consistent with prior practice and to
preserve, protect and maintain for Buyer and Company the good will of the
Hospital's medical staff, suppliers, employees, clientele, patients, tenants and
others having business relations with Company. Shareholders and Sellers shall
use their best efforts to obtain all documents called for by this Agreement.
From and after the date of this Agreement until Closing, Sellers and
Shareholders shall cause the Company to maintain and keep the Assets in good
order and repair. Buyer, Sellers and Shareholders shall use best efforts to
facilitate the consummation of the transactions contemplated by this Agreement.
The Company shall make no dividend, distribution or extraordinary payment to any
Affiliate.
5.2 Absence of Material Change. From the date hereof until the Closing,
Shareholders and Sellers shall cause the Company to make no material adverse
change in the business and operation of the Hospital and in the utilization of
the Assets and shall not enter jointly or separately into any other significant
contract or commitment or any other transaction with respect thereto without the
prior written consent of Buyer, which shall not be unreasonably withheld.
5.3 Access to Books and Records.
(1) From the date hereof until the Closing, Shareholders and
Sellers shall cause the Company to give to Buyer and to Buyer's counsel,
accountants, and other representatives, reasonable access during normal business
hours (and at a time or times
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that will not disrupt the delivery of care to patients) to all of Company's
offices, properties, books, contracts, commitments, records and affairs relating
to the Stock and Assets, other than the Excluded Assets, so that Buyer may
inspect and audit them and shall furnish to Buyer a copy of all documents and
information concerning the properties and affairs of the Stock and the Assets as
Buyer may reasonably request. If any such books, records and materials are in
the custody of third parties, Shareholders and Sellers shall cause the Company
to direct such third parties to promptly provide them to Buyer. Copies of
documents furnished to Buyer by Company and Shareholders will be returned by
Buyer upon request if the transaction is not consummated. Shareholders and
Sellers shall cause the Company to provide Buyer promptly with interim financial
statements of Company and any other management reports as and when they are
available. Additionally, from the date hereof until Closing, Shareholders and
Sellers shall cause the Company to grant Buyer full access to Company's
personnel and computers as is reasonably necessary to assist Buyer.
(2) Following the Closing, Buyer shall cause the Company to
permit Shareholders' and Sellers' representatives (including, without
limitation, their counsel, accountants and auditors), during normal business
hours and upon appropriate advance notice, to (i) have reasonable access to, and
examine and make copies of all books and records of the Hospital, including all
medical records and medical charts of any patient admitted to the Hospital, to
the maximum extent permitted by law and (ii) have reasonable access without cost
to the Hospital's employees and their successors, relating to transactions or
events occurring prior to the Closing and Sellers' and Shareholders' obligations
under this Agreement, as long as such requests do not unreasonably interfere
with the operation of the Hospital. For a period of seven (7) years after the
Closing, Buyer agrees that, prior to the destruction or disposition of any such
books or records, Buyer shall provide not less than forty-five (45) days', nor
more than ninety (90) days' prior written notice to Shareholders and Sellers of
such proposed destruction or disposal. If Shareholders and Sellers desire to
obtain any of such documents, they may do so by notifying Buyer in writing prior
to the date scheduled for such destruction or disposal. In such event, Buyer
shall cause the Company to not destroy such documents and the parties shall then
promptly arrange for the delivery of such documents to Shareholders or Sellers,
their successors or assigns. All out-of-pocket costs associated with the
delivery of the requested documents shall be paid by Shareholders and Sellers.
(3) Following the Closing, Shareholders and Sellers shall
permit Buyer and its representatives (including, without limitation, their
counsel, accountants and auditors), during normal business hours, to have access
to, and examine and make copies of, all books and records relating to the
Company, which books and records are retained by Sellers or Shareholders, if
any, and which relate to transactions or events contemplated by this Agreement
occurring prior to the Closing, to the maximum extent permitted by law. For a
period of seven (7) years after the Closing, Shareholders and Sellers agree
that, prior to the destruction or disposition of any such books or records,
Shareholders shall provide
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not less than forty-five (45) days', nor more than ninety (90) days' prior
written notice to Buyer of such proposed destruction or disposal. If Buyer
desires to obtain any such documents, it may do so by notifying Shareholders and
Sellers in writing prior to the date scheduled for such destruction or disposal.
In such event, Shareholders shall not destroy such documents and the parties
shall then promptly arrange for the delivery of such documents to Buyer, its
successors or assigns. All out-of-pocket costs associated with the delivery of
the requested documents shall be paid by Buyer.
(4) Shareholders and Sellers shall cause or use reasonable
best efforts to cause Company's accounting firm to consent to the inclusion of
the Financial Statements in any registration statements, private placement
memoranda, and periodic reports, if any, necessary or appropriate in order to
enable Buyer or its affiliates to comply with any applicable registration or
reporting requirements of federal or state securities laws.
5.4 Consents. Sellers shall obtain all consents, approvals, exemptions
and authorizations of third parties, whether governmental or private, in form
and substance reasonably acceptable to Buyer, necessary to accomplish this
transaction without causing a default under the Contracts included in the
Continuing Liabilities or a material change in the terms thereof, or causing a
fee to be payable as a result of the consummation of the transactions, except
where the failure to obtain such consents, approvals, exemptions and
authorizations would not have a material adverse effect on the business or
prospects of the Company. In the event Sellers are unable to obtain any one or
more consents required pursuant to this section, Buyer may elect to terminate
this Agreement in its entirety.
5.5 Capital Expenditures. Sellers covenant that between the date hereof
and Closing, the Company shall not incur any obligations with respect to capital
expenditures in an amount greater than Ten Thousand Dollars ($10,000.00) unless
such capital expenditure has been previously approved in writing by Buyer.
5.6 Risk of Loss. In the event there is any damage to or loss of any of
the Assets (whether by fire, theft, vandalism or other cause or casualty),
between the date hereof and the Closing, the Purchase Price shall be reduced by
the amount necessary to repair the damage; provided, however, in the event of a
casualty which in Buyer's reasonable business judgment materially adversely
affects the business or operation or prospects of any of the Assets, Buyer may
elect either (i) to terminate this Agreement, or (ii) to close with a reduction
in the Purchase Price with respect to the damaged property determined as
follows. The reduction in Purchase Price shall be determined, based on the value
on the date of this Agreement of the Assets damaged or lost, the value of which
shall be determined by an MAI appraiser to be mutually selected and paid equally
by Sellers and Buyer. If Sellers and Buyer are unable to mutually select an
appraiser, then one MAI appraiser shall be selected and paid by Buyer and one
MAI appraiser shall be selected and paid by Sellers. If a party does not select
an appraiser as provided in the preceding sentence within ten (10) days after
the other party has given notice of the name of its
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appraiser, such party shall lose its right to appoint an appraiser. If the two
appraisers are selected by the parties as provided above, they shall meet
promptly to determine the reduction in Purchase Price. If they are unable to
agree within fifteen (15) days after the second appraiser has been selected,
they shall jointly select a third MAI appraiser. The reduction in Purchase Price
shall be set by agreement of any two (2) of the three (3) appraisals. If the two
(2) appraisers are unable to agree on a third appraiser within thirty (30) days
after the second appraiser has been selected, either party, by giving written
notice to the other, may apply to the American Arbitration Association for the
purpose of determining the reduction in Purchase Price. Sellers and Buyer shall
each bear one-half (1/2) of the cost of selecting the third appraiser and of
paying the third appraiser's fee. The third appraiser, however selected, shall
be a person who has not previously acted in any capacity for either party. If
any two (2) appraisers are unable to determine the reduction in Purchase Price
within fifteen (15) days after the third appraiser has been selected, then the
three (3) appraisals shall be added together and their total divided by three
(3); the resulting quotient shall be the reduction in Purchase Price. In
determining the reduction in Purchase Price, each appraiser shall take into
consideration, understand, and correctly employ those recognized techniques that
are necessary to produce a credible appraisal.
