EXHIBIT 10.66
PURCHASE AND SALE AGREEMENT
BY AND AMONG
MPT OPERATING PARTNERSHIP, L.P.
MPT OF CHINO, LLC
(COLLECTIVELY, THE "PURCHASER PARTIES")
AND
VERITAS HEALTH SERVICES, INC.,
PRIME HEALTHCARE SERVICES, INC.,
DESERT VALLEY HOSPITAL, INC.,
DESERT VALLEY MEDICAL GROUP, INC.,
AND
PRIME HEALTHCARE SERVICES, LLC
(COLLECTIVELY, THE "SELLER PARTIES")
DATED AS OF NOVEMBER 30, 2005
ARTICLE I DEFINED TERMS.................................................... 2
SECTION 1.1. Certain Defined Terms.................................... 2
SECTION 1.2. Interpretation; Terms Generally.......................... 9
ARTICLE II PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES.......... 10
SECTION 2.1. Purchase and Sale of Assets.............................. 10
SECTION 2.2. Excluded Liabilities..................................... 10
SECTION 2.3. Special Purpose Entity................................... 11
ARTICLE III PURCHASE PRICE................................................. 11
SECTION 3.1. Purchase Price........................................... 11
SECTION 3.2. Taxes, Rentals, Utilities................................ 11
SECTION 3.3. Allocation of Purchase Price............................. 11
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
PARTIES................................................................. 11
SECTION 4.1. Organization............................................. 11
SECTION 4.2. Authorization and Enforceability......................... 12
SECTION 4.3. Absence of Conflicts..................................... 12
SECTION 4.4. Consents and Approvals................................... 12
SECTION 4.5. Financial Statements..................................... 13
SECTION 4.6. Accounts Receivable...................................... 13
SECTION 4.7. No Undisclosed Liabilities............................... 13
SECTION 4.8. Absence of Changes....................................... 13
SECTION 4.9. Licenses................................................. 15
SECTION 4.10. Accreditation; Medicare and Medi-Cal; Third Party
Payors................................................ 15
SECTION 4.11. HIPAA Compliance......................................... 16
SECTION 4.12. Healthcare Regulatory Matters............................ 16
SECTION 4.13. Taxes.................................................... 18
SECTION 4.14. Good Title to Assets..................................... 18
SECTION 4.15. Title and Condition of the Real Property................. 18
SECTION 4.16. Condition of Personal Property........................... 20
SECTION 4.17. Compliance with Environmental Laws....................... 20
SECTION 4.18. Insurance................................................ 22
SECTION 4.19. Litigation............................................... 22
SECTION 4.20. Contracts, Obligations and Commitments................... 23
SECTION 4.21. Intangible Property...................................... 23
SECTION 4.22. Employees and Employee Relations......................... 23
SECTION 4.23. Compliance with Law...................................... 24
SECTION 4.24. Xxxx-Xxxxxx Obligations.................................. 25
SECTION 4.25. Medical Staff Matters.................................... 25
SECTION 4.26. Brokers.................................................. 25
SECTION 4.27. Records.................................................. 25
SECTION 4.28. Existing Leases.......................................... 24
SECTION 4.29 Representations Complete................................. 25
ARTICLE V REPRESENTATIONS AND WARRANTIES BY THE PURCHASER PARTIES.......... 26
SECTION 5.1. Organization............................................. 26
SECTION 5.2. Authorization; Enforcement, Absence of Conflicts......... 26
SECTION 5.3. Binding Agreement........................................ 27
SECTION 5.4. Litigation............................................... 27
SECTION 5.5. Brokers.................................................. 27
SECTION 5.6. Compliance with Law...................................... 27
ARTICLE VI TITLE AND SURVEY................................................ 27
SECTION 6.1. Survey................................................... 27
SECTION 6.2. Title Insurance.......................................... 28
ARTICLE VII PRE-CLOSING COVENANTS.......................................... 28
SECTION 7.1. No Shop.................................................. 28
SECTION 7.2. Access; Confidentiality.................................. 29
SECTION 7.3. Schedule Updates......................................... 30
SECTION 7.4. Conduct of Business by the Seller Parties Pending the
Closing............................................... 30
SECTION 7.5. Cooperation.............................................. 31
SECTION 7.6. Intentionally Deleted
SECTION 7.7. Regulatory and other Authorizations, Notices and
Consents.............................................. 31
SECTION 7.8. Mutual Covenants......................................... 32
SECTION 7.9. Public Announcements..................................... 32
ARTICLE VIII CLOSING CONDITIONS............................................ 33
SECTION 8.1. Conditions to the Obligations of the Seller Parties...... 33
SECTION 8.2. Conditions to the Obligations of the Purchaser Parties... 33
ARTICLE IX CLOSING......................................................... 34
SECTION 9.1. Closing Date............................................. 34
SECTION 9.2. Seller Parties' Closing Date Deliverables................ 34
SECTION 9.3. Purchaser Parties' Closing Date Deliverables............. 36
ARTICLE X TERMINATION...................................................... 37
SECTION 10.1. Termination.............................................. 37
SECTION 10.2. Notice and Effect........................................ 37
ARTICLE XI CERTAIN POST-CLOSING COVENANTS.................................. 37
SECTION 11.1. Post-Closing Access to Information....................... 36
SECTION 11.2 Bankruptcy............................................... 37
ARTICLE XII INDEMNIFICATION................................................ 38
SECTION 12.1. Seller Parties Agreement to Indemnify.................... 38
SECTION 12.2. The Purchaser Parties' Agreement to Indemnify............ 39
SECTION 12.3. Notification and Defense of Claims....................... 39
SECTION 12.4. Investigations........................................... 40
SECTION 12.5. Treatment of Indemnification Payments.................... 40
SECTION 12.6. Exclusive Remedy......................................... 41
ARTICLE XIII DISPUTE RESOLUTION............................................ 41
SECTION 13.1. Governing Law............................................ 39
SECTION 13.2. Jurisdiction And Venue................................... 39
ARTICLE XIV MISCELLANEOUS.................................................. 41
SECTION 14.1. Assignment............................................... 41
SECTION 14.2. Notice................................................... 42
SECTION 14.3. Calculation of Time Period............................... 42
SECTION 14.4. Captions................................................. 42
SECTION 14.5. Entire Agreement; Modification........................... 42
SECTION 14.6. Schedules and Exhibits................................... 43
SECTION 14.7. Further Assurances....................................... 43
SECTION 14.8. Counterparts............................................. 43
SECTION 14.9. Expenses................................................. 43
SECTION 14.10. Purchase Option.......................................... 42
SECTION 14.11 Syndication.............................................. 43
SECTION 14.12. Securities Offering and Filings.......................... 43
SECTION 14.13. Prime Healthcare Services II, LLC........................ 44
SECTION 14.14. Binding Effect........................................... 44
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as
of November 30, 2005 by and among MPT OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership ("MPT"), MPT OF CHINO, LLC, a Delaware limited liability
company, (the "Acquisition Sub") (MPT and the Acquisition Sub being herein
referred to, collectively, as the "Purchaser Parties"); and VERITAS HEALTH
SERVICES, INC., a California corporation ("Veritas"), PRIME HEALTHCARE SERVICES,
INC., a Delaware corporation ("Desert Valley Parent"), DESERT VALLEY HOSPITAL,
INC., a California corporation, PRIME HEALTHCARE SERVICES, LLC, a California
limited liability company ("Prime"), and DESERT VALLEY MEDICAL GROUP, INC., a
California corporation (Veritas, Desert Valley Parent, Desert Valley Hospital,
Inc. Prime and Desert Valley Medical Group, Inc., being collectively referred to
herein as the "Seller Parties").
WITNESSETH:
WHEREAS, Veritas is the current operator of that certain general acute care
hospital (the "Hospital") facility located in the Chino, California area;
WHEREAS, Veritas is a party to that certain Lease with Kasirer Family Holdings
#4, LLC ("KFH") and dated as of April 7, 2001, as amended, (the "KFH Lease")
pursuant to which Veritas leases from KFH, among other things, the land and
improvements relating to the Hospital;
WHEREAS, pursuant to the KFH Lease, KFH subleases to Veritas its leasehold
interest in that certain parking lot located adjacent to the Hospital (the
"Parking Lot Lease");
WHEREAS, the KFH Lease provides Veritas with a right of first refusal to
purchase the land and improvements relating to the Hospital from KFH (the
"Purchase Option"), which right was timely and properly exercised and assigned
to Prime;
WHEREAS, Veritas is currently a Chapter 11 Debtor-in-Possession under Case No.
RS 04-11158 MJ (the "Bankruptcy"), presently pending in the United States
Bankruptcy Court for the Central District of California (the "Bankruptcy
Court");
WHEREAS, Veritas' Purchase Option has been the subject of one of the Adversary
Proceedings (as hereinafter defined) pending in the Bankruptcy Court;
WHEREAS, to avoid any further litigation, KFH, Veritas and Prime have entered
into that certain Settlement Agreement dated November 2, 2005 relating to
Veritas' Purchase Option (the "Settlement Agreement");
WHEREAS, contemporaneously with the closing of the transactions contemplated
hereby and pursuant to the Settlement Agreement, Prime will purchase the land
and improvements relating to the Hospital;
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WHEREAS, contemporaneously with the closing of the transactions contemplated
hereby, KFH will assign the Parking Lot Lease to Prime and Prime will assign the
Parking Lot Lease to the Acquisition Sub;
WHEREAS, subject to the terms and conditions hereinafter set forth, Prime and
the other applicable Seller Parties desire to sell, and the Acquisition Sub
desires to purchase, the Real Property (as hereinafter defined) and certain
other assets associated or used in connection with the Hospital, all on the
terms and conditions set forth in this Agreement; and
WHEREAS, contemporaneously with the closing of such purchase and sale, Veritas
shall lease back the Real Property from the Acquisition Sub pursuant to a lease
in the form of EXHIBIT A (the "Lease");
NOW, THEREFORE, in consideration of the promises and mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. Capitalized terms used herein shall have the
respective meanings ascribed to them in this Section 1.1.
"Acquisition Sub" shall have the meaning set forth in the preamble to this
Agreement.
"Adversary Proceedings" shall have the meaning set forth in Section 4.19 hereof.
"Adverse Events" shall have the meaning set forth in Section 4.10 hereof.
"Affiliate" "means, with respect to any Person (i) any Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (ii) any other Person that owns, beneficially, directly or indirectly,
10% or more of the outstanding capital stock, shares or equity interests of such
Person, or (iii) any officer, director, employee, partner, member, manager or
trustee of such Person or any Person controlling, controlled by or under common
control with such Person (excluding trustees and persons serving in similar
capacities who are not otherwise an Affiliate of such Person). For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities or otherwise.
"AOA" shall have the meaning set forth in Section 4.10 hereof.
"Appraisal" means that certain appraisal of the Real Property in form and
substance, and prepared by a Person, satisfactory to MPT in its sole discretion.
"Appraised Value" means the fair market value of the Real Property as set forth
in the Appraisal.
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"Assets" shall have the meaning set forth in Section 2.1 hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 2.2 hereof.
"Balance Sheet" shall have the meaning set forth in Section 4.5 hereof.
"Balance Sheet Date" shall have the meaning set forth in Section 4.5 hereof.
"Bankruptcy" shall have the meaning set forth in the recitals hereof..
"Business" means the operation of the Hospital and the engagement in and pursuit
and conduct of any business venture or activity related thereto.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York, New
York are authorized or required by law, regulation or executive order to close.
"Business Employees" shall have the meaning set forth in Section 4.22(a) hereof.
"CMS" means the Centers for Medicare and Medicaid Services.
"Claim" shall have the meaning set forth in Section 4.19 hereof.
"Closing" shall have the meaning set forth in Section 9.1 hereof.
"Closing Date" shall have the meaning set forth in Section 9.1 hereof.
"Code" means the United States Internal Revenue Code of 1986, as amended through
the date hereof, and all regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.
"Confidentiality Agreement" shall have the meaning set forth in Section 7.2(c)
hereof.
"Contracts" shall have the meaning set forth in Section 4.20 hereof.
"Deed" shall have the meaning set forth in Section 9.2(b) hereof.
"Desert Valley Parent" shall have the meaning set forth in the recitals hereto.
"Encroachment Issue" shall mean any encroachment of the Real Property onto
adjacent property, or any encroachment of adjacent property onto the Real
Property, each as set forth on the Survey.
"Energy Services Agreement" shall mean that certain Energy Services Agreement
dated December 15, 2004, by and between U.S. Power Corporation and Veritas
Healthcare Services, Inc. d/b/a Chino Valley Medical Center.
"Energy Services Rights" shall mean any and all rights of U.S. Power Corporation
under that certain Energy Services Agreement.
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"Environmental Claim" means any Claim, action, cause of action, investigation or
notice (written or oral) by any Person alleging actual or potential liability
for investigatory, cleanup or governmental response costs, or natural resources
or property damages, or personal injuries, attorney's fees or penalties relating
to (i) the presence, or release into the environment, of any Hazardous Materials
at any location owned, leased or operated by any Seller Party, now or in the
past, or (ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Law" means each federal, state, local and foreign law and
regulation relating to pollution, protection or preservation of human health or
the environment, including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacturing, processing,
distribution, use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Hazardous Materials,
or the preservation of the environment or mitigation of adverse effects thereon
and each law and regulation with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials, including,
without limitation, the Resource Conservation and Recovery Act of 1976, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, the
Hazardous Materials Transportation Act, the Federal Water Pollution Control Act,
the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Safe Drinking Water Act, and all similar federal, state and local environmental
statutes, ordinances and the regulations, orders, or decrees now or hereafter
promulgated thereunder, in each case as amended from time to time.
"Equity Constituents" means, with respect to any Person, as applicable, the
members, general or limited partners, shareholders, stockholders or other
Persons, however designated, who are the owners of the issued and outstanding
equity or ownership interests of such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Exception Documents" means true, correct, current and legible copies of each
document listed as an exception to title on the Title Commitment.
"Excluded Liabilities" shall have the meaning set forth in Section 2.2 hereof.
"Existing Leases" means those certain lease agreements in effect as of the date
hereof (other than the Lease) between Affiliates of MPT and Affiliates of Desert
Valley Parent.
"Financial Statements" shall have the meaning set forth in Section 4.5 hereof.
"Fixtures" means all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in vacuum,
cable transmission, oxygen and similar systems, all
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of which, to the greatest extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but excluding any and all
Energy Services Rights.
"GAAP" means United States generally accepted accounting principles as in effect
from time to time. Any accounting term used herein and not specifically defined
herein shall be construed in accordance with GAAP.
"Governing Documents" means, with respect to any Person, as applicable, such
Person's charter, articles or certificate of incorporation, formation or
organization, bylaws or other documents or instruments which establish and/or
set forth the rules, procedures and rights with respect to such Person's
governance, including, without limitation, any stockholders, limited liability
company, operating or partnership agreement related to such Person, in each case
as amended, restated, supplemented and/or modified and in effect as of the
relevant date.
"Governmental Entity" means any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.
