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Exhibit 10.9
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT dated as of December 19, 1995 by and among New
American Healthcare Corporation, a Tennessee corporation (the "Company"), Welsh,
Carson, Xxxxxxxx & Xxxxx VII, L.P. ("WCAS VII") and the several parties named in
Schedule I hereto (collectively, the "WCAS Stockholders"), and the several
parties named in Schedule II hereto (collectively, the "Founder Stockholders").
The WCAS Stockholders and the Founder Stockholders are herein collectively
referred to as the "Stockholders" and individually as a "Stockholder".
WHEREAS, the Company has entered into a Securities Purchase Agreement dated
as of December 19, 1995 (the "Purchase Agreement"), with the Stockholders
pursuant to which (i) the WCAS Stockholders and certain of the Founder
Stockholders will on the Initial Closing Date (as defined therein) purchase
5,026,500 shares of the Company's Common Stock, $0.01 par value (the "Common
Stock"), and (ii) the WCAS Stockholders and certain of the Founder Stockholders
may in the future purchase (a) up to 250,000 shares of the Company's Series A
Non-Convertible Cumulative Preferred Stock, $0.01 par value (the "Series A
Preferred Stock"), and (b) up to 235,000 shares of the Company's Series B
Convertible Preferred Stock, $0.01 par value (the "Series B Preferred Stock"
and, together with the Series A Preferred Stock, the "Preferred Stock");
WHEREAS, If all of the Preferred Stock were to be purchased pursuant to the
Purchase Agreement, the WCAS Stockholders and the Founder Stockholders would own
the respective numbers of shares of Common Stock, Series A Preferred Stock and
Series B Preferred Stock appearing opposite their respective names in Schedules
I and II hereto; and
WHEREAS, all of the Stockholders believe that it is in the best interests
of the Company that certain arrangements be made among themselves with respect
to the election of directors of the Company and with respect to certain other
matters;
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Designated Directors. (a) For the period specified in clause (c)
below, the Stockholders will vote all shares of voting capital stock of the
Company held by them and will otherwise use their best efforts to cause to be
elected to the Board of Directors of the Company up to a maximum of seven
individuals, of whom (i) so long as the Founder Stockholders, in the aggregate,
own at least 50% of the Common Stock owned by them on the First Closing Date (as
defined in the Purchase Agreement) or subsequently acquired by them pursuant to
the Purchase Agreement (treating for purposes of such computation each holder
of Series B Preferred Stock as the holder of the number of shares of
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Common Stock at the time issuable upon conversion of such shares), two shall be
designated by a majority in interest (based upon voting power) of the Founder
stockholders (the "Founder Stockholders Designees"), Xxxxxx X. Xxxxxx and Xxxx
X. XxXxxxxx, Xx. being initially so designated, (ii) so long as the WCAS
Stockholders, in the aggregate, own at least 50% of the Common Stock acquired by
them on the First Closing Date or subsequently acquired by them pursuant to the
Purchase Agreement (treating for purposes of such computation each holder of
Series B Preferred Stock as the holder of the number of shares of Common Stock
at the time issuable upon conversion of such shares), two shall be designated by
a majority in interest (based upon voting power) of the WCAS Stockholders (the
"WCAS Stockholders Designees"), Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxxx being
initially so designated, and (iii) up to three shall be individuals (the "Mutual
Designees") mutually agreed upon and nominated for shareholder approval by the
Founder Stockholders Designees and the WCAS Stockholders Designees. No Mutual
Designee may be nominated at a board meeting unless there are an equal number of
Founder Stockholder Designees and WCAS Stockholder Designees present. The
Company shall pay all reasonable out-of-pocket expenses incurred by any such
individual or individuals in attending meetings of the Company's Board of
Directors and committee meetings thereof.
(b) A majority in interest (based upon voting power) of the WCAS
Stockholders or the Founder Stockholders, as the case may be, may from time to
time choose any or all of the persons who are to be WCAS Stockholder Designees
or Founders Stockholder Designees, as the case may be, and shall have the right
to cause the removal or replacement of any of their respective designees. If any
WCAS Stockholder Designee or Founder Stockholder Designee, as the case may be,
shall cease to be a member of the Board of Directors of the Company by reason of
resignation, death, disability or removal or otherwise, then a majority in
interest (based upon voting power) of the WCAS Stockholders or the Founding
Stockholders, as the case may be, shall designate a successor to such person as
a WCAS Stockholder Designee or Founder Stockholder Designee, as the case may be.
A majority of interest (based upon voting power) of either the WCAS Stockholders
or the Founder Stockholders shall have the right, in their sole discretion, to
cause the removal of any Mutual Designee. If any Mutual Designee shall cease to
be a member of the Board of Directors of the Company by reason of resignation,
death, disability or removal or otherwise, then any successor Director shall be
nominated and appointed only pursuant to Section l(a) hereof. The Company, the
Founder Stockholders and the WCAS Stockholders agree that, once elected, no
Founder Stockholder Designee or WCAS Stockholder Designee shall be removed
without the approval of a majority of interest (based upon voting power) of the
Founder Stockholders or the WCAS Stockholders, as the case may be.
(c) The obligation of the Founder Stockholders and the WCAS Stockholders
contained in this Section 1 shall terminate on
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the earlier to occur of (i) the fifth anniversary of this Agreement and an
Initial Public Offering. The term "Initial Public Offering" means the earlier to
occur of (x) a firm commitment public offering of Common Stock of the Company
registered pursuant to the Securities Act of 1933 and the rules and regulations
of the Securities and Exchange Commission thereunder (the "Securities Act") (A)
at a price to the public of not less than $10.00 per share and (B) resulting in
proceeds to the Company of not less than $20,000,000, after deduction of
underwriting discounts and commissions but before deduction of other expenses of
issuance, or (y) the merger or consolidation by the Company with or into a
company which has capital stock which is publicly traded and which throughout
the Relevant Time Period (as hereinafter defined) has a public float of at least
$30,000,000 and which merger or consolidation is on terms whereby shares of
Common Stock are exchanged for publicly traded stock, and the fair market value
of the consideration to be received for each share of Common Stock is equal to
or greater than $10.00. The term "Relevant Time Period" means the ten
consecutive trading days commencing two trading days after the public
announcement of the terms of the proposed merger or consolidation.
SECTION 2. Change of Control: Amendment of By-Laws or Charter. In addition
to any other requirements imposed by applicable law or the terms of the
Preferred Stock, until the earlier to occur of the fifth anniversary of this
Agreement and an Initial Public Offering, provided that the WCAS Stockholders
(in the aggregate) and the Founders (in the aggregate) own at least 50% of the
Common Stock of the Company owned by them on the First Closing Date or
subsequently acquired by them pursuant to the Purchase Agreement (treating for
purposes of each such computation each holder of Series B Preferred Stock as the
holder of the number of shares of Common Stock at the time then issuable upon
conversion of such shares), the approval of both of (i) not less than a majority
in interest (based upon voting power) of the WCAS Stockholders and their
successors (if any) and (ii) one or more of the Founder Stockholders owning, in
the aggregate, at least two percent (2.0%) of the outstanding Common Stock of
the Company (treating for purposes of such computation each holder of Series B
Preferred Stock as the holder of the number of shares of Common Stock at the
time issuable upon conversion of such shares) shall be required to approve the
following:
(a) a transaction whereby the Company shall merge or consolidate with or
into another entity (other than the consolidation or merger of a wholly-owned
subsidiary with or into the Company and other than a merger involving the
Company in which the holders of at least 51% of the outstanding Common Stock, on
fully diluted basis, immediately prior to such merger hold at least 51% of the
outstanding capital stock of the surviving entity in any such merger or
consolidation, on a fully diluted basis in substantially the same proportions,
immediately after the merger);
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(b) the sale of more than 33% of the Company's assets; and
(c) any amendment of the Charter or By-laws of the Company.
SECTION 3. Notice of Certain Sales. To the extent that WCAS VII determines,
in its sole discretion, that so notifying the Founder Stockholders is
practicable under the circumstances and will not in any way be adverse to its
interests, it intends to endeavor to notify the Founder Stockholders of its
intention to sell any of the shares of Common Stock or Preferred Stock owned by
it for the purpose of allowing the Founder Stockholders the opportunity to
consider the acquisition of all such shares, it being understood that WCAS VII
reserves the right to sell any or all of the shares of Common or Preferred Stock
owned by it to any person and at any time and under any terms and conditions as
it shall determine in its sole discretion to be in its own best interest. This
Section 3 shall not be deemed to create a contractual obligation on the part of
WCAS VII or right of first refusal requiring WCAS VII to offer the shares to the
Founder Stockholders.
SECTION 4. Co-Sale Rights. (a) If WCAS VII proposes to sell, exchange or
otherwise dispose of (other than in a manner permitted by Section 4(e) below)
any shares of Common Stock or Series B Preferred Stock held by it in a single
transaction or in a series of related transactions and the effect of such sale
would be to reduce or further reduce the aggregate number of shares of Common
Stock (assuming for this purpose that all shares of Series B Preferred Stock
owned by WCAS VII has been converted into Common Stock) then held by WCAS VII to
less than 66 2/3% of the sum of (i) the aggregate number of shares of Common
Stock purchased by WCAS VII on the Initial Closing Date (as defined in the
Purchase Agreement) and (ii) the aggregate number of shares Common Stock into
which the aggregate number of shares of Series B Preferred Stock theretofore
purchased by WCAS VII pursuant to the Purchase Agreement have been or could be
converted, WCAS VII shall give written notice (a "Co-Sale Notice") to the
Company setting forth the terms and conditions of such proposed transaction.
Upon receipt of such Co-Sale Notice, the Company shall promptly forward a copy
thereof to each Founder Stockholder that then holds shares of Common Stock or
Series B Preferred Stock (collectively, the "Eligible Founders"), together with
a statement setting forth (i) the total number of shares of Common Stock then
owned by all Eligible Founders (treating all Series B Preferred Stock owned by
them as having been converted) and (ii) the Group Total (as defined in Section
4(b) below).
(b) The Eligible Founders shall have the right, exercisable by any Eligible
Founder wishing to participate therein only by written notice from such Eligible
Founder to the Company (within ten (10) business days after receipt of any
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Co-Sale Notice) of such Founder's election to sell (on the terms and conditions
set forth in such Co-Sale Notice), its pro rata portion of the aggregate number
of shares of Common Stock or Series B Preferred Stock or both, as the case may
be, to be sold by all Eligible Founders at that time (the "Group Total"), such
amount to be equal to the aggregate number of shares of Common Stock or Series B
Preferred Stock or both, as the case may be, to be sold multiplied by a
fraction, the numerator of which is the aggregate number of shares of Common
Stock or Series B Preferred Stock or both, as the case may be, then owned by all
Eligible Founders and the denominator of which is the aggregate number of shares
of Common Stock or Series B Preferred Stock or both, as the case may be, then
owned by the Eligible Founders and WCAS VII. Each Eligible Founder shall be
entitled to elect to sell a number of shares of the applicable security (its
"Shares") obtained by multiplying the Group Total by a fraction, the numerator
of which is the number of shares of such security owned by such Eligible Founder
and the denominator of which is the aggregate number of shares of such security
owned by all Eligible Founders. The failure by an Eligible Founder to sell
shares pursuant to the co-sale rights hereunder on any occasion shall not affect
its right to sell shares pursuant to the co-sale rights hereunder on any
subsequent occasion.
(c) If the acquiror is acquiring shares of Common Stock or Series B
Preferred Stock or both, as the case may be, in a single transaction or in a
series of related transactions, (i) the price per share of each such security to
be purchased from the Eligible Founders shall be the weighted average of the
prices paid to WCAS VII by the acquiror for such securities, and all other
terms and conditions of the transaction(s) shall be no less favorable, taken as
a whole, to the Eligible Founders than the terms and conditions offered by the
acquiror to WCAS VII for such securities and (ii) the form of consideration to
be paid to each Eligible Founder shall be proportionately the same as that for
all shares of such security transferred by WCAS VII in such transaction or
series of transactions.
(d) Each Eligible Founder participating in the proposed disposition shall
deliver to the Company, as agent for such Eligible Founder, for transfer to the
proposed acquiror, one or more certificates, properly endorsed for transfer or
accompanied by stock transfer powers duly endorsed for transfer, with all stock
transfer taxes paid and stamps affixed, which shares shall be free and clear of
any liens, encumbrances, charges, security interests, pledges or any other
restrictions whatsoever and with signatures thereon guaranteed by a national
bank, which represent the number of shares of Common Stock that such Eligible
Founder is disposing of in such proposed disposition pursuant to this Section 4.
The stock certificate or certificates so delivered by an Eligible Founder to the
Company shall be transferred by the Company to the acquiror at the time of the
consummation of the disposition of the Common Stock pursuant to the terms and
condi-
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tions specified in the related Co-Sale Notice and the Company shall promptly
thereafter remit to such Eligible Founder that portion of the proceeds of
disposition received by the Company to which such Eligible Founder is entitled
by reason of such participation.
(e) Anything herein to the contrary notwithstanding, no co-sale rights
shall apply hereunder with respect to (i) any sale pursuant to an Initial
Public-Offering or (ii) a distribution by WCAS VII to its partners. It is
expressly understood by the parties hereto that shares of Common Stock or Series
B Preferred Stock transferred by WCAS VII shall not remain subject to any
co-sale rights hereunder.
SECTION 5. Legend on Stock Certificates. Each certificate representing
shares of Common Stock and Series B Preferred Stock held by any Stockholder
shall conspicuously bear the following legend until such time as the shares
represented thereby are no longer subject to the provisions hereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A STOCKHOLDERS AGREEMENT, DATED AS OF DECEMBER 19, 1995, AMONG
NEW AMERICAN HEALTHCARE CORPORATION (THE "COMPANY") AND CERTAIN HOLDERS OF
SHARES OF THE OUTSTANDING CAPITAL STOCK OF THE COMPANY. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE COMPANY.
The Company covenants that it will keep a copy of this Agreement on file at
the address specified in, or pursuant to, Section 10 for the purpose of
furnishing copies hereof to the holders of record of shares of Common Stock.
SECTION 6. Duration of Agreement. This Agreement shall terminate in its
entirety upon the consummation of an Initial Public Offering.
SECTION 7. Representations and Warranties. (a) of the Company and each
Stockholder represents and warrants, severally and not jointly, to the Company
and the other Stockholders as follows:
(i) The execution, delivery and performance of this Agreement by the
Company or such Stockholder, as the case may be, will not violate in any
material respect any provision of law, any order of any court or other agency
of government, or any provision of any indenture, agreement or other
instrument to which the Company or such Stockholder or any of its, his or
her, as the case may be, properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a
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default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or such
Stockholder (other than those arising hereunder).
(ii) This Agreement has been duly executed and delivered by the Company or
such Stockholder, as the case may be, and constitutes the legal, valid and
binding obligation of the Company or such Stockholder, enforceable against
the Company or such Stockholder in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting the
enforcement of creditors' rights, and except that the availability of the
equitable remedies of specific performance and injunctive relief may be
subject to the discretion of the court before which any proceeding may be
brought.
(b) Each Stockholder represents and warrants, severally and not jointly,
to the Company and the other Stockholders that the shares of Common Stock listed
on Schedule I or II hereto opposite the name of such Stockholder constitute the
entire ownership interest of such Stockholder in the capital stock of the
Company as of the date hereof.
SECTION 8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Tennessee.
SECTION 9. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns (which become
such by operation of law), legal representatives and heirs.
SECTION 10. Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered personally,
(ii) mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent via a nationally recognized overnight courier or
(iv) sent via facsimile confirmed in writing to the recipient, in each case as
follows:
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if to the Company,
New American Healthcare Corporation
000 Xxxx Xxxxxx, Xxxxx X-00
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Xx. Xxxx X. XxXxxxxx, Xx.
Telecopy No.: (000) 000-0000
With a copy to,
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxx, XX, Esq.
Telecopy No.: (000) 000-0000
or if to any Stockholder at its address
set forth in Schedule I or II attached hereto.
SECTION 11. Modification. Except as otherwise provided herein, neither
this Agreement nor any provision hereof may be modified, changed, discharged or
terminated except by the agreement of (i) holders of not less than a majority of
the shares of Common Stock (treating all shares of Series B Preferred Stock at
the time outstanding as having been converted into Common Stock) at the time
held by WCAS Stockholders and (ii) holders of not less than a majority of shares
of Common Stock (determined by so treating all shares of Series B Preferred so
outstanding as having been so converted) at the time held by Founder
Stockholders; provided, however, that no modification or amendment shall be
effective to reduce the requisite percentages of holdings of Common Stock
required under this Section 11 without the written approval of each of the
Stockholders, and provided, further, that no amendment may apply to less than
all holders referred to in clause (i) or all holders referred to in clause (ii),
without the written approval of each Stockholder referred to in the applicable
clause whose interest would be adversely affected.
SECTION 12. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable,
such illegality, invalidity or unenforceability shall not affect any other
provisions of this Agreement.
SECTION 13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
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SECTION 14. Entire Agreement. This Agreement, together with the Restricted
Stock Agreement and the Employment Agreements (in each case, as defined in the
Purchase Agreement), supersedes all previous agreements between one or more
Founder Stockholders and the Company, including, without limitation, the
Shareholders' Agreement, dated August 28, 1995, by and among Xxxxxx X. Xxxxxx,
Xxxx X. XxXxxxxx, Xx., Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxx and the several
shareholders named on the Shareholder Exhibits attached thereto, an Employment
Agreement, dated October 15, 1995, between the Company and Xxxxxx X. Xxxxxx, an
Employment Agreement, dated October 15, 1995, between the Company and Xxxx X.
XxXxxxxx, Xx., an Employment Agreement, dated October 15, 1995, between the
Company and Xxxxx X. Xxxxxx, an Employment Agreement, dated October 15, 1995,
between the Company and Xxxxxxx X. Xxxx, a Noncompetition Agreement, dated
October 15, 1995, between the Company and Xxxx X. XxXxxxxx, Xx., a
Noncompetition Agreement, dated October 15, 1995, between the Company and Xxxxx
X. Xxxxxx, and a Noncompetition Agreement, dated October 15, 1995, between the
Company and Xxxxxxx X. Xxxx. In the event of any conflict between this Agreement
and any other agreement or instrument with respect to the subject matter hereof
(other than the Restricted Stock Agreement), the provisions of this Agreement
shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the day and year first above written.
NEW AMERICAN HEALTHCARE CORPORATION
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Chairman, President and CEO
PURCHASERS:
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P
By WCAS VII Partners, General Partner
By /s/
-----------------------------------------
General Partner
WCAS Healthcare Partners, L.P
By WCAS HP Partners, General Partner
By /s/
-----------------------------------------
General Partner
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
11
/s/ Xxxxxx X. Xxxx
----------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxx X. XxXxxxxxx
----------------------------------
Xxxxxx X. XxXxxxxxx
/s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Minicussi
----------------------------------
Xxxxxx X. Minicussi
/s/ Xxxxxxx X. xx Xxxxxx
----------------------------------
Xxxxxxx X. xx Xxxxxx
XXXXX X. XXXXXX - TRUSTEE
PROFIT SHARING PLAN DLJSC -
CUSTODIAN FBO XXXXX X. XXXXXX
By /s/ Xxxxx X. Xxxxxx
--------------------------------
HORIZON INVESTMENTS ASSOCIATES, I
By /s/ X. X. Xxxxx
--------------------------------
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FOUNDERS:
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx X. XxXxxxxx, Xx.
----------------------------------
Xxxx X. XxXxxxxx, Xx.
/s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx
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EXHIBIT C-1
SCHEDULE I
WCAS Stockholders
-----------------
Number of Shares of
Common Stock to be Maximum Number of Shares of
Acquired on Initial Preferred Stock to be Acquired on
Name Closing Date Subsequent Closing Dates
---- ------------------- ---------------------------------
Series B Series A
-------- ---------
Welsh, Carson, Xxxxxxxx 4,778,500 222,389 238,641
& Xxxxx VII, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
WCAS Healthcare Partners, L.P. 75,000 3,513 3,762
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Xxxxxxx X. Xxxxx 25,000 1,171 1,254
Xxxxxxx X. Xxxxxx 50,000 2,342 2,508
Xxxxx X. Xxxxxxxx 30,000 1,405 1,505
Xxxxxxx X. Xxxxx 15,000 703 752
Xxxxxx X. Xxxx 5,000 234 251
Xxxxxx X. XxXxxxxxx 7,500 351 376
Xxxxx XxxXxxxx 2,000 94 100
Xxxxx X. Xxxxxx 5,000 234 251
Xxxxxx X. Xxxxxxxxx 4,000 187 201
Xxxxxxx X. xx Xxxxxx 3,000 141 150
Care of WCAS Management
Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Xxxxx X. Xxxxxx - Trustee 0 500 0
Profit Sharing Plan DLJSC - Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
copy to:
Xx. Xxxxxx Xxxxxxx
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Sales Associate
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
HORIZON INVESTMENTS ASSOCIATES, I 0 1000 0
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxx 0 500 0
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
--------- ------- -------
Total 5,000,000 235,000 250,000
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SCHEDULE I
WCAS Stockholders
-----------------
Number of Shares of
Common Stock to be Maximum Number of Shares of
Acquired on Initial Preferred Stock to be Acquired on
Name Closing Date Subsequent Closing Dates
---- ------------------- ---------------------------------
Series B Series A
-------- ---------
Welsh, Carson, Xxxxxxxx 4,778,500 223,124 238,891
& Xxxxx VII, L.P.
One World Financial Center
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
WCAS Healthcare Partners, L.P. 75,000 3,513 3,762
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx X. Xxxxx 25,000 1,171 1,254
Xxxxxxx X. Xxxxxx 50,000 2,342 2,508
Xxxxx X. Xxxxxxxx 30,000 1,405 1,505
Xxxxxxx X. Xxxxx 15,000 703 752
Xxxxxx X. Xxxx 5,000 234 251
Xxxxxx X. XxXxxxxxx 7,500 351 376
Xxxxx XxxXxxxx 2,000 94 100
Xxxxx X. Xxxxxx 5,000 234 251
Xxxxxx X. Xxxxxxxxx 4,000 187 201
Xxxxxxx X. xx Xxxxxx 3,000 141 150
Care of WCAS Management
Corporation
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx X. Xxxxxx - Trustee 0 500 0
Profit Sharing Plan DLJSC - Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
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copy to:
Xx. Xxxxxx Xxxxxxx
Sales Associate
Xxxxxxxxx, Lufkin & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
HORIZON INVESTMENTS ASSOCIATES, I 0 1000 0
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
--------- ------- -------
Total 5,000,000 235,000 250,000
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EXHIBIT C-2
SCHEDULE II
Founder Stockholders
Number of Common Number of Shares Which May Be Acquired Pursuant To
Name Shares Currently Owned Purchase Agreement
---- ---------------------- --------------------------------------------------
Common
Shares Series B Series A
------ -------- --------
Xxxxxx X. Xxxxxx 1,479,000 10,000 470 500
Xxxx X. XxXxxxxx, Xx. 677,000 10,000 470 500
Xxxxx X. Xxxxxx 392,000 5,000 235 250
Xxxx XxXxxx 200,000 0 235 250
Xxxxxxx X. Xxxx 252,000 1,500 70.5 75
--------------------- --------- ------ ------- -----
Total 3,000,000 26,500 1,480.5 1,575
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EXHIBIT C-2
SCHEDULE II
Founder Stockholders
--------------------
Number of Common Number of Shares Which May Be Acquired Pursuant To
Name Shares Currently Owned Purchase Agreement
---- ---------------------- --------------------------------------------------
Common
Shares Series B Series A
Xxxxxx X. Xxxxxx 1,479,000 10,000 470 500
Xxxx X. XxXxxxxx, Xx. 677,000 10,000 470 500
Xxxxx X. Xxxxxx 392,000 5,000 235 250
Xxxxxxx X. Xxxx 252,000 1,500 70.5 75
--------------- --------- ------ ------ -----
Total 2,800,000 26,500 1,245.5 1,575
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EXECUTION COPY
ASSET SALE AGREEMENT
* * * *
XXXXXXXXX MEDICAL CENTER, INC.
EGH, INC.
QUALICARE OF WYOMING, INC.