5.7 Condemnation. From the date hereof until the Closing, in the event
that any portion of the Assets becomes subject to or is threatened with any
condemnation or eminent domain proceedings which in Buyer's reasonable business
judgment materially adversely affects the businesses or operations or prospects
of any of the Assets, then Buyer may elect either (i) to terminate this
Agreement in its entirety or (ii) to close with respect to the Assets less that
part which is condemned or threatened to be condemned with a reduction in the
Purchase Price determined as provided in Section 5.6.
5.8 Good Faith. All parties shall act in good faith and use their
reasonable best efforts to satisfy all conditions to their respective
obligations to close.
5.9 Preserve Accuracy of Representations and Warranties. Sellers and
Shareholders shall refrain from and shall cause the Company to refrain from
taking any action which (and shall take all action and shall cause the Company
to take all action, the failure of which) would render any representations and
warranties contained in Article III hereof inaccurate as of Closing. Sellers and
Shareholders shall promptly notify Buyer of any lawsuits, claims, administrative
actions or other proceedings asserted or commenced against Shareholders,
Sellers, Company, their respective directors, officers, shareholders or
affiliates, or involving or affecting in any way the Assets or the business and
operation of the Assets. Shareholders shall promptly notify Buyer of any facts
or circumstances which come to their attention and which cause, or through the
passage of time may cause, any of Sellers' representations and warranties to be
untrue or misleading at any time from the date hereof to Closing.
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5.10 Maintain Books and Accounting Practices. From the date hereof
until the Closing, Sellers shall cause the Company to maintain the Company's
books of account in the usual, regular and ordinary manner in accordance with
generally accepted accounting principles consistently applied and on a basis
consistent with prior years and shall make no change in its accounting methods
or practices.
5.11 Indebtedness; Liens. From the date hereof until the Closing,
Sellers shall not and shall cause the Company to not create, incur, assume,
guarantee or otherwise become liable or obligated with respect to any
indebtedness for borrowed money, nor make any loan or advance to, or any
investment in, any person or entity, nor create any Lien in any of the Assets or
the Stock, without Buyer's prior written approval which will not be unreasonably
withheld. Until Closing, Sellers shall cause the Company to make all payments
required with respect to its long-term debt and fully and timely comply with and
satisfy all its obligations with respect thereto. Sellers shall cause the
Company to take all action necessary to repay, release and retire any loans or
other long-term liabilities and cause all collateral, obligations and security
against the Assets to be fully released to Buyer's satisfaction as contemplated
hereunder, and Buyer will cooperate with Company and Sellers in this regard.
5.12 Compliance with Laws and Regulatory Consents. From the date hereof
until the Closing, Sellers shall cause the Company to comply with all applicable
statutes, laws ordinances and regulations; keep, hold and maintain all
certificates, accreditations, participations, licenses, and other permits
necessary for the business and operation of the Hospital; to make and cause to
be made all filings and give and cause to be given all notices which may be
necessary or desirable on its part under all applicable laws and under its
contracts, agreements and commitments in order to consummate the transactions
contemplated by this Agreement; and shall use best efforts to consummate the
transactions contemplated by this Agreement and the agreements and documents to
be executed in connection with this Agreement as soon as is practicable.
5.13 No Merger or Consolidation. From the date hereof until the
Closing, Sellers and Shareholders shall not cause or permit the Company to merge
or consolidate with any other entity; nor solicit any inquiries, proposals or
offers relating to the Stock or disposition of the Assets; and shall promptly
notify Buyer orally, and confirm in writing, of all relevant details relating to
inquiries, proposals or offers which they may receive relating to any of the
matters referred to in this Section.
5.14 Maintain Insurance Coverage. From the date hereof until the
Closing, Sellers shall cause the Company to maintain and cause to be maintained
in full force and effect, without change of coverage or insurance carrier unless
approved of in writing by the Buyer (which approval shall not be unreasonably
withheld), the existing insurance on the Assets and the operations of the
Hospital and shall provide, upon request by Buyer, evidence
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satisfactory to Buyer that such insurance continues to be in effect and that all
premiums due have been paid.
At the Buyer's sole option, either (1) prior to Closing, Sellers shall
cause the Company to obtain, at Sellers' expense, "tail" insurance coverage,
converting its existing malpractice insurance to an "occurrence" basis policy
from Company's current carrier with professional and general liability coverages
in amounts equal to or greater than $1,000,000.00 per occurrence and
$3,000,000.00 aggregate and with deductible amounts satisfactory to Buyer; Buyer
shall be named as an additional insured on all insurance policies acquired or
maintained by Company pursuant to this Section 5.14 and Sellers will provide
Buyer reasonable evidence thereof; or (2) Buyer shall receive a credit of
$126,000 reducing the Purchase Price.
5.15 Medicare, Medicaid and Blue Cross Reporting. From the date hereof
until Closing, Sellers shall cause the Company to timely file or cause to be
filed all cost reports and other reports of every kind, nature or description,
required by law or by written or oral contract to be filed with respect to the
purchase of services by third party payors, including, but not limited to,
Medicare, Medicaid, and Blue Cross prior to Closing.
5.16 Current Return Filing. Sellers shall be responsible for the timely
preparation and filing of the federal, state and local income tax returns for
all the tax periods through the Closing and the payment of all taxes for such
periods.
5.17 Environmental Assessment; Additional Environmental Inspections.
Sellers and Shareholder shall permit and cause the Company to permit Buyer to
conduct an environmental assessment of the Real Property. Buyer will pay the
cost of such environmental assessment. If such environmental assessment
discloses the presence of any hazardous substances on the Real Property,
including hydrocarbons, in quantities or concentrations which require
remediation or removal under applicable laws, Buyer shall have the right to
conduct additional investigations, including the taking of soil and groundwater
samples. The environmental study showed the following asbestos clean-up was
needed (collectively the "ASBESTOS CLEAN-UP"). The Asbestos Clean-Up will be
conducted by a licensed contractor in accordance with State of Texas regulations
in such manner as to clean all asbestos containing materials and dust from the
hall area attic and from the suspended ceiling materials. This is to include
cleaning the pipes, wires, cables, etc., in the hall area ceiling area. The
clean-up will include areas that can be reasonably reached from the hall. The
contractor will not disturb the sprayed on asbestos containing material (fire
proofing) on the structural metal beams located in the attic area. Subsequent to
clean-up, and as a part of the Asbestos Clean-Up, evidence of satisfactory air
quality tests from samples taken in halls, offices, patient rooms, and from the
attic space above the ceiling shall be presented to the Buyer. Satisfactory air
quality is defined as less than 0.01 f/cc.
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Prior to Closing, Sellers shall obtain an estimate from a licensed
contractor for the Asbestos Clean-Up and provide a copy of the same to Buyer.