"Government Programs" shall have the meaning set forth in Section 4.10 hereof.
"Hazardous Materials" means any substance deemed hazardous under any
Environmental Law, including, without limitation, asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, lead and lead-based paints, radon, pollutants, effluents,
contaminants, emissions or related materials and any items included in the
definition of hazardous or toxic wastes, materials or substances under any
Environmental Law.
"Healthcare Fraud Laws" shall have the meaning set forth in Section 4.12(a)
hereof.
"HIPAA" shall have the meaning set forth in Section 4.11 hereof.
"Hospital" shall have the meaning set forth in the recitals to this Agreement.
"Improvements" means all buildings, improvements, structures and Fixtures now or
on the Closing Date located on the Land, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, equipment systems and other so-called
"infrastructure" improvements, but excluding any and all Energy Services Rights.
"Indebtedness" of any Person means, without duplication, (a) all liabilities and
obligations, contingent or otherwise, of such Person: (i) in respect of borrowed
money (whether secured or unsecured), (ii) under conditional sale or other title
retention agreements relating to property or services purchased and/or sold by
such Person, (iii) evidenced by bonds, notes, debentures or similar instruments,
(iv) for the payment of money relating to a capitalized lease obligation, (v)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any
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letter of credit, (vi) pursuant to any guarantee, or (vii) secured by (or for
which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) a Lien on the assets or property of such Person,
and (b) all liabilities and obligations of others of the kind described in the
preceding clause (a) and otherwise that (i) such Person is responsible or liable
for, directly or indirectly, as obligor, guarantor, surety or otherwise, or (ii)
which are secured by a Lien on any of the assets or property of such Person.
"Indemnified Party" shall have the meaning set forth in Section 12.3(a) hereof.
"Indemnifying Party" shall have the meaning set forth in Section 12.3(a) hereof.
"Intangible Property" shall have the meaning set forth in Section 4.21 hereof.
"Joint Plan" shall have the meaning set forth in Section 4.30 hereof.
"KFH" shall have the meaning set forth in the recitals hereof.
"KFH Lease" shall have the meaning set forth in the recitals hereof.
"Knowledge," "to the knowledge or best knowledge of" or similar words or phrases
means, with respect to any Person, such Person's actual or deemed knowledge of a
particular fact or matter if (i) any of such Person's current or former officers
or directors (or other Persons however denominated, currently or formerly
exercising similar authority with respect to such Person) including, but not
limited to, in the case of any Seller Party, Xxxxx Xxxxx, DO, Xxxxxxx Xxxxxxxx,
Xxx Xxx Xxxxx, Xxxx Xxxxx, M.D. and/or Xxx Xxxxx (a Person's "Knowledge Group"),
has actual knowledge of such fact or matter; or (ii) any of such Person's
Knowledge Group would be expected to discover or otherwise become aware of such
fact or matter after conducting a reasonably diligent inquiry. Knowledge, when
applied to the Seller Parties, shall mean the Knowledge of any Seller Party.
"Labor Proceeding" shall have the meaning set forth in Section 4.22(c) hereof.
"Land" shall have the meaning set forth in Section 2.1(a) hereof.
"Law" means any federal, state or local statute, rule, regulation, ordinance,
order, code, policy or rule of common law, now or hereafter in effect, and in
each case as amended, and any judicial or administrative interpretation thereof
by a Governmental Entity or otherwise, including, without limitation, any
judicial or administrative order, consent, decree or judgment.
"Lease" shall have the meaning set forth in the recitals to this Agreement.
"Lien" means any mortgage, adverse Claim, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, lien (statutory or otherwise) or
preference, security interest or other encumbrance of any kind or nature
whatsoever.
"Material Adverse Effect" means, with respect to any Person, any change,
event(s), occurrence(s) or effect(s), whether direct or indirect, that, both
before and after giving effect to the transactions contemplated by this
Agreement, could, individually or in the aggregate, have a
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material adverse effect on (i) the business, properties, results of operations,
assets, revenue, income, prospects or condition (financial or otherwise) of, or
the ability to timely satisfy the obligations or liabilities (whether absolute
or contingent) of, any Seller Party, (ii) the Business or the Assets, or (iii)
the ability of any Seller Party to perform its obligations under, and/or
consummate the transactions contemplated by, this Agreement within the time
periods specified herein.
"Medi-Cal" shall have the meaning set forth in Section 4.10 hereof.
"Medicare" shall have the meaning set forth in Section 4.10 hereof.
"Minimum Aggregate Liability Amount" shall have the meaning set forth in Section
12.1(b) hereof.
"Parking Lot Lease" shall have the meaning set forth in the recitals hereof.
"Permitted Encumbrances" means (i) Liens for or arising from current taxes not
yet due and payable; (ii) easements and other restrictions of record; (iii)
matters set forth in the Title Commitment issued by the Title Company; (iv)
matters disclosed on the Survey; and (v) other matters, encumbrances and defects
approved by MPT in writing.
"Permits" shall have the meaning set forth in Section 4.9 hereof.
"Person" means an individual, a corporation, a limited liability company, a
partnership, an unincorporated association, a joint venture, a Governmental
Entity or another entity or group.
"Personal Property" shall have the meaning set forth in Section 4.16 hereof.
"Personal Property Leases" shall have the meaning set forth in Section 4.16
hereof.
"Physician" means any physician rendering services, within, at or on the
Hospital or its premises within the five (5) year period ending on the date of
this Agreement.
"Public Taking" shall have the meaning set forth in Section 4.16(e) hereof.
"Purchase Price" shall have the meaning set forth in Section 3.1 hereof.
"Purchase Option" shall have the meaning set forth in the recitals hereof.
"Purchaser Damages" shall have the meaning set forth in Section 12.1(a) hereof.
"Purchaser Parties" shall have the meaning set forth in the preamble to this
Agreement.
"Purchaser Indemnified Party" shall have the meaning set forth in Section
12.1(a).
"Purchaser's Indemnity Periods" shall have the meaning set forth in Section
12.1(b) hereof.
"Real Property" shall have the meaning set forth in Section 2.1 hereof.
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"Search Reports" means reports of searches made of the uniform commercial code
records of the county in which the Real Property is located, and of the office
of the secretary of state of the state in which the Real Property is located and
in the state in which the principal office of each Seller Party is located.
"Seller Damages" shall have the meaning set forth in Section 12.2(a) hereof.
"Seller Indemnified Parties" shall have the meaning set forth in Section 12.2(a)
hereof.
"Seller Indemnity Period" shall have the meaning set forth in Section 12.2(b)
hereof.
"Seller Instruments" shall have the meaning set forth in Section 4.2 hereof.
"Seller Parties" shall have the meaning set forth in the preamble to this
Agreement.
"Seller Party Plan" shall have the meaning set forth in Section 4.22(f) hereof.
"Service Provider" means any Person who has rendered or is rendering services to
or on behalf of any of the Seller Parties.
"Settlement Agreement" shall have the meaning set forth in the recitals hereof.
"Special Purpose Entity" means an entity which (i) exists solely for the purpose
of owning and/or leasing all or any portion of the Real Property and conducting
the operation of the Business, (ii) conducts business only in its own name,
(iii) does not engage in any business other than the ownership and/or leasing
all or any portion of the Real Property and the operation of the Business, (iv)
does not hold, directly or indirectly, any ownership interest (legal or
equitable) in any entity or any real or personal property other than the
interest which it owns in the Real Property and the other assets incident to the
operation of the Business, (v) does not have any debt other than as permitted by
the Lease or arising in the ordinary course of the Business and does not
guarantee or otherwise obligate itself with respect to the debts of any other
Person other than as approved by MPT, (vi) has its own separate books, records,
accounts, financial statements and tax returns (with no commingling of funds or
assets), (vii) holds itself out as being a company separate and apart from any
other entity, (viii) maintains all corporate formalities independent of any
other entity.
"Subsidiary" means, with respect to any Person, any other Person of or with
respect to which Fifty Percent (50%) or more of the total voting power of the
voting securities is beneficially owned by such Person.
"Survey" means a current "as-built" ALTA survey, certified to ALTA requirements,
prepared by an engineer or surveyor licensed in the state in which the Real
Property is located acceptable to MPT in its sole discretion, which shall be
prepared in accordance with the provisions set forth in Section 6.1 of this
Agreement.
"Taxes" means any and all taxes, charges, fees, levies or other assessments,
including, without limitation, any and all income, gross receipts, excise, real
and personal property (including leaseholds and interests in leaseholds), sales,
use, occupation, transfer, license, ad valorem,
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gains, profits, gift, minimum estimated, social security, unemployment,
disability, premium, recapture, credit, payroll, withholding, severance, stamp,
capital stock, value added leasing, franchise and other taxes or similar charges
of any kind including any interest and penalties on or additions thereto or
attributable to any failure to comply with any requirement regarding any Tax
Return.
"Tax Return" means any return, declaration, filing, report, claim for refund or
information return or other statement relating to Taxes (whether filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Entity), including any schedule or attachment thereto, and including any
amendment or extension thereof.
"Tax Structure" shall have the meaning set forth in Section 7.2(c) hereof.
"Tax Treatment" shall have the meaning set forth in Section 7.2(c) hereof.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" shall have the meaning set forth in Section 4.15(i) hereof.
"Third Party Claim" shall have the meaning set forth in Section 12.3(a) hereof.
"Title Commitment" means a current commitment issued by the Title Company to the
Purchaser Parties pursuant to the terms of which the Title Company shall commit
to issue the Title Policy to the Purchaser Parties in accordance with the
provisions of this Agreement, and reflecting all matters which would be listed
as exceptions to coverage on the Title Policy.
"Title Company" means First American Title Company.
"Title Policy" means a title insurance policy in form and substance satisfactory
to MPT in its sole discretion.
"Veritas" shall have the meaning set forth in the recitals hereof.
"Warranties" means all warranties, representations and guaranties with respect
to any of the Assets, whether express or implied, which any Seller Party now
holds or under which any Seller Party is the beneficiary.
SECTION 1.2. INTERPRETATION; TERMS GENERALLY. The definitions set forth in
Section 1.1 and elsewhere in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless otherwise indicated, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import shall
be deemed to refer to this Agreement (including the Schedules and Exhibits) in
its entirety and not to any part hereof, unless the context shall otherwise
require. All references herein to Articles, Sections, Schedules and Exhibits
shall be deemed to refer to Articles, Sections and Schedules of, and Exhibits
to, this Agreement, unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation
9
are to it as amended and supplemented from time to time (and, in the case of a
statute or regulation, to any corresponding provisions of successor statutes or
regulations). Any reference in this Agreement to a "day" or number of "days"
that does not refer explicitly to a "Business Day" or "Business Days" shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice shall be
deferred until, or may be taken or given on, the next Business Day.
ARTICLE II
PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES
SECTION 2.1. PURCHASE AND SALE OF ASSETS. Based upon the representations and
warranties of the Seller Parties as set forth herein, and subject to the terms
and conditions hereof, at the Closing, Prime (or, if Prime is not the owner of
the applicable Asset, the appropriate Seller Party), in consideration for the
payment of the Purchase Price in accordance with Section 3.1, shall grant, sell,
assign, transfer, convey and deliver to the Acquisition Sub, and the Acquisition
Sub shall purchase and acquire from Prime (or, if Prime is not the owner of the
applicable Asset, the appropriate Seller Party), free and clear of all Liens,
other than Permitted Encumbrances, the following assets of Prime (or, if Prime
is not the owner of the applicable Asset, the appropriate Seller Party)
(collectively, the "Assets"):
(a) those certain tracts of land consisting of approximately six (6) acres
located in Chino, California the legal descriptions of which are set forth on
EXHIBIT B attached hereto (the "Land") and all Improvements located thereon;
(b) all of Prime's rights under and interest in the Parking Lot Lease (the
leasehold interest under the Parking Lot Lease and the real property interest
described in Section 2.1(a) above being referred to collectively herein as the
"Real Property");
(c) to the extent assignable, all rights in all intangible property relating
exclusively to the Real Property, including, but limited to, zoning rights,
Permits (other than operating permits) and indemnification or similar rights and
all Warranties affecting or inuring to the benefit of the Real Property or the
owner thereof (including, without limitation, any indemnification or similar
rights and Warranties related to the Real Property);
(d) all right, title and interest in and to site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications, inspection
reports, engineering and environmental plans and studies, title reports, floor
plans, landscape plans and other plans relating to the Real Property and the
Improvements; and
(e) all right, title and interest in and to all causes of action, claims and
rights in litigation (or which could result in litigation against any party)
pertaining or relating to the Real Property (including, without limitation, any
causes of action, claims or rights in litigation or other rights related to or
arising under any purchase contracts respecting the Real Property).
SECTION 2.2. EXCLUDED LIABILITIES. Notwithstanding anything in this Agreement to
the contrary, except as set forth on SCHEDULE 2.2 (the "Assumed Liabilities") no
Purchaser Party shall assume or agree to pay, satisfy, discharge or perform, or
shall be deemed by virtue of the
10
execution and delivery of this Agreement or any other document delivered at the
Closing pursuant to this Agreement, or as a result of the consummation of the
transactions contemplated by this Agreement or such other document, to have
assumed, or to have agreed to pay, satisfy, discharge or perform, or shall be
liable for, any liability, obligation, contract or Indebtedness of any Seller
Party or any other Person, whether primary or secondary, direct or indirect,
including, without limitation, any liability or obligation relating to the
ownership, use or operation of any of the Assets or the Hospital prior to
Closing, any liability or obligation arising out of or related to any breach,
default, tort or similar act committed by any of the Seller Parties or for any
failure of any of the Seller Parties to perform any covenant or obligation for
or during any period prior to Closing, and any liability arising out of the
ownership and operation of the Assets or the Hospital by Veritas or any other
Person prior to Closing (collectively, the "Excluded Liabilities").
SECTION 2.3. SPECIAL PURPOSE ENTITY. Seller Parties agree that Veritas has been
since its inception, and shall be at all times during the term of the Lease, a
Special Purpose Entity.
ARTICLE III
PURCHASE PRICE
SECTION 3.1. PURCHASE PRICE. Subject to obtaining the Appraisal in accordance
with Section 8.2(m) hereof, the purchase price for the Assets shall be Twenty
One Million and No/100 Dollars ($21,000,000.00) (the "Purchase Price"). Subject
to the terms and conditions hereof, at Closing, the Acquisition Sub shall pay
the Purchase Price via transfer of immediately available federal funds to an
account specified in writing by Desert Valley Parent not less than three (3)
Business Days prior to the Closing Date.
SECTION 3.2. TAXES, RENTALS, UTILITIES. The parties acknowledge that all utility
charges and all real and personal property Taxes related to the Assets shall be
the responsibility of Veritas pursuant to the terms of the Lease.
