EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
by and among
HCA-THE HEALTHCARE COMPANY,
VH HOLDINGS, INC.,
and
FIRST HEALTH GROUP CORP.
Dated as of May 18, 2001
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS 6
ARTICLE II PURCHASE AND SALE; CLOSING 14
2.1 Sale of the Shares 14
2.2 Excluded Assets and Liabilities; Certain
Included Liabilities 15
2.3 Purchase Price 15
2.4 Certain Employee Bonus Arrangements 16
2.5 Closing 16
2.6 Closing Deliveries 17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS 18
3.1 Organization of HCA and Holdings 18
3.2 Organization and Capitalization of CCN and PW 18
3.3 Organization and Capitalization of the CCN
Subsidiaries 19
3.4 Organization and Capitalization of the PW
Subsidiaries 20
3.5 Corporate Authorization 21
3.6 No Conflicting Agreements; Consents 22
3.7 Financial Statements 23
3.8 Absence of Undisclosed Liabilities 23
3.9 Accounts Receivable 23
3.10 Absence of Certain Changes 23
3.11 Legal Proceedings, etc. 24
3.12 Certain Contracts 25
3.13 Title to Property 26
3.14 Employees; Labor Matters; Employee Benefit
Plans; ERISA 26
3.15 Bank Accounts 29
3.16 Taxes 29
3.17 Insurance 30
3.18 Intellectual Property 30
3.19 Compliance with Laws 31
3.20 Environmental Conditions 31
3.21 Relationships with Related Parties 31
3.22 Books and Records 32
3.23 No Material Adverse Change 32
3.24 Non-Directed Use of CCN Network 32
3.25 Certain Percentage Discounts 33
3.26 Brokers 33
3.25 Brokers 33
3.27 Company Providers 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 34
4.1 Organization 34
4.2 Corporate Authorization 34
4.3 No Conflicting Agreements; Consents 35
4.4 Legal Proceedings, etc. 35
4.5 Brokers 35
4.6 Investment Representations 35
ARTICLE V COVENANTS OF SELLERS 36
5.1 Regulatory Approvals 36
5.2 Conduct Prior to the Closing 36
5.3 Employee Matters 37
5.4 Investigation by Purchaser 38
5.5 Financial Statements and Reports 38
5.6 Closing Conditions 39
5.7 Transfer of Assets 39
5.8 Encumbrances 39
5.9 Condition of Assets 39
5.10 Consultative Process 39
5.11 Intercompany Accounts 39
5.12 Exclusivity 40
5.13 Resignations 40
5.14 Provider Agreement Delivery 40
ARTICLE VI COVENANTS OF PURCHASER; CERTAIN ADDITIONAL
COVENANTS OF THE PARTIES 41
6.1 Confidentiality 41
6.2 Regulatory Approvals 41
6.3 Books and Records 41
6.4 Closing Conditions 42
6.5 Employee Matters 42
6.6 WARN Act Compliance 42
6.7 Tax Matters 42
6.8 Tax Indemnification 46
6.9 Management Incentive Plan 46
6.10 Severance Policy 47
6.11 Collection of Accounts Receivable 47
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASER 48
7.1 Representations and Warranties 48
7.2 Compliance with Agreement 49
7.3 Closing Certificates 49
7.4 Secretary's Certificates 49
7.5 Opinion of Counsel 49
7.6 Consents, Authorizations, Etc. 49
7.7 No Action or Proceeding 49
7.8 Certificates of Incorporation; Bylaws 50
7.9 Resignation of Boards of Directors and Officers 50
7.10 Good Standing Certificates 50
7.11 Waiver of Conditions 50
7.12 Affiliation Agreement 50
7.13 Stock Options 50
7.14 Tax Sharing Agreements 50
7.15 Contract Delivery 50
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLERS 51
8.1 Representations and Warranties 51
8.2 Compliance with Agreement 51
8.3 Closing Certificates 51
8.4 Secretary's Certificate 51
8.5 Opinion of Counsel 51
8.6 Consent, Authorizations, Etc. 51
8.7 No Action or Proceeding 52
8.8 Good Standing Certificate 52
8.9 Certificate of Incorporation; Bylaws 52
8.10 Waiver of Conditions 52
8.11 Affiliation Agreement 52
ARTICLE IX INDEMNIFICATION 52
9.1 Indemnification by Sellers 52
9.2 Indemnification by Purchaser 53
9.3 Claims Procedures 53
9.4 Limitations on Claims 54
9.5 Insured Losses 55
9.6 Characterization of Indemnification Payments 55
ARTICLE X TERMINATION 55
10.1 Termination Events 55
10.2 Effect of Termination 56
ARTICLE XI NOTICES 56
11.1 Notices 56
ARTICLE XII MISCELLANEOUS 58
12.1 Fees and Expenses 58
12.2 Entire Agreement 58
12.3 Waiver 59
12.4 Amendment 59
12.5 Counterparts; Facsimile Signatures 59
12.6 No Third Party Beneficiary 59
12.7 Governing Law, Construction 59
12.8 Binding Effect 59
12.9 No Assignment 59
12.10 Headings, Gender, Etc. 60
12.11 Public Announcement 60
12.12 Access to Information 60
12.13 Severability; Invalid Provisions 60
12.14 Cooperation 60
12.15 Further Assurance Clause 61
12.16 Compliance with Obligations 61
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as
of May 18, 2001, by and among HCA - THE HEALTHCARE COMPANY, a Delaware
corporation ("HCA"), VH HOLDINGS, INC., a Nevada corporation ("Holdings"),
and FIRST HEALTH GROUP CORP., a Delaware corporation ("Purchaser"). HCA and
Holdings are hereinafter referred to, together, as the "Sellers".
R E C I T A L S:
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WHEREAS, Holdings is a wholly-owned subsidiary of HCA; and
WHEREAS, Holdings owns 100% of the issued and outstanding shares (as
further defined in Section 3.2(a)(ii), the "CCN Shares") of the capital
stock of CCN Managed Care, Inc., a Delaware corporation ("CCN"); and
WHEREAS, Holdings owns 100% of the issued and outstanding shares (as
further defined in Section 3.2(b)(ii), the "PW Shares") of the capital stock
of Preferred Works, Inc., a Delaware corporation ("PW"); and
WHEREAS, Holdings wishes to sell the CCN Shares and the PW Shares to
Purchaser, and Purchaser wishes to purchase the CCN Shares and the PW Shares
from Holdings on the terms, subject to the conditions and for the
consideration set forth in this Agreement; and
WHEREAS, HCA will derive material benefits from the consummation of the
transactions contemplated hereby and wishes to enter into this Agreement as
an inducement to the other parties to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and other agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following defined terms shall have the
meanings indicated below and, where appropriate, shall include the singular
and plural of the term defined:
"Acquired Entities" shall mean CCN, the CCN Subsidiaries, PW and the PW
Subsidiaries.
"Adjusted Collection Short-Fall Payment" means an amount equal to the
product of the Collection Short-Fall and a fraction with a numerator equal
to the amount of the Assigned Accounts and a denominator equal to the amount
of the Closing Date Receivables which have not been collected on the first
anniversary of the Closing Date.
"Adjusted Collection Short-Fall Schedule" shall have the meaning
ascribed to it in Section 6.11(a).
"Adjustment Schedule" shall have the meaning ascribed to it in Section
2.3(c).
"Affiliate" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified; provided, however, "Affiliate" shall not
include officers, directors or shareholders of HCA.
"Affiliation Agreement" means the PPO Agreement, substantially in the
form of Exhibit 7.12 hereto, by and between HCA and Purchaser, pursuant to
which HCA and Purchaser will agree upon the terms and conditions under which
healthcare providers, physicians and other healthcare facilities affiliated
with HCA may participate as providers in healthcare provider networks and
other health products operated by Purchaser or the Acquired Entities.
"Agreement" shall mean this Stock Purchase Agreement, including the
exhibits and schedules attached hereto.
"Applicable Rate" shall have the meaning ascribed to it in Section
2.3(e).
"Assigned Accounts" shall have the meaning ascribed to it in Section
6.11(e).
"Balance Sheet Date" shall mean February 28, 2001.
"Base Purchase Price" shall mean $195,000,000.
"Books and Records" shall mean all existing accounting, business,
marketing, corporate, and other files, documents, instruments, papers, books
and records, including without limitation, financial statements, budgets,
ledgers, journals, deeds, titles, policies, manuals, minute books, stock
certificates and books, stock transfer ledgers, contracts, franchises,
permits, supplier lists, reports, computer files and data, retrieval
programs and operating data or plans.
"Business Day" shall mean a day other than Saturday, Sunday, or any day
on which the principal commercial banks located in the State of Tennessee or
the State of New York are authorized or obligated to close under the Laws of
such states.
"Bylaws" shall mean the bylaws of the relevant corporation, as amended
to the relevant date.
"CCN" shall mean CCN Managed Care, Inc., a Delaware corporation.
"CCN Shares" shall have the meaning ascribed to it in Section
3.2(a)(ii).
"CCN Subsidiaries" shall have the meaning ascribed to it in Section
3.3(a).
"CCN Subsidiary Shares" shall have the meaning ascribed to it in
Section 3.3(d).
"Certificate of Incorporation" shall mean the certificate of
incorporation, articles of incorporation, charter or similar constituent
document of the relevant corporation, as amended to the relevant date.
"Claim" shall have the meaning ascribed to it in Section 9.3.
"Closing" shall mean the consummation of the transactions contemplated
by this Agreement as provided in Article II.
"Closing Date" shall have the meaning ascribed to it in Section 2.5.
"Closing Date Balance Sheet" shall mean the unaudited combined balance
sheet of the Company as of the Closing Date prepared in accordance with
Section 2.3.
"Closing Date Receivables" means the accounts receivable set forth in
the final Closing Date Balance Sheet other than Transferred Accounts
Receivable.
"Closing Date Receivables Amount" means (a) the lesser of (i) the
amount of the receivables included in the final Closing Date Balance Sheet
net of the reserve for doubtful accounts included in the final Closing Date
Balance Sheet and (ii) $21,139,000, minus (b) the amount of the Transferred
Accounts Receivable net of the Transferred Reserve.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Collection Short-Fall" means the difference between (a) the Closing
Date Receivables Amount and (b) Collections.
"Collections" means the amount collected in respect of the Closing Date
Receivables during the twelve month period following the Closing Date. All
amounts collected that are not attributable to a specific invoice shall be
applied on a first incurred, first paid basis.
"Company" shall mean the Acquired Entities taken as a whole.
"Company Financial Statements" shall have the meaning ascribed to it in
Section 3.7.
"Company Permits" shall have the meaning ascribed to it in Section
3.19.
"Company Plans" shall mean each "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) and each stock purchase, stock option,
other stock-based plan, severance, change-in-control, fringe benefit,
retention bonus, bonus, incentive, deferred compensation, welfare and other
employee benefit plan, employment (including severance and change in
control) agreement, program, policy or other arrangement, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transactions contemplated by this
Agreement or otherwise), whether formal or informal, oral or written, under
which any employee or former employee or director (or dependent or
beneficiary thereof) of any Acquired Entity has any present or future right
to benefits or under which any Acquired Entity has any present or future
liability.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement, dated as of December 13, 2000, between HCA and Purchaser.
"Contract" shall mean any agreement, lease, sublease, license,
sublicense, promissory note, evidence of indebtedness, or other contract to
which any of the Acquired Entities is a party or by which assets of any of
the Acquired Entities are bound.
"Contract Delivery Amount" shall mean (a) zero if all Hospital Provider
Agreements with respect to all Hospitals are indexed, filed and made
available for inspection at CCN's San Diego corporate offices on or before
the Closing Date in accordance with Section 5.14(a) or if Hospital Provider
Agreements with respect to less than 100 Hospitals are not so indexed, filed
and available, (b) $2,000,000 if Hospital Provider Agreements with respect
to between 100 and 149 (inclusive) Hospitals are not so indexed, filed and
made available for inspection at CCN's San Diego corporate offices on or
before the Closing Date in accordance with Section 5.14(a), and (c)
$3,000,000 if Hospital Provider Agreements with respect to 150 or more
Hospitals are not so indexed, filed and made available for inspection at
CCN's San Diego corporate offices on or before the Closing Date in
accordance with Section 5.14(a).
"Controlled Group Member" shall mean any entity (whether or not
incorporated) other than the Sellers and the Acquired entities that,
together with the Sellers and Acquired Entities, is considered under common
control and treated as one employer under Section 414(b), (c), (m) or (o) of
the Code.
"Controlled Group Plan" shall mean any "employee benefit plan" (within
the meaning of Section 3(3) of ERISA) that is sponsored or maintained by a
Controlled Group Member.
"Court Order" shall mean any judgment, order, award or decree of any
federal, state, local or other court or judicial or quasi-judicial tribunal
and any award in any binding arbitration proceeding.
"Damages" shall mean any and all losses, damages, claims, costs, fines,
fees, penalties, interest obligations and deficiencies (including, without
limitation, reasonable attorneys fees and other expenses of litigation).
"Destruction Notice" shall have the meaning ascribed to it in Section
6.3.
"Effective Time" shall have the meaning ascribed to it in Section 2.5.
"Environmental Claim" shall mean any claim, action, cause of action,
investigation or written notice by any person or entity alleging potential
liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (a) the presence, release or threat of
release into the environment, of Hazardous Substances at any location which
is or has been owned, leased or operated, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean the federal, state, regional, county or
local laws, regulations, ordinances, rules and policies and common law in
effect on the date hereof and as of the Effective Time relating to the use,
refinement, handling, treatment, removal, storage, production, manufacture,
transportation or disposal, emission, discharge, release or threatened
release of Hazardous Substances, or otherwise relating to protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), as the same
may be amended or modified to the date hereof and as of the Effective Time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" shall have the meaning ascribed to it in Section 2.2.
"Excluded Liabilities" shall have the meaning ascribed to it in Section
2.2.
"GAAP" shall mean accounting principles generally accepted in the
United States of America as consistently applied by the Acquired Entities
with respect to the Company Financial Statements.
"Governmental Authority" shall mean any national, state or local
government, any political subdivision thereof or any other governmental,
quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, department, bureau, commission or entity, or any
arbitrator with authority to bind a party at law.
"Hazardous Substances" shall mean any toxic or hazardous waste,
pollutants or substances, including, without limitations, friable asbestos,
polychlorinated biphenyls, petroleum products, byproducts, or other
hydrocarbon substances, substances defined or listed as a "hazardous
substance," "toxic substance," "toxic pollutant" or similarly identified
substance or mixture, in or pursuant to any Environmental Law.
"HCA" shall mean HCA - The Healthcare Company, a Delaware corporation.
"HCA Affiliated Group" shall mean the affiliated group of corporations
(as defined in Section 1504(a) of the Code) of which HCA is the parent.
"Holdings" shall mean VH Holdings, Inc., a Nevada corporation.
"Hospital" has the meaning ascribed to it in Section 3.27(a).
"Hospital Provider Agreements" has the meaning ascribed to it in
Section 3.27(a).
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnifying Party" shall have the meaning ascribed to it in Section
9.3.
"Indemnitee" shall have the meaning ascribed to it in Section 9.3.
"Intellectual Property" shall have the meaning ascribed to it in
Section 3.18.
"Knowledge of Purchaser" (and any similar expression) shall mean, as to
a particular matter, the actual knowledge of any of the following officers
of Purchaser following reasonable inquiry: President, Chief Financial
Officer, Executive Vice President-Networks, and General Counsel.
"Knowledge of Sellers" (and any similar expression, including, without
limitation, the expression "of which Sellers have Knowledge") shall mean, as
to a particular matter, the actual knowledge, following reasonable inquiry,
of any of the directors of CCN and PW or of any of the following officers of
CCN and PW: Xxxxxxx Xxxxxxxx, Chairman & Chief Executive Officer; Xxx
Xxxxxxx, Senior Vice President, Operations; Xxxx Xxxxxxxxx, Chief Financial
Officer; Xxxxxx Xxxxxxxx, Senior Vice President, Strategic Planning &
Development; Xxxx Xxxxxxxxxx, Chief Sales & Marketing Officer; Xxxxx Xxxxxx,
M.D., Chief Medical Officer; Xxx Xxxx, Chief Information Officer; Xxxx
Xxxxxxxxx, Vice President, Tactical Marketing; and Xxx Xxxxxxx, Vice
President, Client Services; and the following officers and employees of HCA:
A. Xxxxx Xxxxx, Jr., Senior Vice President - Operations Administration;
Xxxxxxx X. Xxxxx, Vice President - Development; Xxxx Xxxxxxxxx, Vice
President - Managed Care - Western Group; Xxxx Xxxx, Vice President -
Business Development and Managed Care - Eastern Group; and Xxxxx X. Xxxx,
Legal Counsel - Development.
"Laws" shall mean all statutes, laws, ordinances, regulations and other
pronouncements of any Governmental Authority having the effect of law of the
United States, any state or commonwealth of the United States, or any city,
county, municipality, department, commission, board, bureau, agency or
instrumentality thereof.
"Liability Threshold" shall have the meaning ascribed to it in Section
9.4(a).
"Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge or other encumbrance of
any kind, or any conditional sale contract, title retention contract, or
other contract to give or to refrain from giving any of the foregoing.
"Management Severance Obligations" shall have the meaning ascribed to
it in Section 12.16.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, business properties, financial condition or operations of the
Company, taken as a whole.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 3(37) or Section 4001(a)(3) of ERISA.