Prior to Closing, Sellers shall enter into a contract with the contractor
(providing a copy thereof to Buyer) for timely completion of the Asbestos
Clean-Up. Sellers shall timely and promptly (no later than ninety (90) days
after Closing) accomplish the Asbestos Clean-Up in compliance with all laws and
regulations and so as to meet air quality standards. To the extent that the
Asbestos Clean-Up is not completed by Closing, Buyer shall be entitled to
withhold from the Purchase Price two (2) times the amount remaining to be paid
to the contractor so as to induce Sellers compliance with the foregoing. When
the work is completed in accordance with the foregoing, Buyer shall pay to
Sellers the withhold amount net of any expenses or damages suffered by Buyer but
this shall not be Buyer's exclusive remedy.
Additionally, if the Environmental Study shows any hydrocarbons in
quantities or concentrations which require remediation or removal, then Sellers
shall follow the same procedure with respect to such hydrocarbons as is outlined
in the immediately foregoing paragraph regarding Asbestos Clean-Up.
5.18 Performance. Sellers, Shareholders and Buyer shall take
appropriate steps to satisfy their respective obligations, and the conditions to
Closing, including, if any, the obtaining of necessary contracts and application
for necessary licenses and permits.
ARTICLE VI. TITLE AND SURVEY
6.1 Title Report and Policy. At least ten (10) days prior to Closing,
Sellers shall deliver to Buyer, at Sellers' expense, a current TLTA preliminary
title commitment issued by Chicago Title Insurance Company, or other company
which is mutually acceptable to the parties, of the condition of title to each
tract of Real Property (the "COMMITMENT") for a title insurance policy in
current TLTA form (the "TITLE POLICY"). The Commitment and Title Policy shall
show that the Real Property is owned in fee simple or leasehold by Company, free
from all Liens, except the Permitted Liens, and the Commitment may also be
subject to such other items as Company can cause to be removed prior to or at
Closing. The Commitment and Title Policy will also contain (a) a so-called "tax
parcel endorsement" listing all of the tax parcel identification numbers
affecting the Real Property covered by the policy and that no other property is
included in the Real Property and that no other tax parcel identification
numbers affect such Real Property, (b) a contiguity and nonimputation
endorsement, (c) a 3.1 zoning endorsement or its equivalent as then in use by
the title company in form and substance acceptable to Buyer, (d) extended
coverage deleting all standard and general exceptions, (e) affirmative coverage
against any Xxxx-Xxxxxx lien, and (f) any additional endorsements or insurance
as Buyer may reasonably require. The Title Policy shall be in form acceptable to
Buyer and Buyer's lender and shall permit a simultaneous issue rate for the
lender's mortgage title policy with the cost of all special lender endorsements
required by Buyer's lender to be borne by Buyer. The title company shall provide
when delivering the Commitment one (1) copy of all recorded documents
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affecting title of the Real Property to Buyer. At Closing, there shall be issued
to the Company, at Sellers' expense, the Title Policy in the amount of the
Purchase Price which is allocated to the Real Property as improved. In the event
Buyer requests, and at Buyer's expense, the title Company shall issue a mortgage
title policy in an amount up to the Purchase Price which is allocated to the
Real Property as improved, at simultaneous issue rates.
6.2 Survey. At least ten (10) days prior to Closing, Sellers shall
cause to be delivered to Buyer, at Sellers' expense, an "as-built" survey of the
Real Property accompanied by a certificate of a registered surveyor licensed in
the State of Texas, certified as directed by Buyer in full TLTA form, sufficient
to cause the title company to delete the standard printed survey exception and
to issue the Title Policy free from any survey objections or exceptions
whatsoever (the "SURVEY"). The Survey shall show the boundaries of the Real
Property, separate legal descriptions and boundaries for the tracts, the
location and dimension of all improvements, the physical location of all
utilities, and the location of all streets, highways, alleys and public ways
crossing or abutting said Real Property, all dominant and servient easements
identified by recording information, all building lines and all buildings and
structures as are situated thereon as of said date. Said certificate shall state
that the improvements situated on the Real Property lie wholly within the
boundaries thereof and that no part thereof encroach upon or overhang any
easement or rights-of-way or upon the land of others; that such improvements are
wholly within the building restriction lines however established and do not
violate any use or other restriction contained in prior conveyances, zoning
ordinances or regulations; that no adjoining structure encroaches upon the Real
Property or upon any dominant easement appurtenant thereto; and that as of said
date there were no visible encroachments, overlaps, overhangs, easements,
improvements, utility lines or rights-of-way on, above or below the ground
except as shown on the survey plat. Said certificate shall also state whether or
not the Real Property or any part thereof lies within the boundaries of a local,
state or federal flood plain designation. The Survey shall also provide tax map
identification numbers, zoning information and other data sufficient for the
title company to provide the title insurance coverage and endorsements as
described in Section 6.1, above.
6.3 UCC Searches. UCC Financing Statement searches, local and central,
including fixtures, and federal and state tax lien and judgment searches, with
respect to Company, its affiliates and predecessors, including all "DBA's",
trade names and fictitious names of Company (including, but not limited to, all
names set forth in Exhibit 1.2(9)), from each of the jurisdictions in which such
entity does business or has done business within the preceding five (5) years
(the "UCC SEARCHES"), shall be obtained by Sellers, at Sellers' cost, and
delivered to Buyer at least ten (10) days prior to Closing. Copies shall be
included in Exhibit 3.8 attached hereto.
6.4 Defects and Cure. The Title Commitment and Policy and the Survey
and UCC Searches described in this Article are collectively referred to as
"TITLE EVIDENCE".
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Buyer shall notify Sellers as soon as reasonably possible of any Liens disclosed
in the Title Evidence which either: (a) do not constitute Permitted Liens, or
(b) even if they constitute Permitted Liens, if such matter adversely impacts
any of the Assets or the financeability thereof in the reasonable opinion of
Buyer (collectively "DEFECTS"). Sellers, at their sole cost and expense, may
elect to not cure the Defects and shall give written notice to Buyer within ten
(10) days of their receipt of Buyer's objections of their decision whereupon
Buyer may waive such Defects and close or may terminate this Agreement, which
election shall be made within ten (10) days of receipt of notice from Sellers.
If Sellers fail to timely give such notice, Sellers shall be deemed to have
elected not to cure the Defects, whereupon Buyer may waive such objection and
close or may terminate this Agreement, which election by Buyer shall be made
within thirty (30) days following notice of objection to Sellers. Upon
termination of this Agreement under the terms of this Section 6.4, no party to
this Agreement shall have any further claims under this Agreement against any
other party.
ARTICLE VII. CLOSING
7.1 Closing. If all of the conditions set forth in Articles VIII and IX
hereof are satisfied, the closing of the transaction described herein (the
"CLOSING") shall occur on April 30, 1997 at the offices of Xxxxxxx Xxxxxx Xxxx
Xxxxxxx & Manner, P.C., Nashville, Tennessee, and transfer of the Stock shall be
deemed to be effective as of 12:01 a.m. local time on May 1, 1997 (said date
sometimes being referred to as the "CLOSING DATE"). If all of the conditions to
Closing set forth in Articles VIII and IX hereof are not satisfied by April 30,
1997, the Closing shall occur at such time as all approvals and other conditions
to Closing set forth in Articles VIII and IX hereof are satisfied or at such
other time as the parties may mutually agree. On the day of the effectiveness of
Closing, Sellers shall receive immediately available funds in the amount of the
Purchase Price. In the event that the Purchase Price is received by Sellers
before or after the date of effectiveness of the Closing, the Purchase Price
shall be reduced or increased on a per diem basis, based on the Rate, as defined
in Section 12.2.
