Exhibit 10.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
GLENWOOD REGIONAL MEDICAL CENTER,
GLENWOOD HEALTH SERVICES, INC.,
HOSPITAL SERVICE DISTRICT NO. 1
OF THE PARISH OF OUACHITA, STATE OF LOUISIANA,
IASIS GLENWOOD REGIONAL MEDICAL CENTER, L.P.
AND
IASIS HEALTHCARE LLC
TABLE OF CONTENTS
ARTICLE 1. TRANSFER OF ASSETS............................................. 1
SECTION 1.1 Sale of Assets........................................... 1
SECTION 1.2 Excluded Assets.......................................... 3
SECTION 1.3 Assumption of Liabilities................................ 4
SECTION 1.4 Liabilities Not Assumed.................................. 5
SECTION 1.5 Purchase Price; Net Working Capital Adjustment; Accounts
Receivable Adjustment.................................... 7
SECTION 1.6 Closing.................................................. 10
SECTION 1.7 Tax Allocation........................................... 10
SECTION 1.8 Prorations............................................... 10
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLERS...................... 10
SECTION 2.1 Organization, Qualification, Corporate Power and
Authority................................................ 11
SECTION 2.2 Ownership of GHS, Seller JV Entities..................... 11
SECTION 2.3 No Breach................................................ 12
SECTION 2.4 Assets................................................... 12
SECTION 2.5 Compliance With Law; Licenses............................ 12
SECTION 2.6 Real Property............................................ 13
SECTION 2.7 Financial Statements..................................... 14
SECTION 2.8 Accounts Receivable...................................... 15
SECTION 2.9 Events Subsequent to the Date of the Audited Financial
Statements............................................... 15
SECTION 2.10 Trademarks, Patents and Other Rights..................... 16
SECTION 2.11 Legal Proceedings........................................ 17
SECTION 2.12 Taxes.................................................... 17
SECTION 2.13 Contracts and Other Commitments.......................... 17
SECTION 2.14 Employee Benefit Plans................................... 18
SECTION 2.15 Insurance................................................ 18
SECTION 2.16 Employees................................................ 19
SECTION 2.17 Environmental............................................ 19
SECTION 2.18 Relationships with Related Persons....................... 20
SECTION 2.19 Government Reimbursement Program Participation........... 20
SECTION 2.20 Medical Staff............................................ 21
SECTION 2.21 Xxxx-Xxxxxx Care......................................... 22
SECTION 2.22 Fees and Commissions..................................... 22
SECTION 2.23 Disclosure............................................... 22
SECTION 2.24 Reliance................................................. 22
SECTION 2.25 GRMC Not a Specialty Hospital............................ 22
SECTION 2.26 Seller JV Entities....................................... 22
SECTION 2.27 NLCI and GHH............................................. 23
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER........................ 23
SECTION 3.1 Organization, Power and Authority........................ 23
SECTION 3.2 Financial Resources...................................... 23
SECTION 3.3 No Breach................................................ 23
SECTION 3.4 Legal Proceedings........................................ 24
SECTION 3.5 Disclosure............................................... 24
SECTION 3.6 Fees and Commissions..................................... 24
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SECTION 3.7 Reliance................................................. 24
ARTICLE 4. PRE-CLOSING AND CLOSING COVENANTS.............................. 24
SECTION 4.1 Maintenance of Properties and Business................... 24
SECTION 4.2 Access to Information.................................... 25
SECTION 4.3 Notice of Breach......................................... 26
SECTION 4.4 Conditions; Consents and Approvals....................... 26
SECTION 4.5 Communications........................................... 27
SECTION 4.6 Exclusivity.............................................. 27
SECTION 4.7 Pre-Closing Financial Statements......................... 27
SECTION 4.8 Title Commitment; Surveys; Lease Termination............. 27
SECTION 4.9 Circle Drive Lots........................................ 29
SECTION 4.10 Insurance Ratings........................................ 30
SECTION 4.11 Announcements............................................ 30
SECTION 4.12 Employees................................................ 30
SECTION 4.13 Efforts to Close......................................... 31
SECTION 4.14 Confidentiality.......................................... 31
SECTION 4.15 Completion of Schedules.................................. 31
SECTION 4.16 Certification of Certain Representations and Warranties.. 32
ARTICLE 5. CONDITIONS TO THE OBLIGATIONS OF BUYER......................... 32
SECTION 5.1 Representations and Warranties to be True and Correct.... 32
SECTION 5.2 Performance.............................................. 32
SECTION 5.3 All Proceedings to be Satisfactory....................... 33
SECTION 5.4 Absence of Material Adverse Effect....................... 33
SECTION 5.5 Approvals................................................ 33
SECTION 5.6 No Action or Proceeding.................................. 33
SECTION 5.7 Consents................................................. 33
SECTION 5.8 Credit Agreement......................................... 33
SECTION 5.9 Financial Statements..................................... 33
SECTION 5.10 Insurance................................................ 33
SECTION 5.11 Title Insurance; Surveys................................. 34
SECTION 5.12 Encumbrances............................................. 34
SECTION 5.13 Supporting Documents..................................... 34
SECTION 5.14 Seller's Closing Deliverables............................ 36
SECTION 5.15 Medical Staff............................................ 37
SECTION 5.16 Other Conditions......................................... 37
ARTICLE 6. CONDITIONS TO THE OBLIGATIONS OF SELLERS....................... 38
SECTION 6.1 Representations and Warranties to be True and Correct.... 38
SECTION 6.2 Performance.............................................. 38
SECTION 6.3 All Proceedings to be Satisfactory....................... 38
SECTION 6.4 Approvals................................................ 38
SECTION 6.5 No Action or Proceeding.................................. 38
SECTION 6.6 Supporting Documents..................................... 38
SECTION 6.7 Buyer's Closing Deliverables............................. 39
ARTICLE 7. ADDITIONAL AGREEMENTS.......................................... 39
SECTION 7.1 Post Closing Obligations of Buyer........................ 39
SECTION 7.2 Guaranty by IASIS........................................ 40
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SECTION 7.3 Non-Competition/Non-Solicitation/Right of First Refusal.. 40
SECTION 7.4 Retention and Access to Records.......................... 41
SECTION 7.5 Payment of Excluded Liabilities.......................... 42
SECTION 7.6 Misdirected Payments..................................... 42
SECTION 7.7 Insurance Matters........................................ 42
SECTION 7.8 Sellers' Cost Reports.................................... 42
SECTION 7.9 Audited Statements Cooperation........................... 42
SECTION 7.10 Cooperation on Tax Matters............................... 43
SECTION 7.11 Use of Controlled Substance Permits...................... 43
SECTION 7.12 Litigation Cooperation................................... 43
SECTION 7.13 Confidentiality.......................................... 43
SECTION 7.14 Further Documentation or Action.......................... 44
SECTION 7.15 Joinder.................................................. 45
SECTION 7.16 Fees and Taxes........................................... 45
SECTION 7.17 Casualty................................................. 45
SECTION 7.18 Condemnation............................................. 46
SECTION 7.19 Transition Assistance.................................... 46
SECTION 7.20 Preservation of Existing Xxxxx and Trusts................ 46
SECTION 7.21 Ownership of Lincoln Health System, Inc.................. 46
ARTICLE 8. INDEMNIFICATION................................................ 47
SECTION 8.1 Sellers' Indemnification................................. 47
SECTION 8.2 Buyer's Indemnification.................................. 47
SECTION 8.3 Limitation on and Expiration of Indemnification.......... 48
SECTION 8.4 Third-Party Claims....................................... 49
SECTION 8.5 Procedure For Indemnification - Other Claims............. 50
SECTION 8.6 No Double Materiality.................................... 50
SECTION 8.7 Indemnification as Refund of Purchase Price.............. 50
SECTION 8.8 Minimum Investment Requirement........................... 50
SECTION 8.9 Arbitration.............................................. 50
ARTICLE 9. TERMINATION.................................................... 52
SECTION 9.1 Termination and Abandonment.............................. 52
SECTION 9.2 Approval by Board of Directors........................... 52
SECTION 9.3 Effect of Termination.................................... 52
ARTICLE 10. MISCELLANEOUS................................................. 53
SECTION 10.1 Amendments............................................... 53
SECTION 10.2 Waiver................................................... 53
SECTION 10.3 Notices.................................................. 53
SECTION 10.4 Counterparts............................................. 54
SECTION 10.5 Enforceability and Severability.......................... 54
SECTION 10.6 Governing Law............................................ 55
SECTION 10.7 Assignment............................................... 55
SECTION 10.8 Expenses................................................. 55
SECTION 10.9 Survival of Agreements................................... 55
SECTION 10.10 Parties in Interest...................................... 55
SECTION 10.11 Remedies................................................. 55
SECTION 10.12 Third Parties............................................ 55
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SECTION 10.13 Entire Agreement......................................... 55
SECTION 10.14 Specific Performance..................................... 56
SECTION 10.15 Headings; Construction................................... 56
SECTION 10.16 Tax and Medicare Advice and Reliance..................... 56
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INDEX TO EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Capitalized Terms
Exhibit B Escrow Agreement
Exhibit C Xxxx of Sale and Assignment
Exhibit D-1 and D-2 Assignment and Assumption Agreements
Exhibit E Deed
Exhibit F Independent Contractor Agreement
Exhibit G Special Limited Power of Attorney
Exhibit H-1 and H-2 Joinder Agreements
SCHEDULES
Schedule 1.1.1 Personal Property
Schedule 1.1.2 Owned Real Property
Schedule 1.1.3 Assumed Contracts
Schedule 1.1.4 Real Property Leases
Schedule 1.1.6 Licenses
Schedule 1.1.8 Prepaid Expenses
Schedule 1.1.10 Intellectual Property
Schedule 1.1.11 Seller JV Entities
Schedule 1.1.15 Rights and Claims
Schedule 1.2.3 Excluded Land, Buildings and Tangible Personal Property
Schedule 1.2.4 Excluded Contracts
Schedule 1.2.8 Other Excluded Assets
Schedule 1.3.3 Assumed Liabilities and Obligations
Schedule 1.5.2 Consideration
Schedule 1.7 Tax Allocation
Schedule 2.2 Ownership of GHS, Seller JV Entities
Schedule 2.3 No Breach
Schedule 2.4 Assets
Schedule 2.5.1 Compliance with Law; Licenses
Schedule 2.5.2 Licensure and Accreditation Surveys and Deficiency Reports
Schedule 2.6.1 Owned Real Property
Schedule 2.6.2 Real Property Leases
Schedule 2.6.3 Real Property Proceedings
Schedule 2.7 Financial Statements
Schedule 2.9 Events Subsequent to the Date of the Audited Financial
Statements
Schedule 2.10 Trademarks, Patents and Other Rights
Schedule 2.11 Legal Proceedings
Schedule 2.13 Contracts and Other Commitments
Schedule 2.14.1 ERISA - Plans and Benefit Arrangements
Schedule 2.14.2 ERISA - Contributions
Schedule 2.15 Insurance
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Schedule 2.16 Employees
Schedule 2.17 Environmental
Schedule 2.18 Relationships with Related Persons
Schedule 2.19.1 Provider Numbers
Schedule 2.19.2 JCAHO Accreditation
Schedule 2.19.4 Notices from Governmental Reimbursement and Third Party
Payor Programs
Schedule 2.20 Medical Staff
Schedule 2.21 Xxxx-Xxxxxx Care
Schedule 3.3 No Breach
Schedule 4.1.1 Capital Expenditures Budget
Schedule 4.1.10 Asset Transactions
Schedule 4.1.11 Material Seller Contract Exceptions
Schedule 5.7 Required Consents, Approvals and Notices
Schedule 5.14.2 Secured Lenders
Schedule 5.16 Other Conditions
Schedule 7.1 Public Interest Covenants
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated as of the 20th day
of July, 2006, is entered into by and among Glenwood Regional Medical Center, a
Louisiana non-profit corporation ("GRMC"), Glenwood Health Services, Inc., a
Louisiana corporation ("GHS"), Hospital Service District No. 1 of the Parish of
Ouachita, State of Louisiana, a corporate body and political subdivision of the
State of Louisiana ("HSD") (GRMC, GHS and HSD referred to collectively as
"SELLERS"), IASIS Glenwood Regional Medical Center, L.P., a Delaware limited
partnership ("BUYER"), and solely for purposes of Section 7.2 of this Agreement,
IASIS Healthcare LLC, a Delaware limited liability company ("IASIS"). Defined
terms used herein shall have the meanings set forth in Exhibit A hereto.
WITNESSETH
WHEREAS, Sellers desire to sell, and Buyer desires to purchase,
substantially all of the assets, real, personal and mixed, tangible and
intangible, associated with or employed in the business and operations of
Sellers; and
WHEREAS, the Parties desire to enter into this Agreement for the purpose of
setting forth their mutual rights and obligations with respect to the foregoing.
NOW, THEREFORE, in consideration of the premises and subject to the
representations, warranties, covenants, and conditions contained herein, the
Parties agree as follows:
AGREEMENT
ARTICLE 1.
TRANSFER OF ASSETS
SECTION 1.1. SALE OF ASSETS. At the Closing and subject to the terms and
conditions of this Agreement Sellers shall sell, transfer, convey, assign and
deliver to Buyer, and Buyer shall purchase from Sellers, all rights, title, and
interest in and to the following assets of Sellers, other than the Excluded
Assets (the "ACQUIRED ASSETS"):
1.1.1 All tangible personal property, including, without limitation,
all equipment, furniture, fixtures, machinery, vehicles, office furnishings,
computer hardware, instruments, leasehold improvements, spare parts and, to the
extent assignable or transferable, all rights in all warranties of any
manufacturer or vendor with respect thereto (collectively, the "PERSONAL
PROPERTY") owned by Sellers, including, but not limited to, the Personal
Property described on Schedule 1.1.1.
1.1.2 All real property other than Real Property Leases, including,
without limitation, all plants, buildings, structures, improvements,
construction in progress, appurtenances, covenants, easements, servitudes and
fixtures situated thereon, forming a part thereof, or in any manner belonging to
or pertaining to such interests, of Sellers, including, but not limited to, the
Real Property described on Schedule 1.1.2 (collectively, the "OWNED REAL
PROPERTY").
1.1.3 All Contracts of Sellers other than Real Property Leases,
including, but not limited to, the Contracts described in Schedule 1.1.3 hereto,
but not including any Excluded Contracts (all such assigned Contracts, the
"ASSUMED CONTRACTS").
1.1.4 All real property leases (whether as (sub)lessor or (sub)lessee)
(the "REAL PROPERTY LEASES") to which any Seller is a party, including, but not
limited to, the Real Property Leases set forth on Schedule 1.1.4 hereto (any
real property in which a Seller has a leasehold interest, as lessee under a Real
Property Lease, being referred to as the "LEASED REAL PROPERTY" and the Owned
Real Property and the Leased Real Property being collectively referred to as the
"REAL PROPERTY").
1.1.5 All accounts receivable of GRMC and GHS, billed and unbilled,
recorded or unrecorded, accrued and existing, whether or not written off, as of
the Closing Date (collectively, the "ACCOUNTS RECEIVABLE") and all bank accounts
of GRMC and GHS into which deposits for Accounts Receivable and other rights of
payment for goods and services are made and all outstanding checks and deposits
in transit relating to Accounts Receivable and other rights of payment for goods
and services.
1.1.6 To the extent transferable or assignable, rights to all state,
federal, special or local licenses, rights, certificates of need, certificates
of exemption, franchises, accreditations, registrations, permits, approvals and
consents, and all applications therefor and waivers of any requirements
pertaining thereto (each a "LICENSE" and collectively, the "LICENSES"), if any,
issued to Sellers, including, but not limited to, the Licenses described in
Schedule 1.1.6 hereto.
1.1.7 All inventories of usable goods and supplies, including
pharmaceuticals and medications, food, janitorial supplies, office supplies,
forms, consumables, disposables, linens, and medical supplies, existing and
wherever located on the Closing Date and owned by Sellers (collectively, the
"PURCHASED INVENTORY").
1.1.8 Any deposits, other current assets, escrows, prepaid taxes,
prepaid expenses or other advance payments relating to any expenses of Sellers
to the extent assumable and usable by Buyer (collectively, the "PREPAID
EXPENSES") (excluding any Prepaid Expenses that Buyer elects not to purchase at
Closing by providing written notice thereof, which Prepaid Expenses will be
Excluded Assets), including, but not limited to, the Prepaid Expenses listed on
Schedule 1.1.8.
1.1.9 To the extent transferable or assignable, all documents, books,
records, operating and policy manuals and files owned by each Seller, pertaining
to or used in connection with the business and operation of Sellers, whether in
hard copy or other form, including all patient records, medical records, medical
staff records, clinical records, financial records, equipment records and
medical and administrative libraries and personnel records (the "TRANSFERRED
RECORDS"), but not including the Excluded Records (it being understood that
Buyer and Sellers, as applicable, will have access to the Transferred Records
and Excluded Records following the Closing in the manner provided in Section
7.4).
1.1.10 All intangible assets, including without limitation, all
patents, patent applications, trade names, copyrights, copyright applications,
trademarks, service marks,
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applications for trademarks or service marks, logos, rights in computer
software, rights in websites and Internet domain names and other intellectual
property owned, used or licensed (collectively, the "INTELLECTUAL PROPERTY") by
any Seller, and going concern and goodwill associated with the business and
operation of Sellers, and including all Intellectual Property disclosed on
Schedule 1.1.10 and, to the extent assignable by the applicable Seller, all
warranties (express or implied), and all telephone and facsimile numbers as
currently used by GRMC and GHS primarily in support of GRMC and GHS.
1.1.11 Subject to Section 1.2.2, each Seller's ownership interests in
the Persons listed on Schedule 1.1.11 (the "SELLER JV ENTITIES").
1.1.12 All plans and surveys, including without limitation those
related to utilities, easements and roads, "as-built" plans, plats,
specifications, engineers' drawings and architectural renderings and similar
items owned by Sellers and in Sellers' possession or reasonable control relating
to the Real Property.
1.1.13 All insurance proceeds and insurance proceeds receivable
(including applicable deductibles, co-payments or self-insured requirements)
arising in connection with the Acquired Assets with respect to events after the
date hereof ("INSURANCE PROCEEDS").
1.1.14 All provider numbers of Sellers, including, but not limited to,
Sellers' Medicare and Medicaid provider numbers.
1.1.15 All rights and claims that may be asserted by (but not against)
any Seller, including but not limited to those rights and claims set forth on
Schedule 1.1.15 attached hereto.
1.1.16 Except as expressly excluded in Section 1.2 below, all other
property owned by Sellers, whether tangible or intangible, located at the
properties of Sellers or used in connection with the businesses or operations of
Sellers, whether or not reflected on the Interim Balance Sheet (including any
rights of first refusal, options or claims against third parties by Sellers
relating to the Acquired Assets, whether known or unknown, contingent or
otherwise).
SECTION 1.2. EXCLUDED ASSETS. Notwithstanding anything in this Agreement to
the contrary, Sellers are not selling, and Buyer is not purchasing or assuming
obligations with respect to, the following assets (the "EXCLUDED ASSETS"):
1.2.1 All cash, cash equivalents, short term investments, investments
in debt securities limited as to use under indenture agreements, and investments
in fixed income securities (except Insurance Proceeds).
1.2.2 All of Sellers' capital stock or other equity interests in
Premier Purchasing Partners, Inc., Health Services of North Louisiana, L.L.C.,
Lincoln Health System, Inc. and Northeast Rural Alliance, Inc., and any interest
in any of the Seller JV Entities that cannot be transferred due to a lack of a
third-party consent, automatic termination of the interest upon sale of the
Hospital, the ineligibility of the Buyer to acquire the interest, or any other
reason beyond the control of Sellers; provided, however, that this Agreement
shall not be deemed a bona fide written offer to purchase GRMC's ownership
interest in NLCI.
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1.2.3 The land, buildings and tangible personal property set forth on
Schedule 1.2.3, including certain assets related to the Wellness Center and all
other assets relating to the business operations at the Wellness Center as more
particularly described on Schedule 1.2.8. IASIS agrees to lease the track back
to HSD pursuant to a lease for a term of 50 years, subject to a 120 day
termination provision and annual rental of one dollar, to be negotiated prior to
Closing.
1.2.4 All Contracts set forth on Schedule 1.2.4 (the "EXCLUDED
CONTRACTS").
1.2.5 All of Sellers' insurance policies (except as otherwise
specified in Section 1.1.13).
1.2.6 The corporate record books, minute books and tax records of each
Seller and all records of any kind that any Seller is required by Legal
Requirements to retain in its own possession (the "EXCLUDED RECORDS").
1.2.7 All claims of Sellers against third parties, xxxxxx or inchoate,
known or unknown, contingent or otherwise, relating solely to the Excluded
Assets.
1.2.8 Such other assets, if any, specifically described in Schedule
1.2.8.
1.2.9 All rights of Sellers now existing or which may hereafter exist
with respect to any payment or reimbursement owed to Sellers by any Government
Reimbursement Program or other Payor which is attributable to any period of time
ending on or prior to Closing, including, without limitation, any retrospective
settlement of any cost report relating to a period ending on or prior to
Closing.
1.2.10 The shares of GHS's capital stock held by GRMC and any other
shares of capital stock of any of the Sellers.
1.2.11 All rights of Sellers under this Agreement or any agreement
contemplated hereby.
1.2.12 Any membership in a non-profit corporation or other entity
formed in connection with the sale of the Hospital to hold and administer
substantially all of the net proceeds of the sale.
1.2.13 All assets of HSD of any kind (consisting primarily of
certificates of deposit, rights in the Hospital Lease and related bond
documents, rights in contracts with attorneys and financial advisors, rights in
a D&O insurance policy, and all files and records), except those that have been
leased to GRMC or GHS or used primarily in the operation of the business of GRMC
or GHS.
SECTION 1.3. ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume
and agree to pay, discharge and perform, as and when due, the following
liabilities and obligations of Sellers (collectively, the "ASSUMED
LIABILITIES"):
1.3.1 All those current liabilities and obligations of Sellers which
are included in the calculation of the Net Working Capital Amount.
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1.3.2 All liabilities and obligations of Sellers which accrue on or
after the Closing which arise out of the Assumed Contracts and the Real Property
Leases (excluding any liability or obligation with respect to any Assumed
Contracts or Real Property Leases arising as a result of any act or omission
which occurred on or prior to the Closing or the breach of any representation or
warranty hereunder by any Seller).