"Net Working Capital Adjustment Amount" shall mean the amount,
expressed as a positive or negative number (as applicable), equal to the
difference between the net working capital (current assets minus current
liabilities) of the Company immediately after the Effective Time, as set
forth in the Closing Balance Sheet, and as of the Balance Sheet Date, as set
forth on the Reference Balance Sheet; provided, however, that the amounts
reflected on the Closing Balance Sheet or the Reference Date Balance Sheet,
as applicable, with respect to the following matters shall be eliminated
from the calculation of net working capital as of the applicable date: (a)
the Excluded Assets, (b) the Excluded Liabilities, (c) all Taxes for which
Sellers are indemnifying Purchaser in accordance with Section 6.8 hereof,
(d) all Taxes for which either Seller is financially responsible in
accordance with Section 6.7 hereof, (e) all intercompany account balances
that are paid, cancelled or eliminated in accordance with Section 5.11
hereof, and (f) any severance or similar arrangement that must be reflected
on the Closing Balance Sheet as a result of the consummation of the
transactions hereunder or Purchaser's termination of any of the Company's
employees' employment; and provided further, however, that (x) the assets
reflected as "Other Assets" on the Closing Balance Sheet shall be treated as
current assets for purposes of calculating the Net Working Capital Amount;
and (y) the net accounts receivable shown on the Closing Balance Sheet shall
not exceed $21,139,000. The determination of the Company's net working
capital, as adjusted as contemplated by this definition, as of the Balance
Sheet Date based upon the Reference Balance Sheet is set forth in Exhibit
2.3 hereto.
"Non-Hospital Provider" has the meaning ascribed to it in Section
3.27(b).
"Non-Hospital Provider Agreements" has the meaning ascribed to it in
Section 3.27(b).
"Other Tax" shall mean any tax, however denominated, including any
interest, penalties or other additions to tax that may become payable in
respect thereof, imposed by any Governmental Authority, which tax is not
included within the definition of "Tax", including, but not limited to,
sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross
receipt taxes, business license taxes, occupation taxes and transfer taxes,
and other governmental charges, and other obligations of the same or a
similar nature to any of the foregoing.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permits" shall mean all licenses, permits, franchises, rights,
registrations, approvals, authorizations, consents, waivers, exemptions,
releases, variances or orders of, or filings with, or otherwise issued by,
any Governmental Authority.
"Permitted Lien" shall mean (a) any Lien approved in writing by
Purchaser, (b) any Lien for taxes or other governmental charges or
assessments which are not delinquent, (c) any Lien of any landlord, carrier,
warehouseman, mechanic or materialman and any like Lien arising in the
ordinary course of business for sums that are not delinquent, and (d) any
Lien of the lessor or other financing source on assets leased under a
capitalized lease obligation.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, union,
association, court, agency, government, tribunal, instrumentality,
commission, arbitrator, board, bureau or other entity or authority.
"Pre-Closing Period" shall have the meaning ascribed to it in
Section 6.7(b)(i).
"Preliminary Payment Amount" shall have the meaning ascribed to it in
Section 2.3(b).
"Problem Accounts" shall have the meaning ascribed to it in Section
6.11(e).
"Proceeding" shall have the meaning ascribed to it in Section 6.7(e).
"Purchase Price" shall have the meaning ascribed to it in Section
2.3(a).
"Purchaser" shall mean First Health Group Corp., a Delaware
corporation.
"Purchaser Affiliated Group" shall mean the affiliated group of
corporations (as defined in Section 1504(a) of the Code) of which Purchaser
is a member.
"Purchaser Indemnitee" shall have the meaning ascribed to it in Section
9.1.
"Purchaser Tax Act" shall have the meaning ascribed to it in Section
6.8(a).
"PW" shall mean Preferred Works, Inc., a Delaware corporation.
"PW Shares" shall have the meaning ascribed to it in Section
3.2(b)(ii).
"PW Subsidiaries" shall have the meaning ascribed to it in Section
3.4(a).
"PW Subsidiary Shares" shall have the meaning ascribed to it in
Section 3.4(d).
"Real Property" shall have the meaning ascribed to it in Section
3.20(b).
"Reference Balance Sheet" shall mean the unaudited combined balance
sheet of the Company as of the Balance Sheet Date which is attached hereto
at Schedule 3.7.
"Returns" shall mean all reports, estimates, declarations, schedules,
disclosures, information statements, returns and other documentation
required to be filed in connection with, any Taxes.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Selected Accounting Firm" shall mean Xxxxxxxx or another accounting
firm of recognized national standing acceptable to Purchaser and HCA.
"Seller Indemnitee" shall have the meaning ascribed to it in Section
9.2.
"Sellers" shall mean, together, HCA and Holdings.
"Shares" shall mean the CCN Shares and the PW Shares.
"Straddle Period" shall have the meaning ascribed to it in Section
6.7(b)(ii).
"Tax" or "Taxes" shall mean all federal, state and local income or
profits taxes, taxes measured by income, profits or earned surplus, payroll
and employee withholding taxes, unemployment taxes and social security
taxes, including any interest, penalties or other additions to tax that may
become payable in respect thereof, imposed by any Governmental Authority.
"Tax Statement" shall have the meaning ascribed to it in Section
6.7(b)(ii).
"Transfer Accounts" shall mean the checking accounts, bank accounts and
similar arrangements maintained at any financial institution and used by the
Company in connection with HCA's cash management program; the "Transfer
Accounts" shall mean those accounts and arrangements into which the Company
deposits funds to be swept by the HCA cash management system and not the
accounts into which the HCA cash management system deposits funds to be used
by the Company.
"Transferred Accounts Receivable" means the receivables included in the
final Closing Date Balance Sheet generated in a line of business which is
disposed of during the twelve months following the Closing (the amount of
which will be calculated in accordance with the Company's monthly
receivables analysis unless otherwise mutually agreed prior to the Closing
Date).
"Transferred Reserve" means the product of the amount of the reserve
for doubtful accounts included in the final Closing Balance Sheet and a
fraction with a numerator equal to the amount of the Transferred Accounts
Receivable and a denominator equal to the amount of receivables included in
the final Closing Date Balance Sheet.
"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act, 29 U.S.C. S2101-2109.
ARTICLE II
PURCHASE AND SALE; CLOSING
2.1 Sale of the Shares. On and subject to the terms and conditions set
forth in this Agreement, at the Closing, Holdings shall sell, assign,
transfer and deliver to Purchaser, free and clear of all Liens, and
Purchaser shall purchase from Holdings, the CCN Shares and the PW Shares. At
the Closing, title to the Shares shall pass to Purchaser, as record and
beneficial owner. Purchaser shall then be entitled to all rights, including,
without limitation, voting rights, as the sole owner of such Shares, free
and clear of all Liens.
2.2 Excluded Assets and Liabilities; Certain Included Liabilities.
Notwithstanding anything, express or implied, to the contrary contained in
Section 2.1 or elsewhere herein, the following assets and liabilities of the
Acquired Entities are to be excluded from the assets and liabilities of the
Acquired Entities being acquired by or transferred to Purchaser at Closing
through Purchaser's acquisition of the Shares: (a) all Tax accounts of the
Acquired Entities with any Governmental Authority; and (b) all Transfer
Accounts. With the exception of the above-described assets (the "Excluded
Assets") and the excluded liabilities described on Schedule 2.2(i) (the
"Excluded Liabilities"), the Acquired Entities shall retain all of the
assets and liabilities of the Acquired Entities, including, without
limitation, their respective trade payables, operating liabilities,
guarantees, accrued expenses, contingent liabilities and other obligations.
Prior to the Closing, Sellers shall cause the Excluded Assets to be
transferred to Holdings or another Person designated by Holdings by means of
dividend or otherwise.
2.3 Purchase Price.
(a) The consideration to be paid by Purchaser for the Shares (the
"Purchase Price") shall be an amount equal to the Base Purchase Price, plus
(or minus) (i) the Net Working Capital Adjustment Amount, minus (ii) the
Contract Delivery Amount (if any). Prior to the Closing Date, the Parties
shall agree upon the allocation of the Purchase Price between the CCN Shares
and the PW Shares.
(b) For purposes of determining the amount of cash to be
delivered at the Closing in accordance with Section 2.6(b), a preliminary
determination of the Purchase Price (the "Preliminary Payment Amount") shall
be made on or prior to the Closing Date using the Company's then most recent
available month-end balance sheet to calculate the preliminary Net Working
Capital Adjustment Amount. Sellers shall prepare such preliminary
determination and shall deliver to Purchaser a copy of such balance sheet
and a schedule showing the calculation of such preliminary Net Working
Capital Adjustment Amount and the Preliminary Payment Amount not less than
two Business Days prior to the Closing Date.
(c) Within 60 days after the Closing, HCA shall deliver to
Purchaser the Closing Date Balance Sheet together with a schedule (the
"Adjustment Schedule") setting forth Sellers' determination of the Net
Working Capital Adjustment Amount and the Purchase Price based upon the
Closing Balance Sheet. After the Closing, Purchaser shall (i) permit
representatives of Sellers, during normal business hours, to have reasonable
access to, and to examine and make copies of, all books and records of the
Company which are in the possession of Purchaser or the Company for purposes
of preparing the Closing Date Balance Sheet and the Adjustment Schedule, and
(ii) cause the employees of the Company to cooperate with and assist HCA in
the preparation of the Closing Date Balance Sheet and the Adjustment
Schedule. Sellers shall prepare the Closing Date Balance Sheet in
accordance with GAAP and consistently with the Reference Balance Sheet
except as provided in Schedule 5.2.
(d) Purchaser may object to any of the information or
computations contained in the Closing Date Balance Sheet or the Adjustment
Schedule which could affect the Purchase Price. Any such objection must be
made by delivery of a written statement of objections (stating the basis of
the objections with reasonable specificity) to HCA within 30 days following
delivery of the Closing Date Balance Sheet and the Adjustment Schedule to
Purchaser. To the extent that Purchaser does not so object within such 30
day period, the Closing Date Balance Sheet and the Adjustment Schedule, as
delivered to Purchaser, shall be considered final and binding upon the
parties. In the event that Purchaser and HCA are unable to resolve a dispute
or disagreement set forth in a written objection pursuant to this Section
2.3(d) within 30 days of HCA's receipt of such objection, either party may
elect, by written notice to the other party, to have all such disputes or
disagreements resolved by the Selected Accounting Firm. The Selected
Accounting Firm shall determine the Net Working Capital Adjustment Amount
and calculate the Purchase Price, which determination of the Selected
Accounting Firm shall be final and binding upon the parties. The Selected
Accounting Firm shall be instructed to use every reasonable effort to
perform its services within 15 days after submission of the Closing Date
Balance Sheet and the Adjustment Schedule and Purchaser's written objections
to it and, in any case, as soon as practicable after such submission. The
parties will cooperate fully with the Selected Accounting Firm, and shall
cause the Company to cooperate fully with the Selected Accounting Firm, in
connection with its determination of the Net Working Capital Adjustment
Amount and calculation of the Purchase Price. The costs and expenses for the
services of the Selected Accounting Firm shall be borne equally by Purchaser
and HCA.
(e) Within ten days after the Purchase Price shall have been
agreed upon or otherwise finally determined pursuant to Section 2.3(d), HCA
(on behalf of the Sellers) or Purchaser, as appropriate, shall pay the other
party cash (by wire transfer of immediately available funds) in the amount
of the difference between the Purchase Price and the Preliminary Payment
Amount, together with interest thereon for a period from (and including) the
Closing Date to (but excluding) the date of payment, at the prime rate as
quoted in the Money Rates section of The Wall Street Journal from time to
time (the "Applicable Rate").
2.4 Certain Employee Bonus Arrangements. Purchaser agrees to reimburse
Sellers for one half of the amount that Sellers are required to pay to the
CCN employees identified in Exhibit 2.4 hereto pursuant to the Retention
Bonus Agreements identified in such Exhibit 2.4 on the dates that Sellers
are required to make such payments in accordance with such Retention Bonus
Agreements.
2.5 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxx Xxxxxxx
Xxxxxx & Xxxxx, a Professional Limited Liability Company, 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx, or such other place as shall be mutually
agreed upon in writing by the parties hereto, at 10:00 a.m., Central Time,
on July 2, 2001, or if the conditions set forth in Articles VII and VIII
have not been satisfied as of July 2, 2001, on the third Business Day
following the satisfaction (or due waiver) of the conditions set forth in
Articles VII and VIII or such other date as may be mutually agreed upon by
the parties hereto, but in no event later than the later to occur of (i) the
third Business Day following the satisfaction (or due waiver) of such
conditions, and (ii) first Business Day of the calendar month following the
month in which such satisfaction or waiver occurs. The date on which the
Closing takes place is referred to herein as the "Closing Date." The Closing
shall be deemed to occur (i) at 12:01 a.m., Central Time, on July 1, 2001 if
the Closing occurs on or before July 3, 2001 or (ii) at 12:01 a.m., Central
Time, on the Closing Date if the Closing occurs after July 3, 2001, or (iii)
at such other time as shall be mutually agreed upon in writing by the
parties hereto. The time at which the transactions contemplated hereby are
deemed to become effective is referred to herein as the "Effective Time."
2.6 Closing Deliveries. At the Closing, the following events will
occur:
(a) Stock Certificates. Holdings will deliver to Purchaser
certificates representing the CCN Shares, the CCN Subsidiary Shares, the PW
Shares and the PW Subsidiary Shares, such certificates representing the
Shares to be duly endorsed or accompanied by duly executed blank stock
powers, as appropriate.
(b) Payment for Shares. At the Closing, Purchaser shall deliver
the Preliminary Payment Amount in immediately available funds by electronic
wire transfer to an account designated by Sellers.
(c) Interest on Preliminary Payment Amount. If the Effective
Time of the transaction is more than 24 hours before the time at which
Purchaser delivers payment of the Preliminary Payment Amount, Purchaser
shall also pay to Sellers interest on the Preliminary Payment Amount at the
Applicable Rate for each day between the Effective Time and the time of such
funding. If the Effective Time of the transaction is more than 24 hours
after the time at which Purchaser delivers payment of the Preliminary
Payment Amount, Sellers shall pay to Purchaser interest on the Preliminary
Payment Amount at the Applicable Rate for each day between the Effective
Time and the time of such funding. For purposes of this Section 2.6(c),
each full 24 hour period between the Effective Time and the finding of the
Preliminary Payment Amount shall be a "day." All interest payable pursuant
to this Section 2.6(c) shall be due and payable at Closing.
(d) Legal Opinions.
(i) Sellers shall cause an original opinion of Xxxxxx
Xxxxxxx Xxxxxx & Xxxxx, a Professional Limited Liability Company, counsel
for Sellers, to be delivered to Purchaser as contemplated by Section 7.5;
and
(ii) Purchaser shall cause an original opinion of Xxxxxx &
Xxxxxxx, counsel for Purchaser, to be delivered to Sellers as contemplated
by Section 8.5.
(e) Closing Certificates and Documents.
(i) Sellers shall deliver the other certificates and
documents required to be delivered by Sellers pursuant to Article VII; and
(ii) Purchaser shall deliver the other certificates and
documents required to be delivered by Purchaser pursuant to Article VIII.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Purchaser as
follows:
3.1 Organization of HCA and Holdings.
(a) HCA is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware.
(b) Holdings is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Nevada. Holdings is a
wholly-owned subsidiary of HCA.
3.2 Organization and Capitalization of CCN and PW.
(a) CCN.
(i) CCN (A) is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, (B)
has the corporate power and authority to own or lease and to operate its
assets and to conduct its business as currently conducted, and (C) is duly
qualified to transact business as a foreign corporation and is in good
standing in each of the jurisdictions listed in Schedule 3.2(a)(i) and is
not required to be so qualified by the requirement of any Laws in any other
jurisdiction except where failure to be so qualified would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(ii) The authorized capital stock of CCN consists of
9,217,500 shares of common stock, $0.0001 par value per share, of which
8,017,500 shares (the "CCN Shares") are issued and outstanding. The CCN
Shares have been duly authorized and validly issued and are fully paid and
non-assessable.
(iii) (A) Holdings has good and marketable title to, and
owns, the CCN Shares, beneficially and of record, (B) the CCN Shares are
free and clear of all Liens of any nature whatsoever, (C) Holdings has full
voting power over the CCN Shares, subject to no proxy, shareholders'
agreement, voting trust or other agreement relating to the voting of any of
the CCN Shares, and (D) other than this Agreement, there is no agreement
between HCA or any of its subsidiaries (including Holdings) and any other
Person with respect to the disposition of the CCN Shares or otherwise
relating to the CCN Shares.
(iv) Except as set forth in Schedule 3.2(a)(iv), (A) no
Person has any preemptive right to purchase any stock or other securities of
CCN, (B) there are no outstanding securities or other instruments of CCN
which are convertible into or exchangeable for any shares of its capital
stock, (C) other than the CCN Shares, there are no outstanding securities or
other instruments of CCN giving the owner or holder thereof the right to
vote on any matters on which CCN's shareholders may vote, (D) there are no
contracts, arrangements, commitments or restrictions relating to the
issuance, sale, transfer, purchase or obtaining of capital stock or other
securities or instruments of CCN, and (E) there is no existing option,
warrant, right, call or commitment of any character granted or issued by CCN
governing the issuance of shares of its capital stock.
(b) PW.
(i) PW (A) is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware, (B) has the
corporate power and authority to own or lease and to operate its assets and
to conduct its business as currently conducted, and (C) is duly qualified to
transact business as a foreign corporation and is in good standing in each
of the jurisdictions listed in Schedule 3.2(b) and is not required to be so
qualified by the requirement of any Laws in any other jurisdiction except
where failure to be so qualified would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(ii) The authorized capital stock of PW consists of 1,000
shares of common stock, $0.01 par value per share, of which 1,000 shares
(the "PW Shares") are issued and outstanding. The PW Shares have been duly
authorized and validly issued and are fully paid and non-assessable.
(iii) (A) Holdings has good and marketable title to, and
owns, the PW Shares, beneficially and of record, (B) the PW Shares are free
and clear of all Liens of any nature whatsoever, (C) Holdings has full
voting power over the PW Shares, subject to no proxy, shareholders'
agreement, voting trust or other agreement relating to the voting of any of
the PW Shares, and (D) other than this Agreement, there is no agreement
between HCA or any of its subsidiaries (including Holdings) and any other
Person with respect to the disposition of the PW Shares or otherwise
relating to the PW Shares.
(iv) (A) no Person has any preemptive right to purchase any
stock or other securities of PW, (B) there are no outstanding securities or
other instruments of PW which are convertible into or exchangeable for any
shares of its capital stock, (C) other than the PW Shares, there are no
outstanding securities or other instruments of PW giving the owner or holder
thereof the right to vote on any matters on which PW's shareholders may
vote, (D) there are no contracts, arrangements, commitments or restrictions
relating to the issuance, sale, transfer, purchase or obtaining of capital
stock or other securities or instruments of PW, and (E) there is no existing
option, warrant, right, call or commitment of any character granted or
issued by PW governing the issuance of shares of its capital stock.
