Exhibit 2.3
Execution Copy
BY AND BETWEEN
SOUTHERN REGIONAL HEALTH SYSTEM, INC.
AND
ACADIA RIVERWOODS, LLC,
d/b/a RIVERWOODS BEHAVIORAL HEALTH SYSTEM
August 29, 2008
TABLE OF CONTENTS
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Description |
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1.
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Purchase of Assets |
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1.1 Purchased Assets
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1 |
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1.2 Excluded Assets
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2 |
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1.3 Assumed Liabilities
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3 |
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1.4 Excluded Liabilities
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3 |
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1.5 Consideration
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5 |
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1.6 Prorations
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5 |
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1.7 Environmental Report
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6 |
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1.8 Seller’s Operation of the Purchased Assets and Buyer’s Intended Use of the
Purchased Assets
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6 |
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2.
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Closing |
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2.1 Closing
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6 |
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2.2 Actions of Seller at Closing
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6 |
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2.3 Actions of Buyer at Closing
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9 |
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3.
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Representations and Warranties of Seller |
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3.1 Existence and Capacity
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10 |
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3.2 Powers; Consents; Absence of Conflicts With Other Agreements, Etc
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10 |
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3.3 Binding Agreement
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10 |
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3.4 Financial Statements
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10 |
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3.5 Certain Post Financial Statement Date Results
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11 |
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3.6 Licenses
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12 |
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3.7 Certificates of Need
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12 |
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3.8 Medicare Participation/Accreditation
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12 |
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3.9 Regulatory Compliance
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13 |
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3.10 Equipment
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13 |
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3.11 Real Property
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13 |
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3.12 Title
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14 |
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3.13 Employee Benefit Plans
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15 |
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3.14 Litigation or Proceedings
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15 |
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3.15 Environmental Laws
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15 |
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3.16 Xxxx-Xxxxxx and Other Liens
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16 |
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- i -
TABLE OF CONTENTS
(continued)
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Description |
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3.17 Taxes
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16 |
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3.18 Employee Relations
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16 |
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3.19 Agreements and Commitments
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17 |
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3.20 The Contracts
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18 |
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3.21 Supplies
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18 |
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3.22 Insurance
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18 |
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3.23 Medical Staff Matters
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19 |
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3.24 Experimental Procedures
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19 |
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3.25 Condition of Assets
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19 |
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3.26 Compliance Program
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19 |
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3.27 Full Disclosure
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20 |
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3.28 No Broker
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20 |
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3.29 Bond Defeasance
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20 |
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4.
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Representations and Warranties of Buyer |
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4.1 Existence and Capacity
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20 |
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4.2 Powers; Consents; Absence of Conflicts With Other Agreements, Etc
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20 |
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4.3 Binding Agreement
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21 |
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4.4 Available Capital
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21 |
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4.5 Parent Company
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21 |
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4.6 Litigation or Proceedings
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.21 |
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4.7 Hospital Permit and Performance
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21 |
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4.8 Full Disclosure
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22 |
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5.
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Covenants of Seller Prior to Closing |
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5.1 Information
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22 |
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5.2 Operations
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22 |
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5.3 Title Commitment
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22 |
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5.4 Negative Covenants
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23 |
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5.5 Governmental Approvals
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24 |
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5.6 Additional Financial Information
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24 |
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5.7 No-Shop Clause
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24 |
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- ii -
TABLE OF CONTENTS
(continued)
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Description |
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5.8 Insurance Ratings
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24 |
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5.9 Tail Coverage
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24 |
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5.10 Medical Staff Disclosure
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25 |
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6.
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Covenants of Buyer Prior to Closing |
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6.1 Governmental Approvals
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25 |
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6.2 Surveys
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25 |
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7.
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Conditions Precedent to Obligations of Buyer |
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7.1 Representations/Warranties
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26 |
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7.2 Pre-Closing Confirmations
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26 |
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7.3 Title Policy
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26 |
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7.4 Actions/Proceedings
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27 |
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7.5 Adverse Change
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27 |
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7.6 Insolvency
7.7 Consents to Assignments
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27
27 |
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7.8 Vesting/Recordation
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27 |
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7.9 Due Diligence
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27 |
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7.10 Employee Matters
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27 |
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7.11 Closing Deliveries
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27 |
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8.
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Conditions Precedent to Obligations of Seller |
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8.1 Representations/Warranties
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27 |
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8.2 Governmental Approvals
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28 |
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8.3 Actions/Proceedings
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28 |
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8.4 Closing Deliveries
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28 |
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9.
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Covenants Not to Compete |
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9.1 Seller’s Covenant Not to Compete and Nonsolicitation
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28 |
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9.2 Buyer’s Covenant Not to Compete and Nonsolicitation
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28 |
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9.3 Remedies
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29 |
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10.
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Post-Closing Covenants of Buyer |
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10.1 Capital Investments
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29 |
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10.2 Programs and Services
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29 |
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- iii -
TABLE OF CONTENTS
(continued)
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Description |
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10.3 On-site Administrative/Management Team
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29 |
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10.4 Quality
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30 |
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10.5 Clinical Support
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30 |
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10.6 Indigent Care and Medicaid
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31 |
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10.7 Governance
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31 |
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10.8 Survival of Buyer’s Post-Closing Covenants
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31 |
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11.
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Additional Agreements |
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11.1 Allocation of Purchase Price
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31 |
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11.2 Termination Prior to Closing
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31 |
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11.3 Post Closing Access to Information
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31 |
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11.4 Preservation and Access to Records After the Closing
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32 |
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11.5 Tax and Medicare Effect
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33 |
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11.6 Reproduction of Documents
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33 |
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11.7 Cooperation on Tax Matters
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33 |
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11.8 Patient Xxxxxxxx
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34 |
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11.9 Other Payments
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34 |
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11.10 Employee Matters
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35 |
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11.11 Contract Rights Not Assigned
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36 |
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11.12 Defeasance of Bonds
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36 |
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11.13 Use of Hospital Forms, Policies and Records
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36 |
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12.
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Rights of First Refusal and Repurchase Option |
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12.1 Right of First Refusal
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36 |
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12.2 Sales to Certain Entities
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37 |
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12.3 Closure of Hospital
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38 |
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12.4 Regulatory Approvals
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38 |
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13.
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Indemnification |
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13.1 Indemnification by Buyer
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38 |
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13.2 Indemnification by Seller
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39 |
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13.3 Notice and Control of Litigation
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39 |
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13.4 Notice of Claim
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39 |
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13.5 Springing Escrow
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40 |
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- iv -
TABLE OF CONTENTS
(continued)
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Description |
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14.
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Miscellaneous |
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14.1 Schedules and Other Instruments
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41 |
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14.2 Additional Assurances
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41 |
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14.3 Consented Assignment
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42 |
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14.4 Consents, Approvals and Discretion
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42 |
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14.5 Legal Fees and Costs
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42 |
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14.6 Choice of Law
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42 |
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14.7 Benefit/Assignment
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42 |
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14.8 No Brokerage
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42 |
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14.9 Cost of Transaction
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43 |
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14.10 Confidentiality
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43 |
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14.11 Public Announcements
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43 |
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14.12 Waiver of Breach
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43 |
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14.13 Notice
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43 |
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14.14 Severability
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44 |
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14.15 Gender and Number
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44 |
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14.16 Divisions and Headings
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44 |
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14.17 Survival
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45 |
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14.18 Affiliates
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45 |
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14.19 Material Adverse Effect
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45 |
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14.20 Waiver of Jury Trial
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45 |
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14.21 Accounting Date
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45 |
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14.22 No Inferences
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45 |
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14.23 No Third Party Beneficiaries
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45 |
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14.24 Enforcement of Agreement
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45 |
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14.25 Force Majeure
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46 |
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14.26 Entire Agreement/Amendment
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46 |
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14.27 Insolvency and Change of Control
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46 |
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14.28 Risk of Loss
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47 |
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14.29 Waiver of Bulk Sales Law Compliance
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46 |
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- v -
EXHIBITS
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Description |
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Exhibit |
General Assignment, Conveyance and Xxxx of Sale
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A |
Assignment and Assumption Agreement
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B |
Clinical Laboratory Services Agreement
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C |
Laundry Services Agreement
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D |
Food and Nutrition Services Agreement
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E |
Chilled Water and Steam Service Agreement
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F |
Employment Assistance Program Agreement
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G |
Psychiatric Clinical Assessment Agreement
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H |
Access Easement Agreement
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I |
D-Xxxx Agreement
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J |
Detention Pond Agreement
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K |
Springing Escrow Agreement
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L |
Opinion of Counsel
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M |
Amended Restated Lease Agreement
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N |
SCHEDULES
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Description |
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Schedules |
Real Property
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1.1(a) |
Tangible Personal Property
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1.1(b) |
Contracts
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1.1(g) |
Excluded Assets
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1.2 |
Excluded Liabilities
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1.4 |
Breaches
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3.2(c) |
Financial Statements
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3.4 |
Certain Post-Balance Sheet Results
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3.5 |
Licenses
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3.6 |
Certificates of Need
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3.7 |
Medicare Participation/Accreditation
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3.8 |
Regulatory Compliance
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3.9 |
Permitted Encumbrances
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3.11 |
Notice of Violation of Real Estate Law
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3.11(a) |
Easements and Other Limitations
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3.11(c) |
Accessibility Laws
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3.11 (d) |
Tenant Leases
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3.11 (e) |
Rent Roll
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3.11(f) |
Eminent Domain
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3.11(g) |
Flood Hazards
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3.11(h) |
Encroachments
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3.11(i) |
Employee Benefit Plans
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3.13 |
Litigation or Proceedings
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3.14 |
Environmental Laws
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3.15 |
Employee Relations
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3.18 |
Employee Laws
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3.18(b) |
Employment Loss
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3.18(c) |
Agreements and Commitments
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3.19 |
- vi -
SCHEDULES
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Description |
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Schedules |
Consent to Assignment
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3.20(d) |
Penalties, Premiums and Variations
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3.20(e) |
Insurance
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3.22 |
Medical Staff Matters
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3.23 |
Material Defects
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3.25 |
Compliance Program
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3.26 |
Brokers
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3.28 |
Litigation or Proceedings (Buyer)
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4.6 |
Permitted Acute Care Hospital Mergers
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9.1 |
Exceptions to Termination
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14.27 |
- vii -
GLOSSARY OF DEFINED TERMS
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Description |
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Section |
Access Easement Agreement
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2.2(u) |
Accessibility Laws
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3.11(d) |
Accounts Receivable
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1.2(a) |
Advisory Board
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10.7 |
Affiliate
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14.18 |
Agreed Receivable Value
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1.5(a) |
Agreement
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Introduction |
Allocated Portion of the Bonds
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11.12 |
Ancillary Services Agreements
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2.2(e) |
Assignment and Assumption Agreement
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2.2(c) |
Assumed Liabilities
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1.3 |
Bond Defeasance Escrow Account
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1.5(b) |
Buyer
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Introduction |
Buyer Receivables
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11.8(a) |
Buyer Indemnified Parties
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13.2 |
Cash Consideration
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1.5 |
CERCLA
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3.15 |
Certificate of Need
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3.7 |
Change of Control
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14.27 |
Closing
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2.1 |
Closing Cash
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1.5(b) |
Closing Date
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2.1 |
Closing Documents
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3.27 |
Closure Notice
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12.3 |
Closure Purchase Price
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12.3 |
Closure Option Period
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12.3 |
Compliance Program
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3.26 |
Consideration
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1.5 |
Code
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3.17 |
Contracts
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1.1(g) |
DCH
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3.7 |
Detention Pond Agreement
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2.2(w) |
Disqualified Offer Notice
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12.2 |
Disqualified Purchaser
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12.2 |
Disqualified Refusal Period
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12.2 |
Employee Benefits Plans
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3.13 |
Environmental Laws
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3.15 |
ERISA
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3.13 |
Excluded Assets
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1.2 |
Excluded Liabilities
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1.4 |
Exclusive Coverage Agreement
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2.2(q) |
Extended Illness Benefit
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11.10(a) |
Financial Statements
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3.4 |
Financial Statement Date
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3.4(d) |
- viii -
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Description |
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Section |
Government Entity
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3.9 |
HIPAA
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3.9 |
Hired Employees
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11.10(a) |
Hospital
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Recital B |
Hospital Authority
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2.2(g) |
Hospital Forms
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11.13 |
Hospital Purchaser
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12.1 |
Indemnified Party
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13.3 |
Indemnifying Party
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13.3 |
Insolvency Event(s)
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7.6 |
Interim Statements
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5.6 |
Knowledge of Buyer
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4 |
Knowledge of Seller
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3 |
Loss
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13.1 |
Losses
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13.1 |
Material Adverse Effect
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14.19 |
Maximum Reserved Amount
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13.5(e) |
Non-Cash Consideration
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1.5 |
Notice of Dispute
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13.5(d) |
ORS
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3.6 |
Payout Certificate
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13.5(a) |
Permits
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1.1(h) |
Permitted Encumbrances
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3.11 |
Purchased Assets
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1.1 |
Purchase Offer Notice
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12.1 |
RCRA
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3.15 |
Real Property
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1.1(a) |
Reserved Amounts
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13.5(d) |
Right of First Refusal Period
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12.1 |
Seller |
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Introduction |
Seller Indemnified Parties
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13.1 |
Special Flood Hazards
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3.11(h) |
Springing Escrow Agreement
|
|
2.2(1) |
Straddle Patients
|
|
11.8(a) |
Surveys
|
|
6.2 |
Title Commitment
|
|
5.3 |
Title Company
|
|
5.3 |
Title Policy
|
|
5.3 |
Utility Easement Agreement
|
|
2.2(v) |
WARN Act
|
|
13.18(c) |
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This Asset Purchase Agreement (the
“Agreement”) is made and entered into as of August
29, 2008, by and among
Southern Regional Health System, Inc. a
Georgia non-profit
corporation
(“Seller”), and
Acadia RiverWoods, LLC, d/b/a Riverwoods Behavioral Health
System, a Delaware limited liability company
(“Buyer”).
A. Seller owns and operates RiverWoods Psychiatric Center, which is a psychiatric
facility providing behavioral health programs and services as a department of a not-for-profit
acute care hospital in Riverdale,
Georgia.
B. Seller desires to sell to Buyer, and Buyer desires to purchase, certain tangible and
intangible assets of Seller which are related to, necessary for, or used primarily in connection
with, the operation or management of RiverWoods Psychiatric Center, and any buildings and
facilities used solely in the operation thereof (the “Hospital”), on the terms and conditions set
forth in this Agreement.
C. Seller believes that the sale of the assets as provided for herein is in the public
interest.
Now,
Therefore, for and in consideration of the premises and the agreements,
covenants, representations, and warranties hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Purchase of Assets.
1.1 Purchased Assets. Subject to the terms and conditions of this Agreement, as of the Closing
(as defined in Section 2.1 hereof), Seller agrees to sell, convey, transfer, assign and
deliver to Buyer or cause to be sold, transferred, and assigned to Buyer, and Buyer agrees to
purchase and assume, all of the tangible and intangible assets of Seller which are related to,
necessary for, or used primarily in connection with, the operation or management of Hospital, and
any buildings and facilities used solely in the operation thereof, other than the Excluded Assets
(hereinafter defined), which assets shall include, without limitation, the following (the
“Purchased Assets”):
(a) the real property described on Schedule 1.1(a) hereto, together with all
improvements, any construction in progress, any other buildings and fixtures thereon, and all
rights, privileges and easements appurtenant thereto (collectively, the “Real Property”);
(b) all tangible personal property, including, without limitation, all major, minor or other
equipment, vehicles, furniture and furnishings, the current list and general location of which are
set forth on Schedule 1.1(b) hereto;
- 1 -
(c) supplies and inventory, with the exception of any narcotics, owned by Seller as of the
Closing Date that are used or held for use solely in the operation of the Hospital;
(d) those prepaid or advanced expenses, if any, relating solely to the Hospital or the
operations thereof;
(e) all claims, causes of action, and judgments in favor of Seller relating to the condition
of the Purchased Assets and, to the extent assignable by Seller, all warranties (express or
implied) and rights and claims assertable by (but not against) Seller related to the Purchased
Assets which relate to the period from and after the Closing (provided, however, that Seller shall
not transfer to Buyer claims assertable by Seller to recover repair or replacement costs if Seller
already has expended the amounts necessary to fund the repair or replacement);
(f) with the exception of the medical and billing records of the Hospital patients discharged
on or before the Closing Date, all financial, patient, medical staff and personnel records relating
to the Hospital including, without limitation, equipment records, medical administrative libraries,
medical records, patient billing records, documents, catalogs, books, records, files, operating
manuals and current personnel records;
(g) all rights and interests, to the extent assignable, of Seller in the contracts,
commitments, leases and agreements listed on Schedule 1.1(g) hereto (the “Contracts”);
(h) all licenses and permits, to the extent assignable, held by Seller relating
solely to the ownership, development, and operation of the Hospital (including, without
limitation, any pending or approved governmental approvals, but expressly excluding Seller’s
Medicare provider number) (the “Permits”);
(i) all names, trade names, trademarks and service marks (or variations
thereof) associated with the Hospital (other than the trade names, trademarks, service marks and
other intellectual property containing the words, “Southern Regional Medical Center,” “Southern
Regional,” or some variation thereof), all goodwill associated therewith, and all applications and
registrations, if any, associated therewith;
(j) all goodwill associated with the Hospital and the Purchased Assets;
(k) any assets owned by Affiliates of Seller which are used solely in connection with the
operations of the Hospital;
(l) all other property, other than the Excluded Assets, of every kind, character or
description owned by Seller and solely used or held solely for use in the business of the Hospital
or the Purchased Assets, wherever located; and
(m) the interest of Seller in all property of the foregoing types, arising or acquired in the
ordinary course of the business of Seller in connection with the Hospital between the date hereof
and the Closing.