1.3.3 Any liabilities or obligations of Sellers specifically described
in Schedule 1.3.3.
1.3.4 To the extent included in Net Working Capital, any liabilities
or obligations under the Employee Benefit Plans or relating to payroll,
vacation, sick leave, workers' compensation, unemployment benefits, pension
benefits, post-employment benefits, health care plans or benefits, or any other
employee plans or benefits of any kind for Sellers' employees or former
employees or both.
SECTION 1.4. LIABILITIES NOT ASSUMED. Except for the Assumed Liabilities,
Buyer shall not assume or become obligated with respect to any other obligation
or liability of Sellers of any nature whatsoever and Sellers shall retain and
shall be responsible to pay, discharge and perform all of their respective
liabilities not specifically included in the Assumed Liabilities (the "EXCLUDED
LIABILITIES"), including, without limitation, the following obligations or
liabilities of Sellers:
1.4.1 All current liabilities and obligations of Sellers not
specifically included in the calculation of the Net Working Capital Amount.
1.4.2 Obligations or liabilities of Sellers arising from the breach or
default (or any act or omission by Sellers which, with or without notice or
lapse of time or both, would constitute a breach or default) by Sellers prior to
the Closing of any term, covenant or provision of any of the Contracts.
1.4.3 Obligations or liabilities of Sellers under the Excluded
Contracts.
1.4.4 Obligations or liabilities of Sellers now existing or which may
hereafter exist by reason of any liability to refund any payment or
reimbursement received by Sellers from any Government Reimbursement Program or
other Payor which is attributable to any period of time ending on or prior to
Closing, including any claim, penalty or sanction relating to any claim for
overpayment, any cost report relating to a period prior to Closing, and Sellers'
terminating cost report for any of Sellers' Facilities.
1.4.5 Liabilities or obligations of Sellers now existing or which may
hereafter exist by reason of any violation or alleged violation of any Legal
Requirements or Orders by Sellers, or by an employee or independent contractor
of Sellers in which any Seller is alleged to be responsible for the acts or
omissions of any such person, relating to the ownership, use or operation of the
Acquired Businesses or the Acquired Assets prior to Closing.
1.4.6 Except for any liabilities included in Net Working Capital, any
liabilities or obligations of Sellers under the Employee Benefit Plans or
relating to payroll, vacation, sick leave, workers' compensation, unemployment
benefits, pension benefits, post-employment
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benefits, employee stock option or profit sharing plans, health care plans or
benefits, or any other employee plans or benefits of any kind for Sellers'
employees or former employees or both.
1.4.7 All long-term indebtedness, other indebtedness for borrowed
money and other obligations or guarantees of Sellers not specifically included
in the Assumed Liabilities, including without limitation the current portion of
any long-term indebtedness, but specifically excluding the capitalized leases
included in the Assumed Contracts.
1.4.8 Tax liabilities or obligations of Sellers in respect of periods
prior to Closing or resulting from the consummation of the transactions
contemplated herein, including without limitation, claims involving private
inurement, private benefit and intermediate sanctions.
1.4.9 Any obligation or liability of Sellers arising out of or
relating to any federal, state or local investigations of or Proceedings against
any Seller or any Seller's employees or medical staff accruing under, in
connection with or relating to any actions or omission prior to the Closing.
1.4.10 Any debt, obligation, expenses or liability of Sellers arising
out of or incurred solely as a result of any transaction of Sellers occurring
after Closing.
1.4.11 Any liability or obligation of any Seller under any
Environmental Law arising out of or relating to the operation of Sellers'
businesses or Sellers' leasing, ownership or operation of real property prior to
the Closing.
1.4.12 Any obligation or liability of Sellers under any employment,
severance, retention or termination agreement with any employee of Sellers or
any of their Affiliates that is not an Assumed Contract.
1.4.13 Any obligation or liability of Sellers to indemnify, reimburse
or advance amounts to any officer, director, employee or agent of any Seller.
1.4.14 Any obligation or liability of Sellers arising out of any
Proceeding pending as of the Closing Date or commenced after the Closing Date
and arising out of or relating to any occurrence or event happening prior to the
Closing Date.
1.4.15 Obligations or liabilities of Sellers to any donor with respect
to any and all gifts, devises, bequests or donations in any way related to the
Acquired Businesses.
1.4.16 Obligations or liabilities of Sellers under the Xxxx-Xxxxxx Act
(42 U.S.C. Section 291a, et seq.), the Health Professions Educational Assistance
Act, the Nurse Training Act, the National Health Pharmacy and Resources
Development Act or the Community Mental Health Center Act, as amended.
1.4.17 Any obligation or liability of Sellers based upon the acts or
omissions of any Seller after the Closing Date.
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SECTION 1.5. PURCHASE PRICE; NET WORKING CAPITAL ADJUSTMENT; ACCOUNTS
RECEIVABLE ADJUSTMENT.
1.5.1 Preliminary Net Working Capital; Physical Inventory.
(a) On or before the Closing Date, Sellers shall deliver to Buyer
a certificate (the "CLOSING PAYMENT CERTIFICATE") setting forth a detailed
calculation of the Net Working Capital of Sellers as of the last day of the
full month immediately preceding the Closing Date (such estimate is
referred to as the "PRELIMINARY NET WORKING CAPITAL AMOUNT").
(b) Within five (5) days prior to the Closing Date, Sellers shall
conduct a physical inventory of the Purchased Inventory. Buyer shall be
entitled to have a designated representative present to observe such
physical inventory. All items of Purchased Inventory shall be valued and
recorded at the lower of cost or market. The value of the Purchased
Inventory resulting from such physical inventory shall be included in the
Net Working Capital Amount.
1.5.2 Consideration.
(a) Subject to the terms of this Agreement and in reliance upon
the representations and warranties of Sellers contained herein, the
consideration payable by Buyer for the Acquired Assets (the "PURCHASE
PRICE"), prior to adjustment on account of the Final Adjustment Amount,
will be (i) the Cash Purchase Price, plus (ii) the assumption of the
Assumed Liabilities provided in Section 1.3 above. The Purchase Price will
be adjusted following the Closing based on the Final Adjustment Amount as
set forth in Section 1.5.3 below. For purposes hereof, the "CASH PURCHASE
PRICE" means an amount equal to (i) $82,500,000.00 (the "STATED AMOUNT"),
subject to adjustment as set forth in Sections 1.5.2(c) and 1.5.2(d) below,
minus (ii) all obligations of Sellers as lessee or lessees under Assumed
Contracts that are required to be recorded as capital leases in accordance
with GAAP and are set forth on Schedule 1.5.2(a) hereto, minus (iii) the
amount of any other Assumed Liabilities not included in the calculation of
Net Working Capital Amount, plus (iv) the amount, if any, by which the
Preliminary Net Working Capital Amount exceeds the Target Net Working
Capital Amount, minus (v) the amount, if any, by which the Target Net
Working Capital Amount exceeds the Preliminary Net Working Capital Amount.
(b) The Cash Purchase Price shall be paid as follows:
(i) $10,000 shall be paid to HSD by certified check
simultaneously with the execution of this Agreement and shall be
forfeited to the HSD in event the Buyer does not consummate the
transactions contemplated by this Agreement;
(ii) $2,500,000 shall be deposited by Buyer with an escrow
agent mutually acceptable to Sellers and Buyer, to be held and
distributed pursuant to an Escrow Agreement substantially in the form
attached hereto as Exhibit B; and
7
(iii) the balance of the Cash Purchase Price shall be
allocated among and paid to Sellers as set forth on Schedule 1.5.2(b)
hereto.
(c) In the event Sellers, after compliance with their obligations
under Section 4.4.1, are unable to obtain a consent necessary for, or are
otherwise for any reason unable to, transfer of the ownership interest of a
Seller in any of the Seller JV Entities, the Stated Amount shall be reduced
by the amount set forth opposite the name of each such Seller JV Entity on
Schedule 1.5.2(c).
(d) In the event Sellers are unable to convey any of the Circle
Drive Lots to Buyer at Closing in conformity with the provisions of Section
4.9 below, the Stated Amount shall be decreased by the amount set forth
opposite each such lot on Schedule 1.5.2(d).
1.5.3 Final Net Working Capital Calculations.
1.5.3.1 Determination. As promptly as possible, but in any event
within 90 days after the Closing Date, Buyer will deliver to Sellers a
consolidated statement of Net Working Capital of Sellers as of the Closing
Date and a reasonably detailed statement (the "CLOSING STATEMENT") setting
forth Buyer's calculations of the Net Working Capital Amount. After
delivery of the Closing Statement, Sellers and their accountants shall be
permitted reasonable access during normal business hours to review the
Transferred Records and work papers reasonably related to the preparation
of the Closing Statement. Sellers and their accountants may make inquiries
of Buyer and their respective accountants and employees regarding questions
concerning or disagreements with the Closing Statement arising in the
course of their review thereof, and Buyer shall use its commercially
reasonable efforts to cause any such accountants and employees to cooperate
with and respond to such inquiries. If Sellers have any objections to the
Closing Statement, Sellers shall deliver to Buyer a written statement
setting forth their objections thereto (an "OBJECTIONS STATEMENT"). Such
Objections Statement shall set forth in reasonable detail the basis of such
objections together with the amounts in dispute and any determination not
specifically objected to in the Objections Statement shall be final,
binding and non-appealable on the Parties hereto upon delivery of the
Objections Statement. If an Objections Statement is not delivered to Buyer
within 60 days after delivery of the Closing Statement, the Closing
Statement shall be final, binding and non-appealable by the Parties hereto.
Sellers and Buyer shall negotiate in good faith to resolve any objections
set forth in the Objections Statement (and all such discussions related
thereto shall, unless otherwise agreed by Buyer and Sellers, be governed by
Rule 408 of the Federal Rules of Evidence (and any applicable similar state
rule)), but if they do not reach a final resolution within 30 days after
the delivery of the Objections Statement, either Sellers or Buyer may
submit such dispute along with copies of the Closing Statement prepared by
Buyer, the Objections Statement of Sellers and a statement of the items
resolved by agreement and those still in dispute to PricewaterhouseCoopers
LLP (the "INDEPENDENT AUDITOR"). Sellers and Buyer shall use their
commercially reasonable efforts to cooperate with and cause the Independent
Auditor to resolve all such disagreements as soon as practicable. The
resolution of the dispute by the Independent Auditor shall be final,
binding and non-appealable on the
8
Parties hereto. The Closing Statement shall be modified by the Independent
Auditor if necessary to reflect such determination. The fees and expenses
of the Independent Auditor shall be allocated to be paid by Buyer, on the
one hand, and/or Sellers, on the other hand, based upon the percentage
which the portion of the contested amount not awarded to each Party bears
to the amount actually in dispute at the time of submission to the
Independent Auditor, as determined by the Independent Auditor.
1.5.3.2 Net Working Capital Adjustment. If the Net Working
Capital Amount as finally determined pursuant to Section 1.5.3.1 above is
greater than the Preliminary Net Working Capital Amount, Buyer shall pay to
Sellers, the amount of such excess in accordance with this Section 1.5.3.2,
together with interest at the prime rate as published in the Wall Street
Journal on the Closing Date (the "PRIME RATE"). If the Net Working Capital
Amount as finally determined pursuant to Section 1.5.3.1 above is less than
the Preliminary Net Working Capital Amount, Sellers shall pay such
shortfall to Buyer in accordance with this Section 1.5.3.2, together with
interest at the Prime Rate. All amounts owed pursuant to this Section
1.5.3.2 by Buyer to Sellers, on the one hand, or Sellers to Buyer, on the
other hand, are referred to as the "FINAL ADJUSTMENT AMOUNT." The Final
Adjustment Amount shall be calculated as an adjustment to the Cash Purchase
Price. At such time that Buyer and Sellers have agreed to all matters
regarding the Closing Statement and the Final Adjustment Amount in
accordance with Section 1.5.3.1, Buyer and Sellers shall execute and
deliver a signature page to the Closing Statement to evidence their
agreement to, and the finality of, the terms thereof. In the event that any
dispute is submitted to the Independent Auditor for resolution, the Closing
Statement returned by the Independent Auditor shall be the final Closing
Statement. Payment of the Final Adjustment Amount shall be paid by delivery
of immediately available funds to an account designated by the recipient
Party(ies) within five business days after the date of final determination.
1.5.4 ACCOUNTS RECEIVABLE ADJUSTMENT. Contemporaneously with the
delivery of the Closing Statement, Buyer shall deliver to Sellers a detailed
listing of the Accounts Receivable included in the Net Working Capital Amount as
they exist as of the Closing Date. Such listing of Accounts Receivable,
including any adjustments to such listing as may result from the final
determination of the Net Working Capital Amount pursuant to Section 1.5.3.1
above, is referred to as the "LISTED ACCOUNTS RECEIVABLE." For a period of
twelve (12) months following the Closing Date (the "COLLECTION PERIOD"), Buyer
shall use its commercially reasonable efforts, consistent with Buyer's
collection policies and procedures, to collect the Listed Accounts Receivable.
Within thirty (30) days following the expiration of the Collection Period, Buyer
shall deliver to Sellers a detailed listing of the Listed Accounts Receivable
not collected during the Collection Period (the "UNCOLLECTED ACCOUNTS"). In the
event the amount of the Uncollected Accounts is less than the reserve for
uncollected Accounts Receivable included in the Net Working Capital Amount,
Buyer shall pay such difference to Sellers within five (5) days following the
delivery of the listing of Uncollected Accounts. In the event the amount of the
Uncollected Accounts is greater than the reserve for uncollected Accounts
Receivable included in the Net Working Capital Amount, Sellers shall pay such
difference to Buyer within five (5) days following the delivery of the listing
of Uncollected Accounts. The Uncollected Accounts shall be considered Excluded
Assets for all purposes, and, unless waived by Sellers in writing, Buyer shall
execute and deliver to Seller all instruments as shall be reasonably requested
by
9
Sellers to legally and effectively vest in Sellers all of the right, title and
interest of Buyer with respect to all Uncollected Accounts. Buyer's rights with
respect to the Uncollected Accounts contained in this Section 1.5.4 shall be
Buyer's exclusive remedy with respect to the collectability, or lack thereof, of
the Accounts Receivable and, notwithstanding any provision of this Agreement to
the contrary, Buyer shall not be entitled to indemnification for any Losses
arising out of or relating to the collectability, or lack thereof, of the
Accounts Receivable or the sufficiency of the Sellers' allowance or reserve for
doubtful accounts.
SECTION 1.6 CLOSING. The closing of the transactions contemplated by this
Agreement shall take place at 10:00 a.m., local time, at the Executive Offices
of the Hospital in West Monroe, Louisiana, on the last business day of the month
during which there occurs satisfaction or waiver of all of the closing
conditions set forth in Articles 5 and 6 (other than those to be satisfied at
the Closing), or at such date and/or at such other location as the Parties may
mutually designate in writing (such closing being called the "CLOSING" and such
date being called the "CLOSING DATE").
1.6.1 Actions of Sellers at Closing. At the Closing and unless
otherwise waived in writing by Buyer, Sellers shall deliver to Buyer the
Sellers' Closing Documents.
1.6.2 Actions of Buyer at Closing. At the Closing and unless otherwise
waived in writing by Sellers, Buyer shall deliver to Sellers the payment of the
Cash Purchase Price (in accordance with Schedule 1.5.2(b)) and the Buyer's
Closing Documents.
SECTION 1.7 TAX ALLOCATION. The Purchase Price will be allocated among the
Acquired Assets for all Tax purposes in accordance with Section 1060 of the Code
as set forth on Schedule 1.7 hereto. After the Closing, the Parties shall make
consistent use of such allocation for all Tax purposes and in any Tax Returns
filed with the Internal Revenue Service in respect thereof, including IRS Form
8594. In any Proceeding related to the determination of any Tax, neither Buyer
nor Sellers shall contend or represent that such allocation is not a correct
allocation.
SECTION 1.8 PRORATIONS. At the Closing, and to the extent not included in
the Net Working Capital, Buyer and Sellers shall prorate real estate and
personal property lease payments, real estate and personal property Taxes, and
all other income and expenses (including utilities) with respect to the Acquired
Assets which are normally prorated upon a sale of assets as a going concern.
There will be no proration of real estate or other Taxes in respect of which
Sellers are exempt immediately prior to the Closing from the payment of such
Taxes. Buyer will be responsible for those real estate or other Taxes that
accrue after the Closing.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of Sellers represents and warrants to Buyer that, except as set
forth in the Disclosure Schedule (which Disclosure Schedule makes explicit
reference to the particular representation or warranty as to which exception is
taken, which in each case shall constitute the sole representation and warranty
as to which such exception shall apply), and except as to
10
confidential or proprietary information relating to any schedule, as previously
set forth under cover of a letter from counsel for GRMC to counsel for Buyer:
SECTION 2.1 ORGANIZATION, QUALIFICATION, CORPORATE POWER AND AUTHORITY.
2.1.1 Each of Sellers is a corporation or corporate body duly
incorporated or created, validly existing and in good standing under the laws of
the State of Louisiana and is duly licensed or qualified to transact business as
a foreign corporation and is in good standing in each jurisdiction in which the
nature of the business transacted by it, or the character of the properties
owned by it or leased by it, requires such licensing or qualification. Each of
Sellers has the corporate power and authority to own and hold its properties and
to carry on its business as now conducted. GRMC is a not-for-profit corporation
without any capital stock or members and GHS is a for-profit corporation that is
a wholly-owned subsidiary of GRMC. HSD is a corporate body and political
subdivision of the State of Louisiana.
2.1.2 Each Seller has full corporate power and authority to execute,
deliver and perform the obligations and covenants set forth in this Agreement
and Sellers' Closing Documents and to carry out the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and Sellers'
Closing Documents by each Seller and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of each Seller. This Agreement constitutes the
legal, valid, and binding obligation of Sellers, enforceable in accordance with
its terms, subject as to enforcement of remedies to the discretion of courts in
awarding equitable relief and to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the rights of creditors
generally. Each of Sellers' Closing Documents, when duly executed and delivered
by the Seller party thereto and the other parties thereto, will constitute the
legal, valid and binding obligation of the Seller party thereto enforceable in
accordance with its respective terms, subject as to enforcement of remedies to
the discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally.
SECTION 2.2 OWNERSHIP OF GHS, SELLER JV ENTITIES. Schedule 2.2 identifies
each of the Seller JV Entities and the percentage ownership of GRMC in each of
the Seller JV Entities. GRMC owns, beneficially and of record, all of the issued
and outstanding capital stock of GHS. Except as set forth on Schedule 2.2, GRMC
owns the issued and outstanding capital stock of GHS and the partnership or
limited liability company interests of each of the Seller JV Entities set forth
on Schedule 2.2 free and clear of any preemptive rights or other Encumbrances
(other than restrictions on transfer under federal or state securities Legal
Requirements) and none of such capital stock, partnership interests or limited
liability company interests was issued in violation of any federal or state
securities laws or other Legal Requirements. Except as set forth on Schedule
2.2, there are no preemptive or conversion rights or options, warrants or other
rights, agreements, contracts, arrangements or commitments of any character
relating to or obligating GHS or any of the Seller JV Entities to issue, sell,
transfer, purchase or redeem any equity interests in such entity. Except as set
forth in Schedule 2.2, no Seller (i) owns of record or beneficially, directly or
indirectly, or has entered into any agreement to acquire, any shares of capital
stock or other equity securities or any other type of securities convertible
into capital
11
stock or other equity securities of any Person, or any participating interest in
any Person; or (ii) controls, directly or indirectly, any other Person.
SECTION 2.3 NO BREACH. Except as set forth in Schedule 2.3, neither the
execution and delivery of this Agreement and related agreements contemplated
herein by Sellers nor the consummation or performance of the transactions
contemplated hereby will, directly or indirectly (with or without notice of
lapse of time), (i) conflict with or result in the breach or violation of the
articles of incorporation or Bylaws of any Seller, (ii) conflict with or result
in the breach or violation of any provision of any Material Seller Contract, or
Order of any Governmental Authority, in either such case, to which any Seller,
or any of the Acquired Assets, are bound, or cause any acceleration thereof,
(iii) result in the creation or imposition of any Encumbrance whatsoever upon
any of the Acquired Assets, or (iv) contravene, conflict with, or result in a
violation in any material respect of any Legal Requirements. Except for (i)
requirements under the HSR Act, if applicable, (ii) approval by the Louisiana
Attorney General, (iii) passage of a public referendum by the voters of the HSD
(i.e., Xxxx 5, Ouachita Parish, Louisiana, as it stood in 1951), and (iv) the
other approvals as set forth in Schedule 2.3, none of Sellers is or will be
required to give any notice to or obtain any consent from any Governmental
Authority or from any other Person or submit to any vote or referendum in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby (including in connection with the
assignment of any Assumed Contracts to Buyer hereunder).
SECTION 2.4 ASSETS. Except as disclosed in Schedule 2.4, all of the
Acquired Assets are free and clear of any Encumbrances, except for liens for
Permitted Real Property Encumbrances, current taxes not yet due and payable, and
minor imperfections of title, if any, which liens are not material in nature or
amount and do not materially detract from the value or impair the use of the
property subject thereto or materially impair the operations of the Sellers.
Schedule 2.4 sets forth all items of Personal Property of Sellers with an
initial non-depreciated book value in excess of $25,000 and a net book value in
excess of $100 (the "MATERIAL PERSONAL PROPERTY"). All items of Material
Personal Property are structurally sound and in good operating condition and
repair, ordinary wear and tear excepted. All items of Material Personal Property
are in the possession of Sellers. Substantially all of the Purchased Inventory,
whether or not reflected on the Interim Balance Sheet, is of a quality and
quantity useable in the ordinary course of business, except to the extent of
reserves reflected in the Net Working Capital as of the Closing Date. The assets
owned by Sellers, including the Acquired Assets and the Excluded Assets,
constitute all of the assets, tangible and intangible, of any nature whatsoever,
necessary to conduct the Acquired Businesses in the manner presently operated.
SECTION 2.5 COMPLIANCE WITH LAW; LICENSES.