3.3 Organization and Capitalization of the CCN Subsidiaries.
(a) Schedule 3.3 contains a true, complete and correct list of
all subsidiaries, direct or indirect, of CCN (the "CCN Subsidiaries").
Except for the CCN Subsidiaries, CCN does not directly or indirectly own, of
record or beneficially, any outstanding equity interests in any corporation,
partnership, joint venture or other Person.
(b) Each CCN Subsidiary (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, as identified on Schedule 3.3, (ii) has the corporate power
and authority to own or lease and to operate its assets and to conduct its
business as currently conducted, and (iii) is duly qualified to transact
business as a foreign corporation and is in good standing in each of the
jurisdictions listed in Schedule 3.3 and is not required to be so qualified
by the requirement of any Laws in any other jurisdiction except where
failure to be so qualified would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Schedule 3.3 sets forth the authorized capital stock (or
other authorized capital) of each CCN Subsidiary and indicates the number of
issued and outstanding shares of capital stock of such CCN Subsidiary (or,
in the case of non-corporate CCN Subsidiaries, the outstanding equity issued
by such CCN Subsidiary). The shares of capital stock of each CCN Subsidiary
have been duly authorized and validly issued and are fully paid and non-
assessable.
(d) (i) CCN has good and marketable title to, and owns, directly
or indirectly, all of the outstanding shares of capital stock or other
outstanding equity securities of each CCN Subsidiary (the "CCN Subsidiary
Shares"), beneficially and of record; (ii) the CCN Subsidiary Shares are
free and clear of all Liens of any nature whatsoever, (iii) CCN has full
voting power over the CCN Subsidiary Shares, subject to no proxy,
shareholders' agreement, voting trust or other agreement relating to the
voting of any of the CCN Subsidiary Shares, and (iv) other than this
Agreement, there is no agreement between HCA or any of its subsidiaries and
any other Person with respect to the disposition of the CCN Subsidiary
Shares or otherwise relating to the CCN Subsidiary Shares.
(e) (i) no Person has any preemptive right to purchase any stock,
equity interests or other securities of any CCN Subsidiary, (ii) there are
no outstanding securities or other instruments of any CCN Subsidiary which
are convertible into or exchangeable for any shares of its capital stock or
any other equity securities, (iii) other than the CCN Subsidiary Shares,
there are no outstanding securities or other instruments of any of the CCN
Subsidiaries giving the owner or holder thereof the right to vote on any
matters on which CCN Subsidiary shareholders may vote, (iv) there are no
contracts, arrangements, commitments or restrictions relating to the
issuance, sale, transfer, purchase or obtaining of capital stock or other
securities or instruments of any CCN Subsidiary, and (v) there is no
existing option, warrant, right, call or commitment of any character granted
or issued by any CCN Subsidiary governing the issuance of shares of its
capital stock.
3.4 Organization and Capitalization of the PW Subsidiaries.
(a) Schedule 3.4 contains a true, complete and correct list of
all subsidiaries, direct or indirect, of PW (the "PW Subsidiaries"). Except
for the PW Subsidiaries, PW does not directly or indirectly own, of record
or beneficially, any outstanding equity interests in any corporation,
partnership, joint venture or other Person.
(b) Each PW Subsidiary (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, as identified on Schedule 3.4, (ii) has the corporate power
and authority to own or lease and to operate its assets and to conduct its
business as currently conducted, and (iii) is duly qualified to transact
business as a foreign corporation and is in good standing in each of the
jurisdictions listed in Schedule 3.4 and is not required to be so qualified
by the requirement of any Laws in any other jurisdiction except where
failure to be so qualified would not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Schedule 3.4 sets forth the authorized capital stock (or
other authorized capital) of each PW Subsidiary and indicates the number of
issued and outstanding shares of capital stock of such PW Subsidiary (or, in
the case of non-corporate PW Subsidiaries, the outstanding equity issued by
such PW Subsidiary). The shares of capital stock of each PW Subsidiary have
been duly authorized and validly issued and are fully paid and non-
assessable.
(d) (i) PW has good and marketable title to, and owns, directly
or indirectly, all of the outstanding shares of capital stock or other
outstanding equity securities of each PW Subsidiary (the "PW Subsidiary
Shares"), beneficially and of record; (ii) the PW Subsidiary Shares are free
and clear of all Liens of any nature whatsoever, (iii) PW has full voting
power over the PW Subsidiary Shares, subject to no proxy, shareholders'
agreement, voting trust or other agreement relating to the voting of any of
the PW Subsidiary Shares, and (iv) other than this Agreement, there is no
agreement between HCA or any of its subsidiaries and any other Person with
respect to the disposition of the PW Subsidiary Shares or otherwise relating
to the PW Subsidiary Shares.
(e) (i) no Person has any preemptive right to purchase any stock,
equity interests or other securities of any PW Subsidiary, (ii) there are no
outstanding securities or other instruments of any PW Subsidiary which are
convertible into or exchangeable for any shares of its capital stock or any
other equity securities, (iii) other than the PW Subsidiary Shares, there
are no outstanding securities or other instruments of any of the PW
Subsidiaries giving the owner or holder thereof the right to vote on any
matters on which PW Subsidiary shareholders may vote, (iv) there are no
contracts, arrangements, commitments or restrictions relating to the
issuance, sale, transfer, purchase or obtaining of capital stock or other
securities or instruments of any PW Subsidiary, and (v) there is no existing
option, warrant, right, call or commitment of any character granted or
issued by any PW Subsidiary governing the issuance of shares of its capital
stock.
3.5 Corporate Authorization.
(a) The execution, delivery and performance by Sellers of this
Agreement and the other agreements to be entered into by any of them
pursuant to the terms of this Agreement, and the consummation by Sellers of
the transactions contemplated hereby and thereby are within Sellers'
respective corporate powers, are not in contravention of the terms of
Sellers' respective Certificates of Incorporation or Bylaws, and have been
duly authorized and approved by the respective boards of directors of
Sellers. No other corporate proceedings on the part of HCA, Holdings, or any
Acquired Entity are necessary to authorize the execution, delivery and
performance by Sellers or any Acquired Entity of this Agreement or the other
agreements to be entered into by any Seller or any Acquired Entity pursuant
to the terms of this Agreement.
(b) This Agreement has been duly and validly executed and
delivered by Sellers, and, as of the Closing, the other agreements to be
entered into by either Seller or any Acquired Entity pursuant to the terms
of this Agreement will have been duly and validly executed and delivered by
such Seller or Acquired Entity, as the case may be. This Agreement
constitutes, and upon their execution and delivery, such other agreements
will constitute, the legal, valid and binding obligations of Sellers and any
Acquired Entity party thereto, enforceable against Sellers and any Acquired
Entity party thereto in accordance with their respective terms (assuming the
valid authorization, execution and delivery hereof and thereof by Purchaser
and any other unaffiliated entity that is a party thereto), subject, in each
case, to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing.
3.6 No Conflicting Agreements; Consents. Except as set forth in
Schedule 3.6, neither the execution and delivery of this Agreement or any of
the other agreements to be entered into by any Seller or any Acquired Entity
pursuant to the terms of this Agreement nor the consummation of any of the
transactions contemplated hereby or thereby will:
(a) violate, conflict with, result in a breach or termination of
the terms, conditions or provisions of, constitute a default under, or
entitle any party to terminate or accelerate (i) the respective Certificates
of Incorporation or Bylaws of HCA, Holdings, or any of the Acquired
Entities, (ii) any Contract, except such violations, conflicts, breaches,
defaults, terminations or accelerations which, either individually or in the
aggregate, (A) would not materially impair the ability of the Sellers and
the Acquired Entities to perform their respective obligations hereunder or
under the other agreements contemplated hereby to be entered into by any of
them or would not prevent the consummation of the transactions contemplated
hereby or thereby, or (B) would not reasonably be expected to have a
Material Adverse Effect, (iii) any Court Order to which either Seller or any
of the Acquired Entities is a party or by which any Seller or any of the
Acquired Entities is bound, or (iv) any requirements of Law affecting any
Seller or any of the Acquired Entities, except such violations, conflicts,
breaches or defaults of such requirements of Laws which, either individually
or in the aggregate, (A) would not materially impair the ability of the
Sellers and the Acquired Entities to perform their respective obligations
hereunder or under the other agreements contemplated hereby to be entered
into by any of them or would not prevent the consummation of the
transactions contemplated hereby or thereby, or (B) would not reasonably be
expected to have a Material Adverse Effect;
(b) result in the creation or imposition of any Lien upon any of
the assets of any Acquired Entity (except for Permitted Liens); or
(c) require a permit from, the approval, consent or authorization
of, or the making by either Seller or any of the Acquired Entities of any
declaration, filing or registration with, any Governmental Authority, except
as provided in Section 5.1 or Section 6.2 and except for such approvals,
consents, authorizations, declarations, filings or registrations, the
failure of which to be obtained or made (i) would not, individually or in
the aggregate, materially impair the ability of the Sellers to perform their
respective obligations hereunder or under the other agreements contemplated
hereby to be entered into by any of them or prevent the consummation of the
transactions contemplated hereby or thereby, or (ii) would not reasonably be
expected to have a Material Adverse Effect.
3.7 Financial Statements. Schedule 3.7 contains copies of the
following: (i) the unaudited combined financial statements of the Company as
of December 31, 2000; (ii) the audited combined financial statements of the
Company for the year ended December 31, 1999; (iii) the unaudited combined
financial statements of the Company for the two months ended on the Balance
Sheet Date. ; and (iv) when issued, the audited combined financial
statements of the Company for the year ended December 31, 2000. Such
financial statements are collectively, referred to as the "Company Financial
Statements." The Company Financial Statements have been prepared from and
in accordance with the Books and Records of the Company, fairly present in
all material respects the financial position and results of operations of
the Company as of the dates and for the periods indicated, and have been
prepared in accordance with GAAP (except as may be indicated on Schedule 3.7
or in such Company Financial Statements, including the notes thereto).
3.8 Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 3.8, the Company does not have any liabilities of any nature
(whether known or unknown, accrued, absolute, contingent or otherwise)
except for liabilities reflected or reserved against in the Company
Financial Statements (including the notes thereto) and current liabilities
incurred in the ordinary course of the Company's business since the Balance
Sheet Date.
3.9 . [Intentionally omitted.]
3.10 Absence of Certain Changes. Except as disclosed in Schedule 3.10
or as contemplated by Section 2.2, Section 5.2 or Section 5.11 hereof, since
the Balance Sheet Date, the Acquired Entities have conducted their
businesses only in the ordinary course of such businesses and:
(a) neither CCN nor PW has (i) declared, set aside or paid any
dividend or made or agreed to make any other distribution or payment in
respect of its capital stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its capital
stock, or (ii) amended its articles of incorporation or by-laws;
(b) the Company has not incurred any liabilities that under GAAP
would be required to be reflected on a balance sheet for the Company (other
than current liabilities incurred in the ordinary course of its business
consistent with past practice);
(c) the Company has not sold, assigned or transferred any of its
assets or properties except dispositions or sales of inventory in the
ordinary course of business;
(d) the Company has not mortgaged, pledged or subjected to any
Lien, any of the assets or properties of the Company other than (i)
Permitted Liens, or (ii) Liens incurred in the ordinary course of business
consistent with past practice on assets and properties of the Company having
a fair value not exceeding $250,000 in the aggregate;
(e) the Company has not suffered any damage, destruction or loss,
whether or not covered by insurance, that has had or would reasonably be
expected to have, singularly or in the aggregate, a Material Adverse Effect;
(f) except as contemplated by Schedule 3.14(h), neither Sellers
nor the Company has entered into any employment, severance or termination
agreement with any of the employees of the Company;
(g) the Company has not made any change in its accounting
principles, practices or methodologies;
(h) the Company has not (A) made any increase in the rate of
compensation payable to any of its employees, other than normal and
customary increases consistent with past practice or increases that
otherwise were required by the Company's obligations pursuant to applicable
Law or Contracts in effect on the Balance Sheet Date, or (B) increased
severance or termination obligations to any of its employees (except (i)
increases that are the result of increases to an employee's underlying
compensation that either (A) are not required to be disclosed pursuant to
this Section 3.10(h) or (B) are disclosed in Schedule 3.10, and (ii)
increases described in or contemplated by Schedule 3.14(h) hereto);
(i) neither HCA, Holdings, nor the Company has entered into any
agreement or arrangement, or made any other commitment (whether oral or
written), to do any of the foregoing.
3.11 Legal Proceedings, etc. There are no investigations, actions,
suits or proceedings pending, or to the Knowledge of Sellers, threatened
against HCA or any of its subsidiaries (including Holdings and any of the
Acquired Entities) and, to the Knowledge of Sellers, no event has occurred
or circumstance exists that would reasonably be expected to give rise to or
serve as a basis for the commencement of any action, suit or proceeding,
which, either individually or in the aggregate, if decided adversely, could
reasonably be expected to (a) materially impair the ability of Sellers or
any Acquired Entity to perform their respective obligations hereunder or
under the other agreements contemplated hereby to be entered into by any of
them, or (b) prevent the consummation of the transactions contemplated
hereby or thereby. Except as set forth in Schedule 3.11, there are no
investigations, actions, suits or proceedings pending, or to the Knowledge
of Sellers, threatened against HCA or any of its subsidiaries (including
Holdings and any of the Acquired Entities) and, to the Knowledge of Sellers,
no event has occurred or circumstance exists that would reasonably be
expected to give rise to or serve as a basis for the commencement of any
investigation, action, suit or proceeding which, either individually or in
the aggregate, if decided adversely, could reasonably be expected to cause a
Material Adverse Effect, nor is any Acquired Entity subject to any Court
Order which, either individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect. Except as set
forth in Schedule 3.11 or as would not reasonably be expected to cause a
Material Adverse Effect, (i) each of the Acquired Entities and each
Affiliate of any Acquired Entity is, and at all times, since January 1, 1998
has been, in full compliance with all of the terms and requirements of each
Court Order to which it, or any of the assets owned or used by it, is
subject, and (ii) no Acquired Entity and no Affiliate of any Acquired Entity
has received, at any time since January 1, 1998 any written notice or other
written or, to the knowledge of Sellers, oral communication from any
Governmental Authority or any other Person regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any term or
requirement of any Court Order to which any Acquired Entity or any Affiliate
of any Acquired Entity, or any of the assets owned or used by any Acquired
Entity or such Affiliate, is or has been subject, except, in each case, with
respect to a Person other than an Acquired Entity, as could not be
reasonably expected, singularly or in the aggregate, to have a Material
Adverse Effect. Except as otherwise disclosed in Schedule 3.11, neither HCA,
Holdings nor any Acquired Entity has received written or, to the knowledge
of Sellers, oral notice from any Governmental Authority that any Acquired
Entity is the target of any investigation or proceeding by any Governmental
Authority, nor to the Knowledge of Sellers is any such investigation or
proceeding pending.
3.12 Certain Contracts. Except as set forth in Schedule 3.12, the
Company is not in default (nor would it be in default with notice or lapse
of time or both as a result of events that have occurred) under any
Contract, which default or defaults, either individually or in the
aggregate, has had or would reasonably be expected to have a Material
Adverse Effect. The Company has made available to Purchaser customer lists
and true and complete forms of all material Contracts relating to those
clients or suppliers of the Company the loss of which has had or would
reasonably be expected to have a Material Adverse Effect. Prior to the
Closing and subject to the provisions of Section 5.4(x) hereof, Sellers
shall have made each of the following Contracts of the Company available to
the Purchaser:
(a) each Contract that involves performance of services or
delivery of goods or materials by one or more Acquired Entity for one of
their 20 largest customers based on revenue produced in 2000;
(b) each Contract that involves performance of services or
delivery of goods or materials by a vendor to one or more Acquired Entity
and which involved expenditures in 2000 by one or more Acquired Entity of
over $250,000;
(c) each Contract that was not entered into in the ordinary
course of business and that involves expenditures or receipts of one or more
of the Acquired Entities in excess of $250,000;
(d) each joint venture, partnership, and other Contract (however
named) involving a sharing of profits, losses, costs, or liabilities by any
Company with any other Person;
(e) each Contract containing covenants that in any way purport to
restrict the business activity of any Acquired Entity or any Affiliate of an
Acquired Entity or limit the freedom of any Acquired Entity or any Affiliate
of any Acquired Entity to engage in any line of business or to compete with
any Person;
(f) each Contract entered into other than in the ordinary course
of business that contains or provides for an express undertaking by any
Acquired Entity to be responsible for consequential damages;
(g) each Contract for capital expenditures since January 1, 2000
in excess of $50,000;
(h) each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended by any Acquired
Entity other than in the ordinary course of business; and
(i) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
Except as set forth in Schedule 3.12, each Contract required to be made
available pursuant to this Section 3.12 is in full force and effect and is
valid and enforceable in accordance with its terms. None of the Acquired
Entities, and, to Sellers' knowledge, no other party, is in material breach
or default, and no event has occurred which with notice or lapse of time
could constitute a material breach or default or permit termination,
material modification or acceleration, under any such Contract. No party
has repudiated any material term of any such Contract.
3.13 Title to Property. The Company is in possession of and has good
title to, or has valid leasehold interests in or valid rights under contract
to use, all of the assets and properties used in or reasonably necessary for
the conduct of its business; such assets and properties include all assets
and properties reflected on the Company Financial Statements and all of the
assets and properties purchased or otherwise acquired by the Company since
the Balance Sheet Date, other than (a) current assets or properties disposed
of since the Balance Sheet Date in the ordinary course of business
consistent with past practice, and (b) the Excluded Assets. None of such
assets or properties are subject to any Liens (other than Permitted Liens).