7.2 Termination. Notwithstanding anything in this Agreement to the
contrary, this Agreement and the obligations of the parties hereunder may be
terminated on or prior to Closing as follows:
(a) By Sellers (i) in the event the transactions contemplated
by this Agreement have been prohibited or enjoined by reason of any final
judgment, decree or order entered or issued by a court of competent jurisdiction
in litigation or proceedings involving either Buyer, Company, Sellers or
Shareholders; or (ii) in the event Buyer breaches or violates any material
provision of this Agreement or fails to perform any material covenant or
agreement to be performed by Buyer under the terms of this Agreement, and
Sellers have provided written notice thereof to Buyer giving reasonable
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specificity and Buyer has not cured same within a reasonable period of time and
such breach is not waived by Sellers in writing.
(b) By Buyer (i) in the event the transactions contemplated by
this Agreement have been prohibited or enjoined by reason of any final judgment,
decree or order entered or issued by a court of competent jurisdiction in
litigation or proceedings involving Buyer, Company, Sellers or Shareholders;
(ii) pursuant to Section 5.6 or 5.7; or (iii) in the event Sellers or
Shareholders breach or violate any material provision of this Agreement or fail
to perform any material covenant or agreement to be performed by Seller or
Shareholders under the terms of this Agreement and Buyer has provided written
notice thereof to Sellers and Shareholders giving reasonable specificity and
Sellers and Shareholders have not cured same within a reasonable period of time
and such breach is not waived by Buyer in writing.
(c) By Buyer or Sellers if the Closing hereunder shall not
have taken place by June 30, 1997, or, by such later date as shall be agreed
upon by the parties in writing, provided that a party shall not have the right
to terminate under this Section 7.2(c) if the conditions precedent to such
party's obligation to close have been fully satisfied and such party has failed
or refused to close after being requested in writing to close by the other
party.
ARTICLE VIII. SELLERS' CONDITIONS TO CLOSE
The obligations of Sellers under Section X of this Agreement are
subject to the satisfaction on or prior to Closing, of the following conditions
(which may be waived specifically in writing by Sellers in whole or in part):
8.1 Representations and Warranties True at Closing; Compliance with
Agreement. The representations and warranties of Buyer contained in this
Agreement (including the Exhibits hereto) or in any certificate or document
delivered pursuant hereto, shall be deemed to have been made again at the
Closing and shall then be true in all respects; and Buyer shall have performed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at Closing.
8.2 Regulatory Approvals. Buyer shall have obtained, or have reasonable
assurance that it will obtain (at its own cost), all consents, licenses,
permits, approvals, provider contracts, determinations from the Texas Department
of Health, if any, required for Buyer to acquire the Stock and continue the
operations of the Hospital.
8.3 No Action/Proceeding. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the transaction herein contemplated, and no governmental
agency, body or other
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entity shall have taken any other action or made any request of Company,
Sellers, Shareholders or Buyer as a result of which Sellers reasonably and in
good xxxxx xxxxx that to proceed with the transactions hereunder may constitute
a violation of law.
8.4 Compliance with Article XI. Buyer shall have made to Sellers and
Shareholders the deliveries required by Article XI hereof.
8.5 Approval by Counsel. All matters, proceedings, instruments and
documents required to carry out this Agreement or incidental thereto and all
other relevant legal matters shall have been approved at or before the Closing
by counsel for Sellers and Shareholders, which approval will not be unreasonably
withheld.
8.6 Order Prohibiting Transaction. No order shall have been entered in
any action or proceeding before any court or governmental agency, and no
preliminary or permanent injunction by any court shall have been issued which
would have the effect of (a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing consummation of such transactions,
or (c) imposing material limitations on the ability of Buyer effectively to
acquire and hold the Stock, or, in any case, to exercise rights of ownership
pursuant thereto. There shall have been no federal or state statute, rule or
regulation enacted or promulgated after the date of this Agreement that would
reasonably result, directly or indirectly, in any of the consequences referred
to in this Section.
8.7 Completion of Exhibits. All Exhibits to this Agreement will be
completed to the mutual satisfaction of the parties.
ARTICLE IX. BUYER'S CONDITIONS TO CLOSE
The obligations of Buyer under Article XI of this Agreement are subject
to the satisfaction, on or prior to Closing, of the following conditions (which
may be waived in writing by Buyer in whole or in part):
9.1 Representations and Warranties True at Closing; Compliance with
Agreement. The representations and warranties of Sellers contained in this
Agreement (including the Exhibits hereto) or in any certificate or document
delivered to Buyer pursuant hereto, shall be deemed to have been made again at
the Closing and shall then be true in all respects; and Sellers shall have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by it prior to or at Closing.
9.2 No Loss, Damage or Destruction. In the event there is any damage to
or loss of any of the Assets (whether by fire, theft, vandalism or other cause
or casualty), the terms of Sections 5.6 and 5.7 hereof shall have been complied
with.
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9.3 No Material Adverse Change. There shall have been no material
adverse change or change known to have a future material adverse affect on the
condition or prospects, financial or otherwise, of Company, the Assets or the
operations of the Hospital. There shall not be any material claims, litigation
or governmental proceedings pending or threatened against Company, Sellers or
Shareholders which would adversely affect the Company, the Hospital, the Assets
or the consummation of the transactions contemplated hereby at Closing.
9.4 Regulatory Approvals. Buyer shall have obtained or have reasonable
assurance of obtaining (at its own cost) (a) certification for participation in
the Medicaid programs of the State of Texas, and (b) certification from the
appropriate agency of the federal government for participation in the Medicare
program. Sellers shall have delivered to Buyer all consents, licenses, permits,
approvals, material provider contracts, or determinations required for Buyer to
acquire the Stock and operate the Hospital as contemplated hereunder.
9.5 No Action/Proceeding. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the transaction herein contemplated, and no governmental
agency, body or other entity shall have taken any other action or made any
request of Company, Sellers, Shareholders or Buyer as a result of which Buyer
reasonably and in good xxxxx xxxxx that to proceed with the transactions
hereunder may constitute a violation of law.
9.6 Compliance with Articles VI and X. The Sellers shall have made to
Buyer the deliveries required by Articles VI and X hereof within the time
periods required thereunder.
9.7 Inspection of Assets. Buyer shall have obtained environmental
engineering reports and mechanical and electrical engineering reports and
surveys (including those referred to in Section 5.17 above), if Buyer elects to
obtain them, at Buyer's cost, indicating a condition of the Assets acceptable to
Buyer. Buyer and its representatives shall have had and continue to have
reasonable rights of inspection of the Assets, and the results of Buyer's
inspection shall be acceptable to Buyer in Buyer's sole discretion.
9.8 Approval by Counsel. All matters, proceedings, instruments and
documents required to carry out this Agreement or incidental thereto and all
other relevant legal matters shall have been approved at or before the Closing
by counsel for Buyer, which approval will not be unreasonably withheld.
9.9 Order Prohibiting Transaction. No order shall have been entered in
any action or proceeding before any court or governmental agency, and no
preliminary or permanent injunction by any court shall have been issued which
would have the effect of (a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing consummation of such transactions,
or (c) imposing material limitations on the
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ability of Buyer effectively to acquire and hold the Stock or Assets, or, in any
case, to exercise rights of ownership pursuant thereto. There shall have been no
federal or state statute, rule or regulations enacted or promulgated after the
date of this Agreement that would reasonably result, directly or indirectly, in
any of the consequences referred to in this Section.