1.2 Excluded Assets. Notwithstanding the generality of Section 1.1, those assets,
properties and rights of Seller and its Affiliates described below, together with any assets
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described on Schedule 1.2 hereto, shall be retained by Seller or an Affiliate of Seller as
the case may be (collectively, the “Excluded Assets”) and shall not be conveyed to Buyer:
(a) the accounts receivable arising from the rendering of services to patients at the
Hospital, billed and unbilled, recorded or unrecorded, with collection agencies or otherwise,
accrued and existing in respect of services rendered up to the Closing Date (the “Accounts
Receivable”);
(b) all Seller records relating to the Excluded Assets and Excluded Liabilities (as defined
below), as well as all records which by law Seller is required to maintain in its possession;
(c) all rights in connection with and the assets of Seller’s or its Affiliates’ employee
benefit plans;
(d) all proceeds from insurance policies payable or paid to Seller to the extent such amounts
reimburse Seller for amounts previously expended to repair or replace any Purchased Asset;
(e)
all contracts that are not identified on Schedule 1.1(g);
(f) all rights of Seller under this Agreement and its related documents;
(g) any narcotics located at or held for use at the Hospital;
(h) all medical and billing records of patients discharged on or prior to the
Closing Date;
(i) Seller’s Medicare provider number;
(j) The mobile mammography trailer previously located on the Real Property;
and
(k) the equipment and other tangible personal property described on Schedule
1.2 hereto.
1.3 Assumed Liabilities. In connection with the conveyance of the Purchased Assets to Buyer,
Buyer agrees to assume, as of the Closing, the future payment and performance of all obligations
and liabilities accruing on or after the Closing Date with respect to the following (collectively,
the “Assumed Liabilities”): (a) Buyer’s performance following the Closing Date under the Contracts
assigned to Buyer; and (b) Buyer’s operation of the Hospital following the Closing Date. Buyer
shall not be liable for any claims arising prior to Seller’s assignment and Buyer’s assumption of
the Assumed Liabilities on the Closing Date.
1.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer shall not assume and under
no circumstances shall Buyer be obligated to pay or assume, and none of the assets of Buyer shall
be or become liable for or subject to any liability, indebtedness, commitment, or obligation of
Seller, whether known or unknown, fixed or contingent, recorded or unrecorded,
- 3 -
currently existing
or hereafter arising or otherwise (collectively, the “Excluded Liabilities”), including the
following Excluded Liabilities:
(a) any debt, obligation, expense or liability that is not an Assumed Liability;
(b) claims or potential claims for medical malpractice or general liability relating to events
asserted to have occurred prior to the Closing;
(c) those claims and obligations (if any) specified in Schedule 1.4 hereto;
(d) any liabilities or obligations associated with or arising out of any of the Excluded
Assets;
(e) liabilities and obligations of Seller and its Affiliates arising under the terms of the
Medicare, Medicaid, CHAMPUS/TRICARE, Blue Cross, or other third party payor programs (provided,
however, that Buyer’s post-Closing performance under any payor Contracts assigned to it by Seller
shall not be deemed to be Excluded Liabilities);
(f) federal, state or local tax liabilities or obligations of Seller in respect of periods
prior to the Closing or resulting from the consummation of the transactions contemplated herein
including, without limitation, any income tax, any franchise tax, any tax recapture, any sales
and/or use tax, any state and local recording fees and taxes which may arise upon the consummation
of the transactions contemplated herein, and any FICA, FUTA, workers’ compensation, and any and all
other taxes or amounts due and payable as a result of the exercise by any employee at the Hospital
of such employee’s right to, paid time off, vacation, sick leave, and holiday benefits accrued
while in the employ of Seller, with the exception of any taxes or amounts due and payable as a
result of the exercise by a Hired Employee of any extended illness benefit after the Closing;
(g) liability for any and all claims by or on behalf of Seller’s employees relating to periods
prior to the Closing including, without limitation, liability for any pension, profit sharing,
deferred compensation, or any other employee health and welfare benefit plans, liability for any
EEOC claim, ADA claim, FMLA claim, wage and hour claim, unemployment compensation claim, or
workers’ compensation claim, and any liabilities or obligations to former employees of Seller under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended;
(h) any obligation or liability accruing, arising out of, or relating to any
federal, state or local investigations of, or claims or actions against, Seller or any of its Affiliates
or any of their employees, medical staff, agents, vendors or representatives with respect to acts or
omissions prior to the Closing;
(i) any civil or criminal obligation or liability accruing, arising out of, or
relating to any acts or omissions of Seller, its Affiliates or their directors, officers, employees and
agents claimed to violate any constitutional provision, statute, ordinance or other law, rule,
regulation, interpretation or order of any governmental entity;
(j) liabilities or obligations arising as a result of any breach by Seller at any time of any
contract or commitment that is not assumed by Buyer;
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(k) liabilities or obligations arising out of any breach of any Contract by Seller prior to
the Closing;
(l) any obligation or liability asserted under the federal Xxxx-Xxxxxx program or other
restricted grant and loan programs with respect to the ownership or operation of the Hospital or
the Purchased Assets;
(m) any debt, obligation, expense, or liability of Seller arising out of or incurred solely as
a result of any transaction of Seller occurring after the Closing or for any violation by Seller of
any law, regulation, or ordinance at any time (including, without limitation, those pertaining to
fraud, environmental, healthcare regulatory and ERISA matters);
(n) all liabilities and obligations relating to any oral agreements, oral contracts or oral
understandings with any referral sources including, but not limited to, physicians, unless reduced
to writing and expressly assumed as part of the Contracts;
(o) the trade accounts payable of Seller as of the Closing Date;
(p) obligations and liabilities as of the Closing Date in respect of accrued paid time off
benefits (with the exception of extended illness benefits exercised by Hired Employees after the
Closing) of Seller’s employees at the Hospital, and related taxes.
1.5 Consideration. In consideration for the Purchased Assets, the Buyer shall assume
the Assumed Liabilities (the “Non-cash Consideration”) effective as of the Closing Date, and
shall pay an amount equal to Ten Million Dollars ($10,000,000) (the “Cash Consideration” and,
together with the Non-cash Consideration, the “Consideration”) which shall be paid by Buyer as
follows:
(a) The agreed value of the Accounts Receivable retained by Seller and not assumed by Buyer on
the Closing Date is One Million Three Hundred Thousand Dollars ($1,300,000) (the “Agreed Receivable
Value”), which will be offset from the Cash Consideration; and
(b) The remainder of the Cash Consideration, an amount equal to Eight Million Seven Hundred
Thousand Dollars ($8,700,000) (the “Closing Cash”), shall be paid to Seller at Closing by wire
transfer of immediately available funds into account(s) designated by Seller. If not already funded
by Seller at the time of Closing, a portion of the Closing Cash, in an amount sufficient to defease
the portion of the Series 1998A Bonds attributable to the Hospital property, shall be deposited
into a bond defeasance escrow account established by Seller (the “Bond Defeasance Escrow Account”).
1.6 Prorations. Except as otherwise provided herein, within ninety (90) days after
the Closing Date, Seller and Buyer shall prorate as of the Closing Date any amounts which
become due and payable on or after the Closing Date with respect to (a) the Contracts, (b) ad
valorem taxes, if any, on the Purchased Assets (which shall be prorated at the Closing), (c)
personal property taxes on the Purchased Assets (which shall be prorated at the Closing) and (d)
all utilities servicing any of the Purchased Assets, including water, sewer, telephone, electricity
and gas service. Any such amounts which cannot be determined within ninety (90) days after the
Closing Date shall be similarly prorated as soon as practicable thereafter.
- 5 -
1.7 Environmental Report. Buyer has received a Report of a Preliminary Environmental Site
Assessment of the Real Property and the Hospital, prepared by a firm selected by Buyer, and the
scope, findings, and conclusions of such report shall have been satisfactory to Buyer, and Seller
has received a Report of a Supplemental Environmental Site Assessment of the Real Property and the
Hospital, prepared by a firm selected by Seller.
1.8 Seller’s Operation of the Purchased Assets and Buyer’s Intended Use of the Purchased
Assets. Seller and Buyer hereby acknowledge and agree that Seller has operated the Hospital and
Purchased Assets as a department of Seller’s non-profit hospital
and not as a free-standing
healthcare facility with separate licenses and approvals. Upon and after Closing, Buyer will own,
operate, and use the Hospital and the Purchased Assets as a
freestanding psychiatric healthcare facility. Except as specifically set forth herein, Buyer
makes no representation and warranty that the Purchased Assets are suitable for the operation of a
for-profit free-standing health care company.
2. Closing.
2.1 Closing. Subject to the satisfaction or waiver by the appropriate party of all of the
conditions precedent to Closing specified in Sections 7 and 8 hereof, the consummation of
the transactions contemplated by and described in this Agreement (the “Closing”) shall take place
at 10:00 a.m. local time, at such location as agreed upon by the parties. The Closing shall occur
within thirty (30) days following the satisfaction or waiver of the conditions set forth in
Section 7 and Section 8, or on such other date as the parties may mutually
designate in writing (the date of consummation is referred to herein as the “Closing Date”).
Notwithstanding the foregoing, either party may terminate this agreement if the Closing has not
occurred within forty-five (45) days following the execution of this Agreement.
2.2 Actions of Seller at Closing. At the Closing and unless otherwise waived in writing by
Buyer, Seller shall deliver to Buyer the following:
(a) A Limited Warranty Deed, fully executed and in recordable form, conveying to Buyer good
and marketable fee simple title to the Real Property described in Schedule 1.1(a) subject
to the Permitted Encumbrances (as used in this Agreement, “good and marketable fee simple title”
shall mean insurable by a national Title Company at standard rates);
(b) A General Assignment, Conveyance and Xxxx of Sale in the form attached as Exhibit
A, fully executed by Seller, conveying to Buyer good and valid title to all tangible assets
which are a part of the Purchased Assets and valid title to all intangible assets which are a part
of the Purchased Assets, free and clear of all liabilities, claims, liens, security interests and
restrictions other than the Assumed Liabilities and Permitted Encumbrances;
(c) An Assignment and Assumption Agreement in the form attached as Exhibit B (the
“Assignment and Assumption Agreement”), fully executed by Seller, conveying to Buyer Seller’s
interest in the Contracts;
(d) All instruments and documents reasonably required by the Title Company (as defined in
Section 5.3 hereof) to issue the Title Policy (as defined in Section 5.3 hereof) as
described in and provided by Section 7.3 hereof;
- 6 -
(e) Ancillary Services Agreements between the Buyer and Seller on terms and conditions that
are fair market value through which services are provided that meet quality and performance
standards currently available to Buyer in the market (the “Ancillary Services Agreements”),
including, without limitation, the Clinical Laboratory Services Agreement in the form attached as
Exhibit C, the Laundry Services Agreement in the form attached as Exhibit D, the
Food and Nutrition Services Agreement in the form attached as Exhibit E, and a Chilled
Water and Steam Services Agreement in the form attached as Exhibit F, each fully executed
by the Seller;
(f) Copies of resolutions duly adopted by the Board of Directors of Seller, authorizing and
approving its performance of the transactions contemplated hereby and the execution and delivery of
this Agreement and the documents described herein, certified as true and of full force as of the
Closing, by the appropriate officers of Seller;
(g) An Employee Assistance Program Agreement between Buyer and Seller in the form attached as
Exhibit G, pursuant to which Buyer shall provide to Seller exclusive twenty-four (24) hour
per-day, seven (7) day per-week psychiatric call coverage for a period of six (6) years (the
“Employee Assistance Program Agreement”);
(h) The Psychiatric Clinical Assessment Agreement executed by Seller in the
form attached as Exhibit H, pursuant to which Buyer shall provide to Seller exclusive twenty-four (24) hour per-day, seven (7) day per-week psychiatric clinical assessment and call coverage
for a period of six (6) years (the “Psychiatric Clinical Assessment Agreement”);
(i) An easement agreement fully executed by Seller granting Buyer a non-exclusive easement for access, ingress and egress from Xxx Xxxxxxxx Road (Garden Walk Blvd.)
to the Real Property, across the portion of Seller’s adjacent property shown as “Proposed Access
Easement” on that certain ALTA/ACSM Land Title Survey for Southern Regional Medical
Center RiverWoods Institute, prepared by Integrated Science & Engineering, dated June 5, 2008,
with terms and conditions satisfactory to Buyer and in the form attached as Exhibit I (the
“Access Easement Agreement”);
(j) A telephone line use agreement (“D-Xxxx Agreement”) fully executed by Seller providing
Buyer the right to use a D-Xxxx device installed on Seller’s property, with terms and conditions
satisfactory to Buyer and in the form attached as Exhibit J;
(k) An agreement regarding the use of the “Detention Pond” shown and depicted on the Plat of
Survey at the southernmost end of the Real Property, fully executed by Seller and in the form
attached as Exhibit K (the “Detention Pond Agreement”);
(l) The springing escrow agreement among Buyer, Seller and LaSalle Bank, N.A., in the form
attached as Exhibit L (the “Springing Escrow Agreement”), fully executed by Seller;
(m) An opinion of counsel to Seller in the form attached as Exhibit M;
(n) An amendment of that certain August 14, 1997 Restated Lease Agreement by and between the
Hospital Authority and the Seller in the form attached as Exhibit N, removing the Real
Property and the Hospital from the premises leased to Seller, and releasing
- 7 -
and discharging the
Hospital Authority and the Seller from obligations arising thereunder which relate to the Real
Property and the Hospital, and waiving the Hospital Authority’s reversionary interests and rights
of first refusal in and to the Real Property and the Hospital;
(o) Copies of resolutions duly adopted by the Hospital Authority of Xxxxxxx County,
Georgia
(“Hospital Authority”), authorizing and approving: (i) the Hospital Authority’s transfer of the
Real Property to the Seller; (ii) Seller’s performance of the transactions contemplated hereby;
(iii) the waiver of the Hospital Authority’s reversionary rights and rights of first refusal in and
to the Real Property and the Hospital; and (iv) the execution and delivery of this Agreement and
the documents described herein, certified as true and of full force as of the Closing, by the
appropriate officers;
(p) Certificates of the President or a Vice President of Seller, certifying that each covenant
and agreement of Seller to be performed or prior to or as of the Closing pursuant to this Agreement
has been performed and each representation and warranty of Seller is true and correct in all
material respects on the Closing Date, as if made on and as of the Closing;
(q) Certificates of incumbency for the officers of Seller executing this Agreement or making
certifications for the Closing dated as of the Closing Date;
(r) Certificates of existence and good standing of Seller from the State of
Georgia, dated the
most recent practical date prior to the Closing;
(s) All Certificates of Title and other documents (if any) evidencing an ownership interest
conveyed as part of the Purchased Assets;
(t) Written consents to assignment from the third parties to the Contracts identified on
Schedule 3.20(d);
(u) A quit-claim deed fully executed by the Hospital Authority in recordable form, conveying
to Buyer all of the Hospital Authority’s right, title and interest in and to the Real Property;
(v) A certificate of non-foreign status certifying that Seller is not a foreign person for
purposes of the Foreign Investment in Real Property Act;
(w) An affidavit sufficient to demonstrate that Seller is exempt from the withholding
requirements of Section 48-7-128 of the Official Code of
Georgia Annotated;
(x) A real property transfer tax declaration in the form required by the State of
Georgia;
(y) Title to the Ford passenger van to be transferred to Buyer as part of the Purchased
Assets;
(z) An assignment and amendment agreement with terms and conditions satisfactory to Buyer,
duly amending and assigning to Buyer that certain Physician Employment Agreement by and between
Southern Crescent Physicians Group, Inc. and Xxxxx X. Xxxxxx, M.D., dated July 1, 2007, duly
executed by Xxxxx X. Xxxxxx, M.D. and Southern Crescent Physicians Group, Inc.;
- 8 -
(aa) Evidence reasonably satisfactory to Buyer that the Bond Defeasance Escrow Account has
been established by Seller; and
(bb) Such other instruments and documents as Buyer reasonably deems necessary to effect the
transactions contemplated hereby.
2.3 Actions of Buyer at Closing. At the Closing and unless otherwise waived in writing
by Seller, Buyer shall deliver to Seller the following:
(a) The Closing Cash in accordance with Section 1.5 hereof;
(b) The Assignment and Assumption Agreement, fully executed by Buyer, pursuant to which Buyer
shall assume the future performance of the Contracts as herein provided;
(c) The Ancillary Services Agreements, fully executed by Buyer;
(d) Evidence of Acadia Healthcare Company, LLC’s guarantee of Buyer’s payment obligations
hereunder;
(e) Copies of resolutions duly adopted by the Board of Managers of Buyer, authorizing and
approving Buyer’s performance of the transactions contemplated hereby and the execution and
delivery of this Agreement and the documents described herein, certified as true and in full force
as of the Closing, by the appropriate officers of Buyer;
(f) Certificates of the President or a Vice President of Buyer, certifying that each covenant
and agreement of Buyer to be performed prior to or as of the Closing pursuant to this Agreement has
been performed and each representation and warranty of Buyer is true and correct on the Closing
Date, as if made on and as of the Closing;
(g) Certificates of incumbency for the officers of Buyer executing this Agreement or making
certifications for the Closing dated as of the Closing Date;
(h) Certificates of existence and good standing of Buyer from the State of
Delaware, dated the most recent practical date prior to Closing and evidence that Buyer is
qualified to do business in the State of
Georgia;
(i) The Detention Pond Agreement, fully executed by Buyer;
(j) The Psychiatric Clinical Assessment Agreement, fully executed by Buyer;
(k) The Springing Escrow Agreement, fully executed by Buyer;
(l) The Access Easement Agreement, fully executed by Buyer;
(m) The Employee Assistance Program Agreement, fully executed by Buyer;
(n) The D-Xxxx Agreement, fully executed by Buyer; and
- 9 -
(o) Such other instruments and documents as Seller reasonably deems necessary to effect the
transactions contemplated hereby; including, without limitation, those requested by the Title
Company to issue the Title Policy at Closing, as set forth in Section 7.3 below.