SECTION 3.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets for purposes of Section 1060 of the Code as set forth on
SCHEDULE 3.3. The parties agree to use, and to not take any position which is
inconsistent with, such allocation in the preparation and filing of any Tax
Return (including Form 8594).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER PARTIES
With the understanding that the Purchaser Parties shall rely hereon, and as a
material inducement to the Purchaser Parties to enter into this Agreement and
the Lease, each Seller Party hereby jointly and severally represents, warrants
and covenants to the Purchaser Parties as of the date hereof and as of the
Closing Date as follows:
SECTION 4.1. ORGANIZATION. Each Seller Party is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of their respective states of incorporation and is duly licensed in
each jurisdiction in which the nature of the business conducted, or the assets
owned, operated and/or leased, by such Seller Party requires or makes such
qualification necessary. Veritas is, and has at all times since its
incorporation been, a
11
Special Purpose Entity. SCHEDULE 4.1 sets forth the ownership of each Seller
Party and, except as set forth therein, no other party has any equity interest
in any Seller Party or any option, warrant or other right to acquire same.
SECTION 4.2. AUTHORIZATION AND ENFORCEABILITY. Each Seller Party has the
requisite corporate or limited liability company power and authority to conduct
its business as it is now being conducted and as proposed to be conducted and to
execute, deliver and carry out the terms of this Agreement, together with all
documents and agreements necessary to give effect to the provisions of this
Agreement, including the Lease, and to consummate the transactions contemplated
hereby and thereby. All corporate or limited liability company actions required
to be taken by each Seller Party (including, without limitation, all necessary
actions by the board of directors and shareholders of such Seller Party) to
authorize the execution, delivery and performance of this Agreement as well as
all documents, agreements and instruments executed by such Seller Party which
are necessary to give effect to this Agreement (collectively, the "Seller Party
Instruments") and all transactions contemplated hereby and thereby, have been
duly and properly taken or obtained in accordance and compliance with, as
applicable, such Seller Party's Governing Documents. Each Seller Party has
heretofore delivered to the Purchaser Parties true, correct and complete copies
of such Seller Party's Governing Documents. No other action on the part of any
Seller Party is necessary to authorize the execution, delivery and performance
of this Agreement, the Seller Party Instruments and all transactions
contemplated hereby and thereby. This Agreement, the Seller Party Instruments
and all agreements to which any Seller Party will become a party hereunder,
including the Lease, are and will constitute the valid and legally binding
obligations of such Seller Party, and are and will be enforceable against such
Seller Party in accordance with the respective terms hereof or thereof, except
as enforceability may be restricted, limited or delayed by applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and except as enforceability may be subject to and limited by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
SECTION 4.3. ABSENCE OF CONFLICTS. Each Seller Party's execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not, with or without the giving of notice and/or the
passage of time: (i) violate or conflict with any provision of such Seller
Party's Governing Documents; (ii) violate any provision of any Law to which such
Seller Party is subject; (iii) violate or conflict with any judgment, order,
writ or decree of any court applicable to such Seller Party; (iv) result in or
cause the creation of a Lien on any of the Assets; or (v) except as disclosed on
SCHEDULE 4.3, result in the breach or termination of any provision of, or create
rights of acceleration or constitute a default under, the terms of any
indenture, mortgage, deed of trust, contract, agreement or other instrument to
which such Seller Party is a party or by which such Seller Party or any of the
assets is bound.
SECTION 4.4. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.4, no
license, permit, qualification, order, consent, authorization, approval or
waiver of, or registration, declaration or filing with, or notification to, any
Governmental Entity or other Person is required to be made or obtained by or
with respect to any Seller Party, including, without limitation the approval of
the Bankruptcy Court, in connection with the execution, delivery and performance
of this Agreement or the Seller Party Instruments by any Seller Party, the
purchase of the
12
outstanding stock of Veritas, as contemplated by Section 8.2(m) hereof, or the
consummation of the transactions contemplated hereby or thereby.
SECTION 4.5. FINANCIAL STATEMENTS. SCHEDULE 4.5 sets forth (i) the audited
balance sheets of each applicable Seller Party (other than Prime and Veritas)
for the fiscal years ended 2003 and 2004, (ii) the unaudited balance sheet of
Veritas for the fiscal year ended 2003 and the audited balance sheet of Veritas
for the fiscal year ended 2004; (iii) the unaudited balance sheet of each Seller
Party at September 30, 2005 (the "Balance Sheet Date") (the balance sheets
described in this subsection (iii) being herein referred to, collectively, as
the "Balance Sheets"), (iv) the audited statement of income and cash flows of
each applicable Seller Party (other than Prime and Veritas) for the fiscal years
ended 2003 and 2004, (v) the unaudited statement of income of Veritas for the
fiscal year ended 2003 and the audited statement of income and cash flows of
Veritas for the fiscal year ended 2004 and (vi) the unaudited statement of
income of each Seller Party for the nine (9) months ended September 30, 2005
(the financial statements described in this sentence, being herein referred to,
collectively, as the "Financial Statements"). Except as set forth on SCHEDULE
4.5, the Financial Statements have been prepared in accordance with GAAP, are
based on the books, records and accounts of the Seller Parties and fairly
present the financial condition and results of operations, cash flows and
shareholders' equity of the Seller Parties as of the respective dates thereof
and for the respective periods indicated therein, except (i) that the unaudited
interim statements do not include complete note (including footnote) disclosure
as required by GAAP; and (ii) that the unaudited interim statements are subject
to normal, year-end adjustments which are not, and will not be, material in
amount or effect, either individually or in the aggregate.
SECTION 4.6. ACCOUNTS RECEIVABLE. The accounts receivable of Veritas include
only accounts receivable arising from bona fide transactions in the conduct of
the ordinary course of business of Veritas, are in all material respects true
and genuine, represent legal, valid and binding obligations of the respective
debtors enforceable in accordance with their terms. No material payment of said
receivables is contingent upon performance of any obligations or contract, past
or future, and, except as set forth on SCHEDULE 4.6, all such receivables are
free of all security interests and encumbrances. Except as set forth on SCHEDULE
4.6, no defense, counterclaim, offset or adjustment exists as to any such
account receivable.
SECTION 4.7. NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 4.7, no
Seller Party has any material liability or obligation, whether absolute,
accrued, contingent or otherwise, including any potential future liability
arising out of acts or omissions which have already occurred, which is not fully
and accurately reflected or reserved against in the Balance Sheets except for
liabilities or obligations that may have arisen in the ordinary course of
business of the Seller Parties, consistent with the past practice of the Seller
Parties, since the Balance Sheet Date (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement or violation of law) and no Seller Party
has Knowledge of any fact, condition or circumstance which could form the basis
of any such liability or obligation.
SECTION 4.8. ABSENCE OF CHANGES. Except as set forth on SCHEDULE 4.8 or as
otherwise provided in this Agreement, since the Balance Sheet Date, Veritas has:
13
(a) conducted its business only in the ordinary course of business and
consistently with its past practices;
(b) not suffered any change, event or circumstance which has had, or could have,
a Material Adverse Effect;
(c) preserved its legal existence and retained its business organization intact;
(d) maintained its relationships with all suppliers, trade creditors and trade
debtors;
(e) paid or satisfied all of its debts, liabilities or obligations as the same
became due;
(f) paid all compensation and other obligations to its employees when the same
were due and payable;
(g) timely made all applicable filings with Governmental Entities;
(h) not mortgaged, pledged, subjected to Lien, charged, encumbered or granted a
security interest in or to any of the Assets;
(i) except as otherwise provided in this Agreement, not sold or transferred any
of its assets except for sales of inventory in the ordinary course of business
and consistently with its past practices;
(j) not suffered any damage, destruction or loss (whether or not covered by
insurance) affecting the Assets;
(k) not cancelled any debts owing to it or otherwise granted or waived any right
of substantial value;
(l) not terminated or materially modified any contract, lease, agreement or
arrangement with any payor, vendor or supplier or received notice of termination
or become aware of any threat of termination with respect to any such contract,
lease, agreement or arrangement;
(m) not made any capital expenditure or commitment for the acquisition of assets
in excess of Fifty Thousand Dollars ($50,000);
(n) not made or suffered any change to its Governing Documents;
(o) not made or received any loans or advances to or from any Person, other than
renewals or extensions of existing indebtedness and uses of lines of credit;
(p) maintained its books and records in accordance with GAAP, consistent with
past practices;
(q) not incurred, assumed or guaranteed any Indebtedness;
(r) not experienced any defections in its medical staff; or
14
(s) not agreed or offered, whether in writing or otherwise, to take, and neither
Veritas nor its board of directors (or by any Person or group of Persons
possessing and/or exercising similar authority with respect to Veritas) or
Equity Constituents have authorized the taking of, any action described in
Sections 4.8(a) through 4.8(r) above.
SECTION 4.9. LICENSES. Veritas has all licenses, permits, certificates of need,
provider numbers and agreements and other authorizations of Government Entities
(the "Permits") from all applicable Governmental Entities necessary or proper in
order to operate the Hospital and to conduct the Business. Except as set forth
on SCHEDULE 4.9, Veritas has good, clear and indefeasible title to and ownership
of all the Permits, free and clear of all Liens and may grant Acquisition Sub a
first priority security interest in and to the Permits. Each Permit issued to
and held by Veritas is identified and described on SCHEDULE 4.9, and true,
correct and current copies of each such Permit have previously been made
available to the Purchaser Parties by the Seller Parties. Except as set forth on
SCHEDULE 4.9, Veritas previously has complied and is currently complying with
its obligations under each of the Permits and all such Permits are in full force
and effect. No written notice from any authority in respect to the threatened,
pending or possible revocation, termination, suspension or limitation of any of
the Permits has been issued or given to any Seller Party and no Seller Party has
any Knowledge of the proposed or threatened issuance of any such notice or of
any grounds or basis therefor. The Hospital is currently licensed as a general
acute-care hospital with 126 general acute-care beds, and will remain so
licensed through the Closing Date in compliance with and subject only to the
usual and customary laws and government regulations pertaining to the operation
of an acute-care hospital in the State of California.
SECTION 4.10. ACCREDITATION; MEDICARE AND MEDI-CAL; THIRD PARTY PAYORS. Veritas
is currently accredited by the American Osteopathic Association ("AOA") and has
previously made available to the Purchaser Parties true, correct and complete
copies of the following documents (i) the most recent AOA accreditation survey
reports for the Hospital and deficiency list and plan of correction, if any, and
a list and description of events in the past three (3) years at the Hospital
that constitute "Adverse Events" (as defined by AOA), if any, and any
documentation that was created prepared and/or produced by any Seller Party to
satisfy AOA requirements relating to addressing such Adverse Events; (ii) any
state licensing survey reports with respect to the Hospital for the two (2) year
period prior to the date hereof, as well as any statements of deficiencies and
plans of correction in connection with such reports; (iii) the fire marshal's
surveys for the past two (2) years and list of deficiencies, if any, for the
Hospital; and (iv) the boiler inspection reports for the past two (2) years and
list of deficiencies, if any, for the Hospital. Veritas has taken all reasonable
steps to correct all such deficiencies and a description of any uncorrected
deficiency is set forth on SCHEDULE 4.10. Except as set forth on SCHEDULE 4.10
attached hereto, Veritas participates without restriction under Title XVIII of
the Social Security Act ("Medicare") and Title XIX of the Social Security Act
("Medi-Cal"), the Medicare and the Medi-Cal programs of the State of California
and the TRICARE/CHAMPUS programs (collectively, the "Government Programs").
Veritas has received Medicare or Medi-Cal reimbursement with respect to the
Hospital and is eligible to receive payment without restriction under Medicare
and Medi-Cal. Except as set forth on SCHEDULE 4.10, the Hospital is in
compliance with the conditions of participation for the Government Programs, has
received all approvals or qualifications necessary for capital reimbursement and
has been found by CMS to be in compliance with 42 C.F.R. Sections 489.20 and
489.24 and its medicare provider agreement will
15
not be terminated for failure to so comply. Except as set forth on SCHEDULE
4.10, there is no pending, nor, to the Seller Parties' Knowledge, threatened,
proceeding or investigation under the Government Programs involving the Hospital
or any of the Assets. Veritas has previously made available to the Purchaser
Parties true, correct and complete copies of the most recent Medicare and
Medi-Cal certification survey reports for the Hospital including any statements
of deficiencies and plans of correction, and the corrective action plans related
thereto. Veritas has taken all reasonable steps to correct all such deficiencies
and a description of any uncorrected deficiency is set forth on SCHEDULE 4.10.
With respect to the operation of the Hospital, except as set forth on SCHEDULE
4.10, neither Veritas nor any of its officers, directors or any of the Business
Employees (as hereinafter defined), nor any Seller Party (or Equity Constituent
thereof) or Service Provider (i) has been excluded, suspended or debarred from,
or otherwise adjudicated, deemed or determined ineligible for, participation in
any Government Program, including Medicare or Medi-Cal, (ii) has been convicted
of a criminal offense related to conduct that would trigger an exclusion from
any Government Program, (iii) committed any act or omission which could result
in, or form the basis of, any of the actions described in clauses (i) or (ii) of
this sentence; and (v) no Medicare funds will be used to make any payment for
any items or services furnished by any excluded individual. Veritas has timely
filed, caused to be timely filed and, as to reports due after the Closing, shall
timely file, all cost reports required by third party payors, including, but not
limited to, Government Programs and other insurance carriers, and, except as
disclosed on SCHEDULE 4.10 all such reports are or will be complete and accurate
when filed. Except as disclosed on SCHEDULE 4.10, Veritas is and has been in
compliance with filing requirements with respect to cost reports of the
Hospital, including appropriate allocation of expenses associated with any
management or consulting services provided by any of the Seller Parties or any
employees of the Seller Parties and such reports do not claim and the Hospital
has not received, payment or reimbursement in excess of the amount provided or
allowed by applicable law or any applicable agreement, except where excess
reimbursement was noted on the cost report. True and correct copies of the cost
reports to third parties for the Hospital for the three (3) most recent fiscal
years with respect to which Veritas received such cost reports have been made
available to the Purchaser Parties. Except as disclosed on SCHEDULE 4.10, no
Seller Party, has received any written notice of any dispute relating to the
Hospital between any Seller Party and any Governmental Entity, including any
fiscal intermediary or carrier, federal, state or local governmental body or
entity, or the Administrator of the Center for Medicare and Medi-Cal Services,
with respect to any Government Program cost reports or claims filed with respect
to the Hospital, on or before the date of this Agreement.
SECTION 4.11. HIPAA COMPLIANCE. Veritas is in full compliance with the Standards
for Privacy of Individually Identifiable Health Information and the Transaction
and Code Set Standards which were promulgated pursuant to the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"). SCHEDULE 4.11 describes
any privacy, security or transaction and code set standards compliance plan of
Veritas in place or in development, and any plans, analyses or budgets relating
to information systems, including but not limited to necessary purchases,
upgrades or modifications to effect HIPAA compliance.
SECTION 4.12. HEALTHCARE REGULATORY MATTERS.