WOODLAND PARK HOSPITAL, INC.
collectively, as Seller
AND
NEW AMERICAN HEALTH CARE CORPORATION
as Buyer
Dated: December 22, 1997
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TABLE OF CONTENTS
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Paragraph Description Page
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Preamble ................................................................................... 1
Recitals ................................................................................... 1
1. Transfer of Assets ............................................................... 1
1.1 Transferred Assets ........................................................ 1
1.2 Retained Assets ........................................................... 4
2. Purchase Price ................................................................... 5
2.1 Amount .................................................................... 5
2.2 Closing Schedule and Determination of Purchase Price ...................... 5
2.3 Payment of Purchase Price ................................................. 6
3. Assumption of Obligations of Seller .............................................. 7
3.1 Obligations Assumed ....................................................... 7
3.2 Obligations Not Assumed ................................................... 8
4. Disclosure Statement ............................................................. 10
5. Representations and Warranties of Seller ......................................... 11
5.1 Organization of Seller .................................................... 11
5.2 Authority ................................................................. 11
5.3 Financial ................................................................. 12
5.4 Title to Transferred Assets ............................................... 12
5.5 Third Parry Rights ........................................................ 12
5.6 Governmental Consents ...................................................... 13
5.7 Hazardous Substances ....................................................... 13
5.8 Litigation ................................................................. 13
5.9 Licenses and Permits ....................................................... 14
5.10 Compliance with Laws ....................................................... 14
5.11 Employee Relations ......................................................... 14
5.12 Personnel .................................................................. 15
5.13 Assumed Contracts .......................................................... 15
5.14 Brokerage and Finder's Fees ................................................ 15
5.15 U.S. Persons ............................................................... 15
5.16 Inventory .................................................................. 16
5.17 Changes Since Interim Statements ........................................... 16
5.18 Cost Reports, Third Party Receivables and Conditions of Participation ...... 17
5.19 Medical Staff .............................................................. 17
5.20 Xxxx-Xxxxxx Care ........................................................... 17
5.21 Taxes ...................................................................... 18
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5.22 ERISA Plans ................................................................ 18
5.23 No Negotiations with Third Parties ......................................... 18
5.24 Miscellaneous Representations Relating to Real Property..................... 18
5.25 Motor Vehicles ............................................................. 19
6. Obligations and Covenants of Seller ............................................... 19
6.1 Conduct of Business ........................................................ 19
6.2 Access and Information ..................................................... 21
6.3 Encumbrances ............................................................... 21
6.4 Consent of Others .......................................................... 22
6.5 No Transfer of Assets ...................................................... 22
6.6 Seller's Efforts to Close .................................................. 22
6.7 Monthly Statements ......................................................... 23
7. Representations and Warranties of Buyer ........................................... 23
7.1 Organization and Good Standing ............................................... 23
7.2 Authority .................................................................... 23
7.3 Brokerage and Finder's Fees .................................................. 24
7.4 Permits and Accreditations ................................................... 24
7.5 No Knowledge of Seller's Breach .............................................. 24
7.6 No Assurance ................................................................. 25
8. Obligations and Covenants of Buyer ................................................ 25
8.1 Consent of Others ............................................................ 25
8.2 Inspection ................................................................... 25
8.3 Buyer's Efforts to Close ..................................................... 26
8.4 Waiver of Bulk Sales Law Compliance .......................................... 26
8.5 Ability to Perform ........................................................... 26
9. Conditions Precedent to Obligations of Buyer ...................................... 27
9.1 Accuracy of Warranties and Representations ................................... 27
9.2 Performance of Obligations ................................................... 27
9.3 Approval of Inspection ....................................................... 27
9.4 Third Party Consents ......................................................... 27
9.5 Permits and Program Participation ............................................ 28
9.6 Tax Matters .................................................................. 28
9.7 Title Insurance .............................................................. 28
9.8 Instruments of Transfer ...................................................... 28
9.9 Officer's Certificate ........................................................ 29
9.10 Certified Resolutions ........................................................ 29
9.11 Xxxx-Xxxxx-Xxxxxx Act ........................................................ 29
9.12 Adverse Action ............................................................... 29
9.13 Parent Guaranty .............................................................. 30
9.14 Opinion of Seller's Counsel .................................................. 30
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10. Conditions Precedent to Obligations of Seller ..................................... 30
10.1 Accuracy of Warranties and Representations ................................. 30
10.2 Performance of Obligations ................................................. 31
10.3 Payment of Purchase Price .................................................. 31
10.4 Officer's Certificate ...................................................... 31
10.5 Certified Resolutions ...................................................... 31
10.6 Xxxx-Xxxxx-Xxxxxx Act ...................................................... 31
10.7 Adverse Action ............................................................. 32
10.8 Continued Existence of Commitment Letter ................................... 32
10.9 Opinion of Buyer's Counsel ................................................. 32
11. Closing ........................................................................... 32
11.1 Pre-Closing ................................................................ 33
11.2 Escrow ..................................................................... 33
11.3 Deliveries at Closing ...................................................... 33
12. "AS IS" Purchase .................................................................. 34
13. Exclusivity Fee ................................................................... 35
14. Additional Covenants .............................................................. 35
14.1 Further Documentation or Action ............................................ 36
14.2 Preservation of and Access to Records ...................................... 36
14.3 Litigation Cooperation ..................................................... 38
14.4 Employee Benefit Plans ..................................................... 38
14.6 Confidentiality ............................................................ 39
14.7 Cure of Disapproved Items .................................................. 40
14.8 Excluded Assets and Receivables ............................................ 41
14.9 Cost Report Audits and Contests ............................................ 45
14.10 Filing Cost Reports; Amounts Due To or From Third Party Payors ............. 46
14.11 Employee Matters ........................................................... 46
14.12 Medical Staff Privileges/Bylaws ............................................ 49
14.13 Antitrust Laws Compliance .................................................. 49
14.14 Filing Tax Returns ......................................................... 50
14.15 Use of Controlled Substance Permits ........................................ 50
14.16 Limited Use of Manuals and Software ........................................ 50
14.17 Use of Name ................................................................ 51
14.18 Purchase of Supplies ....................................................... 52
15. Survival of Representations ....................................................... 52
16. Indemnification ................................................................... 52
16.1 Indemnification of Buyer By Seller ........................................... 52
16.2 Indemnification of Seller By Buyer ........................................... 52
16.3 Notification and Settlement of Claims ........................................ 53
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16.4 Limitations on Indemnification Obligations ................................... 54
16.5 Time Limitations ............................................................. 54
16.6 Exclusive Remedy ............................................................. 55
17. Termination ....................................................................... 55
17.1 Termination Upon Certain Events .............................................. 55
17.2 Effect of Termination ........................................................ 56
18. Liquidated Damages. ............................................................... 56
19. General Provisions ................................................................ 57
19.1 Notices ................................................................ 57
19.2 Form of Instruments .................................................... 58
19.3 Attorneys' Fees ........................................................ 58
19.4 Remedies Not Exclusive ................................................. 59
19.5 Successors and Assigns ................................................. 59
19.6 Counterparts............................................................ 61
19.7 Captions and Paragraph Headings ........................................ 61
19.8 Entirety of Agreement; Amendments ...................................... 61
19.9 Expenses and Prorations ................................................ 62
19.10 Construction ........................................................... 62
19.11 Waiver ................................................................. 62
19.12 Severability ........................................................... 63
19.13 Certain Definitions .................................................... 63
19.14 Consents Not Unreasonably Withheld ..................................... 67
19.15 Time Is of the Essence ................................................. 68
19.16 Interest on Amounts Due ................................................ 68
19.17 Governing Law .......................................................... 68
19.18 Tax and Medicare Effect ................................................ 68
19.19 Casualty ............................................................... 69
19.20 Condemnation ........................................................... 69
19.21 Tax-Deferred Exchange .................................................. 69
Signatures................................................................................... 71
ANNEX I- LIST OF SCHEDULES .................................................................. 72
ANNEX II - LIST OF EXHIBITS.................................................................. 74
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ASSET SALE AGREEMENT
THIS ASSET SALE AGREEMENT ("AGREEMENT") is made and entered into as of the
22nd day of December, 1997, by and between NEW AMERICAN HEALTHCARE CORPORATION,
a Tennessee corporation ("BUYER"), and DAVENPORT MEDICAL CENTER, INC., an Iowa
corporation, EGH, INC., an Oregon corporation, QUALICARE OF WYOMING, INC., a
Wyoming corporation and WOODLAND PARK HOSPITAL, INC., an Oregon corporation
(collectively, "SELLER"), with reference to the following facts:
A. Seller owns or leases the following acute-care general hospitals:
Xxxxxxxxx Medical Center, Eastmoreland Hospital, Lander Valley Regional Medical
Center and Woodland Park Hospital (collectively, the "HOSPITALS") and owns,
leases or operates the medical office buildings and other activities and
businesses related thereto (collectively, together with the Hospitals, the
"HOSPITAL BUSINESSES").
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the Hospital Businesses and all of the equipment, fixtures and other real
and personal property which are related to Seller's operation of the Hospital
Businesses and located at a Hospital as specified herein on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, and the
representations, warranties and covenants herein contained, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby agree
as follows:
1. Transfer of Assets
1.1 Transferred Assets
At the Closing (as hereinafter defined in Paragraph 11), for the
consideration hereinafter provided and in reliance upon the representations and
warranties of the parties set forth herein, Seller shall sell, transfer, convey
and assign to Buyer, and Buyer shall purchase from Seller, all right, title and
interest of Seller in and to the following assets (the "TRANSFERRED ASSETS"):
1.1.1 The real property owned in fee by Seller upon which the
Hospitals or any medical office buildings included in the Hospital Businesses
are situated, and all other real property owned in fee by Seller including any
real property owned by Seller in the Hospitals' market areas, whether developed
or undeveloped, and whether or not contiguous (other than any Retained Assets)
(all of which real property is identified on SCHEDULE "1.1.1"), together with
all land improvements, the Hospitals, construction work-in-progress located at
any Hospital Businesses, the medical office buildings and any other
25
buildings and other improvements thereon, and all rights, privileges and
easements appurtenant thereto (the "REAL PROPERTY").
1.1.2 The leasehold estates of Seller, as tenant, and the related
lease and sublease agreements (including, without limitation, that certain lease
dated July 10, 1982 between the City of Lander and Lander Valley Regional
Medical Center, as amended (the "LANDER LEASE") regarding the real property
comprising Lander Valley Regional Medical Center (the "LANDER PROPERTY") and
that certain lease dated December 27, 1968 between Woodland Park Corporation and
W.P.H., Inc., as amended (the "WOODLAND PARK LEASE") regarding the real property
comprising a portion of Woodland Park Hospital (the "WOODLAND PARK PROPERTY"))
(all such leases, including the Lander Lease and the Woodland Park Lease shall
collectively be referred to as the "REAL PROPERTY LEASES") with respect to the
Hospital Businesses, the real property upon which such Hospital Businesses are
situated and the other buildings and other improvements and fixtures thereon
(whether owned or leased), which Real Property Leases and the Lander Property
and Woodland Park Property are identified on SCHEDULE "1.1.2", together with all
construction work-in-progress in respect of the same and all rights privileges
and easements appurtenant thereto (the "LEASED REAL PROPERTY").
1.1.3 All tangible personal property (other than items of
tangible personal property that are consumed, disposed of or held for sale or
inventoried in the ordinary course of business) owned by Seller and located at
the Hospital Businesses, excluding, however, any such personal property which is
a Retained Asset (as hereinafter defined in Paragraph 1.2). The current list of
such tangible personal property is set forth on SCHEDULE "1.1.3".
1.1.4 All inventories of supplies, drugs, food, janitorial and
office supplies, maintenance and shop supplies, and other disposables which are
existing as of the Closing Date (the "PURCHASED INVENTORY").
1.1.5 All contracts, agreements and leases to which Seller is a
party at the Closing Date, other than the Real Property Leases, and all
other obligations, purchase orders, commitments or covenants to which Seller is
a party at the Closing Date (all such contracts, agreements, leases, other
obligations, purchase orders, commitments or covenants are collectively referred
to as the "CONTRACTS") including, but not limited to, the Contracts (a) that are
set forth on SCHEDULE "1.1.5", (b) pursuant to which a Seller paid or received
less than $15,000 during its last fiscal year or pursuant to which it expects to
pay or receive less than $15,000 during its current fiscal year, whether or not
listed on SCHEDULE "1.1.5", or (c) with respect to the Contracts which are
entered into after the date hereof, the requirements of Paragraph 6.1(d) have
been satisfied. SCHEDULE "1.1.5" shall include a listing of all Contracts
entered into prior to the date hereof and pursuant to which Seller paid more
than $15,000 during its last fiscal year and shall list such Contracts
alphabetically by appropriate categories (such as leases, service agreements,
affiliation agreements, provider agreements, and agreements with physicians).
Notwithstanding the foregoing, the Contracts shall not include any contract
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respecting an intercompany transaction between Seller, on the one hand, and an
Affiliate of Seller, on the other, whether or not such transaction relates to
the provision of goods and services, tax sharing arrangements, payment
arrangements, intercompany charges or balances, or the like (the "INTERCOMPANY
TRANSACTIONS"), except that transactions arising in connection with open
purchase orders where the Seller's Affiliates have acted as an intermediary for
Seller shall not be regarded as Intercompany Transactions.
1.1.6 To the extent lawfully transferable, all certificates of
need (including those that have been issued but have not been fully implemented
or that have been applied for), accreditations, registrations, licenses, permits
and other governmental consents or approvals necessary to or intended for the
operation of the Hospital Businesses as presently conducted by Seller.
1.1.7 Only those advance payments, prepayments, prepaid expenses,
deposits and the like (the "PREPAIDS") which are existing as of the Closing
Date, which were incurred by Seller solely with respect to Seller's operation of
the Hospital Businesses and which are determined by Buyer to be usable by and
transferrable to Buyer concurrently with Buyer's approval of the Disclosure
Statement pursuant to Paragraph 4 (the "PURCHASED PREPAIDS"), the current
categories and amounts of which are set forth on SCHEDULE "1.1.7".
1.1.8 All of Seller's right, title and interest in and to the
business names set forth in SCHEDULE "1.1.8".
1.1.9 All unexpired warranties and covenants not to compete that
are transferrable to Buyer which Seller has received from third parties with
respect to the Transferred Assets (but not directly or indirectly with respect
to any of the Retained Assets) including, without limitation, such warranties
and covenants as are set forth in any construction agreement, lease agreement,
equipment purchase agreement, consulting agreement, agreement for architectural
and engineering services or purchase and safe agreement.
1.1.10 All goodwill of the business evidenced by the Transferred
Assets.
1.1.11 All Hospital Records, including the personnel records of
the Hired Employees (as hereinafter defined in Paragraph 14.11), that are
maintained at the Hospitals in the ordinary course of business; provided that
Seller shall have the right of access thereto as set forth in Paragraph 14.2.
1.1.12 All Receivables (as hereinafter defined in Paragraph
19.13(a)), other than the Government Receivables (as hereinafter defined in
Paragraph 19.13(a)) (the "PURCHASED RECEIVABLES").
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1.1.13 All right, title and interest of Seller in and to any and
all joint ventures, partnerships, limited liability companies, the current list
of which is set forth on SCHEDULE "1.1.13", together with all of Seller's right,
title and interest in and to the joint venture, partnership or operating
agreements relating thereto and in and to all distributions and allocations
which Seller is entitled to receive as of the Closing.
1.2 RETAINED ASSETS
At the Closing, Seller shall retain all assets owned directly or
indirectly by Seller or any of its Affiliates, other than the Transferred
Assets, whether or not such assets are used in connection with or are necessary
for the operation of the Hospital Businesses. Without limiting the generality of
the foregoing, such retained assets (the "RETAINED ASSETS") shall include the
following:
1.2.1 Except for the Purchased Inventory, the Purchased Prepaids
and the Purchased Receivables, all assets constituting working capital, whether
cash, cash equivalents, securities or other current assets, all Government
Receivables and all claims, choses in action, rights of recovery, rights of set
off, rights to refunds and similar rights relating thereto.
1.2.2 Except for the business names referred to in Paragraph
1.1.8 and the Assumed Contracts and except for manuals relating to equipment and
other tangible property included in the Transferred Assets, all privileged or
proprietary materials, documents, information, media, methods and processes
owned by Seller, and any and all rights to use the same, including, but not
limited to, all intangible assets of an intellectual property nature, all
proprietary computer software, all clinical and policy and procedure manuals,
all promotional, marketing and recruiting materials (including all marketing
computer hardware and software and all telephone numbers) and the names Xxxxx",
OrNda" and any and all derivations, abbreviations and variations thereof.
1.2.3 Any and all rights respecting computer and data processing
hardware that is proprietary to Seller or any Affiliate of Seller, and any
computer and data processing hardware, whether or not located at a Hospital,
that is part of a computer system whether or not the central processing unit for
which is located at such Hospital.
1.2.4 All amounts due to Seller arising from Intercompany
Transactions or from Medicare or other Payors with respect to the cost reports
and other filings referred to in Paragraph 14.10.
1.2.5 All personnel records other than those of the Hired
Employees.
1.2.6 All assets of or dedicated to the Plans.
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1.2.7 Such other assets, if any, specifically described in
SCHEDULE "1.2.7."
Buyer acknowledges and agrees that Seller shall have the right to
remove, and may remove at any time prior to or within 30 days following the
Closing Date (at Seller's expense, but without charge by Buyer for storage),
from time to time all or any part of the Retained Assets; provided, however,
that such removal by Seller shall take place during normal business hours and
with reasonable prior written notice to Buyer of the time when such removal
shall take place. Seller's employees, representatives and agents shall conduct
themselves during such removal process in such a manner so that Buyer's normal
business activities shall not be unduly or unnecessarily disrupted thereby.
2. PURCHASE PRICE
2.1 AMOUNT
The purchase price (the "PURCHASE PRICE") to be paid by Buyer to
Seller for the Transferred Assets shall be equal to the sum of (a) $55,000,000
plus (b) an amount equal to the net book values of the Purchased Inventory, the
Purchased Prepaids and the Purchased Receivables as of the Closing Date, less
(c) 100% of the Paid Time Off of the Hired Employees which Buyer has assumed
pursuant to Paragraph 3.1(b), less (d) 20% of the Sick Pay of the Hired
Employees which Buyer has assumed pursuant to Paragraph 3.1(b), less (e) the net
book value of the Accrued Operating Expenses (as defined in Paragraph 3.1(d)) as
of the Closing Date, less (f) the net book value of the capitalized leases
outstanding as of the Closing Date.
2.2 CLOSING SCHEDULE AND DETERMINATION OF PURCHASE PRICE
As soon as practicable, but in no event later than 75 days after
the Closing Date, Seller shall cause a schedule (the "CLOSING SCHEDULE") to be
prepared and delivered to Buyer which shall calculate the Purchase Price and
include (a) a revised Schedule 1.1.7 showing the net book value of the Purchased
Prepaids as of the Closing Date, and (b) a schedule showing the net book value
of the Purchased Inventory, the Purchased Receivables and the Accrued Operating
Expenses (exclusive of the amounts set forth on SCHEDULE "3.1(b)"), all as of
the Closing Date, (c) a revised SCHEDULE "3.1(b)" showing as of the Closing Date
the amount of the Paid Time Off and Sick Pay of the Hired Employees assumed by
Buyer pursuant to Paragraph 3.1(b) and not paid to a Hired Employee by Seller,
and (d) a revised SCHEDULE "3.1(g)" showing as of the Closing Date the net book
value of the then outstanding capitalized leases calculated in accordance with
generally accepted accounting principles, consistently applied. If the Closing
Schedule as submitted by Seller is challenged by Buyer, then, unless otherwise
resolved by agreement of the parties within 30 days from the date of Buyer's
challenge or such later date as the parties may mutually agree, the Closing
Schedule shall be deemed in dispute, which dispute shall be resolved by the
independent certified public
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accountants of Buyer, on the one hand, and the independent certified public
accountants of Seller, on the other hand. If such accountants cannot resolve the
disagreement within 30 days of such submission, or such later date as the
parties may mutually agree upon, such disagreement shall be mutually submitted
by the parties to one of the so-called "big five" accounting firms (other than
the parties' respective independent certified public accountants) to be selected
by the mutual agreement of such parties' independent certified public
accountants, whose determination shall be final and binding and shall be
rendered within 30 days of the date on which the matter is submitted to such
firm. Any such selected accounting firm shall determine the issues in dispute
after following such procedures, consistent with the language of this Agreement,
as it deems appropriate to the circumstances and with reference to the amounts
at issue. No particular procedures are intended to be imposed upon such
accounting firm, it being the desire of the parties that any such dispute shall
be resolved as expeditiously and inexpensively as reasonably practicable. If
Buyer does not give written notice to Seller of its challenge of the Closing
Schedule within 30 days following Buyer's receipt of the Closing Schedule, Buyer
shall be deemed to have accepted the same. The Closing Schedule, either as
accepted by Buyer or as resolved in the manner herein provided, shall fix the
Purchase Price. The pendency of a dispute shall not affect the payment
obligation hereunder of either Buyer or Seller to the extent such payment is not
disputed.
2.3 PAYMENT OF PURCHASE PRICE
No less than three business days prior to the Closing, Seller
shall prepare and deliver to Buyer an estimate of the Closing Schedule (the
"ESTIMATED STATEMENT") based upon (and if determined by Seller to be reasonably
practicable, updated or estimated from) the books and records of Seller with
respect to the Hospital Businesses for the most recent month ending prior to the
Closing for which data is available and shall reflect on the Estimated Statement
the allocation of expenses and the prorations required by Paragraph 19.9. All
determinations made with respect to the Estimated Statement shall be based upon
the internal records of, and the valuations customarily used by, Seller and
shall be consistent with generally accepted accounting principles used by Seller
with respect to the recording and accruing of the types of assets, the Purchased
Inventory, the Purchased Prepaids, the Purchased Receivables, and the Accrued
Operating Expenses, and under no circumstances shall a physical inventory or
audit be required. The Purchase Price determined by reference to the Estimated
Statement (the "TENTATIVE PURCHASE PRICE") shall be paid to Seller by Buyer at
the Closing. The Purchase Price shall be paid at and after the Closing as
follows:
(a) Purchase Price Paid at Closing. At the Closing, the Purchase
Price shall be paid as follows:
(i) Buyer shall wire transfer immediately available funds to
one or more accounts designated by Seller prior to the Closing in an
amount equal to the Tentative Purchase Price (subject to payment of
Seller's obligations under 19.9); and
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(ii) Buyer shall assume Seller's liability under the Assumed
Obligations by delivering to Seller one or more Bills of Sale and
Assignment and Assumption of Assumed Obligations (the "XXXX OF SALE")
substantially the form and substance of EXHIBIT "2.3(a)(ii)".
(b) Post Closing Purchase Price Adjustment. Within five business
days of the final determination of the amount of the Purchase Price as provided
in Paragraph 2.2, either Buyer shall pay to Seller or Seller shall pay to Buyer,
as the case may be, in immediately available funds, the amount by which the
Purchase Price as so finally determined is different from the Tentative Purchase
Price. The pendency of a dispute shall not affect the payment obligation
hereunder of either Buyer or Seller to the extent such payment is not disputed.
3. ASSUMPTION OF OBLIGATIONS OF SELLER
3.1 OBLIGATIONS ASSUMED
Buyer shall assume, effective as of the Closing and as part of
the Purchase Price, and shall pay, discharge and perform as and when due, each
of the following obligations of Seller (the "ASSUMED OBLIGATIONS"):
(a) (i) all obligations and liabilities of Seller which pertain
to or are to be performed during any period commencing on or after the Closing
Date and which arise under any contract, license, permit, agreement,
arrangement, understanding or undertaking included in the Transferred Assets,
including the Contracts, the Real Property Leases and the Permits, and any
obligation or liability of Seller's Affiliates which is in the nature of a
guaranty of any of the foregoing (including letters of credit and performance
bonds) and (ii) all obligations and inabilities of Seller under those open
purchase orders which were entered into by Seller in the ordinary course of
business with respect to the Hospital Businesses before the Closing Date and
which provide for the delivery of goods or services subsequent to the Closing
Date (collectively, the "ASSUMED CONTRACTS").