3. Representations and Warranties of Seller. For the purposes of this Agreement,
“Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Xxxxxx X. Xxxx, Xxxxxxx
X. Xxxxxxx, Xxxxxxx Xxxxx and Xxxxx Xxxxx, after due inquiry into the matter in question, as such
knowledge may exist as of the date hereof and as of the Closing Date. As of the date hereof, and,
when read in light of any Schedules which have been updated in accordance with the provisions of
Section 14.1 hereof, as of the Closing Date, Seller represents and warrants to
Buyer the following:
3.1 Existence and Capacity. Seller is a non-profit corporation, duly organized and
validly existing in good standing under the laws of the State of
Georgia. Seller has the requisite
power and authority to enter into this Agreement, to perform its obligations hereunder and to
conduct its business as now being conducted.
3.2 Powers; Consents; Absence of Conflicts With Other Agreements, Etc. The
execution, delivery, and performance of this Agreement by Seller, and all other agreements
referenced herein, or ancillary hereto, to which Seller is a party, and the consummation of the
transactions contemplated herein by Seller:
(a) are within its corporate powers, are not in contravention of law or of the terms of its
organizational documents, and have been duly authorized by all appropriate corporate action;
(b) except as provided in Section 5.5, below, do not require any approval or consent
of, or filing with, any governmental agency or authority bearing on the validity of this Agreement
which is required by law or the regulations of any such agency or authority;
(c) except as set forth on Schedule 3.2(c), will neither conflict with, nor result in
any breach or contravention of, or the creation of any lien, charge, or encumbrance under, any debt
instrument or other indenture, agreement, lease, instrument or understanding to which it is a party
or by which it is bound;
(d) will not, to the Knowledge of Seller, violate any statute, law, rule, regulation or any
judgment, writ, injunction, decree, or order of any governmental authority.
3.3 Binding Agreement. This Agreement and all agreements to which Seller will become a party
pursuant hereto are and will constitute the valid and legally binding obligations of Seller and are
and will be enforceable against Seller in accordance with the respective terms hereof or thereof.
3.4 Financial Statements. Seller has delivered to Buyer true and correct copies of the
following financial statements of or pertaining to the Hospital and its operations (“Financial
Statements”); which Financial Statements are maintained on an accrual basis, and copies of which
are attached hereto as Schedule 3.4:
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(a) audited balance sheets, income statements, and statements of cash flows for the Seller for
the fiscal years ended 2007, 2006 and 2005
(b) unaudited balance sheets, income statements, and statements of cash flows for the Seller
for interim period ended June, 2008;
(c) unaudited, internal department financial and operation reports pertaining to the Hospital
for fiscal years ended 2007, 2006, 2005, 2004, 2003, 2002; and
(d) unaudited, internal department financial and operation reports pertaining to the Hospital
for fiscal year ended June, 2008 (“Financial Statement Date”).
Such Financial Statements were prepared in the normal course of business based upon the books
and records of the Hospital as historically maintained and fairly represent, in all material
respects, the Hospital’s financial condition and results of operations as of the dates indicated
thereon. To the Knowledge of Seller, except as disclosed on Schedule 3.4, Seller does not
have any liabilities or obligations related to the Purchased Assets or the Hospital, whether
contingent or absolute, direct or indirect, or matured or unmatured which would have a Material
Adverse Effect (as defined in Section 14.19) on the financial condition of the Hospital.
3.5 Certain Post Financial Statement Date Results. Except as set forth in Schedule 3.5
hereto, since the Financial Statement Date set forth in Section 3.4 there has not been any:
(a) material damage, destruction, or loss (whether or not covered by insurance) affecting the
tangible Purchased Assets;
(b) event, change or occurrence which has or could reasonably be expected to have a Material
Adverse Effect;
(c) threatened employee strike, work stoppage, or labor dispute pertaining to
the Hospital;
(d) sale, assignment, transfer, or disposition of any item of property, plant or equipment
included in the Purchased Assets having a value in excess of One Thousand Dollars ($1,000) (other
than supplies), except in the ordinary course of business with comparable replacement thereof;
(e) general increases in the compensation payable by Seller to any of its employees or
independent contractors providing services to the Hospital, or any increase in, or institution of,
any bonus, insurance, pension, profit-sharing or other employee benefit plan, remuneration or
arrangements made to, for or with such employees;
(f) changes in the composition of the medical staff of the Hospital, other than normal
turnover occurring in the ordinary course of business;
(g) changes in the rates charged by the Hospital for their services, other than those made in
the ordinary course of business;
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(h) changes in accounting methods or practices or changes in depreciation or
amortization policies, employed by the Seller with respect to the Hospital;
(i) transactions pertaining to the Hospital by Seller outside the ordinary
course of business.
3.6 Licenses. The Hospital is or will be duly licensed, as of the date of Closing, as a
psychiatric hospital pursuant to the applicable laws of the State of
Georgia. All other ancillary
departments of Hospital, if any, which are required to be specially licensed are duly licensed by
the
Georgia Department of Human Resources Office of Regulatory Services, Health Care Section, or
other appropriate licensing agency
(“ORS”). Seller has all other licenses, registrations, permits,
and approvals which are needed or required by law to operate the businesses related to or affecting
the Hospital or any ancillary services related thereto. Seller has delivered to Buyer an accurate
list (
Schedule 3.6 ) of all such licenses, registrations, permits and approvals owned or
held by Seller relating to the ownership or operation of the Hospital or the Purchased Assets, all
of which are now and as of the Closing shall be in good standing and, to the Knowledge of Seller,
not subject to meritorious challenge.
3.7 Certificates of Need. Seller has delivered to Buyer a copy of the Certificate of Need
decision dated November 5, 1990, approving Seller’s application for the Hospital, as well the
February 22, 2008 letter from the Georgia Department of Community Health, Division of Health
Planning (“DCH”) confirming that no further Certificate of Need review or approval is required with
respect to the sale of the Hospital (Schedule 3.7). No Certificate of Need applications,
requests for letters of nonreviewability or determination requests pertaining to the Hospital are
currently pending. As used herein, “Certificate of Need” means a written statement issued by DCH
evidencing community need for a new, converted, expanded or otherwise significantly modified health
care facility, health service or capital expenditure.
3.8 Medicare Participation/Accreditation. The Hospital is qualified for participation in the
Medicare, Medicaid and CHAMPUS/TRICARE programs through the provider contracts of Southern Regional
Medical Center, is in material compliance with the conditions of participation in such programs,
and has received all approvals or qualifications necessary for reimbursement for the Hospital. The
services provided by the Hospital are duly accredited as part of Southern Regional Medical Center’s
accreditation, with no contingencies, by the Joint Commission for the three (3) year period
specified on Schedule 3.8. A copy of the most recent accreditation letter from the Joint
Commission pertaining to the Hospital has been made available to Buyer. All billing practices of
Seller with respect to the Hospital to all third party payors, including the Medicare, Medicaid and
CHAMPUS/TRICARE programs and private insurance companies, have been in material compliance with all
applicable laws, regulations and policies of such third party payors including the Medicare,
Medicaid and CHAMPUS/TRICARE programs, and to the Knowledge of Seller, neither Seller nor the
Hospital have billed or received any payment or reimbursement in excess of amounts allowed by law. Seller has not been
excluded from participation in the Medicare, Medicaid or CHAMPUS/TRICARE programs, nor, to the
Knowledge of Seller, is any such exclusion threatened. Based upon and in reliance upon Seller’s
review of (i) the “list of Excluded Individuals/Entities” on the website of the United States
Health and Human Services Office of Inspector General (xxxx://xxx.xxx.xxx/xxxxx/xxxxxxxxxx.xxxx), and (ii) the “List of Parties Excluded From
Federal Procurement and Nonprocurement Programs” on the website of the United States General
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Services Administration (xxxx://xxx.xxxxx.xxx/xxxx/), none of the officers, directors or
managing employees of Seller have been excluded from participation in the Medicare, Medicaid or
CHAMPUS/TRICARE programs. Except as set forth in a writing delivered by Seller to Buyer which
specifically makes reference to this Section 3.8 or as set forth on Schedule 3.8,
Seller has not received any written notice pertaining to the Hospital from any of the Medicare,
Medicaid or CHAMPUS/TRICARE programs, or any other third party payor programs of any pending or
threatened investigations or surveys (other than surveys in the ordinary course of business).
3.9 Regulatory Compliance. Except as set forth in a writing delivered by Seller to Buyer which
specifically makes reference to this Section 3.9 or as set forth on Schedule 3.9,
the operations of the Hospital are in material compliance with all applicable statutes, rules,
regulations, and requirements of the Government Entities having jurisdiction over the Hospital and
the operations of the Hospital or its related ancillary services. As used herein, “Government
Entity” means any government or any agency, bureau, board, directorate, commission, court,
department, official, political subdivision, tribunal or other instrumentality of any government,
whether federal, state or local. Seller has timely filed all reports, data, and other information
required to be filed with the Government Entities and, to the Knowledge of Seller, neither Seller
nor any of its employees have committed a violation of federal or state laws regulating health care
fraud, including but not limited to the federal Xxxx-Xxxxxxxx Xxx, 00 X.X.X. §0000x-0x, the
Physician Self-Referral Law, 42 U.S.C. §1395nn, as amended, and the False Claims Act, 31 U.S.C.
§3729, et seq. The Hospital is in compliance in all material respects with the administrative
simplification provisions required under the Health Insurance Portability and Accountability Act of
1996 (“HIPAA”), including the electronic data interchange regulations and the health care privacy
and security regulations, as of the applicable effective dates for such requirements.
3.10 Equipment. Since the Financial Statement Date, Seller has not sold or otherwise disposed
of any item of equipment having a value in excess of One Thousand Dollars ($1,000) associated with,
or constituting any part of, the Hospital and the Purchased Assets.
3.11 Real Property. As of the Closing, Seller owns good and marketable fee simple title to the
Real Property. The Real Property will be conveyed to Buyer free and clear of any and all liens,
encumbrances or other restrictions except those more particularly described in Schedule
3.11 hereto and approved by Buyer (the “Permitted Encumbrances”). With respect to the Real
Property:
(a) Except as described on Schedule 3.1 1(a), Seller has not received during the past
five (5) years notice of a violation of any applicable ordinance or other law, order, regulation,
or requirement and has not received notice of condemnation, lien, assessment, or the like relating
to any part of the Real Property or the operation thereof;
(b) Seller has not received notice that the Real Property and its operation violate any
applicable zoning ordinances, nor, to the Seller’s Knowledge, will the Buyer’s operation of a
psychiatric hospital on the Real Property result in a violation of any applicable zoning ordinance
or the termination of any applicable zoning variance now existing, and Seller has received no
written notice that the buildings and improvements constituting the Real Property are noncompliant
with any building codes;
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(c) Except as described on Schedule 3.11(c), the Real Property is subject to no
easements, restrictions, ordinances, or such other limitations on title so as to make such property
unusable for its current use or the title uninsurable or unmarketable or which materially restrict
or impair the use, marketability or insurability of the Real Property;
(d) Except as described on Schedule 3.11(d) and subject to any applicable
“grandfathered” or other pre-existing rights and conditions under the Accessibility Laws (as
hereafter defined), to Seller’s Knowledge, the Real Property is in required compliance in all
material respects with the applicable provisions of the Rehabilitation Act of 1973, Title III of
the Americans with Disabilities Act, and the provisions of any comparable state statute relative to
accessibility (these laws are referred to, collectively, as the “Accessibility Laws”), and there is
no pending, or to the Knowledge of Seller, threatened litigation, administrative action or
complaint (whether from state, federal or local government or from any other person, group or
entity) relating to compliance of any of the Real Property with the Accessibility Laws;
(e) Except as described on Schedule 3.11(e), there are no tenants or other persons or
entities occupying any space in the Real Property, other than pursuant to tenant leases described
in Schedule 3.11(e) and no tenants have paid rent in advance for more than one month and no
improvement credit or other tenant allowance of any nature is owed to any tenant, nor is any
landlord improvement work required, except as disclosed in Schedule 3.11;
(f) Schedule 3.11(f) sets forth a “rent roll” which sets forth for any leases at the
Hospital where Seller or an Affiliate is landlord: (i) the names of then current tenants; (ii) the
rental payments for the then current month under each of the leases; (iii) a list of all then
delinquent rental payments; (iv) a list of all concessions granted to tenants; (v) a list of all
tenant deposits and a description of any application thereof, and (vi) a list of all uncured
material defaults under the leases known to Seller;
(g) Except as described on Schedule 3.11(g), Seller has not received any written
notice of any existing, proposed or contemplated plans to modify or realign any street or highway
or any existing, proposed or contemplated eminent domain proceeding that would result in the taking
of all or any part of the Real Property or that would materially and adversely affect the current
use of any part of the Real Property;
(h) Except as described on Schedule 3.11(h), to Seller’s Knowledge, the Real Property
is not located within a one hundred year flood plain or an area identified by the Secretary of
Housing and Urban Development as having “special flood hazards,” as such term is used in the
National Flood Insurance Act of 1968, as amended and supplemented by The Flood Disaster Protection
Act of 1973, and in regulations, interpretations and rulings thereunder; and
(i) Except
as described on Schedule 3.11(i). to Seller’s Knowledge, the existing
improvements located upon the Real Property do not encroach upon adjacent premises or upon existing
utility company easements and existing restrictions are not violated by the improvements located on
the Real Property.
3.12 Title. As of the Closing, Seller shall own and hold good and marketable title to all of
the Purchased Assets, and at the Closing Seller will assign and convey to Buyer good and marketable
title to all of the Purchased Assets, or any part thereof, subject to no mortgage, lien,
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pledge, security interest, conditional sales agreement, right of first refusal, option, restriction,
liability, encumbrance, or charge other than the Permitted Encumbrances.
3.13 Employee Benefit Plans. Attached hereto is an accurate list (Schedule 3.13) of
all “employee welfare benefit plans” and “employee pension benefit plans,” as such terms are
defined by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and any other
group employee benefit plan, agreement, arrangement or plans, arrangements and understanding
maintained for the benefit of Seller (collectively, the “Employee Benefit Plans”) which relate to
the Hospital. To the Knowledge of Seller, neither Seller nor any affiliate of Seller has taken any
action, or omitted to take any action, with respect to the Employee Benefit Plans which would or
could be expected to result in a Lien on any of the Purchased Assets.
3.14 Litigation or Proceedings. Seller has delivered to Buyer an accurate list (Schedule
3.14) of all material litigation with respect to the Hospital or the Purchased Assets. Seller
is not in default under any order of any court or federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality wherever located related to the
Hospital or the Purchased Assets. Except as set forth in a writing delivered by Seller to Buyer
which specifically makes reference to this Section 3.14 or as set forth on Schedule
3.14, there are no claims, actions, suits, proceedings, or investigations pending, or to the
Knowledge of Seller, threatened against or related to the Hospital or the Purchased Assets, at law
or in equity, or before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality wherever located.
3.15 Environmental Laws. As of the Closing, except as set forth on Schedule 3.15
hereto: (i) the Real Property is not subject to any environmental hazards, risks or
liabilities, (ii) the Real Property is not in violation of any federal, state or local statutes,
regulations, laws or orders pertaining to the protection of human health and safety or the
environment (collectively, “Environmental Laws”), including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, as amended (“CERCLA”), and the Resource
Conservation and Recovery Act, as amended (“RCRA”) and (iii) Seller has not received any notice
alleging or asserting either a violation of any Environmental Law or a legal obligation to
investigate, assess, remove, or remediate any property that is an Asset under this Agreement,
including but not limited to the Real Property, under or pursuant to any Environmental Law. Except
as set forth on Schedule 3.15 hereto, no Hazardous Substances (which for purposes of this
Section 3.15 shall mean and include polychlorinated biphenyls, asbestos, and any hazardous
substances, materials, constituents, or wastes which are regulated by any Environmental Law,
including, without limitation, CERCLA and RCRA) have been, and through the Closing Date will be,
possessed, managed, processed, released, handled, disposed of on or released or discharged from or
onto, or threatened to be released from or onto, the Real Property (including groundwater) by
Seller, or to Seller’s Knowledge, any third party, in violation of any applicable Environmental
Law. Except as set forth on Schedule 3.15 hereto, neither Seller, nor to Seller’s
Knowledge, any prior owners, operators or occupants of the Real Property, have allowed any
Hazardous Substances to be discharged, possessed, managed, processed, released, or otherwise
handled on the Real Property in a manner which is in violation of any Environmental Law, and Seller
has complied with all Environmental Laws applicable to any part of the Real Property. Seller shall
immediately notify Buyer should Seller become aware of any lien, notice, litigation, or threat of
litigation relating to any alleged or actual unauthorized release of any Hazardous Substance with
respect to any part of the Real Property. Except as set forth on Schedule 3.15
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hereto, to the Knowledge of Seller, the physical plants constituting a portion of the Purchased Assets do not
contain regulated asbestos-containing material in any form. Without in any way limiting the
generality of the foregoing, to the Knowledge of Seller: (i) all underground storage tanks located
on the Real Property and all information in Seller’s possession relating to the capacity, uses,
dates of installation and contents of such tanks located on the Real Property are identified in
Schedule 3.15; (ii) there are no, nor have there ever been, any collection dumps, pits, and
disposal facilities or surface impoundments located on the Real Property for the containment of
Hazardous Substances except as identified in Schedule 3.15; and (iii) all existing
underground storage tanks have been maintained in material compliance with all Environmental Laws.