2.5.1 Except as set forth in Schedule 2.5.1, Sellers have the lawful
authority and all material Licenses required to conduct the Acquired Businesses
as such businesses are presently being conducted or to own or operate their
assets (including, without limitation, all Licenses required in connection with
the operation of the Facilities). Except as set forth in Schedule 2.5.1, there
are no pending or, to the Knowledge of Sellers, threatened, Proceedings by any
state, federal, special or local government or any subdivision thereof or any
public or private group which would have the effect of changing the operation of
the Acquired Businesses.
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Schedule 2.5.1 contains a list and brief description of all material Licenses
issued or granted (or required to be issued or granted) to Sellers. Each License
listed or required to be listed in Schedule 2.5.1 is valid and in full force and
effect. Sellers are, and at all times since January 1, 2004, have been, in
compliance in all material respects with the terms of each material License, and
no Seller has received, at any time since January 1, 2004, any written notice or
communication from any Governmental Authority or any other Person regarding any
actual, alleged or potential violation of any License. All applications required
to have been filed by Sellers for the renewal of all material Licenses have been
duly filed on a timely basis with the appropriate Governmental Authorities, and
all other filings of Sellers required to have been made with respect to such
Licenses have been duly made on a timely basis with the appropriate Governmental
Authorities.
2.5.2 All licensure and accreditation surveys and deficiency reports
received by Sellers and relating to any of the Acquired Businesses since January
1, 2004 are set forth on Schedule 2.5.2. Any violations or deficiencies set
forth in any of the items on Schedule 2.5.2 have been corrected by Sellers or,
to the extent not corrected, the current status thereof is noted on Schedule
2.5.2.
2.5.3 Sellers are, and at all times since January 1, 2004, have been,
in compliance in all material respects with all Legal Requirements that are or
were applicable to the operation of their businesses, including the Acquired
Businesses, or the ownership or use of any of the Acquired Assets. Sellers have
not received, at any time since January 1, 2004, any written notice or other
written communication from any Governmental Authority regarding any actual,
alleged, possible, or potential violation of, or failure to comply with, any
Legal Requirement.
SECTION 2.6 REAL PROPERTY.
2.6.1 Schedule 2.6.1 contains a correct legal description and street
address of each parcel of Owned Real Property that is to be an Acquired Asset.
Except as set forth in Schedule 2.6.1, (i) none of the Sellers has entered into
any leases, subleases, arrangements, licenses or agreements to sell, option,
dispose of, alienate, or affect its right to use or occupy all or any portion of
the Owned Real Property, and (ii) no party other than Sellers is in possession
of all or any portion of the Owned Real Property under any lease, license or
other agreement.
2.6.2 Schedule 2.6.2 lists all Real Property Leases to which any
Seller is a party (whether as (sub)lessor, (sub)lessee, guarantor or otherwise).
Schedule 2.6.2 contains a correct description of the parties to each Real
Property Lease, street address, approximate rentable square footage, monthly
rent, expiration date and any renewal options with respect to all Leased Real
Property. Sellers enjoy peaceful and undisturbed possession of all Leased Real
Property. Except as set forth in Schedule 2.6.2, (i) no Seller has entered into
any (sub)leases, arrangements, licenses or agreements to sell, option, dispose
of, alienate, or affect its right to use or occupy all or any portion of the
Leased Real Property, and (ii) no party other than Sellers is in possession of
all or any portion of the Leased Real Property under any leases, license or
other agreement.
2.6.3 The plants, buildings, structures, improvements, construction in
progress, appurtenances, and fixtures forming a part of the Real Property are
structurally sound and in good operating condition and repair, ordinary wear and
tear excepted. The use of the Real
13
Property by Sellers for the purposes for which it is currently being used
conforms in all material respects to all applicable public and private
restrictions and to all applicable fire, safety, zoning and building Legal
Requirements. Except as set forth on Schedule 2.6.3, there are no pending or, to
Sellers' Knowledge, threatened eminent domain, condemnation, zoning, building or
life safety codes, or other Proceedings affecting the Real Property. The Real
Property has adequate rights of access to dedicated public ways and is served
adequately by water, electric, sewer and other necessary utilities and services.
2.6.4 True and complete copies of (i) all deeds or leases, as the case
may be, existing title insurance policies, surveys, appraisals, environmental
assessments, engineering reports, specifications and plans of or pertaining to
the Real Property and (ii) all instruments, agreements and other documents
evidencing, creating or constituting any Encumbrances with respect to the Real
Property, in each case in the possession or reasonable control of Sellers, have
been delivered or made available to Buyer.
SECTION 2.7 Financial Statements.
2.7.1 Attached to Schedule 2.7 are: (i) the audited consolidated
balance sheets of GRMC (including GHS) as of August 31, 2005 and 2004 and the
related statements of financial position, activities and changes in net assets
and cash flows for each fiscal year then ended, including in each case the notes
thereto, together with the report of the independent certified public accounting
firm set forth therein (the "AUDITED FINANCIAL STATEMENTS"); and (ii) the
consolidated unaudited balance sheet of GRMC (including GHS) (the "INTERIM
BALANCE SHEET") as of May 31, 2006 (the "INTERIM BALANCE SHEET DATE") and the
related statements of financial position, activities and changes in net assets
and cash flows for the nine (9) months then ended (collectively referred to as
the "UNAUDITED FINANCIAL STATEMENTS") (the Audited Financial Statements, the
Unaudited Financial Statements and the unaudited financial statements to be
delivered by Sellers pursuant to Section 4.7 below (the "PRE-CLOSING FINANCIAL
STATEMENTS") are sometimes referred to herein collectively as the "FINANCIAL
STATEMENTS"). The Financial Statements have been (and, in the case of the
Pre-Closing Financial Statements, will be) prepared in accordance with GAAP
consistently applied (except, in the case of the Unaudited Financial Statements
and the Pre-Closing Financial Statements, for the absence of footnotes (that, if
presented, would not differ materially from those included in the most recent
Audited Financial Statements) and normal recurring year end adjustments (the
effect of which will not, individually or in the aggregate, be material), or as
otherwise set forth on Schedule 2.7) and, subject to such exceptions, fairly
present in accordance with GAAP the financial position of GRMC (including GHS)
and the results of operations and changes in financial position and cash flows
as of the dates and for the periods specified therein. The Financial Statements
have been (and, in the case of the Pre-Closing Financial Statements, will be)
prepared in accordance with the books and records of GRMC and GHS.
2.7.2 Except as set forth in the Unaudited Financial Statements or in
Schedule 2.7, no Seller has any material liabilities or obligations (whether
accrued, absolute, contingent or otherwise) other than current liabilities
incurred in the ordinary course of business since the Interim Balance Sheet
Date.
14
2.7.3 Sellers maintain a system of internal control over financial
reporting sufficient to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP.
2.7.4 Since January 1, 2004, neither GRMC nor GHS, nor, to the
Knowledge of Sellers, any director, officer, employee, auditor, accountant or
representative of GRMC or GHS, has received or has otherwise had or obtained
knowledge of any complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures, methodologies
or methods of such Seller or its internal control over financial reporting,
including any complaint, allegation, assertion or claim that such Seller has
engaged in questionable or improper accounting practices.
SECTION 2.8 ACCOUNTS RECEIVABLE. The Accounts Receivable reflected on the
Interim Balance Sheet or the accounting records of GRMC and GHS as of the
Closing represent or will represent valid obligations for monies due for goods
sold and delivered or services actually performed by GRMC and GHS in the
ordinary course of business. The respective reserves in respect of Accounts
Receivable, including allowances for bad debts, charity care and contractual
adjustments, shown on the Interim Balance Sheet or in the accounting records of
GRMC and GHS as of the Closing are or will be calculated consistent with past
practice in accordance with GAAP and, in the case of the reserves in the
accounting records of GRMC and GHS as of the Closing, will not represent a lower
percentage of the Accounts Receivable than the reserve reflected in the Interim
Balance Sheet.
SECTION 2.9 EVENTS SUBSEQUENT TO THE DATE OF THE AUDITED FINANCIAL
STATEMENTS. Since the date of the Audited Financial Statements, Sellers have
operated the Acquired Businesses in the ordinary course of business, GRMC has
not sold or agreed to sell any ownership interest held by GRMC in the Seller JV
Entities, and, except as set forth in Schedule 2.9, none of Sellers has:
(i) issued any stock, bond or other corporate security;
(ii) issued any note, bond or other debt security or
created, incurred, assumed or guaranteed any indebtedness for borrowed
money or capitalized lease obligations in excess of $25,000;
(iii) discharged or satisfied any Encumbrance or incurred or
paid any obligation or liability (absolute, accrued or contingent)
other than current liabilities shown on the Audited Financial
Statements and current liabilities incurred since the date of the
Audited Financial Statements in the ordinary course of business;
(iv) declared or made any payment or distribution to
shareholders or members thereof or purchased or redeemed any shares of
its capital stock or its membership interests;
(v) mortgaged, pledged or subjected to any Encumbrance any
of its assets, tangible or intangible, other than liens of current
real property taxes
15
not yet due and payable, other than leases in the ordinary course of
business with respect to space located in the Medical Mall;
(vi) sold, assigned or transferred any of the tangible
assets of such Seller other than dispositions of obsolete tangible
personal property in the ordinary course of business or sale or
transfers of inventory in the ordinary course of business, or
cancelled any debt or claim;
(vii) sold, assigned, transferred or granted any exclusive
license with respect to any patent, trademark, trade name, service
xxxx, copyright, trade secret or other intangible asset of such
Seller;
(viii) suffered any loss of property in excess of $25,000
(whether or not covered by insurance) or waived, cancelled or
compromised any right or claim (or series of rights or claims) in
excess of $25,000 whether or not in the ordinary course of business;
(ix) granted any increase in the base compensation of, or
paid any bonuses or other compensation, to any of its officers and
employees outside of the ordinary course of business;
(x) adopted, amended or increased the payments or benefits
under any Employee Benefit Plan, outside of the ordinary course of
business;
(xi) made any material change in the manner of its business
or operations including any change in accounting principles and
practices;
(xii) entered into any transaction except in the ordinary
course of business or as otherwise contemplated hereby;
(xiii) made any capital investment in, any loan or advances
to or acquired the securities or assets of, any other Person either
involving more than $25,000 or outside the ordinary course of
business;
(xiv) experienced a Material Adverse Effect; or
(xv) entered into any commitment (contingent or otherwise)
to do any of the foregoing.
SECTION 2.10 TRADEMARKS, PATENTS AND OTHER RIGHTS. Schedule 2.10 sets forth
a list and brief description of all material Intellectual Property owned or
licensed by Sellers in the conduct of the Acquired Businesses (excluding
"clickwrap" or "shrinkwrap" agreements contained in or pertaining to "off the
shelf" software or terms of use or service for any website). To the Knowledge of
Sellers, none of Sellers infringes upon or unlawfully uses any intellectual
property owned by another Person. None of Sellers currently utilizes any
existing or pending patent, trademark, trade name, service xxxx, copyright,
software, trade secret or know-how, except for those which are owned, possessed
or lawfully used by it in its business operations and, to Sellers' Knowledge,
none of Sellers infringes upon or unlawfully uses any patent, trademark,
16
trade name, service xxxx, copyright or trade secret owned or validly claimed by
each Person. Each of Sellers owns, has a valid license to use or has the right
validly to use all Intellectual Property (including, without limitation, all
"clickwrap" or "shrinkwrap" agreements contained in or pertaining to "off the
shelf" software or terms of use or service for any website) necessary to carry
on its business substantially as currently conducted and possesses a sufficient
number of software licenses to operate its business as currently conducted.
SECTION 2.11 LEGAL PROCEEDINGS. Except as disclosed in Schedule 2.11, there
are no Proceedings instituted or pending, or to Sellers' Knowledge, overtly
threatened, (i) by or against any of Sellers or that to Sellers' Knowledge
otherwise may have a Material Adverse Effect on the Acquired Businesses or any
of the Acquired Assets, or (ii) that challenge, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the
transactions contemplated hereby. There are no Orders outstanding, or, to the
Knowledge of Sellers, overtly threatened (a) against any of Sellers or that
otherwise may have a Material Adverse Effect on the Acquired Businesses or any
of the Acquired Assets; or (b) that challenge, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the
transactions contemplated hereby. Except as disclosed in Schedule 2.11, to
Sellers' Knowledge, (x) there are no Proceedings instituted, pending or overtly
threatened, by or against any of the Seller JV Entities and (y) there are no
Orders outstanding or overtly threatened against any of the Seller JV Entities.
SECTION 2.12 TAXES. Each of Sellers has filed all federal, state, parish
and local tax returns, declarations, reports and information returns or
statements (collectively, "TAX RETURNS") relating to Taxes including, without
limitation, income, sales, franchise, single business, payroll, premium,
withholding, informational and personal property tax returns, required to be
filed by it, and all such Tax Returns were accurate and complete in all material
respects. Each of Sellers has paid or made adequate provision for the payment of
all Taxes (whether or not shown on any Tax Return) owed by it. No claims for
additional Taxes are pending with respect to the fiscal year ended August 31,
2005, or for any fiscal years prior thereto. None of Sellers is a party to any
pending Proceeding, nor, to Sellers' Knowledge, is any such Proceeding
threatened, by any Governmental Authority for the assessment or collection of
Taxes. To Sellers' Knowledge, no claim has ever been made by any Governmental
Authority in which, or with which, Sellers do not file Tax Returns that any
Seller is or may be subject to taxation by that jurisdiction. Each Seller has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party. No Seller is a party to any Tax
allocation or sharing agreement. No Seller (i) has been a member of an
affiliated group filing a consolidated federal income Tax Return or (ii) has any
liability for the Taxes of any Person (other than GRMC and GHS) under Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise
SECTION 2.13 CONTRACTS AND OTHER COMMITMENTS. Schedule 2.13 lists all of
the written Material Seller Contracts and provides a written description of any
oral Material Seller Contracts. To Sellers' Knowledge, except as set forth in
Schedule 2.13, each Material Seller Contract is a valid and binding obligation
of each of the parties thereto, enforceable in accordance with its terms
(subject to bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and except for limitations upon the
availability of
17
equitable remedies, including specific performance). Each Seller and, to
Sellers' Knowledge, except as set forth in Schedule 2.13, each other party to
each Material Seller Contract is, and at all times since January 1, 2004, has
been, in material compliance with all applicable terms and requirements of each
Material Seller Contract. Since January 1, 2004, except as set forth in Schedule
2.13, no Seller has given to, or received from, any other party to any Material
Seller Contract, any written notice or other communication regarding any actual
or alleged breach of or default under any Material Seller Contract by any Seller
or any other party to such Material Seller Contract. True and complete copies of
each of the Assumed Contracts and Material Seller Contracts have been delivered
or made available to Buyer.
SECTION 2.14 EMPLOYEE BENEFIT PLANS.
2.14.1 Each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained, contributed to or required to be contributed to by a Seller or any
Commonly Controlled Entity for the benefit of current, former and retired
employees, independent contractors or agents (the "SELLER ERISA PLANS") and each
other plan, contract, program or arrangement maintained, contributed to or
required to be contributed to by a Seller or any Commonly Controlled Entity for
the benefit of current, former and retired employees (the "SELLER BENEFIT
ARRANGEMENTS"), independent contractors or agents complies in all material
respects and has been administered in all material respects according to its
terms and all applicable Legal Requirements, including ERISA, and no "reportable
event" or "prohibited transaction" (as such terms are defined in ERISA) or
termination has occurred with respect to any such plan or arrangement and no
Seller has any material liability to any Governmental Authority or other Person
in connection therewith. Copies or descriptions of each Seller ERISA Plan and
Seller Benefit Arrangement (and, where applicable, the most recent summary plan
description, actuarial report, determination letter, annual report (Form 5500)
and trust agreement relating to such Seller ERISA Plan and Seller Benefit
Arrangement) have been made available for review prior to the date hereof.
Schedule 2.14.1 provides a list of each Seller ERISA Plan and Seller Benefit
Arrangement.
2.14.2 Except as set forth on Schedule 2.14.2, no Seller nor any
Commonly Controlled Entity contributes to or has an obligation to contribute to,
nor has any Seller, or any Commonly Controlled Entity, at any time within six
(6) years prior to the Closing Date contributed to or had an obligation to
contribute to, either (i) a multiemployer plan within the meaning of Section
3(37) of ERISA, (ii) any plan subject to Title IV of ERISA or (iii) any defined
benefit pension plan.
SECTION 2.15 INSURANCE. Schedule 2.15 sets forth a complete and accurate
list of all insurance policies under which any of the assets or properties of
any of Sellers is covered or otherwise relating to the Acquired Businesses. Such
insurance policies are in full force and effect on a "claims made" basis or an
"occurrence" basis, as indicated on Schedule 2.15, with no premium arrearage,
and each Seller has paid all premiums due, and has otherwise performed all of
its obligations under, each such insurance policy. None of Sellers has received
any notice canceling or materially amending any of such insurance policies, and
to Sellers' Knowledge, no such cancellation or amendment is threatened.
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SECTION 2.16 EMPLOYEES.
2.16.1 Schedule 2.16 contains a complete list (as of the date therein)
of all current employees of GRMC and GHS and rates of pay, fringe benefits,
bonuses and other compensation arrangements, accrued vacation, sick pay and
other paid time off and service credited for vesting for purposes of the Plans,
the date of hiring and job title of each such person, and indication as to
whether such person works on or off the Hospital campus.
2.16.2 There is no collective bargaining agreement in effect between
GRMC or GHS and any labor unions or organizations representing any of the
employees of GRMC or GHS. Neither GRMC nor GHS has at any time experienced any
organized slowdown, work interruption strike or work stoppage by any of its
employees, and, to the knowledge of Sellers, there is no strike, labor dispute
or union organization activities pending or threatened affecting GRMC or GHS.
2.16.3 Except as set forth in Schedule 2.16, the employment of each
employee of GRMC or GHS is terminable at the will of GRMC or GHS, and neither
GRMC nor GHS is a party to any employment, non-competition or severance contract
or agreement with any employee of GRMC or GHS.
2.16.4 Each of GRMC and GHS is and has been in compliance in all
material respects with all applicable Legal Requirements regarding employment
and employment practices, terms and conditions of employment, wages and hours,
anti-discrimination and occupational health and safety, including laws
concerning unfair labor practices within the meaning of Section 8 of the
National Labor Relations Act, as amended, and the employment of non-residents
under the Immigration Reform and Control Act of 1986, as amended.
SECTION 2.17 ENVIRONMENTAL. Except as set forth on Schedule 2.17 hereto:
2.17.1 Sellers are, and to Seller's Knowledge at all times have been,
in material compliance with all applicable Environmental Laws. To Sellers'
Knowledge: (a) during each Seller's respective period of ownership or operation
of any Real Property, that Seller has been in material compliance with all
applicable Environmental Laws; or (b) any material noncompliance is listed on
Schedule 2.17 and has been remediated in accordance with applicable
Environmental Laws. To Sellers' Knowledge, all tenants or other persons or
entities that use any portion of any Real Property of Sellers or any
improvements thereon included in the Acquired Businesses are conducting their
operations in material compliance with all applicable Environmental Laws.
2.17.2 Since January 1, 2004, no Seller has received any request for
information, notice of claim, demand or other notification regarding any
potential liability under or violation of any Environmental Laws, and Sellers
have no Knowledge that any Seller is or may be in material violation of any
Environmental Law or may be potentially responsible with respect to any
investigation or clean-up of any Hazardous Materials.
2.17.3 During each Seller's respective period of ownership or
operation of Real Property, that Seller has not, and to Sellers' Knowledge, no
other Person has, disposed, discharged, caused a Release (as defined under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq.), injected or otherwise placed any
19
Hazardous Materials into, on or under the soils, surface water or groundwater
at, on, under or from any portion of any Real Property of Sellers or
improvements thereon, except for any Release of Hazardous Materials incidental
to and in the ordinary course of operating the Acquired Businesses and then in
compliance with applicable Environmental Laws. To Sellers' Knowledge, no portion
of any structures on any of the Acquired Assets contain any asbestos that is not
fully encapsulated. Sellers have no Knowledge of a Release of any Hazardous
Materials at, on, under or from any Real Property of Sellers that could subject
an owner or operator of such Real Property to any claim or liability or that
could reasonably be expected to require investigation, removal or remediation.
2.17.4 Sellers do not store, generate or handle, nor do Sellers allow
any tenant or other person to store, generate or handle, any Hazardous Materials
at, on or under any of the Real Property of Sellers or improvements thereon
except for such Hazardous Materials that are stored or handled incidental to and
in the ordinary course of operating the Acquired Businesses and then in material
compliance with Environmental Laws.
2.17.5 To Sellers' Knowledge, no underground storage tanks,
aboveground storage tanks or drums of Hazardous Materials are present on any
portion of any of the Real Property of Sellers or improvements thereon.
2.17.6 Sellers have obtained, and are and have been in material
compliance with, all Licenses required by any Environmental Laws for the
operation of the Acquired Businesses, and all such Licenses are current and in
full force and effect.
2.17.7 Sellers have delivered or made available to Buyer, to the
extent in the possession or reasonable control of Sellers, true and complete
copies and results of any environmental reports, studies, audits, analyses,
tests or monitoring pertaining to any Real Property of Sellers or improvements
included in the Acquired Businesses.
SECTION 2.18 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
Schedule 2.18, (i) no shareholder, member, director or officer of any Seller
(any such individuals, a "RELATED PERSON"), or, to the knowledge of Sellers, any
Affiliate or member of the immediate family of any Related Person, is, or since
January 1, 2004 has been, involved in any material business arrangement or
relationship with any Seller, other than employment arrangements entered into in
the ordinary course of business, and (ii) no Related Person or, to the knowledge
of Sellers, any Affiliate or member of the immediate family of any Related
Person, owns or holds, or since January 1, 2004 has owned or held, any property
or right, tangible or intangible, used by any of Sellers in the conduct of the
Acquired Businesses.
SECTION 2.19 GOVERNMENT REIMBURSEMENT PROGRAM PARTICIPATION.
2.19.1 The Facilities and other Acquired Businesses, as applicable,
are qualified for participation in the Medicare, Medicaid and TRICARE programs
("GOVERNMENT REIMBURSEMENT PROGRAMS"), have current and valid provider contracts
with such Government Reimbursement Programs, are in material compliance with the
conditions of participation in such Government Reimbursement Programs, and have
received all approvals or qualifications necessary for reimbursement by such
Government Reimbursement Programs. Copies of all
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existing Medicare, Medicaid and TRICARE provider Contracts of the Facilities and
other Acquired Businesses, as applicable, have been provided or made available
to Buyer. Schedule 2.19.1 sets forth a list of all provider numbers of Sellers
under any provider Contracts with Government Reimbursement Programs and other
third party payors, including any insurance company or health care provider
(such as a health maintenance organization, preferred provider organization, or
any other managed care program) ("PAYORS"), all of which are in full force and
effect.