(b) All obligations and liabilities to the Hired Employees for
(i) accrued and earned paid time off or vacation pay of any kind whatsoever
through the Closing Date, whether or not the same has been recorded on the
financial records of Seller ("PAID TIME OFF") and (ii) accrued sick pay (both
regular sick pay and extended sick leave), whether or not the same has been
recorded on the financial records of Seller ("SICK PAY"). Schedule 3.1(b) is a
listing of accrued Paid Time Off and Sick Pay as of the date indicated thereon
with respect to all current employees of the Hospital Businesses, which schedule
includes all Paid Time Off accrued and earned by such employees as of such date,
whether or not the same has been recorded on the financial records of Seller.
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(c) All obligations and liabilities concerning employee matters
assumed by Buyer pursuant to Paragraph 14.11.
(d) Any accrued and unpaid liabilities (whether or not due) of
Seller in existence on the Closing Date, which were incurred in the ordinary
course of the operation of the Hospital Businesses, which are reasonably
acceptable to Buyer and which represent the following current liabilities
(collectively, the "ACCRUED OPERATING EXPENSES") (i) trade payables incurred to
suppliers of goods or services, (ii) water, gas, electricity and other utility
charges, (iii) license fees, (iv) rent, common area maintenance charges,
operating expenses and other charges arising under the Real Property Leases, (v)
insurance premiums but only with respect to policies that will be continued in
force by Buyer after the Closing, (vi) salaries and other payroll costs (but
only to the extent recorded by Seller on its financial statements in accordance
with generally accepted accounting principles) respecting Hired Employees
accrued in accordance with normal accounting practices of Seller (but not
including bonuses or other incentive compensation or accrued benefits with
respect to benefit plans that are not assumed by Buyer), and (vii) similar
liabilities incurred in the ordinary course of the operation of the Hospital
Businesses and customarily recorded as a current liability, other than the
current portion of long term liabilities and obligations, income taxes (whether
deferred or currently payable) and the obligations and liabilities specified in
Paragraph 3.2(a) through (f), but only up to the amount received as a credit
under Paragraph 2.1.
(e) Any obligation to make changes or improvements needed to the
Hospital Businesses for them to be in material compliance following the Closing
with safety, building, fire, land use, access (including, without limitation,
the Americans With Disabilities Act) or similar Laws respecting the physical
condition of the Hospitals.
(f) Any Tax liability of Seller incurred as a result of the sale
of the Transferred Assets hereunder to Buyer, and any Taxes imposed upon the
right or privilege of doing business from the Hospitals after the Closing.
(g) All obligations and liabilities of Seller with respect to
only those capitalized lease obligations and other recorded indebtedness set
forth on SCHEDULE "3.1(g)", but only to the extent of the amounts set forth
thereon as of the Closing Date and only up to the amount received as a credit
under Paragraph 2.1.
3.2 OBLIGATIONS NOT ASSUMED
Except for the Assumed Obligations, Buyer shall not assume or
become obligated with respect to any other obligation or liability of Seller or
any of its Affiliates of any nature whatsoever and Seller shall retain and shall
pay, discharge and perform such obligations and liabilities (whether express or
implied, fixed or contingent, liquidated or unliquidated, known or unknown, due
or to become due)(the "EXCLUDED LIABILITIES"), including, without limiting the
generality of the foregoing, the following:
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(a) Obligations or liabilities arising from the breach or default
(or any act or omission by Seller which, with or without notice or lapse of time
or both, would constitute a breach or default) by Seller on or prior to the
Closing of any term, covenant or provision of any of the Assumed Contracts.
(b) Obligations or liabilities of Seller now existing or which
may hereafter exist by reason of any liability to refund any payment or
reimbursement received by Seller from Medicare, Medicaid, CHAMPUS or any other
Payor which is attributable to any period of time ending on or prior to the
Closing (including, but not limited to, any liability to Medicare, Medicaid,
CHAMPUS or any other Payor resulting from the sale of the Transferred Assets by
Seller to Buyer hereunder, including any recapture or gain from sale liability).
(c) Amounts due from Seller arising from Intercompany
Transactions.
(d) Liabilities or obligations of Seller, or its Affiliates now
existing or which may hereafter exist by reason of any violation or alleged
violation of Law by Seller or any of its Affiliates, or by an employee or
independent contractor of any of the foregoing where any of the foregoing is
alleged to be responsible for the acts or omissions of any such person, relating
to the ownership, use or operation of the Transferred Assets on or prior to the
Closing Date (including any event or circumstance occurring or existing on or
prior to the Closing Date and which constituted a violation of Law on or prior
to the Closing Date).
(e) Liabilities of Seller either arising from or in connection
with (i) the litigation described in Paragraph 5.8, (ii) any other litigation
relating to events occurring prior to the Closing Date of which Seller has no
Knowledge, and (iii) any and all liabilities or obligations of Seller for claims
for personal injury (including sickness, trauma, disease, pain and suffering,
loss of future earnings, punitive damages and the like), property damage and any
other damage or injury in existence or arising out of an event which occurred at
or prior to the Closing Date whether or not any claim has been made or
litigation has been instituted with respect thereto and whether or not any such
claim is covered partially or fully by insurance.
(f) Except as expressly assumed under Paragraphs 3.1 or 14.11,
liabilities and obligations for benefits under the Plans or any penalties or
other amounts related thereto.
(g) All ERISA liabilities and obligations, and all obligations to
give notice of and to provide continuation health care coverage for employees
(other than the Hired Employees), former employees and their dependents or any
qualified beneficiary of such employees in accordance with the requirements of
COBRA, including, without limitation, all liabilities, taxes, sanctions,
interest and penalties imposed upon, incurred by or
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assessed against Buyer or any affiliated corporation within a controlled group
relationship with Buyer (as determined under Section 414 of the Code), and any
of their employees, arising by reason of or relating to any failure to provide
the COBRA coverage to all employees other than the Hired Employees, former
employees and their dependents or any qualified beneficiary of such employees.
The Excluded Liabilities shall remain the sole responsibility of
Seller. Buyer acknowledges and agrees that the ongoing operations of Buyer after
the Closing, including Buyer's operation of the Hospital Businesses and the
continuation by Buyer after the Closing of any Assumed Contract or practice or
procedure of Seller shall be the sole responsibility of Buyer and Seller shall
have no liability for such operation and such continuation.
4. DISCLOSURE STATEMENT
On or before January 12, 1998, Seller shall deliver to Buyer a disclosure
statement (the "DISCLOSURE STATEMENT") which includes the schedules described in
the List of Schedules attached hereto as Annex I (other than any schedules
intended to be provided by Buyer) and such other schedules as may be attached to
the Disclosure Statement and which includes the exhibits to this Agreement
described in the List of Exhibits attached hereto as Annex II. Notwithstanding
the subsequent delivery of the Disclosure Statement, Buyer and Seller agree that
Seller's representations and warranties set forth in this Agreement shall be
deemed modified as of the date of this Agreement by the information contained in
the Disclosure Statement. Within 15 business days after Buyer's receipt of the
Disclosure Statement, Buyer shall either approve the Disclosure Statement or
notify Seller that it disapproves the Disclosure Statement and thereby elects,
subject to the provisions of Paragraph 14.7, to terminate this Agreement. If
Buyer fails to give notice to Seller within such 15-day period that it
disapproves the Disclosure Statement or any portion thereof, then Buyer shall be
deemed to have approved the Disclosure Statement. After the execution of this
Agreement, Seller may amend any one or more of the schedules included in the
Disclosure Statement by the delivery of one or more supplemental disclosure
statements (the "SUPPLEMENTAL DISCLOSURE STATEMENTS") to Buyer, and Buyer and
Seller agree that Seller's representation and warranties set forth in this
Agreement shall be deemed modified as of the date of this Agreement by the
information contained in any of the Supplemental Disclosure Statements provided
that Seller shall promptly disclose such new information within five business
days of learning of such information. Seller hereby agrees not to intentionally
withhold information of which it has Knowledge which relates to any Schedule
previously delivered by Seller to Buyer. Upon receipt of a Supplemental
Disclosure Statement, Buyer shall have a period of ten business days either to
approve the Supplemental Disclosure Statement or to notify Seller that it
disapproves the Supplemental Disclosure Statement and thereby elects, subject to
the provisions of Paragraph 14.7, to terminate this Agreement. If such ten-day
period would expire after the date for the Closing specified in Paragraph 11 or
the date for termination specified in Paragraph 17.1(c), then each such date
shall be extended
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to coincide with the date on which such ten-day period expires. If Buyer shall
notify Seller within the time periods herein specified that it disapproves a
Supplemental Disclosure Statement, subject to the provisions of Paragraph 14.7,
this Agreement shall terminate without liability to Buyer or Seller and shall be
of no further force or effect, except as otherwise expressly provided herein. If
Buyer shall fail to give notice to Seller within the time periods herein
specified that it disapproves a Supplemental Disclosure Statement, then Buyer
shall be deemed to have approved the applicable Supplemental Disclosure
Statement.
5. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION OF SELLER
Each Seller is a corporation duly incorporated and validly
exiting under the laws of, and is authorized to exercise its corporate powers,
rights and privileges and is in good standing in, the state of its incorporation
and is in good standing and duly qualified to do business as a foreign
corporation in any jurisdiction in which the nature of its business requires it
to be so qualified (each of which is listed on SCHEDULE "5.1") and has full
corporate power to carry on its business as presently conducted and as will be
conducted through the Closing and to own or lease and operate its properties and
assets now owned or leased and operated by it, and is duly qualified to operate
its business and is in good standing under the Laws of the state of its
incorporation. Schedule 5.1 also contains a list of all subsidiaries of each
Seller.
5.2 AUTHORITY
Each Seller has the full corporate power and the authority to (i)
own, lease and operate its facilities and assets as presently owned, leased and
operated, (ii) carry on its business as it is now being conducted and (iii)
execute, deliver and perform the obligations and covenants set forth in this
Agreement and all other agreements contemplated hereby and to carry out the
transactions contemplated hereby. The execution and delivery of this Agreement
by each Seller and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of each
Seller. No further corporate action is necessary to make this Agreement valid
and binding upon and enforceable against each Seller in accordance with its
terms except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding may be brought. Except as set forth in the Disclosure Statement, the
execution, delivery and performance of this Agreement and all other agreements
contemplated hereby or executed in connection herewith and the consummation of
the transactions contemplated hereby will not (a) violate
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any Law applicable to Seller, (b) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of each Seller, or (c) violate any
applicable judgment, decree, order, regulation or rule of any court or
regulatory authority.
5.3 FINANCIAL STATEMENTS
(a) Financial Statements. SCHEDULE "5.3" contains (i) the
unaudited balance sheets of each Seller with respect to the Transferred Assets
as of May 31, 1997 and 1996 (and, if available, 1995) and the related statements
of income for each fiscal year then ended (the "PRIOR YEARS' STATEMENTS") and
(b) the unaudited balance sheet of each Seller with respect to the Transferred
Assets as of August 31, 1997 and the related statements of income for the three
months then ended (the "INTERIM STATEMENTS"). The Prior Years' Statements, the
Interim Statements and the Monthly Statements are collectively referred to as
the "FINANCIAL STATEMENTS". The Financial Statements have been prepared from,
and are in accordance with, the books and records of each Seller and in all
material respects present fairly the financial position and results of
operations of each Seller with respect to the Transferred Assets as of the dates
and for the periods indicated, in each case in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated.
(b) Qualification to Statements. Notwithstanding the
foregoing, the Financial Statements do not reflect all intercompany
eliminations, adjustments and accruals (which are not material, in the
aggregate), do not contain footnotes or other explanatory materials associated
with financial statements prepared in accordance with generally accepted
accounting principles and do not contain normal and recurring year-end
adjustments. The Financial Statements are to be read in conjunction with, and
are subject to, all notes and other explanatory materials, if any, set forth
therein.
5.4 TITLE TO TRANSFERRED ASSETS
Except for the Assumed Obligations and except as set forth
on SCHEDULE "5.4" (collectively, the "PERMITTED EXCEPTIONS"), Seller has good
and marketable fee simple title to the Real Property, good and marketable
leasehold title to the Lander Property and the Woodland Park Property, and good
and defensible title to the remaining Transferred Assets all of which are free
and clear of all liens, encumbrances (including security interests of any kind
whatsoever), covenants, conditions, restrictions, easements, encroachments,
rights of way, charges or other rights, claims or interests of any third party
whatsoever (collectively the "LIENS") which, to Seller's Knowledge, were created
by Seller or any of its Affiliates.
5.5 THIRD PARTY RIGHTS
Except for the governmental consents referred to in
Paragraph 5.6 and except as otherwise disclosed on SCHEDULE "5.5", as of the
Closing, Seller may transfer and
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assign to Buyer all of its right, title and interest in and to the Transferred
Assets without obtaining the consent or approval of any other Person or party.
5.6 GOVERNMENTAL CONSENTS
Except as disclosed on SCHEDULE "5.6" OR "5.9", no consent,
approval, authorization or order of, and no exemption by or filing with, any
court or governmental agency is required on behalf of Seller in connection with
the execution and delivery of this Agreement or any other agreement contemplated
hereby or executed in connection herewith or for the consummation and
fulfillment by Seller of the transactions contemplated hereby or thereby or
performance by Seller of each and every one of its obligations hereunder or
thereunder.
5.7 HAZARDOUS SUBSTANCES
(a) SCHEDULE "5.7" contains a list of all surveys or reports
obtained by or otherwise in the possession of Seller which relate to the
environmental condition of the Hospitals, the Real Property, the Lander Property
and the Woodland Park Property, and Seller has provided or will provide to Buyer
copies of all such reports and surveys. Except as disclosed by the Environmental
Survey or otherwise on SCHEDULE "5.7", to Seller's Knowledge: (a) the current
operations of the Hospitals are not in violation in any material respect of any
Environmental Regulations, (b) there are no Hazardous Materials present on the
premises of the Hospitals, on the Real Property, the Lander Property or the
Woodland Park Property in any manner which constitutes a violation in any
material respect of any Environmental Regulations, and (c) there is no
proceeding or action pending or threatended by any Person or governmental agency
regarding the environmental condition of the Hospitals, the Real Property, the
Lander Property or the Woodland Park Property.
(b) Seller has not received any written communication that
alleges that Seller is not or was not in compliance with all applicable
Environmental Regulations, and Seller shall promptly notify buyer in writing if
any such communications is received prior to Closing.
5.8 LITIGATION
Except as set forth on SCHEDULE "5.8", there are no actions,
suits, claims (other than medical or dental claims made by employees under any
self insurance program of Seller or any Affiliate of Seller) or proceedings
pending, or to Seller's Knowledge, threatened against or affecting the
Transferred Assets or relating to the operations of the Hospitals, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, agency or instrumentality.
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5.9 LICENSES AND PERMITS
Seller possesses all certificates of need, licenses,
permits, and other governmental consents and approvals (the "PERMITS") necessary
for Seller's operation of the Hospitals at the locations and in the manner
presently operated except where Seller's failure to have such Permit would not
materially adversely impact Seller's operations of the Hospitals at the
locations and in the manner presently operated. Except as otherwise disclosed on
SCHEDULE "5.9", the Hospitals are fully accredited by the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO"), is certified for
participation in the Medicare, Medicaid and, if applicable CHAMPUS programs, has
a current and valid provider contract with each such program and, to Seller's
Knowledge, is in substantial compliance with the material conditions of
participation in each such program and with the indigent care conditions, if
any, contained in or related to any Permits obtained in connection with the
Hospitals. SCHEDULE "5.9" contains a list of all Permits held or applied for by
Seller which have an effect on the operation of the Hospitals. Except as
described in SCHEDULE "5.9", no written notices have been received by Seller
with respect to complaints lodged with any regulatory authority or agency or
with respect to threatened, pending, or possible revocation, termination,
suspension or limitation of any of said licenses and permits, nor, to Seller's
Knowledge, are there any grounds for revocation, suspension or limitation.
5.10 COMPLIANCE WITH LAWS
To Seller's Knowledge and with respect solely to the
Transferred Assets and the operation of the Hospitals, except as disclosed on
SCHEDULE "5.10", Seller is in compliance in all material respects with all
material applicable Laws other than the Environmental Regulations (the
compliance with which is governed by Paragraph 5.7), including, but not limited
to, Laws relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining and the payment of social
security and similar taxes, and Seller is not liable for any arrearages in wages
or any taxes or penalties for failure to comply with any of the foregoing.
5.11 EMPLOYEE RELATIONS
Except as disclosed on SCHEDULE "5.11", (a) neither Seller,
nor the Hospitals are a party to any agreement with any union, trade association
or other employee organization with respect to the employees of the Hospitals,
(b) no written demand has been made for recognition by a labor organization with
respect to any employees of the Hospitals, and (c) to Seller's Knowledge no
union organizing activities by or with respect to any such employees are taking
place.
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5.12 PERSONNEL
SCHEDULE "5.12" contains (a) a complete list of all of
Seller's current employees (by employee number) and rates of pay, fringe
benefits and written personnel policies, and (b) the date of hiring and job
title of each such person. Except as provided in SCHEDULE "1.1.5", Seller has no
employment agreements with any of the employees and all current employees are
employed on an "at will" basis. SCHEDULE "5.12" shall be revised as of the
Closing to reflect the employees who have been terminated within 90 days of the
Closing.
5.13 ASSUMED CONTRACTS
SCHEDULE "1.1.5" contains a true and correct list of all
Contracts other than those Contracts described in Paragraph 1.1.5(b). To
Seller's Knowledge, except as set forth on SCHEDULE "5.13", (a) there is no
default by Seller under any Assumed Contract, (b) Seller has not received
written notice that any Person intends to cancel or terminate any Assumed
Contract or exercise or not exercise any right, remedy or other option
thereunder, (c) all of the Assumed Contracts are in full force and effect
without amendment or modification, (d) the consummation of the transactions
contemplated by this Agreement will not constitute and, no event has occurred
which, with or without the passage of time or the giving of notice, would
constitute a breach or default by any party to any such Assumed Contract or
would cause the acceleration of any obligation of any party thereto or the
creation of any Lien upon any Transferred Asset, and (e) Seller has not waived
any material right under any Assumed Contract.
5.14 BROKERAGE AND FINDER'S FEES
None of Seller, its Affiliates or any of their officers or
directors has employed, contracted for the services of, or authorized any
broker, finder or investment banker with respect to the negotiations leading up
to the execution of this Agreement or the consummation of the transactions
contemplated hereby, and Seller shall be solely responsible for any fees or
commissions payable to any such broker, finder or investment banker by reason of
the actions (or alleged actions) of Seller, its Affiliates or any of their
officers or directors.
5.15 U.S. PERSONS
Seller is not a "foreign person" for purposes of Section
1445 of the Internal Revenue Code of 1986, as amended (the "CODE"), or any other
Laws requiring with holding of amounts paid to foreign Persons.
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5.16 INVENTORY
All of the Purchased Inventory will consist of items
actually on hand of a quality and quantity useable and saleable in the ordinary
course of business of the Hospitals as currently operated by Seller, consistent
with past practices.
5.17 CHANGES SINCE INTERIM STATEMENTS
From and after the date of the Interim Statements and until
the Closing Date, other than as contemplated or permitted by this Agreement,
Seller has conducted the Hospital Businesses only in the ordinary and normal
course, and except as shown on SCHEDULE "5.17", the institution or completion of
compliance programs, or events in anticipation of the divestiture of the
Hospital Businesses, there has not been:
(a) Any entry into or termination by Seller of any material
commitment, contract, agreement or transaction (including, without limitation,
any borrowing or lending transaction or capital expenditure) related to the
Hospital Businesses except for transactions in the ordinary course of business;
(b) Other than in the ordinary course of business, (i) any
sale or other disposition of any asset included in the Interim Statements having
net book value in excess of $75,000 (except to the extent such asset is replaced
by assets serving a similar purpose), or (ii) any material mortgage, pledge or
imposition of any lien or other encumbrances on any such asset, or (iii) any
sale or other disposition of Inventory included in the Interim Statements;
(c) Any change, or any request or application for a change
in, the provider numbers of the Hospitals, or any creation, modification or
termination of any agreement with any Payor, or any change in the method of
accounting with respect to the Hospitals; or
(d) Any general increase made in the compensation levels or
severance benefits of the employees of the Hospitals or rates charged by the
Hospitals, except in the ordinary course of business.
(e) Material adverse changes in the financial condition of
the Transferred Assets, the Hospital Businesses, or in the results of operations
of the Hospitals or Seller.
(f) Strikes, work stoppages or other labor disputes
adversely affecting the Hospitals.
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5.18 COST REPORTS, THIRD PARTY RECEIVABLES AND CONDITIONS OF
PARTICIPATION
Notices of Program Reimbursement have been issued by the
applicable fiscal intermediary with respect to the cost reports of the Hospitals
for Medicare, Medicaid (if required) and Blue Cross (if required) reimbursement
have been audited through the periods set forth in SCHEDULE "5.18." True and
correct copies of these cost reports and any cost reports since the date of the
last audited cost report have been provided to Buyer. Except as disclosed on
Schedule 5.18, the cost reports of the Hospitals for Blue Cross and Medicare
were filed when due in substantial compliance with the then existing Laws
pertaining thereto. Except as set forth in Schedule 5.18, to the Knowledge of
Seller, (a) Seller has not received notice of any adjustments, challenges,
intent to reopen, and/or material dispute between a Hospital and Blue Cross,
governmental authorities or the Medicare fiscal intermediary regarding such cost
reports for the periods subsequent to the period specified in Schedule 5.18
other than with respect to adjustments thereto made in the ordinary course of
business which do not involve individual amounts in excess of $50,000 per cost
report; (b) there are no pending or threatened material claims by any of such
programs against a Hospital or Seller; and (c) no Hospital or Seller has been
subject to loss of waiver of liability for utilization review denials with
respect to any such program during the past two years.
5.19 MEDICAL STAFF
Seller has previously delivered to Buyer, with respect to each
Hospital, (a) a true and correct copy of the blank forms generally used with
respect to medical staff privilege and membership application or delineation of
privilege; (b) all current medical staff bylaws, rules and regulations and
amendments thereto respecting the Hospitals; and (c) all written contracts with
physicians, physician groups, or other members of the medical staff of the
Hospitals. Except as disclosed in SCHEDULE "5.19," there are no material pending
or, to Seller's Knowledge, threatened disciplinary or corrective actions or
appeals therefrom involving physician applicants, acting medical staff members
or affiliated health professionals initiated by Seller.
5.20 XXXX-XXXXXX CARE
Except as disclosed on SCHEDULE "5.20," neither the Hospitals
nor Seller has received any loans, grants or loan guarantees pursuant to the
Xxxx-Xxxxxx Act (42 U.S.C. Section 291a, et seq.), the Health Professions
Educational Assistance Act, the Nurse Training Act, the National Health Pharmacy
and Resources Development Act, and the Community Mental Health Centers Act, as
amended, or any other federal, state or local statute or regulation or
government program whatsoever and the transactions contemplated hereby will not
result in any obligation on the part of the Buyer to repay any such loans,
grants or loan guarantees or provide uncompensated care in consideration
thereof.
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5.21 TAXES
All tax returns of every kind (including, without limitation,
returns of all income taxes, franchise taxes, real and personal property taxes,
intangibles taxes, patient revenue or other health care taxes, withholding
taxes, employee compensation taxes and all other Taxes of any kind applicable to
Seller) that are due to have been filed in accordance with applicable Laws in
fact have been duly filed, and all taxes shown to be due and payable on such
returns and any other Taxes (whether or not evidenced by a return) have paid in
full and correctly reflect the liabilities of Seller for taxes for the period
covered by each tax return.
5.22 ERISA PLANS
For purposes of this Agreement, the term "PLANS" shall mean
(i) all "Employee Benefit Plans" (as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of which
Seller ever was a sponsor or participating employer or as to which Seller makes
contributions or is required to make contributions and (ii) any similar
employment, severance or other arrangement or policy of Seller (whether written
or oral) providing for insurance coverage (including self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits or retirement benefits, or for profit sharing, deferred
compensation, bonuses, stock options, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits.
Notwithstanding any statement or indication in this Agreement to the contrary,
except as provided in Paragraph 3.1(b), there are no Plans as to which Buyer
will be required to make any contributions or with respect to which Buyer shall
have any obligation or liability whatsoever, whether on behalf of any of the
current employees of the Hospital Businesses after the Closing.