3.16 Xxxx-Xxxxxx and Other Liens. The Hospital and Purchased Assets are not subject to any
loans, grants or loan guarantees pursuant to the Xxxx-Xxxxxx Act program, the Health Professions
Educational Assistance Act, the Nurse Training Act, the National Health Planning and Resources
Development Act, and the Community Mental Health Centers Act, as amended, or similar laws or acts
relating to healthcare facilities. The transactions contemplated hereby will not result in any
obligation on Buyer or any of its Affiliates to repay any of such loans, grants or loan guarantees.
3.17 Taxes. With respect to the Hospital and Purchased Assets, Seller has filed all federal,
state and local tax returns required to be filed by it (all of which are true and correct in all
material respects) and has duly paid or made provision for the payment of all taxes (including any
interest or penalties and amounts due state unemployment authorities) which are due and payable to
the appropriate tax authorities. Seller has withheld proper and accurate amounts from its
employees’ compensation in compliance with all withholding and similar provisions of the Internal
Revenue Code of 1986 (the “Code”), including employee withholding and social security taxes, and
any and all other applicable laws. No deficiencies for any of such taxes have been asserted or
threatened, and no audit on any such returns is currently under way or threatened. There are no
outstanding agreements by Seller for the extension of time for the assessment of any such taxes.
Seller has not taken and will not take any action in respect of any federal, state or local taxes
(including, without limitation, any withholdings required to be made in respect of employees) which
may have an adverse impact upon the Hospital or the Purchased Assets as of or subsequent to
Closing. There are no tax liens on any of the Purchased Assets and, to the Knowledge of Seller, no
basis exists for the imposition of any such liens (other than for liens that arise for taxes that
are not yet due and payable).
3.18 Employee Relations.
(a) Except as set forth on Schedule 3.18 hereto, there has not been within the last
three (3) years, there is not presently pending, or to the Knowledge of Seller threatened, and no
event has occurred or circumstance exists that could provide the basis for any strike, slowdown,
picketing, work stoppage, or employee grievance process, or any proceeding against or affecting the
Hospital relating to an alleged violation of any legal requirements pertaining to labor relations,
including any charge, complaint, or unfair labor practices claim filed by an employee, union, or
other person with the National Labor Relations Board or any
comparable governmental body,
organizational activity, or other labor dispute against or affecting the Hospital. With respect to
the Hospital employees, no collective bargaining agreement exists or is currently being negotiated
by Seller; no application for certification of a collective bargaining
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agent is pending; no demand has been made for recognition by a labor organization; no union representation question exists; no
union organizing activities are taking place; and none of the Hospital employees is represented by
any labor union or organization.
(b) Seller has complied in all respects with all material legal requirements relating to
employment; employment practices; terms and conditions of employment; equal employment opportunity;
nondiscrimination; immigration; wages; hours; benefits; payment of employment, social security, and
similar taxes; occupational safety and health; and plant closing related to the Hospital. To
Seller’s Knowledge, Seller is not liable for the payment of any compensation, damages, taxes,
fines, penalties, interest, or other amounts, however designated, for failure to comply with any of
the foregoing legal requirements. Except as set forth in Schedule 3.18(b), there are no
pending or, to the Knowledge of Seller, threatened claims before the Equal Employment Opportunity
Commission (or comparable state agency), complaints before the Occupational Safety and Health
Administration (or comparable state agency), wage and hour claims, unemployment compensation
claims, workers’ compensation claims, or the like related to the Hospital.
(c) Seller has provided to Buyer the personnel records of all of Seller’s employees who
provide services at the Hospital and the salary or wage records for such employees including
records reflecting sick, paid-time-off, vacation leave, and extended illness benefits that is
accrued or credited but unused or unpaid. Seller has provided to Buyer copies of each employment,
consulting, independent contractor, bonus, or severance agreement to which Seller is a party and
which relates to the operation of the Hospital. Schedule 3.18(c) sets forth the employees
who had an “employment loss,” as such term is defined in the Worker Adjustment and Retraining
Notification Act (the “WARN Act”), within the ninety (90) days preceding the Closing; in relation
to the foregoing, Seller has not violated the WARN Act or any similar state or local legal
requirements. To the Knowledge of Seller, no officer, director, agent, employee, consultant, or
independent contractor of Seller is bound by any contract that purports to limit the ability of
such officer, director, agent, employee, consultant, or independent contractor to engage in or
continue or perform any conduct, activity, duties or practice relating to the business of Seller.
3.19 Agreements and Commitments. Seller has delivered to Buyer an accurate list (Schedule
3.19) of all commitments, contracts, leases, and agreements, written or oral, which materially
affect the Hospital, the Purchased Assets, or the operation of any thereof, to which Seller is a
party or by which Seller, the Hospital, the Purchased Assets, or any portion thereof is bound, and
which involve future payments, performance of services or delivery of goods to or by Seller in an
amount or value in excess of One Thousand Dollars ($1,000), including, without limitation, (a)
physician agreements, (b) agreements with health maintenance organizations, preferred provider
organizations, or other alternative delivery systems, (c) joint venture or partnership agreements,
(d) employment contracts or any other contracts, agreements, or commitments to or with individual
employees or agents, (e) contracts or commitments materially affecting ownership of, title to, use
of or any interest in real estate including any tenant leases, (f) equipment leases, (g) equipment
maintenance agreements, (h) agreements with municipalities, (i) collective bargaining agreements or
other contracts or commitments to or with any labor unions, labor organizations, or other employee
representatives or groups of employees, (j) loan agreements, mortgages, liens, or other security
agreements, (k) patent licensing agreements or any other agreements, licenses, or commitments with
respect to patents, patent
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applications, trademarks, trade names, service marks, technical assistance, copyrights, or other like terms affecting the Hospital or the Purchased Assets, (1)
contracts or commitments providing for payments based in any manner on the revenues or profits of
the Hospital or the Purchased Assets, (m) agreements, licenses, or commitments relating to data
processing programs, software, or source codes utilized in connection with the Hospital or the
Purchased Assets, (n) contracts or commitments, whether in the ordinary course of business or not,
which restrain, in any manner, the operations of the Hospital (including, but not limited to,
noncompetition agreements), and (o) contracts or commitments, whether in the ordinary course of
business or not, which involve future payments, performance of services or delivery of goods or
material, to or by Seller of any amount or value in excess of Ten Thousand Dollars ($10,000) on an
annual basis.
3.20 The Contracts. Schedule 1.1(g) sets forth a complete and accurate list of the
Contracts. Seller has made available to Buyer true and correct copies of the Contracts. Seller
represents and warrants with respect to the Contracts that:
(a) The Contracts constitute valid and legally binding obligations of Seller and are
enforceable against Seller in accordance with their terms;
(b) Each Contract constitutes the entire agreement by and between the respective parties
thereto with respect to the subject matter thereof;
(c) All obligations required to be performed by Seller under the terms of the Contracts have
been performed in all material respects, and to Seller’s Knowledge no act or omission by Seller has
occurred or failed to occur which, with the giving of notice, the lapse of time or both would
constitute a default under the Contracts, and each of such Contracts is in full force and effect
without default on the part of Seller;
(d) Except as expressly set forth on Schedule 3.20(d), none of the Contracts requires
consent to the assignment and assumption by Buyer, and Seller will use reasonable commercial
efforts to obtain any required consents prior to the Closing; and
(e) Except as expressly set forth on Schedule 3.20(e), the assignment of the Contracts
to and assumption of such Contracts by Buyer will not result in any penalty or premium, or
variation of the rights, remedies, benefits or obligations of any party thereunder.
3.21 Supplies. The inventory and supplies constituting any part of the Purchased Assets are
substantially of a quality and quantity usable and salable in the ordinary course of business of
the Hospital. On the Closing Date, there shall be at least one week of supplies at the Hospital
(other than narcotics).
3.22 Insurance. Seller has delivered to Buyer an accurate schedule (Schedule 3.22)
disclosing the insurance policies covering the ownership and operations of the Hospital and the
Purchased Assets, which Schedule reflects the policies’ numbers, identity of insurers, amounts, and
coverage. All of such policies are in full force and effect with no premium arrearage. Seller has
given in a timely manner to its insurers all notices required to be given under its insurance
policies with respect to all of the claims and actions covered by insurance, and no insurer has
denied coverage of any such claims or actions. Except as set forth on Schedule 3.22, Seller
has
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not (a) received any written notice or other communication from any such insurance company
canceling or materially amending any of such insurance policies, and, to Seller’s Knowledge, no
such cancellation or amendment is threatened or (b) failed to give any required notice or present
any claim which is still outstanding under any of such policies with respect to the Hospital or any
of the Purchased Assets.
3.23 Medical Staff Matters. Seller has provided to Buyer a true, correct and complete copy of
its medical staff bylaws, rules and regulations. The physicians listed on Schedule 3.23
hereto are current members in good standing of the active Medical Staff of Southern Regional
Medical Center with privileges to perform medical services at the Hospital. There are no adverse
actions pending with respect to any of the physicians listed on Schedule 3.23 or with any
applicant for privileges at the Hospital, and there are no pending or, to the Knowledge of Seller,
threatened disputes with any applicants, staff members, or health professional affiliates
associated with the Hospital, and Seller knows of no basis therefore. There are no pending appeal
periods applicable to any applicant of the Hospital or any of the physicians listed on Schedule
3.23.
3.24 Experimental Procedures. During the past five (5) years, to Seller’s Knowledge, Seller
has not performed or permitted the performance of any experimental or research procedures or
studies involving patients in the Hospital not authorized and conducted in accordance with the
procedures of the Southern Regional Medical Center Institutional Review Board.
3.25 Condition of Assets. The tangible Purchased Assets are in good condition, ordinary wear
and tear excepted. Except as expressly set forth in this Agreement, or the instruments of transfer
of the Purchased Assets, Schedule 3.25 lists any material defects (which shall include for
this purpose all known noncompliance with applicable building and safety codes and all known life
safety issues) in the buildings, structures, facilities and major equipment of which Seller has
Knowledge.
3.26 Compliance Program. Seller has provided to Buyer a copy of its current compliance program
materials, other than materials subject to a legal privilege which could be waived by such
provision, including without limitation, all program descriptions, compliance officer and committee
descriptions, ethics and risk area policy materials, training and education materials, auditing and
monitoring protocols, reporting mechanisms, and disciplinary policies pertaining to the Hospital.
Except as set forth in a writing delivered by Seller to Buyer which specifically makes reference to
this Section 3.26 or to the extent set forth on Schedule 3.26, Seller (a) is not a
party to a Corporate Integrity Agreement with the Office of Inspector General of the Department of
Health and Human Services, (b) has no reporting obligations pursuant to any settlement agreement
entered into with any governmental entity, (c) to Seller’s Knowledge, has not been the subject of
any government payer program investigation conducted by any federal or state enforcement agency,
(d) has not been a defendant in any qui tam/False Claims Act litigation, (e) has not been served
with or received any search warrant, subpoena, civil investigative demand, contact letter, or
telephone or personal contact by or from any federal or state enforcement agency (except in
connection with medical services provided to third parties who may be defendants or the subject of
investigation into conduct unrelated to the operation of the Hospital), and (f) has not received
any complaints from employees, independent contractors, vendors, physicians, or any other person
that would indicate that Seller has violated any law or
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regulation. Schedule 3.26 includes a description of each audit and investigation conducted by Seller pursuant to its compliance
program during the last five (5) years and related to or involving the Hospital or the Purchased
Assets. For purposes of this Agreement, the term “compliance program” refers to provider programs
of the type described in the compliance guidance published by the Office of Inspector General of
the Department of Health and Human Services.
3.27 Full Disclosure. This Agreement and Schedules hereto, all Closing Documents (as defined
below) and all due diligence materials and information furnished and to be furnished to Buyer and
its representatives by Seller pursuant hereto do not and will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the statements made and to be
made not misleading. Copies of all documents referred to in any Schedule hereto have been delivered
or made available to Buyer and constitute true, correct and complete copies thereof and include all
amendments, exhibits, schedules, appendices, supplements or modifications thereto or waivers
thereunder. The term “Closing Documents” means those documents executed and delivered at the
Closing pursuant to Section 2 above.
3.28 No Broker. Except as set forth on Schedule 3.28, Seller has not and will not pay
any broker, investment banker, financial advisor or other person or entity on a contingency fee
basis in connection with the transactions contemplated by this Agreement. All fees payable to
Stroudwater Associates are on an hourly basis with no contingency and are the sole responsibility
of Seller.
3.29 Bond Defeasance. Upon the sale and transfer of the Purchased Assets to Buyer hereunder,
the Purchased Assets shall no longer be deemed to have been purchased or acquired using the
proceeds of tax-exempt bonds or otherwise be subject to any of Seller’s trust indentures or other
agreements related to Seller’s bond indebtedness.
4. Representations and Warranties of Buyer. For the purposes of this Agreement, “Knowledge
of Buyer” or “Buyer’s Knowledge” means the actual knowledge of Xxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx
Xxxxxx and Xxx Xxxx, after due inquiry into the matter in question, as such knowledge may exist as
of the date hereof and as of the Closing Date. As of the date hereof, and, when read in light of
any Schedules which have been updated in accordance with the provisions of Section 14.1
hereof, as of the Closing Date, Buyer represents and warrants to Seller the following:
4.1 Existence and Capacity. Buyer is a limited liability company, duly organized and validly
existing in good standing under the laws of the State of Delaware. Buyer has the requisite power
and authority to enter into this Agreement, to perform its obligations hereunder, and to conduct
its business as now being conducted. Buyer is qualified to do business in the State of Georgia.
4.2 Powers; Consents; Absence of Conflicts With Other Agreements, Etc. The execution,
delivery, and performance of this Agreement by Buyer and all other agreements referenced herein, or
ancillary hereto, to which Buyer is a party, and the consummation of the transactions contemplated
herein by Buyer:
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(a) are within its corporate powers, are not in contravention of law or of the terms of its
organizational documents, and have been duly authorized by all appropriate corporate action;
(b) except as provided in Section 6.1, below, do not require any approval or consent
of, or filing with, any governmental agency or authority bearing on the validity of this Agreement
which is required by law or the regulations of any such agency or authority;
(c) will neither conflict with, nor result in any breach or contravention of, or the creation
of any lien, charge or encumbrance under, any indenture, agreement, lease, instrument or
understanding to which it is a party or by which it is bound; and
(d) will not, to the Knowledge of Buyer, violate any statute, law, rule, regulation or any
judgment, writ, injunction, decree, or order of any governmental authority.
4.3 Binding Agreement. This Agreement and all agreements to which Buyer will become a party
pursuant hereto are and will constitute the valid and legally binding obligations of Buyer and are
and will be enforceable against Buyer in accordance with the respective terms hereof and thereof.
4.4 Available Capital. Buyer has a firm financing commitment or funds in amounts sufficient to
pay the Cash Consideration and provide adequate working capital to operate the Hospital and will at
the Closing have immediately available funds in cash, which are sufficient to:
(a) pay the Cash Consideration; and
(b) consummate the transactions contemplated in this Agreement.
Buyer will immediately notify Seller if, prior to Closing, Buyer learns that sufficient funds are
or may be no longer available.
4.5 Parent Company. The guarantor of the obligations of Buyer is Acadia Healthcare Company,
LLC, sole member of Buyer.
4.6 Litigation or Proceedings. Other than as set forth on Schedule 4.6, there is no
proceeding pending or, to the Knowledge of Buyer, threatened against Buyer or Acadia Healthcare
Company, LLC (or any affiliate thereof) (i) with respect to which there is a reasonable likelihood
of a determination which, individually, or in the aggregate, would materially hinder or impair the
consummation of the transactions contemplated by this Agreement or (ii) which seeks to enjoin or
obtain damages in respect to the consummation of the transactions contemplated by this Agreement.
4.7 Hospital Permit and Performance. To the Knowledge of Buyer, there are no facts or
circumstances that may affect Buyer’s ability to obtain Joint Commission accreditation, a new
permit from ORS, participate, to the extent allowed by law, in the Medicare and Medicaid programs,
or to perform its obligations under this Agreement.
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4.8 Full Disclosure. This Agreement, all Closing Documents and all due diligence materials and
information furnished and to be furnished to Seller and its representatives by Buyer pursuant
hereto do not and will not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made and to be made not misleading; and, Buyer has
no knowledge of Seller being in violation of any of Seller’s representations, warranties or
covenants contained herein.
5. Covenants of Seller Prior to Closing. Between the date of this Agreement and the
Closing (or earlier termination of this Agreement):
5.1 Information. Seller shall afford to the officers and authorized representatives and agents
(which shall include accountants, attorneys, bankers, and other consultants) of Buyer full and
complete access at all reasonable times (i) to and the right to inspect the plants, properties,
books, and records of the Hospital and (ii) to those officers, directors, employees, agents,
counsel or representatives of Seller who have knowledge of the Hospital, Purchased Assets or
business of the Hospital; and will furnish Buyer with such additional financial and operating data
and other information as to the business and properties of Seller pertaining to the Hospital as
Buyer may from time to time reasonably request without regard to where such information may be
located. Buyer’s right of access and inspection shall be exercised in such a manner as not to
interfere unreasonably with the operations of the Hospital or Seller, and shall be coordinated
through Seller’s designated agents.