(a) No Seller Party or, to the Knowledge of any Seller Party, any Physician,
Service Provider or other Person rendering services (including directly or
indirectly referring patients) to or at, or
16
in any way affiliated with the Hospital (i) is a party to, or has received
notice of, the commencement of any investigation or debarment proceedings or any
governmental investigation or action (including any civil investigative demand
or subpoena) under the False Claims Act (31 U.S.C. Section 3729 et seq.), the
Anti-Kickback Act of 1986 (41 U.S.C. Section 51 et seq.), the Federal Health
Care Programs Anti-Kickback statute (42 U.S.C. Section 1320a-7a(b)), the Ethics
in Patient Referrals Act of 1989, as amended (Xxxxx Law) (42 U.S.C. 1395nn), the
Civil Money Penalties Law (42 U.S.C. Section 1320a-7a), or the Truth in
Negotiations (10 U.S.C. Section 2304 et seq.), Health Care Fraud (18 U.S.C.
1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement (18 U.S.C. 669), False
Statements (18 U.S.C. 1001), False Statements (18 U.S.C. 1035), and Patient
Inducement Statute and equivalent state statutes or any rule or regulation
promulgated by a Governmental Entity with respect to any of the foregoing
(collectively, the "Healthcare Fraud Laws") affecting any Seller Party, or the
Hospital (and no grounds for any such proceeding, investigation or action
exist); and (ii) is not in full compliance with all applicable Healthcare Fraud
Laws. The terms and structure of the Tenant Leases currently comply and shall
comply in all respects with all Healthcare Fraud Laws.
(b) Except as set forth on SCHEDULE 4.12, no Seller Party, or, to the Seller
Parties' Knowledge, any Physician, Service Provider or other Person rendering
services (including directly or indirectly referring patients) to or at, or in
any way affiliated with, the Hospital, has ever been investigated, charged or
implicated in any violation of any state or federal statute or regulation
involving false, fraudulent or abusive practices relating to participation in
state or federally sponsored reimbursement programs, including, but not limited
to, false or fraudulent billing practices. No Seller Party, or, to the Seller
Parties' Knowledge, any Physician, Service Provider or other Person rendering
services (including directly or indirectly referring patients) to or at, or in
any way affiliated with, the Hospital, has ever engaged in any of the following:
(i) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any applications for any benefit or payment
under Medicare or Medi-Cal program; (ii) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment under Medicare or Medi-Cal
program; (iii) failing to disclose knowledge of any event affecting the initial
or continued right to any benefit or payment under Medicare or Medi-Cal program
on its own behalf or on behalf of another, with intent to secure such payment or
benefit fraudulently; (iv) knowingly and willfully soliciting, paying, or
receiving any remuneration (including kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay such
remuneration (A) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medi-Cal, or (B) in
return for purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or ordering of any good, facility, service, or item for
which payment may be made in whole or in part by Medicare or Medi-Cal; (v)
presenting or causing to be presented a claim for reimbursement for services
that is for an item or service that was known or should have been known to be
(A) not provided as claimed, or (B) false or fraudulent; or (vi) knowingly and
willfully making or causing to be made or inducing or seeking to induce the
making of any false statement or representation (or omitting to state a fact
required to be stated therein or necessary to make the statements contained
therein not misleading) of a material fact with respect to (A) a facility in
order that the facility may qualify for Governmental Entity certification or (B)
information to be provided under 42 USC Section 1320a-3.
17
SECTION 4.13. TAXES. Veritas has filed or caused to be filed all Tax Returns of
Veritas which have become due (taking into account valid extensions of time to
file) prior to the date hereof. Such Tax Returns are accurate and complete in
all material respects, and Veritas has paid or caused to be paid all Taxes for
the periods covered thereby, whether or not shown to be due on such Tax Returns.
There are (i) no outstanding Liens for any Taxes that have been filed by any
Governmental Entity against the Assets, nor, to the Seller Parties' Knowledge,
any of the assets purchased from KFH, or any other assets of any Seller Party
used in the Business (other than for ad valorem taxes not yet due and payable),
and (ii) no claims being asserted with respect to any Taxes owed by any Seller
Party with respect to the Assets or the Business for which any Purchaser Party
could be held liable, and there is no basis for the assertion of any such claim.
No Seller Party has made or agreed or offered to make, or revoked or agreed or
offered to revoke, a Tax election with respect to or affecting the Assets at any
time during the last two (2) years. Except as set forth on SCHEDULE 4.13, no
Seller Party is a party to any tax abatement agreement relating to the Assets.
Except as disclosed with reasonable specificity on SCHEDULE 4.13, there are no
outstanding waivers or agreements extending the statute of limitations for any
period with respect to any Tax to which the Assets or any Purchaser Party may be
subject following the Closing.
SECTION 4.14. GOOD TITLE TO ASSETS. Except as set forth on SCHEDULE 4.14, each
applicable Seller Party owning any of the Assets has good, absolute and
marketable title to, and unrestricted possession of, such Assets (other than the
Real Property, which is addressed in Section 4.15 below), free and clear of all
Liens (other than Permitted Encumbrances) and any adverse Claims of third
parties.
SECTION 4.15. TITLE AND CONDITION OF THE REAL PROPERTY.
(a) Schedule 2.1(a) sets forth a legal description of the Real Property. Except
as set forth on SCHEDULE 4.15, Prime is the sole and exclusive legal and
equitable owner of all right, title and interest in the Real Property and at
Closing will have and convey to the Acquisition Sub good and marketable title to
the Real Property, free and clear of any and all Liens, encumbrances,
restrictions or easements of any kind whatsoever (other than Permitted
Encumbrances).
(b) The location, construction, occupancy, operation, use and sale of the Real
Property (including the Improvements) do not violate any applicable law,
statute, ordinance, rule, regulation, order or determination of any Governmental
Entity or any restrictive covenant or deed restriction (recorded or otherwise)
affecting the Real Property, including, without limitation, any applicable
zoning or subdivision ordinance or building code, flood disaster law or health
and environmental law or regulation.
(c) With regard to the Real Property, except as set forth on SCHEDULE 4.15(C) or
as otherwise disclosed in the Survey, to the Knowledge of the Seller Parties,
there are no (i) encroachments onto or from adjacent properties; (ii) violations
of set-back, building or side lines; (iii) encroachments onto any easements or
servitudes located on such Real Property; (iv) pending or, to the Knowledge of
any Seller Party, threatened boundary line disputes; (v) portions of such Real
Property located in a flood plain or in an area defined as a wetland under
applicable state or federal law; (vi) cemeteries or gravesites located on the
Real Property; or (vii) mine shafts under
18
the Real Property or any other latent defects, such as sinkholes, regarding or
affecting the Real Property.
(d) The existing water, sewer, gas and electricity lines, storm sewer and other
utility systems are adequate to serve the utility needs of the Real Property.
All of said utilities are installed and operating, and all installation and
connection charges have been paid in full.
(e) Except as set forth on SCHEDULE 4.15(E), neither the whole nor any portion
of the Real Property has been condemned, requisitioned or otherwise taken by any
public authority (a "Public Taking"), and no notice of any Public Taking has
been received by any Seller Party with regard to any of the Real Property. No
Seller Party has any Knowledge of any Public Taking being threatened or
contemplated. No Seller Party has any Knowledge of any public improvements which
have been ordered to be made and/or which have not heretofore been assessed,
and, to the Knowledge of the Seller Parties, there are no special, general or
other assessments pending or threatened against or affecting any of the Real
Property (except those expressly identified in the Title Commitment).
(f) Except as set forth on SCHEDULE 4.15(F), there are no Claims, actions,
suits, proceedings or investigations pending or, to the Knowledge of any Seller
Party, threatened, against or affecting all or any portion of the Real Property.
(g) Permanent certificates of occupancy, all licenses, permits, certificates of
need (if applicable), authorizations and approvals required by all Governmental
Entities having jurisdiction, have been issued for the Improvements, and, as of
the Closing, all of the same will be in full force and effect. The Improvements,
as designed and constructed, comply with all statutes, restrictions, regulations
and ordinances applicable thereto, including but not limited to the Americans
with Disabilities Act and Section 504 of the Rehabilitation Act of 1973. No
Seller Party either has in its possession or has Knowledge of any studies or
reports which specify or suggest the presence of any defects in the design or
construction of any of the Improvements.
(h) No Seller Party has Knowledge of any fact or condition which would result in
the termination of the current access from the Real Property to any presently
existing public highways and/or roads adjoining or situated on the Real Property
or to sewer or other utility services to serve the Real Property.
(i) SCHEDULE 4.15(I) attached hereto sets forth an accurate and complete list of
all leases, subleases, commitment letters, letters of intent and other rental
agreements, whether written or oral, now or hereafter in effect, if any, that
grant or will grant a possessory interest in and to any space in the Real
Property or that otherwise assign or convey rights with regard to the Real
Property or the Improvements (collectively referred to as the "Tenant Leases").
SCHEDULE 4.15(I) designates which of the Tenant Leases described therein are
with the referral sources (as determined by any of the Healthcare Fraud Laws) of
Veritas or any other Seller Party. SCHEDULE 4.15(I) specifies the rent and
security deposit, if any, for each Tenant Lease. The Seller Parties have made
available to the Purchaser Parties complete, correct and current copies of all
Tenant Leases. The Seller Parties shall provide to the Purchaser Parties prior
to Closing Tenant Lease estoppels in form satisfactory to the Purchaser Parties
from all Tenants under the applicable Tenant Leases. Except for the Tenant
Leases and any other items listed on SCHEDULE 4.15(I),
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there are no purchase contracts, leases of space, options, rights of first
refusal or other written or oral agreements of any kind whereby any person or
entity will have acquired or will have any basis to assert any right, title or
interest in, or right to the possession, use, enjoyment or proceeds of, any part
or all of the Real Property or the Improvements.
(j) No Seller Party has accepted the payment of rent or other sums due under any
of the Tenant Leases for more than one (1) month in advance. As of the Closing,
none of the Tenant Leases and none of the rents or other charges payable
thereunder, if any, will have been assigned, pledged or encumbered. Except as
set forth on SCHEDULE 4.15(J), as of the Closing, no brokerage or leasing
commissions or other compensation will be due or payable to any Person with
respect to, or on account of, the Lease or any Tenant Lease or any extensions or
renewals thereof, if any, excepting those agreements entered into or accepted in
writing by the Purchaser Parties.
(k) All tenant improvements, repairs and other work and obligations, if any,
then required to be performed by the landlord under each of the Tenant Leases
will be fully performed and paid for in full on or prior to the Closing.
(l) Except as set forth on SCHEDULE 4.15(L): (i) the Tenant Leases are freely
assignable by the applicable Seller Parties to the Acquisition Sub, have not
been modified, amended or assigned, are legally valid, binding and enforceable
against the applicable Seller Parties (and, to the best of the Seller Parties'
Knowledge, against the other parties to such Tenant Leases) in accordance with
their respective terms and are in full force and effect; (ii) there are no
monetary defaults and no material nonmonetary defaults by the applicable Seller
Party or, to the best of the Seller Parties' Knowledge, any other party to the
Tenant Leases; (iii) no Seller Party has received written notice of any default,
offset, counterclaim or defense under any of the Tenant Leases; and (iv) no
condition or event has occurred which with the passage of time or the giving of
notice or both would constitute a default or breach by any Seller Party of the
terms of any of the Tenant Leases.
(m) The Real Property constitutes all the land and improvements used by Veritas
in connection with the operation of the Hospital, it being understood that
certain administrative activities relating to such operations are not conducted
at the Real Property.
SECTION 4.16. CONDITION OF PERSONAL PROPERTY. SCHEDULE 4.16 sets forth a list of
all equipment and other items of tangible personal property used by the Seller
Parties in the operation of the Hospital (the "Personal Property") and said
SCHEDULE 4.16 identifies the ownership of such Personal Property. Except as set
forth on SCHEDULE 4.16, each applicable Seller Party has good, clear and
indefeasible title to and ownership of all the Personal Property, free and clear
of all Liens and may grant Acquisition Sub a first priority security interest in
and to the Personal Property. SCHEDULE 4.16 sets forth an accurate and complete
list of all leases of personal property used in the operation of the Hospital
(the "Personal Property Leases"). The Seller Parties have made available to the
Purchaser Parties complete, correct and current copies of all of the Personal
Property Leases. Except as set forth on SCHEDULE 4.16: (i) each applicable
Seller Party may, grant a first priority security interest in the Personal
Property Leases to the Acquisition Sub, (ii) the Personal Property Leases have
not been modified, amended or assigned, are legally valid, binding and
enforceable against such Seller Party (and, to the Seller Parties'
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Knowledge, against the other parties to such Personal Property Leases) in
accordance with their respective terms and are in full force and effect; (iii)
there are no monetary defaults and no material nonmonetary defaults by each
applicable Seller Party, or, to the Seller Parties' Knowledge, any other party
to the Personal Property Leases; (iv) no Seller Party has received notice of any
default, offset, counterclaim or defense under any Personal Property Lease; and
(v) no condition or event has occurred which with the passage of time or the
giving of notice or both would constitute a default or breach by each applicable
Seller Party of the terms of any Personal Property Lease. Except as set forth on
SCHEDULE 4.16, all Personal Property is in good operating condition and repair,
ordinary wear and tear excepted, and is located on the Real Property.
SECTION 4.17. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 4.17:
(a) with respect to the ownership and operation of the Real Property and the
Hospital, including any operations at or from any real property currently or
formerly owned, used, leased, occupied or managed by any Seller Party, each
Seller Party is and has at all times been, in compliance with all Environmental
Laws;
(b) no Governmental Entity or any nongovernmental third party has notified any
Seller Party of any alleged violation or investigation of any suspected
violation under the Environmental Laws in connection with the ownership,
operation and/or leasing of the Real Property or the Hospital, including any
litigation or cause of action alleging personal injury or property damage caused
by exposure to, or the disposal, release or migration of, any Hazardous
Materials;
(c) with respect to the ownership, operation and/or leasing of the Real Property
and the Hospital, no Seller Party has stored, disposed of or arranged for the
disposal of Hazardous Materials, except in compliance with the Environmental
Laws;
(d) there have been no actions nor, any activities, circumstances, conditions,
events or incidents, including, without limitation, the generation,
transportation, treatment, storage, release, emission, discharge, presence or
disposal of any Hazardous Materials on or from any of the Real Property or the
Hospital that could form the basis of any claim under the Environmental Laws
against any Seller Party or any Purchaser Party;
(e) no Seller Party has, whether contractually or by operation of law (including
any Environmental Law), assumed or succeeded to any liability of any direct or
indirect predecessors or any other Person (including, without limitation, KFH)
related or with respect to any Environmental Law applicable to the Real Property
or the Hospital;
(f) there are no underground storage tanks located at, on or under the Real
Property, and the Real Property does not contain any asbestos-containing
building material;
(g) there are no conditions presently existing on, at or emanating from the Real
Property or the operation of the Hospital, that may result in any liability,
investigation or clean-up cost under any Environmental Law; and
(h) no Seller Party, nor to the Seller Parties' Knowledge, any other Person, has
installed, used, generated, manufactured, treated, handled, refined, produced,
processed, stored or disposed of, any Hazardous Materials in, on or under the
Real Property, except in compliance with the
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Environmental Laws. No Seller Party has undertaken any activity, and the Seller
Parties have no Knowledge that any other Person has undertaken any activity, on
the Real Property which would cause (i) the Real Property to become a hazardous
waste treatment, storage or disposal facility within the meaning of, or
otherwise bring the Real Property within the ambit of, any Environmental Law,
(ii) a release or threatened release of Hazardous Material from the Real
Property within the meaning of, or otherwise bring the Real Property within the
ambit of, any Environmental Law, or (iii) the discharge of Hazardous Material
into any watercourse, body of, surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require a
permit under any Environmental Law. No activity has been undertaken by any
Seller Party with respect to the Real Property which would cause a violation or
support a claim under any Environmental Law. No investigation, administrative
order, litigation or settlement with respect to any Hazardous Material is in
existence, or, to the Seller Parties' Knowledge, threatened with respect to the
Real Property. No notice has been served on any Seller Party from any
Governmental Entity claiming any violation of any Environmental Law, or
requiring compliance with any Environmental Law, or demanding payment or
contribution for environmental damage or injury to natural resources. No Seller
Party has obtained or is required to obtain, and no Seller Party has any
Knowledge of any reason Acquisition Sub will be required to obtain, any permits,
licenses, or similar authorizations to occupy, operate or use the Improvements
or any part of the Real Property by reason of any Environmental Law.