3.14 Employees; Labor Matters; Employee Benefit Plans; ERISA.
(a) The Company is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending, or to the Knowledge of Sellers,
threatened against the Company relating to its business, except for any such
proceeding which has not had, or would not reasonably be expected to have, a
Material Adverse Effect. To the Knowledge of Sellers, there are no
organization efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees of
the Company. There is no labor strike, material slowdown or material work
stoppage or lockout actually pending or, to the Knowledge of Sellers,
threatened against or affecting the Company, and the Company has not
experienced any strike, material slowdown or material work stoppage or
lockout since January 1, 1998. Except to the extent a liability with
respect thereto is included in the Reference Balance Sheet or the Closing
Balance Sheet, the Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it or amounts required to be
reimbursed to such employees. The Company is in material compliance with
all applicable laws respecting labor, employment, fair employment practices,
terms and conditions of employment, workers' compensation, occupational
safety, plant closings, and wages and hours. The Company has withheld all
amounts required by law or by agreement to be withheld from the wages,
salaries, and other payments to employees; and except to the extent a
liability with respect thereto is included in the Reference Balance Sheet or
the Closing Balance Sheet, the Company is not liable for any arrears of
wages or any Taxes or any penalty for failure to comply with any of the
foregoing.
(b) Schedule 3.14(b) contains a list of (i) each Company Plan
that is intended to be qualified within the meaning of Code Section 401(a)
and (ii) each other material Company Plan. Neither the Company, nor to the
Knowledge of the Sellers, any other person or entity, has any express or
implied commitment, whether legally enforceable or not, to modify, change or
terminate any Company Plan in any material respect, other than with respect
to a modification, change or termination required by ERISA or the Code.
(c) With respect to each Company Plan listed in Schedule 3.14(b),
Sellers have delivered or prior to Closing will deliver to Purchaser a
current, accurate and complete copy (or, to the extent no such copy exists,
an accurate description) of each of the following, to the extent applicable:
(i) any related trust agreement or other funding instrument; (ii) the most
recent determination letter, if applicable; (iii) any summary plan
description and other material written communications provided over the past
three years by any Acquired Entity to its employees concerning the extent of
the benefits provided under such Company Plan; and (iv) for the three most
recent years (A) the Form 5500 and attached schedules, (B) audited financial
statements, (C) actuarial valuation reports and (D) attorney's response to
an auditor's request for information.
(d) Except as disclosed in Schedule 3.14(d), (i) each Company
Plan has been established and administered in all material respects in
accordance with its terms and the applicable provisions of ERISA, the Code
and other applicable laws, rules and regulations; (ii) each Company Plan
that is intended to be qualified within the meaning of Code Section 401(a)
has received a favorable determination letter as to its qualification, and
nothing has occurred, whether by action or failure to act, that could
reasonably be expected to adversely affect the qualified status of any such
Company Plan or the exempt status of any such trust; (iii) no event has
occurred and no condition exists that would subject any Acquired Entity,
either directly or by reason of its affiliation with any Controlled Group
Member, to any material tax, fine, lien, penalty or other liability imposed
by ERISA, the Code or other applicable laws, rules and regulations with
respect to each Company Plan, or any pension plan that is maintained or
sponsored by a Controlled Group Member, that is intended to be qualified
within the meaning of Code Section 401(a); (iv) there have been no
reportable events within the meaning of ERISA Section 4043, accumulated
funding deficiencies within the meaning of ERISA Section 302 or Code
Section 412 (whether or not waived), or PBGC liens imposed with respect to
any Company Plan or any employee benefit plan subject to Title IV of ERISA
that is sponsored or maintained by a Controlled Group Member; (v) for each
Company Plan with respect to which a Form 5500 has been filed, no material
change has occurred with respect to the matters covered by the most recent
Form 5500 since the date thereof; (vi) no "reportable event" (as such term
is defined in ERISA Section 4043) has occurred with respect to any Company
Plan that is subject to Title IV of ERISA; (vii) neither the Sellers, any of
the Acquired Entities, nor, to the Knowledge of Sellers, any other party in
interest or a disqualified person (as defined in Code Section 4975(e)(2))
has engaged in a "prohibited transaction" (within the meaning of ERISA
Section 406 and Code Section 4975) with respect to any Company Plan for
which there is no exemption under ERISA Section 408 or Code Section 4975;
(viii) except as required by Title I, Part 6 of ERISA, no Company Plan
provides retiree welfare benefits and no Acquired Entity has any obligations
to provide any post-employment or retiree welfare benefits (ix)
contributions required to be made under the terms of any of the Company
Plans as of the date of this Agreement have been timely made or, if not yet
due, have been properly reflected on the Company's most recent consolidated
balance sheet filed prior to the date of this Agreement; (x) with respect to
the Company Plans, no event has occurred and, to the Knowledge of Sellers,
there exists no condition or set of circumstances in connection with which
Company would reasonably be expected to be subject to any material liability
(other than for routine benefit liabilities) under the terms of, or with
respect to, such Company Plans, ERISA, the Code or any other applicable law;
(xi) neither the Company nor any Controlled Group Member has any liability
under ERISA Section 502; (xii) in all material respects, all tax, annual
reporting and other governmental filings required by ERISA and the Code have
been timely filed with the appropriate governmental agency and all notices
and disclosures have been timely provided to participants, (xiii) no excise
tax could be imposed upon the Company under Chapter 43 of the Code;
(xiv) the Company does not maintain, sponsor, contribute to or have any
liability with respect to any employee benefit plan, program or arrangement
that provides benefits to non-resident aliens with no U.S. source income
outside of the United States; (xv) contributions required to be made under
the terms of any of the Company Plans as of the date of this Agreement have
been timely made or, if not yet due, have been properly reflected on the
Company's most recent consolidated balance sheet filed prior to the date of
this Agreement.
(e) With respect to each of the Company Plans that is subject to
Title IV of ERISA, as of the Closing Date, (i) the assets of each such
Company Plan will be at least equal in value to the then current present
value of the then current accrued benefits (vested and unvested) of the
participants in such Company Plan on a termination basis, based on the
actuarial methods and assumptions reported to the PBGC in the standard
termination filing; (ii) there is no "unfunded benefit liability" (within
the meaning of Section 4001(a)(18) of ERISA, but excluding from the
definition of "current value" of "assets" accrued but unpaid contributions);
(iii) the Company has made when due any "required installments" within the
meaning of Section 412(m) of the Code and Section 302(e) of ERISA, whichever
may apply; (iv) the Company is not required to provide security under
Section 401(a)(29) of the Code; (v) all premiums (and interest charges and
penalties for late payment, if applicable) have been paid when due to the
PBGC; (vi) no filing has been made by the Company or any Controlled Group
Member with the PBGC and no proceeding has been commenced by the PBGC to
terminate any Company Plan and no condition exists which could constitute
grounds for the termination of any such Company Plan by the PBGC.
(f) There is no Multiemployer Plan under which any employee or
any former employee of any Acquired Entity has any present or future right
to benefits or under which any Acquired Entity or any of its subsidiaries
has any present or future liability. The Company has not sponsored or
contributed to or been required to contribute to a Multiemployer Plan.
(g) With respect to any Company Plan, no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending
or, to the Knowledge of the Sellers, threatened. Additionally, with respect
to any Company Plan, no facts or circumstances exist that reasonably could
give rise to any such actions, suits or claims that would reasonably be
expected to have a Material Adverse Effect. Neither the Sellers nor any of
the Acquired Entities has received any written or oral communication from
the PBGC in respect of any Company Plan subject to Title IV of ERISA
concerning the funded status of any such plan or any transfer of assets and
liabilities from any such plan in connection with the transactions
contemplated hereby. No Company Plan is currently subject to an audit or
other investigation by the IRS, the Department of Labor, the PBGC or any
other governmental authority.
(h) Except as disclosed in Schedule 3.14(h), no Company Plan
exists that could result in the payment to any present or former employee or
director of any Acquired Entity of any money or other property or accelerate
or provide any other rights or benefits to any present or former employee of
any Acquired Entity or any of its subsidiaries as a result of the
transactions contemplated by this Agreement, whether or not such payment
would constitute a parachute payment within the meaning of Code Section
280G.
3.15 Bank Accounts. Schedule 3.15 is a list of the names and locations
of all financial institutions at which any Acquired Entity maintains a
checking account, deposit account, securities account, safety deposit box or
other deposit or safekeeping arrangement (other than the Transfer Accounts),
the name of the Acquired Entity that maintains each such account or
arrangement and the number or other means of identification of each such
account and arrangement.
3.16 Taxes.
(a) Sellers or members of the HCA Affiliated Group have duly
filed or cause to be filed, or shall duly file or cause to be filed, in a
timely manner (taking into account all extensions of due dates) with the
appropriate Governmental Authorities all Returns which are required to be
filed on or before the Closing Date by or on behalf of the Acquired
Entities. All such Returns are correct and complete in all material
respects. All Taxes shown to be due on such Returns filed prior to the date
hereof have been paid in full, and all Taxes shown to be due on such Returns
filed after the date hereof will be paid in full within the time permitted
under the Code or applicable Laws. There are no Liens on any of the assets
of the Company with respect to Taxes, other than Liens for Taxes not yet due
and payable or for Taxes, if any, as are listed on Schedule 3.16 and are
being contested in good faith through appropriate proceedings.
(b) Except as set forth in Schedule 3.16, and except with respect
to Tax liabilities of any member of the HCA Affiliated Group other than the
Acquired Entities, (i) no deficiencies for Taxes have been claimed, proposed
or assessed in writing by any Governmental Authority for which any of the
Acquired Entities may have any liability, (ii) there are no pending or
threatened audits, suits, proceedings, actions, investigations or claims for
or relating to any liability in respect of Taxes of which Sellers have
Knowledge, (iii) there are no matters under discussion by the Sellers with
any Governmental Authorities with respect to Taxes that may result in
additional amount of Taxes for which any of the Acquired Entities may have
any liability and (iv) no power of attorney has been executed and is
currently in force with respect to any Tax matter. None of the Acquired
Entities has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(c) Except as set forth on Schedule 3.16, none of the Sellers nor
Acquired Entities (i) has filed a consent pursuant to the collapsible
corporation provisions of Section 341(f) of the Code (or any corresponding
provision of state or local law) with respect to the Acquired Entities or
agreed to have Section 341(f)(2) of the Code (or any corresponding provision
of state or local law) apply to any disposition of any asset owned by the
Acquired Entities; (ii) has agreed to make, nor is required to make, any
adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise for any taxable year; or (iii) has made any
payments, is obligated to make any payments or is a party to any agreement
that under certain circumstances could obligate it to make any payments with
respect to the Acquired Entities that will not be deductible under Code
Section 280G. Schedule 3.16 sets forth all elections of a material nature
with respect to Taxes affecting any of the Acquired Entities which have been
made since HCA acquired the Company.
(d) None of the Acquired Entities has any liability for the Taxes
of any Person other than the Acquired Entities or other members of the HCA
Affiliated Group under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign law), or as a transferee or successor,
pursuant to any Tax sharing agreement, indemnification arrangement, or
similar contract or arrangement, or otherwise.
3.17 Insurance. Schedule 3.17 includes a list of all insurance policies
maintained by or for the benefit of any Acquired Entity, including fire and
extended coverage and casualty, liability and other forms of insurance.
Sellers shall use commercially reasonable efforts to keep such insurance or
comparable insurance in full force and effect until the Effective Time.
3.18 Intellectual Property. Except as set forth in Schedule 3.18, each
Acquired Entity owns or has the right to use (and following the Closing will
continue to own or have the right to use) all patents, trademarks, trade
names, service marks, trade secrets, copyrights and other intellectual
property rights and licenses as are necessary to conduct its business as
currently conducted (the "Intellectual Property"), free of all Liens except
Permitted Liens. Except as set forth in Schedule 3.18, (a) to the Knowledge
of Sellers, no infringement exists by any of the Acquired Entities on the
intellectual property rights of any other Person that results in any way
from the operations of the businesses of the Company, except such
infringements which, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, and (b) there has
been no notice for a Claim against any of the Acquired Entities that its
operations, activities or business infringe any intellectual property of any
other Person. Except as set forth in Schedule 3.18, (i) no Court Orders or
proceedings are pending, or to the Knowledge of Sellers, threatened, against
any of the Acquired Entities that challenge the validity of, or such
Acquired Entity's ownership of or right to use, any of the Intellectual
Property, and (ii) to the Knowledge of Sellers, there is no infringing use
of any of the Intellectual Property owned by any Acquired Entity by any
other Person. Schedule 3.18 lists all registrations or applications therefor
with regard to Intellectual Property. Schedule 3.18 lists all material
software used by an Acquired Entity under license from a third party.
3.19 Compliance with Laws. The Acquired Entities hold all Permits
applicable to their respective businesses required by applicable Law (the
"Company Permits"), except where the failure to obtain such Permits, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Acquired Entities are in compliance with the
terms of the Company Permits, except for such failures to comply which,
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Except as set forth in Schedule 3.19, the
Acquired Entities are in compliance with all Laws of any Governmental
Authority, except where the failure to comply, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
3.20 Environmental Conditions. Except as set forth in Schedule 3.20:
(a) Each of the Acquired Entities is in material compliance with
all Environmental Laws;
(b) No Acquired Entity has stored any Hazardous Substances on any
of the real property owned or leased by it (the "Real Property"), except
Hazardous Substances necessary to the business of the Acquired Entities
stored in material compliance with applicable Environmental Laws;
(c) No Acquired Entity has disposed of or released any Hazardous
Substances on any of the Real Property, except in such a manner as would not
reasonably be expected to give rise to an Environmental Claim;
(d) No Acquired Entity has received any written communication
from a Governmental Authority or any other Person that alleges that such
Acquired Entity is not in compliance with Environmental Laws or is otherwise
subject to liability relating to Environmental Laws;
(e) There is no Environmental Claim pending or, to the Knowledge
of Sellers, threatened against any Acquired Entity; and
(f) There have been no actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Hazardous Substances, that
reasonably could form the basis of any Environmental Claim against any
Acquired Entity, except Environmental Claims which, either individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
3.21 Relationships with Related Parties. Except as set forth in
Schedule 3.21, no Seller or any Affiliate of Sellers (other than the
Acquired Entities) owns, or since December 31, 1998 has had, any interest in
any property (whether real, personal, or mixed whether tangible or
intangible), used in or pertaining to the Acquired Entities' business. No
Seller or any Affiliate of Sellers or of any of the Acquired Entities owns,
or since December 31, 1998, has owned (of record or as a beneficial owner)
an equity interest or any other financial or profit interest (other than a
de minimis interest) in, a Person (other than the Acquired Entities) that
has (i) had business dealings or a material financial interest in any
transaction with any Acquired Entity, or (ii) engaged in competition with
any Acquired Entity with respect to any line of the products or services of
such Acquired Entity (a "Competing Business") in any market presently served
by the Acquired Entities. Except as set forth on Schedule 3.21, no Seller or
any Affiliate of Sellers (other than an Acquired Entity) is a party to any
Contract (other than a Hospital Provider Agreement or a Non-Hospital
Provider Agreement) with, or has any claim or right against, any Acquired
Entity (other than claims or rights arising under any Hospital Provider
Agreement or Non-Hospital Provider Agreement or in connection with services
provided by the Company to HCA and its Affiliates in the ordinary course of
the Company's business). All Contracts set forth on Schedule 3.21 are
currently in full force and effect, and HCA has not given termination notice
to any Acquired Entity with respect to any such Contract. Except as set
forth in Schedule 3.21, HCA and its Affiliates do not provide corporate
services in any material respect to the Acquired Entities.
3.22 Books and Records. The Books and Records of the Acquired Entities
maintained since January 1, 1998 are complete and correct in all material
respects and have been maintained in accordance with sound business
practices and in material compliance with the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended
(regardless of whether or not the Acquired Entities are subject to that
section), including the maintenance of an adequate system of internal
controls. The records contained in the minute books of the Acquired
Entities with respect to actions taken after January 1, 1998 are accurate in
all material respects.
3.23 No Material Adverse Change. Between the Balance Sheet Date and
the date of this Agreement, there has not been any material adverse change
in the business, operations, properties, assets or financial condition of
the Company, and to the knowledge of Sellers, no event has occurred during
such period and no circumstances exist as of the date of this Agreement that
would reasonably be expected to result in a Material Adverse Change.
3.24 Non-Directed Use of CCN Network. (a) Except as set forth in
Schedule 3.24 hereto, CCN does not have any group health arrangement with a
Payor that permits the Payor (i) to use the CCN Network within a geographic
area on other than an exclusive or a primary basis; or (ii) to access the
CCN Network provider discounts on a non-directed basis. For purposes of
this subsection (a), "non-directed basis" means that the Payors' covered
individuals are not steered or directed to use CCN Network providers through
financial incentives or other channeling tools, and "primary basis" means
that the Payor may use the Company's network and another directed network in
the same geographic area, provided that if both networks have provider
contracts with the utilized hospital, the Company's network rate will be
applied.
(b) CCN does not have any workers compensation arrangement with a
Payor that permits the Payor (i) to use the CCN Network within a geographic
area on other than an exclusive basis or a primary basis or (ii) to access
the CCN Network provider discounts on a non-directed basis. For purposes of
this clause (b), "non-directed basis" means that the Payors' covered
individuals are not channeled to a CCN Network provider through the use of
electronic or hard copy provider directories, toll-free telephone numbers,
work site posters, or adjuster and case management referral to network
providers, and "primary basis" means that the Payor may use the Company's
network and another directed network in the same geographic area, provided
that if both networks have provider contracts with the utilized hospital,
the Company's network rate will be applied.
3.25 Certain Percentage Discounts.
(a) The blended rate percentage discount off billed charges
listed in Schedules 3.25 (a) and (b) hereto for the hospitals listed in such
schedules are true and correct in all material respects for the period
indicated thereon, except as set forth in such schedules.
(b) The blended rate percentage discount off billed charges (or
state fee schedule, if applicable) listed in Schedules 3.25 (c) and (d)
hereto for the hospitals listed in such schedules are true and correct in
all material respects for the period indicated thereon.
(c) The blended rate percentage discount off billed charges (or
state fee schedule, if applicable) listed in Schedules 3.25 (e) and (f)
hereto for providers in the states listed in such schedules are true and
correct in all material respects for the period indicated thereon and for
the claims processed during such period, except as set forth in such
schedules.