5.2 Operations. Seller will:
(a) carry on its business pertaining to the Hospital in substantially the same manner as
presently conducted, and not make any material change in personnel, operations, finance, accounting
policies, or real or personal property pertaining to the Hospital;
(b) maintain the Hospital and all parts thereof in good operating condition, ordinary wear and
tear excepted;
(c) perform all of its obligations under agreements relating to or affecting the Hospital or
the Purchased Assets;
(d) keep in full force and effect present insurance policies or other comparable insurance
pertaining to the Hospital and Purchased Assets; and
(e) use reasonable commercial efforts to maintain and preserve its business organizations at
the Hospital intact, retain its present Hospital employees and maintain its relationships with
physicians, suppliers, customers, and others having business relations with the Hospital.
5.3 Title Commitment. Seller, at its expense, shall obtain a current title commitment for the
Real Property (the “Title Commitment”) issued by a national title insurance company (the “Title
Company”), together with legible copies of all exceptions to title referenced therein. The Title
Commitment shall set forth the state of title to the Real Property, together with all exceptions or
conditions to such title, including, without limitation, all easements, restrictions,
rights-of-way, covenants, reservations, and all other encumbrances affecting the Real Property
which would appear in an owner’s title policy, if issued. The Title Commitment shall contain the
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express commitment of the Title Company to issue an Owner’s Title Policy (the “Title Policy”) to
Buyer in an amount equal to Ten Million Dollars ($10,000,000), insuring good and marketable fee
simple title to the Real Property with the standard printed exceptions endorsed or deleted in
accordance with Section 7.3 hereof.
5.4 Negative Covenants. Seller will not, without the prior written consent of Buyer:
(a) amend or terminate any of the Contracts, enter into any contract or commitment, or incur
or agree to incur any liability of or relating to the Hospital, except as provided herein or in the
ordinary course of business of the Hospital and in no event greater than One Thousand Dollars
($1,000) per item;
(b) enter into any contract or commitment related to the Hospital with physicians or other
referral sources;
(c) increase benefits arrangements or compensation payable or to become payable, or make any
bonus payment to or otherwise enter into one or more bonus agreements (including, without
limitation, adopt any employee retention plan or severance plan) with any Hospital employee, except
in the ordinary course of business in accordance with existing personnel policies;
(d) create, assume, or permit to exist any new debt, mortgage, pledge, or other lien or
encumbrance upon any of the Purchased Assets (including, without limitation, any letter of credit),
whether now owned or hereafter acquired;
(e) acquire (whether by purchase or lease) or sell, assign, lease, or otherwise transfer or
dispose of any property, plant, or equipment pertaining to the Hospital except in the normal course
of business with comparable replacement thereof;
(f) purchase capital assets or incur costs in respect of construction-in-progress pertaining
to the Hospital in excess of Ten Thousand Dollars ($10,000) in the aggregate;
(g) take any action outside the ordinary course of business of the Hospital or their related
ancillary services except as provided in the written transition services plan mutually agreed upon
by the parties;
(h) sell, transfer, otherwise dispose of any Purchased Assets or reduce inventory of the
Hospital except in the ordinary course of business;
(i) enter into a collective bargaining agreement;
(j) make charitable contributions on behalf of the Hospital other than the provision of
indigent and charity care services consistent with historic practices;
(k) change accounting, collection or payment practices, policies or assumptions in respect of
the Hospital, except as required by law; or
(l) enter into any agreement which would have a Material Adverse Effect on the Hospital.
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5.5 Governmental Approvals. Seller shall (i) use reasonable commercial efforts
to obtain all governmental approvals (or exemptions therefrom), including, without limitation,
approval from ORS, DCH and the Hospital Authority, necessary or required to allow Seller to perform
its obligations under this Agreement; and (ii) assist and cooperate with Buyer and its
representatives and counsel in obtaining all governmental approvals, licenses and permits (or
exemptions therefrom) which Buyer deems necessary or appropriate and in preparing any document or
other material which may be required by any governmental agency as a predicate to or as a result of
the transactions contemplated herein.
5.6 Additional Financial Information. Within two (2) business days after they are created (but
in any event no later than twenty (20) days following the end of each calendar month prior to
Closing), Seller shall deliver to Buyer true and complete copies of the internal department
financial and operational reports (collectively, the “Interim Statements”) of, or relating to, the
Hospital for each month then ended, together with a year-to-date summary. The Interim Statements
will be based upon the books and records of the Hospital and fairly represent in all material
respects its financial condition and results of operations as of the dates indicated thereon.
5.7 No-Shop Clause. Seller agrees that it shall not, and shall direct and use its
best efforts to cause its officers, directors, employees, agents and representatives (including any
investment banker, attorney or accountant retained by it) not to: (i) offer for sale or lease all
or any significant portion of the Purchased Assets or any ownership interest in any entity owning
any of the Purchased Assets, (ii) solicit offers to buy all or any significant portion of the
Purchased Assets or any ownership interest in any entity owning any of the Purchased Assets, (iii)
initiate, encourage or provide any documents or information to any third party in connection with,
discuss or negotiate with any person regarding any inquiries, proposals or offers relating to any
disposition of all or any significant portion of the Purchased Assets or a merger or consolidation
of any entity owning any of the Purchased Assets, or (iv) enter into any agreement or discussions
with any party (other than Buyer) with respect to the sale, assignment, or other disposition of all
or any significant portion of the Purchased Assets or any ownership interest in any entity owning
any of the Purchased Assets or with respect to a merger or consolidation of any entity owning any
of the Purchased Assets. Seller will notify Buyer in writing of any inquiry or proposal concerning
any such transaction within three (3) business days of receiving such proposal.
5.8 Insurance Ratings. Seller will take all action reasonably requested by Buyer to enable
Buyer to succeed to the workers’ compensation and unemployment insurance ratings, and other ratings
for insurance or other purposes established by Seller for the Hospital. Buyer shall not be
obligated to succeed to any such ratings, except as it may elect to do so.
5.9 Tail Coverage. Seller’s existing professional and general liability insurance policies
shall continue to insure Seller for Excluded Liabilities to the same extent they did so prior to
the Closing Date. If Seller alters, amends, terminates or changes its existing professional and
general liability policies such that they no longer do so, Seller shall, at its sole cost, obtain
“tail” insurance to insure against the professional and general liabilities of the Hospital prior
to the Closing and at coverage levels equal to the current policies insuring Seller.
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5.10 Medical Staff Disclosure. Seller shall deliver to Buyer a written disclosure containing a
brief description of all adverse actions taken against medical staff members or applicants of the
Hospital during the past three (3) years which could be reasonably anticipated to result in claims
or actions against Seller.
6. Covenants of Buyer Prior to Closing. Between the date of this Agreement and the
Closing:
6.1 Governmental Approvals. Buyer shall (i) use reasonable commercial efforts to obtain all
governmental approvals, licenses and permits (or exemptions therefrom) that are attainable prior to
Closing, which are necessary or required to allow Buyer to perform its obligations under this
Agreement and to operate the Hospital as a freestanding behavioral health facility that is
accredited by the Joint Commission (including, without limitation, any licenses, permits and
approvals from the ORS and DCH, as necessary); and (ii) assist and cooperate with Seller and its
representatives and counsel in obtaining all governmental consents, approvals, and licenses which
Seller deems necessary or appropriate and in the preparation of any document or other material
which may be required by any governmental agency as a predicate to or as a result of the
transactions contemplated herein.
6.2 Surveys. Seller shall deliver copies of all existing surveys, if any, of the Real Property
to Buyer. Seller, at Buyer’s expense, has obtained current as-built surveys of the Real Property
(collectively, the “Surveys”) and has provided a copy of such surveys to Buyer. The Surveys meet
the requirements of an ALTA/ASCM survey. The Surveys (i) are currently dated; (ii) show the
location on the Real Property of all improvements, fences, evidences of abandoned fences, lakes,
ponds, creeks, streams, rivers, easements, roads, and rights-of-way; (iii) identify all easements
and rights-of-way by reference to the recording information applicable to the documents creating
such easements or rights-of-way; (iv) show any encroachments onto the Real Property from any
adjacent property, any encroachments from the Real Property onto adjacent property, and any
encroachments into any easement or restricted area within the Real Property; (v) locate all
existing improvements (such as buildings, power lines, fences, and the like); (vi) locate all
dedicated public streets or other roadways providing access to the Real Property, including all
curb cuts and all alleys; (vii) locate all set-back lines and similar restrictions covering the
Real Property or any part thereof and any violations of such restrictions; and (viii) show thereon
a legal description of the boundaries of the Real Property by metes and bounds or other appropriate
legal description. Each Survey shall contain the surveyor’s certification to Buyer, Seller, the
Hospital Authority, and the Title Company that (i) the Survey was made on the ground; (ii) there
are no visible or recorded easements, discrepancies, conflicts, encroachments, or overlapping of
improvements except as shown on the Survey; (iii) the Survey correctly shows all visible or
recorded easements or rights-of-way across the Real Property or any other easements or
rights-of-way of which the surveyor has been advised, including, without limitation, those matters
affecting title reflected in the Title Commitment; (iv) the Survey correctly shows the location of
all buildings, structures, and other improvements situated on the Real Property; (v) the Survey
conforms to all applicable minimum guidelines for surveys of comparable property as set forth in
applicable laws, regulations, or professional standards; (vi) all means of ingress to and egress
from the Real Property have been completed, dedicated, and accepted for public maintenance by the
relevant municipal authority; (vii) except as shown thereon, the Real Property is not located
within the 100 year flood plain or other flood hazard
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area; (viii) the Survey is a true, correct,
and accurate representation of the Real Property; and (ix) such other matters as may be required by
the Title Company to allow it to issue the Title Policy.
7. Conditions Precedent to Obligations of Buyer. Notwithstanding anything herein to the
contrary, the obligations of Buyer to consummate the transactions described herein are subject to
the fulfillment, on or prior to the Closing Date, of the following conditions precedent unless (but
only to the extent) waived in writing by Buyer at the Closing:
7.1 Representations/Warranties. The representations and warranties of Seller contained in this
Agreement shall be true in all material respects when made and, when read in light of any Schedules
which have been updated in accordance with the provisions of Section 14.1 hereof, as of the
Closing Date as though such representations and warranties had been made on and as of such Closing
Date. Each and all of the terms, covenants, and conditions of this Agreement to be complied with or
performed by Seller on or before the Closing Date pursuant to the terms hereof shall have been duly
complied with and performed or waived by Buyer at Closing.
7.2 Pre-Closing Confirmations. Buyer shall have obtained documentation or other evidence
satisfactory to Buyer in its reasonable discretion that Buyer has:
(a) Received approval from all Government Entities (including, without limitation, ORS, DCH
and the Hospital Authority) to the extent their approval is required to complete the transactions
herein contemplated;
(b) Received confirmation from DCH that no further Certificate of Need review or approval is
required before Buyer acquires the behavioral health Certificate of Need of the Hospital;
(c) Obtained reasonable assurances that Medicare and Medicaid certification of the Hospital
for its operation by Buyer, as permitted by law, will be effective as of the Closing or a
reasonable date thereafter and that Buyer may participate in and receive reimbursement from such
programs;
(d) Obtained reasonable assurances that the Purchased Assets conveyed to Buyer do not
constitute collateral for any bond financing obtained by Seller; and
(e) Obtained such other consents and approvals as may be legally or contractually required for
the consummation of the transactions described herein.
7.3 Title Policy. At the Closing, Seller shall, at its sole cost and expense, cause a pro
forma of the Title Policy (or marked Title Commitment containing no additional exceptions to
title to the Real Property) to be furnished to Buyer by the Title Company. The Title Policy
shall
be issued on an ALTA Form 1992 Owner’s Title Policy in an amount equal to Ten Million
Dollars ($10,000,000) and shall insure to Buyer good and marketable, fee simple title to the
Real
Property subject only to (i) the Permitted Encumbrances, and (ii) taxes for the current and
subsequent years “not yet due and payable.” The Title Policy shall have all standard and
general
exceptions deleted so as to afford full “extended form coverage.”
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7.4 Actions/Proceedings. No action or proceeding before a court or any other governmental
agency or body shall have been instituted or threatened to restrain or prohibit the transactions
herein contemplated, and no governmental agency or body shall have taken any other action or made
any request of any party hereto as a result of which Buyer reasonably and in good xxxxx xxxxx it
inadvisable to proceed with the transactions hereunder.
7.5 Adverse Change. Since the date hereof, there shall not have occurred any event, change or
occurrence that has or could reasonably be expected to have a Material Adverse Effect on the
Hospital, and Seller shall not have suffered any material change, loss or damage to the Purchased
Assets, whether or not covered by insurance.
7.6 Insolvency. Seller shall not (i) be in receivership or dissolution, (ii) have made any
assignment for the benefit of creditors, (iii) have admitted in writing its inability to pay its
debts as they mature, (iv) have been adjudicated a bankrupt, or (v) have filed a petition in
voluntary bankruptcy, a petition or answer seeking reorganization, or an arrangement with creditors
under the federal bankruptcy law or any other similar law or statute of the United States or any
state, nor shall any such petition have been filed against Seller (individually, an “Insolvency
Event”, and, collectively, “Insolvency Events”)
7.7 Consents to Assignments. All consents of third parties which are reasonably necessary, in
the opinion of Buyer, to complete effectively the transactions herein contemplated shall have been
obtained and are in form and substance approved by Buyer.
7.8 Vesting/Recordation. Seller shall have furnished to Buyer, in form and substance
reasonably satisfactory to Buyer, assignments or other instruments of transfer and consents and
waivers by others, necessary or appropriate to transfer to and effectively vest in Buyer all right,
title, and interest in and to the Purchased Assets, in proper statutory form for recording if such
recording is necessary or appropriate.
7.9 Due Diligence. Buyer shall have completed its own due diligence investigation of the
operation of the Hospital, the results of which shall have been deemed satisfactory in the sole
discretion of Buyer, its agents, employees and representatives.
7.10 Employee Matters. Seller shall have paid to its Hospital employees any unused paid time
off (except for any extended illness benefits) accrued while in the employ of Seller as of the pay
period ending immediately prior to the Closing.
7.11 Closing Deliveries. Seller shall have made the deliveries required to be made by it under
Section 2.2 hereof.
8. Conditions Precedent to Obligations of Seller. Notwithstanding anything herein to the
contrary, the obligations of Seller to consummate the transactions described herein are subject to
the fulfillment, on or prior to the Closing Date, of the following conditions precedent unless (but
only to the extent) waived in writing by Seller at the Closing:
8.1 Representations/Warranties. The representations and warranties of Buyer contained in this
Agreement shall be true in all material respects when made and, when read in light of any Schedules
which have been updated in accordance with the provisions of Section 14.1 hereof, as of the
Closing Date as though such representations and warranties had been made
- 27 -
on and as of such Closing
Date. Each and all of the terms, covenants, and conditions of this Agreement to be complied with or
performed by Buyer on or before the Closing Date pursuant to the terms hereof shall have been duly
complied with and performed or waived by Seller at Closing.
8.2 Governmental Approvals. All material consents, authorizations, orders and approvals of (or
filings or registrations with) any Government Entity (including, without limitation, ORS, DCH and
the Hospital Authority) or other party required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made by Buyer when so required, except
for any documents required to be filed, or consents, authorizations, orders or approvals required
to be issued, after the Closing Date.
8.3 Actions/Proceedings. No action or proceeding before a court or any other governmental
agency or body shall have been instituted or threatened to restrain or prohibit the transactions
herein contemplated, and no governmental agency or body shall have taken any other action or made
any request of any party hereto as a result of which Seller reasonably and in good xxxxx xxxxx it
inadvisable to proceed with the transactions hereunder.
8.4 Closing Deliveries. Buyer shall have made the deliveries required to be made by it under
Section 2.3 hereof.
9. Covenants Not to Compete.
9.1 Seller’s Covenant Not to Compete and Nonsolicitation. Seller hereby covenants that at all
times from the Closing Date until the seventh (7th) anniversary of the Closing Date, Seller shall
not, and shall cause its Affiliates, and each of their successors and assigns, not to, directly or
indirectly, (i) except as a consultant or contractor to or of Buyer (or any Affiliate of Buyer),
own, lease, manage, operate, control, or participate in any manner with the ownership, leasing,
management, operation or control of any business which offers services in competition with those
services being provided by the Hospital as of the date of this Agreement, including but not limited
to any psychiatric hospital, within a fifty (50) mile radius of the Hospital, without Buyer’s prior
written consent (which Buyer may withhold in its sole and absolute discretion); (ii) directly
solicit for employment any person who at Closing became an employee of Buyer; or (iii) disrupt or
attempt to disrupt any present or reasonably foreseeable future relationship, contractual or
otherwise between Buyer, on the one hand, and any physician, physician group, or other healthcare
or behavioral health provider with whom Buyer contracts with in connection with the Hospital, on
the other hand. Notwithstanding the foregoing, nothing contained herein shall prohibit Seller from
acquiring or merging with the acute care hospitals or acute care hospital systems identified on
Schedule 9.1 which provide behavioral health services, provided such services are not
provided on Seller’s Riverdale campus.
9.2 Buyer’s Covenant Not to Compete and Nonsolicitation. Buyer hereby covenants that at all
times from the Closing Date until the seventh (7th) anniversary of the Closing Date, Buyer shall
not, and shall cause the subsidiaries of Acadia Healthcare Company, LLC, and each of their
successors and assigns, not to, directly or indirectly, (i) except as a consultant or contractor to
or of Seller (or any Affiliate of Seller), own, lease, manage, operate, control, or participate in
any manner with the ownership, leasing, management, operation or control of any business which
offers any services other than behavioral health (and the services necessary to
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operate behavioral
health facilities), within a fifty (50) mile radius of the Hospital, without Seller’s prior written
consent (which Seller may withhold in its sole and absolute discretion); (ii) directly solicit for
employment any person who is an employee of Seller; or (iii) disrupt or attempt to disrupt any
present or reasonably foreseeable future relationship, contractual or otherwise between Seller, on
the one hand, and any physician, physician group, or other healthcare or behavioral health provider
with whom Seller contracts with in connection with its acute care hospital, on the other hand.