2.19.2 Each of the Facilities and other Acquired Businesses, as
applicable, are duly accredited, with no contingencies (except as set forth on
Schedule 2.19.2), by the Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO") for the periods set forth on Schedule 2.19.2. Copies of
the most recent accreditation letters from JCAHO pertaining to each of the
Facilities and other Acquired Businesses, as applicable, have been made
delivered or made available to Buyer. Sellers have delivered or made available
to Buyer true and correct copies of the most recent Statements of Deficiencies
and Plan of Correction on Form CMS-2567 for each of the Facilities and other
Acquired Businesses, as applicable.
2.19.3 None of Sellers nor any of their respective officers,
directors, managing employees, or controlling shareholders are excluded from
participation in the Government Reimbursement Programs, nor, to Sellers'
Knowledge, is there any such exclusion threatened or any basis for such
exclusion.
2.19.4 Except as set forth on Schedule 2.19.4, since August 31, 2000,
none of Sellers has received any notice from any of the Governmental
Reimbursement Programs, or any other third-party payor programs, of any pending
or threatened investigations, or surveys, and Sellers have no Knowledge that any
such investigations or surveys are pending, threatened, or imminent, or that
there is any basis for any such investigation or survey.
2.19.5 All cost reports of the Facilities and other Acquired
Businesses, as applicable, have been filed when due, and all payments reflected
as due to or from any Seller thereunder have been made, and, such cost reports
do not claim, and neither the Facilities and other Acquired Businesses, as
applicable, nor any Seller has received, any payment or reimbursement in excess
of amounts allowed by Legal Requirements or any applicable Contract. True and
exact copies of all cost reports filed by or on behalf of the Facilities and
other Acquired Businesses, as applicable, since August 31, 2000, together with
all material correspondence with respect thereto, have been provided or made
available to Buyer. None of Sellers has received any notice of any dispute with
any Governmental Authority, any fiscal intermediary or any other party regarding
any cost report, which has not been resolved, and any required payment made.
SECTION 2.20 MEDICAL STAFF. Sellers have delivered or made available to
Buyer, with respect to the Acquired Businesses, as applicable, (a) true and
correct copies of the blank forms generally used with respect to medical staff
privilege and membership application or delineation of privilege; (b) all
current medical staff bylaws, rules and regulations and amendments thereto
respecting each of the Acquired Businesses; and (c) a list of all current
members of the medical staff of each Facility. Except as disclosed in Schedule
2.20, there are no pending or, to Sellers' Knowledge, threatened adverse actions
with respect to any medical staff members of any of the Acquired Businesses or
any applicant thereto for which a medical staff
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member or applicant has requested a judicial review hearing which has not been
scheduled or has been scheduled but has not been completed. There are no
pending, or to Sellers' Knowledge, threatened material disputes with medical
staff applicants, medical staff members or allied health professionals of any
Facility, and all appeal periods in respect of any such medical staff member or
applicant against whom an adverse action has been taken have expired. To
Sellers' Knowledge, within the last two (2) years, neither Sellers nor any
member of the Hospital's medical staff have performed or permitted the
performance of any experimental or research procedures or studies involving
patients in the Hospital.
SECTION 2.21 XXXX-XXXXXX CARE. Except as disclosed on Schedule 2.21, none
of the Acquired Businesses has received any loans, grants or loan guarantees
pursuant to the Xxxx-Xxxxxx Act (42 U.S.C. Section 291a, et seq.), the Health
Professions Educational Assistance Act the Nurse Training Act, the National
Health Pharmacy and Resources Development Act, or the Community Mental Health
Centers Act, as amended, or any other Legal Requirement or governmental program
whatsoever and the transactions contemplated hereby will not result in any
obligation on the part of the Buyer to repay any such loans, grants or loan
guarantees or provide uncompensated care in consideration thereof.
SECTION 2.22 FEES AND COMMISSIONS. Other than certain fees to be paid by
Sellers to Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, no Seller has agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of,
Sellers in connection with this Agreement and the transactions contemplated
hereby.
SECTION 2.23 DISCLOSURE. To Sellers' Knowledge no representation or
warranty by Sellers in this Agreement, and no exhibit, schedule, or certificate
furnished or to be furnished by Sellers pursuant hereto, contains any untrue
statement of a material fact, or omits to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading.
SECTION 2.24 RELIANCE. No Seller has relied upon any representation or
warranty regarding Buyer or any matters relating to Buyer or any of its
Affiliates, other than the representations and warranties contained in this
Agreement, or in any certificate, exhibit, schedule or other document required
to be executed or delivered to such Seller pursuant to the terms of this
Agreement.
SECTION 2.25 GRMC NOT A SPECIALTY HOSPITAL. GRMC is not a Specialty
Hospital.
SECTION 2.26 SELLER JV ENTITIES. Subject to Section 4.16, with respect to
each of the Seller JV Entities, other than NLCI and GHH, Sellers make the
representations and warranties contained in Sections 2.1.1, 2.3, 2.5, 2.11, 2.12
and 2.19, effective as of the Certification Date, in each case to the best of
Sellers' Knowledge; provided, however, that with respect to any of the Seller JV
Entities that is not a corporation, (i) the representations and warranties
contained in Section 2.1.1 shall be as to such entity's status as a partnership,
limited liability company or limited partnership, as applicable and (ii) the
representations and warranties contained in Section 2.3 shall be as to the
applicable organizational documents of such entity.
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SECTION 2.27 NLCI AND GHH. Subject to Section 4.16, with respect to NLCI
and GHH, Sellers make the representations and warranties contained in Sections
2.1.1, 2.3, 2.5, 2.11, 2.12 and 2.19 as to NLCI and GHH, effective as of the
Certification Date; provided, however, that (i) the representations and
warranties contained in Sections 2.1.1 and 2.3 are to the best of Sellers'
Knowledge, (ii) the representations and warranties contained in Section 2.1.1
shall be as to NLCI's and GHH's status as a limited liability company and (iii)
the representations and warranties contained in Section 2.3 shall be as to the
organizational documents for NLCI and GHH.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
SECTION 3.1 ORGANIZATION, POWER AND AUTHORITY.
3.1.1 Buyer is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is or by
Closing will be duly qualified to do business as a "foreign" limited partnership
and is in good standing under the laws of the State of Louisiana.
3.1.2 Buyer has full power and authority to execute, deliver and
perform the obligations and covenants set forth in this Agreement and Buyer's
Closing Documents and to carry out the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and Buyer's Closing
Documents by Buyer and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of
Buyer. This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable in accordance with its terms, subject as to enforcement of
remedies to the discretion of courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally. Each of Buyer's Closing Documents,
when duly executed and delivered by Buyer and the other parties thereto, will
constitute the legal, valid and binding obligation of Buyer enforceable in
accordance with its respective terms, subject as to enforcement of remedies to
the discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally.
SECTION 3.2 FINANCIAL RESOURCES. Buyer has sufficient financial resources,
and at the Closing Buyer will possess sufficient funds, to permit Buyer to
deliver the Cash Purchase Price in accordance with Section 1.5, subject to
satisfaction of the conditions precedent to Buyer's obligations to close the
transactions contemplated by this Agreement.
SECTION 3.3 NO BREACH. Except as set forth in Schedule 3.3, neither the
execution and delivery of this Agreement and related agreements contemplated
herein by Buyer nor the consummation or performance of the transactions
contemplated hereby will, directly or indirectly (with or without notice of
lapse of time), (i) conflict with or result in the breach or violation of the
certificate of limited partnership or limited partnership agreement of Buyer,
(ii) conflict with or result in the breach or violation of any provisions of any
material contract or
23
agreement or any Order of any Governmental Authority, in each case to which
Buyer is a party or by which its assets or properties are bound, or cause any
acceleration thereof, (iii) result in the creation or imposition of any
Encumbrance whatsoever upon any of the properties or assets of Buyer, or (iv)
contravene, conflict with, or result in a violation in any material respect of
any Legal Requirements. Except (i) for applicable requirements under the HSR
Act, if any, and (ii) as set forth in Schedule 3.3, Buyer is not required to
give any notice to or obtain any consent from any Governmental Authority or from
any other Person in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
SECTION 3.4 LEGAL PROCEEDINGS. There are no Proceedings instituted or
pending, or to Buyer's knowledge, overtly threatened against Buyer that
challenge, or may have the effect of preventing, delaying, making illegal or
otherwise interfering with, the transactions contemplated hereby. There are no
Orders outstanding, or, to Buyer's knowledge, overtly threatened against Buyer
that challenge, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the transactions contemplated hereby.
SECTION 3.5 DISCLOSURE. To Buyer's Knowledge no representation or warranty
by Buyer in this Agreement, and no exhibit, schedule, or certificate furnished
or to be furnished by Buyer pursuant hereto, contains any untrue statement of a
material fact, or omits to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading.
SECTION 3.6 FEES AND COMMISSIONS. Buyer has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of,
Buyer in connection with this Agreement and the transactions contemplated
hereby.
SECTION 3.7 RELIANCE. Buyer has not relied upon any representation or
warranty regarding Sellers, the Acquired Assets, the Acquired Businesses, and/or
the Facilities or any other matters relating to Sellers or any of their
Affiliates, other than the representations and warranties contained in this
Agreement, or in any certificate, exhibit, schedule or other document required
to be executed or delivered to Buyer pursuant to the terms of this Agreement.
ARTICLE 4.
PRE-CLOSING AND CLOSING COVENANTS
SECTION 4.1 MAINTENANCE OF PROPERTIES AND BUSINESS. Between the date hereof
and Closing Sellers shall carry on the Acquired Businesses in the ordinary
course of business (including collecting receivables and paying payables) and
substantially in the same manner as previously conducted and to conduct the
Acquired Businesses so as to maintain the properties and business of Sellers to
preserve the business organization and the goodwill of customers, suppliers and
employees of Sellers and other Persons having business relationships with
Sellers. Except as otherwise herein provided or otherwise in the ordinary course
of business, without the prior written consent of Buyer, none of Sellers shall
between the date hereof and Closing:
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4.1.1 Fail to make capital expenditures substantially in accordance
with the schedule of budgeted capital expenditures attached hereto as Schedule
4.1.1 (the "CAPITAL EXPENDITURES BUDGET");
4.1.2 Make any capital expenditure in excess of $25,000 per
transaction or $100,000 in the aggregate, except as set forth in the schedule of
Capital Expenditures Budget;
4.1.3 Make any distribution to its members, stockholders or partners,
as applicable;
4.1.4 Amend its governing documents except as otherwise provided by
this Agreement;
4.1.5 Make any material change in the operations of its businesses,
including any changes in accounting principles and practices;
4.1.6 Acquire any other business or interest therein;
4.1.7 Buy or sell any amount of capital stock or other ownership
interest in any Person, or otherwise change its capital structure, except as
otherwise provided by this Agreement;
4.1.8 Grant any options, warrants, or other rights to acquire equity
or debt;
4.1.9 Increase the compensation of any director, officer, or employee
other than regularly scheduled increases consistent with an existing
compensation program and past practices;
4.1.10 Mortgage, sell, lease, transfer, donate, dispose of or
distribute any of its assets having a fair market value in excess of $25,000 in
any single transaction or $100,000 in the aggregate, except as set forth on
Schedule 4.1.10;
4.1.11 Execute, amend or terminate any Material Seller Contract to
which it is a party, except as set forth on Schedule 4.1.11;
4.1.12 Settle any material Proceeding, including any administrative
agency matter;
4.1.13 Incur or guarantee any Indebtedness in excess of $50,000 in any
single transaction or $100,000 in the aggregate or make any loans;
4.1.14 Take any action that would result in a breach of Section 2.9;
or
4.1.15 Agree to do any of the foregoing.
SECTION 4.2 ACCESS TO INFORMATION. Prior to Closing, Sellers shall permit
Buyer and its counsel, accountants, and other representatives reasonable access
during normal business hours to all of the properties, books, contracts,
commitments, and records of Sellers and
25
to furnish such statements (financial and otherwise), records, reports,
documents, and other information concerning the operations of Sellers as Buyer
and its counsel reasonably request from time to time. To the extent requested by
Buyer, Sellers shall cause Sellers to request their accountants, attorneys, and
other representatives to cooperate with the representatives of Buyer in
connection with the right of access granted herein.
SECTION 4.3 NOTICE OF BREACH. Prior to Closing, each Party shall promptly
give notice to the other Parties of the discovery of any fact or condition or
occurrence of any event, or the failure of any event to occur, that results in a
breach of any representation or warranty of such party or a failure by it to
comply with any covenant, condition or agreement contained herein. If any such
fact or condition requires any change to the schedules prepared by Sellers,
Sellers shall promptly deliver to Buyer a supplement to such schedules
specifying such change. No disclosure pursuant to this Section 4.3 will cure any
past breach of any representation or warranty or covenant set forth herein.
SECTION 4.4 CONDITIONS; CONSENTS AND APPROVALS.
4.4.1 Following the execution of this Agreement, each Party will give
the notices to, make the filings with and use its commercially reasonable
efforts to obtain the authorizations, consents, and approvals of Governmental
Authorities, including as required (i) under the HSR Act, (ii) by the Louisiana
Attorney General or (iii) in connection with the submission of a public
referendum to the voters of the HSD, and any other third party consents or
referendums required to be obtained by such Party in order to consummate the
transactions contemplated hereby.
4.4.2 Without limiting the generality of the foregoing, (i) each Party
shall make or cause to be made the applications or filings required to be made
by it under or with respect to any Legal Requirements or by any Governmental
Authorities in connection with the authorization, execution and delivery of this
Agreement and the consummation of the other transactions contemplated hereby, as
promptly as is reasonably practicable, and in any event within thirty (30) days
after the date hereof, (ii) each Party shall pay any fees due by such Party in
connection with such applications or filings, (iii) each Party shall use its
commercially reasonable efforts to comply at the earliest practicable date with
any request under or with respect to the HSR Act or any other Legal Requirements
or by any Governmental Authorities for additional information, documents or
other materials received from the Federal Trade Commission or the Department of
Justice or any other Governmental Authorities in connection with such
applications or filings and the transactions contemplated by this Agreement and
(iv) each Party shall coordinate and cooperate with, and give due consideration
to all reasonable additions, deletions or changes suggested in connection with,
making (a) any filing made under or with respect to the HSR Act or any such
other Legal Requirements at the request of any Governmental Authorities, and (b)
any filings, conferences or other submissions related to resolving any
investigation or other inquiry by any such Governmental Authorities. Buyer shall
promptly request early termination of any applicable waiting periods under the
HSR Act.
4.4.3 Each Party shall, and shall cause its Affiliates to, furnish to
each other Party all information necessary for any such application or other
filing to be made in connection with the transactions contemplated by this
Agreement. Each Party shall promptly inform the
26
others of any communication with, and any proposed understanding, undertaking or
agreement with, any Governmental Authority regarding any such application or
filing. If a Party hereto intends to independently participate in any meeting
with any Governmental Authority in respect of any such filings, investigation or
other inquiry, then such Party shall give the others reasonable prior notice of
such meeting. The Parties shall coordinate and cooperate with one another in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any Party
in connection with all meetings, actions and proceedings under or relating to
any such application or filing.
SECTION 4.5 COMMUNICATIONS. Each Party will promptly advise each other
Party of all material, written communications which it receives from a
third-party pertaining to the transactions contemplated by this Agreement,
including such communications which it receives from Governmental Authorities.
SECTION 4.6 EXCLUSIVITY. Until the earlier of the Closing Date or the date
that this Agreement is terminated by its terms, Sellers will not, and will cause
each of their respective Affiliates, representatives, officers, employees,
directors or agents not to, directly or indirectly, (i) submit, solicit,
initiate, encourage or discuss any proposal or offer from any Person (other than
Buyer and its Affiliates in connection with the transactions contemplated
hereby) or enter into any agreement or accept any offer relating to or
consummate any (a) reorganization, liquidation, dissolution or recapitalization
of any of Sellers, (b) merger or consolidation involving any of Sellers, (c)
purchase or sale of equity securities (or any rights to acquire, or securities
convertible into or exchangeable for, any such equity securities) of all or
substantially all of the assets of any of Sellers, or (d) similar transaction or
business combination involving any of Sellers or their business or assets (each
of the foregoing transactions described in clauses (a) through (d), a "COMPANY
TRANSACTION") or (ii) furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by any
Person (other than Buyer and its Affiliates) to do or seek to do any of the
foregoing. Sellers agree to notify Buyer promptly, and in any event, within
seventy-two (72) hours, if any Person makes any bona fide proposal, offer,
inquiry or contact with respect to a Company Transaction and all material terms
with respect to such Company Transaction.
SECTION 4.7 PRE-CLOSING FINANCIAL STATEMENTS. Until the Closing Date, GRMC
and GHS shall deliver to Buyer within fifteen (15) days after the end of each
month a copy of their unaudited consolidated monthly financial statements as of
the end of such month and for the fiscal period then ended prepared in a manner
and containing information consistent with Sellers' Accounting Practices and
Procedures.
SECTION 4.8 TITLE COMMITMENT; SURVEYS; LEASE TERMINATION.
4.8.1 Within thirty (30) days after the date of this Agreement, Buyer
shall obtain and deliver to Sellers, for each parcel of Owned Real Property (i)
a Title Commitment which shall (a) be for a Title Policy in an amount equal to
such amount as the Buyer reasonably determines to be the fair market value of
each such parcel, naming Buyer as insured and committing to insure good and
marketable fee simple title to such Real Property in Buyer's name, and (b)
include the Title Company's requirements for issuing the Title Policy, and (ii)
copies of any documents appearing as exceptions to title in the Title Commitment
or as
27
requirements to the issuance of a Title Policy pursuant to the Title Commitment.
The Title Policy will (i) provide for extended coverage deleting the standard
and general printed exceptions, with any matters covered by the so-called
standard printed "survey exception" to be specifically referenced to as being
shown by the Surveys, (ii) provide for the issuance of a Mortgage Title Policy
(if requested by Buyer), and (iii) contain such endorsements as Buyer or any
lenders of Buyer shall reasonably require.
4.8.2 Not later than ninety (90) days after the date of this
Agreement, Buyer shall obtain and deliver to Sellers Surveys for each parcel of
Owned Real Property.
4.8.3 If any of the following occur (each, an "OBJECTION"):
4.8.3.1 any Title Commitment or other evidence of title or search
of the appropriate real estate records discloses that any party other than
a Seller has title to the insured estate covered by the Title Commitment;
4.8.3.2 any title exception is disclosed in Schedule B to any
Title Commitment that Buyer reasonably believes could materially and
adversely affect Buyer's use and enjoyment of the Owned Real Property
described therein, including any exceptions pertaining to Encumbrances
securing any loans that do not constitute an Assumed Liability but
excluding any exceptions (other than with respect to Section 1338 Waivers)
that Sellers certifying in writing that Sellers will cause to be deleted
from the Title Commitment on or prior to the Closing; or
4.8.3.3 any Survey discloses any matter which Buyer reasonably
believes could materially and adversely affect Buyer's use and enjoyment of
the Owned Real Property described therein;
then, Buyer shall notify Sellers in writing of any such Objections within
fifteen (15) days after the later of Buyer's receipt of the Title Commitment and
all of the Surveys (the "TITLE REVIEW DATE"). In the event that the Title
Company amends or updates the Title Commitment after the Title Review Date
(each, a "TITLE COMMITMENT UPDATE"), Buyer shall furnish Sellers with a copy of
the title commitment update and a written statement of Objections to any matter
first raised in a Title Commitment Update within ten (10) days after its receipt
of such Title Commitment Update (each, a "TITLE UPDATE REVIEW PERIOD"). Except
as otherwise set forth herein, if Buyer fails to notify Sellers in writing of
any Objections in the Title Commitment or Survey prior to the Title Review Date,
or to any matter first disclosed in a Title Commitment Update prior to the end
of the Title Update Review Period, as applicable, Buyer shall be deemed to have
approved such matters which shall be considered to be Permitted Real Property
Encumbrances as set forth in Section 4.8.6 below.
4.8.4 If Sellers receive a timely Objection in accordance with Section
4.8.3, Sellers shall use commercially reasonable efforts to cure each Objection
and take all steps required by the Title Company to eliminate each Objection as
an exception to the Title Commitment, but, subject to Section 4.8.5 below, shall
not be obligated to spend more than $50,000 in the aggregate to cure all such
Objections.
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4.8.5 Notwithstanding anything contained herein to the contrary,
Sellers shall in any event be obligated to cure any matters, whether or not the
Buyer identifies the same as an Objection, and regardless of cost to Sellers,
(i) that are mortgage or deed of trust liens or security interests against the
Owned Real Property other than taxes and assessments not yet due, or that
otherwise are Encumbrances that would be removed upon the payment of money, or
(ii) that have been placed against the Owned Real Property after the date of
this Agreement and that are not otherwise permitted pursuant to the provisions
hereof, and, except as otherwise agreed to in writing by Buyer, such matters
will not be deemed to be Permitted Real Property Encumbrances.
4.8.6 At the Closing, Sellers shall convey title to the Owned Real
Property owned by Sellers subject to no exceptions other than (collectively, the
"PERMITTED REAL PROPERTY ENCUMBRANCES"):
4.8.6.1 Matters created by or with the written consent of Buyer;
4.8.6.2 Liens for real estate taxes and assessments not yet due;
and
4.8.6.3 Any exceptions disclosed by the Title Commitments or
Surveys which are approved or deemed approved by Buyer in accordance with
this Section 4.8.
4.8.7 The cost of the Title Commitments and the Title Policy, together
with any search or abstract fees and endorsements, and any Surveys shall be
shared equally between Buyer and Sellers, with Buyer responsible for fifty
percent (50%) of all such costs and Sellers responsible for fifty percent (50%)
of all such costs.
4.8.8 Prior to or simultaneously with the Closing, Sellers shall cause
that certain Amended and Restated Lease Agreement dated as of May 1, 1996,
between HSD, as landlord, and GRMC, as tenant (the "HOSPITAL LEASE"), to be
terminated.