SECTION 4.18. INSURANCE. SCHEDULE 4.18 sets forth a complete and accurate list
and brief description of all insurance policies currently held by any Seller
Party with respect to the Real Property, the operation of the Hospital, and the
professional liability, negligence and other acts of the Physicians and the
Service Providers, it being acknowledged that such insurance coverages are, at a
minimum, those required by the terms of the Lease. All such Insurance policies
are in full force and effect, all premiums due thereon have been paid in full
and each Seller Party is in compliance with the terms of such Insurance
Policies.
SECTION 4.19. LITIGATION. Except as set forth on SCHEDULE 4.19, there is no
dispute, suit, action, proceeding, inquiry or investigation (a "Claim") against
or involving any of the Seller Parties or any of their properties or rights,
pending or, to the Knowledge of the Seller Parties, threatened (including,
without limitation any suit, action, proceeding or investigation pursuant to
Title 11 of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, or any other federal, state or local law regulating employment) nor do the
Seller Parties know of any facts which might result in any such Claim. There is
no Claim pending, or, to the Seller Parties' Knowledge, threatened, against any
Physician or Service Provider which could, by operation of law, through contract
or otherwise, result in a Claim against any Seller Party, and no Seller Party
has any Knowledge of any facts which could result in such a Claim. Except as set
forth on SCHEDULE 4.19, there is no judgment, decree, injunction, rule or order
of any Governmental Entity or any other Person (including, without limitation,
any arbitral tribunal) outstanding against any Seller Party and no Seller Party
is not in violation of any term of any judgment, decree, injunction or order
outstanding against it. Furthermore, there is no Claim by or before any
Governmental Entity or other Person pending or, to the Knowledge of the Seller
Parties, threatened, which questions or challenges the validity of this
Agreement or any action taken or to be taken by any Seller Party pursuant to
this Agreement or in connection with the transactions contemplated hereby, nor
is
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there any basis for any such Claim. SCHEDULE 4.19(A) sets forth each and every
adversary proceeding connected with the Bankruptcy (the "Adversary
Proceedings").
SECTION 4.20. CONTRACTS, OBLIGATIONS AND COMMITMENTS. SCHEDULE 4.20 sets forth a
list of all contractual agreements for consideration in excess of $5,000.00,
whether written or oral, relating to or affecting the Assets and/or the
operation of the Business to which any Seller Party is a party, including,
without limitation, the KFH Lease and the Parking Lot Lease (the "Contracts").
The Seller Parties have made available to the Purchaser Parties complete and
correct copies of all of the Contracts. Except as set forth on SCHEDULE 4.20,
(i) the Contracts are legally valid, binding and enforceable against the
applicable Seller Party (and, to the Seller Parties' Knowledge, against all
parties thereto) in accordance with their respective terms and are in full force
and effect; (ii) there are no defaults by any Seller Party, or to the Seller
Parties' Knowledge, any other party to the Contracts; (iii) no Seller Party has
received notice of any default, offset, counterclaim or defense under any
Contract; and (iv) no condition or event has occurred which with the passage of
time or the giving of notice or both would constitute a default or breach by an
Seller Party of the terms of any Contract.
SECTION 4.21. INTANGIBLE PROPERTY. SCHEDULE 4.21 sets forth a true and complete
list of the trademarks, service marks, and other intangible assets used by the
Seller Parties in the operation of the Hospital (the "Intangible Property") and
said SCHEDULE 4.21 identifies the ownership of such Intangible Property. Each
applicable Seller Party owns, or possesses adequate, enforceable licenses or
other rights to use, all of the Intangible Property, and no rights thereto have
been granted to others by any Seller Party. Except as set forth on SCHEDULE
4.21, all of the Intangible Property is owned or used by the applicable Seller
Party free and clear of all assignments, licenses, restrictions, encumbrances,
charges or claims for infringement, and none is subject to any outstanding
order, decree, judgment, stipulation or charge. There is no unauthorized use,
disclosure, infringement or misappropriation of any of the Intangible Property
by any third party. The Seller Parties' use of the Intangible Property does not
infringe upon or otherwise violate the rights of others. No one has asserted to
any Seller Party that the use of the Intangible Property by any Seller Party
infringes upon the patents, trade secrets, trade names, trademarks, service
marks, copyrights or other intellectual property rights of any other Person and
no Seller Party has any Knowledge of any fact or circumstance which could
provide the basis for any such assertion.
SECTION 4.22. EMPLOYEES AND EMPLOYEE RELATIONS.
(a) SCHEDULE 4.22(A) contains a current, correct and complete list of the names
and current hourly wage, monthly salary and other compensation of all employees
who are or who will provide services at the Hospital (collectively, the
"Business Employees"), together with a summary (containing estimates to the
extent necessary) of the individual's existing bonuses, additional compensation
and other benefits (whether current or deferred), if any, accrued, paid or
payable to each such individual for services rendered or to be rendered through
the fiscal period ending September 30, 2005. Except as set forth on SCHEDULE
4.22(A), all of the Business Employees are "at will" employees. Except as set
forth on SCHEDULE 4.22(A), no Seller Party is a party to any oral (express or
implied) or written: (i) employment agreement, or (ii) agreement that contains
any severance or termination pay obligations, with any Business Employee. The
Seller Parties have made available true, correct and current copies (or, if not
written, accurate descriptions of the parties and terms) of such agreements to
the Purchaser Parties.
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(b) Except as set forth on SCHEDULE 4.22(B), no Business Employee is represented
by any labor union, trade association or other employee organization, no demand
for recognition has been made by any labor union with respect to the Business
Employees, and there is not and has not been any labor union organizing activity
at the Hospital during the periods it has been operated by any Seller Party.
Except as set forth on SCHEDULE 4.22(B), no Seller Party is a party to any
collective bargaining agreement or understanding with any labor union, trade
association or other employee organization with respect to any Business Employee
and no such agreements are currently being proposed and/or negotiated.
(c) Except as set forth on SCHEDULE 4.22(C), there is no labor dispute, work
stoppage, strike, slowdown, walkout, lockout, or any other interruption or
disruption of operations at the Hospital as a result of labor disputes or
disturbances with respect to the Business Employees and there is no
investigation, grievance, arbitration, complaint, claim or other dispute or
controversy (collectively, the "Labor Proceeding") pending or threatened,
between any Seller Party and any present or former Business Employee, nor have
any discharges or terminations of any former Business Employee occurred which
would form the basis for any claim of discrimination against any Seller Party.
Except as set forth on SCHEDULE 4.22(C), no Seller Party has any Knowledge of
any facts or past, current or contemplated event that could form the basis for
any such Labor Proceeding, nor has there been any such Labor Proceeding within
the past twelve (12) months.
(d) Except as set forth on SCHEDULE 4.22(D), no Seller Party has received any
notice that any vice president, director or director-level employee, or higher,
of Vertias or any group of Business Employees, has any plans to terminate his or
her employment or affiliation with any Seller Party.
(e) Veritas has complied with and is currently in compliance with, and Veritas
has not received any notice of noncompliance with, any and all applicable laws
relating to the employment of labor, including, without limitation, any
provisions relating to wages, hours, equal employment, occupational safety and
health, workers' compensation, unemployment insurance, collective bargaining,
immigration, affirmative action and the payment and withholding of social
security and other taxes. Veritas has withheld all amounts required by law or
agreement to be withheld from the wages or salaries of the Business Employees,
and Veritas is not liable for any arrears of any tax or penalties for failure to
comply with the foregoing.
(f) SCHEDULE 4.22(F) sets forth each Employee Pension Benefit Plan (as defined
in Section 3(2) of ERISA) maintained by Veritas (each a "Veritas Plan") and
applicable to the Business Employees. Veritas is in compliance in all material
respects with all applicable laws and regulations respecting such Veritas Plans.
SECTION 4.23. COMPLIANCE WITH LAW. Each Seller Party, (a) is in compliance in
all material respects with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of the Business and its ownership and use of
its assets and no event has occurred or circumstance exists which (with notice
or lapse of time) would result in any noncompliance with any such law, rule,
regulation, ordinance, license permit, order, writ or decree; and (b) has timely
made or given all filings and notices required to be made by such Seller Party
in connection with the Business with the regulatory agencies of any Governmental
Entity.
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SECTION 4.24. XXXX-XXXXXX OBLIGATIONS.
(a) Except as set forth on SCHEDULE 4.24, neither Veritas, nor, to the Knowledge
of the Seller Parties, any predecessor in interest of Veritas, has received any
loans, grants or loan guarantees pursuant to the United States Xxxx-Xxxxxx Act
(42 U.S.C. 291a, et seq.) program, the Health Professions Educational Assistance
Act, the Nurse Training Act, the National Health Pharmacy and Resources
Development Act or the Community Mental Health Centers Act. All of the
obligations set forth on SCHEDULE 4.24 have been fully satisfied. The
transactions contemplated hereby will not result in any obligation of any
Purchaser Party to repay any such loan, grant or loan guarantee or to provide
uncompensated care in consideration thereof.
(b) None of the Assets are subject to any liability in respect of amounts
received by any Seller Party, or any other Person for the purchase or
improvement of the Assets or any part thereof under restricted or conditioned
grants or donations, including monies received under the Public Health Service
Act, 42 U.S.C. Section 291, et seq.
SECTION 4.25. MEDICAL STAFF MATTERS. Except as set forth on SCHEDULE 4.25, there
are no pending or, to the Knowledge of the Seller Parties, threatened
investigations, appeals, challenges, disciplinary or corrective actions, or
disputes involving applicants to the medical staff of the Hospital, current
members of the medical staff of the Hospital or affiliated health professionals.
Since the Balance Sheet Date, no member of the medical staff of the Hospital has
resigned or been terminated therefrom and no Seller Party has received notice
that any Physician or medical staff member intends to resign from its medical
staff. True and correct copies of Medical Staff Bylaws of the Hospital, the
Hospital's Medical Staff Rules and Regulations, and the Hospital's Medical Staff
Hearing Procedures, all as presently in effect, have been previously made
available by the Seller Parties to the Purchaser Parties.
SECTION 4.26. BROKERS. Except as set forth on SCHEDULE 4.26, No Person is or
will be entitled to any brokerage, finder's or other similar fee, commission or
payment in connection with or as a result of the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of any Seller Party.
SECTION 4.27. RECORDS. True, complete and current copies of each Seller Party's
Governing Documents have been delivered to the Purchaser Parties prior to the
execution and delivery of this Agreement. The books of account, minute books,
stock record books and other records of each Seller Party, all of which have
been made available to the Purchaser Parties, are complete and correct. The
minute books of each Seller Party contain records of all meetings and other
corporate actions of the directors and shareholders of such Seller Party, and
have been delivered to the Purchaser Parties prior to the execution and delivery
of this Agreement.
SECTION 4.28. EXISTING LEASES. Desert Valley Parent and its Subsidiaries are in
compliance in all respects with the terms of the Existing Leases and no default
or breach (or event which with notice and/or passage of time would constitute
such a default or breach) has occurred by any party thereto. None of the
facilities and none of the Desert Valley Parent's Subsidiaries subject to the
existing Leases has suffered a Material Adverse Effect since February 28, 2005
and no event has occurred which would reasonably likely to result in such a
Material Adverse Effect.
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SECTION 4.29. REPRESENTATIONS COMPLETE. The representations and warranties made
by the Seller Parties in this Agreement and the statements made in or
information contained on any Schedules or certificates furnished by any Seller
Party pursuant to this Agreement do not contain and will not contain, as of
their respective dates and as of the Closing Date, any untrue statement of a
material fact, nor do they omit or will they omit, as of their respective dates
or as of the Closing Date, to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 4.30. BANKRUPTCY CASE. The Bankruptcy Court confirmed the Modified
Second Amended Joint Chapter 11 Plan of Reorganization in the Bankruptcy (the
"Joint Plan") on July 1, 2005. Pursuant to the Joint Plan, all assets of the
Bankruptcy estate have been re-vested in Veritas. The Effective Date of the Plan
was July 31, 2005. Veritas is in compliance in all respects with the Joint Plan
and all orders of the Bankruptcy Court relating to the Bankruptcy. All
distributions required under the Joint Plan have been made and the Joint Plan is
substantially consummated (as such term is defined in 11 U.S.C. Section 1101(2).
ARTICLE V
REPRESENTATIONS AND WARRANTIES BY THE PURCHASER PARTIES
The Purchaser Parties hereby jointly and severally represent and warrant to the
Seller Parties as of the date hereof, and as of the Closing Date as follows:
SECTION 5.1. ORGANIZATION. MPT is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware. The
Acquisition Sub is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware and qualified to do
business in the State of California.
SECTION 5.2. AUTHORIZATION; ENFORCEMENT, ABSENCE OF CONFLICTS. Each Purchaser
Party has the requisite power and authority to execute, deliver and carry out
the terms of this Agreement, to consummate the transactions contemplated hereby
and to conduct its businesses as now being conducted. All actions required to be
taken by each to authorize the execution, delivery and performance of this
Agreement, all documents executed by the Purchaser Parties which are necessary
to give effect to this Agreement and all transactions contemplated hereby and
thereby, have been duly and properly taken or obtained. No other action on the
part of either Purchaser Party is necessary to authorize the execution, delivery
and performance of this Agreement, all documents necessary to give effect to
this Agreement and all transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
and/or the passage of time: (i) violate or conflict with any provision of the
Governing Documents of either Purchaser Party; (ii) violate any provision of
law, statute, rule or regulation to which either Purchaser Party is subject;
(iii) violate or conflict with any judgment, order, writ or decree of any court
applicable to either Purchaser Party; (iv) violate or conflict with any law or
regulation applicable to either Purchaser Party; or (v) result in the breach or
termination of any provision of, or create rights of acceleration or constitute
a default under, the terms of any debt or obligation to which either Purchaser
Party is a party or by which either Purchaser Party is bound.