5.23 NO NEGOTIATIONS WITH THIRD PARTIES
Neither Seller nor its Affiliates have entered into any
negotiations, letters of intent, or understandings which are presently in
effect, with any Person (other than Buyer) with respect to the sale or other
disposition of any of the Transferred Assets (other than Inventory in the
ordinary course of business). Neither Seller nor its Affiliates is a party to
any presently effective executory agreement with any Person other than Buyer
with respect to any such sale or disposition.
5.24 MISCELLANEOUS REPRESENTATIONS RELATING TO REAL PROPERTY
(a) To Seller's Knowledge, the Hospitals are not in
material violation of applicable building code, safety, fire, land use or access
Laws.
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(b) No part of the Real Property is currently subject to
condemnation proceedings and, to Seller's Knowledge, no condemnation or taking
is threatened or contemplated.
(c) Seller has furnished to Buyer complete copies of all
mechanical and structural studies or reports or assessments, engineering plans,
architectural drawings, soil studies, surveys and other documents in Seller's
possession which have been prepared by or at the direction of Seller or its
Affiliates relating to any of the Transferred Assets.
5.25 MOTOR VEHICLES
All motor vehicles used in the business of Seller, identified
as owned or leased, are listed in SCHEDULE "5.25" hereto. All such vehicles are
properly licensed and registered in accordance with applicable Law.
6. OBLIGATIONS AND COVENANTS OF SELLER
Seller hereby covenants and agrees as follows:
6.1 CONDUCT OF BUSINESS
From the date hereof to the Closing Date, Seller agrees that,
with respect to the Hospital Businesses, unless Buyer otherwise consents in
writing and except for actions taken pursuant to Assumed Contracts in effect on
the date hereof or which arise from or are related to the anticipated transfer
of the Hospital Businesses or as otherwise contemplated by this Agreement,
Seller shall do or comply with each of the following:
(a) Subject to the limitations set forth in this
Paragraph 6.1, operate the Hospital Businesses as presently operated and only in
the ordinary course, and, consistent with such operation, will comply in all
material respects with all applicable legal and contractual obligations.
(b) Use its best efforts to preserve the business
organization of the Hospital Businesses intact and to preserve the Hospital
Businesses' relationships with doctors, patients, Payors, suppliers and others
having business relations with the Hospital Businesses.
(c) Not incur or commit to incur any obligation with
respect to purchase orders for the Hospital Businesses which exceed $40,000 for
any one purchase order or $150,000 for all such purchase orders per Hospital.
(d) Not enter into any contract or amendment of a
contract (other than a contract which is described in Paragraph 1.1.5(b)) unless
Buyer has failed to disapprove of such contract or amendment in a written notice
to Seller given within five business days of
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Seller's written notice to Buyer of such contract or amendment accompanied by a
copy thereof. Buyer's disapproval of such contract or amendment shall not be
unreasonable. Any contract or amendment entered into in compliance with this
Paragraph 6.1(d) shall constitute an Assumed Contract for all purposes of this
Agreement as if it were originally set forth on Schedule 1.1.5. Notwithstanding
the foregoing, Seller may enter into any contract which can be terminated
without cause, premium or payment within 90 days of the Closing Date or, if such
contract is a lease under which Seller is lessor, such contract contains terms
which are consistent with its past practices, are commercially reasonable and
not in violation of any Law or safe harbor therein contained.
(e) Not (i) purchase or sell, or make any contract for
the purchase or sale of, any assets or properties which would be included in the
Transferred Assets other than purchases in the thresholds set forth in
subparagraph (c) above unless concurrently with or within a reasonable time
before or after such sale, Seller replaces such asset with a similar item of
equal or greater value; or (ii) accelerate or delay the purchase of Inventory in
a manner inconsistent with past practice, except as required by subparagraph (c)
above.
(f) Not grant any general or uniform increase in the
rates of pay or benefits to the employees of the Hospital Businesses (or a class
thereof), except for compensation previously agreed to prior to the date hereof
and merit pay increases agreed to prior to the date hereof.
(g) Maintain, without change of coverage or insurance
carrier unless approved of in writing by the Buyer (which approval shall not be
unreasonably withheld or delayed), the existing insurance on the Transferred
Assets and the operations of the Hospitals.
(h) Timely file or cause to be filed all cost reports and
other reports of every kind, nature or description, required by law or by
contract to be filed with respect to the purchase of services by Payors prior to
Closing.
Nothing in this Paragraph 6.1 shall, without the mutual
written agreement of Buyer and Seller, obligate Seller to make expenditures
other than in the ordinary course of business or to make any commitment on
behalf of or which would be binding upon Buyer. Notwithstanding any provision
contained in this Agreement to the contrary, Seller may give notice of
termination or may terminate at any time prior to the Closing Date any contract
which is not an Assumed Contract, and any change in the operation of the
Hospital Businesses or the Hospital Businesses' relationships with the Persons
listed in subparagraph (b) above (including, without limitation, a loss of any
or all of the employees or patients of, or doctors of other professional
providing services to, the Hospital Businesses) as a result of such notice of
termination or termination or as a result of Seller's compliance with its
obligations under this Agreement shall not constitute a violation of this
Paragraph 6.1.
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6.2 ACCESS AND INFORMATION
Subject to the restrictions set forth in Paragraph 14.6 and
provided that Buyer has complied with each and every provision thereof, Seller
shall afford Buyer, any prospective lender of Buyer, and the counsel,
accountants and other representatives of Buyer and any such lender, reasonable
access, throughout the period from the date hereof to the Closing, to the
Transferred Assets and the employees, personnel and medical staff of the
Hospital Businesses and all the properties, books, contracts, commitments, cost
reports and records of the Hospital Businesses (regardless of where such
information may be located), including, without limitation, the right to conduct
an Environmental Survey (as such term is defined in Paragraph 8.2). Until the
first anniversary of the Closing Date, under no circumstances shall Buyer
directly or indirectly solicit the employment of any employees of Seller based
at any of the Hospitals, except as Hired Employees pursuant to the terms hereof
or except as may be permitted with the prior written consent of a responsible
officer of Seller. Such access shall be afforded after no less than 24 hours
prior notice, during normal business hours and only in such manner so as not to
disturb patient care or to interfere with the normal operations of the Hospital
Businesses; provided, however, that notwithstanding the foregoing and subject to
the provisions concerning nondisclosure as set forth in Paragraph 14.6, without
first obtaining the consent of Xxxxxx X. Xxxxxx, neither Buyer, any prospective
lender of Buyer, nor their respective counsel, accountants and other
representative, shall tour or visit the Hospital Businesses or contact any of
the employees, personnel or medical staff of the Hospital Businesses and any
such tour, visit or contact during the Inspection Period shall take place only
during a period of time, not to exceed ten days, to be mutually agreed upon by
Buyer and Seller. Seller also shall furnish to Buyer all such information
concerning the affairs of the Hospital Businesses as is in the possession or
control of Seller and as Buyer may reasonably request, including the right to
have copies and/or extracts of pertinent records, documents and contracts. In
addition, Seller shall provide such written consents and authorizations as may
be necessary for Buyer to have access to materials on file with governmental
agencies. Nothing in this Agreement to the contrary shall in any manner restrict
the ability of Buyer to discuss the business and affairs of the Hospital
Businesses with any governmental agency having jurisdiction over the Hospital
and/or this transaction or the fiscal intermediaries administering the
Hospitals' Payor programs. Seller's covenants under this Paragraph 6.2 are made
with the understanding that Buyer and any other Person provided with access to
information under this Paragraph 6.2 shall use all such information in
compliance with all Laws. Neither Buyer nor any other Person shall have access
to employee records, Patient Records or any other records to the extent that the
disclosure of such records would be prohibited by any Law, accreditation
standards, or rule or agreement (express or implied) of confidentiality or
violate or breach any attorney-client privilege.
6.3 ENCUMBRANCES
From the date hereof and until the Closing, Seller shall not
create any new Lien to attach upon any of the Transferred Assets, except for
statutory liens for Taxes not
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delinquent as of Closing. The provisions of this Paragraph shall not apply to
any Liens resulting from acts or omissions of Buyer.
6.4 CONSENT OF OTHERS
Prior to the date hereof, Buyer has designated in writing
which Assumed Contracts Buyer desires the written consent to the assignment from
Seller to Buyer from the other party thereto (the "DESIRED CONSENTS"), the list
of which is attached hereto as SCHEDULE "6.4". As soon as reasonably practicable
after the date hereof, and in any event prior to the Closing, Seller shall use
its reasonable commercial efforts to obtain the Desired Consents; provided,
however, that it shall not be a condition precedent to Buyer's obligations
hereunder, that Seller obtain all of the Desired Consents (except for the
consents listed in Paragraph 9.4) prior to Closing. The foregoing
notwithstanding, it shall be the responsibility of Buyer to use its reasonable
commercial efforts to obtain any consents required in connection with the
Permits, participations, and accreditations referred to in Paragraph 9.5
(including Buyer's licensing requirements), provided, however, Seller shall
cooperate with Buyer in obtaining such consents so long as such cooperation is
at no cost to Seller. Seller shall have no liability to Buyer if, after using
its reasonable commercial efforts, it is unable to obtain any of the consents
referred to in the first sentence of this Paragraph.
6.5 NO TRANSFER OF ASSETS
Except as otherwise provided in Paragraph 6.1, from and after
the date hereof and until the Closing Date, Seller shall not, without the prior
written consent of Buyer: (a) offer for sale or other disposition (whether by
lease, merger or otherwise) the Transferred Assets (or any material portion
thereof) or any ownership interest in any entity owning any of the Transferred
Assets, (b) solicit offers to acquire (whether by lease, merger or otherwise)
the Transferred Assets (or any material portion thereof) or any ownership
interest in any entity owning any of the Transferred Assets, (c) hold
discussions with, or furnish any information to, any Person (other than Buyer)
looking toward such an offer or solicitation or looking toward a merger or
consolidation of any entity owning any of the Transferred Assets or (d) enter
into any agreement (including, but not limited to, any confidentiality or
similar agreement, letter of intent, memorandum or letter of understanding, or
definitive agreement) with any Person (other than Buyer) with respect to the
sale or other disposition (whether by lease, merger or otherwise) of the
Transferred Assets (or any material portion thereof) or any ownership interest
in any entity owning any of the Transferred Assets or with respect to any
merger, consolidation, or similar transaction involving any entity owning any of
the Transferred Assets.
6.6 SELLER'S EFFORTS TO CLOSE
Seller shall use its reasonable commercial efforts to satisfy
all of the conditions precedent set forth in Paragraphs 9 and 10 to its or
Buyer's obligations under this
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Agreement to the extent that Seller's action or inaction can control or
influence the satisfaction such conditions.
6.7 MONTHLY STATEMENTS
From the date hereof to the Closing, Seller shall deliver to
Buyer within 15 days after the end of each calendar month copies of the
unaudited balance sheet of the Transferred Assets and the related statement of
income for the immediately preceding calendar month (the "MONTHLY STATEMENTS").
7. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants the following:
7.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly incorporated, and validly existing
under the laws of, and is authorized to exercise its corporate powers, rights
and privileges and is in good standing in, the State of Tennessee and has full
corporate power to carry on its business as contemplated hereby and to own or
lease and operate its properties and assets now owned or leased and operated by
it.
7.2 AUTHORITY
Buyer has the full corporate power and authority to execute,
deliver and perform the obligations and covenants set forth in this Agreement
and to carry out the transactions contemplated herein. The execution, delivery
and performance of this Agreement by Buyer and the consummation of the
transactions contemplated herein have been duly authorized by the Board of
Directors of Buyer. No further corporate action is necessary on the part of
Buyer to make this Agreement binding upon and enforceable against Buyer in
accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect relating to creditors' rights generally and except that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding may be brought. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
(a) violate any Law applicable to Buyer or (b) violate or conflict with any
provision of the Articles of Incorporation or Bylaws of Buyer.
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7.3 BROKERAGE AND FINDER'S FEES
As of the date hereof, none of Buyer, its Affiliates or any of
their officers or directors has employed, contracted for the services of or
authorized any broker, finder or investment banker with respect to the
negotiations leading up to the execution of this Agreement or the consummation
of the transactions contemplated hereby, and Buyer shall be solely responsible
for any fees or commissions payable to any such broker, finder or investment
banker by reason of the actions (or alleged actions) of Buyer, its Affiliates or
any of their officers or directors making a claim for such fees or commissions
whether pursuant to an agreement entered into after the date hereof or
otherwise.
7.4 PERMITS AND ACCREDITATIONS
There is no matter known to Buyer which would adversely affect
the obtaining by Buyer of any Permits or accreditations necessary for the
operation by Buyer of the Hospital Businesses as of the Closing in the same
manner as the Hospital Businesses are presently operated by Seller. Each of
Buyer and its Affiliates possess all Permits and accreditations necessary to
permit them to operate the health care facilities operated by them. All such
health care facilities have been accredited by the JCAHO. Neither Buyer nor any
of its affiliates has received any notice or has any knowledge of any matter
which would materially adversely effect the maintenance of any such Permits or
accreditations.
7.5 NO KNOWLEDGE OF SELLER'S BREACH
Neither Buyer nor any of its Affiliates has Knowledge of any
breach of any representation or warranty by Seller or of any other condition or
circumstance that would excuse Buyer from its timely performance of its
obligations hereunder. If any of Buyer's Designated Representatives (as defined
herein) shall have received or reviewed any written information (a "WRITTEN
STATEMENT") indicating that Seller has made a misstatement in or omission from
any representation or warranty of Seller under this Agreement before the Closing
Date (whether through Seller or otherwise), then for the purpose of Seller's
liability under the corresponding representations and warranties in this
Agreement after the Closing Date, the effect shall be as if the corresponding
representations and warranties were so modified in this Agreement as of the
Closing Date; provided, however, that (a) Buyer's opportunity to make an
investigation (including, but not limited to its due diligence investigation) of
the Transferred Assets shall not limit the express representations and
warranties of Seller made herein, unless any of Buyer's Designated
Representatives has received or reviewed a Written Statement, and (b) Buyer must
notify Seller within 48 hours (or promptly, if 15 days or less prior to the
Closing Date) if any such information comes to its attention before the Closing
Date, and Buyer's failure to so notify Seller shall constitute a waiver by Buyer
of Seller's breach, if any, of any representation or warranty to which such
Written Statement relates, or a waiver of such condition or circumstance insofar
as it would
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excuse Buyer from its timely performance of obligations. As used herein,
"BUYER'S DESIGNATED REPRESENTATIVES" shall mean Xxxx X. XxXxxx and Xxxx X.
XxXxxxxx, Xx.
7.6 NO ASSURANCE
Buyer acknowledges and agrees that the rates or bases used in
calculating payments or reimbursements to it by any Payor (including but not
limited to Medicare) may differ from the rates and bases used in calculating
such payments or reimbursements to Seller; provided, however, that Seller will
notify Buyer of any changes in said rates arising prior to Closing of which
Seller has Knowledge.
8. OBLIGATIONS AND COVENANTS OF BUYER
Buyer hereby covenants and agrees as follows:
8.1 CONSENT OF OTHERS
As soon as reasonably practicable after the date of this
Agreement, and in any event prior to the Closing, Buyer shall use its reasonable
commercial efforts to obtain the consents required to be obtained by Buyer
hereunder of all necessary Persons and governmental agencies having jurisdiction
over this transaction to the consummation of the transactions contemplated
hereunder, including, without limitation, the Permits, participations and
accreditations referred to in Paragraph 9.5.
8.2 INSPECTION
Prior to the date of this Agreement, Buyer commenced its due
diligence investigation and inspection of the Transferred Assets (structural,
operational, environmental, title or otherwise) and of the business, prospects
and affairs of the Transferred Assets and the Hospital Businesses (the
"INSPECTION"). As Buyer has not completed the Inspection prior to the date of
this Agreement, Buyer hereby covenants and agrees that Buyer shall complete the
Inspection on or before the expiration of the Inspection Period referred to in
Paragraph 9.3, provided that Seller has fully and timely responded to all due
diligence requests made by Buyer or its representatives, and all costs and
expenses incurred in connection with the Inspection shall be borne by Buyer
except as otherwise specifically set forth herein. As part of the Inspection,
(i) Seller has obtained and delivered to Buyer (a) preliminary title reports
(the "PRELIMINARY TITLE REPORTS") issued by Chicago Title Insurance Company (the
"TITLE COMPANY") with respect to the Real Property, the Lander Property, and the
Woodland Park Property, together with true, correct and legible copies of all
instruments referred to therein as conditions or exceptions to title, (b) UCC
search reports covering each Seller (and, to Seller's Knowledge, all trade names
and d/b/a's used by the Hospitals and the Hospital Businesses ("UCC REPORTS"),
and (ii) Buyer has obtained (x) written environmental surveys of the Real
Property, the Lander Property and the Woodland Park Property (collectively, the
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"ENVIRONMENTAL SURVEY") prepared by an environmental consulting firm (the
"CONSULTANT"), and (y) ALTA surveys complying with the Minimum Standard Detail
Requirements for ALTA/ASCM Land Title Surveys (the "SURVEYS") for the Real
Property, the Lander Property and the Woodland Park Property, and Buyer has
delivered copies of the Environmental Survey (including the final reports and
all draft reports) and the Surveys to Seller. Buyer and Seller acknowledge and
agree that the Environmental Survey as of the date of this Agreement is only an
initial environmental site assessment (the "PHASE I ASSESSMENTS") but will
include, if subsequently determined by Buyer and the Consultant to be necessary
or prudent, and if Buyer thereafter directs the Consultant to undertake the same
(at Buyer's sole cost and expense) a further investigation with respect thereto
(the "PHASE II INVESTIGATION") of the Real Property, the Lander Property and/or
the Woodland Park Property and that thereafter all references in this Agreement
to the Environmental Survey shall mean both the Phase I Assessment and all Phase
II Investigations. The right of access granted to Buyer pursuant to Paragraph
6.2 shall include the right to inspect, sample, test or perform any other
service or procedure reasonably necessary for the preparation of the
Environmental Survey. Buyer shall give Seller no less than 24 hours' notice
before the Consultant enters onto the Real Property, the Lander Property or the
Woodland Park Property to conduct the Phase II Investigation, which shall be
conducted so as not to interfere with the normal operation of the Hospital
Businesses. Seller shall be permitted to have one of its employees present
during all inspections of and sample gatherings (including borings) from the
soil or any floor tile, insulation or other internal component of the Real
Property, the Lander Property and the Woodland Park Property.
8.3 BUYER'S EFFORTS TO CLOSE
Buyer shall use its reasonable commercial efforts to satisfy
all the conditions precedent set forth in Paragraphs 9 and 10 to its or Seller's
obligations under this Agreement to the extent that Buyer's action or inaction
can control or influence the satisfaction of such conditions.
8.4 WAIVER OF BULK SALES LAW COMPLIANCE
Subject to the indemnification provisions of Paragraph 16.1,
Buyer hereby waives compliance by Seller to the extent permitted by Law with the
requirements, if any, of Article 6 of the Uniform Commercial Code as in force in
any state in which the Transferred Assets are located and all other similar Laws
applicable to bulk sales and transfers.
8.5 ABILITY TO PERFORM
Attached hereto as EXHIBIT "8.5" is a letter from TD
Securities to Xxxx XxXxxxxx, Xx. dates December 10, 1997 (the "COMMITMENT
LETTER"), wherein TD Securities has listed the lenders who have committed
definitively to participate in Buyer's $132,500,000 Senior Secured Credit
Facility. Buyer hereby agrees from and after the date hereof, to take no
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action which would cause such lenders to withdraw their commitment to
participate in the Senior Secured Credit Facility.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction or Buyer's waiver in writing, at or prior to the Closing, of each
of the following additional conditions:
9.1 ACCURACY OF WARRANTIES AND REPRESENTATIONS
Each of the representations and warranties of Seller set forth
in this Agreement and in the Disclosure Statement delivered pursuant hereto
shall be true and correct in all material respects as of the date of this
Agreement and at and as of the Closing Date with the same force and effect as
though such representations and warranties had been made as of the Closing Date,
except as to changes occurring in the ordinary course of business of the
Hospital Businesses after the date of this Agreement and not materially
adversely affecting the business, properties or financial condition of the
Hospital.
9.2 PERFORMANCE OF OBLIGATIONS
Seller shall have performed in all material respects all
agreements and covenants required by this Agreement to be performed by it on or
prior to the Closing.
9.3 APPROVAL OF INSPECTION
Buyer shall have approved, subject to the provisions of
Paragraph 14.7, the results of the Inspection in the manner set forth in this
Paragraph 9.3. Buyer shall complete the Inspection on or before the date which
is ten days from the date hereof (the "INSPECTION PERIOD"). On or prior to the
expiration of the Inspection Period, Buyer shall give Seller written notice of
its approval or disapproval of the Inspection. If Buyer gives notice of its
disapproval of the Inspection, such notice must specify the items to which Buyer
objects which led Buyer to disapprove the Inspection and the satisfaction of the
requirements of this Paragraph 9.3 shall be governed by Paragraph 14.7. If Buyer
fails to deliver to Seller a proper and timely notice of disapproval of the
Inspection, Buyer shall be deemed to have approved the Inspection.
9.4 THIRD PARTY CONSENTS
Woodland Park Hospital, Inc. shall have entered into an
amendment to the Woodland Park Lease to extend the term of the Lease to December
31, 2019 and Buyer shall have received the consent to the assignment by Seller
of the Woodland Park Lease in a form reasonably acceptable to Buyer.
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9.5 PERMITS AND PROGRAM PARTICIPATION
Buyer shall have obtained (or received reasonable assurances
that it shall obtain) all Permits and accreditations required for the operation
of the Hospitals by Buyer following the Closing in substantially the same manner
as currently operated, and Buyer shall have obtained (or received reasonable
assurances that it shall obtain within a reasonable period of time after the
Closing) Medicare, Medicaid and CHAMPUS certification of the Hospitals and the
participation by the Hospitals in the program of any other Payor reasonably
determined by Buyer that will in each instance be effective as of the Closing
and that within a reasonable period of time after the Closing the Hospitals may
participate in or receive reimbursement from all such programs effective as of
the Closing.
9.6 TAX MATTERS
Seller shall have delivered to Buyer a duly executed
certificate of nonforeign status in the form required by Section 1445 of the
Code.
9.7 TITLE INSURANCE
At the Closing, Buyer shall have received either (a) ALTA (or
the local equivalent thereof) extended coverage owner's policies (or, with
respect to the Lander Property and the Woodland Park Property, a leasehold
owner's policy) of title insurance issued by the Title Company to Buyer insuring
title to the Real Property, the Lander Property and the Woodland Park Property
in an amount equal to the portion of the Purchase Price allocated to the Real
Property, the Lander Property and the Woodland Park Property pursuant to
Paragraph 14.5, showing good and marketable title to the Real Property and good
and marketable leasehold title to the Lander Property and the Woodland Park
Property vested in Buyer free and clear of all Liens except (i) statutory liens
not yet delinquent, (ii) the Permitted Exceptions, (iii) any matter that may be
disclosed by the Surveys, and (iv) all other matters and exceptions approved,
deemed approved or waived by Buyer during the Inspection Period (collectively
the "TITLE POLICY"), or (b) the written commitments or binders of the Title
Company to issue the Title Policy in the aforementioned condition within a
reasonable time after the Closing Date. Seller shall, at Buyer's expense,
execute and deliver such certificates and affidavits as may be reasonably
required to delete the standard printed exceptions which are capable of being
deleted from the Title Policy.
9.8 INSTRUMENTS OF TRANSFER
At the Closing, Seller shall have delivered to Buyer or Escrow
Agent (as hereinafter defined in Paragraph 11), as the case may be, such special
or limited warranty deeds for the Real Property, assignments of lease for the
Real Property Leases, Bills of Sale and other good and sufficient instruments of
transfer, conveyance and assignment as are reasonably requested by Buyer and
reasonably satisfactory to counsel for Buyer and Seller and
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which shall be effective to vest in Buyer title to the Transferred Assets in
accordance with SECTION "5.4". Seller shall also execute and deliver, at no
additional expense to Seller, such instruments as may be reasonably required by
the Title Company in order to issue any endorsements obtained by Buyer, at
Buyer's expense; provided, however, that the issuance of any such endorsements
shall not be a condition to Closing.