SECTION 4.9 CIRCLE DRIVE LOTS. Sellers shall use their commercially
reasonable efforts to obtain Section 1338 Waivers with respect to the Circle
Drive Lots prior to Closing. In the event Sellers are unable to obtain such
Section 1338 Waivers with respect to any Circle Drive Lots as of the Closing,
Buyer and HSD shall enter into a lease with respect to each such Circle Drive
Lot for a term of fifty (50) years, with the rental deemed paid in lump sum
payment as part of the Purchase Price and on other terms and conditions
otherwise reasonably acceptable to Sellers and Buyer. In such event, following
the Closing, Sellers shall file Proceedings, and shall thereafter diligently use
commercially reasonable efforts to pursue those Proceedings to a final,
nonappealable judgment, to quiet title with respect to each such Circle Drive
Lot, free and clear of any rights of an HSD Vendor to acquire title to the
applicable Circle Drive Lots or otherwise to exercise any rights of rescission,
first offer or other claim or interest in such a Circle Drive Lot under the
provisions of Section 1338 (such a final, nonappealable judgment as to HSD
Vendor rights under Section 1338 being referred to as a "SECTION 1338
JUDGMENT"). If and when there is entry of a Section 1338 Judgment with respect
to a particular Circle Drive Lot, the lease regarding such Circle Drive Lot
shall terminate upon HSD transferring title to such Circle Drive Lot to Buyer by
a Deed in substantially the form attached as Exhibit E and otherwise on the
terms set forth in Sections 5.11,
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5.12 and 5.13.3, in exchange for the payment by Buyer to HSD of the
consideration assigned to such lot on Schedule 1.5.2(d).
SECTION 4.10 INSURANCE RATINGS. From the date of this Agreement until the
Closing Date, Sellers shall take all actions reasonably requested by Buyer to
enable Buyer, at Buyer's expense, to succeed to the Workers' Compensation and
Unemployment Insurance ratings of Sellers and the business of Sellers for
insurance purposes; provided that Sellers make no representation or warranty
that Buyer will be successful in such succession. Buyer shall not be obligated
to succeed to any such rating, except as it may elect to do so.
SECTION 4.11 ANNOUNCEMENTS. No press release or public announcement related
to this Agreement or the transactions contemplated herein or, prior to the
Closing, any other announcement or communication to the employees, consultants,
customers or suppliers of Sellers, shall be issued or made by any Party hereto
without the joint approval of Buyer and Sellers, unless required by applicable
Legal Requirements (in the reasonable opinion of counsel) in which case Buyer
and Sellers, as applicable, shall have the right to review such press release,
announcement or communication prior to its issuance, distribution or
publication.
SECTION 4.12 EMPLOYEES.
4.12.1 WARN Act. At Closing, Sellers shall deliver to Buyer a list as
of the Closing Date setting forth the name of each employee of GRMC and GHS
whose employment was terminated or whose hours were reduced by 50% or more
during the 90 day period ending on the Closing Date and the reason for such
termination or reduction. As of the Closing Date, Buyer will offer to employ all
of the persons then actively employed (excluding those on disability, worker's
compensation or otherwise not actively engaged in rendering services to GRMC or
GHS) by GRMC and GHS. Without limiting the foregoing, Buyer will offer to employ
not less than such number of GRMC's and GHS's employees as shall be necessary to
avoid any potential liability for a violation of the WARN Act attendant to a
failure to notice such employees of a so-called "MASS LAYOFF" or "PLANT CLOSING"
as defined in the WARN Act. Employees, if any, terminated by GRMC or GHS during
the ninety (90) day period prior to the Closing Date (and with respect to which
Sellers have provided Buyer with written notice as of the Closing) and Buyer's
termination, if any, of any Transferred Employee within ninety (90) days
subsequent to the Closing, shall be taken into consideration and Buyer's
obligations hereunder shall extend to any WARN Act violations resulting from the
aggregation of such terminations.
4.12.2 Continuity. The employment opportunities offered to the
employees of GRMC and GHS pursuant to Section 4.12.1 above will be on
substantially the same terms and conditions (including compensation, job duties
and responsibilities) as those on which such employees are employed by Sellers
as of the Closing Date; provided, however, that (i) any offer of employment made
by Buyer pursuant to Section 4.12.1 above will not constitute any commitment,
contract or understanding (expressed or implied) of any obligation on the part
of Buyer to a post-Closing Date employment relationship of any fixed term or
duration or upon any terms or conditions other than those that Buyer may
establish pursuant to individual offers of employment; and (ii) employment
offered by Buyer is "at will" and may be terminated by Buyer or by an employee
at anytime for any reason (subject to any written commitments to the contrary
30
made by Buyer or any such employee). Those of Sellers' employees who accept such
offer of employment are referred to herein as "TRANSFERRED EMPLOYEES." Buyer
shall recognize the entire length of the prior service with GRMC and GHS for the
purposes of determining the eligibility of any Transferred Employee to
participate in and receive benefits under Buyer's vacation, severance and health
and medical benefits plans and programs (to the extent permitted by the
applicable insurers), and for purposes of determining such Transferred
Employee's eligibility to participate in and receive vesting (but not for
purposes of benefit accrual) under Buyer's pension or retirement plans.
4.12.3 Sellers' Employee Benefit Plans. Effective as of the Closing
Date, Sellers, to the extent applicable, shall (i) retain or assume each
Employee Benefit Plan and each related contract and trust and all associated
assets, liabilities, and obligations, and neither Buyer nor any of its
Affiliates shall assume or be liable for any of the obligations or liabilities
under any Employee Benefit Plan, and (ii) make or cause to be made on behalf of
all Sellers' employees all contributions due to be made under each Employee
Benefit Plan for all periods prior to the Closing Date. Additionally, Sellers,
at their sole cost and expense, shall take such actions as are necessary to
make, or cause each Employee Benefit Plan to make, appropriate distributions to
Sellers' employees in accordance with such Employee Benefit Plan and applicable
Legal Requirements.
4.12.4 COBRA. Sellers acknowledge and agree that Sellers, and not
Buyer, shall be responsible for making COBRA continuation coverage (as described
in Section 601 of ERISA) available to all persons who are classified as M & A
qualified beneficiaries (as such term is defined in Treasury Regulation Section
54.4980B-9) as a result of the sale contemplated by this Agreement. If Sellers
fail to provide the COBRA continuation coverage to any M & A qualified
beneficiary as required in the preceding sentence, Buyer shall provide such
COBRA continuation coverage; provided, that, Buyer would have been responsible
to provide such coverage under the terms of Treasury Regulation 54.4980B-9 in
the absence of the preceding sentence and provided, further, that Sellers shall
be responsible to reimburse Buyer for the amount of benefits paid on behalf of
such M & A qualified beneficiary for period of the COBRA continuation coverage
in excess of the premiums charged to such M & A qualified beneficiary for such
period.
SECTION 4.13 EFFORTS TO CLOSE. Each Party shall use its commercially
reasonable efforts to cause all of the conditions precedent to Buyer's and
Sellers' obligations set forth in Article 5 and Article 6 to be satisfied, to
the extent that such Party's action or inaction can control or influence the
satisfaction of such conditions.
SECTION 4.14 CONFIDENTIALITY. Each Party acknowledges and agrees that the
Confidentiality Agreement shall survive the execution and delivery of this
Agreement by the Parties hereto and that all information provided to the Parties
or their representatives in accordance with this Agreement shall be subject to
the terms of the Confidentiality Agreement.
SECTION 4.15 COMPLETION OF SCHEDULES. Except for Schedule 1.5.2 and
Schedule 7.1, which have been agreed to by the Parties and attached to this
Agreement, Sellers shall use their commercially reasonable efforts to complete
the Disclosure Schedule on or before August 4, 2006 (the "SCHEDULE COMPLETION
DATE"). From and after the date of this Agreement,
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Buyer agrees to use its commercially reasonable efforts to provide comments to
drafts of the individual schedules comprising the Disclosure Schedule promptly
following receipt of such drafts from Sellers. In the event the Disclosure
Schedule is not complete as of the Schedule Completion Date or the Disclosure
Schedule, as completed (other than Schedule 3.3, which is to be provided by
Buyer), is not satisfactory to Buyer, in its sole discretion, Buyer's sole
remedy shall be the right to terminate this Agreement pursuant to Section 9.1.6
hereof by delivering written notice to Sellers within five (5) days following
the Schedule Completion Date. In the event Buyer does not deliver such notice,
Buyer shall be deemed to have accepted the Disclosure Schedule.
SECTION 4.16 CERTIFICATION OF CERTAIN REPRESENTATIONS AND WARRANTIES.
Sellers shall use their commercially reasonable efforts to make a certification
to Buyer in writing as to the accuracy of the representations and warranties
contained in Section 2.26 and Section 2.27 (the "CERTIFICATION") on or before
the Schedule Completion Date. Sellers shall be deemed to have made such
representations and warranties effective as of the date the Certification is
delivered to Buyer (the "CERTIFICATION DATE"). In the event Sellers have not
made the Certification as of the Schedule Completion Date or the Certification,
as delivered, is not satisfactory to Buyer, in its sole discretion, Buyer's sole
remedy shall be the right to terminate this Agreement pursuant to Section 9.1.6
hereof by delivering written notice to Sellers within five (5) days following
the Schedule Completion Date. In the event Buyer does not deliver such notice,
Buyer shall be deemed to have accepted the representations and warranties
contained in Section 2.26 and Section 2.27 as certified by Sellers in the
Certification.
ARTICLE 5.
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate this Agreement and any other
transaction contemplated by this Agreement are, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
SECTION 5.1 REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article 2 shall be true, complete,
and correct in all material respects (except to the extent qualified by
materiality or Material Adverse Effect, in which case they shall be true and
correct in all respects) on and as of (i) the date of this Agreement and (ii)
the Closing Date (without giving effect to any supplements to the Disclosure
Schedules) with the same effect as though such representations and warranties
had been made on and as of such date, and an officer of each of Sellers shall
have certified to such effect to Buyer in writing.
SECTION 5.2 PERFORMANCE. Sellers shall have performed and complied in all
material respects (except to the extent qualified by materiality or Material
Adverse Effect, in which case, Sellers shall have performed or complied with in
all respects) with all agreements and covenants contemplated herein that are
required to be performed or complied with by Sellers prior to or at the Closing
Date, and an officer of each of Sellers shall have certified to such effect to
Buyer in writing.
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SECTION 5.3 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by Sellers in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Buyer and its counsel, and Buyer and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they reasonably may request.
SECTION 5.4 ABSENCE OF MATERIAL ADVERSE EFFECT. There shall not have been
any Material Adverse Effect since the date of this Agreement.
SECTION 5.5 APPROVALS. All necessary regulatory approvals for the
transactions contemplated by this Agreement, and all Licenses (or satisfactory
assurance from the applicable Governmental Authorities that such License will be
issued promptly following the Closing Date and be effective as of the Closing
Date) as are necessary to allow Buyer to own the Acquired Assets and to allow
the continued operation of the Acquired Businesses following the Closing, shall
have been obtained. Sellers and Buyer shall have complied with the waiting
period requirements of the HSR Act, if applicable.
SECTION 5.6 NO ACTION OR PROCEEDING. No Order of any Governmental Authority
restraining, enjoining or otherwise preventing or delaying the consummation of
this Agreement or the transactions contemplated hereby shall be outstanding, and
no Proceedings or investigations by or before, or otherwise involving, any
Governmental Authority shall be threatened or pending against Sellers or Buyer
which seeks to enjoin or prevent the consummation of the transactions
contemplated under this Agreement or which seeks material damages in connection
with the transactions contemplated hereby.
SECTION 5.7 CONSENTS. All consents, approvals and notices which are set
forth on Schedule 5.7 shall have been obtained or given.
SECTION 5.8 CREDIT AGREEMENT. All required consents, approvals and/or
waivers under that certain Amended and Restated Credit Agreement dated as of
June 22, 2004, among IASIS Healthcare LLC, a Delaware limited liability company,
IASIS Healthcare Corporation, a Delaware corporation, the Subsidiary Guarantors
(as defined therein) the Lenders (as defined therein), and Bank of America,
N.A., as Administrative Agent, L/C Issuer and Swingline Lender (each as defined
therein) shall have been obtained.
SECTION 5.9 FINANCIAL STATEMENTS. Buyer shall have received audited
consolidated financial statements of GRMC and GHS for the year ending August 31,
2006, accompanied by an unqualified report thereon issued by a public registered
accounting firm, that comply with and satisfy the representations contained in
Section 2.7 hereof.
SECTION 5.10 INSURANCE. Sellers shall have provided evidence to Buyer of a
minimum of three (3) years of tail coverage (Extended Reporting Endorsement),
for Professional Liability coverage, on events that may have occurred prior to
Closing, but are not reported until after Closing. The amount of insurance for
the Tail (Extended Reporting Endorsement) will be no less than $100,000 per
occurrence, with a deductible of not more than $75,000 per claim, for claims
made after the Closing, for the primary Professional Liability limit of
insurance coverage. The Sellers will also continue to participate and pay
surcharges to the Louisiana Patient
33
Compensation Fund for a period of no less than three (3) years from the Closing
Date, in order to continue to access the cap of $500,000 for medical malpractice
in the state of Louisiana. Sellers shall have provided tail coverage (Extended
Reporting Endorsement) on any other "claims made" coverages for a period of no
less than three (3) years. "Claims made" coverages may include, but are not
limited to, Excess Professional Liability, Employed Physicians' Medical
Malpractice coverage, Directors' & Officers' Liability, Employment Practices
Liability, and Environmental Liability. Sellers shall also name Buyer as an
Additional Insured on all tail coverage (Extended Reporting Endorsements).
SECTION 5.11 TITLE INSURANCE; SURVEYS.
5.11.1 The Title Company shall have issued and delivered to Buyer (or
shall be irrevocably committed to issue and deliver to Buyer by a currently
effective, duly "marked-up" Commitment or a pro forma policy acceptable to
Buyer) the Title Policy and the Mortgage Title Policy, if applicable, as
contemplated pursuant to Section 4.8 hereof.
5.11.2 Buyer shall have received the Surveys, which must be certified
to the Buyer and the Title Company and must show no Objections that have not
been satisfied in accordance with Section 4.8.
SECTION 5.12 ENCUMBRANCES. All Encumbrances (other than Permitted Real
Property Encumbrances and any other Encumbrances described on Schedule 2.4) with
respect to the Acquired Assets must have been released prior to or subject to
Closing.
SECTION 5.13 SUPPORTING DOCUMENTS. Buyer and its counsel shall have
received executed copies of the following documents (the "SELLERS' CLOSING
DOCUMENTS"):
5.13.1 Xxxx of Sale and Assignment. A xxxx of sale and assignment,
substantially in the form attached hereto as Exhibit C, conveying to Buyer good
title to all tangible assets which are a part of the Acquired Assets and valid
title to all intangible assets which are a part of the Acquired Assets, free and
clear of all Encumbrances (other than Permitted Real Property Encumbrances).
5.13.2 Assignment and Assumption Agreements. Assignment and assumption
agreements, substantially in the forms attached hereto as Exhibit D-1 and
Exhibit D-2 (collectively, the "ASSIGNMENT AND ASSUMPTION AGREEMENTS"): (i)
conveying to Buyer all of Sellers' right, title and interest in, to and under
the Assumed Contracts and, by one or more separate instruments, the Real
Property Leases, and (ii) pursuant to which Buyer shall assume the future
payment and performance of the Assumed Liabilities.
5.13.3 Deeds. For each interest of Sellers in the Owned Real Property,
a recordable act of cash sale (a "DEED") in the form attached hereto as Exhibit
E. Each Deed will be with a warranty of title only as to the acts of the
applicable Seller and anyone claiming by, through or under that Seller. Each
Deed will convey the applicable Owned Real Property "as is" with no
representation or warranty as to the condition or fitness of the Owned Real
Property for any purpose, except only as to any representation or warranty
specifically made in this Agreement. The Deeds will include waivers of
redhibition and quanti minoris. The legal
34
descriptions for the Owned Real Property to be included in each Deed shall
conform to the legal descriptions of the Surveys.
5.13.4 Cross Easements. One or more cross easement agreements (which
may be incorporated in the relevant Deeds), in a form reasonably acceptable to
Sellers and Buyer, providing for vehicular and pedestrian ingress and egress to
and from the portions of Parcels D and F described on Schedule 1.2.3 as Excluded
Assets and over and across the existing driveways constructed on Parcels B, D
and Lot 14 of Parcel E of the Owned Real Property for access to and from Circle
Drive and XxXxxxxx Road, in conformity with the plan of resubdivision (which
will be performed as part of the Surveys) to segregate as legal lots of record
the portions of Parcels D and F that are to be Excluded Assets.
5.13.5 FIRPTA Affidavit. A FIRPTA affidavit, executed by each of
Sellers transferring Owned Real Property, certifying each Seller's U.S. taxpayer
identification number and that each Seller is not a foreign person within the
meaning of Section 1445 of the Code (and any similar affidavit that may be
required under state law).
5.13.6 Authorizing Resolutions. Copies of duly adopted resolutions of
the boards of directors of each of Sellers and the shareholders and members of
each of Sellers, as applicable, authorizing and approving Sellers' performance
of the transactions contemplated hereby and the execution and delivery of this
Agreement and Sellers' Closing Documents, certified by the appropriate officer
or officers of each Seller as true and in full force and effect as of the
Closing.
5.13.7 Certificate of Good Standing. A certificate of good standing of
each of GRMC and GHS from the Secretary of State of Louisiana dated no earlier
than two weeks prior to the Closing.
5.13.8 Articles of Incorporation. The articles of incorporation of
GRMC and GHS, certified as of a recent date by the Secretary of State of
Louisiana, and a copy of the enabling legislation and ordinances of the HSD,
certified as of a recent date by the Secretary of the HSD.
5.13.9 Bylaws. The bylaws or similar governing documents of each
Seller.
5.13.10 Secretary's Certificate. A certificate of the Secretary or an
Assistant Secretary of each Seller dated as of the Closing Date and certifying:
(i) that the documents delivered under Sections 5.13.8 and 5.13.9 are true and
complete copies of the organizational documents of each Seller as in effect on
the date of such certification; (ii) that attached thereto is a true and
complete copy of all resolutions adopted by the Board of Directors or other
governing body and the members and shareholders, as applicable, of each Seller
authorizing the execution, delivery and performance of this Agreement and all
transactions contemplated by this Agreement and that all such resolutions are in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; (iii) that the articles of
incorporation, charter or enabling legislation have not been amended since the
date of the last amendment referred to in the document(s) delivered pursuant to
Section 5.13.8 above; and (iv) to the incumbency and specimen signature of each
officer of Sellers
35
executing this Agreement or the other documents to be delivered by Sellers
pursuant to this Agreement and a certification by another officer of each
respective Seller as to the incumbency and signature of the officer signing the
certificate referred to in this Section.
SECTION 5.14 SELLER'S CLOSING DELIVERABLES. Buyer and its counsel shall
have received executed copies of the following documents:
5.14.1 Estoppel Letters. Estoppel letters in a form reasonably
satisfactory to Buyer from (i) each landlord party to any Real Property Lease
under which any Seller leases or subleases any Real Property from any such
landlord party, and (ii) each tenant party to any Real Property Lease under
which any Seller leases or subleases any Real Property to such tenant party.
5.14.2 Pay-Off Letters; Releases. (i) Pay-off letters from all secured
lenders of any of Sellers listed on Schedule 5.14.2 (the "SECURED LENDERS") in a
form reasonably acceptable to Buyer and the Title Company providing for, upon
the payment of all outstanding amounts owed by each Seller to each of the
Secured Lenders at Closing, the termination of all security interests held by
the Secured Lenders with respect to the Acquired Assets, executed by the Secured
Lenders, and (ii) UCC lien, litigation and tax searches showing all Encumbrances
on the Acquired Assets, accompanied by fully executed UCC termination statements
or other releases of all Encumbrances that are not Permitted Real Property
Encumbrances.
5.14.3 Counsel Opinion. The opinion of Sellers' counsel dated as of
the Closing Date, in form and substance reasonably satisfactory to Buyer,
covering the following items related to Sellers, as applicable: (i) existence
and good standing, (ii) authority to execute, deliver and perform this Agreement
and the other agreements contemplated hereby, (iii) authorization of this
Agreement and the other agreements contemplated hereby, (iv) enforceability of
this Agreement and the other agreements contemplated hereby and (v) consents,
approvals, authorizations or other actions by or filings with Governmental
Authorities required in order to consummate the transactions contemplated
hereby.
5.14.4 Hospital Lease Termination. Evidence, reasonably satisfactory
to Buyer, of the termination of the Hospital Lease.
5.14.5 Section 1338 Waivers. (a) Except as to the Circle Drive Lots:
(i)(A) corrections or other modifications to the acts of sale by which the HSD
acquired the HSD Owned Real Property, or other waivers, from all HSD Vendors by
which all HSD Vendors waive and stipulate that they have no rights with respect
to the applicable HSD Owned Real Property under Section 1338, in each case in a
form acceptable to Buyer and the Title Company; and (B) such title records,
court records, certificates and other information as Buyer or the Title Company
may reasonably require to evidence that the proper Persons are executing those
corrections, modifications or waivers as or on behalf of the relevant HSD
Vendors; or (ii) if despite their commercially reasonable efforts, Sellers are
unable to obtain all required corrections, waivers or modifications described in
clause (i) as to any parcel of HSD Owned Real Property or any interest therein,
such other final court judgments, opinions of Governmental Authorities,
instruments or certificates as may be acceptable to Buyer and the Title Company
to evidence that HSD Vendors do not have rights with respect to the applicable
HSD Owned Real Property under
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Section 1338 and that the transfer of the HSD Owned Real Property by Sellers to
Buyer is in compliance with Section 1338 (the items in clauses (i) and (ii)
being, collectively, the "SECTION 1338 WAIVERS"). Sellers shall use commercially
reasonable efforts to obtain Section 1338 Waivers as to all of the HSD Owned
Real Property. Sellers agree to keep Buyer apprised of their progress in
obtaining the Section 1338 Waivers; and Buyer will use commercially reasonable
efforts to respond promptly, and to cause the Title Company to respond promptly,
as to whether or not draft documents Sellers propose to have signed, or other
actions Sellers propose to take, will satisfy the conditions of this Section
5.14.5 for acceptable Section 1338 Waivers.