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SECTION 5.3. BINDING AGREEMENT. This Agreement and all agreements to which any
Purchaser Party will become a party hereunder is and will constitute the valid
and legally binding obligations of such Purchaser Party, and are and will be
enforceable against such Purchaser Party in accordance with the respective terms
hereof or thereof, except as enforceability may be restricted, limited or
delayed by applicable bankruptcy, insolvency or other laws affecting creditors'
rights generally and except as enforceability may be subject to and limited by
general principles of equity.
SECTION 5.4. LITIGATION. There is no Claim pending or, to the Knowledge of the
Purchaser Parties, threatened against or affecting any Purchaser Party that has
or would reasonably be expected to have a material adverse effect on the ability
of the Purchaser Parties to perform their respective obligations under this
Agreement or any aspect of the transactions contemplated hereby.
SECTION 5.5. BROKERS. No Person is or will be entitled to any brokerage,
finder's or other similar fee, commission or payment in connection with or as a
result of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser Parties.
SECTION 5.6. COMPLIANCE WITH LAW. The Purchaser Parties, where applicable (a)
are in compliance with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of their businesses, and their ownership and
use of their assets, except where non-compliance would not prevent or impede the
Purchaser Parties from consummating the transactions contemplated hereby or the
ability of the Purchaser Parties to perform their respective obligations under
this Agreement and, to the Knowledge of the Purchaser Parties, no event has
occurred or circumstance exists which (without notice or lapse of time) would
result in any noncompliance with any such law, rule, regulation, ordinance,
license permit, order, writ or decree which would prevent or impede the
Purchaser Parties from consummating the transactions contemplated hereby; and
(b) have timely made or given all filings and notices required to be made by the
Purchaser Parties with the regulatory agencies of any Governmental Entity,
except where such failure would not prevent or impede the Purchaser Parties from
consummating the transactions contemplated hereby.
ARTICLE VI
TITLE AND SURVEY
SECTION 6.1. SURVEY. MPT shall cause to be prepared, at Seller Parties' expense,
a current ALTA/ACSM Land Title Survey of the Real Property, prepared by a duly
licensed land surveyor. The survey shall be currently dated, shall show the
location on the Real Property of any improvements, fences, evidence of abandoned
fences, ponds, creeks, streams, rivers, easements, roads, rights-of-way, means
of ingress and egress, location of all utilities serving the Real Property, and
encroachments, and shall contain a legal description of the boundaries of the
Real Property by metes and bounds and the appropriate flood zone designation and
the total number of acres constituting the Real Property. The surveyor shall
certify to the Purchaser Parties and to the Title Company that the survey is
correct and that there are no visible discrepancies, conflicts, encroachments,
overlapping of improvements, fences, evidence of
27
abandoned fences, ponds, creeks, streams, rivers, easements, roads or
rights-of-way except as are shown on the survey plat. Any and all matters shown
on such survey shall be legibly identified by appropriate volume and page
recording references with dates of recording noted. If MPT shall disapprove such
survey for any reason in MPT's sole discretion, MPT may either (i) treat such
objection as a title objection and request that it be cured, or (ii) terminate
this Agreement and the parties hereto shall have no further liability or
obligations hereunder, expect as otherwise expressly set forth herein. If the
Seller Parties are unable to cure any objection to the survey within ten (10)
days following delivery of notice to Seller Parties thereof, then MPT may
terminate this Agreement upon written notice to the Seller Parties.
SECTION 6.2. TITLE INSURANCE. MPT will cause to be prepared, at Seller Parties'
expense, a title commitment for the issuance of an ALTA Owner's Policy (and a
leasehold policy covering the real property interest under the Parking Lot
Lease) in form and substance satisfactory to MPT, issued by a title insurance
company acceptable to MPT and qualified to insure titles in the State of
California (the "Title Company"), in the amount of the Purchase Price, covering
title to the Real Property at a date not earlier than the date hereof and
showing good and marketable title, subject only to the Permitted Encumbrances.
All of the standard exceptions within the policy and the exceptions for
mechanic's and materialmen's liens and the survey exception shall be deleted. If
MPT shall disapprove any items stated in the Title Commitment or the Exception
Documents, MPT may either (i) treat such objection as a title objection and
request that it be cured, or (ii) terminate this Agreement and, upon such
termination, the parties hereto shall have no further liability or obligations
hereunder, except as otherwise expressly provided herein. If the Seller Parties
are unable to cure any exception or objection to title that is not a Permitted
Encumbrance within ten (10) days following delivery of notice to the Seller
Parties thereof, then MPT may terminate this Agreement upon written notice to
Seller Parties.
ARTICLE VII
PRE-CLOSING COVENANTS
From and after the execution and delivery of this Agreement to and including the
Closing Date, the applicable party shall observe the following covenants:
SECTION 7.1. NO SHOP. Neither any Seller Party nor any investment banker,
attorney, accountant, representative or other Person retained by or on behalf of
any Seller Party, shall directly or indirectly, initiate contact with, respond
to, solicit or encourage any inquiries, proposals or offers by, or participate
in any discussions or negotiations with, enter into any agreement with, disclose
any information concerning any Seller Party, the Hospital or the Assets to,
afford any access to the properties, books or records of any Seller Party to, or
otherwise assist, facilitate or encourage, any Person in connection with any
possible proposal regarding a sale, lease, transfer, disposition or other
transaction related to or affecting all or any portion of the Assets (including
all or any portion of the Real Property). The Seller Parties shall notify MPT
immediately if any discussions or negotiations are sought to be initiated, any
inquiry or proposal is made, or any such information is requested.
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SECTION 7.2. ACCESS; CONFIDENTIALITY.
(a) Between the date hereof and the Closing, the Seller Parties shall (i) afford
the Purchaser Parties and their authorized representatives full and complete
access to the employees, (including the Business Employees) medical staff, and
other agents and representatives of the Seller Parties relating to the Business
and during normal working hours to all books, records, offices and other
facilities of the Seller Parties relating to the Business, (ii) permit the
Purchaser Parties to make such inspections and to make copies of such books and
records as they may reasonably require and (iii) furnish the Purchaser Parties
with such financial and operating data and other information related to the
Business or the Seller Parties as the Purchaser Parties may from time to time
reasonably request. The Purchaser Parties and their authorized representatives
shall conduct all such inspections under the supervision of personnel of the
Seller Parties in a manner that will minimize disruptions to the business and
operations of the Seller Parties and in a manner as to maintain the
confidentiality of this Agreement.
(b) The Purchaser Parties and their authorized representatives (including their
designated engineer, architects, surveyors and/or consultants) may, upon
reasonable notice and at any time enter into and upon all or any portion of the
Real Property in order to investigate and assess, as the Purchaser Parties deem
necessary or appropriate in their sole and absolute discretion, the condition
(including the structural and environmental condition) of the Assets. The Seller
Parties shall cooperate with the Purchaser Parties and their authorized
representatives in conducting such investigation, shall allow, the Purchaser
Parties and their authorized representatives full access to the Assets, together
with full permission to conduct such investigation, and shall provide to the
Purchaser Parties and their authorized representatives all information
maintained by the Seller Parties and related to the condition of the Assets,
including the Real Property, and all plans, soil or surface or ground water
tests or reports, any environmental investigation results, reports or
assessments previously or contemporaneously conducted or prepared by or on
behalf of, or in the possession of or reasonably available to the Seller Parties
or any of their engineers, consultants or agents and all other information
relating to environmental matters in respect of their properties and businesses.
(c) The provisions of that certain Confidentiality Agreement dated May 5, 2005
among the parties (the "Confidentiality Agreement") shall remain binding and in
full force and effect until the Closing. Notwithstanding anything to the
contrary contained herein or in the Confidentiality Agreement, the
confidentiality obligations as they relate to the transactions contemplated by
this Agreement shall not apply to the purported or claimed Federal income tax
treatment of the transactions (the "Tax Treatment") or to any fact that may be
relevant to understanding the purported or claimed Federal income tax treatment
of the transactions (the "Tax Structure"), and each party hereto (and any
employee, representative, or agent of any party hereto) may disclose to any and
all persons, without limitation of any kind, the Tax Treatment and Tax Structure
of the transactions contemplated by this Agreement and any materials of any kind
(including any tax opinions or other tax analyses) that relate to the Tax
Treatment or Tax Structure. In addition, each party hereto acknowledges that it
has no proprietary or exclusive rights to any tax matter or tax idea related to
the transactions contemplated by this Agreement. The preceding sentence is
intended to ensure that the transactions contemplated by this Agreement shall
not be treated as having been offered under conditions of confidentiality for
purposes of the Confidentiality Regulations and shall be construed in a manner
consistent with such purpose. The information
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contained herein, in the Schedules hereto or delivered to the Purchaser Parties
or its authorized representatives pursuant hereto shall be subject to the
Confidentiality Agreement as Information (as defined and subject to the
exceptions contained therein) until the Closing and, for that purpose and to
that extent, the terms of the Confidentiality Agreement are incorporated herein
by reference.
SECTION 7.3. SCHEDULE UPDATES. From the date hereof until the Closing Date, the
Purchaser Parties, on the one hand, and the Seller Parties on the other hand,
shall immediately advise the other in writing of any additions or changes to any
Schedule to reflect any deficiencies or inaccuracies in such Schedule or to
reflect circumstances or matters which occur after the date of this Agreement
which, if existing prior to such date, would have been required to be described
on such Schedule; provided, however, that no additions or changes made to any
Schedule by any party to correct deficiencies or inaccuracies on such Schedule
shall be deemed to cure any breach or inaccuracy of a representation or
warranty, covenant or agreement or to satisfy any condition unless otherwise
agreed to in writing by the other party, but provided further, however, that an
addition or change made to any Schedule by any Party to reflect circumstances or
matters which occur after the date of this Agreement shall be deemed to cure a
breach or inaccuracy of a representation or warranty, covenant or agreement, but
shall not be deemed to satisfy any condition unless agreed to in writing by the
other party.
SECTION 7.4. CONDUCT OF BUSINESS BY THE SELLER PARTIES PENDING THE CLOSING. The
Seller Parties covenant and agree that, during the period from the date hereof
and continuing until the earlier of the termination of this Agreement or the
Closing Date, unless the Purchaser Parties shall otherwise agree in writing, the
Seller Parties shall conduct their businesses only in, and the Seller Parties
shall not take any action except in, the ordinary course of business and in a
manner consistent with past practice and in compliance in all material respects
with all applicable laws and regulations, and that the Seller Parties shall use
reasonable best efforts to preserve substantially intact the business
organization of each Seller Party, to keep available the services of their
current officers, employees and consultants and to preserve the present
relationships of each Seller Party with patients, suppliers and other persons
with which each Seller Parties have significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or
set forth on SCHEDULE 7.4, Veritas, or any Person acting on behalf of Veritas,
shall not, during the period from the date hereof and continuing until the
earlier of the termination of this Agreement or the Closing Date, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of MPT:
(a) amend, repeal or otherwise change in any way its Governing Documents;
(b) make or revoke any Tax election related to or affecting the Assets;
(c) fail to perform its obligations in all respects under agreements relating to
or respecting its assets, properties and rights;
(d) reduce the coverage of, fail to timely renew or pay the premiums on or
cancel any insurance policy;
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(e) cause to lapse or fail to renew any license and certification necessary to
conduct its business;
(f) fail to timely make all applicable filings with Governmental Entities;
(g) create, assume or, other than those presently in existence, permit to exist
any Lien upon any of the Assets;
(h) purchase, sell, assign, lease or otherwise acquire, transfer or dispose of
any material assets, except in the ordinary course of business and consistent
with its past practice;
(i) enter into or agree to enter into any agreement or arrangements granting any
rights to purchase any of its assets, properties or rights, except for purchases
of inventory in the ordinary course of business and consistent with its past
practice;
(j) engage in any business other than the Business;
(k) terminate or modify any contract, lease or other agreement to which it is a
party (excluding expiration or satisfaction in accordance with the terms of such
contract or agreement);
(l) waive any right of substantial value other than in exchange for reasonable
consideration; or
(m) take, agree or offer, in writing or otherwise, to take, any of the actions
described in Sections 7.4 (a) through (l) above. In addition, no Seller Party
shall take any action which would make any of the representations or warranties
of any Seller Party contained in this Agreement untrue, incorrect or incomplete
or prevent any Seller Party from performing or cause any Seller Party not to
perform its covenants hereunder, in each case, such that the conditions set
forth in Sections 8.2(a) or 8.2(b), as the case may be, would not be satisfied.
SECTION 7.5. COOPERATION. Subject to compliance with applicable law, from the
date hereof until the Closing Date, (a) the Seller Parties shall confer on a
regular and frequent basis with one or more representatives of the Purchaser
Parties to report operational matters that are material and the general status
of ongoing operations of the Business, (b) each of the Purchaser Parties and the
Seller Parties shall promptly provide the other or their counsel with copies of
all filings made by such party with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby, (c) the Seller Parties
shall promptly provide to Purchaser Parties a written summary of any
developments in the Bankruptcy including each of the Adversary Proceedings.
SECTION 7.6. INTENTIONALLY DELETED.
SECTION 7.7. REGULATORY AND OTHER AUTHORIZATIONS, NOTICES AND CONSENTS.
(a) Each party hereto shall use all commercially reasonable efforts to obtain
all authorizations, consents, orders and approvals of all Governmental Entities
and officials that may be or become necessary for its execution and delivery of,
and the performance of its obligations
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pursuant to, this Agreement and each such party will cooperate fully with the
other parties hereto in promptly seeking to obtain all such authorizations,
consents, orders and approvals.
(b) The Seller Parties shall give promptly such notices to third parties and use
its commercially reasonable efforts to obtain such third party consents and
estoppel certificates as MPT may in its sole and absolute discretion deem
necessary or desirable in connection with the transactions contemplated by this
Agreement, including, without limitation, all third party consents that are
necessary or desirable in connection with the transfer of the Assumed Contracts.
(c) The Purchaser Parties shall cooperate and use commercially reasonable
efforts to assist the Seller Parties in giving such notices and obtaining such
consents and estoppel certificates; provided, however, that the Purchaser
Parties shall have no obligation to give any guarantee or other consideration of
any nature in connection with any such notice, consent or estoppel certificate
which MPT in its sole and absolute discretion may deem adverse to the interests
of the Purchaser Parties.
(d) Anything in this Agreement to the contrary notwithstanding, this Agreement
shall not constitute an agreement to assign any Asset if an attempted assignment
thereof, without the consent of the other party thereto, would constitute a
breach or other contravention thereof, noncompliance by any Seller Party or its
affiliates thereunder or in any way adversely affect the rights of any Purchaser
Party thereunder. The Seller Parties and the Purchaser Parties agree that, in
the event any consent, approval or authorization necessary or desirable to
preserve for the Purchaser Parties any right or benefit with respect to any such
Asset is not obtained prior to the Closing, the Seller Parties will, subsequent
to the Closing, cooperate with the Purchaser Parties in attempting to obtain
such consent, approval or authorization as promptly thereafter as practicable.