9.9 OFFICER'S CERTIFICATE
Seller shall have delivered to Buyer (a) a certificate, dated
the Closing, executed by its President, any Vice President or any authorized
signatory on behalf of Seller (and not in such person's individual capacity),
stating that as of the Closing (i) Seller knows of no facts except as
specifically disclosed in writing in such certificate which would cause Seller
to be in breach of any of its representations and warranties hereunder, (ii) to
Seller's Knowledge, Seller has duly performed in all material respects all
obligations and covenants to be performed by it hereunder and (b) good standing
certificates for each Seller from the Secretary's of State of their respective
states of incorporation, dated as of a date not earlier than ten business days
prior to the Closing Date.
9.10 CERTIFIED RESOLUTIONS
A copy of the following shall have been delivered to Buyer:
the resolutions of the Board of Directors of each Seller (and any shareholder of
Seller, if required) authorizing the execution of this Agreement and the
performance of the transactions contemplated hereby, together with an incumbency
certificate from each Seller, all of which shall be certified as true, correct
and effective as of the Closing Date by the Secretary or Assistant Secretary of
each Seller.
9.11 XXXX-XXXXX-XXXXXX ACT
Seller shall have complied with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1975 (15 U.S.C. Section 18A) and the rules
promulgated thereunder (said statute and rules are collectively referred to
hereinafter as the "PREMERGER RULES"), together with all other Laws concerning
antitrust and fair trade. The applicable waiting period required under the
Premerger Rules shall have expired without objection or shall have been waived,
and all other consents or approvals required by such other Laws shall have been
obtained.
9.12 ADVERSE ACTION
No bona fide action or proceeding shall be pending against
either Buyer or Seller wherein an unfavorable judgment, decree or order would
prevent or make unlawful the carrying out of the transactions contemplated by
this Agreement or would compel Buyer's divestiture of all or any part of the
Transferred Assets or otherwise restrict Buyer's operation
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of the Transferred Assets; and no governmental agency shall have notified either
Buyer or Seller that the consummation of the transactions by this Agreement
would constitute a violation of Laws of any jurisdiction or would compel Buyer's
divestiture of all or any part of the Transferred Assets or otherwise restrict
Buyer's operation of the Transferred Assets or that it has commenced or intends
to commence proceedings to restrain the consummation of the transactions
contemplated hereunder and such agency has not withdrawn such notice.
9.13 PARENT GUARANTY
At the Closing, Xxxxx Healthcare Corporation, a Nevada
corporation ("SELLER'S PARENT"), the ultimate parent of all entities comprising
Seller, shall have delivered to Buyer a guaranty of Seller's performance of its
obligations hereunder, which guaranty shall be substantially in the form of
EXHIBIT "9.13".
9.14 OPINION OF SELLER'S COUNSEL
Buyer shall have received an opinion from the general counsel,
associate general counsel or senior counsel of Seller, dated as of the Closing
Date and addressed to Buyer stating that (a) each Seller is a corporation
validly existing and in good standing under the laws of the state of its
incorporation and (b) this Agreement has been duly and validly authorized,
executed and delivered by each Seller and is not contrary to the Articles of
Incorporation or bylaws of such Seller. In rendering such opinion, such counsel
may rely upon certificates of governmental officials and may place reasonable
reliance upon certificates of officers of each Seller. The opinion of counsel
shall be limited, however, to California and federal laws and shall be subject
to such other customary conditions and limitations as are applicable.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
satisfaction or Seller's waiver in writing, at or prior to the Closing, of each
of the following additional conditions:
10.1 ACCURACY OF WARRANTIES AND REPRESENTATIONS
Each of the representations and warranties of Buyer set forth
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and at and as of the Closing Date with the same force and
effect as though such representations and warranties had been made as of the
Closing Date, except as to changes occurring in the ordinary course of business
of Buyer after the date of this Agreement and not materially adversely affecting
the business, properties or financial condition of the Buyer.
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10.2 PERFORMANCE OF OBLIGATIONS
Buyer shall have performed in all material respects all
agreements and covenants required by this Agreement to be performed by it on or
prior to the Closing.
10.3 PAYMENT OF PURCHASE PRICE
Buyer shall have delivered, or caused to be delivered, to
Seller at the Closing (a) the immediately available funds described in Paragraph
2.3(a)(i), (b) the Bills of Sale and (c) immediately available funds in an
amount equal to the costs to be reimbursed to Seller by Buyer pursuant to
Paragraph 19.9, net of amounts owed to third parties by Seller pursuant to
Paragraph 19.9.
10.4 OFFICER'S CERTIFICATE
Buyer shall have delivered to Seller (a) a certificate, dated
the Closing, executed by its President or any Vice President, on behalf of Buyer
(and not in such person's individual capacity), stating that as of the Closing
(i) Buyer knows of no facts except as specifically disclosed in writing in such
certificate which would cause Buyer to be in breach of any of its
representations and warranties hereunder (ii) to the best of Buyer's Knowledge,
Buyer has duly performed all obligations and covenants to be performed by it
hereunder and (b) good standing certificates for Buyer from the Secretary of
State of Tennessee, dated as of a date not earlier than ten business days prior
to the Closing Date.
10.5 CERTIFIED RESOLUTIONS
Copies of the following shall have been delivered to Seller:
(a) the resolutions of the Board of Directors of Buyer authorizing the execution
of this Agreement and the performance of the transactions contemplated hereby
which shall be certified as true, correct and effective as of the Closing Date
by the Secretary or Assistant Secretary of Buyer and (b) an incumbency
certificate of Buyer which shall be certified as true, correct and effective as
of the Closing Date by the Secretary or Assistant Secretary of Buyer.
10.6 XXXX-XXXXX-XXXXXX ACT
Buyer shall have complied with the Premerger Rules and all
other Laws concerning antitrust and fair trade. The applicable waiting period
required under the Premerger Rules and such other Laws shall have expired
without objection or shall have been waived, and all other consents or approvals
required by such other Laws shall have been obtained.
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10.7 ADVERSE ACTION
No bona fide action or proceeding shall be pending against
either Buyer or Seller wherein an unfavorable judgment, decree or order would
prevent or make unlawful the carrying out of the transactions contemplated by
this Agreement or would compel Buyer's divestiture of all or any part of the
Transferred Assets or otherwise restrict Buyer's operation of the Transferred
Assets; and no governmental agency shall have notified either Buyer or Seller
that the consummation of the transactions contemplated by this Agreement would
constitute a violation of Laws of any jurisdiction or would compel Buyer's
divestiture of all or any part of the Transferred Assets or otherwise restrict
Buyer's operation of the Transferred Assets or that it has commenced or intends
to commence proceedings to restrain the consummation of the transactions
contemplated hereunder and such agency has not withdrawn such notice.
10.8 CONTINUED EXISTENCE OF COMMITMENT LETTER
The Commitment Letter shall be in full force and effect and
all lenders listed therein shall have taken such action as is necessary to
enable them to fund Buyer's Senior Secured Credit Facility on or before the
Closing Date.
10.9 OPINION OF BUYER'S COUNSEL
Seller shall have received an opinion from Xxxxxxx Xxxxxx Xxxx
Xxxxxxx & Manner, P.C., counsel to Buyer, dated as of the Closing Date and
addressed to Seller stating that (a) Buyer (and each of Buyer's Subsidiaries if
Buyer's Subsidiaries will, pursuant to Paragraph 19.5, take title to the
Transferred Assets) is a corporation validly existing and in good standing under
the laws of the State Tennessee (and, with respect to each such Buyer's
Subsidiary, its respective state of incorporation) and (b) this Agreement has
been duly and validly authorized, executed and delivered by Buyer and is not
contrary to the Articles of Incorporation or bylaws of Buyer. In rendering such
opinion, such counsel may rely upon certificates of governmental officials and
may place reasonable reliance upon certificates of officers of Buyer. The
opinion of counsel shall be limited, however, to Tennessee and federal laws and
shall be subject to such other customary conditions and limitations as are
applicable.
11. CLOSING
The Closing shall take place on January 31, 1998, at a time and a place
mutually agreeable to the parties or, subject to the limitations set forth in
Paragraph 17.1(c), such later date as all conditions precedent to the parties'
obligations set forth in Paragraphs 9 and 10 shall have been satisfied, waived
or are capable of being performed as of such date. The date on which the Closing
actually occurs shall be referred to herein as the "CLOSING DATE". The Closing
shall be effective for all purposes as of 12:01 a.m. (determined by reference to
the local
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time zones in which the Hospital Businesses are located) on the day immediately
following the Closing. The term "CLOSING" as used in this Agreement shall mean
the meeting of Buyer and Seller at which (of, if an escrow is established with
Escrow Agent (as hereinafter defined in Paragraph 11.2), the actions of Escrow
Agent by which) the documents and instruments referred to in Paragraph 9.8 are
delivered to Buyer, the documents and funds referred to in Paragraph 10.3 are
delivered to Seller and the other actions required to be taken hereunder shall
have been taken.
11.1 PRE CLOSING
A pre-closing of the transactions contemplated hereunder may,
if either party so elects, be held at a time and place mutually agreeable to
counsel to each of the parties on the day preceding the Closing Date.
11.2 ESCROW
If either of the parties desires to consummate the Closing
through an escrow, an escrow shall be opened with (and the escrow agent shall
be) Chicago Title Company, an Affiliate of the Title Company ("ESCROW AGENT"),
by depositing a fully executed copy of this Agreement with Escrow Agent to serve
as escrow instructions. This Agreement shall be considered the primary escrow
instructions between the parties, but the parties shall execute such additional
standard escrow instructions as Escrow Agent shall require in order to clarify
the duties and responsibilities of Escrow Agent. In the event of any conflict
between this Agreement and such additional standard escrow instructions, this
Agreement shall prevail. On the Closing Date, Escrow Agent shall (a) cause the
special or limited warranty deeds for the Real Property, together with any other
documents which the parties hereto may mutually designate, to be recorded in the
official records of the appropriate county on the Closing Date, (b) issue and
deliver to Buyer the Title Policy, or the binding commitment of the Title
Company to issue the Title Policy, (c) deliver to Seller by wire transfer of
immediately available funds to the account or accounts designated by Seller the
Purchase Price referred to in Paragraph 2.3(a)(i) and the costs to be reimbursed
to Seller by Buyer pursuant to Paragraph 19.9 (net of the amount of costs to be
reimbursed to Buyer by Seller), (d) deliver to Buyer the other agreements,
documents and instruments set forth in Paragraph 11.3(a), and (e) deliver to
Seller the other agreements, documents and instruments set forth in Paragraph
11.3(b).
11.3 DELIVERIES AT CLOSING
At the Closing, Buyer shall cause the Purchase Price referred
to in Paragraph 2.3(a)(i) and the costs to be reimbursed to Seller by Buyer
pursuant to Paragraph 19.9 to be wired to the account or accounts designated by
Seller and, upon written confirmation from the sending bank that said wire
transfer has commenced (which written confirmation shall include the
confirmation number of such wire transfer), the parties shall
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take the actions set forth below; provided, however, that if the Closing is to
be consummated through Escrow Agent, then on or prior to the Closing Date, Buyer
shall cause such funds to be wired to the Escrow Agent and upon Escrow Agent's
confirmation of its receipt of such funds, the parties shall undertake such
actions by making the deliveries described below to Escrow Agent for recordation
and/or delivery on the Closing Date.
(a) Seller. Seller shall deliver to Buyer the deeds and
other instruments of transfer, conveyance and assignment as described in
Paragraph 9.8, the other agreements, documents and instruments referred to in
Paragraph 9.
(b) Buyer. Buyer shall deliver to Seller the agreements,
certificates, documents and instruments referred to in Paragraph 10.
12. "AS IS" PURCHASE
Buyer acknowledges and agrees (and upon which Seller shall have
materially relied in selling the Transferred Assets to Buyer at the Purchase
Price and on the other terms and conditions herein set forth) that prior to the
expiration of the Inspection Period Buyer shall have completed the Inspection
(including its full and complete inspection of the Transferred Assets) and upon
the Closing shall conclusively be deemed to have been satisfied with the results
of the Inspection and with any cure of any Disapproved Item by Seller pursuant
to Paragraph 14.7. Based on the Inspection, Buyer is purchasing the Transferred
Assets on an "AS IS" basis and in "WITH ALL FAULTS" condition and except as
otherwise specifically provided in this Agreement, Seller makes no
representation or warranty, whether expressed or implied, regarding the physical
condition of the Transferred Assets, their fitness or suitability for any
particular purpose, or their compliance with applicable local building codes,
safety, fire, land use or access laws (including, without limitation, the
Americans With Disabilities Act), or any similar Law.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER, BY ITS SIGNATURE BELOW,
HEREBY ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS
AGREEMENT, NEITHER SELLER, NOR ANY OF ITS OFFICERS, EMPLOYEES, AFFILIATES OR
AGENTS, HAS MADE ANY REPRESENTATION OR WARRANTY REGARDING THE TRANSFERRED
ASSETS, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF HABITABILITY OR WARRANTY
OF MERCHANTABILITY OR WARRANTY OF SUITABILITY FOR A PARTICULAR PURPOSE, AND
BUYER HEREBY EXPRESSLY DISCLAIMS THE IMPLIED WARRANTY OF HABITABILITY, THE
IMPLIED WARRANTY OF MERCHANTABILITY, THE IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, AND ALL EXPRESSED OR IMPLIED WARRANTIES RELATING TO THE
QUALITY OF OR OTHERWISE RELATING TO THE PHYSICAL CONDITION OF THE TRANSFERRED
ASSETS.
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13. EXCLUSIVITY FEE
Prior to the execution of this Agreement, Buyer has deposited the sum
of $700,000 (the "EXCLUSIVITY FEE") into an escrow account (the "ESCROW") at the
Escrow Agent as consideration for Seller's covenants set forth in Paragraphs
6.2, 65, 8.2 and as a good faith deposit for Buyer's performance under this
Agreement. The Exclusivity Fee shall be held and administered by the Escrow
Agent pursuant to the terms of that certain Escrow Agreement dated September 18,
1997 among Buyer, Xxxxx Healthcare Corporation on behalf of Seller, and Escrow
Agent (as may be amended from time to time, the "ESCROW AGREEMENT"). The
Exclusivity Fee shall be distributed as follows:
13.1 If the transaction contemplated by this Agreement fails to
close because of (a) the breach by Buyer of its material representation,
warranties or obligations hereunder, or (b) the conditions precedent set forth
in Paragraphs 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 or 10.9 have not been satisfied
by Buyer or waived by Seller, then, subject to the rights of the Escrow Agent
under the Escrow Agreement, all funds in the Escrow shall be distributed to
Seller.
13.2 If the transaction contemplated by this Agreement fails to
close for any reason other than (a) a breach by Buyer of its material
representations, warranties or obligations hereunder, or (b) the conditions
precedent set forth in Paragraphs 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 or 10.9
have not been satisfied by Buyer or waived by Seller, then, subject to the
rights of the Escrow Agent under the Escrow Agreement, all funds in the Escrow
shall be distributed (x) first to Seller in an amount equal to the costs to be
reimbursed by Buyer pursuant to Paragraph 19.9, and (y) thereafter, to Buyer in
an amount equal to the balance of such funds.
13.3 If the transaction contemplated by this Agreement shall close,
then, subject to the rights of the Escrow Agent under the Escrow Agreement, all
funds in the Escrow shall be wire transferred on the Closing Date to Seller in
partial satisfaction of Buyer's obligation to pay the Purchase Price in
immediately available funds.
14. ADDITIONAL COVENANTS
The following provisions shall apply, and the following actions shall
be taken, on, before or after the Closing:
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14.1 FURTHER DOCUMENTATION OR ACTION
From time to time, at the request of either party, whether on
or after the Closing, without further consideration, either party, at its
expense and within a reasonable amount of time after request hereunder is made,
shall execute and deliver such further instruments of assignment and transfer
and take such other action as may be reasonably required to more effectively
assign and transfer the Transferred Assets to Buyer, deliver or make the payment
of the Purchase Price to Seller or any amounts due from one party to the other
pursuant to the terms of this Agreement or confirm Seller's ownership of the
Retained Assets or carry out the purposes of any provision of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any Transferred Asset, or
assume any Assumed Obligation, if the attempted assignment or assumption of the
same, as a result of the absence of a consent or authorization of a third party,
would constitute a breach or default under any lease, agreement or commitment or
would in any way adversely affect the rights, or increase the obligations, of
Buyer or Seller with respect thereto; provided, however, that the assignment of
any contract, including, without limitation Medicare, Medicaid and similar
provider agreements, which may lawfully be made subject to customary conditions
subsequent (such as need surveys, evaluations of Buyer or other determinations
by the counter parties to such agreements) shall be deemed not to constitute a
default under, or in any way adversely affect the rights or increase the
obligations of Buyer with respect to, such lease, agreement or commitment,
unless the counter party indicates prior to the Closing that such condition or
conditions subsequent are not likely to be met. If any such consent or
authorization is not obtained, or if an attempted assignment or assumption would
be ineffective or would adversely affect the rights or increase the obligations
of Seller or Buyer with respect to any such lease, agreement or commitment, so
that Buyer would not, in fact, receive all such rights, or assume the
obligations, of Seller with respect thereto as they exist prior to such
attempted assignment or assumption, then Seller and Buyer shall enter into such
reasonable cooperative arrangements as may be reasonably acceptable to both
Buyer and Seller (including, without limitation, sublease, agency, indemnity or
payment arrangements and enforcement at the cost and for the benefit of Buyer of
any and all rights of Seller against an involved third party) to provide for
Buyer the benefits of such Transferred Asset or to relieve Seller from the
obligations of such Assumed Obligation, and any transfer or assignment to Buyer
by Seller of any such Transferred Asset, or any assumption by Buyer of any such
Assumed Obligation, which shall require such consent or authorization of a third
party that is not obtained shall be made subject to such consent or
authorization being obtained.
14.2 PRESERVATION OF AND ACCESS TO RECORDS
(a) Owner of Hospital Records. The term "HOSPITAL
RECORDS" shall mean (a) all or any portion of the medical, clinical and other
records directly or indirectly associated with the admission, care and treatment
of patients (excluding, however, all billing, other financial and marketing
information related thereto) for periods ending on or prior to
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the Closing Date (the "PATIENT RECORDS") and (b) all or any portion of the
financial and other records and files of the Hospitals (including patient
billing, other financial and marketing information, whether or not included as
part of the "financial jacket" of the Patient Records) for periods ending on or
prior to the Closing Date (the "BUSINESS RECORDS") including, without limiting
the generality of the foregoing, any records, documents or other material (but
excluding any such privileged or confidential records, documents or other
materials that relate directly to the negotiation of this Agreement and the
consummation of the transactions contemplated hereby). As set forth in Paragraph
1.1, the Hospital Records are Transferred Assets. Notwithstanding the foregoing,
the parties shall cooperate in providing copies and access to the Hospital
Records as set forth below.
(b) Seller's Access. Buyer shall retain the Hospital
Records pertaining to a particular Hospital at such Hospital (or at such other
locations as Buyer shall determine from time to time provided Buyer has given
Seller written notice of such locations) at Buyer's cost, until the expiration
of five years from the Closing (and, if at the expiration thereof any tax or
Payor audit or judicial proceeding is in process or the applicable statute of
limitations has been extended or has not then expired or terminated, for such
longer period if such audit or proceeding is in process or such statutory period
is extended and for such longer period until such expiration or termination)
(the "DOCUMENT RETENTION PERIOD"). After the Closing, Buyer shall grant, and
Seller shall have, access to the Hospital Records (including any Patient
Records) as needed for any lawful purpose (including Seller's inspection and
copying of the same), and Seller shall have the same rights of access to inspect
and copy that Buyer had prior to the Closing; provided, however, that any
Hospital Records delivered to or made available to Seller and its
representatives will be treated as strictly confidential by Seller and its
representatives, will not be directly or indirectly divulged, disclosed or
communicated to any other Person other than Seller and its representatives who
are reasonably required to have access to such information (unless Seller is
compelled to disclose the same by judicial or administrative process), and will
be returned to Buyer when Seller's use therefor has terminated. Buyer shall
instruct the appropriate employees of the Hospital Businesses to cooperate in
providing access to such records to Seller and its authorized representatives as
contemplated herein. Access to such records shall be, wherever reasonably
possible, during normal business hours, with 24 hours' prior notice to Buyer of
the time when such access shall be needed. Seller's employees, representatives
and agents shall conduct themselves in such a manner so that Buyer's normal
business activities and patient care shall not be unduly or unnecessarily
disrupted. After the expiration of the aforementioned Document Retention Period,
Buyer shall not, without 90 days prior written notification to Seller (the
"DESTRUCTION NOTICE"), destroy any Hospital Records in its possession. Within 80
days after its receipt of the Destruction Notice, Seller shall have the right,
at its own expense, to require Buyer to deliver any such records to Seller and
Buyer shall thereupon deliver the same to Seller. Within ten business days
following the Closing, Buyer shall apprise the executive officers and such other
appropriate employees of the Hospital Businesses of, and shall instruct such
officers and employees to adopt and follow a records retention/destruction
policy with respect to the
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Hospital Records which complies with, the foregoing record maintenance and
destruction program for the Hospital Records.
(c) Buyer's Access. To the extent not included in the Hospital
Records, after Closing Seller shall (i) make its books and records available to
Buyer and Buyer's auditors on 24 hours' prior notice and in a manner so as no to
or unnecessarily interfere with Seller's operations, and (ii) otherwise
cooperate with Buyer in order to permit Buyer to conduct an audit of Seller's
financial statements for any period prior to Closing, provided that such audit
is conducted in accordance with generally accepted auditing principles.
14.3 LITIGATION COOPERATION
After the Closing, upon prior reasonable written request, each
party shall cooperate with the other, at the requesting party's expense (but
including only out-of-pocket expenses to third parties and not the costs
incurred by any party for the wages or other benefits paid to its officers,
directors or employees), in furnishing reasonably available information
testimony and other assistance in connection with any actions, tax or cost
report audits, proceedings, arrangements or disputes involving either of the
parties hereto (other than in connection with disputes between the parties
hereto) and based upon contracts, arrangements or acts of Seller or any of their
respective Affiliates which were in effect or occurred on or prior to the
Closing and which related to the Transferred Assets, including, without
limitation, arranging discussions with, and the calling as witnesses of,
officers, directors, employees, agents and representatives of Buyer.
14.4 EMPLOYEE BENEFIT PLANS
The parties hereto recognize and agree that Buyer is not assuming
any of the Plans and, except as provided in Paragraph 3.1(b), is not assuming
any obligation or liability related to the Plans. Seller (a) shall terminate as
of the Closing Date the active participation of all Hired Employees in all of
the Plans covering such employees, (b) shall cause the Plans to make timely
appropriate distributions, to the extent required, to the Hired Employees in
accordance with, and to the extent permitted by, the terms and conditions of
such Plans and (c) in connection with the termination of the active
participation of all Hired Employees in such Plans and the termination of
employment with Seller of all Hired Employees, shall comply, and shall cause
each Plan to comply, with all applicable Laws. Prior to the Closing, Seller
shall have delivered to Buyer, for information purposes only, forms of any
letters or other communications which Seller shall distribute to the employees
of the Hospital notifying such employees of their rights in respect of their
cessation of active participation in the Plans.
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14.5 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated among each of the
Transferred Assets (or, where more practical, each category of Transferred
Assets) in accordance with SCHEDULE "14.5". Seller and Buyer hereby agree to
allocate the Purchase Price in accordance with Schedule 14.5, to be bound by
such allocations for all purposes, to account for and report the purchase and
sale of the Transferred Assets contemplated hereby for all purposes (including,
without limitation, financial, accounting, Medicare reimbursement (to the extent
required by applicable Law) and federal and state tax purposes) in accordance
with such allocations, and not to take any position (whether in financial
statements, cost reports, tax returns, cost report or tax audits, or otherwise)
unless required by applicable Law, which is inconsistent with such allocations
without the prior written consent of the other party.