9.10 Satisfaction of Long-Term Liabilities. Sellers shall have repaid,
released and retired all loans and long-term liabilities and obtain a full
release of all collateral, obligations and security interests related to the
Assets and Stock to Buyer's satisfaction.
9.11 Consents. Shareholders shall have obtained all of the consents
described in Section 5.4.
9.12 Tail Insurance. Sellers shall deliver to Buyer evidence of tail
insurance coverage required by Section 5.14 hereof.
9.13 Due Diligence; Information. Shareholders and Sellers acknowledge
that this Agreement is being negotiated and entered into prior to Buyer's
receipt of all due diligence information and Buyer's analysis thereof,
including, but not limited, to Company liabilities, direct and contingent,
results of analysis of reimbursement methodologies and prior history, and the
condition of the Assets, cost report review, analysis of contracts and potential
agreements by which the property will be bound, exposure under disclosed suits
and claims, engineering reports, title reports, title commitments, surveys, and
other matters. The results of information obtained by Buyer as a result of its
due diligence efforts shall be acceptable to it, in Buyer's sole discretion.
9.14 Title Evidence. The Title Evidence shall have been delivered to
Buyer, in form satisfactory to Buyer, in accordance with Article VII hereof and
any Defects evidenced thereby shall be been cured to Buyer's satisfaction, in
its sole discretion, in accordance with Section 6.4 hereof.
9.15 Approvals. This Agreement and consummation of the transactions
contemplated hereunder shall have been approved by (i) the Board of Directors of
Buyer and (ii) the Buyer's primary lender, which approval or disapproval shall
be obtained within fourteen (14) business days after receipt of the
environmental survey referred to in Section 5.17.
9.16 Completion of Exhibits. All exhibits to this Agreement will be
completed to the mutual satisfaction of the parties.
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ARTICLE X. OBLIGATIONS OF SELLERS AT CLOSING
At Closing, Sellers shall deliver or cause to be delivered to Buyer, at
Shareholders' expense, the following in a form and substance reasonably
satisfactory to Buyer:
10.1 Documents Relating to Stock. Sellers shall execute, acknowledge,
deliver and cause to be executed, acknowledged and delivered to Buyer:
(1) Stock certificates, registered in the name of Park, duly
endorsed by Park or with stock powers attached, representing all of the Stock,
or, in lieu thereof, new stock certificates representing the Stock, in Buyer's
name, along with evidence of the cancellation of the certificates previously
representing the Stock.
(2) The resignation of each member of the Board of Directors
and each officer of Company effective as of the Closing.
10.2 Opinion of Counsel. Sellers shall deliver to Buyer and its lender
the favorable opinion of counsel for Sellers, Company and Shareholders, dated as
of Closing, in form and substance reasonably acceptable to Buyer and its lender.
10.3 Corporate Good Standing and Corporate Resolution. Sellers shall
deliver to Buyer a certificate of good standing from the Secretary of State of
Company's state of organization, and from each jurisdiction in which Company is
qualified to do business, dated the most recent practical date prior to Closing,
together with a certified copy of the Bylaws and Articles of Incorporation of
the Company, and a certified copy of the resolutions of the Board of Directors
and shareholders of each Seller, authorizing the execution, delivery and
consummation of this Agreement and the execution, delivery and consummation of
all other agreements and documents executed in connection herewith by them,
sufficient in form and content to meet the requirements of the law of the state
of such Seller's incorporation relevant to such transactions and certified by
officers of such Seller to be validly adopted and in full force and effect and
unamended as of Closing.
10.4 Closing Certificate. Sellers shall deliver to Buyer certificates
of an officer of each Seller, dated as of Closing, certifying that (a) each
covenant and obligation of Sellers has been complied with, and (b) each
representation and warranty of Sellers and Shareholders is true and correct on
the Closing as if made on and as of the Closing.
10.5 Third Party Consents. Sellers shall deliver to Buyer:
(1) All consents, approvals, releases, filings and
authorizations of third parties which are necessary in the reasonable opinion of
Buyer (in form reasonably acceptable to Buyer) for the execution, delivery and
consummation of this Agreement and the transactions contemplated herein;
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(2) All consents required by Section 5.4; and
(3) Estoppel and attornment letters, if needed, from tenants
of the Company in a form reasonably acceptable to Buyer as set forth in Exhibit
10.5(3) hereto.
10.6 Taxes and Other Payments. Sellers shall deliver to Buyer:
(1) Proof of cash payment directly to the tax authorities or
cash payment (or credit on the Purchase Price) to Buyer in the amount of all
real estate taxes and assessments which are a lien on the date of Closing
general and special.
(2) A certificate of non-foreign status signed by the
appropriate party and sufficient in form and substance to relieve Buyer of all
withholding obligations under Section 1445 of the Code. In the event that
Sellers cannot furnish such a certificate or is not entitled to rely upon such a
certificate under the provisions of Section 1445 and the regulations thereunder,
Sellers and Shareholders shall take and/or permit Buyer to take any and all
steps necessary to allow Buyer to satisfy the requirements of Section 1445.
(3) Receipt or other evidence from the Revenue Department of
the State of Texas showing that all liability for sales and use taxes and
employment taxes due from Company have been paid, in form reasonably acceptable
to Buyer if needed in Texas.
(4) Receipt or other evidence from the Texas Department of
Unemployment Security evidencing that all contributions under Texas unemployment
compensation law due from Company have been paid, in form reasonably acceptable
to Buyer if needed in Texas.
10.7 Releases and Other Matters.
(1) Release of all obligations described in Section 1.4(1).
Release of all Liens applicable to the Stock or Assets, except for Permitted
Liens, required after the completion of due diligence.
(2) Certificates of Occupancy with respect to each of the
completed and occupied structures which are included in the Assets in form and
substance reasonably acceptable to Buyer.
10.8 Notice to Third-Party Payors. Shareholders shall deliver executed
notices, as needed of the sale of the Stock, to be furnished to all third-party
payors in the form of Exhibit 10.8 hereto.
10.9 Tail Insurance. Sellers shall deliver evidence of tail insurance
coverage as required by Section 5.14 hereof.
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10.10 Additionally Requested Documents; Post Closing Assistance. At the
reasonable request of Buyer at Closing and at any time or from time to time
thereafter, Sellers and Shareholders shall cooperate with Buyer to put Buyer in
actual possession and operating control of the Hospital, execute and deliver
such further instruments of sale, conveyance, transfer and assignment, as Buyer
may reasonably request in order to effectively sell, convey, transfer and assign
the same to Buyer, to execute and deliver such further instruments and to take
such other actions as Buyer may reasonably request to release Buyer and Company
from any obligations or liabilities retained or assumed by Sellers or
Shareholders and to execute and deliver such further instruments and to
cooperate with Buyer as Buyer may reasonably request or to enable Buyer and
Company to obtain any necessary health care or regulatory certifications,
approvals, consents and licenses, accreditations or permits. After the Closing,
Sellers and Shareholders shall remit to Buyer any payments received by Sellers
or Shareholders with respect to Receivables of the Company. Any funds so
collected will be remitted to the Company within five (5) working days following
receipt of such payments.
10.11 Assumption Agreement. Sellers shall deliver to Buyer and Company
an Assumption Agreement evidencing that Sellers shall be jointly and severally
responsible for all obligations pertaining to past operations of the Hospital
other than the Continuing Liabilities, the form of which is set forth in Exhibit
10.11 hereto.