3.26 Brokers. Except for Xxxxxxx Xxxxx & Co., neither HCA nor any of
its subsidiaries (including any of the Acquired Entities) has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement. The
Acquired Entities do not have, and following the Closing the Acquired
Entities will not have, any financial obligation to Xxxxxxx Xxxxx & Co. in
connection with the transactions contemplated by this Agreement.
3.27 Company Providers. (a) Schedule 3.27(a) contains a list of all
hospitals (each a "Hospital") contractually obligated to provide health care
services at negotiated rates to enrolled members of payors that have
contracted with CCN (such contractual obligations, the "Hospital Provider
Agreements"). The term "Hospitals" does not include hospitals which are
contractually obligated to provide the services described in this Section
3.27(a) pursuant to contracts with networks leased by CCN. Such list is
true, complete and correct in all material respects as of the date of such
report.
(b) Schedule 3.27(b) contains a list of all group health
physicians and other professionals, free-standing centers, home health
agencies, surgery centers, medical laboratories and other non-Hospital
health care providers ("Non-Hospital Providers") contractually obligated to
provide health care services at negotiated rates to enrolled members of
payors that have contracted with CCN (such contractual obligations, the
"Non-Hospital Provider Agreements"), in CD-Rom format, produced from the CCN
provider database as of May 17, 2001. Sellers make no representations or
warranties with respect to the accuracy of such list. Within 10 Business
Days of the date hereof, Sellers agree to cause the Company to deliver, in
CD-Rom format, a list of all Non-Hospital Providers for group health,
workers compensation and auto networks, which reflect changes for duplicate
and erroneous data. Such list will be true, complete and correct in all
material respects as of the date of such report. The term "Non-Hospital
Providers" does not include any health care providers described in this
Section 3.27(b) which are contractually obligated to provide the services
described in this Section 3.27(b) pursuant to contracts with networks leased
by CCN. Each Hospital Provider Agreement and, to the Knowledge of Sellers,
each Non-Hospital Provider Agreement, is in full force and effect and is
valid and enforceable in accordance with its terms. None of the Acquired
Entities, and, to Sellers' Knowledge, no other party, is in material breach
or default, and no event has occurred which with notice or lapse of time
could constitute a material breach or default or permit termination,
modification or acceleration, under any Hospital Provider Agreement. No
party has repudiated any term of any Hospital Provider Agreement. CCN is
the contracting party to all Hospital Provider Agreements and Non-Hospital
Provider Agreements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
4.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
4.2 Corporate Authorization.
(a) The execution, delivery and performance by Purchaser of this
Agreement and the other agreements to be entered into by Purchaser pursuant
to this Agreement, and the consummation by Purchaser of the transactions
contemplated hereby and thereby are within Purchaser's corporate powers, are
not in contravention of the terms of Purchaser's Certificate of
Incorporation or Bylaws, and have been duly authorized and approved by the
board of directors of Purchaser. No other corporate proceedings on the part
of Purchaser are necessary to authorize Purchaser's execution, delivery and
performance of this Agreement or the other agreements to be entered into by
Purchaser pursuant to this Agreement.
(b) This Agreement has been duly and validly executed and
delivered by Purchaser, and as of the Closing, the other agreements to be
entered into by Purchaser pursuant to the terms of this Agreement will have
been duly and validly executed and delivered by Purchaser. This Agreement
constitutes, and upon their execution and delivery, such other agreements
will constitute, the legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms
(assuming the valid authorization, execution and delivery hereof and thereof
by HCA, Holdings and any other unaffiliated entity that is a party thereto),
subject, in each case, to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general application relating to or affecting creditors'
rights and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing.
4.3 No Conflicting Agreements; Consents. Neither the execution and
delivery of this Agreement or any of the other agreements to be entered into
by Purchaser pursuant to this Agreement nor the consummation of any of the
transactions contemplated hereby or thereby will:
(a) violate, conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default under (i) the
Certificate of Incorporation or Bylaws of Purchaser, (ii) any Contract
(substituting the term "Purchaser" for the phrase "Acquired Entities" in the
definition thereof), except such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, would not materially impair
the ability of Purchaser to perform its obligations hereunder or under the
other agreements contemplated hereby to be entered into by Purchaser or
would not prevent the consummation of the transactions contemplated hereby
or thereby, (iii) any Court Order to which Purchaser is a party or by which
Purchaser is bound, or (iv) any requirements of Law affecting Purchaser,
except such violations, conflicts, breaches or defaults of such requirements
of Laws which, either individually or in the aggregate, would not materially
impair the ability of Purchaser to perform its obligations hereunder or
under the other agreements contemplated hereby to be entered into by
Purchaser or which would not prevent the consummation of the transactions
contemplated hereby or thereby; or
(b) require a permit from, the approval, consent or authorization
of, or the making by Purchaser of any declaration, filing or registration
with, any Governmental Authority, except as provided in Section 6.2 or
Section 5.1 and except for such approvals, consents, authorizations,
declarations, filings or registrations, the failure of which to be obtained
or made would not, either individually or in the aggregate, materially
impair the ability of Purchaser to perform its obligations hereunder or
under the other agreements contemplated hereby to be entered into by
Purchaser or prevent the consummation of the transactions contemplated
hereby or thereby.
4.4 Legal Proceedings, etc. There are no actions, suits or
proceedings pending or, to the Knowledge of Purchaser, threatened against
Purchaser which, either individually or in the aggregate, would materially
impair the ability of Purchaser to perform its obligations hereunder or
under the other agreements contemplated hereby to be entered into by
Purchaser or could reasonably be expected to prevent the consummation of the
transactions contemplated hereby or thereby.
4.5 Brokers. Except for Xxxxxxx Xxxxx Xxxxxx Inc. ("SSB"), Purchaser
has not paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
4.6 Investment Representations.
(a) Purchaser is acquiring the Shares for its own account and not
with a view to the distribution thereof within the meaning of the Securities
Act.
(b) Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
purchasing the Shares and to understand the risks of, and other
considerations relating to, its purchase of the Shares.
(c) Purchaser is aware that as of the Closing Date, the Shares,
the CCN Subsidiary Shares and the PW Subsidiary Shares will not have been
registered under the Securities Act or any state's securities laws.
Purchaser further understands that the certificates representing the Shares,
the CCN Subsidiary Shares and the PW Subsidiary Shares will include an
appropriate legend to the effect that such securities have not been
registered under the Securities Act or any state's securities laws and that
such securities may not be sold or transferred except in compliance with the
Securities Act and applicable state securities laws.
ARTICLE V
COVENANTS OF SELLERS
5.1 Regulatory Approvals. Sellers will, and will cause the Acquired
Entities to, (a) use commercially reasonable efforts to obtain, as promptly
as practicable, each of the Permits, approvals, authorizations and
clearances of Governmental Authorities that are or should be listed in
Schedule 5.1 hereto, and to make the filings and declarations with
Governmental Authorities that are or should be listed in Schedule 5.1 hereto
as promptly as practicable after the date hereof (except with respect to the
filings pursuant to the HSR Act, which shall be filed by the date set forth
below), (b) provide such information and communications to applicable
Governmental Authorities that are necessary in connection with the foregoing
or in connection with the Purchaser's obtaining any Permits, approvals,
authorizations and clearances of Governmental Authorities or making any
filings or declarations with Governmental Authorities in accordance with
Section 6.2 as such Governmental Authorities or Purchaser may reasonably
request, and (c) cooperate with Purchaser in obtaining or making, as soon as
practicable, any Permits, approvals, authorizations, clearances, filings and
declarations of or with Governmental Authorities that Purchaser is required
to obtain pursuant to Section 6.2. Additionally, Sellers will use
commercially reasonable efforts to make a filing and to assist Purchaser in
making its filing of a pre-merger notification report form pursuant to the
HSR Act on or before May 29, 2001.
5.2 Conduct Prior to the Closing. On or after the date hereof and
prior to the Closing, except as disclosed in Schedule 5.2 hereto or
otherwise consented to or approved in writing by an authorized officer of
Purchaser:
(a) Sellers shall not act or omit to act, and shall cause the
Acquired Entities not to act or omit to act, otherwise than in accordance
with the following:
(i) None of the Acquired Entities shall amend its
Certificate of Incorporation or Bylaws;
(ii) No change shall be made in the number of shares of
authorized or issued capital stock (or other authorized capital) of any of
the Acquired Entities; nor shall any option, warrant, call, right,
commitment or agreement of any character be granted or made by any of the
Acquired Entities relating to the capital stock or other securities of such
Acquired Entity; nor shall any of the Acquired Entities issue, grant or sell
any securities or obligations convertible into or exchangeable for shares of
its capital stock, nor shall any Seller enter into or permit any of the
Acquired Entities to enter into any other agreement with respect to any
capital stock of such Acquired Entity or any security convertible into or
relating to any capital stock of any of the Acquired Entities;
(iii) Neither CCN nor PW shall declare or pay dividends
or make any other distributions in respect of its capital stock, except as
provided in Section 2.2 or 5.7;
(iv) Sellers will not change or permit any change to be made
in any accounting policy, practice or method of the Company;
(v) The Acquired Entities will not (A) incur any
indebtedness for borrowed money, other than intercompany indebtedness which
will be forgiven at Closing in accordance with Section 5.11 hereof; (B)
assume, guaranty, endorse or otherwise become liable or responsible for the
obligations of any Person other than another Acquired Entity; (C) make any
loans, advances or capital contributions to, or investments in, any other
Person; or (D) make any commitments to do any of the foregoing; and
(vi) Except as contemplated by the Affiliation Agreement, the
Acquired Entities will not renegotiate in any manner adverse to them the
terms of their provider agreements with HCA or any of its Affiliates.
(b) Sellers shall use commercially reasonable efforts not to act
or omit to act, and shall cause the Acquired Entities to use commercially
reasonable efforts not to act or omit to act, otherwise than in accordance
with the following:
(i) The business operations, activities and practices of the
Acquired Entities shall be conducted consistent with the ordinary course of
business and in conformity with past practice;
(ii) The respective business organizations of the Acquired
Entities will be preserved intact, and the services of the present
employees, agents and representatives of the Acquired Entities will be kept
available for Purchaser (except with respect to those employees or
relationships terminated for cause); and
(iii) The relationships with, and the goodwill of, the
customers and employees of the Acquired Entities and others having business
relations with the Acquired Entities will be preserved.
5.3 Employee Matters. Pending the Closing, except as otherwise
consented to or approved in writing by an authorized officer of Purchaser or
as otherwise provided in Schedule 5.3(a) hereto, Sellers will cause the
Company not to (a) make any increase in the rate of compensation payable to
any of its employees, other than increases that otherwise may be required by
the Company's obligations pursuant to the Contracts listed in Schedule
3.14(h) or applicable Law, (b) increase severance or termination obligations
to any of its employees (except (i) increases that are the result of
increases to an employee's underlying compensation that are permitted under
this Section 5.3, and (ii) increases described in or contemplated by
Schedule 3.14(h) hereto), (c) enter into any employment, consulting,
severance or termination agreement with any of its employees, or (d) except
as contemplated by Schedule 3.14(h) hereto and by Section 6.9 hereto, amend
or terminate any Company Plan or adopt or enter into any new plan or
agreement that would be a Company Plan if it existed on the date hereof.
5.4 Investigation by Purchaser.
Between the date of this Agreement and the Closing Date, to the
extent permitted by Law, Sellers will provide Purchaser and its counsel,
accountants and other representatives with reasonable access during normal
business hours, to all of the assets, properties, facilities, employees,
agents, accountants and Books and Records of any Acquired Entity and will
furnish or make available to Purchaser and such representatives during such
period all such information and data (including, without limitation, copies
of Contracts) concerning the business, operations or affairs of any Acquired
Entity in the possession of any Seller or any Acquired Entity or under their
control as Purchaser or such representatives reasonably may request;
provided, however, such investigation shall be coordinated through persons
as may be designated in writing by HCA for such purpose. Purchaser's right
of access and inspection shall be made in such a manner as not to interfere
unreasonably with the operation of the Company. In this regard, Purchaser
agrees that such inspection shall not take place, and no employees or other
personnel of the Company shall be contacted by Purchaser's representatives,
without first coordinating such contact or inspection with Xxxxxxx X. Xxxxx,
Vice President of HCA, R. Xxxxxx Xxxxxxxx, Senior Vice President, Strategic
Planning and Development of CCN, any of the officers of the Company listed
in the definition of the term "Knowledge of Sellers," or their designee.
Notwithstanding the foregoing, Purchaser understands that (x) litigation and
other materials (including internal/external legal audit letters or reviews,
patient records and similar patient information, PRO information, National
Data Bank reports, peer and quality review information and other physician-
specific confidential information, and all information relating to the
governmental investigation of HCA) that are deemed privileged or
confidential by Sellers and materials which Sellers may not disclose without
violating confidentiality agreements with third parties will not be made
available to Purchaser, and (y) except for information that Sellers have
agreed to deliver (or cause the Company to deliver) in accordance with this
Agreement, Sellers shall not be obligated to generate or produce information
in any prescribed format not customarily produced by Sellers unless the
generation or production thereof, either individually or in the aggregate,
shall not be unduly burdensome, monetarily or otherwise, to Sellers or the
Company and shall not interfere unreasonably with the operation of the
Company.
5.5 Financial Statements and Reports. As soon as practicable following
the end of each month (and each fiscal year) from and after the date hereof
and prior to the Closing Date, Sellers will deliver to Purchaser true and
complete copies of the unaudited balance sheets and the related unaudited
statements of income of the Company (on a consolidated basis) for each month
(and each fiscal year) then ended, which financial statements shall have
been prepared from and in accordance with the Books and Records of the
Company, and which shall fairly present, in all material respects, the
financial position and results of operations of the Company, as of the date
and for the period indicated.
5.6 Closing Conditions. Sellers will use their commercially reasonable
efforts to cause each of the conditions set forth in Article VII to be
satisfied as soon as reasonably practicable, but in all events on or prior
to June 29, 2001.
5.7 Transfer of Assets. From and after the date hereof and until the
Closing, Sellers shall cause the Company not to sell or dispose of any of
its assets or properties without the prior written consent of Purchaser,
except for (a) dispositions of the Excluded Assets as contemplated by
Section 2.2, or (b) dispositions or sales of inventory in the ordinary
course of business. Notwithstanding the foregoing or the provisions of
Section 5.2(a)(iii), the Company may pay dividends or make distributions of
current assets in respect of its capital stock.
5.8 Encumbrances. From and after the date hereof and until the
Closing, Sellers shall not permit the Company to enter into or assume any
mortgage, pledge, conditional sale or other title retention agreement or
permit any Lien to attach upon any of its assets, whether now owned or
hereafter acquired, except for (i) Permitted Liens, or (ii) Liens incurred
in the ordinary course of business and in conformity with past practice on
assets and properties of the Company having an original cost or fair value
(whichever is less) not exceeding $250,000 in the aggregate.
5.9 Condition of Assets. From and after the date hereof and until the
Closing, Sellers shall use commercially reasonable efforts, and shall cause
the Company to use commercially reasonable efforts, to maintain and keep in
good order, subject to ordinary wear and tear, all leasehold improvements,
inventory, machinery, equipment and other tangible personal property owned
or leased by the Company and used in connection with the operation of the
Company's business. Subject to the compliance by HCA and Holdings with the
obligations set forth in the preceding sentence, Purchaser acknowledges that
it will take possession and ownership of such assets and properties of the
Company by operation of its purchase of the Shares pursuant to this
Agreement AS IS, WHERE IS AND WITH ALL FAULTS. ALL OTHER WARRANTIES WITH
RESPECT TO SUCH ASSETS AND PROPERTY, EXPRESSED OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND ANY WARRANTIES REGARDING HABITABILITY OR FITNESS FOR
HABITATION, ARE EXPRESSLY DISCLAIMED; provided, however, that the foregoing
shall not limit any of the representations or warranties that Sellers
expressly make in this Agreement.
5.10 Consultative Process. From and after the date hereof and until the
Closing, Purchaser shall designate an individual or individuals whom Sellers
may contact during normal business hours for the purpose of approving
actions or transactions for which the consent of Purchaser is required under
this Agreement. The written approval of a designated individual as
contemplated in this Section 5.10 shall constitute the consent of Purchaser
to the transaction or action so approved. Unless and until Purchaser gives
written notice to the Sellers to the contrary, such designated individuals
shall be Xxxxxx X. Xxxxxxxx, Vice President, Finance and Chief Financial
Officer.
5.11 Intercompany Accounts. Except as otherwise provided in this
Agreement, including without limitation Section 2.2, and except as otherwise
provided in Schedule 5.11, at or prior to the Closing, (a) all indebtedness
and other amounts (i) owed by HCA, Holdings, or any of their Affiliates
(other than an Acquired Entity) to an Acquired Entity or (ii) owed by an
Acquired Entity to HCA, Holdings, or any of their Affiliates (other than an
Acquired Entity) shall be paid, canceled or eliminated (whether or not then
due), and (b) all Liens relating to any of the aforesaid indebtedness or
amounts shall be canceled and shall be discharged of record and (c) all
arrangements calling for the transfer of funds by any Acquired Entity in
connection with HCA's cash management program shall be terminated as of the
Closing. Except as set forth in the Reference Balance Sheet, as of the
Balance Sheet Date, there were no intercompany account balances between the
Company, on one hand, and HCA, Holdings or their Affiliates, on the other
hand.
5.12 Exclusivity. From the date hereof until the earlier of the Closing
or the termination of this Agreement, Sellers agree that neither Sellers nor
any Affiliate thereof nor any of their respective officers, directors or
representatives will, (a) negotiate with any other Persons with respect to a
sale, merger, consolidation, reorganization or other business combination
pursuant to which the stock, assets or business of any Acquired Entity would
be combined with that of, or sold to, any acquirer or any other business or
entity (except as contemplated by Section 2.2); (b) solicit or respond to
any offers, bids, negotiations or inquiries with respect to the same; (c)
furnish any information with respect to the business, activities,
operations, assets or liabilities of the Company, or other similar matters,
to any Persons whatsoever (other than as described in this Agreement) with
respect to the foregoing; nor (d) proceed or continue with negotiations in
respect of the foregoing which may be in progress as of the date of this
Agreement.