14.6 CONFIDENTIALITY
The parties hereto recognize and agree that all information,
instruments, documents and details concerning the business of Buyer and Seller
are strictly confidential, and Seller and Buyer expressly covenant and agree
with each other that they will not, nor will they allow any of their respective
officers, directors, employees or agents (including professional advisors) to,
reproduce, distribute or disclose any matters relating to the business of the
other or relating to this Agreement, its negotiation, terms, provisions or
conditions, including Purchase Price (collectively, the "CONFIDENTIAL
INFORMATION"), except for disclosure to their respective professional advisors
(who shall agree not to reproduce, distribute or disclose the same) which is
reasonably necessary to effectuate the transactions contemplated hereby and in a
manner consistent with the provisions of this Agreement. Notwithstanding the
foregoing, (a) Buyer shall be entitled to disclose Confidential Information to
any prospective lender of Buyer, and nothing contained in this Paragraph 14.6
shall prohibit Buyer from disclosing, and Seller hereby consents to Buyer's
disclosure of, the transactions contemplated hereby to governmental agencies to
the extent reasonably necessary to obtain the Permits, participations and
accreditations contemplated by Paragraph 9.5, and (b) Buyer and Seller shall be
entitled to disclose to third parties such information regarding the
transactions contemplated hereby as is necessary to obtain such third parties'
consents to the assignment of any Assumed Contract. Without limiting the
generality of the foregoing, except as specifically permitted by this Paragraph
14.6, no public announcement or other disclosure of the proposed sale or
acquisition of the Transferred Assets or of this Agreement or its contents shall
be made by or on behalf of either party without the prior written consent of
other party and such other party's prior approval of the form and content of the
same, which consent and approval shall not be unreasonably withheld or delayed.
Except as specifically permitted by this Paragraph 14.6, each party shall keep
all Confidential Information obtained from the other either before or after the
date of this Agreement confidential, and neither party shall reveal such
information to, nor produce copies of any written information for, any Person
outside its management group or its professional advisors without the prior
written consent of the other party, unless such party is compelled to
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disclose such information by judicial or administrative process or by any other
requirements of Law. If the sale contemplated by this Agreement should fail to
close for any reason, each party shall return to the other as soon as possible
all originals and copies of written information provided to such party by or on
behalf of the other party and none of such information shall be used by either
party, or their employees, agents or representatives in the business operations
of any Person. Notwithstanding the foregoing, each party's obligations under
this Paragraph 14.6 shall not apply to any information or document which is or
becomes available to the public other than as a result of a disclosure by the
other party in violation of this Agreement or other obligation of
confidentiality under which such information may be held or becomes available to
the party on a non-confidential basis from a source other than the other party
or its officers, directors, employees or agents. The parties' obligations under
this Paragraph 14.6 shall survive the termination of this Agreement or the
Closing.
14.7 CURE OF DISAPPROVED ITEMS
If Buyer disapproves the Disclosure Statement, any Supplemental
Disclosure Statement or the Inspection within the time periods applicable
thereto (a "DISAPPROVED ITEM"), Seller shall have the right, but not the
obligation, within ten days following its receipt of notice of Buyer's
disapproval, to elect to cure such Disapproved Item by the delivery of an
appropriate written notice to Buyer. Seller's notice shall set forth its
proposed manner of cure of the Disapproved Item, which shall be subject to the
prior approval of Buyer, and the anticipated period of time necessary to
complete the cure. Buyer shall have five days after receipt to approve or
disapprove Seller's notice to cure. If Buyer fails to disapprove Seller's notice
to cure within said five day period, Buyer shall be deemed to have approved
Seller's notice to cure. If Seller elects to cure a Disapproved Item, Seller
shall commence the cure promptly following the delivery of its written notice to
Buyer (and Buyer's approval or deemed approval of the proposed manner of cure)
and thereafter shall diligently pursue the cure to completion, provided,
however, in all events any cure by Seller of a Disapproved Item must be
completed prior to the Closing. If Seller completes the cure of the Disapproved
Item to Buyer's reasonable satisfaction within the time period herein specified,
Buyer shall have no right to terminate this Agreement as a result of the
Disapproved Item. If Seller fails to give notice to Buyer within the time period
herein specified that it elects to cure the Disapproved Item, then, at the
election of either party, the parties shall negotiate in good faith the
resolution of the Disapproved Items (including Seller's cure of all or some of
the same). If the Disapproved Items cannot be so resolved within 30 days from
the date of such election and if Buyer does not within five days thereafter
withdraw its notice of disapproval of the Disclosure Statement, any Supplemental
Disclosure Statement or the Inspection or if, notwithstanding Seller's election
to cure, Seller fails to complete the cure within the time period herein
specified or Buyer timely disapproves Seller's notice to cure, this Agreement
shall terminate without liability to Buyer or Seller and shall be of no further
force or effect except as otherwise expressly provided herein and the
Exclusivity Fee shall be returned to Buyer; provided, however, that if Seller
fails to complete the cure before the
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Closing, Buyer, at its discretion, may elect to proceed with the Closing and
Seller shall promptly reimburse Buyer for, and indemnify and hold Buyer harmless
from and against, all Losses incurred by Buyer after the Closing with respect to
the cure of the Disapproved Items.
14.8 EXCLUDED ASSETS AND RECEIVABLES
(a) General Rule. Any asset (including all remittances and all
mail and other communications) that is determined by the parties' agreement, or,
absent such agreement, determined by litigation, to be or otherwise relate to a
Retained Asset (including, without limitation, the proceeds of the Government
Receivables) and that is or comes into the possession, custody or control of
Buyer or any of its Affiliates (or their successors in interest or assigns, or
their respective Affiliates) shall forthwith be transferred, assigned or
conveyed by Buyer and its Affiliates (or their respective successors in interest
or assigns and their respective Affiliates) to Seller, and until such transfer,
assignment and conveyance, Buyer and its Affiliates (and their respective
successors in interest and assigns and their respective Affiliates) shall not
have any right, title or interest in such asset but instead shall hold such
asset in trust for the benefit of Seller. Any asset (including all remittances
and mail and other communications) that is determined by the parties' agreement
or, absent such agreement, determined by litigation, to be or otherwise relate
to a Transferred Asset and that is or comes into the possession, custody or
control of Seller or any of their Affiliates (or their respective successors in
interest or assigns) shall forthwith be transferred, assigned and conveyed by
Seller and their Affiliates (or their respective successors in interest or
assigns) to Buyer and until such transfer, assignment and conveyance, Seller and
their Affiliates (and their respective successors in interest and assigns) shall
not have any right, title or interest in such asset, but instead shall hold such
asset in trust for the benefit of Buyer. Seller and its agents and
representatives shall have the right upon reasonable written notice and subject
to applicable privileges and confidentiality Laws, during regular business
hours, to examine and inspect all the books and records of Buyer and its
Affiliates and to have access to the Hospital or other locations from which
Buyer and its Affiliates conduct their business operations for the sole purpose
of investigating the existence of any Retained Asset in the possession of Buyer
or any of its Affiliates and of auditing Buyer's collection of the Receivables.
If, as a result of any dispute by Seller of any payments due from Buyer pursuant
to this Paragraph 14.8, an amount is due from Buyer to Seller in excess of
$5,000, then Buyer shall, in addition to all other obligations of Buyer
hereunder, reimburse Seller for all out-of-pocket costs and expenses incurred by
Seller in connection with such dispute, including, without limitation, the cost
and expense of any audit conducted by Seller.
(b) Straddle Patient Receivables. To compensate Seller for
services rendered and medicine, drugs and supplies provided through the Closing
Date with respect to patients ("STRADDLE PATIENTS") who were admitted to any
Hospital on or before the Closing Date and discharged by such Hospital after the
Closing Date, the following shall apply:
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(i) Cut-Off Xxxxxxxx. Seller shall prepare xxxxxxxx for all
Straddle Patients as of the close of business on the Closing Date. All
payments which are received by Buyer (or its successor in interest or
assigns) after the Closing Date with respect to Straddle Patients and which
relate to such cut-off xxxxxxxx shall constitute Receivables. All
Receivables relating to such cut-off xxxxxxxx which are not Government
Receivables shall be considered Purchased Receivables pursuant to Paragraph
1.1.12. All such cutoff xxxxxxxx which are Government Receivables shall
constitute a Retained Asset and shall immediately be paid to Seller in the
manner described in subparagraphs (a) above and (b)(iii) below.
(ii) Cut-Off Xxxxxxxx Not Accepted. If the Payor of any Straddle
Patient cannot for any reason accept cut-off xxxxxxxx, then Seller shall
deliver to Buyer a statement calculating the total charges made by Seller
for services rendered and medicine, drugs and supplies provided through the
Closing Date with respect to such Straddle Patient. Within ten days
following the discharge of each such Straddle Patient, Buyer shall deliver
to Seller a statement reflecting the total charges for the services rendered
and medicine, drugs and supplies billed to such Straddle Patient after the
Closing Date and the payments receivable (the "STRADDLE PATIENT PAYMENTS")
by Buyer with respect to such Straddle Patient (including any cost per
discharge limit imposed by TEFRA and all deductibles and co-insurance
payments). The prorata share of the Straddle Patient Payments to which
Seller shall be entitled for the services, medicine, drugs and supplies
provided by Seller to each such Straddle Patient through the Closing Date
shall be paid by Buyer to Seller in the manner herein provided and shall be
equal to the amount obtained by multiplying the Straddle Patient Payments by
a fraction, the numerator of which is the total charges made by Seller with
respect to such Straddle Patient through the Closing Date and the
denominator of which is the total charges made by Buyer and Seller with
respect to such Straddle Patient. Seller or Buyer, as may be applicable, may
have such statements as submitted by Buyer or Seller verified by their
respective independent certified public accountants within 30 days from
delivery. If such statements, as submitted by Buyer or Seller, are
acceptable, then such statements shall fix the value of the services,
medicine, drugs and supplies provided by Seller and Buyer to each such
Straddle Patient. If any such statement is challenged by Seller or Buyer,
then, unless otherwise resolved by agreement of the parties within 30 days
of any such challenge, such statement shall be deemed in dispute, which
dispute shall be resolved by the parties' independent certified public
accountants. If such accountants cannot resolve the matter within 30 days,
then it shall be submitted by them to a third accounting firm for resolution
in accordance with the procedures contained in Paragraph 2.2. If Seller or
Buyer does not give written notice to the party preparing the statement of
its challenge of such statement within the first said
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30 day period, the receiving party shall be deemed to have accepted the same.
Within five business days of the later of the final determination of the value
of the services, medicines, drugs and supplies provided by Seller and Buyer to
each such Straddle Patient or the date Buyer receives payment for such Straddle
Patient, Buyer shall pay to Seller such value in the manner described in
subparagraph (iii) below. The pendency of a dispute shall not effect the payment
obligation hereunder of Buyer to the extent such payment is not in dispute.
(iii) Payments. All payments to be made pursuant to the foregoing
subparagraphs of this Paragraph 14.8 shall be paid in immediately available
funds.
(c) Government Receivables. The following provisions shall apply
with respect to the collection and administration of the Government Receivables:
(i) Appointment of Collection Agent. Seller hereby appoints Buyer
as its agent to collect the Government Receivables, and Buyer hereby accepts
such appointment. As soon as possible after the Closing, Seller shall
deliver to Buyer a schedule of all Government Receivables outstanding as of
the Closing Date, which schedule shall show the amount due from each Payor,
patient or other third party and shall deliver to Buyer possession of the
Business Records pertaining to the Government Receivables.
(ii) Collection. Buyer shall exercise its reasonable commercial
efforts to collect the Government Receivables on behalf of and as agent for
Seller. Buyer shall not have any right, title or interest in the Government
Receivables, any proceeds received with respect to the Government
Receivables or in the Business Records pertaining to the Government
Receivables, but instead shall hold all such Government Receivables,
proceeds and Business Records in trust for the sole benefit of Seller. All
payments received by Buyer after the Closing Date from Payors, patients and
other third parties shall be applied to the oldest remaining Government
Receivables due from such Payor, patient or ocher third party in the order
in which they arose, unless otherwise indicated on or suggested by any
remittance advice from such Payor, patient or other third party which
accompanies the payment. Any Government Receivables settled or compromised
by Buyer without Seller's prior written consent shall be deemed to have been
collected in full by Buyer. All payments received by Buyer with respect to
the Government Receivables shall be paid by Buyer to Seller weekly
commencing on the first Monday following the Closing Date and covering the
seven day period ending on the immediately preceding Saturday. Buyer shall
promptly notify Seller if it receives notice from any Payor, or patient,
whether
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orally or in writing, stating that the amount of any Medicare Receivable is
in dispute, including in such notice, to the extent known, a reasonably
detailed description of the amount and nature of the dispute. Buyer shall
not be required to file any lawsuit or commence any other proceeding to
collect any Medicare Receivable.
(iii) Termination of Collection Efforts. Buyer's obligations under
this Paragraph 14.8(c) shall commence on the Closing Date and end on the
first anniversary of the Closing Date (the "COLLECTION PERIODS"). At any
time during the Collection Period, Seller may instruct Buyer to terminate
its efforts to collect any Medicare Receivable, whereupon Buyer shall
promptly transmit to Seller all records (including any Hospital Records)
pertaining to such Medicare Receivable. With respect to any Government
Receivables which have not been collected by the end of the Collection
Period or with respect to which Seller has instructed Buyer to terminate its
collection efforts, Seller and its Affiliates shall be free to institute
such collection efforts with respect thereto (including, without limitation,
instituting legal proceedings) as they in their sole discretion shall
determine.
(iv) Cooperation. Buyer agrees to cooperate with Seller and to
provide access to any and all records (including the Hospital Records) to
assist Seller in the collection, rebilling and auditing of the Government
Receivables or in the monitoring of Buyer's collection efforts hereunder.
Until all Government Receivables have been collected and paid over to
Seller, Buyer and Seller agree as follows: (A) Seller may, without charge,
locate one or more of its employees at the places of business where Buyer
then maintains the records relating to the Government Receivables or
otherwise exercises its efforts to collect the Government Receivables in
order to assist with and monitor Buyer's collection of the Government
Receivables and Seller's collection, rebilling and auditing of the
Government Receivables, (B) Buyer shall provide any such employees of
Seller, without charge, adequate and proper space to facilitate the
performance of such duties, and (C) Buyer shall provide the reasonable
assistance of its employees, without charge, in connection with the
performance of such duties by such employees of Seller.
(v) Security Interest. Buyer hereby grants to Seller a security
interest in the Government Receivables and all proceeds therefrom to secure
Buyer's performance of its obligations to distribute the proceeds of the
Government Receivables to Seller pursuant to this Paragraph 14.8. Buyer
shall execute and deliver to Seller at Closing a form UCC-1 Financing
Statement in each jurisdiction where a Hospital is located to perfect such
security interest in furtherance of the parties' intent that Seller shall
have all rights of a secured party under all applicable laws. Seller agrees
to terminate its security interest
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by filing a UCC-3 Termination Statement in each jurisdiction where a UCC-1
Financing Statement was filed as provided herein one year from the Closing
Date.
(vi) Cost Reports. Notwithstanding the foregoing to the contrary,
Buyer shall not have any responsibility for, and Buyer's obligations under
this Paragraph 14.8 shall not include, collecting or handling any pending or
administrative appeal, claim or contested settlement with Medicare, Medicaid
or any other Payor with respect to the cost reports and other filings
referred to in Paragraph 14.10.
14.9 COST REPORT AUDITS AND CONTESTS
(a) After the Closing and for the period of time necessary to
conclude any pending or potential audit or contest of any cost reports with
respect to the Hospital Businesses concerning periods ending on or before the
Closing Date, Buyer shall within five days of Buyer's receipt of the same,
forward to Seller all information received from Payors relating to periods prior
to and as of the Closing Date, including, without limitation, cost report
settlements, notices of program reimbursements, demand letters for payment and
proposed audit adjustments. Upon the reasonable request of Seller, Buyer shall
assist Seller (including by providing the reasonable support of its employees at
no cost to Seller) in obtaining information deemed by Seller to be necessary or
convenient in connection with any audit or contest of such reports.
(b) If any Payor determines that Seller is liable to refund any
payment or reimbursement received by Seller from such Payor which is
attributable to any period of time ending on or prior to the Closing and which
arises out of or by reason of the sale of the Transferred Assets hereunder
(including any such determination based on such Payor's disregard of the
provisions of Paragraph 14.5) and if Buyer (or its successors or assigns)
thereby realize an increase in its reimbursements from any such Payor
(including, without limitation, an increase by reason of a step up in the basis
of the Transferred Assets by Buyer, or its successors or assigns), then Buyer
and its successors and assigns shall pay to Seller an amount equal to all such
increases in reimbursements as such increases are received by Buyer, or its
successors or assigns, no less frequently than quarterly until such time as
Seller has received the full amount of such refund. Buyer and its successors and
assigns agree to seek from such Payor an increase in its reimbursements upon the
receipt from Seller of written notice stating that such an adverse determination
has been made by such Payor and the cost of pursuing such increased
reimbursement by Buyer shall be paid by Seller promptly on demand for such
payment by Buyer. Notwithstanding the foregoing, to the extent that the Health
Care Financing Administration promulgates regulations pursuant to Section 4404
of the Balanced Budget Act of 1997 that definitively remove any and all
obligation on the part of Seller to refund any payment or reimbursement received
by Seller pursuant to this
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subparagraph (b) from any Payor, then Buyer's obligations under this
subparagraph (b) shall terminate.
14.10 FILING COST REPORTS; AMOUNTS DUE TO OR FROM THIRD PARTY PAYORS
Seller shall prepare and timely file all cost reports (including,
without limitation, the terminated cost report) and all other filings which are
required to be filed with Medicare, any other Payors or any governmental agency
with respect to the operations of the Hospital Businesses for any and all
periods ending on or prior to the Closing Date. Buyer shall assist Seller in the
preparation of such cost reports and other filings by promptly completing and
returning to Seller the year end cost report package for the terminated cost
report which Seller delivers to Buyer. Seller shall retain all rights to any
amounts receivable from Medicare or other Payors with respect to such filed cost
reports or filings (as reflected thereon or as finally determined by the audit,
contest or other adjustment of such reports or filings) and shall remain
obligated for all amounts due Medicare with respect to such filed cost reports
or filings (as reflected thereon or as finally determined by the audit, contest
or other adjustment of such cost reports or filings) and the parties hereby
acknowledge and agree that Buyer is not being assigned or otherwise receiving
and is not hereby assuming any of the same. Buyer shall promptly notify Seller
of such amounts due to Medicare from Seller or any amounts due from Medicare to
Buyer which are being withheld by Medicare by reason of Seller's breach of its
obligations under this Paragraph 14.10 or by reason of any other event or
occurrence taking place or otherwise attributable to the operations of the
Hospital and the Transferred Assets on or prior to the Closing Date (including,
without limitation, any periodic interim payments governed by the provisions of
Paragraph 14.8(c)). On receipt of such notice, together with written evidence
from Medicare or such other Payors in support thereof, if any exist, Seller
shall remit all such amounts or comply with its obligations hereunder within
sufficient time to avoid the imposition of any interest charges or the
withholding of any payment due from Medicare or other Payors to Buyer; provided,
however, that if any such withholding has occurred, for whatever reason, Seller
shall reimburse Buyer for the full amount of all payments so withheld within
three business days of Buyer's written notice to Seller of the same.
14.11 EMPLOYEE MATTERS
(a) Retained Employees. Buyer shall offer to hire at the Closing
each of Seller's then active employees who are in good standing to perform
comparable services, in such position and for such compensation as is comparable
to the position such employee held with, and the compensation paid to such
employee by, Seller at the Closing, provided that Buyer shall not be obligated
to offer employment to Hospital based personnel who are on the corporate payroll
of an Affiliate of Seller (including each Hospital's Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, Director of Nursing and
Director of Development). For purposes of this Agreement, active employees in
good standing are those employees who are actually providing services to the
Hospital Businesses
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(including those employees who are temporarily absent due to vacation or other
routine matter in compliance with Law or Seller's policies pertaining to
employee matters), but shall exclude any employee whose employment status
currently is restricted, suspended or otherwise affected as a result of
disciplinary, corrective or other similar action. Seller has identified on only
those employees as of the date indicated thereon who meet the requirements of
the preceding sentence and who Buyer shall offer to hire (the "RETAINED
Employees"). The list of the Retained Employees shall be adjusted by Seller as
of the Closing Date to reflect changes in the employees of Seller, and Buyer
shall offer to hire the Persons identified by Seller on such adjusted list of
Retained Employees. Seller or its Affiliates shall have the right to employ or
offer to employ any Retained Employee (including, without limitation, the Chief
Executive Officer, the Chief Operating Officer, the Chief Financial Officer and
the Director of Nursing of each Hospital) who declines Buyer's offer of
employment, provided that neither Seller nor its Affiliates shall offer
employment to, or solicit such persons until Buyer has notified Seller that it
does not intend to offer employment to such Person(s) or such Person(s) has
declined Buyer's offer.
(b) Hiring of Retained Employees by Buyer. Buyer shall hire at
the Closing the Retained Employees who elect to accept employment with Buyer
(the "HIRED EMPLOYEES") and shall continue to employ the Hired Employees for a
period of no less than 90 days following the Closing Date, unless Buyer sooner
terminates the employment of any Hired Employee for cause or any Hired Employee
resigns or accepts another position with Buyer. Except as may be limited hereby
or by contract, the Hired Employees' employment with Buyer will be for no
definite term and the Hired Employees' positions and compensation levels will be
subject to Buyer's policies. Buyer agrees to give the Hired Employees full
credit for the Paid Time Off and Sick Pay of such employees as reflected on the
revised Schedule "3.1(b)", either by allowing such employees such Paid Time Off
or Sick Pay reflected on such revised Schedule "3.1(b)" as to which such
employees would have been entitled under the policies of Seller if such
employees had remained employees of Seller or, upon termination of employment,
by making full payment to such employees of the Paid Time Off that such
employees would have received had they taken such Paid Time Off. Buyer shall be
fully responsible for providing or paying Paid Time Off and, as applicable, Sick
Pay to any Hired Employee and for any unemployment compensation or any other
unemployment benefits payable to a Hired Employee whose employment is terminated
by Buyer and Buyer shall indemnify, and hold Seller harmless from and against
all Losses actually incurred, paid or required (including those required under
penalty of Law or by a governmental entity) to be paid by Seller resulting from
Buyer's termination of a Hired Employee and/or failure to provide or pay Paid
Time Off or, as applicable, Sick Pay.
(c) Health and Other Employee Benefits. Buyer shall provide the
Hired Employees the program of health care benefits that are made available to
its employees in general; provided, however, that such health care benefits
shall be immediately available to the Hired Employees as of the Closing Date who
were then participants of and entitled to receive benefits under Seller's health
care plans without any limitation with respect to
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preexisting conditions, and such Hired Employees shall become as of the Closing
Date participants without regard to any applicable waiting period or any
limitation with respect to preexisting conditions. Buyer shall give each other
Hired Employee credit for his or her prior service with Seller for purposes of
satisfying any waiting periods of Buyer's health care plans with respect to
eligibility to participate or preexisting conditions. Buyer shall also give each
Hired Employee credit for his or her prior service with Seller for those
purposes for which length of service may be considered in connection with
determining all other employee benefits of Buyer made available to its employees
in general, including without limitation, retirement, severance, Paid Time Off
ant Sick Pay. Buyer acknowledges and agrees that Buyer is a successor employer
for purposes of COBRA, that the Hired Employees will not, as a result, be deemed
to have had a termination of employment for purposes of COBRA and that any COBRA
notices or coverages required to be given or made available to any Hired
Employee shall be given or made by Buyer and not Seller. Seller shall be
responsible for COBRA notices and coverages with respect to any employees other
than the Hired Employees.