If such consent, approval or authorization cannot be obtained, the Seller
Parties will use commercially reasonable efforts to provide the Purchaser
Parties with the rights and benefits of such affected Asset, and, if the Seller
Parties provide such rights and benefits, the Purchaser Parties shall assume the
obligations and burdens with respect thereto in accordance with this Agreement,
including, subcontracting, sublicensing, or subleasing to the Purchaser Parties,
any and all rights of the applicable Seller Party against a third party thereto.
SECTION 7.8. MUTUAL COVENANTS. The parties shall use their good faith reasonable
efforts to satisfy the conditions to the closing of the transactions
contemplated hereby. Without limiting the generality of the foregoing, the
respective parties shall execute and/or deliver, or use their respective good
faith reasonable efforts to cause to be executed and/or delivered, the documents
contemplated to be executed and/or delivered by them at Closing.
SECTION 7.9. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, the parties agree
to consult with each other before any party hereto or any of their respective
affiliates issues any press release or makes any public statement with respect
to this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue, or permit to be issued, any such press release or
make, or permit to be made, any such public statement prior to such
consultation.
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ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.1. CONDITIONS TO THE OBLIGATIONS OF THE SELLER PARTIES. The
obligations of the Seller Parties to effect the transactions contemplated hereby
shall be further subject to the fulfillment of the following conditions, any one
or more of which may be waived by the Seller Parties:
(a) All of the representations and warranties of Purchaser Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.
(b) The Purchaser Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.
(c) The Purchaser Parties shall have executed, where applicable, and delivered
to the Seller Parties the documents referenced in Section 9.3 hereof.
(d) Prime shall have purchased and acquired the Real Property pursuant to the
terms and conditions of the KFH Lease and the Settlement Agreement (including an
assignment of leasehold interest with respect to the Parking Lot Lease to
Veritas).
SECTION 8.2. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER PARTIES. The
obligations of the Purchaser Parties to effect the transactions contemplated
hereby shall be further subject to the fulfillment of the following conditions,
any one or more of which may be waived by the Purchaser Parties:
(a) All of the representations and warranties of Seller Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.
(b) The Seller Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.
(c) No Seller Party shall have suffered any change, event or circumstance which
has had, or could have, a Material Adverse Effect.
(d) The Purchaser Parties shall have satisfactorily completed their due
diligence investigations of the Assets, the Business and the Seller Parties and
shall be satisfied with the results of such investigations.
(e) All necessary approvals, consents, estoppel certificates and the like of
Governmental Entities and third parties (including the Bankruptcy Court approval
of the Settlement Agreement, any other Bankruptcy Court approval and the consent
of Xxxxxxxx Lutheran Church with respect to the assignment of the Parking Lot
Lease) to the validity and effectiveness of the transactions contemplated hereby
have been obtained.
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(f) No portion of the Assets shall have been damaged or destroyed by fire or
casualty.
(g) No condemnation, eminent domain or similar proceedings shall have been
commenced or threatened with respect to any portion of the Assets.
(h) The Purchaser Parties shall have received copies of all permits, licenses
and other approvals of Governmental Entities required for the operation of the
Assets for their intended uses and written evidence satisfactory to the
Purchaser Parties that the operation and use of the Hospital are in accordance
with all applicable governmental requirements.
(i) The Purchaser Parties shall have received evidence that the Seller Parties
are maintaining insurance on the Assets and that the Purchaser Parties are named
as additional insureds and, where applicable, loss payees.
(j) The Seller Parties shall have executed where applicable, and delivered to
Purchaser Parties the documents referenced in Section 9.2 hereof.
(k) There shall not have been instituted by any creditor of any Seller Party,
any Governmental Entity or any other third party, any suit, action or proceeding
which would affect the Assets or seek to restrain, enjoin or invalidate the
transactions contemplated by this Agreement.
(l) Prime shall have purchased and acquired the Real Property pursuant to the
terms and conditions of the KFH Lease and the Settlement Agreement (including an
assignment of leasehold interest with respect to the Parking Lot Lease to
Veritas).
(m) Prime or its Affiliates shall have completed its purchase of all of the
outstanding capital stock of Veritas and Seller Parties shall have furnished
Purchaser Parties with evidence of the same.
(n) The Appraisal shall have been delivered and shall reflect an Appraised Value
that equals or exceeds the Purchase Price.
(o) The Bankruptcy Court shall have entered an order approving the Settlement
Agreement.
ARTICLE IX
CLOSING
SECTION 9.1. CLOSING DATE. . The closing of the purchase and sale of the Assets
pursuant hereto (the "Closing") shall be handled through deliveries by mail into
escrow on November 30, 2005 (the actual date of closing being herein referred to
as the "Closing Date"), or on such other date (the "Closing Date") and such
other place as the parties hereto shall mutually agree.
SECTION 9.2. SELLER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date, the
Seller Parties shall deliver to the Purchaser Parties the documents listed
below.
(a) Duly executed bills of sale and assignments transferring all Assets other
than the Real Property in form and substance satisfactory to MPT;
34
(b) A duly executed general warranty deed in substantially the form as EXHIBIT
9.2(B) (the "Deeds") conveying the Real Property to the Acquisition Sub;
(c) A certified copy of the resolutions of the governing body of each Seller
Party dated as of the date hereof and authorizing such Seller Party's execution,
delivery and performance of this Agreement and all other documents to be
executed in connection herewith;
(d) Certificates of existence and good standing of each Seller Party from the
secretary of state of such Seller Party's state of incorporation or
organization, dated the most recent practical date prior to the Closing Date;
(e) Certificates of good standing and foreign qualification of each Seller Party
from the secretary of state of the State of California dated the most recent
practical date prior to the Closing Date;
(f) The Title Commitment and Title Policy in form and substance satisfactory to
MPT;
(g) A Survey dated the most recent practical date prior to the Closing Date in
form and substance satisfactory to MPT;
(h) A Phase I Environmental Site Assessment Report dated the most recent
practical date prior to the Closing Date in form and substance satisfactory to
MPT (and a Phase II if recommended by the Phase I Report);
(i) Property condition and seismic reports for the Real Property, dated the most
recent practical date prior to the Closing Date and in form and substance
satisfactory to MPT;
(j) A Zoning Compliance Letter/Certificate dated the most recent practical date
prior to the Closing Date in form and substance satisfactory to MPT;
(k) Tenant Estoppel Certificates in form and substance satisfactory to MPT;
(l) Owner's Affidavits in form and substance satisfactory to MPT;
(m) The Search Reports dated the most recent practical date prior to the Closing
Date in form and substance satisfactory to MPT;
(n) A Non-Foreign Affidavit in form and substance satisfactory to MPT;
(o) The Lease, together with a Memorandum of Lease Agreement in form and
substance satisfactory to MPT;
(p) A Lease Guaranty Agreement substantially in the form attached hereto as
EXHIBIT 9.2(P);
(q) The Assignment of Rents and Leases in substantially the form attached hereto
as EXHIBIT 9.2(Q);
(r) The Security Agreements in substantially the form attached hereto as EXHIBIT
9.2(R);
35
(s) Intentionally deleted;
(t) The legal opinion of Xxxxxxx, Xxxxxx & Xxxxxxx LLP as counsel for the Seller
Parties, substantially in the form attached hereto as EXHIBIT 9.2(T);
(u) At the Closing, each Seller Party shall have furnished to the Purchaser
Parties a certificate dated the Closing Date signed by such Seller Party to the
effect that all of the representations and warranties of each Seller Party
contained in the Agreement (considered collectively) and each of these
representations and warranties (considered individually) remain in all respects
true and correct as of the Closing Date as if made on such date and that such
Seller Party has performed and satisfied all covenants and conditions required
by this Agreement to be performed or satisfied by such Seller Party on or prior
to Closing;
(v) All necessary approvals, consents, estoppel certificates, orders and the
like of third parties or Governmental Entities (including the Bankruptcy Court,
if applicable) to the validity and effectiveness of the transactions
contemplated hereby;
(w) The Noncompete Agreements substantially in the form attached hereto as
EXHIBIT 9.2(W);
(x) An order of the Bankruptcy Court approving the Settlement Agreement;
(y) The Assignment and Assumption of the Parking Lot Lease in form and substance
satisfactory to MPT and;
(z) Such other instruments and documents as the Purchaser Parties reasonably
deem necessary to effect the transactions contemplated hereby.
SECTION 9.3. PURCHASER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date,
the Purchaser Parties shall deliver to the Seller Parties the documents listed
below.
(a) A certified copy of the resolutions of the governing body of each Purchaser
Party dated as of the date hereof authorizing the execution, delivery and
performance of this Agreement and all other documents to be executed in
connection herewith;
(b) Certificates of existence and good standing of each Purchaser Party from the
Delaware Secretary of State of the State of Delaware, dated the most recent
practical date prior to the Closing Date;
(c) Certificates of good standing and foreign qualification of the Acquisition
Sub from the secretary of state of the State of California, dated the most
recent practical date prior to the Closing Date;
(d) The Lease, together with a Memorandum of Lease in form and substance
satisfactory to MPT;
(e) The Assignment of Rents and Leases in substantially the form attached hereto
as EXHIBIT 9.2(Q);
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(f) An Opinion of Xxxxx Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, P.C., as
counsel for the Purchaser Parties substantially in the form attached as EXHIBIT
9.3(F);
(g) At the Closing, each Purchaser Party shall have furnished to the Seller
Parties a certificate dated the Closing Date signed by such Purchaser Party to
the effect that all of the representations and warranties of such Purchaser
Party contained in the Agreement (considered collectively) and each of these
representations and warranties (considered individually) remain in all respects
true and correct as of the Closing Date as if made on such date and that such
Purchaser Party has performed and satisfied in all material respects all
covenants and conditions required by this Agreement to be performed or satisfied
by such Purchaser on or prior to Closing;
(h) Any bills of sale and assignments requiring the signature of any Purchaser
Party;
(i) The Security Agreements in substantially the form attached hereto as EXHIBIT
9.2(R);
(j) The Noncompete Agreements substantially in the form attached as EXHIBIT
9.2(W); and
(k) The Assignment and Assumption of the Parking Lot Lease in form and substance
satisfactory to MPT.
ARTICLE X
TERMINATION
SECTION 10.1. TERMINATION. Notwithstanding anything to the contrary in this
Agreement, the remaining obligations of the parties hereunder may be terminated
and the transactions contemplated hereby abandoned at any time prior to Closing:
(i) by mutual written consent of the parties; (ii) by the Seller Parties if the
conditions set forth in Section 8.1 shall not have been satisfied on or before
December 31, 2005; or (iii) by the Purchaser Parties if the conditions set forth
in Section 8.2 shall not have been satisfied on or before December 31, 2005.
SECTION 10.2. NOTICE AND EFFECT. In the event of the termination of this
Agreement pursuant to this Article X, the party terminating this Agreement shall
give prompt written notice thereof to the parties, and the transactions
contemplated hereby shall be abandoned, without further action by any party.
Each filing, application and other submission relating to the transactions
contemplated hereby shall, to the extent practicable, be withdrawn from the
person to which it was made. The confidentiality provisions set forth in Article
VII of this Agreement shall survive any termination of this Agreement.
Notwithstanding any statement contained in this Agreement to the contrary,
termination of this Agreement shall not relieve any party from liability for any
breach or violation of this Agreement that arose prior to such termination.
ARTICLE XI
CERTAIN POST-CLOSING COVENANTS
SECTION 11.1. POST-CLOSING ACCESS TO INFORMATION. The Parties acknowledge that,
subsequent to Closing, each may need access to the Assets and to information,
documents or computer data in the control or possession of the other for
purposes of concluding the transactions contemplated herein and for audits,
investigations, compliance with governmental requirements, regulations and
requests, the prosecution or defense of third party claims. Accordingly, the
Parties agree that
37
they will make available to the other and their agents, independent auditors
and/or governmental entities such documents and information as may be available
relating to the Assets or the Hospital and will permit the other to make copies
of such documents and information at the requesting party's expense.
SECTION 11.2. BANKRUPTCY Seller Parties shall immediately notify the Purchaser
Parties of any material pleadings, rulings, hearings, and developments,
including, without limitation, the filing of any status reports required by the
Bankruptcy Court and any Application for Final Decree, with respect to the
Bankruptcy, including, without limitation, the Adversary Proceedings.
ARTICLE XII
INDEMNIFICATION
SECTION 12.1. SELLER PARTIES AGREEMENT TO INDEMNIFY.
(a) Subject to the limitations set forth in this Article, the Seller Parties
jointly and severally agree to indemnify, defend and hold harmless the Purchaser
Parties, their Affiliates and their respective officers, directors, members,
(general and limited) partners, shareholders, employees, agents and
representatives (collectively, the "Purchaser Indemnified Parties") from and
against all demands, claims, actions, losses, damages, liabilities, penalties,
Taxes, costs and expenses (including, without limitation, attorneys' and
accountants' fees, settlement costs, arbitration costs and any reasonable other
expenses for investigating or defending any action or threatened action)
asserted against or incurred by the Purchaser Indemnified Parties or any of them
arising out of or in connection with or resulting from (i) any breach of,
misrepresentation associated with or failure to perform under any covenant,
representation, warranty or agreement under this Agreement or the other
agreements contemplated hereby on the part of any Seller Party; (ii) any
Encroachment Issue; or (iii) any Excluded Liabilities (including Taxes arising
prior to Closing, and any Purchaser Damages arising out of the ownership and
operation of the Assets prior to Closing) (collectively, "Purchaser Damages").
(b) The indemnification of the Purchaser Indemnified Parties by the Seller
Parties provided for under this Article XII shall be limited in certain respects
as follows: (i) the right of the Purchaser Indemnified Parties to seek
indemnification under this Section 12.1 shall terminate on the third anniversary
of Closing (the "Purchaser's Indemnity Periods"), except that the Purchaser'
Indemnity Period shall terminate on the fifth anniversary of the Closing Date
for claims under Sections 4.15 and 4.17 and (ii) the Seller shall not be
required to indemnify the Purchaser Indemnified Parties for indemnification
claims under this Section 12.1 unless and until the aggregate amount of all
losses resulting in Purchaser' Damages exceeds One Hundred Thousand and No/100
Dollars ($100,000.00) (the "Minimum Aggregate Liability Amount") in which event
the foregoing indemnification obligation shall apply to the aggregate amount of
Purchaser Damages that exceeds One Hundred Thousand and No/100 Dollars
($100,000.00); provided, however, that the maximum liability of the Seller
Parties under this Agreement shall be an amount equal to the Purchase Price. The
foregoing limitations on time and amount shall not apply to any Purchaser
Damages arising or resulting from (i) any act or omission of any Seller Party
which constitutes fraud, (ii) any breach by any Seller Party of its post-closing
covenants; (iii) any Encroachment Issue; or (iv) the Excluded Liabilities.
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SECTION 12.2. THE PURCHASER PARTIES' AGREEMENT TO INDEMNIFY.