(b) If the Section 1338 Waivers are not obtained for all or any part of
such HSD Owned Real Property other than the Circle Drive Lots (for ease of
reference, the "RELEVANT PARCELS"), then, Buyer shall have the option to be
exercised in its sole and absolute discretion to terminate this Agreement
pursuant to Section 9.1.5 herein, or to enter into a ground lease for the
Relevant Parcels at the Closing, with HSD, as lessor, and Buyer, as lessee, for
a term of 50 years, with the rental considered to be prepaid in one lump sum
payment as a part of the Purchase Price and on such other terms and conditions
otherwise acceptable to Sellers and Buyer. In the event Buyer opts to accept a
ground lease for the Relevant Parcels, Sellers shall, promptly following the
Closing, file Proceedings, and shall thereafter diligently use commercially
reasonable efforts to pursue those Proceedings to a Section 1338 Judgment. If
and when there is entry of a Section 1338 Judgment with respect to a particular
Relevant Parcel, the lease regarding such Relevant Parcel shall terminate upon
HSD transferring title to such Relevant Parcel to Buyer by a Deed in
substantially the form attached as Exhibit E and otherwise on the terms set
forth in Sections 5.11, 5.12 and 5.13.3.
5.14.6 Real Property Transfers. Such documents as the Title Company
reasonably and customarily requires in connection with the issuance of a
standard title insurance policy, including a standard title insurance agreement
or affidavit necessary to cause the Title Company to delete all standard printed
exceptions from the Title Policy (other than taxes, if any, for the current year
not yet due and payable) certifying, among other things, as to the absence of
and providing for indemnity by Sellers from mechanic's and materialmen's liens
and tenants and parties in possession and Sellers' authority documents and legal
existence and good standing certificates.
5.14.7 Section 1338 Waiver or Leases for Circle Drive Lots. With
respect to each Circle Drive Lot, either (i) Buyer shall have received a Section
1338 Waiver or (ii) Buyer and Seller shall have entered into a lease with
respect to such Circle Drive Lot as contemplated by Section 4.9.
5.14.8 Other Documents. Such additional supporting documents as Buyer
or its counsel reasonably may request in order to further evidence the
transactions contemplated hereby and vest in Buyer all rights, title and
interest in the Acquired Assets.
SECTION 5.15 MEDICAL STAFF. The Hospital shall not have suffered any
material adverse change in the composition of its medical staff.
SECTION 5.16 OTHER CONDITIONS. The conditions contained in Schedule 5.16
shall have been satisfied.
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ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS OF SELLERS
The obligations of Sellers to consummate this Agreement and any other
transaction contemplated by this Agreement are, at their option, subject to the
satisfaction, on or before the Closing Date, of the following conditions.
SECTION 6.1 REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article 3 shall be true, complete
and correct in all material respects (except to the extent qualified by
materiality or Material Adverse Effect, in which case they shall be true and
correct in all respects) on and as of the date of this Agreement and the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date, and an officer of Buyer shall have certified to
such effect to Sellers.
SECTION 6.2 PERFORMANCE. Buyer shall have performed and complied with in
all material respects (except to the extent qualified by materiality or Material
Adverse Effect in which case Buyers shall have performed or complied in all
respects) with all agreements contemplated herein that are required to be
performed or complied with by Buyer prior to or at the Closing Date, and an
officer of Buyer shall have certified to such effect to Sellers in writing.
SECTION 6.3 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by Buyer in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Sellers and their counsel, and Sellers and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.
SECTION 6.4 APPROVALS. All necessary regulatory and other governmental
approvals for the transactions contemplated by this Agreement (including but not
limited to those approvals referenced in Section 2.3 and in Schedule 2.3) shall
have been obtained. Sellers and Buyer shall have complied with the waiting
period requirements of the HSR Act, if applicable.
SECTION 6.5 NO ACTION OR PROCEEDING. No Order of any Governmental Authority
restraining, enjoining or otherwise preventing or delaying the consummation of
this Agreement or the transactions contemplated hereby shall be outstanding, and
no Proceeding or investigations by or before, or otherwise involving, any
Governmental Authority shall be threatened or pending against any Seller or
Buyer which seeks to enjoin or prevent the consummation of the transactions
contemplated under this Agreement or which seeks material damages in connection
with the transactions contemplated hereby.
SECTION 6.6 SUPPORTING DOCUMENTS. Sellers and their counsel shall have
received copies of the following documents (the "BUYER'S CLOSING DOCUMENTS"):
6.6.1 Assignment and Assumption Agreements. The Assignment and
Assumption Agreements, pursuant to which Buyer shall assume the future payment
and performance of the Assumed Liabilities.
6.6.2 Deeds. The Deeds, duly executed by Buyer.
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6.6.3 Authorizing Resolutions. Copies of resolutions duly adopted by
the board of directors of the general partner of Buyer authorizing and approving
Buyer's performance of the transactions contemplated hereby and the execution
and delivery of this Agreement and the Buyer's Closing Documents, certified by
the appropriate officer or officers of the general partner of Buyer as true and
in full force and effect as of the Closing Date.
6.6.4 Certificate of Good Standing. A certificate of good standing of
Buyer and IASIS from the Secretary of State of the State of Delaware, and a
certificate of good standing of Buyer from the Secretary of State of the State
of Louisiana, each dated no earlier than two weeks prior to the Closing.
6.6.5 Secretary's Certificate. A certificate of the Secretary or an
Assistant Secretary of Buyer dated as of the Closing Date and certifying: (i)
that attached thereto is a true and complete copy of all resolutions adopted by
the Board of Directors of the General Partner of Buyer authorizing the
execution, delivery, and performance of this Agreement and all transactions
contemplated by this Agreement and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; and (ii) to the incumbency and
specimen signature of each officer of the General Partner of Buyer executing
this Agreement or the other documents to be delivered by Buyer pursuant to this
Agreement and a certification by another officer of the General Partner of Buyer
as to the incumbency and signature of the officer signing the certificate
referred to in this Section.
SECTION 6.7 BUYER'S CLOSING DELIVERABLES. Sellers and their counsel shall
have received executed copies of the following documents:
6.7.1 Counsel Opinion. The opinion of Buyer's counsel, dated as of the
Closing Date, in form and substance reasonably satisfactory to Sellers, covering
the following items related to Buyer and IASIS, as applicable: (i) existence and
good standing, (ii) authority to execute, deliver and perform this Agreement and
the other agreements contemplated hereby, (iii) authorization of this Agreement
and the other agreements contemplated hereby, (iv) enforceability of this
Agreement and the other agreements contemplated hereby and (v) consents,
approvals, authorizations or other actions by or filings with Governmental
Authorities required in order to consummate the transactions contemplated
hereby.
6.7.2 Other Documents. Such additional supporting documents as Sellers
or their counsel reasonably may request in order to further evidence the
transactions contemplated hereby and Buyer's assumption of the Assumed
Liabilities.
ARTICLE 7.
ADDITIONAL AGREEMENTS
SECTION 7.1 POST CLOSING OBLIGATIONS OF BUYER. In addition to those
post-closing obligations as are expressly or by clear implication provided for
elsewhere in this Agreement, Buyer shall have the post-closing obligations
provided for in Schedule 7.1; provided, however, that Buyer's obligations under
paragraphs (a) and (e)(i) of Schedule 7.1 shall be excused to the extent that
there occurs an event or circumstance after the Closing, beyond the
39
reasonable control of Buyer, that has, or is reasonably likely to have, a
material adverse effect on the business, assets, results of operations or
financial condition of the businesses of Sellers acquired by Buyer (including
any such event or circumstances arising from changes in reimbursement rates,
access to managed care contracts, the ability to recruit and retain physicians
or the failure of Buyer to obtain after reasonable diligence necessary
certificates of need or other Licenses in connection with the operation of such
business) and that renders performance impracticable or substantially frustrates
the purpose of the obligations.
SECTION 7.2 GUARANTY BY IASIS. Subject to the terms and conditions of this
Agreement, IASIS hereby unconditionally and absolutely guarantees the prompt
performance and observation by Buyer of the obligations, covenants and
agreements of Buyer arising out of, connected with, or related to this
Agreement, as it may be amended from time to time. The obligation of IASIS under
this Section 7.2 is a continuing guaranty and shall remain in effect, and the
obligations of IASIS shall not be affected, modified or impaired upon the
happening from time to time of any of the following events, whether or not with
notice to or consent of IASIS:
7.2.1 The compromise, settlement, release, change, modification,
amendment (except to the extent of such compromise, settlement release, change,
modification or amendment) of any or all of the obligations, duties, covenants
or agreements of any Party under this Agreement or any ancillary documents
hereto; or
7.2.2 The extension of the time for performance or payment of money
pursuant to this Agreement, or of the time for performance of any other
obligations, covenants or agreements under or arising out of this Agreement or
any ancillary documents hereto or the extension or the renewal thereof.
Subject to the terms and conditions hereof, IASIS waives (i) any and all
defenses specifically available to a guarantor (other than non-performance of
any of Sellers' obligations hereunder and other than performance in full by
Buyer), and (ii) any notices, including, without limitation, any notice of any
amendment of this Agreement or waiver or other similar action granted pursuant
to this Agreement.
SECTION 7.3 NON-COMPETITION/NON-SOLICITATION/RIGHT OF FIRST REFUSAL.
7.3.1 In consideration of the Purchase Price to be received under this
Agreement, each Seller agrees that, for a period of five (5) years after the
Closing Date (the "RESTRICTED PERIOD"), neither any Seller nor any of such
Seller's Affiliates shall, directly or indirectly, do any of the following:
7.3.1.1 engage in, or invest in, own, lease, manage, operate, or
control any person engaged in any business whose products or activities
compete in whole or in part with the Competing Business within the
Restricted Area; or
7.3.1.2 without the prior written consent of Buyer, hire or
attempt to hire, retain, induce or attempt to induce any Transferred
Employee to leave the employ of Buyer or its Affiliates, or in any way
interfere with the relationship between Buyer or its Affiliates and any
Transferred Employee, or solicit, offer employment to, or otherwise
40
engage as an employee, independent contractor, or otherwise, any
Transferred Employee (with the exception of the employees currently working
at the Wellness Center);
7.3.2 For purposes hereof, (i) "COMPETING BUSINESS" shall mean the
ownership, leasing, management, operation or control of any acute care hospital,
specialty hospital, comprehensive rehabilitation facility, rehabilitation
agency, diagnostic imaging center, outpatient diagnostic catheterization
facility, inpatient or outpatient psychiatric or substance abuse facility,
ambulatory or other type of surgery center, nursing home, skilled nursing
facility, assisted living facility or home health agency; provided, however,
that the following shall not constitute a Competing Business: urgent care
clinics, health screenings, charity care services, educational programs, any
programs offered through GRMC's Wellness Center as of the date of this Agreement
and any programs substantially similar to such programs (collectively,
"PERMISSIBLE CHARITABLE PROGRAMS"), continued ownership of an interest held
before the date of this Agreement in any Seller JV Entities not transferred
hereunder, so long as Sellers use reasonable efforts to liquidate such interests
as soon as practicable, and, subject to the restrictions of Section 8.8, the
provision of financial support to a tax-exempt, non-profit institution to
provide Permissible Charitable Programs, and charitable grants to programs of
social welfare operated by tax-exempt, non-profit institutions for the aid and
support of the needy; and (ii) "RESTRICTED AREA" shall mean the following
parishes in the State of Louisiana: Ouachita and all parishes immediately
contiguous thereto, which include Lincoln, Union, Xxxxxxxxx, Richland, Xxxxxxxx
and Xxxxxxx.
7.3.3 Each Seller acknowledges that all of the foregoing provisions
are reasonable and are necessary to protect and preserve the value of the
Acquired Businesses, prevent any unfair advantage being conferred on Sellers and
induce Buyer to enter into this transaction, allowing HSD to continue to fulfill
its mission of causing quality healthcare to be delivered to the residents of
Ouachita Parish. If any of the covenants set forth in this Section 7.3 are held
to be unreasonable, arbitrary, or against public policy, the restrictive time
period herein will be deemed to be the longest period permissible by law under
the circumstances and the restrictive geographical area herein will be deemed to
comprise the largest territory permissible by law under the circumstances.
7.3.4 If, during the Restricted Period, the covenant contained in
Section 7.3.1 is determined to be unenforceable with respect to any portion of
the Restricted Period or in any other respect, Buyer and Sellers shall enter
into an Independent Contractor Agreement substantially in the form of Exhibit F,
the term of which shall be the remainder of the Restricted Period.
SECTION 7.4 RETENTION AND ACCESS TO RECORDS. After the Closing Date, Buyer
shall retain the Transferred Records for a period consistent with Buyer's record
retention policies and practices, and in any event for at least the minimum
period for which such Transferred Records are required to be retained under
applicable Legal Requirements. Buyer also shall provide Sellers and their
representatives reasonable access thereto, during normal business hours and on
reasonable prior notice, to enable them to prepare financial statements or tax
returns or deal with tax audits and any other reasonable business purpose. After
the Closing Date, GRMC shall provide Buyer and its representatives reasonable
access to Excluded Records during normal
41
business hours and on reasonable prior notice, for any reasonable business
purpose specified by Buyer in such notice.
SECTION 7.5 PAYMENT OF EXCLUDED LIABILITIES. Following the Closing, Sellers
shall be responsible to pay, or make reasonably estimated adequate provision for
the payment, in full of all of their respective Excluded Liabilities to the
extent Sellers are liable therefor, subject to the right of Sellers to contest,
defend against and compromise such liabilities.
SECTION 7.6 MISDIRECTED PAYMENTS. Sellers shall promptly remit to Buyer any
monies received by Sellers after Closing constituting or in respect of the
Acquired Assets and Assumed Liabilities. Buyer shall promptly remit to Sellers
any monies received by Buyer after Closing constituting or in respect of the
Excluded Assets and Excluded Liabilities. If any Person, including but not
limited to any Government Reimbursement Program, determines that funds
previously paid or credited to the business of Sellers acquired by Buyer in
respect of services rendered prior to the Closing Date have resulted in an
overpayment or must be repaid, Sellers (other than the HSD) shall be responsible
for any repayment of said monies that is due (and the defense of such actions).
If Buyer suffers any deduction to or offset against amounts due Buyer in
connection therewith, Sellers shall promptly pay to Buyer the amounts so
deducted or offset upon demand and receipt of documentation substantiating the
nature and amount of the deduction or offset and that it is attributable to an
overpayment made to Sellers.
SECTION 7.7 INSURANCE MATTERS. From and after the Closing Date, GRMC and
GHS shall maintain in full force and effect, until the expiration of the
applicable statute of limitations, the insurance policies listed on Schedule
2.15 with respect to occurrences prior to the Closing Date at any of the
Facilities or otherwise with respect to the business of Sellers acquired by
Buyer. Upon Buyer's request from time to time after the Closing Date, but no
more frequently than bi-annually, GRMC and GHS shall provide Buyer with a
reasonably detailed claims history with respect to claims made under such
insurance policies.
SECTION 7.8 SELLERS' COST REPORTS. GRMC and GHS, at their sole expense,
will prepare and timely file all cost reports relating to their operations for
periods through the Closing Date or required as a result of the consummation of
the transactions contemplated by this Agreement, including final cost reports
for the Facilities (collectively, the "SELLERS' COST REPORTS"). Sellers' Cost
Reports will be filed to include amounts received and receivable, as required by
applicable Government Reimbursement Programs. Buyer shall have the right to
review and approve Sellers' Cost Reports prior to filing, which approval shall
not be unreasonably withheld. Buyer will forward promptly to Sellers any
correspondence relating to Sellers' Cost Reports. Sellers shall retain the
originals of Sellers' Cost Reports. GRMC and GHS will furnish copies of Sellers'
Cost Reports to Buyer upon Buyer's request and allow Buyer reasonable access to
such documents.
SECTION 7.9 AUDITED STATEMENTS COOPERATION. Sellers shall cooperate with
Buyer in Buyer's efforts to obtain the consent of Ernst & Young, LLP, and other
accounting firms, as may be required, in order for Buyer to include GRMC's and
GHS's audited financial statements in any registration statement or filing under
the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933,
as amended.
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SECTION 7.10 COOPERATION ON TAX MATTERS. Following the Closing, the Parties
shall cooperate fully with each other and shall make available to the other, as
reasonably requested and at the expense of the requesting Party, and to any
taxing authority, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of Sellers for all periods on or prior
to the Closing and any information which may be relevant to determining the
amount payable under this Agreement, and shall preserve all such information,
records and documents (to the extent a part of the Acquired Assets delivered to
Buyer at Closing) at least until the expiration of any applicable statute of
limitations or extensions thereof. Sellers shall make available to Buyer the
records of individual wages of all employees, as well as copies of state
unemployment Tax returns, to the extent necessary for Buyer to verify future
unemployment Tax rates and to calculate the correct taxable payroll for the
remainder of the calendar year in which the transaction occurs. Sellers also
shall file terminating Forms W-2 and Forms 1099 with respect to all periods
ending prior to the Closing Date, as appropriate.
SECTION 7.11 USE OF CONTROLLED SUBSTANCE PERMITS. To the extent permitted
by Legal Requirements, Buyer shall have the right, for a period not to exceed
one hundred eighty (180) days following the Closing, to operate under the
Licenses of GRMC and GHS relating to controlled substances and the operations of
pharmacies, until Buyer is able to obtain such permits for itself; provided,
however, that nothing herein shall require Sellers to renew any Licenses which
may expire during such one hundred eighty (180) day period. GRMC and GHS shall
execute and deliver to Buyer the special limited powers of attorney
substantially in the form and substance of Exhibit G. Buyer acknowledges that it
shall apply for all such permits as soon as reasonably possible before and after
the Closing and shall diligently pursue such applications. Buyer shall indemnify
and hold Sellers harmless from and against all Losses actually incurred, paid or
required under penalty of any Legal Requirement to be paid by Sellers resulting
in whole or in part from the use of such Licenses by Buyer. Buyer's
indemnification obligation hereunder is separate and apart from, and in addition
to, its indemnification obligations under Article 8.
SECTION 7.12 LITIGATION COOPERATION. Each of Sellers, on the one hand, and
Buyer, on the other hand, shall cooperate with the other, at the requesting
Party's expense (but including only out-of-pocket expenses to third parties,
photocopying and delivery costs and not the costs incurred by any Party for the
wages or other benefits paid to its officers, directors or employees), in
furnishing reasonably available information, testimony and other assistance in
connection with any actions, Tax or cost report audits, proceedings,
arrangements or disputes involving any of the Parties hereto (other than in
connection with disputes between the Parties hereto) and relating to the
Acquired Assets or the transactions contemplated hereby, including, without
limitation, arranging discussions with, and the calling as witnesses of,
officers, directors, employees, agents and representatives of any Party.
SECTION 7.13 CONFIDENTIALITY. The Parties hereto recognize and agree that
all information, instruments, documents and details concerning the businesses of
Buyer and Sellers prior to the Closing are strictly confidential, and Sellers
and Buyer expressly covenant and agree with each other that they will not, nor
will they allow any of their respective officers, directors, employees or agents
(including professional advisors) to, reproduce, distribute or disclose any
matters relating to the business of the other prior to the Closing or relating
to this Agreement, its negotiation, terms, provisions or conditions, including
Purchase Price (collectively, the "CONFIDENTIAL INFORMATION"), except for
disclosure to their respective professional advisors
43
(who shall agree not to reproduce, distribute or disclose the same) which is
reasonably necessary to effectuate the transactions contemplated hereby and in a
manner consistent with the provisions of Agreement and except as provided in
this Section 7.13. Notwithstanding the foregoing, (a) nothing contained in this
Section 7.13 shall prohibit either Buyer or Sellers from disclosing the
transactions contemplated hereby to Governmental Authorities to the extent
reasonably necessary to obtain the Licenses, participations and accreditations
contemplated hereby or any other governmental approvals as may be required for
the transactions contemplated hereby, (b) Buyer and Sellers shall be entitled to
disclose to third parties such information regarding the transactions
contemplated hereby as is necessary to obtain such third parties' consents to
the assignment of any Assumed Contract, and (c) each Party shall be entitled to
disclose any information relating to a breach by another Party of any of its
obligations under this Agreement. Without limiting the generality of the
foregoing, except as specifically permitted by this Section 7.13, no public
announcement or other disclosure of the proposed sale or acquisition of the
Acquired Assets or of this Agreement or its contents shall be made by or on
behalf of either Buyer or Sellers without the prior written consent of the other
Parties and such other Parties' prior approval of the form and content of the
same, which consent and approval shall not be unreasonably withheld or delayed.
Except as specifically permitted by this Section 7.13, each Party shall keep all
Confidential Information obtained from any other Party either before or after
the date of this Agreement confidential, and no Party shall reveal such
information to, nor produce copies of any such written information for, any
Person outside its management group or its professional advisors without the
prior written consent of the other Parties, unless the disclosing Party is
compelled to disclose such information by judicial or administrative process or
by any other requirements of Legal Requirements. If the sale contemplated by
this Agreement should fail to close for any reason, each Party other than the
HSD shall return to the others as soon as possible all originals and copies of
written information provided to such Party by or on behalf of such other Parties
as well as all summaries, analyses, notes, and other embodiments of such
information, and none of such information shall be used by any Party, or its
employees, agents or representatives, in the business operations of any Person.
Notwithstanding the foregoing, each Party's obligations under this Section 7.13
shall not apply to any information or document which is or becomes available to
the public (other than as a result of a disclosure by any other Party in
violation of this Agreement or other obligation of confidentiality under which
such information may be held) or becomes available to the Party on a
non-confidential basis from a source other than another Party or its officers,
directors, employees or agents. The Parties' obligations under this Section 7.13
shall survive the termination of this Agreement or the Closing and shall be
subject to all applicable Legal Requirements.