(d) Acknowledgment of Responsibility. Buyer acknowledges and
agrees that as of the date and time the Closing is effective pursuant to
Paragraph 11, Buyer is considered for purposes of the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Section 2101, et seq. (the "WARN ACT",)
the employer of the Retained Employees and that Buyer (and not Seller) shall
thereupon be responsible for complying with the WARN Act with respect to the
Retained Employees and that prior to such time none of the Retained Employees
shall be, nor shall they be deemed to be, terminated. Buyer shall indemnify and
hold Seller harmless from and against all losses, liabilities, fines, penalties,
charges, costs and expenses, including reasonable attorneys' fees (including a
reasonable estimate of the allocable costs of in-house counsel and staff)
actually incurred, paid or required under penalty of Law to be paid by Seller
(i) resulting from any compliance obligation (including, without limitation, the
obligation to give notice or pay money) Seller or Buyer has under the WARN Act
with respect to the termination of any Retained Employee whose name appears on
the adjusted list of Retained Employees on the Closing Date or (ii) resulting
from any claims of the Hired Employees (including, without limitation, claims
for health care coverage or benefits). Buyer's indemnification obligation
hereunder is separate and apart from and in addition to its indemnification
obligations under Paragraph 16.2.
(e) No Employment Contract. The understandings set forth in this
Paragraph 14.11 are solely for the purpose of defining the obligations between
Buyer and Seller with respect to the individuals employed in the operation of
the Hospital Businesses as of the Closing Date and shall not be construed as
creating any employment contract or other contract between either Buyer or
Seller, on the one hand, and any such employee, on the other, nor to create or
modify any Plan. All such employees shall remain terminable at will by Buyer or
Seller, as the case may be, except to the extent otherwise required by Law or
any preexisting employment or other contracts which have been specifically
assumed by Buyer hereunder.
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14.12 MEDICAL STAFF PRIVILEGES/BYLAWS
For a period of 30 days after the Closing, Buyer shall not
change or modify either (a) the medical staff privileges for physicians on staff
at the Hospitals on the Closing Date, or (b) the medical staff bylaws in effect
on the Closing Date for each Hospital.
14.13 ANTITRUST LAWS COMPLIANCE
The parties acknowledge that the transaction contemplated by this
Agreement is subject to the provisions of the Premerger Rules and other Laws
concerning antitrust and fair bate. Accordingly, the following provisions shall
apply:
(a) Initial Filings. Buyer and Seller shall promptly prepare and
file with the Federal Trade Commission ("FTC") and with the United States
Department of Justice ("JUSTICE DEPARTMENT") the notification and report forms
required under the provisions of the Premerger Rules and shall promptly make all
filings with any other governmental agencies as are required by any other Laws
pertaining to antitrust and fair trade. Each such filing shall not, to the
knowledge of the filing party, fail to conform to the requirements of the
Premerger Rules or such other Laws. The filing fee required with respect to each
such filing shall be paid by the party filing the same.
(b) Additional Filings. Buyer and Seller shall each promptly
notify the other of any request by the FTC, Justice Department or such other
governmental agencies for additional information with respect to such filings.
The party who receives such request shall promptly respond thereto and the other
party shall cooperate in supplying any information required to enable the
responding party to so comply. Each such filing shall not, to the knowledge of
the filing party, fail to conform to the requirements of the Premerger Rules or
such other Laws.
(c) Cooperation. All analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted on behalf
of either party hereto in connection with the proceedings under or relating to
the Premerger Rules or any Law pertaining to antitrust or fair trade shall be
subject to the joint approval or disapproval and the joint control of Buyer and
Seller, acting with the advice of their respective counsel, it being the intent
of the foregoing that the parties hereto will consult and cooperate with one
another, and consider in good faith the views of one another, in connection with
any such analysis, presentation, memorandum, brief, argument, opinion or
proposal. Nothing herein shall prevent either party or their respective
Affiliates from making or submitting any such analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal in response to a
subpoena or other legal process or as otherwise required by Law or submitting
factual information to the Justice Department, FTC, any other governmental
agency or any court or administrative law judge in response to requests therefor
or as otherwise required by Law.
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14.14 FILING TAX RETURNS
Buyer shall cause its employees, at no cost to Seller, to assist
Seller, in the same manner and to the extent that employees of the Hospital
Businesses currently provide such assistance, in the preparation and filing of
all returns relating to taxes imposed upon the businesses operated through the
Transferred Assets that relates to periods ending on or prior to the Closing
Date but which are due after the Closing Date.
14.15 USE OF CONTROLLED SUBSTANCE PERMITS
To the extent permitted by Law, Buyer shall have the right, for a
period not to exceed 180 days following the Closing Date, to operate under the
Permits of Seller relating to controlled substances and the operations of
pharmacies, until Buyer is able to obtain such permits for itself; provided,
however, that nothing herein shall require Seller to renew any Permits which may
expire during such 180-day period. Seller shall execute and deliver to Buyer the
special limited powers of attorney substantially in the form and substance of
EXHIBIT "14.15" Buyer acknowledges that it shall apply for all such permits as
soon as reasonably possible before and after the Closing Date and shall
diligently pursue such applications. Buyer shall indemnify and hold Seller
harmless from and against all Losses actually incurred, paid or required under
penalty of Law to be paid by Seller resulting in whole or in part from the use
of such permits by Buyer. Buyer's indemnification application hereunder is
separate and apart from, and in addition to, its indemnification obligations
under Paragraph 16.2, which shall be subject to and governed by the provisions
of Paragraph 16.3.
14.16 LIMITED USE OF MANUALS AND SOFTWARE
Subject to obtaining any necessary consent or permission from
third-party vendors or licensors, Seller agrees to make available to Buyer,
solely in connection with Buyer's operation of the Hospitals: (i) the
royalty-free, nonexclusive right and license to use, for a period not to exceed
one year from the Closing Date, the clinical policy and procedure manuals of
Seller which are Retained Assets (the "MANUALS"); and (ii) information services
(the "SERVICES") using only the proprietary computer software and hardware
described in Exhibit 14.16 (the "SOFTWARE") presently used at the Hospitals for
a period not to exceed one year from the Closing Date, on the following terms
and conditions:
(a) Buyer shall accept the Manuals and Software in their present
condition, "AS IS" and "WITH ALL FAULTS" and without any representation or
warranty of any kind whatsoever, either expressed or implied, by Seller
including, but not limited to, any representation or warranty that the Manuals
or Software are adequate for Buyer's operation of the Hospitals after the
Closing or are in compliance with any Laws. Any and all fees, costs and expenses
incurred in connection with the transition by Buyer from the Software and
Manuals to other manuals, software and hardware shall be borne solely by
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Buyer, including, without limiting the generality of the foregoing, all fees,
costs and expenses incurred in creating extract files and reports in connection
with such transition.
(b) Buyer agrees that Seller shall have no obligation whatsoever
to update or otherwise revise the Manuals or the Software, even if Seller or its
Affiliates are revising similar manuals or software or hardware at other health
care facilities, as Buyer shall assume full responsibility therefor provided,
however, that Seller will provide to Buyer, for Buyer's use during the term of
the license granted by this Paragraph 14.16, any routine upgrade to base
operating systems licensed hereunder at the time and in the manner of Seller's
general distributions to its facilities using such systems.
(c) Buyer acknowledges and agrees that the Manuals and Software
are strictly confidential and proprietary information of Seller and its
Affiliates, and Buyer hereby expressly covenants and agrees that it will not
(nor will it allow any of its officers, directors, employees or agents to),
directly or indirectly, reproduce, distribute or disclose all or any part of the
Manuals or Software, unless Buyer's disclosure is compelled by judicial or
administrative process or except as may be required in the operation of the
Hospitals (including, but not limited to, as required by any Laws). Upon the
expiration of the license hereby granted to Buyer or the sooner termination of
Buyer's use of the Manuals and/or Software, Buyer shall return to Seller all
originals and copies of the Manuals and/or Software.
(d) As a material inducement to Seller's agreement to license the
Manuals and Software to Buyer, (i) Buyer hereby releases and forever discharges
Seller and its Affiliates from and against any and all claims, demands, debts,
liabilities, obligations and causes of action of every kind in law, equity or
otherwise, whether known or unknown, suspected or unsuspected, which Buyer or
its Affiliates now or may hereafter have against Seller or its Affiliates by
reason of the use by Buyer of the Manuals and/or Software and (ii) Buyer shall
indemnify and hold Seller and its Affiliates harmless from and against all
losses liabilities, fines, penalties, charges, costs and expenses, including
reasonable attorneys' fees (including a reasonable estimate of the allocable
costs of in-house counsel and staff) actually incurred, paid or required under
penalty of Law to be paid by Seller or its Affiliates resulting in whole or in
part from the use by Buyer of the Manuals and/or Software.
14.17 USE OF NAME
Buyer and Seller shall enter into one or more license agreements
(the "LICENSE AGREEMENTS") pursuant to which Seller or its Affiliate shall grant
to Buyer or Buyer's Subsidiary, the non-exclusive right to use the names "Pulse
Home Health" and "Pulse Health Services" solely in the manner and at the
Hospitals where such names currently are used, for a period of three years
commencing on the Closing Date. The License Agreements shall provide that Buyer
shall maintain certain standards of care and other matters as are specified in
the License Agreements.
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14.18 PURCHASE OF SUPPLIES
Buyer has asked to participate in Seller's Affiliate's group
purchasing organization called BuyPower for a period of two years from the
Closing Date. In connection therewith, at the Closing, Buyer shall execute a Buy
Power purchasing assistance agreement in the form attached hereto as Exhibit
"14.18" shall not be required to pay the base participation fee for the two
years that it participates in BuyPower.
15. SURVIVAL OF REPRESENTATIONS
Notwithstanding any investigation made by Seller or Buyer, any
distribution in liquidation or dissolution, or any voluntary or involuntary act
of Seller or Buyer, subject to the provisions of Paragraph 16.5, the
representations, warranties, covenants, agreements and indemnifications made by
the parties shall survive the Closing and shall be deemed to be material and to
have been relied upon by Buyer and Seller.
16. INDEMNIFICATION
16.1 INDEMNIFICATION OF BUYER BY SELLER
Subject to the provisions of Paragraphs 15, 16.3, 16.4, 16.5
and 16.6, each Seller shall indemnify and hold Buyer harmless from and against
claims incurred or asserted against and all losses, liabilities, damages, COSTS
and expenses, including reasonable attorneys' fees (including a reasonable
estimate of the allocable costs of in-house legal counsel and staff) (all such
claims, losses, liabilities, damages, costs and expenses shall collectively be
referred to as "LOSSES"), actually incurred, paid or required (including those
required under penalty of Law) to be paid by Buyer with respect to such Hospital
and the related Hospital Businesses, resulting from (a) any breach of any
representation, warranty, covenant or agreement made herein by such Seller with
respect to such Hospital and related Hospital Businesses, or (b) if the Closing
occurs, any obligation, liability or claim relating to (i) the Excluded
Liabilities relating to such Hospital and related Hospital Businesses, or (ii)
the Retained Assets relating to such Hospital and related Hospital Businesses;
provided, however, that except for personal injury claims made by third parties
for injuries occurring prior to the Closing Date and caused solely by the
condition of the Real Property, the Lander Property or the Woodland Park
Property, nothing in this Paragraph 16.1(b) shall obligate any Seller to
indemnify Buyer for any such obligation, liability or claim relating to the
physical condition of the Transferred Assets as Buyer is purchasing the
Transferred Assets "AS IS" and "WITH ALL FAULTS".
16.2 INDEMNIFICATION OF SELLER BY BUYER
Subject to the provisions of Paragraphs 15, 16.3, 16.4, 16.5
and 16.6, Buyer shall indemnify and hold each Seller harmless from and against
all Losses, actually incurred, paid or required (including those required under
penalty of Law) to be paid by each
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Seller with respect to Hospital and related Hospital Businesses sold by such
Seller pursuant to this Agreement, resulting in whole or in part from (a) any
breach of any representation, warranty, covenant or agreement made herein by
Buyer, (b) the activities of Buyer or its agents which arise in connection with
the Inspection or otherwise (including, without limitation, the compliance by
Seller or its agents with any request made by Buyer or its agents) of such
Hospital and related Hospital Businesses or (c) if the Closing occurs, any
obligation, liability or claim relating to (i) the Assumed Obligations relating
to such Hospital and related Hospital Businesses, or (ii) the Transferred Assets
relating to, or the operations of, such Hospital and related Hospital Businesses
to the extent such obligation, liability or claim is based upon acts or
omissions occurring after the Closing Date, and is not an Excluded Liability or
a Retained Asset, including the ongoing operations of the Transferred Assets
relating to such Hospital and related Hospital Businesses after the Closing Date
and the continuance or performance by Buyer after the Closing Date of any
agreement or practice of such Seller.
16.3 NOTIFICATION AND SETTLEMENT OF CLAIMS
Any party seeking indemnification hereunder (the
"INDEMNITEE") shall, (a) within 30 days from the date the Indemnitee received
actual knowledge of the claim (or by such earlier date after the Indemnitee has
received actual knowledge of the claim as may be necessary to avoid material
prejudice to the other party), notify the other party (the INDEMNITOR") of such
claim (the "INDEMNIFICATION NOTICE") and provide the Indemnitor with a copy of
such claim or other documents received, and (b) upon request, otherwise make
available to the Indemnitor all relevant information material to the defense of
such claim and within the Indemnitee's possession. The failure of the Indemnitee
to give the Indemnitor notice within the specified number of days 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. If
the Indemnitor notifies the Indemnitee in writing within ten days after an
Indemnification Notice is given to the Indemnitor that the Indemnitee is
entitled to indemnification hereunder or defense with respect to such claim
(subject, however, to any reservation of rights the Indemnitor may have to
contest the Indemnitee's right to indemnification hereunder), then the
Indemnitor shall have the right by notice given to the Indemnitee within 15 days
after the date of the Indemnification Notice to assume and control the defense
thereof, including the employment of counsel selected by the Indemnitor, and the
Indemnitor shall pay all expenses of such defense. The Indemnitee shall have the
right to employ separate counsel in any such proceeding and to participate in
(but not control) the defense of such claim, but the fees and expenses of such
counsel shall be borne by the Indemnitee unless the employment thereof has been
specifically authorized by the Indemnitor in writing; provided, however, that if
the named parties to any such proceeding (including any impleaded parties)
include both the Indemnitee and the Indemnitor, and if the Indemnitor requires
that the same counsel represent both the Indemnitee and the Indemnitor and if
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them, then the Indemnitee shall
have the right to retain
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its own counsel at the cost and expense of the Indemnitor. If the Indemnitor
shall have failed to assume the defense of any claim in accordance with the
provisions of this Paragraph 16.3, then the Indemnitee shall have the absolute
right to control the defense of such claim and, if and when it is finally
determined that the Indemnitee is entitled to indemnification from the
Indemnitor hereunder, the fees and expenses of the Indemnitee's counsel shall be
borne by the Indemnitor and paid by Indemnitor to Indemnitee within five
business days of written demand therefor, but the Indemnitor shall be entitled,
at its own expense, to participate in (but not control) such defense. The
Indemnitor shall have the right to settle or compromise any such claim in its
sole and absolute discretion and without consultation with the Indemnitee so
long as such settlement or compromise does not impose any obligations on the
Indemnitee (except with respect to providing releases of the third party). The
Indemnitee shall not settle or compromise the claim without satisfying one of
the following conditions (otherwise the Indemnitor shall be released from all
indemnification obligations hereunder to the Indemnitee with respect to such
claim): (a) the Indemnitee shall first obtain the written consent of the
Indemnitor or (b) the Indemnitor shall have failed, after written notice to it
of such suit, to take action to defend the same within the 15-day period
described above.
16.4 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS
(a) Buffer and Deductible. Notwithstanding anything to the
contrary contained in this Paragraph 16, no claim for indemnification hereunder
shall be made by the Indemnitee against the Indemnitor with respect to a
particular Hospital until the aggregate amount of Losses resulting from such
claims by the Indemnitee against the Indemnitor with respect to such Hospital
shall exceed $300,000 but thereafter Indemnitee shall be entitled to recovery of
the full amount of all such Losses, including the first $300,000; provided,
however, that individual claims of less than $10,000 shall not be aggregated for
purposes of the foregoing $300,000 limitation. The provisions of this Paragraph
16.4 shall not apply to any claim based on the parties' obligations set forth in
Xxxxxxxxxx 0, 0, 0 xxx 00.
(x) Maximum Limit on Seller's Indemnification Obligation. If
the Closing occurs, then in no event shall any Seller be liable to Buyer under
Paragraph 16.1 for amounts which, in the aggregate, exceed the portion of the
Purchase Price allocable to such Seller.
16.5 TIME LIMITATIONS
Seller shall not be liable for any breach of any
representation, warranty, covenant or agreement contained herein or made by
Seller under or in connection with this Agreement unless Buyer shall have given
written notice to Seller of the basis of its claim within two years of the
Closing. Buyer shall not be liable for any breach of any representation,
warranty, covenant or agreement contained herein or made by Buyer under or in
connection with this Agreement unless Seller shall have given written notice to
Buyer of the basis of its claim within two years of the Closing. The provisions
of this Paragraph 16.5
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shall not apply to any claim based on the parties' obligations set forth in
Paragraphs 2, 3 and 14.
16.6 EXCLUSIVE REMEDY
Absent fraud, the sole exclusive remedy for damages of a
party hereto for any breach of the representations, warranties, covenants and
agreements of the other party contained in this Agreement, or any document or
instrument delivered in connection herewith, shall be the remedies contained in
this Paragraph 16; provided, however, that the remedy for breaches of the
covenants set forth in Paragraph 14.6 shall not be limited to the remedies set
forth in this Paragraph 16 and shall include injunctive and other equitable
remedies, as appropriate. If the Closing occurs, Buyer shall not be entitled to
indemnity under Paragraph 16.1, and Seller shall not be entitled to indemnity
under Paragraph 16.2, except for out-of-pocket Losses actually suffered or
sustained by Buyer or Seller, as the case may be, and such indemnity shall not
include Losses in the nature of consequential damages, lost profits, diminution
in value, damage to reputation or goodwill, or the like. In computing Losses,
such amount shall be computed net of any related recoveries to which the
Indemnitee is entitled under insurance policies or other related payments
received or receivable from any other Person and net of any tax benefits
actually received by the Indemnitee, taking into account the income tax
treatment of the receipt of indemnification.
17. XXXXXXXXXXX
00.0 XXXXXXXXXXX XXXX XXXXXXX EVENTS
Either Buyer or Seller may, at or prior to the time set for
Closing, terminate this Agreement under any one of the following circumstances:
(a) If at the time for Closing (i) a bona fide action or
proceeding shall be pending against any party wherein an unfavorable judgment,
decree or order would prevent or make unlawful the carrying out of the
transactions contemplated by this Agreement or (ii) any governmental agency
shall have notified any party to this Agreement that the consummation of the
transactions contemplated by this Agreement would constitute a violation of the
Laws of any jurisdiction and that it has commenced or intends to commence
proceedings to restrain the consummation of the transactions contemplated
hereunder, and such agency has not withdrawn such notice prior to such
termination; provided, however, that, notwithstanding Paragraph 17.1(c) to the
contrary, the Closing shall be extended so long as either party hereto is
diligently attempting to obtain the dismissal of such action or proceeding or
cause such notice to be withdrawn; or
(b) If the conditions of this Agreement to be complied with
or performed by the other party at or before the Closing shall not have been
complied with or performed on or before the date specified for the Closing in
Paragraph 11 or, subject to
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Paragraph 17.1(c) below, such later date upon which the parties shall mutually
agree, and such noncompliance or nonperformance shall not have been waived by
the party giving notice of termination; or
(c) If for any reason the Closing shall not have occurred on
or before April 1, 1998.
17.2 EFFECT OF TERMINATION
If there has been a termination under this Paragraph 17, then
this Agreement shall be deemed terminated, and all further obligations of the
parties hereunder shall terminate except that those obligations set forth in
Paragraphs 13, 14.6, 16, and 18 shall survive. Any termination under this
Paragraph 17 shall be without liability to the parties hereto, except that such
termination shall be without prejudice to the rights and remedies which any
party seeking to terminate this Agreement may have if (a) a default shall be
made by the other party in the observance or in the due and timely performance
by such party of any of the covenants herein contained, or (b) there shall have
been a breach by the other party of any of the warranties and representations
herein contained, and except for fraudulent acts by a party, the remedies for
which shall not be limited by the provisions of this Agreement. Notwithstanding
the foregoing to the contrary, if Seller shall have made such default or breach,
then Buyer need not terminate this Agreement but may seek to specifically
enforce Seller's obligations hereunder.
18. LIQUIDATED DAMAGES
IN THE EVENT THAT THE TRANSACTIONS CONTEMPLATED HEREUNDER SHALL
FAIL TO CLOSE BECAUSE OF (A) THE BREACH BY BUYER OF ITS MATERIAL
REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER, OR (B) THE CONDITIONS
PRECEDENT SET FORTH IN PARAGRAPHS 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 OR 10.9
HAVE NOT BEEN SATISFIED BY BUYER OR WAIVED BY SELLER, THEN BUYER SHALL BE IN
DEFAULT, SELLER SHALL BE RELEASED FROM SELLER'S OBLIGATION TO SELL THE
TRANSFERRED ASSETS TO BUYER. THE PARTIES HEREBY EXPRESSLY AGREE THAT SELLER
SHALL RECEIVE AS SELLER'S LIQUIDATED DAMAGES AN AMOUNT EQUAL TO THE EXCLUSIVITY
FEE AND THE PARTIES EXPRESSLY AGREE THAT BECAUSE THE PRECISE AMOUNT OF SELLER'S
DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE EXTREMELY DIFFICULT TO CALCULATE
ACCURATELY, SUCH AMOUNT IS NOT UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT
THE TIME THIS AGREEMENT IS ENTERED INTO. SELLER AND BUYER ACKNOWLEDGE AND AGREE
THAT THEY HAVE MADE A REASONABLE ENDEAVOR TO ESTIMATE THE ACTUAL DAMAGES SELLER
WOULD SUSTAIN AS A RESULT OF BUYER'S DEFAULT. HOWEVER, THE PROSPECTIVE
IMPRACTICABILITY
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AND EXTREME DIFFICULTY OF FIXING SELLER'S ACTUAL DAMAGES HAS REQUIRED THE
PARTIES TO ATTEMPT TO LIQUIDATE SELLER'S DAMAGES IN THE EVENT OF BUYER'S
DEFAULT, SINCE SELLER'S DAMAGES WILL RESULT FROM, AMONG OTHER THINGS, MARKET
FLUCTUATION, SELLER'S COSTS AND EXPENSES OF THIS TRANSACTION (INCLUDING, WITHOUT
LIMITATION, SELLER'S LEGAL AND OTHER EXPENSES INCURRED IN CONNECTION WITH THIS
AGREEMENT AND PREPARING FOR THE CLOSING), AND LOSSES WHICH WOULD RESULT FROM
SELLER HAVING REMOVED THE TRANSFERRED ASSETS FROM THE MARKET FOR ANY LENGTH OF
TIME. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, RECEIPT OF LIQUIDATED DAMAGES
SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY FOR BUYER'S FAILURE TO COMPLETE THE
PURCHASE OF THE TRANSFERRED ASSETS.
19. GENERAL PROVISIONS
19.1 NOTICES
All notices, requests, demands, waivers, consents and other
communications hereunder shall be in writing, shall be delivered either in
person, by telegraphic, facsimile or other electronic means, by overnight air
courier or by mail, and shall be deemed to have been duly given and to have
become effective (a) upon receipt if delivered in person or by telegraphic,
facsimile or other electronic means calculated to arrive on any business day
prior to 6:00 p.m. local time at the address of the addressee, or on the next
succeeding business day if delivered on a non-business day or after 6:00 p.m.
local time, (b) one business day after having been delivered to an air courier
for overnight delivery or (c) five business days after having been deposited in
the mails as certified or registered mail, return receipt requested, all fees
prepaid, directed to the parties or their assignees at the following addresses
(or at such other address as shall be given in writing by a party hereto):
If to Seller, addressed to:
c/x XXXXX HEALTHSYSTEM
00000 Xxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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with a copy to counsel for Seller:
Xxxxx HealthSystem
00000 Xxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
Facsimile: (000) 000-0000
and
Xxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxxxxx Xxxx., 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Facsimile: (000) 000-0000
If to Buyer, addressed to:
NEW AMERICAN HEALTHCARE CORPORATION
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. XxXxxx
Facsimile: (000) 000-0000
with a copy to counsel for Buyer:
Xxxxxxx X. Xxxx, Esq.