5.13 Resignations. Sellers shall obtain the written resignations of all
directors and officers of the Acquired Entities as are requested by
Purchaser not less than ten days in advance of the Closing, such
resignations to be effective as of the Effective Time. To the extent that
any such officer or director is also an employee of an Acquired Entity, such
resignation shall be applicable only to the Person's position as an officer
or director and not to such Person's employment.
5.14 Provider Agreement Delivery. (a) Sellers shall cause the Company
to use commercially reasonable efforts to index and make available for
Purchaser's inspection at CCN's headquarters all of the Hospital Provider
Agreements on or before the Closing Date.
(b) Sellers shall cause the Company to use commercially
reasonable efforts to index and make available for Purchaser's inspection
and statistical sampling at the Company's facilities substantially all of
the Non-Hospital Provider Agreements. The parties agree that if a
statistically significant sampling of the Non-Hospital Provider Agreements
indicates that 95% or more of such Non-Hospital Provider Agreements are at
the Company's facilities, Sellers shall have satisfied their obligation
under this Section 5.14(b).
ARTICLE VI
COVENANTS OF PURCHASER; CERTAIN ADDITIONAL
COVENANTS OF THE PARTIES
6.1 Confidentiality. Purchaser acknowledges and agrees that the
Confidentiality Agreement shall survive the execution and delivery of this
Agreement by the parties hereto until the Closing shall have occurred and
that all information provided to Purchaser or its "Representatives" or
"Other Recipients" (as such terms are defined in the Confidentiality
Agreement) in accordance with this Agreement shall be considered "Evaluation
Material" (as such term is defined in the Confidentiality Agreement) except
as otherwise provided in the Confidentiality Agreement. Notwithstanding the
foregoing, the provisions of the Confidentiality Agreement set forth in
Schedule 6.1 hereto shall not survive the parties' execution and delivery
hereof, but the deletion of such provisions shall not affect the remainder
of the Confidentiality Agreement.
6.2 Regulatory Approvals. Purchaser will (a) use commercially
reasonable efforts to obtain, as promptly as practicable, all Permits,
approvals, authorizations and clearances of Governmental Authorities that
are or should be listed in Schedule 6.2 hereto and to make the filings and
declarations with Governmental Authorities that are or should be listed in
Schedule 6.2 hereto as promptly as practicable after the date hereof (except
with respect to the filings pursuant to the HSR Act, which shall be filed by
the date set forth below), (b) provide such information and communications
to applicable Governmental Authorities as is necessary in connection with
the foregoing or in connection with Sellers' obtaining any of the Permits,
approvals, authorizations and clearances of Governmental Authorities or
making any filings or declarations with Governmental Authorities in
accordance with Section 5.1 as such Governmental Authorities or any Seller
may reasonably request, and (c) cooperate with Sellers in obtaining or
making, as soon as practicable, any Permits, approvals, authorizations,
clearances, filings and declarations of or with Governmental Authorities
that Sellers are required to obtain or make pursuant to Section 5.1.
Additionally, Purchaser will use commercially reasonable efforts to make a
filing, and to assist the Sellers in making their filing, of a pre-merger
notification report form pursuant to the HSR Act on or before May 29, 2001.
6.3 Books and Records. Until six months after the later to occur of
(a) the final adjudication of any dispute or investigation involving Taxes
arising out of the business, operations or affairs of the Company before the
Effective Time, (b) the final adjudication of any matter for which Sellers
may be required to indemnify or hold harmless Purchaser, the Company or any
Purchaser Indemnitee pursuant to the terms of this Agreement, or (c) the
running of applicable statutes of limitations, Purchaser will maintain all
Books and Records of the Company that relate to the pre-Closing business,
operations, assets and properties of the Company, and shall give Sellers
full and complete access during regular business hours to all such records
to the fullest extent reasonably required to enable Sellers to satisfy their
respective obligations hereunder or under applicable law. In addition to the
following, Purchaser shall not, without 90 days prior written notification
(a "Destruction Notice") to Sellers, destroy any pre-Closing Books and
Records of the Company. Following Sellers' receipt of a Destruction Notice,
if Sellers advise Purchaser in writing within such 90 day period, Purchaser
will promptly deliver the applicable Books and Records to Sellers.
6.4 Closing Conditions. Purchaser will use its commercially reasonable
efforts to cause the conditions set forth in Article VIII hereof to be
satisfied as soon as reasonably practicable, but in all circumstances prior
to June 29, 2001.
6.5 Employee Matters. As of the Effective Time, the employees of the
Company shall continue employment with the Company in the same positions and
at the same level of wages and/or salary and without having incurred a
termination of employment or separation from service; provided, however,
except as may be specifically required by Section 6.6, by applicable law or
by any Employment Contract described in Schedule 3.14(h), the Company shall
not be obligated to continue any employment relationship with any employee
for any specific period of time. As of the Effective Time, Purchaser shall
provide benefits to employees of the Company which are substantially similar
to the benefits provided to similarly situated employees of Purchaser and
its subsidiaries. To the extent any employee benefit plan, program or policy
of Purchaser or its affiliates is made available to the employees of the
Company: (i) service with the Company by any employee prior to the Effective
Time shall be credited for eligibility and vesting purposes under such plan,
program or policy, but not for benefit accrual purposes, and (ii) with
respect to any welfare benefit plans to which such employees may become
eligible, Purchaser shall use its commercially reasonable efforts to cause
such plans to provide credit for any co-payments or deductibles by such
employees and waive all pre-existing condition exclusions and waiting
periods, other than limitations or waiting periods that have not been
satisfied under any welfare plans maintained by the Company for their
employees prior to the Effective Date.
6.6 WARN Act Compliance. For at least 91 days following the Effective
Time, Purchaser will cause the Company to continue the employment of a
legally sufficient number of employees at each "single site of employment"
(and at each "facility" and "unit" within each "single site of employment")
so that the Company shall not be deemed to have effected a "plant closing"
or "mass layoff" under the provisions of the WARN Act. All quoted terms
used in this Section 6.6 and not defined herein shall have the meanings
ascribed to such terms under the WARN Act.
6.7 Tax Matters.
(a) Termination of Existing Tax Sharing Agreements. All tax
sharing agreements or similar arrangements with respect to or involving the
Acquired Entities shall be terminated effective as of the Effective Time.
(b) Payment of Taxes.
(i) Sellers shall prepare and file, or cause to be prepared
and filed, all Returns of or which include any of the Acquired Entities
(including any amendments thereto) with respect to any taxable period ending
at or prior to the Effective Time (a "Pre-Closing Period"). Such Returns
shall be prepared in a manner consistent with past practices. Sellers shall
provide Purchaser with copies of all Returns upon the request of Purchaser.
Notwithstanding anything to the contrary in this Agreement, Sellers shall
pay (A) any and all Taxes imposed on or with respect to any Acquired Entity
for a Pre-Closing Period (including, without limitation, any Taxes imposed
on any Acquired Entities as a result of having been (or ceasing to be) a
member of the HCA Affiliated Group, and any Taxes that are determined by
income or earned surplus attributable to a Pre-Closing Period), and (B) any
and all Taxes of any Person (other than the Acquired Entities) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local or foreign
law), or as a transferee or successor, pursuant to any Tax sharing
agreement, indemnification agreement, or similar contract or arrangement, or
otherwise. Purchaser shall prepare and file, or cause to be prepared and
filed, all Returns of or which include any of the Acquired Entities and
shall pay all Taxes or Other Taxes of any of the Acquired Entities for all
taxable periods other than a Pre-Closing Period, except to the extent
provided in the preceding sentence and in paragraph (ii) below.
(ii) For purposes of the immediately preceding paragraph (i)
and this paragraph (ii), if, for federal, state or local tax purposes, the
taxable period of an Acquired Entity that includes the Effective Time does
not terminate at the Effective Time (a "Straddle Period"), the parties
hereto will, to the extent permitted by applicable law, elect with the
relevant Governmental Authority to treat a portion of any such Straddle
Period as a short taxable period ending as of the Effective Time and such
short taxable period shall be treated as a Pre-Closing Period for purposes
of this Agreement. In any case where applicable law does not permit such an
election to be made then, for purposes of this Agreement, Taxes with respect
to the Acquired Entities for the Straddle Period shall be allocated to the
Pre-Closing Period using an interim closing-of-the-books method that
complies with Treas. Reg. Section 1.1502-76(b)(2)(i) (assuming that such
taxable period ended at the Effective Time) and treating such period as a
Pre-Closing Period for purposes of this Agreement, except that (A)
exemptions, allowances or deductions that are calculated on an annual basis
(such as the deduction for depreciation) shall be apportioned on a per diem
basis, and (B) real property taxes shall be allocated in accordance with
Section 164(d) of the Code. In the case of any Straddle Period described in
the preceding sentence, Purchaser shall provide Sellers and their authorized
representatives with copies of the completed Return for such period and a
statement certifying the amount of Taxes shown on such Return that are
chargeable to Sellers (the "Tax Statement") at least 30 days prior to the
due date for the filing of such Return (including any extension thereof),
and Sellers and their authorized representatives shall have the right to
review and comment on each such Return and Tax Statement prior to the filing
of such Return. Sellers and Purchaser agree to consult and resolve in good
faith any issues arising as a result of the review of such Return and Tax
Statement by Sellers or their authorized representatives and to mutually
consent to the filing of such Return. If the parties hereto are unable to
resolve any dispute within ten business days prior to the due date for
filing of the Return in question (including any extension thereof), the
parties shall jointly request the Selected Accounting Firm to resolve any
issue in dispute as promptly as possible. If the Selected Accounting Firm is
unable to make a determination with respect to any disputed issue prior to
the due date (including extensions) for the filing of the Return in
question, the Purchaser and the Acquired Entities, as the case may be, may
file such Return without the consent of Sellers, subject, however, to the
obligation thereafter to file an amended Return reflecting the final
decision of the Selected Accounting Firm (which decision shall be rendered
prior to the expiration of the period during which an amended Return may
validly be filed with respect to the applicable taxable period). Not later
than five days before the due date (including any extensions thereof) for
payment of Taxes with respect to such Return, Sellers shall pay to Purchaser
an amount equal to the Taxes shown on the Tax Statement as being chargeable
to Sellers pursuant to this paragraph (ii). If Sellers have disputed such
amount, appropriate adjustments shall be made to the amount paid by Sellers
in order to reflect the decision of the Selected Accounting Firm in
immediately available funds not later than five days after such decision has
been rendered.
(c) Refunds and Tax Benefits.
(i) Purchaser shall pay to Sellers, within 30 days of
receipt, any refund or credit (including any interest paid or credited with
respect thereto) received by Purchaser or any member of the Purchaser
Affiliated Group of Taxes relating to any Pre-Closing Period or portions of
Straddle Periods at or before the Effective Time. Purchaser shall, if
Sellers so request, cause the relevant Acquired Entity (or other relevant
member of the Purchaser Affiliated Group) to file for any refund or credit
to which Seller reasonably believes it is entitled pursuant to this Section
6.7(c). Any Proceeding with respect to such a claim shall be governed by the
provisions of this Section 6.7, including the provisions of Section 6.7(e).
(ii) Purchaser and each Acquired Entity shall make an
election under Section 172(b)(3) of the Code to relinquish the entire carry
back period with respect to any net operating loss attributable by such
Acquired Entity in any taxable period beginning at or after the Effective
Time that could be carried back to a Pre-Closing Period. Neither Sellers nor
any member of the HCA Affiliated Group shall be required to pay to Purchaser
or any Acquired Entity any refund or credit of Taxes that results from the
carry back to any Pre-Closing Period of any net operating loss, capital loss
or tax credit attributable by any Acquired Entity in any taxable period
beginning at or after the Effective Time.
(d) Cooperation.
(i) Sellers, on the one hand, and Purchaser and the Acquired
Entities, on the other hand, agree to furnish or cause to be furnished to
each other or their respective representatives, upon request, as promptly as
practicable, such information and assistance (including access to Books and
Records) relating to the Acquired Entities as is reasonably necessary for
the preparation of any Return, claim for refund, audit or similar matter, or
the prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment of Taxes or Other Taxes.
(ii) Except as otherwise provided in Section 6.7(b)(ii), if
Sellers and Purchaser disagree as to the matters governed by this Section
6.7, Sellers and Purchaser shall promptly consult with each other in an
effort to resolve such dispute. If any such disagreement cannot be resolved
within 15 days after either party asserts in writing that such dispute
cannot be resolved, the Selected Accounting Firm shall act as an arbitrator
to resolve such disagreement. The Selected Accounting Firm's determination
shall be binding and conclusive, and any expenses relating to the engagement
of such Selected Accounting firm shall be shared equally by Sellers and
Purchaser.
(e) Post-Closing Audits and Other Proceedings. In the case of any
audit, examination or other proceeding ("Proceeding") with respect to Taxes
for which Sellers are or may be liable pursuant to this Agreement (other
than a Proceeding relating to Taxes for a Straddle Period), Purchaser shall
promptly notify Sellers in writing of any such Proceeding, and Purchaser
shall timely execute or cause to be executed powers of attorney or other
documents necessary to enable Sellers to take all actions desired by Sellers
with respect to such Proceeding to the extent such Proceeding may affect the
amount of Taxes for which Sellers are liable pursuant to this Agreement.
Sellers shall have the sole right to control any such Proceedings,
(including any Proceedings to initiate claims for refunds of or credits with
respect to any Taxes for which Sellers are liable pursuant to this Agreement
and that Sellers believe are available) including the right to initiate any
claim for refund or credit, file any amended Return or take any other action
that it deems appropriate with respect to such Taxes (or refunds or
credits). All costs and expenses incurred in connection with any such
Proceeding shall be borne by Sellers, and Purchaser and the Acquired
Entities shall be reimbursed by Sellers for any and all reasonable direct
costs and expenses incurred by them in connection with such Proceeding.
Sellers shall keep Purchaser informed of all material developments and
events relating to such Proceeding and will not settle any Proceeding
without Purchaser's prior written consent. In the event that Purchaser's
consent is withheld, Purchaser will assume the control, costs and expenses
of the Proceeding. If such Proceeding is ultimately resolved by payment of
an amount in excess of the amount in the original settlement proposal (or
receipt of a refund in an amount less than the amount in the original
settlement proposal), Purchaser will pay the amount of such excess (or shall
pay Sellers the amount of such refund shortfall). If such Proceeding is
ultimately resolved by payment of an amount less than the amount of the
original settlement proposal (or a refund or credit in an amount greater
than the original settlement proposal), Sellers will reimburse Purchaser for
its costs and expenses to the extent of such difference. Notwithstanding the
foregoing, Sellers and Purchaser shall jointly control all Proceedings in
connection with (i) any Tax claim relating to Taxes of any Acquired Entity
for a Straddle Period and (ii) any Tax claim that would reasonably be
expected to have a material adverse effect on the business, financial
condition or results of operation of Purchaser or the Acquired Entities for
any taxable periods including or ending after the Closing Date. HCA shall,
upon Purchaser's request and at Purchaser's sole cost, provide Purchaser
with copies of filings made in proceedings that relate to CCN Taxes and the
corresponding statements or reports made by Governmental Authorities with
respect to such Taxes.
(f) Timing Adjustments. In the event that a final determination
(which shall include the execution of a Form 870-AD or successor form)
results in a timing difference (e.g., an acceleration of income or delay of
deductions) that would increase Sellers' liability for Taxes pursuant to
Article VI or results in a timing difference (e.g., an acceleration of
deductions or delay of income) that would increase Purchaser's liability for
Taxes or Other Taxes pursuant to Article VI, Sellers or Purchaser, as the
case may be, shall promptly make payments to Purchaser or Sellers as and
when Purchaser or Sellers, as the case may be, actually realizes any Tax
benefits as a result of such timing difference (or under such other method
for determining the present value of any such anticipated Tax benefits as
agreed to by the parties). Such Tax benefit for federal, state and local
income tax purposes, shall be computed for any year using the Purchaser's or
Sellers', as the case may be, actual tax liability with and without giving
effect to such timing difference.
6.8 Tax Indemnification.
(a) Sellers shall indemnify, defend and hold Purchaser and the
Acquired Entities harmless from and against any and all Damages for (i)
Taxes imposed on or with respect to any Acquired Entity for a Pre-Closing
Period (including, without limitation, any Taxes imposed on any Acquired
Entities as a result of having been (or ceasing to be) a member of the HCA
Affiliated Group, and any Taxes that are determined by income or earned
surplus attributable to a Pre-Closing Period) and (ii) Taxes of any Person
(other than the Acquired Entities) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local or foreign law), or as a transferee or
successor, pursuant to any Tax sharing agreement, indemnification agreement,
or similar contract or arrangement, or otherwise. Notwithstanding the
foregoing, Sellers shall not indemnify, defend or hold harmless Purchaser
and the Acquired Entities from and against any and all Damages for Taxes
attributable to any action taken (which would otherwise give rise to a Tax
indemnity payment by Sellers) after the Effective Time by Purchaser or the
Acquired Entities (other than any such action required by Law or expressly
required or otherwise expressly contemplated by this Agreement or with the
written consent of Sellers) (a "Purchaser Tax Act'').
(b) Purchaser shall indemnify, defend and hold Sellers and the
HCA Affiliated Group harmless from and against any and all Damages for (i)
Taxes or Other Taxes of any of the Acquired Entities for any period
beginning on or after the Effective Date, except to the extent Sellers are
otherwise required to indemnify Purchaser for such Taxes pursuant to Section
6.8(a), and (ii) Taxes attributable to a Purchaser Tax Act.
(c) The amount of any Taxes or Other Taxes for which
indemnification is provided under this Section 6.8 shall not be (A)
increased to take account of any net Tax cost incurred by the indemnified
party arising from the receipt of indemnity payments hereunder or (B)
reduced to take account of any net Tax benefit realized by the indemnified
party arising from the incurrence or payment of any such Taxes. Any
indemnity payment under this Agreement shall be treated as an adjustment to
the Purchase Price for United State federal income tax purposes.
(d) Any indemnity payment required to be made pursuant to this
Section 6.8 shall be paid within 30 days after the indemnified party makes
written demand upon the indemnifying party, but in no case earlier than five
business days prior to the date on which the relevant Taxes or Other Taxes
are required to be paid to the relevant Governmental Authority (including
estimated Tax payments).