ARTICLE XI. OBLIGATIONS OF BUYER AT CLOSING
At Closing, Buyer shall deliver or cause to be delivered to Sellers the
following in a form and substance reasonably satisfactory to Sellers:
11.1 Purchase Price. Buyer shall deliver the Purchase Price to Sellers
in immediately available funds.
11.2 Corporate Good Standing and Certified Board Resolutions. Buyer
shall deliver to Sellers a certificate of good standing of the Secretary of
State of Buyer's state of organization dated the most recent practical date
prior to Closing together with a certified copy of the resolutions of the Board
of Directors of the Buyer authorizing the execution, delivery and consummation
of this Agreement and the execution, delivery and consummation of all other
agreements and documents executed in connection herewith by Buyer, and certified
by an officer of Buyer to be validly adopted and in full force and effect and
unamended as of Closing.
11.3 Opinion of Buyer's Counsel. Buyer shall deliver to Sellers a
favorable opinion of counsel for Buyer, dated as of Closing, in form and
substance reasonably acceptable to Sellers.
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11.4 Closing Certificate. Buyer shall deliver to Sellers a certificate
of an officer of the Buyer, dated as of Closing, certifying that (a) each
covenant and obligation of Buyer has been complied with and (b) each
representation and warranty of Buyer is true and correct on the Closing as if
made on and as of the Closing.
ARTICLE XII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
12.1 Survival. The covenants, obligations, representations and
warranties contained in this Agreement or any certificate or document delivered
pursuant hereto shall be deemed to be material and to have been relied upon by
the parties hereto notwithstanding any investigation prior to the Closing and
shall survive the date of Closing for a period of eighteen (18) months after
Closing, and shall not be merged into any deeds or other document delivered in
connection with the Closing; provided that claims relating to taxes shall
survive until sixty (60) days after the applicable statute of limitations
relating to the underlying claim. In the event that a claim has been timely
asserted but is still pending at the expiration of the survival period, such
claim shall not expire.
12.2 Indemnification by Sellers and Shareholders. Subject to the
provisions of Section 12.4 and Section 12.5, Sellers and Shareholders shall,
jointly and severally, promptly indemnify, defend and hold harmless (and upon
demand shall reimburse) Buyer, Company and the directors, officers,
stockholders, employees and agents of Buyer and, after Closing, the directors,
officers, stockholders, employees and agents of the Company (and with respect to
the ERISA matters, Buyer and all affiliated corporations within a controlled
group relationship with Buyer (as determined under Section 414 of the Internal
Revenue Code), and their employees) against any and all claims, actions,
demands, suits, proceedings, assessments, judgments, losses, costs, and expenses
(including reasonable costs of investigation, court costs, legal fees and
expenses incident to any of the foregoing or incurred in attempting to avoid the
same or oppose the imposition thereof) and other damages resulting from any of
the following (i) any inaccuracy in or any breach by Sellers of any of their
covenants, obligations, representations or warranties contained in this
Agreement or any certificate or document of Sellers delivered pursuant to this
Agreement, (ii) the ownership, licensing, operation, action, inaction or conduct
of Company, Hospital, or any of the Assets or any of Company's employees, agents
or independent contractors, relating to all periods of time prior to Closing,
except the Continuing Liabilities, (iii) the Excluded Liabilities, and (iv) any
other liabilities of Company not expressly retained by Company hereunder. Any
indemnification payment pursuant to the foregoing shall include interest at a
floating rate equal to three points over the prime rate of Citibank N.A., from
time to time, (the "RATE") from the date the loss, costs, expenses or damages
were incurred until the date of payment. The maximum aggregate liability of all
indemnitors for indemnification under this Section 12.2 shall not exceed the Cap
as defined in Section 12.5.
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12.3 Indemnification by Company and Buyer. Subject to the provisions of
Section 12.4, Company and Buyer shall promptly indemnify, defend, and hold
harmless (and upon demand shall reimburse) Sellers and Shareholders against any
and all claims, actions, demands, suits, proceedings, assessments, judgments,
losses, costs, and expenses (including reasonable costs of investigation, court
costs, legal fees and expenses incident to any of the foregoing or incurred in
attempting to avoid the same or oppose the imposition thereof) and other damages
resulting from any of the following: (i) any inaccuracy in or any breach by
Buyer of any of its covenants, obligations, representations or warranties
contained in this Agreement or any certificate or document of Buyer delivered
pursuant to this Agreement, and (ii) any claim which is brought or asserted by
any third party(s) against Sellers or any Shareholders for failure to pay or
perform any of the Continuing Liabilities. Any indemnification payment pursuant
to the foregoing shall include interest at the Rate from the date the loss,
costs, expenses or damages were incurred until the date of payment.
12.4 Procedure for Indemnification.
(1) Notice. Promptly after receipt of written or actual notice
of any action or claim (the "CLAIM") as to which it asserts a right to
indemnification, the party seeking indemnification hereunder (the "INDEMNITEE")
shall give written notice thereof (the "NOTICE") to the person from whom
indemnification is sought (the "INDEMNITOR"), provided that the failure of the
Indemnitee to give the Indemnitor prompt notice shall not relieve the Indemnitor
of any of its obligations hereunder, but may create a cause of action for breach
for damages directly attributable to such delay.
(2) Third Party Claims. (a) If any claim for indemnification
by Indemnitee arises out of a Claim by a person other than Indemnitee, the
Indemnitor shall be entitled to assume the defense thereof, by written notice to
the Indemnitee within fifteen (15) days after receipt of the notice. Indemnitor
shall thereupon undertake all steps or proceedings to defeat or compromise any
such Claim, including retaining counsel reasonably satisfactory to the
Indemnitee. Except as otherwise provided herein, all costs, fees and expenses
with respect to any such Claim shall be borne by Indemnitor. If the Indemnitor
assumes the defense of a Claim, it shall not settle such Claim unless such
settlement includes an unconditional release by the claimant of the Indemnitee,
reasonably satisfactory to the Indemnitee and except that Indemnitor shall not,
without the prior written consent of Indemnitee, directly or indirectly require
Indemnitee to take or refrain from taking any action, or make any public
statement, or consent to any settlement, which it reasonably considers to be
against its interest. Indemnitee shall have the right to participate at its own
expense, in such proceedings, but control of such proceedings shall remain
exclusively with Indemnitor.
(b) If the Indemnitor shall fail to notify the
Indemnitee of its desire to assume the defense of any such Claim within the
prescribed period of time, then the
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Indemnitee may assume such defense in such manner as it may deem appropriate,
and the Indemnitor shall be bound by any determinations made or any settlements
thereof effected by the Indemnitee. The Indemnitor shall be permitted, at its
own expense, to join in such defense and to employ its own counsel but control
of such proceedings shall remain exclusively with Indemnitee.
(c) Indemnitor and Indemnitee agree to make available
to each other, their counsel and other representatives, all information and
documents reasonably available to them reasonably requested by the other which
relate to any such Claim, and to render to each other such reasonable assistance
as may be reasonably requested in order to insure the proper and adequate
defense of such Claim, but any costs or expenses related thereto shall be borne
by Indemnitor; and provided that any failure (after written notice with
specificity and an opportunity to cure) shall not relieve the Indemnitor of any
of its obligations hereunder but may create a cause of action for breach for
damages directly attributable to such failure.