Xxxxxxx, Xxxxxx, Xxxx, Xxxxxxx & Manner
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
19.2 FORM OF INSTRUMENTS
To the extent that a form of any document to be delivered
hereunder is not included within the Disclosure Statement, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the recipient thereof and consistent with the
provisions of this Agreement.
19.3 ATTORNEYS' FEES
In any litigation or other proceeding relating to this
Agreement, including litigation with respect to any instrument, document or
agreement made under or in
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connection with this Agreement, the prevailing party shall be entitled to
recover its costs and reasonable attorneys' fees (including a reasonable
estimate of the allocable costs of in-house legal counsel and staff).
19.4 REMEDIES NOT EXCLUSIVE
Except as otherwise expressly set forth in this Agreement, no
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by a party shall not, except as otherwise
expressly provided for herein, constitute a waiver of the right to pursue other
available remedies.
19.5 SUCCESSORS AND ASSIGNS
(a) Buyer's Limited Right to Assign. Prior to the Closing
Date, Buyer, in its sole discretion, may assign any or all of its rights and
obligations with respect to the Transferred Assets and the Assumed Obligations
to a corporation, partnership, limited liability company or any other Person
which is not an individual in which Buyer and its Affiliates hold at least 80%
of the voting stock, partnership interests, membership interests or other
ownership interests ("BUYER'S SUBSIDIARY"), provided that no such assignment
shall relieve Buyer of any obligation or liability to Seller hereunder, and
provided further that the following shall apply:
(i) Buyer shall provide Seller of prompt written notice
of any such assignment.
(ii) No such assignment shall be effected if the making
of the assignment will result in Buyer's inability to obtain any consent,
approval or authorization required by Paragraph 9.4 or any Permit required
by Paragraph 9.5.
(iii) Buyer's Subsidiary shall irrevocably appoint Buyer
as its sole and exclusive representative and agent authorized to act for
and to receive notices and payments on its behalf in all matters arising
from or related to this Agreement.
(iv) As a condition to Seller's agreement to such
assignments, Buyer hereby agrees that prior to the Closing Buyer will be
the ultimate parent entity of the consolidated group of companies of which
Buyer is a group member or that, in the event of any reorganization
involving Buyer and its subsidiaries prior to the Closing, the ultimate
parent entity of the
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consolidated group of companies emerging from such reorganization that
includes Buyer and its successors and assigns shall, prior to any such
reorganization, execute such documents as are reasonably necessary to
confirm the assumption by such ultimate parent entity of Buyer's
obligations to Seller hereunder.
(v) Buyer shall remain jointly and severally liable to
Seller and to third parties with respect to any Assumed Obligations
transferred to Buyer's Subsidiary, and, without limiting the generality of
the foregoing, hereby absolutely and unconditionally guarantees the full,
prompt and faithful performance by Buyer's Subsidiary of all covenants and
obligations to be performed by Buyer's Subsidiary under this Agreement and
any agreement delivered in connection herewith which are assigned to
Buyer's Subsidiary, including but not limited to, the payment of all sums
stipulated to be paid by such Buyer's Subsidiary pursuant to such
assignment, it being understood that each such covenant and obligation
constitutes the direct and primary obligation of Buyer, is independent of
the covenants and obligations of Buyer's Subsidiary and that a separate
action or actions may be brought and prosecuted against Buyer whether
action is brought against Buyer's Subsidiary or whether Buyer's Subsidiary
is joined in any such action or actions (Buyer hereby waiving any right to
require Seller to proceed against Buyer's Subsidiary). Buyer hereby
authorizes Seller, without notice and without affecting Buyer's liability
hereunder, from time to time to (A) renew, compromise, extend, accelerate,
or otherwise change the terms of any obligation of Buyer's Subsidiary
hereunder with the agreement of Buyer's Subsidiary, (B) take and hold
security for the obligations guaranteed, and exchange, enforce, waive and
release any such security, and (C) apply such security and direct the
order or manner of sale thereof as Seller in its discretion may determine.
Buyer hereby further waives:
(I) Any right to subrogation, reimbursement,
exoneration or contribution or any other rights that would result
in Buyer being deemed a creditor of Buyer's Subsidiary under the
federal Bankruptcy Code or any other law, in each case arising
from the existence or performance of Buyer's guaranty of the
obligations of Buyer's Subsidiary hereunder,
(II) Any defense that may arise by reason of the
incapacity or lack of authority of Buyer's Subsidiary;
(III) Any defense based upon a statute or rule of law
which provides that the obligations of a surety must
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be neither larger in amount nor in other respects more
burdensome than those of the principal) and
(IV) Any duty on the part of Seller to disclose to
Buyer any facts that Seller may now or hereafter know about
Buyer's Subsidiary, since Buyer hereby acknowledges that it is
fully responsible for being and keeping informed of the financial
condition of Buyer's Subsidiary and all circumstances bearing on
the risk of non-payment of any obligations assigned to Buyer's
Subsidiary.
(b) No Third Party Rights. Subject to the provisions of
Paragraph 19.5(a), the rights under this Agreement shall not be assignable nor
the duties delegable by any party without the written consent of the other; and
nothing contained in this Agreement, express or implied, is intended to confer
upon any Person or entity, other than the parties hereto and their permitted
successors-in-interest and permitted assignees, any rights or remedies under or
by reason of this Agreement unless so seated to the contrary.
19.6 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
19.7 CAPTIONS AND PARAGRAPH HEADING
Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing it.
19.8 ENTIRETY OF AGREEMENT; AMENDMENT
This Agreement (including the Schedules hereto), the other
documents and instruments specifically provided for in this Agreement and the
letter agreement of even date herewith between Seller and Buyer regarding
Seller's remediation of certain environmental matters on the Real Property, the
Woodland Park Property and the Lander Property, contain the entire understanding
between the parties concerning the subject matter of this Agreement and such
other documents and instruments and, except as expressly provided for herein,
supersede all prior understandings and agreements, whether oral or written,
between them with respect to the subject matter hereof and thereof. There are no
representations, warranties, agreements, arrangements or understandings, oral or
written, between the parties hereto relating to the subject matter of this
Agreement and such other documents and instruments which are not fully expressed
herein or therein. This Agreement
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may be amended or modified only by an agreement in writing signed by all of the
parties hereto.
19.9 EXPENSES AND PRORATIONS
Each party shall bear and pay its own costs and expenses
relating to the transactions contemplated by, or the performance of or
compliance with any condition or covenant set forth in, this Agreement. In
determining the costs and expenses of each party hereunder, the following rules
shall apply: (a) all costs of the Preliminary Title Reports and each Title
Policy shall be paid by Seller up to an amount equal to the amount Seller would
have incurred if each Title Policy were a standard coverage owner's or leasehold
owner's policy of title insurance (without deletion of survey exceptions), and
the remaining costs of each Title Policy (including any endorsements required by
Buyer), if any, shall be borne by Buyer; (b) all costs of the Surveys, the
Environmental Survey and all UCC Reports shall be borne by Buyer; (c) all fees,
charges and costs of economists and other experts, if any, jointly retained by
Buyer and Seller in connection with the submissions made to any governmental
agency and advice in connection therewith respecting the approval of the
transactions contemplated hereby will be borne one-half by Seller and one-half
by Buyer except for all fees relating to the Xxxx-Xxxxx-Xxxxxx filing, which
fees shall be paid by Buyer; (d) all escrow charges and related fees shall be
borne one-half by Seller and one-half by Buyer; (e) if not properly reflected as
an Accrued Operating Expense as of the Closing Date, all real and personal
property taxes (including all special assessments and any installment payments
thereof) shall be prorated between Seller and Buyer as of the Closing Date based
on the assessed valuations of such property for the taxable year in which the
Closing occurs and the property tax rates for such taxable year of all
applicable taxing jurisdictions; and (f) all other costs, charges and expenses
shall, except as otherwise provided in this Agreement, be allocated between
Buyer and Seller in accordance with the customs of the county in which the Real
Property is located.
19.10 CONSTRUCTION
This Agreement and any documents or instruments delivered
pursuant hereto shall be construed without regard to the identity of the Person
who drafted the various provisions of the same. Each and every provision of this
Agreement and such other documents and instruments shall be construed as though
the parties participated equally in the drafting of the same. Consequently, the
parties acknowledge and agree that any rule of construction that a document is
to be construed against the drafting party shall not be applicable either to
this Agreement or such other documents and instruments.
19.11 WAIVER
The failure of any party to insist, in any one or more
instances, on performance of any of the terms, covenants and conditions of this
Agreement shall not be construed as a waiver or relinquishment of any rights
granted hereunder or of the future
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performance of any such term, covenant or condition, but the obligations of the
parties with respect thereto shall continue in full force and effect. No waiver
of any provision or condition of this Agreement by any party shall be valid
unless in writing and signed by such party or operational by the terms of this
Agreement. A waiver by one party of the performance of any covenant, condition,
representation or warranty of the other party shall not invalidate this
Agreement, nor shall such waiver be construed as a waiver of any other covenant,
condition, representation or warranty. A waiver by any party of the time for
performing any act shall not constitute a waiver of the time for performing any
other act or the time for performing an identical act required to be performed
at a later time.
19.12 SEVERABILITY
The provisions of this Agreement are severable, and if any
one or more provisions may be determined to be judicially unenforceable, in
whole or in part, the remaining provisions and any partially unenforceable
provisions, to the extent enforceable, shall nevertheless be binding upon and
enforceable against the parties hereto.
19.13 CERTAIN DEFINITIONS
(a) Newly Defined Terms. For purposes of this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" of a specified Person shall mean any corporation,
partnership, sole proprietorship or other Person or entity which directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with the Person specified. The term "control" means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person or entity.
"COBRA" shall mean Sections 601 through 609 of ERISA and
Section 4980B of the Code.
"ENVIRONMENTAL REGULATIONS" shall mean all Laws and all
policies and guidelines as of the date of this Agreement relating to the use,
handling, treatment, storage, transportation, disposal, emissions, discharges or
releases of Hazardous Materials or otherwise relating to the protection of the
environment or industrial hygiene (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata).
"GOVERNMENT RECEIVABLES" shall mean any and all Receivables
due from Medicare, Medicaid or CHAMPUS, or any other Receivable (including any
such Receivables respecting a Straddle Patient), the assignment of which is
either prohibited by Law or by the terms of any contract with a payor, and
including all deductibles and co-insurance payments receivable from the patient
or other payor, and including all Receivables which
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represent amounts due from Payors with respect to the cost reports and other
filings referred to in Paragraph 14.10.
"HAZARDOUS MATERIALS" shall mean any substance, material or
waste (including, without limitation, medical wastes, asbestos in any form,
formaldehyde, radon, radioactive substance, hydrocarbons, petroleum, gasoline,
crude oil or any products, byproducts or fractions thereof, polychlorinated
biphenyls, industrial solvents, flammables, explosives and any other substance
or material defined or listed as "hazardous substances", "hazardous waste",
"toxic substances", "toxic pollutant" or similarly identified substances,
materials or mixtures in or pursuant to the Environmental Regulations) which, in
any material respect, is known to cause as of the date of this Agreement a
health or environmental hazard and require remediation at the behest of any
governmental agency.
"KNOWLEDGE" of (I) a party or Person other than Seller shall
mean the current conscious awareness of the Persons who serve as of the date of
this Agreement as the duly elected officers of such party or Person after
reasonable inquiry, and (ii) Seller shall mean the current conscious awareness
of the Chief Executive Officer, the Chief Financial Officer, the Chief Operating
Officer, the Director of Nursing and the Plant Manager of each Hospital as
communicated to Seller's representatives in response to inquiries made in the
course of Seller's preparation of the Disclosure Statement.
"LAWS" shall mean all statutes, rules, regulations,
ordinances, orders, codes, permits, licenses, policies, and agreements with or
of federal, state, local and foreign governmental and regulatory authorities and
any order, writ, injunction or decree issued by any court, arbitrator or
governmental agency or in connection with any judicial, administrative or other
nonjudicial proceeding (including, without limitation, arbitration or
reference).
"PAYOR" shall mean Medicare, Medicaid, CHAMPUS and Medically
Indigent Assistance programs, Blue Cross, Blue Shield or any other third party
payor (including an insurance company), or any health care provider (such as a
health maintenance organization, preferred provider organization, peer review
organization, or any other managed care program).
"PERSON" shall mean any individual, partnership, corporation,
limited liability company, trust, unincorporated association, joint venture or
any other entity of any kind whatsoever, whether for profit or not for profit,
and any governmental agency.
"REASONABLE COMMERCIAL EFFORTS" OR "REASONABLE EFFORTS" do
not include the provision of any consideration to any third party or the
suffering of any economic detriment to a party's ongoing operations for the
procurement of any consent, authorization or approval required under this
Agreement except for the costs of gathering and supplying data or other
information or making any filings, fees and expenses of counsel and consultants
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and for customary fees and charges of governmental authorities and
accreditation organizations.
"RECEIVABLES" shall mean all accounts, notes or other amounts
receivable recorded or otherwise accrued by Seller as of the Closing Date as
accounts, notes or other amounts receivable (excluding any amount not so
recorded or accrued and any amount which ever was recorded or accrued before the
Closing Date but which has been written off or: fully reserved as of the Closing
Date) from Payors, patients, physicians or any other Person (whether or not
billed) including, without limiting the generality of the foregoing, any amount
due to Seller arising from or in connection with the treatment of patients at,
or the operation of, the Hospital Businesses, including (to the extent not
already included) rights to payment for services rendered through the Closing
Date to Straddle Patients, but excluding all such Receivables constituting
Buyer's share of Straddle Patient Payments payable to Buyer pursuant to
Paragraph 14.8(b).
"TAXES" shall mean (i) all federal, state, county and local
sales, use, property, payroll, recordation and transfer taxes, (ii) all federal,
state, county and local taxes, levies, fees, assessments or surcharges (however
designated, including privilege taxes, room or bed taxes and user fees) which
are based on the gross receipts, net operating revenues or patient days of a
Hospital for a period ending on, before or including the Closing Date or a
formula taking any one of the foregoing into account, and (iii) any interest,
penalties and additions to tax attributable to any of the foregoing, but shall
not include any income tax or other tax based on net income or any taxes payable
by Seller relating to Seller's 1031 exchange as described in Paragraph 19.21.
(b) Table of Contents for Previously Defined Terms. The terms
listed below are defined elsewhere in this Agreement and, for ease of reference,
the Paragraph containing the definition of each such term is set forth opposite
such term.
Term Paragraph
---- ---------
Accrued Operating Expenses 3.1(d)
Assumed Contracts 3.1(a)
Assumed Obligations 3.1
Xxxx of Sale 2 3(a)(ii)
Business Records 14.2(a)
Buyer's Designated Representatives 7.5
Buyer's Subsidiary 19.5(a)
Closing 11
Closing Date 11
Closing Schedule 2.2
Code 5.15
Collection Period 14.8(d)(iii)
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Commitment Letter 8.5
Confidential Information 14.6
Consultant 8.2
Contracts 1.1.5
Desired Consents 6.4
Destruction Notice 14.2(b)
Disapproved Item 14.7
Disclosure Statement 4
Document Retention Period 14.2(b)
Environmental Survey 8 2
ERISA 5 22
Escrow 13
Escrow Agent 11.2
Escrow Agreement 13
Estimated Statement 2.3
Excluded Liabilities 3.2
Exclusivity Fee 13
Financial Statements 5.3(a)
Hired Employees 14 11(b)
Hospitals A
Hospital Businesses A
Hospital Records 14 2
Indemnification Notice 16 3
Indemnitee 16.3
Indemnitor 16.3
Inspection 8.2
Inspection Period 9.3
Intercompany Transactions 1.1.5
Interim Statements 5.3(a)
Inventory 1.1.4
JCAHO 5 9
Justice Department 14.13(a)
Lander Lease 1.1.2
Lander Property 1.1.2
Leased Real Property 1.1.2
Liens 5.4
Losses 16.1
Manuals 14.16
Monthly Statements 6.7
Paid Time Off 3 1(b)
Patient Records 14.2(a)
Permits 5.9
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Permitted Exceptions 5.4
Phase I Assessment 8.2
Phase II Investigation 8.2
Plans 5.22
Preliminary Title Reports 8.2
Premerger Rules 9.11
Prepaids 1.1.7
Prior Years' Statements 5.3(a)
Purchase Price 2.1
Purchased Inventory 1.1.4
Purchased Prepaids 1.1.7
Purchased Receivables 1.1.12
Real Property 1.1. 1
Real Property Leases 1.1.2
Retained Employees 14.11
Retained Assets 1.2
Seller's Parent 9.13
Services 14.16
Software 14. 16
Straddle Patients 14.8(b)
Straddle Patient Payments 14.8(b)(iii)
Supplemental Disclosure Statement 4
Surveys 8.2
Tentative Purchase Price 2.3
Title Company 8.2
Title Policy 9.7
Transferred Assets 1.1
UCC Reports 8.2
WARN Act 14.11
Woodland Park Lease 1.1.2
Woodland Park Property 1.1.2
Written Statement 7.5
19.14 CONSENTS NOT UNREASONABLY WITHHELD
Wherever the consent or approval of any party is required
under this Agreement, such consent or approval shall not be unreasonably
withheld delayed or conditioned, unless such consent or approval is to be given
by such party at the sole and absolute discretion of such party or is otherwise
similarly qualified.
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19.15 TIME OF THE THE ESSENCE
Time is hereby expressly made of the essence with respect to
each and every term and provision of this Agreement. The parties acknowledge
that each will be relying upon the timely performance by the other of its
obligations hereunder as a material inducement to each party's execution of this
Agreement. Consequently, the parties agree that they are bound strictly by the
provisions concerning timely performance of their respective obligations
contained in this Agreement and that if any attempt is made by either party to
perform an obligation required to be performed or to comply with a provision of
this Agreement required to be complied with in a manner other than in strict
compliance with the time period applicable thereto, even if such purported
attempt is but one day late, then such purported attempt at performance or
compliance shall be deemed a violation of this Paragraph 19.15, shall be deemed
in contravention of the intention of the parties hereto, shall be null and void
and of no force or effect and shall constitute such party's material default
under this Agreement.
19.16 INTEREST ON AMOUNTS DUE
Any amount due from either party to the other which is not
paid when due shall bear interest at a rate equal to the prime rate reported by
the Wall Street Journal under "Money Rates" from time to time or the highest
rate permitted by Law, whichever is lower.
19.17 GOVERNING LAW
This Agreement shall be construed and enforced in accordance
with the laws of the State of California, without regard to the principles of
conflicts of law theory; provided, however, that the validity, interpretation
and effect of any documents or instruments by which real property is conveyed
shall be governed by the laws of the State in which such real property is
located.
19.18 TAX AND MEDICARE EFFECT
Except as otherwise expressly provided for in this Agreement,
neither party (nor such party's counsel or accountant) has made or is making any
representations to the other party (nor such party's counsel or accountant)
concerning any of the Tax, income or franchise tax, or Medicare effects arising
by reason of the transactions provided for in this Agreement as each party has
obtained independent professional advice with respect thereto and upon which it
has solely relied. Except as otherwise provided in this Agreement, no party
shall be liable or in any way responsible to any other party because of any Tax,
income or franchise tax, or Medicare effect resulting from the transactions
provided for in this Agreement and each party shall be responsible for the
payment of any Tax, income
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or franchise tax, or Medicare related charge or payment for which it becomes
liable by reason of the consummation of the transactions provided for in this
Agreement.
19.19 CASUALTY
If any part of the Transferred Assets are damaged, lost or
destroyed (whether by fire, theft, vandalism or other casualty) in whole or in
part on or prior to the Closing Date, Seller shall promptly notify Buyer of the
same; and if the fair market value of such damage or destruction does not
(according to Seller's reasonable estimate) exceed $3,000,000, Seller shall, at
Seller's option, either (a) reduce the Purchase Price by the fair market value
of the assets destroyed as reasonably determined by Seller, such value to be
determined as of the day immediately prior to such destruction or, as the case
may be, by the estimated cost to restore damaged goods, (b) provided that the
insurance proceeds are obtainable without delay and are, in Seller's reasonable
judgment, sufficient to fully restore the damaged assets, upon the Closing,
transfer the insurance proceeds or the rights to insurance proceeds of
applicable insurance to Buyer and Buyer may restore the improvements, or (c)
repair or restore such damaged or destroyed improvements. If any part of the
Transferred Assets are damaged, lost or destroyed (whether by fire, theft,
vandalism or other cause or casualty) in whole or in part prior to the Closing
and the fair market value of such damages exceeds (according to Buyer's
reasonable estimate) $3,000,000, Buyer may elect either to (x) require Seller to
transfer so much of the proceeds (or the right to the proceeds) of applicable
insurance to Buyer as is required for Buyer to restore the improvements and
Buyer shall thereafter restore the improvements or (y) terminate this Agreement,
in which case the Exclusivity Fee shall be returned to Buyer.
19.20 CONDEMNATION
From the date hereof and until the Closing, in the event that
any portion of either the Real Property underlying a particular Hospital, the
Lander Property or the Woodland Park Property is taken, reduced or restricted by
any pending, threatened or contemplated condemnation or eminent domain
proceeding or otherwise, then Buyer, at its sole option, may elect to terminate
this Agreement only with respect to the Hospital and related Hospital Businesses
affected by such preceding, in which case the Purchase Price shall be reduced by
the amount allocated to such Hospital and related Hospital Businesses pursuant
to Paragraph 14.5.
19.21 TAX-DEFERRED EXCHANGE
The parties acknowledge that it is Seller's intent to
transfer some or all of the Transferred Assets as part of a tax-deferred
exchange which qualifies for nonrecognition of gain under Section 1031 of the
Code. The manner and format for such exchange shall be designated by Seller;
provided, however, that at no time shall Buyer acquire any interest in any
property other than the Transferred Assets. Buyer shall cooperate with
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Seller in effecting such exchange, provided that (a) Buyer shall not incur any
additional liability in connection with such exchange, and (b) all additional
closing costs and charges attributable to the exchange shall be paid by Seller.
The exchange format to be designated may require Buyer to enter into an exchange
escrow with Seller, to acquire Seller's newly selected real property and other
tangible or intangible property, and then to transfer such real property and
other tangible or intangible property to Seller, or Seller may elect to effect a
non-simultaneous exchange wherein Seller will convey the Transferred Assets
subject to the exchange to an intermediary designated by Seller who will convey
such Transferred Assets to Buyer.
Rest of the Page Intentionally Left Blank
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
Seller:
XXXXXXXXX MEDICAL CENTER, INC.
WOODLAND PARK HOSPITAL, INC.
EGH, INC. QUALICARE OF WYOMING, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
NEW AMERICAN HEALTHCARE
CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------
Title: CEO
-----------------------------
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ANNEX I
LIST OF SCHEDULES
Schedule Description
-------- -----------
1.1.1 Real Property Owned
1.1.2 Real Property Leases, Lander Property
and Woodland Park Property
1.1.3 Personal Property
1.1.5 Contracts
1.1.7 Purchased Prepaids
1.1.8 Business Names
1.1.13 Joint Ventures
1.2.7 Other Retained Assets
3.1(b) Paid Time Off
3.1(g) Capital Leases
5.1 Sellers' States of Incorporation and
Subsidiaries
5.3 Financial Statements
5.4 Permitted Exceptions
5.5 Third Party Consents
5.6 Governmental Consents
5.7 Hazardous Substances
5.8 Litigation
5.9 Permits
5.10 Compliance with Laws
5.11 Union Matters
5.12 Personnel List
5.13 Defaults Under Assumed Contracts
5.17 Adverse Changes
5.18 Cost Reports and Participation Matters
5.19 Medical Staff Matters
8.5 Commitment Letter
9.13 Parent Guaranty
14.15 Special Limited Powers of Attorney
14.16 Licensed Software
14.18 BuyPower Agreement
5.20 Government Fund
5.25 Motor Vehicle Titles
6.4 Desired Consents
14.5 Purchase Price Allocation
96
ANNEX II
LIST OF EXHIBITS
Exhibit
-------
2.3(a)(ii) Xxxx of Sale and Assignment and Assumption
of Assumed Obligations
8.5 Commitment Letter
9.13 Parent Guaranty
14.15 Special Limited Powers of Attorney
14.16 Licensed Software
14.18 BuyPower Agreement