(e) In no event shall the indemnities provided for in this
Section 6.8 be subject to the provisions of Section 9.4 of this Agreement.
6.9 Management Incentive Plan. Sellers represent and warrant to
Purchaser that the terms of the Company's Management Incentive Plan for the
year 2001 are identical to the terms of the Company's prior Management
Incentive Plan; provided, however, that the aggregate potential liability
under such plan with respect to 2001 and the incentive goals for
participants in the plan for 2001 are different than those for the prior
plan. Based on such representation and warranty, Purchaser agrees that it
will cause the Company's Management Incentive Plan to remain in effect
without amendment except as contemplated hereby through the Company's fiscal
year ending December 31, 2001, and to cause the Company to make all payments
required thereunder. Purchaser acknowledges that such plan will be amended
on or prior to the Closing Date to permit a person to receive a pro rata
bonus for 2001 if such person (a) otherwise would be eligible to receive a
bonus payment, and (b) is terminated as an employee of the Company between
(and including) the Closing Date and December 31, 2001 under circumstances
that would entitle such person to severance.
6.10 Severance Policy. Purchaser agrees that it will cause the
Company's severance policies to remain in effect without amendment until the
date which is nine months after the Closing Date and to cause the Company to
make all payments required thereunder.
6.11 Collection of Accounts Receivable. (a) Within thirty (30)
days following the first anniversary of Closing, Purchaser shall deliver to
HCA a schedule (the "Adjusted Collection Short-Fall Schedule") setting forth
Purchaser's determination of the Adjusted Collection Short-Fall Payment.
(b) HCA may object to any of the information or computations
contained in the Adjusted Collection Short-Fall Schedule which could affect
the Adjusted Collection Short-Fall Payment. Any such objection must be made
by delivery of a written statement of objections (stating the basis of the
objections with reasonable specificity) to Purchaser within 30 days
following delivery of the Adjusted Collection Short-Fall Schedule to HCA.
To the extent that HCA does not so object within such 30 day period, the
Adjusted Collection Short-Fall Schedule, as delivered to HCA, shall be
considered final and binding upon the parties. In the event that HCA and
Purchaser are unable to resolve a dispute or disagreement set forth in a
written objection pursuant to this Section 6.11 within 30 days of
Purchaser's receipt of such objections, either party may elect, by written
notice to the other party, to have all such disputes or disagreements
resolved by the Selected Accounting Firm. The Selected Accounting Firm shall
determine the Adjusted Collection Short-Fall Payment, which determination of
the Selected Accounting Firm shall be final and binding upon the parties.
The Selected Accounting Firm shall be instructed to use every reasonable
effort to perform its services within 15 days after submission of the
Adjusted Collection Short-Fall Schedule and HCA's written objections to it
and, in any case, as soon as practicable after such submission. The parties
will cooperate fully with the Selected Accounting Firm, and shall cause the
Company to cooperate fully with the Selected Accounting Firm, in connection
with its determination of the Adjusted Collection Short-Fall Payment and
calculation of the Adjusted Collection Short-Fall Payment. The costs and
expenses for the services of the Selected Accounting Firm shall be borne
equally by Purchaser and HCA.
(c) Within ten days after the Adjusted Collection Short-Fall
Payment is agreed upon or otherwise finally determined pursuant to Section
6.11(b), HCA shall pay Purchaser cash (by wire transfer of immediately
available funds) in the amount of the Adjusted Collection Short-Fall
Payment.
(d) Purchaser shall use commercially reasonable efforts to
collect the Closing Date Receivables. Purchaser will use no lesser efforts
with respect to the collection of Closing Date Receivables than the Company
has historically used with respect to the collection of similarly aged
accounts receivable generated by the Company. Neither the Company nor
Purchaser shall adjust the amount of, or settle below face amount of, any
Closing Date Receivable in a manner that is inconsistent with the manner
that the Company has historically used with respect to receivables it has
generated without HCA's prior written approval, which approval shall not be
unreasonably withheld.
(e) Simultaneously with the delivery to Purchaser of the Adjusted
Collection Short-Fall Payment, Purchaser shall assign to HCA all of
Purchaser's and the Company's right, title and interest in either (i) all
Closing Date Receivables that remain uncollected on the first anniversary of
the Closing Date or (ii) the Closing Date Receivables that remain
uncollected on the first anniversary of the Closing Date and which are
obligations of third parties who are not customers or clients of the Company
or Purchaser on the first anniversary of the Closing Date (such assigned
accounts the "Assigned Accounts"). Simultaneously with the transfer by the
Purchaser and the Company of the Assigned Accounts, Purchaser shall identify
to HCA, in writing, each Assigned Account with respect to which there are
(a) actions, suits or proceedings pending, or, to Purchaser's knowledge,
threatened or (b) to Purchaser or the Company's knowledge, allegations that
the Company did not fully perform its obligations to such payor ("Problem
Accounts"). Upon HCA's request, Purchaser shall give HCA a written
explanation of the matters and/or allegations that caused it to identify an
account as a Problem Account. In addition, upon HCA's request, Purchaser
shall give, and shall cause the Company to give HCA, all information,
including any relevant Books and Records, related to the Problem Accounts.
(f) Purchaser and the Company shall cooperate with HCA in
collecting the Assigned Accounts. Purchaser and the Company shall promptly
remit to HCA any amounts received after the first anniversary of the Closing
Date in respect of the Assigned Accounts.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PURCHASER
Except as may be waived by Purchaser, the obligations of Purchaser to
purchase the Shares and to consummate the transactions contemplated hereby
on the Closing Date shall be subject to the satisfaction on or prior to the
Closing Date of the following conditions:
7.1 Representations and Warranties. The representations and warranties
of Sellers set forth in this Agreement (i) to the extent qualified by
Material Adverse Effect shall be true and correct and (ii) to the extent not
qualified by Material Adverse Effect shall be true and correct, except that
this clause (ii) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, taken together, would
not have a Material Adverse Effect and would not materially impair the
ability of Sellers to consummate the transactions contemplated by this
Agreement, in the case of each of (i) and (ii), as of the Closing Date as
though made on and as of the Closing Date (except to the extent such
representations speak as of an earlier date, in which case as of such date.)
7.2 Compliance with Agreement. On and as of the Closing Date, Sellers
shall have performed and complied in all material respects with each
covenant and agreement required by this Agreement to be performed and
complied with by them on or before the Closing Date.
7.3 Closing Certificates. Sellers shall have delivered to Purchaser a
certificate, dated as of the Closing Date and signed on behalf of HCA and
Holdings, respectively, by the President or Vice President of each thereof,
certifying the fulfillment of the conditions specified in Sections 7.1 and
7.2 hereof.
7.4 Secretary's Certificates. At the Closing, Purchaser shall have
received copies of the following, in each case certified as of the Closing
Date by a Secretary or an Assistant Secretary of HCA and Holdings,
respectively:
(a) resolutions of the respective boards of directors of HCA and
Holdings authorizing the execution, delivery and performance of this
Agreement and the other agreements that HCA or Holdings is required to
execute and deliver pursuant to the terms of this Agreement; and
(b) the signature and incumbency of the respective officers of
HCA and Holdings authorized to execute and deliver this Agreement and the
other agreements and certificates that HCA or Holdings is required to
deliver on or before the Closing Date pursuant to this Agreement.
7.5 Opinion of Counsel. At the Closing, Purchasers shall have received
the opinion, dated the Closing Date, of Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, a
Professional Limited Liability Company, counsel for Sellers, as to matters
for which opinions are customarily given in transactions of this nature.
Such opinion may include qualifications and assumptions that are customary
and appropriate with respect to the substance of such opinion.
7.6 Consents, Authorizations, Etc. All orders, consents, Permits,
authorizations, approvals, waivers, filings, registrations and notifications
of or to Governmental Authorities that are or should have been set forth at
Schedules 5.1 and 6.2 hereto that are required to be obtained or given prior
to the Closing shall have been obtained or given, and all applicable waiting
periods with respect thereto shall have expired.
7.7 No Action or Proceeding. On the Closing Date, (a) no judgment,
order or decree of any court or other Governmental Authority restraining,
enjoining or otherwise preventing the consummation of this Agreement or the
transactions contemplated hereby shall be outstanding, (b) no action, suit,
investigation or proceeding brought by any Governmental Authority shall be
pending before any court or other Governmental Authority to restrain, enjoin
or otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby, which action, suit, investigation or proceeding, in the
reasonable opinion of Purchaser, may result in a decision, ruling or finding
that individually or in the aggregate has or would reasonably be expected to
adversely affect the validity or enforceability of this Agreement, or
materially impair the ability of Purchaser to perform its obligations under
this Agreement, and (c) neither the Justice Department nor the FTC shall
have requested, orally or in writing, that Sellers delay or postpone the
Closing, and the Attorney General of any State of the United States shall
not have requested, in writing, that Sellers delay or postpone the Closing.
7.8 Certificates of Incorporation; Bylaws. Sellers shall have
delivered to Purchasers true and complete copies of the respective
Certificates of Incorporation and Bylaws of HCA, Holdings, CCN, and PW.
7.9 Resignation of Boards of Directors and Officers. Each then-current
officer and/or member of the board of directors of any of the Acquired
Entities who is designated by Purchaser to HCA in writing not less than ten
days prior to the Closing shall have tendered his or her written resignation
as an officer and/or director to the applicable Acquired Entity, such
resignations to be effective at or before the Effective Time.
Notwithstanding the foregoing, no such officer or director shall be required
to resign as an employee of the Company.
7.10 Good Standing Certificates. At the Closing, Sellers shall have
delivered to Purchaser good standing certificates issued with respect to
HCA, Holdings, and each of the Acquired Entities issued by the Secretary of
State of the relevant entity's state of incorporation. Each such good
standing certificate shall be dated as of a date that is not more than
twenty days prior to the Closing Date.
7.11 Waiver of Conditions. Purchaser may waive any condition of this
Article VII to the extent permitted by applicable law. Except as otherwise
provided herein, the consequences of any knowing waiver shall be the
elimination of the waived condition as a valid basis for Purchaser to refuse
to close the transactions contemplated by this Agreement.
7.12 Affiliation Agreement. The Affiliation Agreement shall have been
executed and delivered by the parties thereto.
7.13 Stock Options. All stock options referenced or which should be
referenced on Schedule 3.2(a)(iv) shall have been terminated with no
obligation to the Acquired Entities except for the payment obligations
described in Section 2.4. Such termination may become effective as of the
Effective Time.
7.14 Tax Sharing Agreements. All tax sharing agreements between HCA
and any Acquired Entity shall have been terminated.
7.15 Contract Delivery. At or prior to the Closing, Sellers shall
have indexed and made available for inspection at CCN's headquarters at
least 80% of the Hospital Provider Agreements and indexed and made available
for inspection and statistical sampling at CCN's facilities at least 80% of
the Non-Hospital Provider Agreements. With respect to the Non-Hospital
Provider Agreements, this condition shall be determined through sampling a
statistically significant number of such Non-Hospital Provider Agreements.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLERS
Except as may be waived in writing by Sellers, the obligations of
Sellers to consummate the transactions contemplated hereby on the Closing
Date shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions:
8.1 Representations and Warranties. The representations and
warranties of Purchaser set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect shall be true and correct and (ii) to
the extent not qualified by Material Adverse Effect shall be true and
correct, except that this clause (ii) shall be deemed satisfied so long as
any failures of such representations and warranties to be true and correct,
taken together, would not have a Material Adverse Effect and would not
materially impair the ability of Purchaser to consummate the transactions
contemplated by this Agreement in the case of each of (i) and (ii), as of
the Closing Date as though made on and as of the Closing Date (except to the
extent such representations speak as of an earlier date, in which case as of
such date.)
8.2 Compliance with Agreement. On and as of the Closing Date,
Purchaser shall have performed and complied in all material respects with
each covenant and agreement required by this Agreement to be performed and
complied with by it on or before the Closing Date.
8.3 Closing Certificates. Purchaser shall have delivered to Sellers a
certificate, dated as of the Closing Date and signed on behalf of Purchaser
by the President or a Vice President thereof, certifying the fulfillment of
the conditions specified in Sections 8.1 and 8.2 hereof.
8.4 Secretary's Certificate. At the Closing, Sellers shall have
received copies of the following, in each case certified as of the Closing
Date by a Secretary or an Assistant Secretary of Purchaser:
(a) resolutions of the board of directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and
the other agreements that Purchaser is required to execute and deliver
pursuant to the terms of this Agreement;
(b) the signature and incumbency of the officers of Purchaser
authorized to execute and deliver this Agreement and the other agreements
and certificates that Purchaser is required to deliver on or before the
Closing Date pursuant to this Agreement.
8.5 Opinion of Counsel. At the Closing, Sellers shall have received
the opinion, dated the Closing Date, of Xxxxxx & Xxxxxxx, counsel for
Purchaser, as to matters for which opinions are customarily given in
transactions of this nature. Such opinion may include qualifications and
assumptions that are customary and appropriate with respect to the substance
of such opinion.
8.6 Consent, Authorizations, Etc.. All orders, consents, Permits,
authorizations, approvals, waivers, filings, registrations and notifications
of or to Governmental Authorities that are or should be set forth at
Schedules 5.1 and 6.2 hereto that are required to be obtained or given prior
to the Closing shall have been obtained or given, and all applicable waiting
periods with respect thereto shall have expired.
8.7 No Action or Proceeding. On the Closing Date, (a) no judgment,
order or decree of any court or other Governmental Authority restraining,
enjoining or otherwise preventing the consummation of this Agreement or the
transactions contemplated hereby shall be outstanding, and (b) no action,
suit, investigation or proceeding brought by any Governmental Authority
shall be pending before any court or other Governmental Authority or
threatened by any Governmental Authority to restrain, enjoin or otherwise
prevent the consummation of this Agreement or any of the transactions
contemplated hereby, which action, suit, investigation or proceeding, in the
reasonable opinion of HCA, may result in a decision, ruling or finding that
individually or in the aggregate has or would reasonably be expected to
adversely affect the validity or enforceability of this Agreement or
materially impair the ability of HCA or Holdings to perform their respective
obligations under this Agreement, and (c) neither the Justice Department nor
the FTC shall have requested, orally or in writing, that Sellers delay or
postpone the Closing, and the Attorney General of any State of the United
States shall not have requested, in writing, that Sellers delay or postpone
the Closing.
8.8 Good Standing Certificate. At the Closing, Purchaser shall have
delivered to Sellers a good standing certificate issued with respect to
Purchaser by the Secretary of State of Purchaser's state of incorporation.
Such good standing certificate shall be dated as of a date that is not more
than twenty days prior to the Closing Date.
8.9 Certificate of Incorporation; Bylaws. Purchaser shall have
delivered to Sellers true and complete copies of Purchaser's Certificate of
Incorporation and Bylaws.
8.10 Waiver of Conditions. Sellers may waive any conditions of this
Article VIII to the extent permitted by applicable law. Except as otherwise
provided herein, the consequences of any knowing waiver shall be (a) the
elimination of the waived condition as a valid basis for Sellers to refuse
to close the transactions contemplated by this Agreement, and (b) the
release of Purchaser from any claim by Sellers for resulting injuries and
Damages with respect to that waived condition.
8.11 Affiliation Agreement. The Affiliation Agreement shall have been
executed and delivered by the parties thereto.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Sellers. Subject to the provisions of this
Article IX, Sellers shall jointly and severally indemnify and hold harmless
Purchaser, any Affiliate of Purchaser, the respective officers, directors,
shareholders, employees, agents and representatives of Purchaser and its
Affiliates, and each such Person's respective successors and assigns (each,
a "Purchaser Indemnitee") from and after the Effective Time from and against
the Excluded Liabilities and any Damages incurred or suffered by such
Purchaser Indemnitee as a result of or arising from (a) any inaccuracy in
any of the representations and warranties made herein by Sellers, (b) any
breach of any of the covenants or agreements made herein by Sellers, (c) any
claims, actions, suits or other proceedings arising out of any of the
Excluded Liabilities, (d) the current governmental investigation of HCA and
its Affiliates (including any portion of such investigation which pertains
to the Acquired Entities), (e) any Controlled Group Plan that is not a
Company Plan and (f) any claim brought by an obligor of a Problem Account
which claim is based solely upon events which occurred prior to the Closing
Date and which claims are filed as a counterclaim in response to HCA's
attempt to collect the Problem Account. Notwithstanding the foregoing, the
sole recourse of a Purchaser Indemnitee for any and all Damages relating to
or arising from a breach of any of the covenants or agreements contained in
(i) Section 6.7 shall be controlled by the provisions of Section 6.8 and
(ii) in Section 5.14 shall be limited to the Purchase Price adjustment
described in Section 2.3(a)(ii).
9.2 Indemnification by Purchaser. Purchaser shall indemnify and hold
harmless each Seller, any Affiliate of any Seller, the respective officers,
directors, shareholders, employees, agents and representatives of each
Seller and their respective Affiliates, and each such Person's respective
successors and assigns (each a "Seller Indemnitee") from and after the
Effective Time from and against any Damages incurred or suffered by such
Seller Indemnitee as a result of, or arising from (a) any inaccuracy in any
of the representations and warranties made herein by Purchaser, (b) any
breach of any of the covenants or agreements made herein by Purchaser, (c)
any claims, actions, suits, or other proceedings relating to the operations
of the Company after the Effective Time, and (d) any claims, actions, suits
or proceedings arising out of any post-Closing obligation or action on the
part of the Company under any Contract which is not an Excluded Liability.
Notwithstanding the foregoing, the sole recourse of a Seller Indemnitee for
any and all Damages relating to or arising from a breach of any of the
covenants or agreements contained in Section 6.7 shall be controlled by the
provisions of Section 6.8.