(3) Other Claims. In the event of any Claim other than those
provided for in subsection (2) hereof, Indemnitee shall be entitled to
indemnification hereunder as provided herein.
(4) Payment of Claims. Amounts payable by the Indemnitor to
the Indemnitee under this Section 12.4 shall be payable by the Indemnitor as
incurred by the Indemnitee. In the event, Indemnitor fails to pay, timely and
fully, any such amounts, Indemnitee may pay such amount. In such event,
Indemnitee may recover from the Indemnitor, in addition to the amount so paid,
plus (i) interest on the amount claimed at the Rate, and (ii) reasonable
attorneys' fees in connection with the enforcement of payment under this Section
12.4.
(5) No Set-Off. The Indemnitee's right to indemnification
under this Section 12.4 shall not be subject to set-off for any claim by the
Indemnitor against the Indemnitee.
(6) Claims by a Straddle Patient. Any claim by a patient
relating to professional negligence or similar matters involving a patient of
the Hospital served both prior to Closing and subsequent to Closing will be the
responsibility of either Buyer or Sellers and Shareholders in accordance with
the following guidelines: (i) if it is a claim in which clearly the incident
giving rise to liability arose prior to Closing, Sellers and Shareholders shall
respond to the loss and defense expenses; (ii) if it is a claim in which clearly
the incident giving rise to liability arose subsequent to Closing, Buyer shall
respond to the loss and defense expenses; and (iii) in the event that the
incident giving rise to liability as to time is not clear, Shareholders and
Sellers on the one hand and Buyer on the other, will jointly defend the case and
each will fully cooperate with the other in such defense. Once the case is
closed, if Buyer and Shareholders and Sellers cannot agree to
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the allocation of both indemnity and expenses, then the matter shall be
submitted to binding arbitration in accordance with the rules and procedures of
the American Arbitration Association.
12.5 Limitations on Obligations. Notwithstanding anything else to the
contrary, any liabilities and obligations under Sections 12.2 and 12.3 shall be
limited as follows:
(1) Maximum liability. The maximum aggregate liability of
Sellers and Shareholders in the aggregate, on the one hand, and Buyer, on the
other hand, for indemnification under Sections 12.2 and 12.3 of this Agreement
shall be equal to One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
"CAP"). Notwithstanding the foregoing, the Cap shall not be applicable if the
indemnification claim is the result of a claim under Excluded Liabilities,
actual fraud or a purchase price adjustment pursuant to Article II.
(2) Escrow Upon Certain Conditions. In the event that prior to
eighteen (18) months after Closing a Sale Event, as later defined, occurs then,
Sellers and Shareholders, jointly and severally, agree that they shall escrow
One Million Five Hundred Thousand Dollars ($1,500,000.00) pursuant to the terms
of the Escrow Agreement attached hereto as Exhibit 12.5 (the "ESCROW
AGREEMENT"). The Escrow Agreement shall be to fund indemnification obligations
pursuant to Section 12.2 and shall expire with respect to all unasserted claims
upon eighteen (18) months after Closing; provided, however, with respect to any
claims which were timely asserted but are still pending at the expiration of the
eighteen (18) months period, money shall continue to be held in escrow in the
amount of Buyers reasonable estimate of the claims until resolution of the
pending claims. Additionally, the Escrow Agreement will provide that in the
event that a Sale Event occurs after the eighteen (18) months, but while a claim
is still pending but has not been paid, the escrow described in the foregoing
sentence shall be made. A "SALE EVENT" shall have occurred in the event Parent
or Park sells all or substantially all of its assets or Parent sells or
otherwise conveys a controlling interest in Park, or Park issues additional
stock to any entity or person other than Parent so that there is a change in
control of Park, or Park no longer owns and operates all of the interest in
Lincoln Trail Behavioral Health System, Radcliff, Kentucky. A "controlling
interest" or "change in control" shall mean 51% or more of the voting equity of
Park no longer is beneficially and legally owned by Parent. Sellers and
Shareholders each covenant to not vote for and prohibit a Sale Event from
occurring unless simultaneous therewith or prior thereto the escrow has been
established and funded as provided above.
12.6 Company not Liable. Notwithstanding anything to the contrary
contained in this Agreement, the indemnification obligations under Section 12.2
are solely that of Shareholders and Sellers, and are not the obligations of the
Company. Shareholders and Sellers will not seek contribution, recourse or
redress of any kind against the Company in
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connection with such indemnification obligations whether pursuant to corporate
law or contractual rights of Sellers and Shareholders.
12.7 Assignment by Buyer. No consent shall be required for any
assignment or reassignment of the rights of Buyer under this Article XII.
ARTICLE XIII. RESTRICTIVE COVENANTS
13.1 Covenant Not to Compete. Shareholders and Sellers hereby covenant
and agree with Buyer that during the "NONCOMPETE PERIOD" within the "NONCOMPETE
AREA" they shall not directly or indirectly without prior written consent of
Buyer, (a) acquire, lease, manage, consult for, finance or own any part of (as
member, shareholder or partner) any health care facility which provides any
services similar to the services provided by the Hospital, including general
surgical, acute care, and diagnostic services, including laboratory work related
thereto, or (b) solicit for employment or employ any person who at Closing
remained an employee of Company, or (c) disrupt or attempt to disrupt any past,
present or reasonably foreseeable future relationship, contractual or otherwise
between Buyer, on the one hand, and any physician, physician group, or other
healthcare provider with whom Buyer contracts in connection with the Hospital,
on the other hand. The "NONCOMPETE PERIOD" shall commence at the Closing and
terminate on the second anniversary thereof. The "NONCOMPETE AREA" shall mean
the following counties in Texas: Nacogdoches, Panola, Xxxx, San Xxxxxxxxx,
Xxxxxx and Xxxxxx, and the following counties in Louisiana: DeSoto and Sabine.
Ownership of less than five percent (5%) of the stock of a publicly held company
shall not be deemed a breach of this covenant.
13.2 Enforceability. In the event of a breach of Section 13.1 hereof,
Shareholders and Sellers recognize that monetary damages shall be inadequate to
compensate Company and Buyer and Company and Buyer shall be entitled, without
the posting of a bond, to an injunction restraining such breach, with the costs
including attorneys fees of securing such injunction to be borne by Shareholders
and Sellers. Nothing herein contained shall be construed as prohibiting Buyer
from pursuing any other remedy available to it for such breach or threatened
breach.
All parties hereto hereby acknowledge the necessity of protection
against the competition of Shareholders and Sellers and that the nature and
scope of such protection has been carefully considered by the parties. The
period provided and the area covered are expressly represented and agreed to be
fair, reasonable and necessary. The consideration provided for herein is deemed
to be sufficient and adequate to compensate for agreeing to the restrictions
contained in Section 13.1 hereof. If, however, any court determines that the
foregoing restrictions are not reasonable, such restrictions shall be modified,
rewritten or interpreted to include as much of their nature and scope as will
render them enforceable.
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ARTICLE XIV. MISCELLANEOUS
14.1 Assignment. No party may assign its rights or obligations under
this Agreement without the express written consent of the other party. No
assignment shall relieve the assignor of any liability or obligation hereunder.