9.3 Remedies. In the event of a breach of this Section 9, the parties recognize that
monetary damages shall be inadequate to compensate the injured party and the injured party shall be
entitled, without the posting of a bond or similar security, to an injunction restraining such
breach. Nothing contained herein shall be construed as prohibiting the parties from pursuing any
other remedy available to them for such breach or threatened breach. All parties hereto hereby
acknowledge the necessity of protection against the competition of the other party and its
Affiliates and that the nature and scope of such protection has been carefully considered by the
parties. The parties further acknowledge and agree that the covenants and provisions of this
Section 9 form part of the consideration under this Agreement and are among the inducements
for the parties entering into and consummating the transactions contemplated herein. The period
provided and the area covered are expressly represented and agreed to be fair, reasonable and
necessary. The consideration provided for herein is deemed to be sufficient and adequate to
compensate for agreeing to the restrictions contained in this Section 9. If, however, any
court determines that the foregoing restrictions are not reasonable, such restrictions shall be
modified, rewritten or interpreted to include as much of their nature and scope as will render them
enforceable. The party who substantially prevails in an action to enforce this Section 9,
shall be entitled to an award of costs and attorneys’ fees to be paid by the non-prevailing party.
10. Post-Closing Covenants of Buyer. Subject to Section 14.27, following the
Closing:
10.1 Capital Investments. Based upon its detailed assessment of the capital needs of the
Hospital, Buyer shall commit at least One Hundred Thousand Dollars ($100,000) to capital
expenditures at the Hospital in the three (3) year period following the Closing Date.
10.2 Programs and Services. Buyer intends to (i) assess all of Hospital’s programs and
services to determine opportunity for growth within the current continuum of care as well as the
addition of new behavioral health services; (ii) complete an assessment to evaluate market demand
and the possibility of adding ECT services as well as chemical dependency and lodging services; and
(iii) maintain the Hospital as a licensed behavioral health institution and maintain at least the
current scope of services for a period of at least five (5) years from the Closing Date. In no
event will Buyer operate the Hospital as anything other than a licensed behavioral health
institution. In the event that Buyer determines that the continued operation of the Hospital as a
behavioral health institution is uneconomic and determines that it intends to close the Hospital,
Seller will have the right to purchase the assets of the Hospital as described in Section
12.
10.3 On-site Administrative/Management Team. Buyer will (i) develop and implement a dedicated
and on-site marketing team; and (ii) develop and implement an industry standard on-site senior
management and organization structure which will include, at a minimum, a CEO, CFO, Medical
Director, Director of Clinical Services/DON, Director of Intake and Assessment and Director of
Business Development. Other department managers may
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consist of Quality/Risk, Outpatient Services,
Plant Operations and Dietary. Based upon the patient volume and average daily census, the initial
managers may be responsible for more than one office to maximize efficiencies.
10.4 Quality.
(a) Buyer will implement its Quality Management Program, which will provide a mechanism for
measurement and assessment of important processes or outcomes related to patient care and
organizational function(s) and which shall incorporate elements or indicators from the Hospital’s
existing quality program. Buyer will develop quality monitors under the direction of Buyer’s
Quality Council, Medical Executive Committee and Board of Governors. Core indicators may include,
without limitation, the following: staffing effectiveness, restraint/seclusion usage, medication
errors, drug utilization usage, patient satisfaction, suicides/suicide attempts, elopements,
emergency transfers, medical consultations, contracted medical services, readmissions, AMA
discharges, continued stay review, efficacy of discharge planning (including ER disposition and
placements), negative patient outcomes, adverse drug reactions, pharmacy quality controls,
medication administration, patient rights, falls reduction, patient safety education, infection
control surveillance, environmental rounds, medical record reviews, delinquency rates, staff
competency, staff orientation, dietary quality control, safety management, security management,
emergency preparedness, life safety management, medical equipment management, utilities management,
hazardous materials and waste management, utilities failure/errors, departmental quality controls,
and risk management indicators.
(b) Buyer shall have a Quality Council, whose membership shall include, without limitation,
the following of Buyer’s employees: CEO, Medical Director, Director of Quality Improvement and
Director of Clinical Services/Nursing and other members of the management/clinical team as
designated. Seller shall have the right to appoint one (1) member of the Quality Council from
Seller’s executive team in order to provide coordination of the Buyer’s quality programs with
Seller’s quality programs. Buyer’s Director of Quality/Performance Improvement or his/her designee
shall be the chairperson of the Quality Council. The Quality Council shall meet monthly, or more
often as required, to meet its responsibilities and shall record its activities and report to the
Buyer’s Board of Managers at least quarterly.
10.5 Clinical Support. Buyer shall work with Seller’s emergency services department
in the coordination of services to psychiatric and behavioral health patients. Pursuant to
term
and conditions set forth in the Exclusive Coverage Agreement, Buyer shall provide exclusive
twenty-four (24) hour per day /seven (7) days per week access to qualified mental health
professionals that will perform on-site assessments and assist in the coordination of care of
psychiatric and behavioral health patients within the Seller’s emergency services department.
Buyer also will provide mobile and physician psychiatric consultation services to Seller’s
medical and surgical patients in Seller’s main hospital. Such services shall be delivered by
qualified mental health professionals to include both employed and contracted physicians, as
well as physician extenders/nurse practitioners as appropriate. Buyer shall cause any
clinician
providing services to Seller under this arrangement to secure the necessary medical staff and
hospital credentialing by Seller as appropriate. Unless otherwise modified with the written
consent of both parties, the Exclusive Coverage Agreement will only be applicable to Seller’s
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main hospital campus even in the event of an acquisition or merger by or between Seller and an
acute care hospital or system identified on Schedule 9.1.
10.6 Indigent Care and Medicaid. Buyer shall provide the level of uncompensated indigent or
charity care that is required of Buyer under applicable Laws. Buyer will work with Seller in the
disposition of all behavioral patients regardless of financial class.
10.7 Governance. The Hospital will be governed by its own Board of Managers appointed by
Buyer. In order to provide community input into the governance of the Hospital, coordinate services
on the campus of Seller and insure quality programs that meet the community’s needs, on or after
the Closing Buyer will form an advisory board to advise the Board of Managers of the Hospital (the
“Advisory Board”). The Advisory Board will have representation from Buyer, Buyer’s Board of
Managers, Seller and the community.
10.8 Survival of Buyer’s Post-Closing Covenants. Each post-closing covenant of Buyer set forth
in this Section 10 shall apply to any transferee, assignee or purchaser of the Purchased
Assets, in accordance with its terms for a period equal to the earlier of: (i) the time period
specified in the covenant; or (ii) six (6) years (except for Section 10.6. which shall
survive indefinitely).
11. Additional Agreements.
11.1 Allocation of Purchase Price. The Consideration shall be allocated among the various
classes of Purchased Assets in accordance with and as provided by Section 1060 of the Code. Within
one hundred eighty (180) days of the Closing, Buyer shall provide Seller with a preliminary
allocation of the Consideration. The parties agree that any tax returns or other tax information
they may file or cause to be filed with any governmental agency shall be prepared and filed
consistently with such agreed upon allocation. In this regard, the parties agree that, to the
extent required, they will each properly prepare and timely file Form 8594 in accordance with
Section 1060 of the Code.
11.2 Termination Prior to Closing. Notwithstanding anything herein to the contrary, this
Agreement may be terminated at any time: (i) on or prior to the Closing Date by mutual consent of
Seller and Buyer; (ii) on or prior to the Closing Date by Buyer, if satisfaction of any condition
to Buyer’s obligations under Section 7 of this Agreement becomes impossible or impractical
with the use of commercially reasonable efforts (unless the failure results primarily from Buyer
breaching any representation, warranty, or covenant herein) and such condition shall not have been
waived by Buyer; (iii) on or prior to the Closing Date by Seller, if satisfaction of any condition
to Seller’s obligations under Section 8 of this Agreement becomes impossible or impractical
with the use of commercially reasonable efforts (unless the failure results primarily from Seller’s
breaching any representation, warranty, or covenant herein) and such condition shall not have been
waived by Seller; (iv) by Buyer or Seller if the Closing Date shall not have taken place within
forty-five (45) days after execution of this Agreement unless extended by mutual agreement of Buyer
and Seller; or (v) by either Seller or Buyer pursuant to Section 14.1 hereof
11.3 Post Closing Access to Information. Seller and Buyer acknowledge that subsequent to
Closing each party may need access to information or documents in the control or
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possession of the
other party for the purposes of concluding the transactions herein contemplated, audits, compliance
with governmental requirements and regulations, and the prosecution or defense of third party
claims. Accordingly, Seller and Buyer agree that for a period of six (6) years after Closing each
will make reasonably available to the other’s agents, independent auditors, counsel, and/or
governmental agencies upon written request and at the expense of the requesting party such
documents and information as may be available relating to the Purchased Assets for periods prior
and subsequent to Closing to the extent necessary to facilitate concluding the transactions herein
contemplated, audits, compliance with governmental requirements and regulations, and the
prosecution or defense of claims.
11.4 Preservation and Access to Records After the Closing.
(a) After the Closing, Seller shall, in the ordinary course of business and as required by
law, keep and preserve in their original form the medical and billing records of patients in the
Hospital as of the Closing. For purposes of this Agreement, the term “records” includes all
documents, electronic data and other compilations of information in any form. Buyer acknowledges
that as a result of entering into this Agreement and operating the Hospital it will gain access to
patient and other information which is subject to rules and regulations regarding confidentiality.
Buyer agrees to abide by any such rules and regulations relating to the confidential information it
acquires. Buyer agrees to maintain any patient records delivered to Buyer at the Closing at the
Hospital after Closing in accordance with applicable law (including, if applicable, Section
1861(v)(i)(I) of the Social Security Act (42 U.S.C. §1395(v)(l)(i)), the privacy and security
requirements of the Administrative Simplification subtitle of the HIPAA and applicable state
requirements with respect to medical privacy and requirements of relevant insurance carriers, all
in a manner consistent with the maintenance of patient records generated at the Hospital after
Closing.
(b) Upon reasonable notice, during normal business hours, at the sole cost and expense of
Seller and upon Buyer’s receipt of any required consents and authorizations, Buyer will afford to
the representatives of Seller full and reasonable access to, and copies of, the patient medical and
billing records of the Hospital which relate to the period following the Closing for reasonable
business purposes. Upon reasonable notice, during normal business hours and at the sole cost and
expense of Seller, Buyer shall also make its officers and employees available to Seller at
reasonable times and places after the Closing for the foregoing purposes. In addition, Seller shall
be entitled, at Seller’s sole risk, to remove from the Hospital copies of any such patient records,
but only for purposes of pending litigation involving a patient to whom such records refer, as
certified in writing prior to removal by counsel retained by Seller in connection with such
litigation and only upon Buyer’s receipt of any required consents and authorizations. Any patient
record so removed from the Hospital shall be promptly returned to Buyer following its use by
Seller. Any access to the Hospital, their records or Buyer’s personnel granted to Seller in this
Agreement shall be upon the condition that any such access not materially interfere with the
business operations of Buyer. Buyer agrees to promptly provide to Seller (and in any event no later
than seventy-two hours after Buyer’s receipt) copies of any requests for any such records received
by Buyer and involving Seller, including, without limitation, requests related to litigation to
which Seller is a party and any governmental subpoenas, audit requests or like demands.
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(c) Upon reasonable notice, during normal business hours, at the sole cost and expense of Buyer and
upon Seller’s receipt of any required consents and authorizations, Seller will afford to the
representatives of Buyer full and reasonable access to, and copies of, the patient medical and
billing records of the Hospital which relate to the period prior to the Closing for reasonable
business purposes. Upon reasonable notice, during normal business hours and at the sole cost and
expense of Buyer, Seller shall also make its officers and employees available to Buyer at
reasonable times and places after the Closing for the foregoing purposes. In addition, Buyer shall
be entitled, at Buyer’s sole risk, to remove from Seller’s offices copies of any such patient
records, but only for purposes of pending litigation involving a patient to whom such records
refer, as certified in writing prior to removal by counsel retained by Buyer in connection with
such litigation and only upon Seller’s receipt of any required consents and authorizations. Any
patient record so removed from the Hospital shall be promptly returned to Seller following its use
by Buyer. Any access to the Seller’s facilities, its records or Seller’s personnel granted to Buyer
in this Agreement shall be upon the condition that any such access not materially interfere with
the business operations of Seller. Seller agrees to promptly provide to Buyer (and in any event no
later than seventy-two hours after Seller’s receipt) copies of any requests for any such records
received by Seller and involving Buyer, including, without limitation, requests related to
litigation to which Buyer is a party and any governmental subpoenas, audit requests or like
demands.
11.5 Tax and Medicare Effect. None of the parties (nor such parties’ counsel or accountants) has
made or is making any representations to any other party (nor such party’s counsel or accountants)
concerning any of the tax or Medicare effects of the transactions provided for in this Agreement as
each party hereto represents that each has obtained, or may obtain, independent tax and Medicare
advice with respect thereto and upon which it, if so obtained, has solely relied.
11.6 Reproduction of Documents. This Agreement and all documents relating hereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b)
the documents delivered at the Closing, and (c) financial statements, certificates and other
information previously or hereafter furnished to Seller or to Buyer, may, subject to the provisions
of Section 14.10 hereof, be reproduced by Seller and by Buyer by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar process and Seller and
Buyer may destroy any original documents so reproduced. Seller and Buyer agree and stipulate that
any such reproduction shall be admissible in evidence as the original itself in any judicial,
arbitral or administrative proceeding (whether or not the original is in existence and whether or
not such reproduction was made by the Seller or Buyer in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
11.7 Cooperation on Tax Matters. Following the Closing, the parties shall cooperate fully with each
other and shall make available to the other, as reasonably requested and at the expense of the
requesting party, and to any taxing authority, all information, records or documents relating to
tax liabilities or potential tax liabilities of Seller for all periods on or prior to the Closing
and any information which may be relevant to determining the amount payable under this Agreement,
and shall preserve all such information, records and documents (to the extent a part of the
Purchased Assets delivered to Buyer at Closing) at least until the expiration of any applicable
statute of limitations or extensions thereof.
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11.8 Patient Xxxxxxxx.
(a) Buyer Receivables. Buyer shall be entitled to the accounts receivables which arise
from services provided to patients of the Hospital on or following the Closing Date (the “Buyer
Receivables”). The Buyer Receivables shall include, without limitation amounts prepaid by patients
to compensate for hospital days and collectible receivables attributable to services rendered on or
after the Closing Date to patients of the Hospital who were patients of the Hospital prior to the
Closing and patients of the Hospital after the Closing (the “Straddle Patients”).
(b) Seller Receivables. To compensate Seller for services rendered and medicine, drugs
and supplies provided prior to the Closing Date with respect to the Straddle Patients, the
following shall apply:
(i) Cut-off Xxxxxxxx. To the extent that a payor will accept a cut-off
billing, Seller shall prepare cut-off xxxxxxxx for all Straddle Patients as of the date immediately
preceding the Closing Date. All payments which are received related to the cut-off xxxxxxxx will be
property of Seller.
(ii) Cut-off Xxxxxxxx Not Accepted. If the payor of any Straddle Patient cannot or
does not for any reason accept cut-off xxxxxxxx, then Buyer, to the extent Buyer has an agreement
with such payor, shall submit xxxxxxxx to such payor for the entire portion of such Straddle
Patient’s stay. To the extent applicable, Buyer shall also provide a copy of all remittance advices
or other documentation related thereto to Seller within five (5) days of submitting claims for
Straddle Patients to payors. To the extent Buyer receives funds from such payor, Buyer shall then
remit to Seller within fifteen (15) days after each receipt of payment with respect to such billing
the amount determined by multiplying the total payment received for such Straddle Patient by a
fraction, the numerator of which shall be the number of days such Straddle Patient was a patient
prior to the Closing Date, and the denominator of which shall be the total number of days such
Straddle Patient was a patient, both before and after the Closing Date.
To the extent that Buyer does not have an agreement with such payor, then Buyer shall, within
five (5) days from the date of discharge of any Straddle Patient, provide Seller with such
documentation as may be necessary, including but not limited to remittance advices or other
documentation related thereto, for Seller to submit xxxxxxxx to such payor for the entire portion
of such Straddle Patient’s stay. Seller shall then remit to Buyer within fifteen (15) days after
each receipt of payment with respect to such billing the amount determined by multiplying the total
payment received for such Straddle Patient by a fraction, the numerator of which shall be the
number of days such Straddle Patient was a patient following the Closing Date, and the denominator
of which shall be the total number of days such Straddle Patient was a patient, both before and
after the Closing Date.
11.9 Other Payments. If Seller or Buyer receives any amount from Medicare or Medicaid for
cost-based patients, from any patient (including prepaid amounts), or from any other payor which
relates to services rendered by another party hereto, the party receiving such amount shall
immediately remit said full amount to such other party.
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11.10 Employee Matters.