9.3 Claims Procedures. Unless a different procedure is specified in
Section 6.7 or 6.8, in the case of any Damages for which indemnification is
sought hereunder, the party seeking indemnification (the "Indemnitee") shall
promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") in writing of the existence and nature of such
Damages, as well as the claim, demand, action or proceeding, if any, out of
which the Damages arise (a "Claim"); provided, however, that no failure or
delay by the Indemnitee in the performance of the foregoing shall reduce or
otherwise affect the obligation of the Indemnifying Party to indemnify and
hold the Indemnitee harmless, except to the extent the Indemnitee's failure
to give or delay in giving the required notice materially impairs the
Indemnifying Party's ability to indemnify or defend or to mitigate its
Damages, in which case the Indemnifying Party shall have no obligation to
indemnify the Indemnitee to the extent of Damages, if any, caused by such
failure to give or delay in giving the required notice. If such Damages
arise out of a Claim by a third person, the Indemnitee must give the
Indemnifying Party a reasonable opportunity to defend the same or prosecute
such action to conclusion or settlement satisfactory to the Indemnifying
Party at the Indemnifying Party's sole cost and expense and with counsel of
its own selection, and the Indemnifying Party shall pay any resulting
settlements (including all associated Damages), satisfy any judgments or
comply with any decrees; provided, further, however, that the Indemnitee
shall at all times also have the right fully to participate in the defense
at Indemnitee's sole cost and expense so long as such participation occurs
without hindering or impairing the defense of the Indemnifying Party.
Notwithstanding the foregoing, without the prior written consent of the
Indemnitee, the Indemnifying Party shall not compromise or settle any Claim
if (i) the terms thereof impose any liability or obligations on the
Indemnitee, or (ii) the terms thereof fail to include an unconditional
general release of the Indemnitee with respect to all liabilities and
obligations in respect of such Claim. If the Indemnifying Party shall,
within a reasonable time after said notice, fail to defend, the Indemnitee
shall have the right, but not the obligation, and without waiving any rights
against the Indemnifying Party, to undertake the defense of, and with the
consent of the Indemnifying Party (such consent not to be withheld
unreasonably), to compromise or settle the Claim on behalf, for the account,
and at the risk and expense, of the Indemnifying Party and shall be entitled
to collect the amount of any settlement or judgment or decree and all costs
and expenses (including, without limitation, reasonable attorney's fees) in
connection therewith from the Indemnifying Party. Except as provided in the
preceding sentence, the Indemnitee shall not compromise or settle any Claim.
9.4 Limitations on Claims.
(a) Liability Thresholds. Notwithstanding anything in this
Article IX to the contrary, no indemnified Damages with respect to Claims
arising out of a breach of Sellers' representations and warranties shall be
payable pursuant to this Article IX unless and until the aggregate amount of
indemnified Damages asserted against Sellers under this Article IX with
respect to such Claims equals or exceeds an amount equal to one percent (1%)
of the Base Purchase Price (the "Liability Threshold"). Once the Liability
Threshold for such Claims has been reached, the Indemnitee shall be entitled
to the benefit of the indemnity under this Article IX for such Claims to the
extent of any and all Damages; provided, however, that except with respect
to Claims for indemnification pursuant to Section 9.1(a) with respect to
Sellers' representations and warranties in Section 3.24 hereof, the
aggregate amount of Seller's liability under Section 9.1 shall not exceed
the amount equal to fifty percent (50%) of the Base Purchase Price.
Notwithstanding anything in this Agreement to the contrary, Seller's
liability for claims for indemnification related to breaches of covenants,
including, without limitation, Sections 9.1(b), (d), (e) or (f), shall not
be subject to any Liability Threshold, liability cap (other than as set
forth in clause (ii) of the last sentence of Section 9.1 hereof) or time
limitation (other than limitations imposed by statute or common law).
(b) Subrogation. Following full indemnification as provided for
hereunder, the Indemnifying Party shall be subrogated to all rights of the
Indemnitee with respect to all Persons relating to the matter for which
indemnification has been made.
(c) Survival of Representations and Warranties; Limitation of
Time to Bring Claims. The representations and warranties set forth in this
Agreement shall survive the Closing and shall expire eighteen (18) months
after the Effective Time, other than those set forth in Sections 3.2 and 3.5
hereof, which shall survive in perpetuity, and those set forth in Sections
3,14, 3.16, 3.20, and insofar as any Damages relate to Claims made against
the Company by third parties, 3.24 which shall survive until 90 days after
the expiration of the applicable statute of limitations. No Claim for
indemnification arising out of a breach of representations and warranties in
this Agreement may be brought after the applicable time provided for in this
Section 9.4(c).
9.5 Insured Losses. The amount of any Damages for which
indemnification is provided under this Article IX shall be net of any
duplicative amounts recovered by the Indemnitee under insurance policies or
from unaffiliated third Persons with respect to such Damages.
9.6 Characterization of Indemnification Payments Purchaser and
Sellers agree to treat any payment made under this Article IX as an
adjustment to the Purchase Price. If, contrary to the intent of Purchaser
and Sellers as expressed in the preceding sentence, a Governmental Authority
requires any payment made pursuant to this Article IX to be treated in a
different manner, then the Indemnifying Party shall indemnify and hold
harmless the Indemnified Party on an after-tax basis (taking into account
any actual Tax benefits or detriments realized with respect to the Damages
for which the payment under this Article IX is being made).
ARTICLE X
TERMINATION
10.1 Termination Events. (a) This Agreement may be terminated at any
time prior to Closing upon prior written notice by the party electing to
terminate this Agreement to the other party:
(i) by mutual agreement of HCA and Purchaser (expressed in
writing);
(ii) by either HCA or Purchaser if any permanent injunction, Court
Order or other order, decree or ruling of any court or other Governmental
Authority of competent jurisdiction permanently restraining, enjoining or
otherwise preventing the consummation of the transactions contemplated
hereby shall have been issued and become final and non-appealable;
(iii) subject to the provisions of Section 10.1(b), by either
HCA or Purchaser if the Closing shall not have occurred by July 31, 2001;
provided, however, that the right to terminate this Agreement under this
Section 10.1(c) shall not be available to any party whose breach of its
representations and warranties in this Agreement or whose failure to perform
any of its covenants and agreements under this Agreement shall have been a
contributing cause of, or resulted in, the failure of the Closing to occur
on or before such date; provided, that the right to terminate this Agreement
pursuant to this Section 10.1(a)(iii) shall not be available to any party
whose failure to fulfill any material obligation under this Agreement or
whose failure to use all good faith efforts to promptly cause the
satisfaction of the conditions under Sections 7 and 8 has been the cause of,
or resulted in, the failure of the Closing to occur by such date;
(iv) by HCA upon a breach in any material respect of any covenant
or agreement on the part of the Purchaser set forth in this Agreement, or if
any representation or warranty of the Purchaser shall have been breached or
shall have become untrue, in any such case that the conditions set forth in
Sections 8.1 and 8.2 would be incapable of being satisfied by July 31, 2001
(or any later date as such date may be otherwise extended by mutual
agreement of the parties); or
(v) by Purchaser upon a breach in any material respect of any
covenant or agreement on the part of any Seller set forth in this Agreement,
or if any representation or warranty of any Seller shall have been breached
or shall have become untrue in any such case such that the conditions set
forth in Sections 7.1 and 7.2 would be incapable of being satisfied by July
31, 2001 (or any later date as such date may be otherwise extended by mutual
agreement of the parties).
(b) Notwithstanding the provisions of Section 10.1(a)(iii)
hereof, HCA and Purchaser each agrees that if all of the conditions to such
party's obligation to close the transaction contemplated hereby have been
satisfied or waived as of July 31, 2001 other than the receipt of the
Governmental Approvals listed in Schedules 5.1 and 6.2 or the expiration of
the waiting period with respect to any such Governmental Approval, neither
HCA nor Purchaser shall terminate this Agreement without first providing the
other party with ten days' written notice of its intention to terminate.
During such ten-day period, HCA and Purchaser each shall cause its counsel
to confer with the other party's counsel in an attempt to agree on the
likelihood of a timely and successful resolution of all such issues relating
to the applicable Governmental Approval or waiting period. Following such
ten-day period, neither HCA nor Purchaser shall terminate this Agreement
unless such Party reasonably believes, based upon the likely time period
necessary to resolve the applicable Governmental Approval issues, the
likelihood of successfully resolving such Governmental Approvals without
conditions, obligations or agreements which adversely effect the party, and
other relevant factors, that not terminating this Agreement could cause
effects which are material and adverse to it in comparison to the size and
nature of the transactions contemplated hereby.
10.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 10.1, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to Sections
6.1 and 12.1 and except for the provisions of this Section 10.2 and Sections
12.2, 12.6, 12.7, 12.8, 12.9, 12.10, 12.11 and 12.13. Moreover, in the event
of termination of this Agreement pursuant to Section 10.1(a)(iii), (iv) or
(v), nothing herein shall prejudice the ability of the non-breaching party
from seeking damages from any other party for any breach of this Agreement,
including without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
ARTICLE XI
NOTICES
11.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in
person or received by telegraphic or other electronic means (including
facsimile, telecopy and telex) or when delivered by overnight courier, or if
mailed, five days after being deposited in the United States mail, certified
or registered mail, first-class postage prepaid, return receipt requested,
to the parties at the following addresses or facsimile numbers:
If to HCA or Holdings, to:
HCA - The Healthcare Company
Xxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
With copies to:
HCA - The Healthcare Company
Xxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Senior Vice President - Development
Fax: (000) 000-0000
and
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx,
A Professional Limited Liability Company
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: G. Xxxxx Xxxxxx
Fax: (000) 000-0000
If to Purchaser, to:
First Health Group Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President
Fax: ((000) 000-0000
With a copy to:
First Health Group Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
and
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
Any party from time to time may change its address or facsimile number
for the purpose of receipt of notices to that party by giving a similar
notice specifying a new address or facsimile number to the other notice
parties listed above in accordance with the provisions of this Section 11.1.
ARTICLE XII
MISCELLANEOUS
12.1 Fees and Expenses. Except as otherwise provided in this Agreement,
the Sellers shall pay their own expenses (including, without limitation, the
fees and expenses of Xxxxxxx Xxxxx & Co. in connection with this Agreement
and also including those expenses of the Acquired Entities in connection
with this Agreement and the transactions contemplated hereby incurred prior
to the Effective Time) and Purchaser shall pay its own expenses (including,
without limitation, the fees and expenses of SSB in connection with this
Agreement, and also including those of the Acquired Entities in connection
with this Agreement and the transactions contemplated hereby incurred after
the Effective Time) in connection with this Agreement and the transactions
contemplated hereby. HCA and Purchaser each shall pay one half all recording
fees, transfer fees, transfer taxes, and documentary or stamp taxes, if any,
relating to the sale and the transactions provided for herein. Except as set
forth in the following sentence, each party shall pay its own fees and
expenses, including counsel fees and filing fees, with respect to the
preparation and filing of its notifications under the HSR Act. Further, and
notwithstanding the foregoing, Purchaser will bear all reasonable costs and
expenses, including attorneys' fees of all parties, resulting from or
relating to any investigation or challenge of the transactions contemplated
hereby initiated by the United States Federal Trade Commission, the United
States Department of Justice or the Attorney General of any state on, prior
to or after the Closing under antitrust or similar laws, including
reasonable costs and expenses resulting from or relating to any "second
request" issued in connection with the parties' HSR Act filings made in
connection with the transactions contemplated hereby.
12.2 Entire Agreement. Except for documents and agreements executed
pursuant hereto, and except for the provisions of the Confidentiality
Agreement (which Confidentiality Agreement shall survive the parties'
execution and delivery of this Agreement and the other documents and
agreements contemplated hereby until the Closing shall have occurred, except
to the extent otherwise provided in Section 6.1), this Agreement supersedes
all prior oral discussions and written agreements between the parties with
respect to the subject matter of this Agreement (including any term sheet or
similar agreement or document relating to the transactions contemplated
hereby). Except for the Confidentiality Agreement, this Agreement, including
the exhibits and schedules hereto and other documents delivered in
connection herewith, contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
12.3 Waiver. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof. Any such
waiver must be in writing and must be duly executed by such party. A waiver
on one occasion shall not be deemed to be a waiver of the same or any other
breach, provision or requirement on any other occasion.
12.4 Amendment. This Agreement may be modified or amended only by a
written instrument duly executed by each of the parties hereto.
12.5 Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same instrument.
Facsimile signatures on this Agreement shall be deemed to be original
signatures for all purposes.
12.6 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of Sellers, Purchaser and
their respective successors or assigns, and it is not the intention of the
parties to confer third party beneficiary rights upon any other Person.
12.7 GOVERNING LAW, CONSTRUCTION. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE
APPLICABLE TO A CONTRACT EXECUTED AND PERFORMED IN SUCH STATE. The parties
hereto agree that no provisions of this Agreement or any related document
shall be construed for or against or interpreted to the advantage or
disadvantage of any party hereto by any court or other Governmental
Authority by reason of any party's having or being deemed to have structured
or drafted such provision, each party having participated equally in the
structuring and drafting hereof.
12.8 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns, including successors by merger or otherwise.
12.9 No Assignment. Neither this Agreement nor any right hereunder or
part hereof may be assigned by any party hereto without the prior written
consent of the other parties hereto; provided, however, that HCA and
Holdings, on the one hand, and Purchaser, on the other hand, may assign
their respective rights and obligations under this Agreement to other
Persons who (a) are wholly-owned (directly or indirectly) by HCA or
Purchaser, respectively, and (b) agree to be bound by the terms and
conditions of this Agreement. Notwithstanding the assignment of this
Agreement or any rights or obligations hereunder, the assignor shall be
jointly and severally liable with its assignee for its obligations
hereunder.
12.10 Headings, Gender, Etc. The headings used in this Agreement
have been inserted for convenience and do not constitute provisions to be
construed or interpreted in connection with this Agreement. Unless the
context of this Agreement otherwise requires, (a) words of any gender will
be deemed to include each other gender, (b) words using the singular or
plural number also will include the plural or singular number, respectively,
(c) the terms "hereof", "herein", "hereby" and derivative or similar words
will refer to this entire Agreement, and (d) the terms "Article," "Section,"
"Schedule" and "Exhibit" will refer to the specified Article or Section of
this Agreement or the specified Schedule or Exhibit to this Agreement.
12.11 Public Announcement. On or before the Closing, the parties
hereto will each consult with one another prior to making or issuing public
statements or announcements with respect to this Agreement or the
transactions contemplated hereby and will use good faith efforts to agree on
the text of a joint public statement or announcement and/or will use good
faith efforts to obtain the other parties' approval of the text of any
public statement or announcement to be made solely on behalf of a party;
provided that the foregoing shall not preclude any party from making such
disclosure as may be required by applicable Law or the rules of any
securities exchange or market on which securities of such party are listed
or quoted.
12.12 Access to Information. Sellers and Purchaser agree that, from
time to time after the Closing, upon the reasonable request of another party
hereto, they will cooperate and will cause their respective Affiliates to
cooperate with each other to effect the orderly transition of the business,
operations and affairs of the Company. Without limiting the generality of
the foregoing, (a) Sellers will give and will cause their Affiliates to give
representatives of the Company reasonable access to all Books and Records of
Sellers reasonably requested by the Company or Purchaser in the preparation
of any post-Closing financial statements, reports or Tax returns of the
Company; and (b) Purchaser will give and will cause the Company to give
representatives of Sellers reasonable access to all pre-Closing Books and
Records of the Company reasonably requested by Sellers in the preparation of
any post-Closing financial statements, reports or Tax returns of Sellers.
12.13 Severability; Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present
or future law, (a) such provisions will be fully severable; (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Agreement will remain in full force and effect and will
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom; and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible.
12.14 Cooperation. Upon request, each of the parties hereto shall
cooperate with the other in good faith, at the requesting party's expense,
in furnishing information, testimony and other assistance in connection with
any actions, proceedings, arrangements, or disputes involving any of the
parties hereto (other than in a dispute among such parties or entities) and
based upon contracts, arrangements or acts of HCA, Holdings, or the Company
which were in effect or occurred prior to the Effective Time and which
relate to the business of the Company. Purchaser shall cause the Company to
provide any information or documents reasonably requested by HCA or Holdings
in connection with tax or other disputes, settlements, investigations,
proceeding or other matters in respect of any period ending at or prior to
the Effective Time. The party requesting documents or information pursuant
to this Section shall pay all fees and expenses paid to unaffiliated third
parties by the party providing such documents or information in connection
with providing such information or document. In addition, following the
Closing, the parties hereto shall cooperate fully with each other and make
available to the other, as reasonably requested, and to any taxing
authority, all information, records, documents relating to tax liabilities
or potential tax liabilities and tax bases of the Company, and shall
preserve all such information, records and documents at least until the
expiration of any applicable statute of limitations or extensions thereof.
12.15 Further Assurance Clause. On and after the Closing Date,
Sellers, the Company and Purchaser will take all appropriate action and
execute all documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the provisions hereof,
including, without limitation, putting Purchaser in possession and operation
control of the business of the Company.
12.16 Compliance with Obligations. Purchaser agrees to deal with
each of the Persons listed on Schedule 12.16 in good faith with respect to
the Management Severance Obligations, to cause the Company to deal with each
of such Persons in good faith with respect to the Management Severance
Obligations, and to cause the Company to fully comply with the terms of the
Management Severance Obligations. Purchaser acknowledges that Sellers have
a material interest in Purchaser's compliance with the covenants set forth
in this Section 12.16, including an interest in maintaining Sellers'
reputation as an employer and to Sellers' relationships with the management
personnel of Seller and its Affiliates. Therefore, Purchaser agrees that it
will not challenge Sellers' standing to bring an action on its own behalf or
on behalf of the Persons listed in Schedule 5.16 to enforce the provisions
of this Section 12.16 or its standing to join in any action brought by any
such Person to enforce the Management Severance Obligations. "Management
Severance Obligations" shall mean the severance payments that may become due
to the Persons decided on Schedule 12.16 hereto pursuant to any Company Plan
in place on the date hereof.
[The following page is the signature page.]
IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be executed as of the date first above written.
HCA - THE HEALTHCARE COMPANY
By: /s/A. Xxxxx Xxxxx, Jr.
-------------------------------------------------
Senior Vice President - Operations Administration
VH HOLDINGS, INC.
By: /s/A. Xxxxx Xxxxx, Jr.
-------------------------------------------------
President
FIRST HEALTH GROUP CORP.
By: /s/Xxxxxx X. Xxxxxxx
-------------------------------------------------
President and Chief Operating Officer