14.2 Other Expenses. Except as otherwise provided in this Agreement,
each party shall pay all of their own expenses in connection with the
negotiation, execution, and/or implementation of the transactions contemplated
by this Agreement. Buyer shall pay the cost of any engineering fees,
mechanical/electrical/structural and environmental reports. Sellers shall be
solely responsible for the payment of any fee to any finder, broker, or similar
person engaged by Shareholders, Sellers or Company in connection with the
transactions contemplated by this Agreement. Buyer is solely responsible for the
payment of any fee to any finder, broker or similar person engaged by Buyer in
connection with the transactions contemplated by this Agreement. All applicable
transfer fees, state and local taxes, or other fees and costs due to any
governmental entity as a result of the transactions contemplated in this
Agreement shall be borne by Sellers.
14.3 Notices. All notices, requests, demands, waivers 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: (a) if delivered
personally or sent by facsimile, on the date received, (b) if delivered by
overnight courier, on the date due to be delivered by such courier, and (c) if
mailed, five (5) days after mailing with postage prepaid. Any such notice shall
be sent as follows:
To Shareholders or Sellers, or to the Company prior to Closing:
Southeastern Hospital Corporation
000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. XxXxxx
(000) 000-0000; (000) 000-0000 (Fax)
with a copy to:
Boult, Cummings, Xxxxxxx & Xxxxx
0000 XxxxxxxXxxx Xxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
(000) 000-0000; (000) 000-0000 (Fax)
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To Buyer, or to the Company after Closing:
New American Healthcare Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 000
P. O. Box 3689
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. XxXxxxxx, Xx., Sr. Vice President
(000) 000-0000; (000) 000-0000 (Fax)
with a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx XX, Esq.
(000) 000-0000; (000) 000-0000 (Fax)
14.4 Controlling Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Tennessee, without
giving effect to provisions thereof regarding conflicts of laws. Any action or
claim relating to or arising out of this Agreement may be brought in any
appropriate state or federal court in Davidson County, Tennessee, and each party
hereto irrevocably consents to personal jurisdiction in any such court for such
action or claim.
14.5 Headings. Any table of contents and paragraph headings in this
Agreement are for convenience of reference only and shall not be considered or
referred to in resolving questions of interpretation.
14.6 Benefit. Subject to Section 14.1 hereof, this Agreement shall be
binding upon and shall inure to the exclusive benefit of the respective heirs,
legal representatives, successors and assigns of the parties hereto.
14.7 Partial Invalidity. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
14.8 Waiver. Neither the failure nor any delay on the part of any party
hereto in exercising any rights, power or remedy hereunder shall operate as a
waiver thereof, or of any other right, power or remedy; nor shall any single or
partial exercise of any right, power or remedy preclude any further or other
exercise thereof, or the exercise of any other right, power or remedy.
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14.9 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
14.10 Interpretation. All pronouns and any variation thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or entity, or the context, may require. Further, it is
acknowledged by the parties that this Agreement including exhibits have
undergone several drafts with the negotiated suggestions of both; and,
therefore, no presumptions shall arise favoring either party by virtue of the
authorship of any of its provisions or the changes made through revisions.
14.11 Entire Agreement. This Agreement, including the Exhibits,
constitutes the entire agreement between the parties hereto with regard to the
matters contained herein and it is understood and agreed that all previous
undertakings, negotiations and agreements between the parties are merged herein.
This Agreement may not be modified orally, but only by an agreement in writing
signed by Buyer, Shareholders or after Closing by Shareholders and Buyer. Except
as expressly provided herein, no waiver of any of the provisions of this
Agreement shall be valid unless it is in writing and signed by the party against
which it is sought to be enforced.
14.12 Legal Fees and Costs. Except as otherwise provided herein, each
party hereto shall pay its own expenses, including, without limitation, legal
and accounting fees and expenses, incident to its negotiation and preparation of
this Agreement and to its performance and compliance with the provisions
contained herein. In the event that any part hereto elects to incur legal
expenses to enforce or interpret any provision of this Agreement, the prevailing
party will be entitled to recover legal expenses, including without limitation,
attorneys' fees, costs and necessary disbursements, in addition to any other
relief to which such party shall be entitled.
14.13 Exclusivity. Buyer contemplates the expenditure of substantial
sums of time and money in connection with legal, accounting, financial, and due
diligence work to be performed in conjunction with the transactions contemplated
under this Agreement. To induce Buyer to proceed with the transactions,
Shareholders and Sellers shall not, and shall cause the Company to not directly
or indirectly, without Buyer's prior written consent, initiate or hold
discussions with any person or entity concerning a purchase, affiliation, or
lease of all or a material part of the Assets, directly or indirectly, whether
by sale of stock, merger, consolidation, sale or lease of material assets,
affiliation, joint venture, or other material transaction for the while this
Agreement is in effect. Shareholders and Sellers will promptly notify Buyer by
telephone and confirm in writing via fax, if any such discussions or
negotiations are sought to be initiated with, or any such proposal or possible
proposal is received directly or indirectly, by Company, Sellers or
Shareholders. In the event Company, Sellers or Shareholders receive an
unsolicited offer related to a type of transaction described in this paragraph,
Company and Shareholders shall promptly inform
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the person making such unsolicited offer of the existence of its obligations
under this Section 14.13, and, subject to legal and fiduciary obligations,
Shareholders and Sellers shall reject and cause the Company to reject such offer
and promptly notify Buyer thereof.
14.14 Completion of Exhibits. The Exhibits have not been prepared in
their final form at the time of execution of this Agreement. Input by Sellers
and Buyer is necessary to finalize the Exhibits and each party agrees to use its
reasonable best efforts to finalize them. The parties will promptly determine
which party will submit drafts of exhibits to the other party. The parties will
work diligently and use reasonable efforts to timely submit drafts of exhibits
for which they are responsible. Submission of Exhibits shall be in writing
delivered via same day courier to the other party's counsel. Either party may
supplement the Exhibits by like written delivery. The submitted Exhibits and
supplements shall be deemed accepted and thereby become an Exhibit to this
Agreement unless: (i) such proposed Exhibit would, individually or in aggregate
with the effect of items disclosed in other Exhibits, constitute a material
adverse effect on the receiving party in the receiving party's sole discretion,
and (ii) within five (5) business days after receipt of such proposed Exhibit,
such receiving party provides written notice to opposing counsel reasonably
detailing the objection thereof and changes in such proposed Exhibit which would
make the same acceptable. Should the parties not be able to resolve written
objections within ten (10) business days thereafter, then either party may
withdraw from this Agreement and terminate it without any obligation or
liability of any sort and this Agreement shall be treated as never having been
executed or delivered. Acceptance of Exhibits (e.g., list of lawsuits in the
supplemental letter referred to in Section 3.20) shall not mean that the
underlying information (e.g., understanding claim, likelihood of successful
defense and adequacy of insurance coverage) is acceptable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"BUYER":
NEW AMERICAN HEALTHCARE
CORPORATION
By:
---------------------------------------
Title:
------------------------------------
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"PARENT":
SOUTHEASTERN HOSPITAL CORPORATION
By:
---------------------------------------
Title:
------------------------------------
"PARK":
PARK HEALTHCARE COMPANY
By:
---------------------------------------
Title:
------------------------------------
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"SHAREHOLDERS":
-------------------------------------------
XXXXX X. XXXXXX
-------------------------------------------
XXXX XXXXXXXXX
-------------------------------------------
X. X. XXXXXXXXX
-------------------------------------------
XXXXXXX X. XXXXXX
-------------------------------------------
XXX X. XXXXXX
-------------------------------------------
XXXX X. XXXXXXX
-------------------------------------------
XXXXX X. XXXXXX
-------------------------------------------
XXXXXXX X. XXXXXX
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