(a) As of the Closing Date, Seller shall terminate all of its Hospital employees, and Buyer
shall offer to hire all Hospital employees commencing as of the Closing Date (the “Hired
Employees”) at their same salary and wage levels. Buyer will develop and implement a transition
plan with consideration of the employees’ seniority, technical experience, performance and their
historical commitment to the Hospital. On the Closing Date, Seller shall pay each Hired Employee
accrued but unused paid time off owed to such Hired Employee, which shall not include any accrued
extended illness benefit, as of the last pay period immediately prior to the Closing Date. Seller
shall any pay remaining sums due to the Hired Employees for unused paid time accrued from the last
pay period before Closing to the Closing Date within ninety (90) days following the Closing Date.
Buyer agrees that the Hired Employees shall be entitled to retain for use the extended illness
benefit accrued while employed by Seller (“Extended Illness Benefit”), all of which shall be used
in accordance with and subject to Buyer’s extended illness benefit plan. However, Buyer shall not
be required to pay any Hired Employee for any unused Extended Illness Benefit.
(b) Within the period of ninety (90) days before the Closing, Seller shall not, and within the
ninety (90) days following the Closing, Buyer shall not: (1) permanently or temporarily shut down a
single site of employment, or one or more facilities or operating units within a single site of
employment, if the shutdown results in an employment loss during any thirty (30) day period at the
single site of employment for fifty (50) or more employees, excluding any part-time employees; or
(2) have a mass layoff at a single site of employment of at least
thirty-three percent (33%) of the active employees and at least fifty (50) employees,
excluding part-time employees. The terms “single site of employment,” “operating unit,” “employment
loss” and “mass layoff” shall be defined as in the WARN Act. With respect to terminations of
employees following the Closing, Buyer shall be responsible for any notification required under the
WARN Act. In respect of the employees employed by Buyer, it shall provide such employees with
employee benefits consistent with the benefits generally offered to similarly-situated employees of
Affiliates of Buyer in the same geographic area as the Hospital.
(c) Buyer will credit each eligible Hired Employee and their eligible dependents under
applicable Buyer employee welfare benefit plans with any deductibles, co-payments or other
cost-sharing amounts attributable to the Hired Employee or eligible dependent under the Seller’s
employee welfare benefit plans, as the case may be, following receipt by Buyer of reasonable
evidence of any such deductibles, co-payments and/or other cost-sharing amounts.
(d) In respect of the Hired Employees, Buyer shall provide employee benefits that are at least
as favorable, on an aggregate basis, as those offered by Buyer to similarly-situated employees at
similarly-situated hospitals owned or leased by Buyer. In providing benefits to Hired Employees
under Buyer’s welfare benefit plans, Buyer shall waive pre-existing conditions limitations in
Buyer’s welfare benefit plans which might otherwise apply to such employees and shall recognize the
existing seniority and service credit with Seller of all such employees to provide credit under
such plans for the purpose of determining eligibility and vesting and the rate of benefit accrual
(but not actual benefit accrual), except to the extent the Hired Employee has not satisfied such
limitations under the current welfare benefit plans of Seller or such waiver of pre-existing
conditions is not permitted under one or more of Buyer’s
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short-term or long-term disability plans provided through insurance contracts or policies. Buyer shall give all Hired Employees credit for
their years of service with the Seller for the purpose of determining benefits under Buyer’s
vacation, sick pay and other paid time off programs.
11.11 Contract Rights Not Assigned. Buyer and Seller shall use reasonable commercial efforts
to obtain any third party consents to the assignment of the Contracts. If one or more consents are
not obtained (and Buyer elects to close over such consent), or if an attempted assignment would be
ineffective or would materially affect Buyer’s rights thereunder so that Buyer would not receive
all of Seller’s rights thereunder, Seller and Buyer shall cooperate in good faith in any reasonable
arrangement designed to provide Buyer the benefits of such Contracts.
11.12 Defeasance of Bonds. Seller shall maintain the Bond Defeasance Escrow Account in the
form presented to Buyer at Closing. Seller shall not withdraw funds from the Bond Defeasance Escrow
Account or use the funds deposited therein except to defease or redeem and/or fund the debt service
on the portion of the Xxxxxxx County Hospital Authority Revenue Anticipation Certificates (Southern
Regional Medical Center Project), Series 1998A, attributable to the acquisition of the Purchased
Assets (the “Allocated Portion of the Bonds”). Within ninety (90) days following the Closing Date,
Seller shall defease or redeem the Allocated Portion of the Bonds and provide Buyer evidence of the
same.
11.13 Use of Hospital Forms, Policies and Records. For a period of sixty (60) days following
the Closing Date, Seller shall permit Buyer to continue to use all electronic and printed forms and
policies (the “Hospital Forms”) historically used by Seller in connection with the operation of the
Hospital, regardless of whether such forms contain Seller’s trade names, trademarks and/or service
marks. Upon Closing, Seller shall provide Buyer with a database of information regarding prior
RiverWoods patients so that Buyer may timely request a prior patient’s records should that patient
be readmitted to RiverWoods. Additionally, Buyer shall have complete access to all documents,
policies and records stored on that portion of the SRHS computer system (G drive) designated
specifically to RiverWoods.
12. Rights of First Refusal and Repurchase Option. Subject to Section 14.27,
following the Closing:
12.1 Right of First Refusal. If, during the period from the Closing Date to the sixth (6th)
anniversary thereof, Buyer receives a bona fide offer from a third party which it intends to accept
to purchase or lease substantially all of the assets of the Hospital or the membership interests of
the Buyer as a stand alone facility/entity (and not as part of a larger purchase of
hospitals/entities), Buyer shall provide Seller a written notice describing the terms of the offer
(a “Purchase Offer Notice”), and Seller or its successor non-profit organization or foundation (the
“Hospital Purchaser”), shall have the right of first refusal described in this Section 12.1
to repurchase all of the assets of the Hospital on the terms and at the price described in the
Purchase Offer Notice and such additional terms as Buyer and Seller may agree. Upon receipt of a
Purchase Offer Notice, the Hospital Purchaser may exercise its right of first refusal, if at all, by: (i) sending Buyer, or such other party designated
in the Purchase Offer Notice, a written notice within ten (10) days following the receipt of a
Purchase Offer Notice (the “Right of First Refusal Period”) informing Buyer of the Hospital
Purchaser’s intent to exercise its right of first refusal; and (ii) within ten (10) days of so
notifying Buyer, negotiating and executing definitive
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agreements with Buyer on the terms set forth in the Purchase Offer Notice and such additional terms as Buyer and Seller may agree. If Hospital
Purchaser fails to exercise its right of first refusal in the manner described above, or if
Hospital Purchaser provides Buyer written notice during the Right of First Refusal Period of
Hospital Purchaser’s intent not to exercise the right of first refusal, the right of first refusal
shall terminate, Buyer shall be free to consummate the transaction described in the Purchase Offer
Notice and the rights of Seller contained in this Section 12.1 shall be of no further force and
effect thereafter. If the Hospital Purchaser exercises its right of first refusal as set forth
herein, the closing of the sale of the Hospital shall occur within fifty (50) days from the date of
exercise, or the date for Closing described in the Purchase Offer Notice, whichever is later. In
any instance where the third party purchaser changes or the terms of such third party offer to
purchase changes, the Hospital shall be afforded an additional right of first refusal in accordance
with this Section 12.1.
12.2 Sales to Certain Entities. If, following the Closing Date (and regardless of the temporal
limitations set forth in Sections 12.1), Buyer receives a bona fide offer from a
Disqualified Purchaser (as hereafter defined) which Buyer intends to accept to purchase or lease
substantially all of the assets of the Hospital or the membership interests of the Buyer as a stand
alone facility/entity (and not as part of a larger purchase of hospitals/entities), Buyer shall
provide Seller a written notice, in accordance with the notice requirements set forth in
Section 14.13 hereof, describing the terms of the offer (a “Disqualified Offer Notice”),
and the Hospital Purchaser, shall have the right of first refusal described in this Section
12.2 to repurchase all of the assets of the Hospital on the terms and at the price described in
the Disqualified Offer Notice and upon such additional terms as Buyer and Seller may agree. Upon
receipt of a Disqualified Offer Notice, the Hospital Purchaser may exercise its right of first
refusal, if at all, by: (i) sending Buyer, or such other party designated in the Disqualified Offer
Notice, a written notice within ten (10) days following the receipt of a Disqualified Offer Notice
(the “Disqualified Refusal Period”) informing Buyer of the Hospital Purchaser’s intent to exercise
its right of first refusal; and (ii) within ten (10) days of so notifying Buyer, negotiating and
executing definitive agreements with Buyer on the terms set forth in the Disqualified Offer Notice
and such additional terms as Buyer and Seller may agree. If Hospital Purchaser fails to exercise
its right of first refusal in the manner described above, or if Hospital Purchaser provides Buyer
written notice during the Disqualified Refusal Period of Hospital Purchaser’s intent not to
exercise the right of first refusal, then Buyer shall be free, for the following twelve (12) month
period to consummate the transaction described in the Disqualified Offer Notice and the rights of
Seller contained in this Section 12.2 shall be of no further force and effect thereafter.
If Hospital Purchaser exercises its right of first refusal as set forth herein, the closing of the
sale of the Hospital shall occur within fifty (50) days from the date of exercise, or the date for
Closing described in the Disqualified Offer Notice, whichever is earlier. For purposes of this
Agreement, a “Disqualified Purchaser” shall mean Spalding Regional Medical Center or any other
entity which: (i) does not directly, or through an Affiliate, provide behavioral health or
substance abuse treatment services and which proposes to use the Hospital for the provision of
goods or services wholly unrelated thereto; or (ii) an entity that operates an acute care hospital
headquartered within a fifteen (15) mile radius of the Hospital. Notwithstanding the foregoing, no
individual or entity shall be deemed to be a Disqualified Purchaser if it is purchasing assets or
securities in connection with an initial public offering of Acadia HealthCare, LLC’s securities or
in a transaction in which Acadia HealthCare, LLC otherwise is taken “public.” In any instance where
the third party purchaser changes or the terms of such third party offer to purchase changes, the
Hospital shall be afforded an additional right of first refusal in accordance with this Section
12.2.
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12.3 Closure of Hospital. If Buyer or its successor determines that it is uneconomic to
maintain the Hospital as a licensed psychiatric facility, and intends to close the Hospital at any
time following Closing, it shall provide the Seller written notice, in accordance with the notice
requirements set forth in Section 14.13 hereof, of such fact (a “Closure Notice”) along
with an appraisal of the property, plant and equipment, and thereafter the Hospital Purchaser shall
have the option described in this Section 12.3 to repurchase all of the assets of Hospital
for the Closure Purchase Price (as hereafter defined) and upon such additional terms as Buyer and
Seller may agree. Upon receipt of a Closure Notice, the Hospital Purchaser may exercise its option,
if at all, by: (i) sending Buyer, or such other party designated in the Closure Notice, a written
notice within ten (10) days following the receipt of the Closure Notice (the “Closure Option
Period”) informing Buyer of the Hospital Purchaser’s intent to exercise its option; and (ii) within
ten (10) days of so notifying Buyer, negotiating and executing definitive agreements with Buyer
agreeing to repurchase all of the assets of Hospital for the Closure Purchase Price and containing
such additional terms as Buyer and Seller may agree. If Hospital Purchaser fails to exercise its
option in the manner described above, or if Hospital Purchaser provides Buyer written notice during
the Closure Option Period of Hospital Purchaser’s intent not to exercise the option, the option
shall terminate, but only if Buyer actually closes the Hospital within the following twelve (12) month period. If the Hospital Purchaser exercises
its option as set forth herein, the closing of the sale of the Hospital shall occur within fifty
(50) days from the date of exercise, or the date for Closing described in the Closure Notice,
whichever is later. For purposes of this Agreement, the “Closure Purchase Price” shall be the fair
market value of the property, plant and equipment at the time of closure and not as a going
concern.
12.4 Regulatory Approvals. All transactions described in this Section 12 are subject
to, and conditioned upon, the parties’ ability to obtain all regulatory and governmental approvals
which are necessary at the time of the exercise of the right or option. Buyer and Seller covenant
and agree to use their good faith efforts to obtain all such approvals in a timely manner if such
approvals can not be obtained within the time frames set forth in Section 12. Buyer and
Seller agree to extend the closing date until such time as the approvals are obtained.
13. Indemnification.
13.1 Indemnification by Buyer. Buyer shall defend, indemnify and hold harmless Seller and its
Affiliates, and its and their respective officers, employees, agents or independent contractors
(collectively, “Seller Indemnified Parties”), from and against any and all losses, liabilities,
damages, costs (including, without limitation, court costs and costs of appeal) and expenses
(including, without limitation, reasonable attorneys’ fees and fees of expert consultants and
witnesses) (individually, a “Loss” and collectively, the “Losses”) that such Seller Indemnified
Party incurs as a result of, or with respect to (i) any misrepresentation or breach of warranty by
Buyer under this Agreement, (ii) any breach by Buyer of, or any failure by Buyer to perform, any
covenant or agreement of, or required to be performed by, Buyer under this Agreement, unless waived
by Seller at Closing, or (iii) any of the Assumed Liabilities, or (iv) any claim made by a third
party with respect to the operation of the Hospital on or following the Closing Date (including
without limitation, any claim that Buyer or its Affiliates violated applicable laws or billed for
services improperly, and any claim associated with Buyer’s use of the Hospital Forms).
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13.2 Indemnification by Seller. Seller shall defend, indemnify and hold harmless Buyer and its
Affiliates, and its and their respective officers, employees, agents, or independent contractors
(collectively, “Buyer Indemnified Parties”), from and against any and all Losses that such Buyer
Indemnified Party incurs as a result of, or with respect to (i) any misrepresentation or breach of
warranty by Seller under this Agreement, (ii) any breach by Seller of, or any failure by Seller to
perform, any covenant or agreement of, or required to be performed by, Seller under this Agreement,
unless waived by Buyer at Closing, or (iii) any of the Excluded Liabilities, or (iv) any claim made
by a third party with respect to the operation of the Hospital prior to the Closing Date (including
without limitation, any claim that Seller or its Affiliates violated applicable laws or billed for
services improperly).
13.3 Notice and Control of Litigation. If any claim or liability is asserted in writing by a
third party against a party entitled to indemnification under this Section 13 (the
“Indemnified Party”) which would give rise to a claim under this Section 13, the
Indemnified Party shall notify the person giving the indemnity (the “Indemnifying Party”) in
writing of the same within fifteen (15) days of receipt of such written assertion of a claim or
liability. The Indemnifying Party shall have the right to defend a claim and control the defense,
settlement, and prosecution of any litigation with counsel reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party, within ten (10) days after notice of such claim,
fails to defend such claim, the Indemnified Party shall (upon further notice to the Indemnifying
Party) have the right to undertake the defense, compromise, or settlement of such claim on behalf
of and for the account and at the risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such claim at any time prior to settlement, compromise,
or final determination thereof. Anything in this Section 13.3 notwithstanding, (i) if there
is a reasonable probability that a claim may materially and adversely affect the Indemnified Party
other than as a result of money damages or other money payments, the Indemnified Party shall have
the right, at its own cost and expense, to defend, compromise, and settle such claim, and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant to the Indemnified Party of a release from
all liability in respect of such claim. The foregoing rights and agreements shall be limited to the
extent of any requirement of any third-party insurer or indemnitor. All parties agree to cooperate
fully as necessary in the defense of such matters. Should the Indemnified Party fail to notify the
Indemnifying Party in the time required above, the indemnity with respect to the subject matter of
the required notice shall be limited to the damages that would have resulted absent the Indemnified
Party’s failure to notify the Indemnifying Party in the time required above after taking into
account such actions as could have been taken by the Indemnifying Party had it received timely
notice from the Indemnified Party.
13.4 Notice of Claim. If an Indemnified Party becomes aware of any breach of the
representations or warranties of the Indemnifying Party hereunder or any other basis for
indemnification under this Section 13, the Indemnified Party shall notify the Indemnifying
Party in writing of the same within forty-five (45) days after becoming aware of such breach or
claim, specifying in detail the circumstances and facts which give rise to a claim under this
Section 13. Should the Indemnified Party fail to notify the Indemnifying Party within the
time frame required above, the indemnity with respect to the subject matter of the required notice
shall be limited to the damages that would have nonetheless resulted absent the Indemnified Party’s
failure to notify the Indemnifying Party in the time required above after taking into account such
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actions as could have been taken by the Indemnifying Party had it received timely notice from the
Indemnified Party.
13.5 Springing Escrow.
(a) If, during the term of the Springing Escrow Agreement, which shall have a term of two
years (a copy of which is incorporated herein by reference as if fully set forth herein), Buyer
determines that a Buyer Indemnified Party has incurred any Losses under Section 13.2, Buyer
shall deliver to Seller a certificate executed by Buyer (a “Payout Certificate”), which Payout
Certificate shall: (i) state that a Buyer Indemnified Party has incurred Losses, (ii) state the
aggregate amount necessary to satisfy such Losses; (iii) specify in reasonable detail the facts
upon which such purported Losses described in the Payout Certificate are based.
(b) If Seller agrees that some or all of the items described in the Payout Certificate
constitute Losses payable to Buyer pursuant to Section 13.2, it shall pay Buyer such
amounts within five (5) business days of receiving the Payout Certificate.
(c) If Seller does not, in good faith, agree that some or all of the items described in the
Payout Certificate constitute Losses pursuant to Section 13.2, Seller shall promptly notify
Buyer and use its best efforts to resolve the matter with Buyer within ten (10) days of receiving
the Payout Certificate.