SECTION 7.14 FURTHER DOCUMENTATION OR ACTION. At the request of a Party,
the other Party or Parties shall execute such reasonably necessary additional
instruments and take such reasonably necessary additional actions as are
consistent with this Agreement with the requesting Party bearing all costs and
expenses related thereto. In addition and from time to time after Closing,
Sellers shall execute and deliver such other reasonably necessary instruments of
conveyance and transfer, and take such other reasonably necessary actions as
Buyer reasonably may request, more effectively to convey and transfer full
right, title and interest to, vest in, and place Buyer in legal and actual
possession of, the Acquired Assets in a manner consistent with this Agreement
with Buyer bearing or reimbursing Sellers for all expenses and costs associated
therewith. Notwithstanding anything contained in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any Acquired Asset,
or assume any Assumed
44
Liability, if the attempted assignment or assumption of the same, as a result of
the absence of a consent or authorization of a third party, would constitute a
breach or default under any lease, agreement or commitment or would in any way
adversely affect the rights, or increase the obligations, of Buyer or Sellers
with respect thereto. If any such consent or authorization is not obtained, or
if an attempted assignment or assumption would be ineffective or would adversely
affect the rights or increase the obligations of Sellers or Buyer with respect
to any such lease, agreement or commitment, so that Buyer would not, in fact,
receive all such rights, or assume the obligations, of Sellers with respect
thereto as they exist prior to such attempted assignment or assumption, then
Sellers and Buyer shall enter into such reasonable cooperative arrangements as
may be reasonably acceptable to both Buyer and Sellers (including, without
limitation, sublease, agency, indemnity or payment arrangements and enforcement
at the cost and for the benefit of Buyer of any and all rights of Sellers
against an involved third party) to provide for Buyer the benefits of such
Acquired Asset or to relieve Sellers from the obligations of such Assumed
Liability, and any transfer or assignment to Buyer by Sellers of any such
Acquired Asset, or any assumption by Buyer of any such Assumed Liability, which
shall require such consent or authorization of a third party that is not
obtained shall be made subject to such consent or authorization being obtained.
Additionally, both Buyer and Sellers shall cooperate and provide reasonable
assistance in any payroll transition.
SECTION 7.15 JOINDER. During the period between the Closing Date and the
fifth anniversary thereof (the "SELLER NON-DISTRIBUTION PERIOD") (provided, that
if there are any unresolved indemnification claims of Buyer under Article 8 as
of the end of the Seller Non-Distribution Period, the Seller Non-Distribution
Period will be extended until such time that any such claims are resolved
pursuant to Article 8), (i) no Seller shall dissolve, and (ii) Sellers shall not
distribute, contribute or otherwise transfer (whether by asset sale, merger,
consolidation, conversion or otherwise) from the net proceeds (after defeasance
of the HSD's outstanding bonds and payment of Excluded Liabilities and payment
for the tail coverage described in Section 5.10) from the sale of the Acquired
Assets pursuant to this Agreement an amount which when added to all
distributions, contributions and other transfers of any Seller, exceeds (i) for
two (2) years following the Closing Date, $5 million and (ii) for five (5) years
following the Closing Date, $10 million, in each case in the aggregate, to any
other Affiliate of Sellers (other than any transfer to any Seller a Party to
this Agreement), or any other Person (each, a "NET PROCEEDS RECIPIENT PARTY");
provided, however, that subject to Section 8.8, each Seller may distribute,
contribute or otherwise transfer such net proceeds during the Seller
Non-Distribution Period to any Net Proceeds Recipient Party in the event that,
immediately prior to or simultaneously with such distribution, contribution or
transfer, such Net Proceeds Recipient Party is permitted under applicable Legal
Requirements to perform all obligations of a Seller under this Agreement and
joins this Agreement and becomes a Party hereto as a Seller for all purposes of
this Agreement by executing and entering into a joinder agreement in
substantially the form attached as Exhibit H-2.
SECTION 7.16 FEES AND TAXES. Buyer shall pay all recording costs, and
Sellers shall pay any transfer Taxes, payable in connection with the transfer of
the Owned Real Property and other Acquired Assets conveyed to Buyer.
SECTION 7.17 CASUALTY. If any part of the Acquired Assets are damaged, lost
or destroyed (whether by fire, theft, vandalism or other casualty) in whole or
in part on or prior to
45
the Closing and the fair market value of such damage or destruction exceeds
(according to Sellers' reasonable estimate) $10,000, Sellers shall promptly
notify Buyer of the same; and if the fair market value of such damage or
destruction exceeds $10,000 but does not (according to Sellers' reasonable
estimate) exceed $5,000,000, Sellers shall, at Sellers' option, either (a)
reduce the Purchase Price by the fair market value of the assets destroyed as
reasonably determined by Sellers, such value to be determined as of the day
immediately prior to such destruction or, as the case may be, by the estimated
cost to restore damaged goods, (b) provided that the insurance proceeds are
obtainable without delay and are, in Seller's reasonable judgment, sufficient to
fully restore the damaged assets, upon the Closing, transfer the insurance
proceeds or the rights to insurance proceeds of applicable insurance to Buyer
and Buyer may restore the improvements, or (c) repair or restore (or cause to be
repaired or restored) such damaged or destroyed improvements. If any part of the
Acquired Assets are damaged, lost or destroyed (whether by fire, theft,
vandalism or other cause or casualty) in whole or in part prior to the Closing
and the fair market value of such damages exceeds (according to Buyer's
reasonable estimate) $5,000,000, Buyer may elect either to (x) require Seller to
transfer as much of the proceeds (or the right to the proceeds) of applicable
insurance to Buyer as is required for Buyer to restore the improvements and
Buyer shall thereafter restore the improvements or (y) terminate this Agreement.
SECTION 7.18 CONDEMNATION. From the date hereof and until the Closing, in
the event that any material portion of the Owned Real Property to be transferred
to Buyer hereunder is taken, reduced or restricted by any pending or threatened
condemnation or eminent domain proceeding or otherwise, then Buyer, at its sole
option, may elect to terminate this Agreement. The Parties agree that for
purposes of this Section, the expropriation proceedings that are pending as of
the date hereof with respect to the Owned Real Property shall not be deemed to
affect a "material portion of the Owned Real Property."
SECTION 7.19 TRANSITION ASSISTANCE. For a period of up to one year
following the Closing, Buyer shall make available to Sellers, as reasonably
requested by Sellers, the services of relevant Hospital management employees to
assist Sellers by answering questions relating to the operations of the Hospital
prior to Closing and performing non-material administrative tasks to assist
Sellers in transitioning from the operation of the Hospital to the operation of
a charitable foundation; provided, however, that the requested assistance of
such employees shall not unreasonably interfere with such employees'
responsibilities on behalf of Buyer.
SECTION 7.20 PRESERVATION OF EXISTING XXXXX AND TRUSTS. The Parties
acknowledge and agree that gifts and bequests made after the Closing naming
Glenwood Regional Medical Center, or any variation thereof, as beneficiary shall
be presumed the property of GRMC and not of Buyer, unless confirmed in writing
to the contrary. Buyer shall give Sellers prompt written notice of any such
gifts and bequests that Buyer receives or of which Buyer becomes aware.
SECTION 7.21 OWNERSHIP OF LINCOLN HEALTH SYSTEM, INC. In the event that
following the Closing, the ownership interest of GRMC in Lincoln Health System,
Inc. ("LHSI") is proposed to be transferred, in whole or in part, to a third
party, which shall include a sale of substantially all of the assets of LHSI in
a transaction in which GRMC receives a distribution of
46
net proceeds from LHSI, Sellers shall negotiate in good faith to obtain a fair
market value for such ownership interest or portion thereof. In the event such
ownership interest or portion thereof is transferred to a third party following
the Closing for consideration in excess of $1,500,000, or the proportionate
amount thereof with respect to the transfer of less than all of such ownership
interest, such excess amount shall be paid to Buyer within five (5) days
following the consummation of such transaction.
ARTICLE 8.
INDEMNIFICATION
SECTION 8.1 SELLERS' INDEMNIFICATION. Sellers, jointly and severally, agree
to indemnify and hold Buyer and its officers, directors, partners, members,
employees, agents, representatives, successors and permitted assigns
(collectively, the "BUYER INDEMNIFIED PARTIES") harmless from and against any
and all liabilities, losses, damages, diminution in value, costs, and expenses
(including reasonable attorneys' fees) (collectively, the "LOSSES") incurred or
sustained by the Buyer Indemnified Parties, as a result of, in connection with
or in relation to:
(a) any breach by any Seller of any representation and warranty
of Sellers contained in this Agreement or any other document or certificate
delivered by or on behalf of Sellers hereunder at or prior to the Closing
(subject to any and all exceptions set forth in the Disclosure Schedule or,
with respect to the Representations and Warranties made as of Closing, any
supplement thereto delivered to the Buyer at or prior to Closing);
(b) any nonfulfillment or breach of any covenant or agreement
contained in this Agreement to be performed or complied with by any Seller;
and
(c) any obligation, liability or claim relating to (i) the
Excluded Liabilities or the Excluded Assets, or (ii) the ownership or
operation of the Acquired Assets on or prior to the Closing (excluding the
Assumed Liabilities).
SECTION 8.2 BUYER'S INDEMNIFICATION. Buyer agrees to indemnify and hold
Sellers and their officers, directors, partners, members, employees, agents,
representatives, successors and permitted assigns (collectively, the "SELLER
INDEMNIFIED PARTIES") harmless from and against any and all Losses incurred or
sustained by the Seller Indemnified Parties as a result of, in connection with
or in relation to:
(a) any breach by Buyer of any representation and warranty of the
Buyer contained in this Agreement or any other document or certificate
delivered by or on behalf of the Buyer hereunder at or prior to the
Closing;
(b) any nonfulfillment or breach of any covenant or agreement
contained in this Agreement to be performed or complied with by Buyer, and
(c) any obligation, liability or claim relating to (i) the
Assumed Liabilities or (ii) the ownership or operation of the Acquired
Assets after the Closing.
47
SECTION 8.3 LIMITATION ON AND EXPIRATION OF INDEMNIFICATION.
Notwithstanding anything in this Article 8 to the contrary, the Seller
Indemnified Parties' rights to indemnification from Buyer and the Buyer
Indemnified Parties' rights to indemnification from Sellers shall be limited as
follows:
8.3.1 The representations, warranties, covenants and agreements set
forth in this Agreement, the Disclosure Schedule and in any other certificates
or documents delivered at the Closing in connection with this Agreement shall
survive the Closing; provided, however, that the representations warranties,
covenants and agreements of all Parties to this Agreement shall, except as
otherwise set forth in this Section 8.3.1, expire and be of no further force or
effect on the date that is two years after the Closing Date; provided, further,
that (a) the representations and warranties of (x) Sellers set forth in Section
2.1 (Organization, Qualification, Corporate Power and Authority), the first
sentence of Section 2.4 (Assets), Section 2.12 (Taxes), Section 2.14 (Employee
Benefit Plans), Section 2.17 (Environmental), Section 2.19 (Government
Reimbursement Program Participation) and Section 2.22 (Fees and Commissions),
and (y) Buyer set forth in Section 3.1 and Section 3.6, shall survive until
thirty (30) days following the expiration of the applicable statutory
limitations period. Any covenants of any Party which by their terms are to be
performed or observed on or following the Closing shall survive the Closing
until fully performed or observed in accordance with their terms. Except in
connection with any action or claim based on intentional or fraudulent
misrepresentation, no claim for indemnification hereunder may be made after the
expiration of the applicable survival period set forth in this Section 8.3.1.
8.3.2 No Party shall be entitled to indemnification pursuant to
Sections 8.1(a) or 8.2(a) unless and until the aggregate amount of Losses to
which the foregoing indemnity relates exceeds on a cumulative basis $800,000
(the "BASKET"), in which case such Party will be entitled to the full amount of
such Losses.
8.3.3 The aggregate indemnification obligations of Sellers contained
in Section 8.1(a) shall be limited in all respects to forty percent (40%) of the
Cash Purchase Price (the "INDEMNIFICATION CAP"); provided, however, that the
aggregate indemnification obligations of Sellers with respect to Losses incurred
or sustained by the Buyer Indemnified Parties, as a result of, in connection
with or in relation to any breach of any representation and warranty contained
in Section 2.1 (Organization, Qualification, Corporate Power and Authority), the
first sentence of Section 2.4 (Assets), Section 2.12 (Taxes), Section 2.14
(Employee Benefit Plans), Section 2.17 (Environmental), Section 2.19 (Government
Reimbursement Program Participation) and Section 2.22 (Fees and Commissions)
shall be limited in all respects to the Cash Purchase Price. Sellers' aggregate
indemnification obligation in respect of all Losses shall be limited to the Cash
Purchase Price.
8.3.4 The aggregate indemnification obligations of Buyer contained in
Section 8.2(a) shall be limited in all respects to the Indemnification Cap;
provided, however, that the aggregate indemnification obligations of Buyer with
respect to Losses incurred or sustained by the Seller Indemnified Parties, as a
result of, in connection with or in relation to any breach of any representation
and warranty contained in Section 3.1 (Organization, Power and Authority) and
Section 3.6 (Fees and Commissions) shall be limited in all respects to the Cash
Purchase
48
Price. Buyer's aggregate indemnification obligation in respect of all Losses
shall be limited to the Cash Purchase Price.
8.3.5 Notwithstanding any provision to the contrary, nothing in this
Agreement shall limit or restrict any of the Seller Indemnified Parties' or
Buyer Indemnified Parties' right to maintain or recover any damages caused by or
resulting from intentional or fraudulent misrepresentation with respect to any
of the representations or warranties contained herein.
SECTION 8.4 THIRD-PARTY CLAIMS.
8.4.1 Promptly after receipt by a Person entitled to indemnity under
Section 8.1 or 8.2 (an "INDEMNIFIED PERSON") of notice of the assertion of any
claim against any Indemnified Person by a third party (a "THIRD-PARTY CLAIM"),
such Indemnified Person shall give notice to the Person obligated to indemnify
under such Section (an "INDEMNIFYING PERSON") of the assertion of such
Third-Party Claim, provided that the failure to notify the Indemnifying Person
will not relieve the Indemnifying Person of any liability that it may have to
any Indemnified Person, except to the extent that the Indemnifying Person
demonstrates that the defense of such Third-Party Claim is prejudiced by the
Indemnified Person's failure to give such notice.
8.4.2 If an Indemnified Person gives notice to the Indemnifying Person
pursuant to Section 8.4.1 of the assertion of a Third-Party Claim, the
Indemnifying Person shall be entitled to participate in the defense of such
Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying
Person is also a Person against whom the Third-Party Claim is made and the
Indemnified Person determines in good faith that joint representation would
materially prejudice the Indemnified Person or (ii) the Indemnifying Person
fails to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such Third-Party Claim and provide indemnification with
respect to such Third-Party Claim), to assume the defense of such Third-Party
Claim. After notice from the Indemnifying Person to the Indemnified Person of
its election to assume the defense of such Third-Party Claim, the Indemnifying
Person shall not, so long as it diligently conducts such defense, be liable to
the Indemnified Person under this Article 8 for any fees of other counsel or any
other expenses with respect to the defense of such Third-Party Claim, in each
case subsequently incurred by the Indemnified Person in connection with the
defense of such Third-Party Claim. If the Indemnifying Person assumes the
defense of a Third-Party Claim, (i) no compromise or settlement of such
Third-Party Claim may be effected by the Indemnifying Person without the
Indemnified Person's consent unless (A) there is no finding or admission of any
violation of any Legal Requirement; (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Person; and (ii) the
Indemnified Person shall have no liability with respect to any compromise or
settlement of such Third-Party Claim effected without its consent. If notice is
given to an Indemnifying Person of the assertion of any Third-Party Claim and
the Indemnifying Person does not, within ten (10) days after the Indemnified
Person's notice is given, give notice to the Indemnified Person of its election
to assume the defense of such Third-Party Claim, the Indemnified Person shall
have the right to control the defense of such Third-Party Claim, provided that
(x) the Indemnifying Person has the right to participate in such defense using
counsel of its choosing at its own expense, and (y) no compromise or settlement
of such Third-Party Claim may be effected by the Indemnifying Person without the
Indemnified Person's consent, not to be unreasonably withheld.
49
SECTION 8.5 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a Third-Party Claim may be asserted
by notice to the Party from whom indemnification is sought and if valid will be
paid promptly after such notice.
SECTION 8.6 NO DOUBLE MATERIALITY. For purposes of calculating the amount
of Losses to which the Buyer Indemnified Parties and Seller Indemnified Parties
are entitled under this Article 8 (but not for purposes of determining whether a
representation or warranty has been breached), the terms "material,"
"materiality," and "material adverse effect" will be disregarded.
SECTION 8.7 INDEMNIFICATION AS REFUND OF PURCHASE PRICE. Any amount
required to be paid by Sellers to any Buyer Indemnified Party under this Article
8 or otherwise as a result of any Losses incurred or sustained by such Buyer
Indemnified Party shall constitute a reduction in the Purchase Price equal to
the full amount required to be so paid to such Buyer Indemnified Party and shall
be a refund of an overpayment of the Purchase Price; provided, however, that the
Parties acknowledge and agree that Buyer shall account for such amount as
required by GAAP.
SECTION 8.8 MINIMUM INVESTMENT REQUIREMENT. During the Seller
Non-Distribution Period (provided, that if there are any unresolved
indemnification claims of Buyer under Article 8 as of the end of the Seller
Non-Distribution Period, the Seller Non-Distribution Period will be extended
until such time that any such claims are resolved pursuant to Article 8),
Sellers shall collectively maintain an aggregate investment in securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, or such other securities as
may be approved by Buyer, such approval not to be unreasonably withheld, in an
amount equal to the Indemnification Cap (the "MINIMUM INVESTMENT REQUIREMENT").
Sellers shall provide Buyer, within fifteen (15) days following written request,
with a statement, together with supporting documentation evidencing Sellers'
compliance with the Minimum Investment Requirement; provided, however, that
Sellers shall deliver to Buyer on or before January 15 and July 15 of each
calendar year following the Closing Date with a statement, together with
supporting documentation, evidencing Sellers' compliance with the Minimum
Investment Requirement as of June 30 and December 31, respectively.
SECTION 8.9 ARBITRATION.
8.9.1 All disputes, claims or controversies arising from or relating
to this Agreement, or the relationships resulting from this Agreement, shall be
resolved by binding arbitration under the Commercial Arbitration Rules and
Mediation Procedures of the American Arbitration Association ("AAA"), except in
connection with disputes relating to the determination of the Final Adjustment
Amount, in which event the provisions of Section 1.5.3 shall be utilized. In
addition, the arbitrator(s) selected according to procedures set forth below
shall determine the arbitrability of any matter brought to them, and their
decision shall be binding on the parties thereto.
50
8.9.2 Arbitration may be initiated by any party hereto by the filing
of an arbitration claim (an "ARBITRATION CLAIM") with AAA. The arbitration
hearing shall be conducted in New Orleans, Louisiana.
8.9.3 There will be three (3) arbitrators, unless the parties to any
dispute are able to agree on a single arbitrator. In the absence of such
agreement within thirty (30) days after the filing of an Arbitration Claim, the
party(ies) on one side of the dispute shall select one (1) arbitrator and the
party(ies) on other side of the dispute shall select one (1) arbitrator, and
those two arbitrators shall then select within ten (10) days a third arbitrator.
If those two arbitrators are unable to select a third arbitrator within such ten
day period, a third arbitrator shall be appointed by the commercial panel of the
AAA.
8.9.4 The decision in writing of at least two of the three arbitrators
will be final and binding upon the parties (or, in the case there is one
arbitrator, the decision in writing of such one arbitrator). The written award
of the arbitrator(s) shall include reasons supporting the award. The
arbitrator(s) will have power and authority to award any remedy or judgment that
could be awarded by a court of law in the State of Louisiana. The award rendered
by arbitration will be final and binding upon the parties hereto, and final
judgment on the arbitration award may be entered in any court of competent
jurisdiction.
8.9.5 The arbitrator(s) will be bound by and strictly enforce the
terms of this Agreement, and may not limit, expand or otherwise modify its
terms. The arbitrator(s) shall make a good faith effort to apply substantive
applicable law, but an arbitration decision will not be subject to review
because of errors of law. The arbitrator(s) will be bound to honor claims of
privilege or work product doctrine recognized at law, but the arbitrator(s) will
have the discretion to determine whether any such claim of privilege or work
product doctrine applies.
8.9.6 The rules of arbitration will be the Commercial Arbitration
Rules of the American Arbitration Association, as modified by any other
instructions that the parties may agree upon at the time, except that each party
will have the right to conduct discovery in any manner and to the extent
authorized by the Federal Rules of Civil Procedure.
8.9.7 The arbitration shall be governed by the laws of the State of
Louisiana, excluding any conflict-of-laws rules or principles that might refer
the governance or the construction of this Agreement to the law of another
jurisdiction.
8.9.8 Each party will bear its own expenses with respect to
arbitration, and the Buyer, on the one hand, and Sellers, on the other, will
share the fees and expenses of the AAA and the arbitrator(s) on a 50-50 basis.
8.9.9 All documents, briefs, testimony, transcripts and arbitrators'
decisions shall be kept confidential unless disclosure is required by law or in
connection with enforcement or appeal of a decision or award hereunder to a
court of property jurisdiction.
51
ARTICLE 9.
TERMINATION
SECTION 9.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated:
9.1.1 by mutual consent of the Parties;
9.1.2 by Buyer, if there has been a material violation or breach by
Sellers of any covenant, agreement, representation or warranty contained in this
Agreement and such breach (i) would prevent the satisfaction of any condition to
the obligations of Buyer at the Closing and (ii) such violation or breach has
not been waived by Buyer and is not or cannot be cured by Sellers within ten
days after written notice thereof from Buyer;
9.1.3 by any Seller, if there has been a material violation or breach
by Buyer of any covenant, representation or warranty contained in this Agreement
and such breach (i) would prevent the satisfaction of any condition to the
obligations of Sellers at the Closing and (ii) such violation or breach has not
been waived by Sellers and is not or cannot be cured by Buyer within ten days
after written notice thereof by Sellers;
9.1.4 by Buyer or any Seller if any Order of any Governmental
Authority of competent jurisdiction permanently restraining, enjoining or
otherwise preventing the consummation of the transactions contemplated hereby
shall have been issued and become final and non-appealable;
9.1.5 by Buyer or any Seller if the Closing has not occurred on or
before December 31, 2006 (the "CLOSING DEADLINE"), or any condition to a Party's
obligation to proceed with Closing becomes impossible to satisfy prior to the
Closing Deadline (and has not been waived), unless such failure results
primarily from the breach of a representation, warranty or covenant of such
Party; or
9.1.6 by Buyer, pursuant to Section 4.15, 4.16, 7.17 or 7.18 of this
Agreement.
9.1.7 by Buyer or Sellers, pursuant to Schedule 5.16.