(a) Subject to the limitations set forth in this Article, the Purchaser Parties
jointly and severally agree to indemnify, defend and hold harmless the Seller
Parties, its and representatives (collectively, the "Seller Indemnified
Parties") from and against all demands, claims, actions, losses, damages,
liabilities, penalties, Taxes, costs and expenses (including, without
limitation, reasonable attorneys' fees, settlement costs, arbitration costs and
any reasonable other expenses for investigating or defending any action or
threatened action) asserted against or incurred by any of the Seller Indemnified
Parties or any of them arising out of or in connection with or resulting from
(i) any breach of, misrepresentation associated with or failure to perform under
any covenant, representation, warranty or agreement under this Agreement or the
other agreements contemplated hereby on the part of any Purchaser Party; or (ii)
the use, ownership or operation of any of the Assets after Closing
(collectively, "Seller Damages").
(b) The indemnification of the Seller Indemnified Parties by the Purchaser
Parties provided for under this Article XII shall be limited in certain respects
as follows: (i) the right of the Seller Indemnified Parties to seek
indemnification under this Section 12.2 shall terminate on the first anniversary
of Closing (the "Seller Indemnity Period"), and (ii) the Purchaser Parties shall
not be required to indemnify the Seller Indemnified Parties for indemnification
claims under this Section 12.2 unless and until the amount of all losses
resulting in Seller Damages exceeds One Hundred Thousand and No/100 Dollars
($100,000.00) in which event the foregoing indemnification obligation shall
apply to the aggregate amount of Seller Damages that exceeds One Hundred
Thousand and No/100 Dollars ($100,000.00); provided, however, that the maximum
liability of the Purchaser Parties under this Agreement shall be an amount equal
to the Purchase Price. The foregoing limitation on time and amount shall not
apply to any Seller Damages arising or resulting from any act or omission of any
Purchaser Party which constitutes fraud, any breach by any Purchaser Party of
its post-closing covenants.
SECTION 12.3. NOTIFICATION AND DEFENSE OF CLAIMS.
(a) A party entitled to be indemnified pursuant to Section 12.1 or Section 12.2
(the "Indemnified Party") shall notify the party liable for such indemnification
(the "Indemnifying Party") in writing of any claim or demand which the
Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, as soon as possible after the Indemnified
Party becomes aware of such claim or demand; provided, that the Indemnified
Party's failure to give such notice to the Indemnifying Party in a timely
fashion shall not result in the loss of the Indemnified Party's rights with
respect thereto except to the extent the Indemnified Party is materially
prejudiced by the delay.
If the Indemnified Party shall notify the Indemnifying Party of any claim or
demand pursuant to the provisions hereof, and if such claim or demand relates to
a claim or demand asserted by a third party against the Indemnified Party (a
"Third Party Claim"), the Indemnifying Party shall have the obligation either
(i) to pay such claim or demand, or (ii) defend any such Third Party Claim with
counsel reasonably satisfactory to the Indemnified Party. After the Indemnifying
Party has assumed the defense of such Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party under this Section 12 for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable
39
costs of investigation, provided that the Indemnified Party shall have the right
to employ counsel, at the Indemnifying Party's expense, to represent it if (A)
in the Indemnified Party's reasonable opinion the Indemnifying Party is not
diligently prosecuting the defense of such Third Party Claim, (B) such Third
Party Claim involves remedies other than monetary damages and such remedies, in
the Indemnified Party's reasonable judgment, could have a material adverse
effect on such Indemnified Party, (C) the Indemnified Party may have available
to it one or more defenses or counterclaims that are inconsistent with one or
more defenses or counterclaims that may be alleged by the Indemnifying Party, or
(D) the Indemnified Party believes in its reasonable discretion that a conflict
of interest exists between the Indemnifying Party and the Indemnified Party with
respect to such Third-Party Claim or action, and in any such event the
reasonable fees and expenses of such separate counsel for the Indemnified Party
shall be paid by the Indemnifying Party. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and other
materials in the Indemnified Party's possession reasonably required by it for
its use in contesting any Third-Party Claim or demand.
(b) No Indemnified Party may settle or compromise any claim or consent to the
entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, unless
(i) the Indemnifying Party fails to assume and diligently prosecuting the
defense of such claim or (ii) such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party from all liability arising out
of such claim and does not contain any equitable order, judgment or term which
includes any admission of wrongdoing or could result in any liability (including
regulatory liability) of the Indemnifying Party or which would otherwise in any
manner affect, restrain or interfere with the business of the Indemnifying Party
or any Affiliate of the Indemnifying Party. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which includes any admission of wrongdoing or could result in
any liability (including regulatory liability) of the Indemnified Party or which
would otherwise in any manner affect, restrain or interfere with the business of
the Indemnified Party or any of the Indemnified Party's Affiliates.
SECTION 12.4. INVESTIGATIONS. The right to indemnification based upon breaches
or inaccuracies of representations, warranties and covenants will not be
affected by any investigation conducted with respect to, or knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, whether as a
result of disclosure by a party pursuant to this Agreement or otherwise, with
respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty or covenant. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant, will not affect a party's right to
indemnification, payment of damages or other remedies based on such
representations, warranties and covenants.
SECTION 12.5. TREATMENT OF INDEMNIFICATION PAYMENTS. All indemnification
payments made pursuant to this Article XII shall be treated by the parties for
income Tax purposes as adjustments to the Purchase Price, unless otherwise
required by applicable Law.
40
SECTION 12.6. EXCLUSIVE REMEDY. FROM AND AFTER THE APPLICABLE CLOSING, THE
PARTIES AGREE AND ACKNOWLEDGE THAT THE INDEMNIFICATION RIGHTS PROVIDED IN THIS
ARTICLE XII SHALL BE THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES TO THIS
AGREEMENT FOR BREACHES OF THIS AGREEMENT AND FOR ALL DISPUTES ARISING UNDER OR
RELATING TO THIS AGREEMENT AND ANY ADDITIONAL AGREEMENTS OR DOCUMENTS EXECUTED
OR DELIVERED IN OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT
FOR POST-CLOSING COVENANTS, CASES WHERE SPECIFIC PERFORMANCE IS AVAILABLE AS A
REMEDY AND EXCEPT IN CASES OF FRAUD.
ARTICLE XIII
DISPUTE RESOLUTION
SECTION 13.1. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES.
SECTION 13.2. JURISDICTION AND VENUE. THE PARTIES CONSENT TO PERSONAL
JURISDICTION IN DELAWARE. THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING
ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY
IN THE STATE OR FEDERAL COURTS OF DELAWARE. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT. THE SELLER PARTIES EXPRESSLY
ACKNOWLEDGE THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND AGREE NOT TO
SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY THE MPT PARTIES IN SAID COURTS.
FURTHER, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO A PARTY
AT THE ADDRESS DESIGNATED PURSUANT TO THIS SECTION 13.2 SHALL BE EFFECTIVE
SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE
PARTIES IS OR MAY BE SUBJECT.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. ASSIGNMENT. This Agreement is not assignable by any party without
the prior written consent of the other party hereto. Notwithstanding the
foregoing, the Purchasing Parties may at any time and without the consent of any
Seller Party assign all of their respective rights and obligations hereunder to
one or more of its Affiliates; provided, however, that no such assignment shall
relieve or release such Purchaser Parties from their obligations hereunder.
41
SECTION 14.2. NOTICE. All notices, demands, requests and other communications or
documents required or permitted to be provided under this Agreement shall duly
be in writing and shall be given to the applicable party at its address or
facsimile number set forth below or such other address or facsimile number as
the party may later specify for that purpose by notice to the other party:
If to any Seller Party: Prime Healthcare Services, Inc.
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx
With a copy to: Prime Healthcare Services, Inc.
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
If to any Purchaser Party c/o Medical Properties Trust, Inc.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
With a copy to: Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx, PC
000 00xx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Each notice shall, for all purposes, be deemed given and received:
(i) if by hand, when delivered;
(ii) if given by nationally recognized and reputable overnight delivery service,
the Business Day on which the notice is actually received by the party; or
(iii) if given by certified mail, return receipt requested, postage prepaid, the
date shown on the return receipt.
SECTION 14.3. CALCULATION OF TIME PERIOD. When calculating the period of time
before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-Business Day, the period in
question shall end as of the next succeeding Business Day.
SECTION 14.4. CAPTIONS. The section and paragraph headings or captions appearing
in this Agreement are for convenience only, are not a part of this Agreement,
and are not to be considered in interpreting this Agreement.
SECTION 14.5. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the
Exhibits and Schedules attached hereto, and other written agreements executed
and delivered at Closing by the parties hereto, constitute the entire agreement
and understanding of the parties with respect to
42
the subject matter of this Agreement. This Agreement supersedes any prior oral
or written agreements between the parties with respect to the subject matter of
this Agreement. It is expressly agreed that there are no verbal understandings
or agreements which in any way change the terms, covenants, and conditions set
forth in this Agreement, and that no modification of this Agreement and no
waiver of any of its terms and conditions shall be effective unless it is made
in writing and duly executed by the parties hereto.
SECTION 14.6. SCHEDULES AND EXHIBITS. All Schedules and Exhibits referred to in
this Agreement and attached hereto shall be deemed a part of this Agreement and
are hereby incorporated herein by reference.
SECTION 14.7. FURTHER ASSURANCES. From time to time after the Closing and
without further consideration, the Seller Parties shall execute and deliver to
the Purchaser Parties such instruments of sale, transfer, conveyance,
assignment, consent or other instruments as may be reasonably requested by the
Purchaser Parties in order to vest all right, title and interest of the
applicable Seller Parties in and to the Assets conveyed and delivered at the
Closing or as otherwise required to carry out the purpose and intent of this
Agreement.
SECTION 14.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Executed signature pages
to this Agreement may be delivered by facsimile transmission and any such
signature page shall be deemed an original.
SECTION 14.9. EXPENSES. The Seller Parties shall pay all costs and expenses
incurred by Seller Parties and Purchaser Parties in connection with the
transactions contemplated hereby, including, without limitation, all document
stamps, transfer, excise, recording, gains, sales, bulk sales, use and similar
conveyance Taxes and fees imposed by reason of and associated with the
transactions contemplated hereby and by deficiency, interest or penalty asserted
with respect thereto, as well as the cost of the survey, the title insurance and
all title endorsements required by the Purchaser Parties and its lenders, and
all attorneys' fees and expenses. The parties acknowledge that the Seller
Parties have already paid MPT the sum of Twenty Five thousand Dollars ($25,000)
which sum shall be credited against the expense reimbursement obligations of
Seller Parties set forth herein.
SECTION 14.10. PURCHASE OPTION. Prime shall have the right and option to
exercise any and all purchase options granted to Veritas under the Lease in
accordance with the terms thereof.
SECTION 14.11. SYNDICATION. Subject to applicable healthcare regulatory
requirements, MPT will offer up to twenty percent (20%) of the equity interests
in Acquisition Sub to the owners, operators and practicing physicians of the
Hospital at such time following closing as determined by MPT. MPT and the Seller
Parties will work together to decide which such persons receive an opportunity
to invest in the Acquisition Sub.
SECTION 14.12. SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, the Seller Parties agree to cooperate with MPT
in connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Real Property and
Improvements, and in connection therewith, the Seller Parties shall furnish MPT
43
with such financial and other information as MPT shall request. MPT may disclose
that it has entered into this Agreement with the Seller Parties and may provide
and disclose information regarding this Agreement, the Seller Parties, the Real
Property and Improvements, and such additional information which MPT may
reasonably deem necessary, to its proposed investors in such public offering or
private offering of securities, or any current or prospective lenders with
respect to such financing. Upon reasonable advance notice, MPT and any lender
providing financing for the Real Property shall have the right to access,
examine and copy all agreements, records, documentation and information relating
to the Seller Parties, the Real Estate and Improvements, and to discuss such
affairs and information with the officers, employees and independent public
accountants of the Seller Parties as often as may reasonably be desired, but
subject to the terms of a confidentiality agreement, as reasonably approved by
the parties.
SECTION 14.13. PRIME HEALTHCARE SERVICES II, LLC. Notwithstanding any other
provision in this Agreement, Prime Healthcare Services II, LLC, a Delaware
limited liability company, shall be deemed not to be an Affiliate for purposes
of this Agreement.
SECTION 14.14. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns; provided,
however, that this Agreement shall not inure to the benefit of any assignee
pursuant to an assignment which violates the terms of this Agreement
[Signatures appear on the following page.]
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers on the date first written above.
SELLER PARTIES:
VERITAS HEALTH SERVICES, INC.
By: /s/ Xxxxx Xxxxx, D.O.
------------------------------------
Name: Xxxxx Xxxxx, D.O.
----------------------------------
Title: President
---------------------------------
PRIME HEALTHCARE SERVICES, INC.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx, M.D.
----------------------------------
Title: Chairman
---------------------------------
DESERT VALLEY HOSPITAL, INC.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx, M.D.
----------------------------------
Title: Chairman
---------------------------------
PRIME HEALTHCARE SERVICES, LLC
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx, M.D.
----------------------------------
Title: Manager
---------------------------------
DESERT VALLEY MEDICAL GROUP, INC.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx, M.D.
----------------------------------
Title: Chairman
---------------------------------
PURCHASER PARTIES:
MPT OPERATING PARTNERSHIP, L.P.
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
MPT OF CHINO, LLC
By: MPT Operating Partnership, L.P.
Its: Sole Member
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President and Chief Executive
Officer
EXHIBIT A
Lease
(See attachment)
A-1
EXHIBIT B
Legal Description of the Land/Real Property
Parcel 1 of Parcel Map No. 11169 in the City of Chino, County of San Bernardino,
State of California, as per Map recorded in Book 131, Pages 29 and 30 of Parcel
Maps, in the Office of the County Recorder of said County, together with those
portions of 00xx Xxxxxx, Xxxxxx Xxxxxx and Jefferson Avenue which would pass
with a conveyance of said parcels by operation of law.
Interest in the non-exclusive easements and rights for vehicular and pedestrian
ingress and egress, parking of motor vehicles, and use of drainage facilities as
set forth in the Declaration of Reciprocal Easements for Parking, Driveways and
Drainage recorded August 7, 1992, as Instrument No. 92-328555, and May 27, 1993,
as Instrument No. 93-227512, Official Records.
B-1
EXHIBIT 9.2(b)
Deed
(See attachment)
Exhibit 9.2(b) - 1
EXHIBIT 9.2(p)
Lease Guaranty Agreement
(See attachment)
Exhibit 9.2(p) - 1
EXHIBIT 9.2(q)
Assignment of Rents and Leases
(See attachment)
Exhibit 9.2(q) - 1
EXHIBIT 9.2(r)
Security Agreements
(See attachment)
Exhibit 9.2(r) - 1
EXHIBIT 9.2(t)
Legal Opinion of Xxxxxxx, Xxxxxx & Xxxxxxx LLP
(See attachment)
Exhibit 9.2(t) - 1
EXHIBIT 9.2(w)
Noncompete Agreements
(See attachment)
Exhibit 9.2(w) - 1
EXHIBIT 9.3(f)
Legal Opinion of Xxxxx, Donelson, Beaman, Xxxxxxxx & Xxxxxxxxx, P.C.
(See attachment)
Exhibit 9.3(f) - 1