(d) If Buyer and Seller are unable to resolve the matter within ten (10) business days of
receiving the Payout Certificate, and Seller does not, in good faith, agree that some or all of the
items described in the Payout Certificate constitute Losses pursuant to Section 13.2,
Seller shall, within such time period, provide Buyer a written notice specifying in reasonable
detail (i) the amount of the liabilities that Seller believes are not Losses as to which Seller is
refusing to provide indemnification (the “Reserved Amounts”), and (ii) the nature and basis for
claiming that such items are not Losses (the “Notice of Dispute”);
(e) Contemporaneously with providing a Notice of Dispute, Seller shall pay the Reserved
Amounts in full by wire transfer of immediately available funds to the Escrow Account (as defined
in the Escrow Agreement). Notwithstanding the foregoing: (i) Seller shall not have any obligations
to pay Reserved Amounts to the Escrow Account until the Reserved Amounts (together with any other
Reserved Amounts which previously were the subject of a Notice of Dispute) in the individual or
aggregate total amount of at least Twenty Thousand Dollars ($20,000); and (ii) the Reserved Amount
payable to the Escrow Account shall not exceed an aggregate amount of One Million Five Hundred
Thousand Dollars ($1,500,000) (the “Maximum Reserved Amount”); provided, however, that such Maximum
Reserved Amount shall apply only to the amount that Seller must contribute to the Escrow Account
nor shall anything herein limit or cap the amount of Losses for which Seller may be liable under
Section 13.2 or in any way delay its obligation to promptly pay for Losses incurred by
Buyer Indemnified Parties.
(f) If Seller does not pay Buyer the amount set forth in the Payout Certificate or pay to the
Escrow Account the Reserved Amounts within ten (10) business days of its receipt of the Payout
Certificate, then:
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(i) all amounts described in the Payout Certificate shall be deemed to be definitively and finally owed to Buyer (and Seller appoints Buyer as its attorney-in-fact,
with full substitution in the premises, to confess judgment of such amount in any court of
competent jurisdiction, such right to be deemed coupled with an interest and irrevocable);
(ii) all unpaid amounts described in the Payout Certificate shall accrue interest at a rate equal to the lower of 10% per annum or the highest amount payable under
applicable law from the date due until the date paid; and
(iii) Seller shall pay any legal fees incurred by Buyer in enforcing the provisions of Section 13.5(e).
(g) The cost of maintaining the Escrow Account shall be shared equally by Seller and
Buyer.
14. Miscellaneous.
14.1 Schedules and Other Instruments. Each Schedule and Exhibit to this Agreement shall be
considered a part hereof as if set forth herein in full. From the date hereof until the Closing
Date, Seller or Buyer may update their Schedules, subject to the other party’s approval rights
described below. Any other provision herein to the contrary notwithstanding, all Schedules,
Exhibits, or other instruments provided for herein and not delivered at the time of execution of
this Agreement or which are incomplete at the time of execution of this Agreement shall be
delivered or completed within ten (10) days after the date hereof or prior to the Closing,
whichever is sooner. It shall be deemed a condition precedent to the obligations of the parties
hereto that each of the Schedules, Exhibits, and related documents, instruments, books, and records
shall meet with the approval of such parties. If a party, in its reasonable discretion, determines
that it should not consummate the transactions contemplated by this Agreement because of any new or
supplemental material information contained in a Schedule, Exhibit or other instrument that is
delivered to such party after the execution of this Agreement, then such party may terminate this
Agreement on or before the Closing by giving written notice thereof to the other party.
14.2 Additional Assurances. The provisions of this Agreement shall be self-operative and shall
not require further agreement by the parties except as may be herein specifically provided to the
contrary; provided, however, at the request of a party, the other party or parties shall execute
such additional instruments and take such additional actions as the requesting party may deem
necessary to effectuate this Agreement. In addition and from time to time after Closing, Seller
shall execute and deliver such other instruments of conveyance and transfer, and take such other
actions as Buyer reasonably may request, more effectively to convey and transfer full right, title,
and interest to, vest in, and place Buyer in legal and actual possession of, any and all of the
Hospital and the Purchased Assets. Seller shall also furnish Buyer with such information and
documents in its possession or under its control, or which Seller can execute or cause to be
executed, as will enable Buyer to prosecute any and all petitions, applications, claims, and
demands relating to or constituting a part of the Hospital or the Purchased Assets. Additionally,
each party shall cooperate and use its best efforts to have its present directors, officers, and
employees cooperate with the other party on and after Closing in furnishing information, evidence,
testimony, and other assistance in connection with any action, proceeding,
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arrangement, or dispute of any nature with respect to matters pertaining to the items subject to this Agreement.
14.3 Consented Assignment. Anything contained herein to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any claim, right, contract, license, lease,
commitment, sales order, or purchase order if an attempted assignment thereof without the consent
of the other party thereto would constitute a breach thereof or in any material way affect the
rights of Seller thereunder, unless such consent is obtained. Each of Seller and Buyer shall use
reasonable commercial efforts to obtain any third party consents to the transactions contemplated
by this Agreement. If such consent is not obtained, or if an attempted assignment would be
ineffective or would materially affect the rights thereunder of Seller so that Buyer would not in
fact receive all such rights, Seller and Buyer shall cooperate in good faith in any reasonable
arrangement designed to provide for Buyer the benefits under any such claim, right, contract,
license, lease, commitment, sales order, or purchase order, including, without limitation,
enforcement of any and all rights of Seller against the other party or parties thereto arising out
of the breach or cancellation by such other party or otherwise.
14.4 Consents, Approvals and Discretion. Except as herein expressly provided to the contrary,
whenever this Agreement requires any consent or approval to be given by a party, or whenever a
party must or may exercise discretion, the parties agree that such consent or approval shall not be
unreasonably withheld or delayed and such discretion shall be reasonably exercised.
14.5 Legal Fees and Costs. Except as set forth in Section 13.5(e), in the event a
party elects to incur legal and other expenses to enforce or interpret any provision of this
Agreement by judicial proceedings, the substantially prevailing party will be entitled to recover
such expenses, including, without limitation, reasonable attorneys’ fees and costs, expert and
accountant fees and costs, and necessary disbursements at all court levels, in addition to any
other relief to which such party shall be entitled.
14.6 Choice of Law. The parties agree that this Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia without regard to conflict of laws principles.
Any action or proceeding arising directly or indirectly in connection with, out of, or relating to
this Agreement may be commenced and maintained only in courts located in Xxxxxxx County, Georgia.
14.7 Benefit/Assignment. Subject to provisions herein to the contrary, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their respective legal
representatives, successors, and assigns. No party may assign this Agreement without the prior
written consent of the other parties, which consent shall not be unreasonably withheld; provided,
however, that Buyer may, without the prior written consent of the Seller, assign its rights and
delegate its duties hereunder to one or more Affiliates (as defined in Section 14.18).
14.8 No Brokerage. Subject to Section 3.28, Buyer and Seller each represent and
warrant to the other that it has not engaged a broker in connection with the transactions described
herein. Each party agrees to be solely liable for and obligated to satisfy and discharge all loss,
cost, damage, or expense arising out of claims for fees or commissions of brokers employed or
alleged to have been employed by such party.
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14.9 Cost of Transaction. Whether or not the transactions contemplated hereby shall be
consummated and except as set forth herein, the parties agree that, except as set forth in
Sections 9, 13.1, 13.2, 13.5 and 14.5: (i) Seller shall pay the fees, expenses, and
disbursements of Seller and its agents, representatives, accountants, and legal counsel incurred in
connection with the subject matter hereof and any amendments hereto; (ii) Buyer shall pay the fees,
expenses, and disbursements of Buyer and its agents, representatives, accountants and legal counsel
incurred in connection with the subject matter hereof and any amendments hereto; and (iii) Seller
shall pay any state or local deed, stamp or other tax associated with or assessed in connection
with the conveyance of any of the Purchased Assets.
14.10 Confidentiality. It is understood by the parties hereto that the information, documents,
and instruments delivered to Buyer by Seller and its agents and the information, documents, and
instruments delivered to Seller by Buyer and its agents are of a confidential and proprietary
nature. Each of the parties hereto agrees that both prior and subsequent to the Closing it will
maintain the confidentiality of all such confidential information, documents, or instruments
delivered to it by each of the other parties hereto or their agents in connection with the
negotiation of this Agreement or in compliance with the terms, conditions, and covenants hereof and
will only disclose such information, documents, and instruments to its duly authorized officers,
members, directors, representatives, and agents (including consultants, attorneys, and accountants
of each party) and applicable governmental authorities in connection with any required notification
or application for approval or exemption therefrom. Each of the parties hereto further agrees that
if the transactions contemplated hereby are not consummated, it will return all such documents and
instruments and all copies thereof in its possession to the other parties to this Agreement. Each
of the parties hereto recognizes that any breach of this Section 14.10 would result in
immediate and irreparable harm to the other party to this Agreement and its Affiliates and that
therefore either Seller or Buyer shall be entitled to an injunction to prohibit any such breach or
anticipated breach, without the necessity of posting a bond, cash, or otherwise, in addition to all
of its other legal and equitable remedies. Nothing in this Section 14.10, however, shall
prohibit the use of such confidential information, documents, or information for such governmental
filings as in the opinion of Seller’s counsel or Buyer’s counsel are required by law or
governmental regulations or are otherwise required to be disclosed pursuant to applicable state
law.
14.11 Public Announcements. Seller and Buyer mutually agree that no party hereto shall
release, publish, or otherwise make available to the public in any manner whatsoever any
information or announcement regarding the transactions herein contemplated without the prior
written consent of Seller and Buyer, except for information and filings reasonably necessary to be
directed to governmental agencies to fully and lawfully effect the transactions herein contemplated
or required in connection with securities and other laws. Nothing herein shall prohibit either
party from responding to questions presented by the press or media without first obtaining prior
consent of the other party hereto.
14.12 Waiver of Breach. The waiver by any party of a breach or violation of any provision of
this Agreement shall not operate as, or be construed to constitute, a waiver of any subsequent
breach of the same or any other provision hereof.
14.13 Notice. Any notice, demand, or communication required, permitted, or desired to be given
hereunder shall be deemed effectively given when personally delivered, when received
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by receipted
overnight delivery, or five (5) days after being deposited in the United States mail, with postage
prepaid thereon, certified or registered mail, return receipt requested, addressed as follows:
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Seller:
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Southern Regional Health System, Inc. |
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00 Xxxxx Xxxxxxxxx Xxxx, XX
Xxxxxxxxx, XX 00000 |
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Attention: President and Chief Executive Officer |
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With simultaneous copies to:
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Southern Regional Health System, Inc. |
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00 Xxxxx Xxxxxxxxx Xxxx, XX |
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Xxxxxxxxx, XX 00000 |
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Attention: Chief Financial Officer |
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Xxxxxxx Xxxxxx & Green, P.C. |
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Resurgens Plaza |
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000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx 0000 |
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Xxxxxxx, Xxxxxxx 00000 |
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Attention: Xxxxxxxx X. Xxxxxxx, Esq. |
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Buyer:
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Acadia Healthcare Company, Inc. |
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0000 Xxxxx Xxxxx Xxxx, Xxxxx 000 |
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Xxxxxxx, XX 00000 |
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Attention: President and CEO |
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With a simultaneous copy to:
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XxXxxxxxx Will & Xxxxx LLP |
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000 Xxxx Xxxxxx Xxxxxx |
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Xxxxx 0000 |
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Xxxxxxx, Xxxxxxxx 00000-0000 |
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Attention: Xxxx X. Xxxxxxxx, Esq. |
or to such other address, and to the attention of such other person or officer as any party
may designate, with copies thereof to the respective counsel thereof as notified by such party.
14.14 Severability. In the event any provision of this Agreement is held to be invalid,
illegal or unenforceable for any reason and in any respect, such invalidity, illegality, or
unenforceability shall in no event affect, prejudice, or disturb the validity of the remainder of
this Agreement, which shall be and remain in full force and effect, enforceable in accordance with
its terms.
14.15 Gender and Number. Whenever the context of this Agreement requires, the gender of all
words herein shall include the masculine, feminine, and neuter, and the number of all words herein
shall include the singular and plural.
14.16 Divisions and Headings. The divisions of this Agreement into sections and subsections
and the use of captions and headings in connection therewith are solely for convenience and shall
have no legal effect in construing the provisions of this Agreement.
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14.17 Survival. All of the representations and warranties made by the parties in this
Agreement or pursuant hereto in any certificate, instrument, or document shall survive the
consummation of the transactions described herein, for a period of twenty-four months from Closing.
Notwithstanding the foregoing, Seller’s representations and warranties set forth in Sections
3.1, 3.2, 3.3, 3.9, 3.12, 3.16 and 3.29 and
Buyer’s representations and warranties set forth in Sections 4.1, 4.2, 4.3, and 4.5
shall survive indefinitely. The representations and warranties set forth herein may be fully and
completely relied upon by Seller and Buyer, as the case may be, notwithstanding any investigation
heretofore or hereafter made by any of them or on behalf of any of them, and shall not be deemed
merged into any instruments or agreements delivered at the Closing or thereafter.
14.18 Affiliates. As used in this Agreement, the term “Affiliate” means, as to the entity in
question, any person or entity that directly or indirectly Controls, is Controlled by or is under
common Control with, the entity in question.
14.19 Material Adverse Effect. As used in this Agreement, the term “Material Adverse Effect”
means an event, change or circumstance which, individually or together with any other event, change
or circumstance would be reasonably expected to have a material adverse effect on the condition,
financial or otherwise, of the Purchased Assets, the business or prospects of, or the results of
operations of, the Hospital.
14.20 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT
MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED
TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS
TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING, BUT NOT LIMITED
TO, THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW OR ANY APPLICABLE
STATUTE OR REGULATIONS. EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING
ITS RIGHT TO DEMAND TRIAL BY JURY.
14.21 Accounting Date. The transactions contemplated hereby shall be effective for accounting
purposes as of 12:01 a.m. on the Closing Date, unless otherwise agreed in writing by Seller and
Buyer. The parties will use commercially reasonable efforts to cause the Closing to be effective as
of a month end.
14.22 No Inferences. Inasmuch as this Agreement is the result of negotiations between
sophisticated parties of equal bargaining power represented by counsel, no inference in favor of,
or against, either party shall be drawn from the fact that any portion of this Agreement has been
drafted by or on behalf of such party.
14.23 No Third Party Beneficiaries. The terms and provisions of this Agreement are intended
solely for the benefit of Buyer and Seller and their respective permitted successors or assigns,
and it is not the intention of the parties to confer, and this Agreement shall not confer,
third-party beneficiary rights upon any other person.
14.24 Enforcement of Agreement. The parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement was not performed in
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accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of competent jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
14.25 Force Majeure. Whenever a period of time is prescribed herein for action to be taken by
either Seller or Buyer, neither shall be liable or responsible for, and there shall be excluded
from the computation for any period of time, any delays due to strikes, riots, acts of God,
shortages of labor or materials, war, governmental laws, regulations or restrictions, or any other
cause of any kind whatsoever which is beyond the reasonable control of either Seller or Buyer, as
the case may be.
14.26 Entire Agreement/Amendment. This Agreement supersedes all previous contracts or
understandings, including any offers, letters of intent, proposals or letters of understanding, and
constitutes the entire agreement of whatsoever kind or nature existing between or among the parties
respecting the within subject matter, and no party shall be entitled to benefits other than those
specified herein. As between or among the parties, no oral statements or prior written material not
specifically incorporated herein shall be of any force and effect. The parties specifically
acknowledge that in entering into and executing this Agreement, the parties rely solely upon the
representations and agreements contained in this Agreement and no others. All prior representations
or agreements, whether written or verbal, not expressly incorporated herein are superseded, and no
changes in or additions to this Agreement shall be recognized unless and until made in writing and
signed by all parties hereto. This Agreement may be executed in two or more counterparts, each and
all of which shall be deemed an original and all of which together shall constitute but one and the
same instrument.
14.27 Insolvency and Change of Control. Notwithstanding anything herein to the contrary
contained herein, the obligations of Buyer to abide by and perform the post-Closing covenants
described in Section 12 shall terminate and no longer be in force and effect if at any time
following the Closing Seller undergoes a Change of Control (as defined below) or experiences an
Insolvency Event. For purposes of this Agreement, “Change of Control” shall mean the sale, lease or
other disposition to any entity (other than those identified on Schedule 14.27) of all or
substantially all of the consolidated assets of Seller.
14.28 Risk of Loss. Notwithstanding any other provision hereof to the contrary, the risk of
loss in respect of casualty to the Purchased Assets shall be borne by Seller prior to the time of
Closing and by Buyer thereafter.
14.29 Waiver of Bulk Sales Law Compliance. Seller hereby waives compliance by Buyer with the
requirements, if any, of Article 6 of the Uniform Commercial Code as in force in any state in which
the Purchased Assets are located and all other similar laws applicable to bulk sales and transfers.
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In Witness Whereof, the parties hereto have caused this Agreement to be executed in
multiple originals by their authorized officers, all as of the date first above written.
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Southern Regional Health System, Inc.
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By: |
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx |
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Title: |
Senior Vice President of Finance and
Chief Financial Officer |
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Acadia Riverwoods, LLC, d/b/a
RiverWoods Behavioral Health System
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By: |
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx |
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Title: |
President and Chief Executive Officer |
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Acadia Healthcare Company, LLC, the sole corporate member of Buyer, joins this Agreement for the
sole purpose of agreeing to the following:
In the event that following the Closing, Buyer fails to perform its obligations under the Agreement
in the manner set forth in the Agreement, and Acadia Healthcare Company, LLC receives prompt
written notice of such failure, Acadia Healthcare Company, LLC shall guaranty the payment,
fulfillment and performance of Buyer’s obligations under the Agreement; provided, however, that in
no instance shall Acadia Healthcare Company, LLC’s obligations under the Agreement be greater than
Buyer’s obligations under the Agreement.
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Acadia Healthcare Company, LLC
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By: |
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx |
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Title: |
President and Chief Executive Officer |
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