The Party desiring to terminate this Agreement pursuant to Section 9.1.2, 9.1.3,
9.1.4, 9.1.5, 9.1.6 or 9.1.7 shall give written notice of such termination to
the other Parties hereto.
SECTION 9.2 APPROVAL BY BOARD OF DIRECTORS. Any termination pursuant to
Section 9.1 shall first be approved by the Board of Directors of the Party
seeking termination, to the extent that such approval is required for such
action.
SECTION 9.3 EFFECT OF TERMINATION. Each Party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. In the event of termination of this Agreement by either Buyer or
Sellers as provided in Section 9.1 above, the provisions of this Agreement shall
immediately become void and of no further force and effect (other than this
Section 9.3, the last sentence of Section 4.2, Article 8 and the Confidentiality
52
Agreement, which shall survive the termination of this Agreement); provided,
however, that if this Agreement is terminated by a Party because of the breach
of the Agreement by another Party or because one or more of the conditions to
the terminating Party's obligations under this Agreement is not satisfied as a
result of any other Party's failure to comply with its obligations under this
Agreement, the terminating Party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.1 AMENDMENTS. This Agreement may not be amended or modified
without the written consent of the Parties hereto.
SECTION 10.2 WAIVER. Failure to insist upon strict compliance with any of
the terms, covenants, or conditions of this Agreement at any one time shall not
be deemed a waiver of such term, covenant, or condition at any other time nor
shall any waiver or relinquishment of any right or power herein at any time be
deemed a waiver or relinquishment of the same or any other right or power at any
other time.
SECTION 10.3 NOTICES. All notices, payments, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if sent by registered or certified mail, postage prepaid, and
return receipt requested to the Parties, addressed as follows (or at such other
addresses as designated by the Parties from time to time):
If to Sellers to:
Hospital Service District No. 1 of the Parish of Ouachita
P. O. Xxx 00000
Xxxx Xxxxxx, XX 00000
Attn: Chairman
and to:
Glenwood Regional Medical Center
000 XxXxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: President
and to:
Glenwood Health Services, Inc.
000 XxXxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: President
53
with copies to:
Stone Xxxxxx Xxxxxxx Xxxxxxxx L.L.C.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx
and
Xxxxx Xxxxxx LLP
00 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: C. Xxxxxxxx Xxxxxxx
and
Snellings, Breard, Xxxxxx, Xxxxxxxx & Xxxxxxxx, L.L.P.
0000 Xxxxx 00xx Xxxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx, Xx.
If to Buyer to:
IASIS Healthcare LLC
000 Xxxxxxxx Xxxx, Xxxxx X
Xxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
SECTION 10.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts (including by means of telecopied signature pages or signature
pages sent electronically in a .pdf format), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 10.5 ENFORCEABILITY AND SEVERABILITY. In the event any provision of
this Agreement or portion thereof is found to be wholly or partially invalid,
illegal, or unenforceable in any proceeding, then such provision shall be deemed
to be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable, or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been
54
originally incorporated herein as so modified or restricted or as if such
provision had not been originally incorporated herein, as the case may be.
SECTION 10.6 GOVERNING LAW. This Agreement shall be construed in accordance
with the internal laws of the State of Louisiana, without regard to conflicts of
laws principles.
SECTION 10.7 ASSIGNMENT. This Agreement shall not be assignable or
delegated by any Party without the prior written consent of the others;
provided, however, that any Party may, without the written consent of the
others, (a) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (b) designate one or more of its Affiliates to
perform its obligations hereunder. Absent an explicit written agreement among
the Parties to the contrary, any assignment, delegation, or designation shall
not release a Party from any of its obligations under this Agreement, and the
delegating or designating Party shall remain liable, jointly, severally, and in
solido, with any delegate or designee with respect to all obligations of the
delegating or designating Party under this Agreement. Any purported assignment,
delegation, or designation in violation of this Section is void.
SECTION 10.8 EXPENSES. Each Party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated.
SECTION 10.9 SURVIVAL OF AGREEMENTS. All representations and warranties
made herein or in any other agreement, certificate, or instrument delivered to
any Party pursuant to or in connection with this Agreement shall survive the
execution and delivery of this Agreement as set forth in Article 8 hereof. Such
representations and warranties shall survive until the time specified herein in
full force and effect notwithstanding any investigation by the Party relying
upon them.
SECTION 10.10 PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the Parties
hereto shall bind and inure to the benefit of the respective successors and
permitted assigns of the Parties hereto whether so expressed or not.
SECTION 10.11 REMEDIES. All remedies for breach of this Agreement shall be
cumulative, except that indemnification under Article 8 shall be the exclusive
remedy for all liabilities, losses, damages, diminution in value, costs, and
expenses for which an indemnification claim can be properly made under Sections
8.1(a) or 8.2(a) (disregarding, for purposes of making this determination, the
limitations of Section 8.3).
SECTION 10.12 THIRD PARTIES. Except as specifically provided herein, this
Agreement does not and is not intended to create any rights in any person or
entity which is not a Party to this Agreement.
SECTION 10.13 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto, and the Confidentiality Agreement constitute the sole and
entire agreements and understandings of the Parties with respect to the subject
matter hereof. All Schedules and Exhibits hereto are incorporated herein by
reference.
55
SECTION 10.14 SPECIFIC PERFORMANCE. Sellers agree that Buyer shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and the obligations of Sellers hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief. Furthermore, Buyer agrees
that Sellers shall have the right, in addition to any other rights and remedies
existing in their favor, to enforce their rights and the obligations of Buyer
hereunder, either jointly or severally, not only by an action or actions for
damages but also by an action or actions for specific performance, injunctive
and/or other equitable relief. The Parties acknowledge and agree that any breach
of any post-Closing covenant by any Party will necessarily result in at least
some irreparable injury.
SECTION 10.15 HEADINGS; CONSTRUCTION. The headings of Articles and Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All Exhibits and Schedules to this Agreement are
incorporated into and constitute an integral part of this Agreement as if fully
set forth herein. All words used in this Agreement will be construed to be of
such gender or number as the context requires. All references to documents,
instruments or agreements will be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto.
SECTION 10.16 TAX AND MEDICARE ADVICE AND RELIANCE. Except as set forth in
this Agreement, none of the Parties (nor any of the Parties' respective counsel,
accountants or other representatives) has made or is making any representation
to any other Party (or to any other Party's counsel, accountants or other
representatives) concerning the consequences of the transactions contemplated
hereby under applicable tax laws or under the laws governing the Medicare
program. Except as expressly provided in this Agreement, each Party has relied
solely upon the tax and Medicare advice of its own employees or of
representatives engaged by such Party and not on any such advice provided by any
other Party hereto.
[remainder of page intentionally left blank]
[signature page follows]
56
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement to
be effective as of the day and year first written above.
GLENWOOD REGIONAL MEDICAL CENTER
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Print Name: Xxxxx Xxxxxx
Title: Chairman of the Board of Directors
GLENWOOD HEALTH SERVICES, INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Print Name: Xxxxxxx Xxxxx
Title: President and CEO
HOSPITAL SERVICE DISTRICT NO. 1 OF THE
PARISH OF OUACHITA, STATE OF LOUISIANA
By: /s/ Xxxxxx X. Liner
-------------------------------------
Print Name: Xxxxxx X. Liner
Title: Chairman of the Board of
Commissioners
IASIS GLENWOOD REGIONAL MEDICAL CENTER,
L.P.
BY: IASIS HEALTHCARE HOLDINGS, INC.,
GENERAL PARTNER
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Print Name: Xxxxx X. Xxxxx
Title: Secretary and General Counsel
Signature Page to Asset Purchase Agreement
IASIS HEALTHCARE LLC
(SOLELY FOR PURPOSES OF SECTION 7.2)
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Print Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
Signature Page to Asset Purchase Agreement
EXHIBIT A
DEFINED TERMS
INDEX OF TERMS DEFINED ELSEWHERE IN THIS AGREEMENT
TERM SECTION
---- -------------
AAA ............................................................ 8.9.1
Accounts Receivable ............................................ 1.1.5
Acquired Assets ................................................ 1.1
Agreement ...................................................... Preamble
Arbitration Claim .............................................. 8.9.2
Assignment and Assumption Agreements ........................... 5.13.2
Assumed Contracts .............................................. 1.1.3
Assumed Liabilities ............................................ 1.3
Audited Financial Statements ................................... 2.7.1
Basket ......................................................... 8.3.2
Buyer .......................................................... Preamble
Buyer Indemnified Parties ...................................... 8.1
Buyer's Closing Documents ...................................... 6.6
Capital Expenditures Budget .................................... 4.1.1
Cash Purchase Price ............................................ 1.5.2
Certification .................................................. 4.16
Certification Date ............................................. 4.16
Closing ........................................................ 1.6
Closing Date ................................................... 1.6
Closing Deadline ............................................... 9.1.5
Closing Payment Certificate .................................... 1.5.1
Closing Statement .............................................. 1.5.3.1
Collection Period .............................................. 1.5.4
Company Transaction ............................................ 4.6
Competing Business ............................................. 7.3.2
Confidential Information ....................................... 7.13
Deed ........................................................... 5.13.3
ERISA .......................................................... 2.14.1
Excluded Assets ................................................ 1.2
Excluded Contracts ............................................. 1.2.4
Excluded Liabilities ........................................... 1.4
Excluded Records ............................................... 1.2.6
Final Adjustment Amount ........................................ 1.5.3.2
Financial Statements ........................................... 2.7.1
GHS ............................................................ Preamble
Government Reimbursement Programs .............................. 2.19.1
GRMC ........................................................... Preamble
Hospital Lease ................................................. 4.8.8
HSD ............................................................ Preamble
IASIS .......................................................... Preamble
Indemnification Cap ............................................ 8.3.3
Indemnified Person ............................................. 8.4.1
Indemnifying Person ............................................ 8.4.1
Independent Auditor ............................................ 1.5.3.1
Initial Capital Expenditure Commitment ......................... Schedule 7.1
Insurance Proceeds ............................................. 1.1.13
Intellectual Property .......................................... 1.1.10
Interim Balance Sheet .......................................... 2.7.1
Interim Balance Sheet Date ..................................... 2.7.1
JCAHO .......................................................... 2.19.2
Leased Real Property ........................................... 1.1.4
LHSI ........................................................... 7.21
License ........................................................ 1.1.6
Licenses ....................................................... 1.1.6
Listed Accounts Receivable ..................................... 1.5.4
Losses ......................................................... 8.1
Mass Layoff .................................................... 4.12.1
Material Personal Property ..................................... 2.4
Minimum Investment Requirement ................................. 8.8
Net Proceeds Recipient Party ................................... 7.15
NLCHI Adjustment ............................................... Schedule 5.16
NLPHO .......................................................... Schedule 5.16
Objection ...................................................... 4.8.3
Objections Statement ........................................... 1.5.3.1
Owned Real Property ............................................ 1.1.2
Payors ......................................................... 2.19.1
Permissible Charitable Programs ................................ 7.3.2
Permitted Real Property Encumbrances ........................... 4.8.6
Personal Property .............................................. 1.1.1
Plant Closing .................................................. 4.12.1
Pre-Closing Financial Statements ............................... 2.7.1
Preliminary Net Working Capital Amount ......................... 1.5.1
Prepaid Expenses ............................................... 1.1.8
Prime Rate ..................................................... 1.5.3.2
Purchase Price ................................................. 1.5.2
Purchased Inventory ............................................ 1.1.7
Real Property .................................................. 1.1.4
Real Property Leases ........................................... 1.1.4
Related Person ................................................. 2.18
Relevant Parcels ............................................... 5.14.5
Restricted Area ................................................ 7.3.2
Restricted Period .............................................. 7.3.1
Schedule Completion Date ....................................... 4.15
Secured Lenders ................................................ 5.14.2
Seller Benefit Arrangements .................................... 2.14.1
Seller ERISA Plans ............................................. 2.14.1
Seller Indemnified Parties ..................................... 8.2
Seller JV Entities ............................................. 1.1.11
Seller Non-Distribution Period ................................. 7.15
Sellers' Closing Documents ..................................... 5.13
Sellers ........................................................ Preamble
Sellers' Cost Reports .......................................... 7.8
Stated Amount .................................................. 1.5.2
Stated Date .................................................... Schedule 5.16
Tax Returns .................................................... 2.12
Third-Party Claim .............................................. 8.4.1
Title Commitment Update ........................................ 4.8.3
Title Review Date .............................................. 4.8.3
Title Update Review Period ..................................... 4.8.3
Transferred Employees .......................................... 4.12.2
Transferred Records ............................................ 1.1.9
Unaudited Financial Statements ................................. 2.7.1
Uncollected Accounts ........................................... 1.5.4
For purposes of this Agreement, the following terms and variations thereof
have the meanings specified or referred to in this Exhibit A:
"AGREEMENT" has the meaning set forth in the first paragraph of this
Agreement.
"ACQUIRED BUSINESSES" means the businesses and operations of Sellers,
including the Facilities and other Acquired Assets.
"AFFILIATE" or "AFFILIATED PERSONS" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under common control
with such Person. For the purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person whether through the ownership of voting securities,
contract or otherwise.
"CIRCLE DRIVE LOTS" means those lots of the HSD Owned Real Property that
are designated as Parcel E.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMONLY CONTROLLED ENTITY" means any corporation, trade, business or
entity under common control with a Seller within the meaning of Section 414(b),
(c), (m) or (o) of the Code or Section 4001 of ERISA.
"CONFIDENTIALITY AGREEMENT" means that certain confidentiality agreement
dated as of February 10, 2006 by and between IASIS and GRMC.
"CONTRACT" means any contract or agreement (whether written or oral) (a)
under which any Seller has or may acquire any rights or benefits, (b) under
which any Seller has or may become subject to any obligation or liability, or
(c) by which any Seller or any of the assets owned or used by any Seller is or
may become bound (and includes, without limitation, the Real Property Leases).
"DISCLOSURE SCHEDULE" means the set of all schedules of this Agreement.
"EMPLOYEE BENEFIT PLAN" or "PLAN" means any Seller Benefit Arrangement or
Seller ERISA Plan.
"ENCUMBRANCE" means any charge, claim, equitable interest, lien,
encumbrance, option, pledge, security interest, mortgage, encroachment,
obligation to offer or transfer, right of first refusal or first option on
transfer, or restriction of any kind.
"ENVIRONMENTAL LAWS" means all Legal Requirements concerning Hazardous
Materials, pollution or protection of the environment (including, without
limitation, soil, air, water and groundwater).
"FACILITIES" means the Hospital and any other healthcare facilities
operated by any Seller.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or municipal
court, legislature, quasi-governmental, executive or regulatory authority,
agency or commission, or other governmental entity, authority or
instrumentality.
"HAZARDOUS MATERIALS" means any (a) pollutant, contaminant, waste,
petroleum, petroleum products, asbestos or asbestos-containing material,
radioactive materials, polychlorinated biphenyls, mold, urea formaldehyde and
radon gas, and (b) any other chemicals, materials or substances defined or
regulated as "hazardous waste," "hazardous material," "hazardous substance,"
"biohazardous waste," "biomedical waste," "medical waste," "sharps,"
"contaminant," "pollutant," "toxic waste," "toxic substance" or words of similar
import under any Environmental Law.
"HOSPITAL" means the acute care hospital operated by GRMC as of the date
hereof.
"HSD OWNED REAL PROPERTY" means the Owned Real Property owned by HSD as
described on Schedule 1.1.2.
"HSD VENDORS" means the Persons who, as vendors, conveyed the HSD Owned
Real Property to the HSD, or their respective heirs and successors in interest.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INDEBTEDNESS" means, without duplication, the sum of (i) all obligations
of Sellers for borrowed money and any accrued interest or prepayment premiums
related thereto, (ii) all obligations of Sellers as lessee or lessees under
Assumed Contracts that have been recorded as capital leases in accordance with
GAAP and (iii) all payment obligations under any interest rate swap agreements
or interest rate hedge agreements to which any Seller is party.
"KNOWLEDGE OF SELLER" (or similar expressions) shall mean the actual
knowledge of the members of the Board of Directors of the Hospital, and any
other individual who holds any of the following titles between the date hereof
and the Closing: Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Chief Nursing Officer, Chief Compliance Officer, and Vice
President of Operations. The identities of the current officers of GRMC, and the
office each holds, are as follows:
Chairman Hon. Xxxxx Xxxxxx
Vice Chairman Xxxx Xxxxxxx
Treasurer Xxxxx Xxxxxxxx
President and CEO Xxxxxxx Xxxxx
Secretary Xxx Xxxxxx
Assistant Secretary Xxxx Xxxxxxxx
Chief Operating Officer None
Chief Financial Officer Xxxxx Xxxxxxxx
Chief Nursing Officer Xxxxxxx Xxxxx
Chief Compliance Officer Xxxxxx Xxxxxx
Vice President of Operations Xxxx Xxxxx and Xxxxx Xxxxxxxxx
"LEGAL REQUIREMENTS" means any federal, state, local or municipal laws,
ordinances, codes, regulations or other legal requirements.
"MATERIAL ADVERSE EFFECT" means any circumstance or event that has, or is
reasonably likely to have (i) a material adverse effect on the business, assets,
results of operations or financial condition of GRMC and GHS, taken as a whole,
or (ii) a material adverse effect on the ability of Sellers to perform their
obligations hereunder.
"MATERIAL SELLER CONTRACT" means any of the following Contracts (whether
written or oral):
(i) any contract or agreement having a value per contract
of, or involving payments by or to any Seller of, at least (x) $50,000
on an annual basis, or (y) $100,000 in the aggregate;
(ii) any joint venture, partnership or other similar
contract or agreement involving co-investment with a third party to
which any Seller is a party;
(iii) any employment, non-competition or severance contract
or agreement of any Seller with any employee of a Seller;
(iv) any contract or agreement of any Seller with any labor
union, including any collective bargaining agreements;
(v) any contract or agreement with a physician or other
healthcare provider, Government Reimbursement Program, or other Payor;
(vi) any note, indenture, loan agreement, credit agreement,
financing agreement, or other evidence of indebtedness relating to the
borrowing of money by any Seller, any guaranty made by any Seller in
favor of any Person, or any letter of credit issued for the account of
any Seller;
(vii) any contract or agreement containing covenants that in
any way purport to restrict the business activity of any Seller or
limit the freedom of any Seller to engage in any line of business or
to compete with any Person;
(viii) any contract or agreement involving the sale of any
assets of any Seller, or the acquisition of any assets of any Seller
(whether by merger, sale of stock, sale of assets, or otherwise), for
consideration of at least $100,000;
(ix) any Real Property Lease of any Seller;
(x) any other contract or agreement material to the
operations of any Seller; and
(xi) each amendment, supplement, and modification in respect
of any of the foregoing.
"NET WORKING CAPITAL" means the result of (i) all current assets of GRMC
and GHS included in the Acquired Assets minus (ii) all current liabilities
(excluding Indebtedness) of GRMC and GHS, in each case determined in accordance
with GAAP applied on a basis consistent with Sellers' Accounting Practices and
Procedures, to the extent consistent with GAAP; provided that, notwithstanding
anything herein to the contrary, in no event will the determination of "Net
Working Capital" include deferred tax assets, deferred tax liabilities or known
or unknown claims payable, or amounts in respect of general liability,
professional liability or workers compensation liability.
"NET WORKING CAPITAL AMOUNT" means the Net Working Capital of GRMC and GHS
as of 11:59 p.m. (local time) on the day immediately preceding the Closing Date.
"NLCI AND GHH" mean Northeast Louisiana Cancer Institute, LLC ("NLCI") and
Glenwood Home Health ("GHH"). GHH means the trade name "Glenwood Home Health,"
the term used to mean and describe those Seller JV Entities, LHCGV, LLC, and
Patient's Choice Hospice and Palliative Care of Louisiana, LLC.
"ORDER" means any order, injunction, judgment, decree, ordinance, ruling or
assessment of any Governmental Authority.
"PARTIES" means Sellers, on the one hand, and Buyer and solely for purposes
of Section 7.2, IASIS, on the other hand.
"PERSON" means any individual, partnership, limited partnership,
corporation, business trust, limited liability company, limited liability
partnership, joint stock company, trust, unincorporated association, joint
venture or other entity, or any Governmental Authority.
"PROCEEDING" means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private).
"PUBLIC INTEREST COVENANTS" means the covenants in Schedule 7.1.
"SECTION 1338" means La. R.S. Section 41:1338, as in effect as of the
Closing.
"SELLERS' ACCOUNTING PRACTICES AND PROCEDURES" means the customary
accounting methods, policies, practices and procedures, including classification
and estimation methodology, used by GRMC and GHS in the preparation of the
Audited Financial Statements and Unaudited Financial Statements.
"SPECIALTY HOSPITAL" means a subsection (d) hospital (as defined in section
1886(d)(1)(B) of the Social Security Act (which is codified at 42 U.S.C.
1395ww(d)(1)(B)) that is primarily or exclusively engaged in the care and
treatment of one of the following: Patients with a cardiac condition; patients
with an orthopedic condition; patients receiving a surgical procedure; or any
other specialized category of services that the Secretary of Health and Human
Services designates as inconsistent with the purpose of permitting physician
ownership and investment interests in a hospital.
"SURVEYS" means current surveys of each parcel, either individually or
collectively as appropriate under the circumstances, of Owned Real Property
being conveyed to Buyer hereunder certified to the Buyer and any lender Buyer
may designate, prepared by a surveyor licensed in the State of Louisiana and
reasonably acceptable to Buyer, conforming to current ALTA Minimum Detail
Requirements for land title surveys, disclosing the location of all
Improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads.
"TARGET NET WORKING CAPITAL AMOUNT" means $12,731,251.00.
"TAXES" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"TITLE COMMITMENT" means a title insurance commitment for an owner's policy
of title insurance for fee or leasehold interest to be issued by the Title
Company.
"TITLE COMPANY" shall mean Lawyer's Title Insurance Company, or other
nationally recognized title insurance company reasonably acceptable to Buyer.
"TITLE POLICY" shall mean an Owner's Policy of Title Insurance insuring
good and marketable title to the Owned Real Property owned by Sellers and
conveyed to Buyer hereunder, in the name of Buyer, issued by the Title Company
with liability in the amount as Buyer may reasonably determine to be the fair
market value of such Owned Real Property, dated as of the Closing Date.
